Commercial Division Blog

Posted: February 15, 2014 / Categories Commercial, Law Firms and Professional Ethics

Alleged Breach of Disciplinary Rule Alone Does Not Create a Cause of Action for Legal Malpractice

On February 4, 2014, Justice Oing of the New York County Commercial Division issued a decision in Pope Investments II LLC v. Belmont Partners, LLC, 2014 NY Slip Op. 30349(U), dismissing a legal malpractice claim that was based on an alleged breach of a disciplinary rule.

In Pope Investments, two groups of plaintiffs sued a handful of defendants, including a law firm and one of its partners, in connection with a failed investment. The court addressed many issues in deciding the motions to dismiss. Here we focus on its dismissal of a malpractice claim based on an alleged breach of a disciplinary rule. The court explained that simply alleging a violation of a disciplinary rule was insufficient to state a claim for legal malpractice:

The Group plaintiffs allege that Guzov and Ofsink committed legal malpractice by violating New York Rules of Professional Conduct Rule 1. 7(b)(4). That Rule requires a lawyer who has decided to represent two clients, regardless of an apparent conflict of interest, obtain written consent from each affected client. The Group plaintiffs claim that defendants Guzov and Ofsink represented AAXT and Kamick for the SMT Transactions without their written consent.

In support of dismissal of this claim, defendants Guzov and Ofsink rely on William Kaufman Org., Ltd. v Graham & James LLP, 269 AD2d 171, 173 (1st Dept 2000) to argue that a violation of a disciplinary rule does not generate a cause of action. That reliance is misplaced. That case also stands for the proposition that some of the conduct constituting a violation of a disciplinary rule may also constitute evidence of malpractice. Nonetheless, a violation of a disciplinary rule, standing alone and without more, does not generate a cause of action. The issue, thus, is whether there is more than just a violation of the Rule.

(Internal quotations and citations omitted) (emphasis added). The court went on to hold that the complaint failed "sufficiently [to] plead what negligent conduct defendants Guzov and Ofsink allegedly perpetrated to support the legal malpractice claim."

There is a certain appeal to a rule that, as the plaintiffs alleged here, violating a disciplinary rule gives rise to liability to the wronged client (assuming damages result). However, as this decision shows, that is not the law.