An attorney may not be held liable for failing to act outside the scope of a retainer

In Natl. Air Cargo, Inc. v Jenner & Block, LLP, 203 AD3d 1655 [4th Dept 2022], the court dismissed the legal malpractice action based on the following basis:

A motion to dismiss a complaint based on documentary evidence “may be appropriately granted only where the documentary evidence utterly refutes [the] plaintiff’s factual allegations, conclusively establishing a defense as a matter of law” (Goshen v. Mutual Life Ins. Co. of N.Y., 98 N.Y.2d 314, 326, 746 N.Y.S.2d 858, 774 N.E.2d 1190 [2002]). In support of its motion, HSE submitted the engagement letter between HSE and NAC. “An attorney may not be held liable for failing to act outside the scope of a retainer” (Attallah v. Milbank, Tweed, Hadley & McCloy, LLP, 168 A.D.3d 1026, 1028, 93 N.Y.S.3d 353 [2d Dept. 2019]; see AmBase Corp. v. Davis Polk & Wardwell, 8 N.Y.3d 428, 435, 834 N.Y.S.2d 705, 866 N.E.2d 1033 [2007]). Here, HSE met its burden of establishing by documentary evidence that the scope of its legal representation did not include a review of the insurance policies for possible coverage of the judgment in the underlying action. The engagement letter stated that HSE’s engagement did “not include responsibility either for review of [NAC’s] insurance policies to determine the possibility of coverage for any … claims that have [been] or may be asserted against [NAC] or for notification of [NAC’s] insurance carriers concerning the matter.” Because review of NAC’s liability insurance policies to determine their potential applicability to the judgment in the underlying action fell outside the scope of HSE’s engagement, the court properly granted HSE’s motion with respect to the professional negligence/legal malpractice cause of action against HSE insofar as asserted by NAC (see Turner v. Irving Finkelstein & Meirowitz, LLP, 61 A.D.3d 849, 850, 879 N.Y.S.2d 145 [2d Dept. 2009]).


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Richard A. Klass, Esq., maintains a law firm engaged in civil litigation at 16 Court Street, 28th Floor, Brooklyn, New York. He may be reached at (718) COURT●ST or RichKlass@courtstreetlaw.comcreate new email with any questions.

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Scales of justice illustrating article about legal malpractice.

An attorney-client relationship may exist even if there’s no written retainer agreement.

Edelman v Berman, 195 AD3d 995 [2d Dept 2021] serves as a good reminder that, just because there is no written retainer agreement, does not mean that an attorney-client relationship does not possibly exist. The court held:

An attorney-client relationship may arise even in the absence of a written retainer agreement, and a court must look to the words and actions of the parties to determine whether such a relationship exists (see Tropp v. Lumer, 23 A.D.3d 550, 551, 806 N.Y.S.2d 599). Here, according the plaintiff the benefit of every favorable inference, she sufficiently alleged the existence of an attorney-client relationship (see Hall v. Hobbick, 192 A.D.3d 776, 144 N.Y.S.3d 88; see also Tropp v. Lumer, 23 A.D.3d at 551, 806 N.Y.S.2d 599).


Richard A. Klass, Esq.
Your Court Street Lawyer

#CourtStreetLawyer #retainer-agreement

Richard A. Klass, Esq., maintains a law firm engaged in civil litigation at 16 Court Street, 28th Floor, Brooklyn, New York. He may be reached at (718) COURT●ST or RichKlass@courtstreetlaw.comcreate new email with any questions.

Prior results do not guarantee a similar outcome.

© 2021 Richard A. Klass

Scales of justice illustrating article about legal malpractice.

Attorney retainer agreement should state matters for which the attorney is NOT retained.

It is important for a retainer agreement to lay out not only the matters that the attorney will represent the client on but also those that the attorney will not provide representation. The client defeated the motion to dismiss in Katz v Siano, 187 AD3d 639, 640 [1st Dept 2020], as the court held:

Plaintiff adequately plead that defendant, who was retained to represent him in a criminal matter, owed him a duty of care with respect to legal advice he allegedly offered in connection with a pending civil action (see Jane St. Co. v Rosenberg & Estis, 192 AD2d 451 [1st Dept 1993], lv denied 82 NY2d 654 [1993]). While the parties entered into a written retainer agreement stating that the legal representation was for the criminal matter, on this motion to dismiss the written retainer does not eliminate any possibility that defendant owed plaintiff a duty of care in connection with legal advice he had given and was continuing to give regarding the separate civil matter, insofar as plaintiff relied upon it within that matter rather than in the criminal matter (see Genesis Merchant Partners, L.P. v Gilbride, Tusa, Last & Spellane, LLC, 157 AD3d 479, 482 [1st Dept 2018]). Accordingly, there is no documentary evidence here sufficient to require dismissal of the legal malpractice claim pursuant to CPLR 3211 (a) (1) (see IMO Indus. v Anderson Kill & Olick, 267 AD2d 10 [1st Dept 1999]). Issues of fact precluding dismissal exist as to whether defendant’s legal malpractice was the proximate cause of any damages suffered by plaintiff in the civil matter and as to whether plaintiff suffered cognizable damages in that matter.

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Scales of justice illustrating article about legal malpractice.

Retainer agreements should set forth scope of lawyer’s representation.

Portus Singapore PTE LTD v Kenyon & Kenyon LLP, 449 F Supp 3d 402, 411-15 [SDNY 2020] serves as a reminder that the scope of the lawyer’s representation should be set forth in the retainer agreement. As the federal court held:

In order to demonstrate that a lawyer was negligent “a plaintiff must show that an attorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession” and that “the attorney’s breach of this professional duty caused the plaintiff’s actual damages.” McCoy v. Feinman, 99 N.Y.2d 295, 755 N.Y.S.2d 693, 785 N.E.2d 714, 718-19 (2002) (internal quotation marks and citations omitted). “What constitutes ordinary and reasonable skill and knowledge cannot be fixed with precision, but should be measured at the time of representation.” Darby & Darby, P.C. v. VSI Intern., Inc., 95 N.Y.2d 308, 716 N.Y.S.2d 378, 739 N.E.2d 744, 747 (2000). Generally, “ordinary and reasonable skill” is determined by looking to standards of legal practice in the State of New York. See, e.g.Sokol, 468 F. Supp. 2d at 637 (discussing New York law practice commentary). Moreover, “[a]n attorney may not be held liable for failing to act outside the scope of a retainer.” *412 Attallah v. Milbank, Tweed, Hadley & McCloy, LLP, 168 A.D.3d 1026, 93 N.Y.S.3d 353, 356 (2019).

In AmBase Corp. v. Davis Polk & Wardwell, 8 N.Y.3d 428, 834 N.Y.S.2d 705, 866 N.E.2d 1033, 1035 (2007), following the liquidation of its parent company, the plaintiff corporation AmBase assumed primary liability for the parent corporation’s federal income taxes and secondary liability for all other liabilities. Following liquidation, the Internal Revenue Service (“IRS”) found the parent company liable for six years’ worth of withholding taxes, which would be imputed to AmBase under the liquidation agreement. Id. AmBase retained Davis Polk “to represent [it] as agent for [the parent corporation] to resolve the tax issues currently before” the IRS. Id., 834 N.Y.S.2d 705, 866 N.E.2d at 1037. Davis Polk then successfully challenged in the Tax Court the IRS’s determination that AmBase was liable. Id., 834 N.Y.S.2d 705, 866 N.E.2d at 1035. AmBase then turned around and sued Davis Polk for legal malpractice on the ground that Davis Polk had failed to advise AmBase that AmBase was only secondarily liable for payment of taxes. Id. AmBase alleged that although it ultimately prevailed in the Tax Court, Davis Polk’s negligence forced AmBase to maintain a multi-million-dollar loss on its books, thereby creating an appearance of insolvency that resulted in lost business opportunities. Id., 834 N.Y.S.2d 705, 866 N.E.2d at 1036.

The New York Court of Appeals noted that the plain language of the retainer agreement “indicates that Davis Polk was retained to litigate the amount of tax liability and not to determine whether the tax liability could be allocated to another entity.” Id., 834 N.Y.S.2d 705, 866 N.E.2d at 1037. Noting that “the issue whether plaintiff was primarily or secondarily liable for the subject tax liability was outside the scope of its representation,” the court held that the “defendants exercised the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession when they focused their efforts on the controversy between AmBase and the IRS – the subject of the retainer agreement – resulting in a most favorable outcome, which was publicly praised by AmBase principals.” Id.

Similarly, in Milbank, Tweed, the law firm agreed in its engagement letter to represent the plaintiff “to investigate and consider options that may be available to urge administrative reconsideration” of the plaintiff’s expulsion from the New York College of Osteopathic Medicine. 93 N.Y.S.3d at 355. The Appellate Division of the Supreme Court affirmed the dismissal of the plaintiff’s complaint that had alleged malpractice on the ground that Milbank, Tweed did not actually negotiate the plaintiff’s readmission to the school. Id. at 356. The court reasoned that an attorney cannot be held liable for failing to act outside the scope of a retainer and that negotiation with the school went beyond the stated scope of the agreement letter. Id.

Davis Polk and Milbank, Tweed stand for the proposition that the failure by a lawyer to take actions outside the scope of that lawyer’s representation of a client cannot form the basis of a legal malpractice suit.

This case is substantially similar to Davis Polk and Milbank, Tweed. The parties do not point to any formal retainer or contract that spelled out the engagement between Kenyon and Portus. Rather, the “scope” of the engagement between Portus and Kenyon was set out in the communications between Kenyon and Portus’s agent, Mr. Treloar. Mr. Treloar’s communication, faxed to Kenyon on June 15, 2001, instructed Kenyon “to enter the National Phase in United States on behalf of our client and in accordance with the *413 details shown on the attached sheet.” McCoy Decl., Ex. A-14.7 Mr. Treloar instructed Kenyon to file the application by June 17, 2001 and alerted Kenyon that this due date was “URGENT.” Id. Mr. Treloar further stated that “[i]n the absence of our specific instructions please keep this application in force.” Id. (emphasis added).

The scope of Kenyon’s initial engagement in 2001 was thus limited to the narrow task of “enter[ing] the National Phase in United States” of the international patent application and to keep the application in place absent further instructions from Portus.8 Acting on these instructions, Kenyon then filed an application for the national stage of the international patent application under 35 U.S.C. § 371 on that same day, June 15, 2001, two days before the deadline to file an application with the USPTO in connection with Portus’s international patent.

Portus’s claim of malpractice against Kenyon fails because Kenyon did exactly what it was required to do in its engagement: Kenyon filed an application pursuant to 35 U.S.C. § 371 within two days and Kenyon kept the application in force and prosecuted the application until it was granted in December 2014.

Portus argues that Kenyon committed malpractice because Kenyon failed to advise Portus in June 2001 that Portus would benefit if Kenyon filed an application under 35 U.S.C. § 111 rather than under 35 U.S.C. § 371 in the event that the USPTO extensively delayed consideration of the application by more than three years. If such a delay occurred, Portus would then be eligible for a patent term adjustment under the AIPA. However, this advantage was entirely speculative and dependent on the subsequent extensive delay by the USPTO of more than three years between the filing of the application in June 2001 and the initial non-final action in January 2005. Nevertheless, Portus claims that Kenyon’s failure to advise Portus of the possible advantage of a 35 U.S.C. § 111 filing in June 2001 was malpractice.

The only advantage that Portus points to from filing a 35 U.S.C. § 111 application rather than a 35 U.S.C. § 371 application in June 2001 is the extended patent term if the USPTO delayed in approving the patent application by more than three years. But that advantage was entirely theoretical in June 2001 before any application had been filed. Portus points to no comparable case where an attorney was required to go beyond the limits of an engagement and advise a client about theoretical advantages of another course of action that were based on unknown future contingencies.

Portus’s argument fails because there was nothing about the June 2001 *414 engagement that required Kenyon to advise Portus about the theoretical advantages of another application, advantages that would accrue to Portus only in the event, which was entirely speculative in June 2001, that the USPTO delayed consideration of the patent application by more than three years. While it is true that a lawyer can be held liable for withholding facts that are “relevant to the client’s decision to pursue a given course of action,” Spector v. Mermelstein, 361 F. Supp. 30, 39-40 (S.D.N.Y. 1972), aff’d, 485 F.2d 474 (2d Cir. 1973), it is also true that “an attorney is not held to a standard of ‘infallibility’ and the ‘perfect vision of hindsight’ is an unreliable test for determining the past existence of legal malpractice.” Nomura Asset Capital Corp. v. Cadwalader, Wickersham & Taft LLP, 889 N.Y.S.2d 506 (Table), at *11 (Sup. Ct. 2009) (internal citations omitted).

Kenyon carried out its representation of Portus as requested by Portus and successfully prosecuted the patent after the non-final and final action by the USPTO until the USPTO eventually granted Portus a patent in December 2014. Just as in Davis Polk and Milbank, Tweed, the scope of the agreement between the parties in this case did not impose upon the defendant an obligation to advise the plaintiff about matters outside the scope of that representation. In particular, Kenyon had no free-standing obligation separate and apart from the scope of the engagement to advise Portus about the drawbacks and advantages associated with a continuation bypass application and a national stage application in June 2001 when Portus retained Kenyon. Portus retained Kenyon for the very narrow purpose of entering the national phase in the United States of Portus’s international application and keeping that application in force until instructed otherwise. See Davis Polk, 834 N.Y.S.2d 705, 866 N.E.2d at 1037 (“Thus, the issue whether plaintiff was primarily or secondarily liable for the subject tax liability was outside the scope of its representation.”).

The cases that Portus cites in support of its contention that Kenyon was negligent in failing to advise Portus adequately after being contacted on June 15, 2001 prior to filing a patent application with the USPTO are inapposite.

In French v. Hogan, 210 A.D.2d 658, 619 N.Y.S.2d 406, 407 (1994), the plaintiff had entered into a contract to purchase a residence and employed the defendant attorney to represent her in connection with the transaction. In affirming the denial of summary judgment to the defendant, the court noted that “there remains an unresolved factual issue as to whether, if timely advised of the existence of the restrictive covenant, plaintiff could have avoided at least a significant portion of her alleged damages” incurred when she converted the property from a residence to a bed and breakfast following her purchase. Id.

In French, the plaintiff did not receive everything that she sought under the engagement with her attorney because the building she purchased had a covenant preventing her from putting the building towards her intended use. In this case, unlike in French, it is undisputed that Portus received what it requested of Kenyon in June 2001, namely that Kenyon enter the national phase of Portus’s application by filing an application under 35 U.S.C. § 371 and that Kenyon keep the application in place unless Portus told Kenyon to do otherwise. Kenyon performed as requested, leading to the successful prosecution of the patent application when it was granted in December 2014.

In the other case cited by Portus, *415 Estate of Nevelson v. Carro, Spanbock, Kaster & Cuiffo, 259 A.D.2d 282, 686 N.Y.S.2d 404 (1999), the plaintiff corporation Sculptotek was created upon the advice of the defendant lawyer for the purposes of organizing the financial affairs of a famous sculptor, Louise Nevelson. After Nevelson’s death, the IRS determined that the corporation was a sham entity and that the corporate assets should be part of the sculptor’s estate. The determination was based in part on the lack of compensation to Nevelson for her artwork. The Appellate Division found that the attorney could be liable for malpractice for failing to advise their clients of the adverse consequences under the plan they recommended.

In Nevelson, the defendants failed to advise the plaintiffs on a central aspect of the plan that the defendants were retained to implement, namely the construction of a corporate structure that would survive an IRS audit. In this case, unlike in Nevelson, Kenyon did everything that Portus asked it to do in June 2001.

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It is important for a retainer agreement…

It is important for a retainer agreement to set forth the tasks that the attorney will perform on behalf of the client, as well as those which are outside of the tasks to be performed. This was emphasized in the following decision of Keld v Giddins Claman, LLP, 170 AD3d 589 [1st Dept 2019]:

The retainer agreement entered into by plaintiff and defendant law firm constitutes documentary evidence which utterly refutes plaintiff’s claims (see generally Leon v. Martinez, 84 N.Y.2d 83, 88, 614 N.Y.S.2d 972, 638 N.E.2d 511 [1994]; CPLR 3211[a][1] ). The scope of services defendant was to provide plaintiff in connection with her purchase of a condominium unit was clearly limited by the retainer agreement. The retainer agreement enumerated the legal services defendants would provide including the review, preparation, and/or negotiation of specific documents related to the closing and the investigation and analysis of issues relating to title. Plaintiff’s allegation that the agreement required defendants to manage all aspects of the purchase including advising on inspections for safety, quality of renovation and environmental issues is without merit. These duties are outside the scope of the retainer (see AmBase Corp. v. Davis Polk & Wardwell, 8 N.Y.3d 428, 435, 834 N.Y.S.2d 705, 866 N.E.2d 1033 [2007] ). Thus, plaintiff cannot maintain a legal malpractice claim against defendants.

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