Commercial Division Blog

Posted: May 7, 2015 / Categories Commercial, Law Firms and Professional Ethics

Continuous Representation Doctrine Requires More than a Continuing Relationship

On April 30, 2015, the First Department issued a decision in Johnson v. Proskauer Rose LLP, 2015 NY Slip Op. 03626, affirming the denial of a motion to dismiss legal malpractice and related claims.

In Johnson, the trial court denied the motion by the defendant law firm and attorney to "dismiss plaintiffs' causes of action alleging fraud, excessive legal fee and unjust enrichment," but did dismiss the plaintiffs' cause of action for legal malpractice. On appeal, the First Department affirmed the dismissal of the legal malpractice claim, explaining:

Plaintiffs do not dispute that, ordinarily, a legal malpractice claim accrues when the injury to the client occurs, regardless of the client's awareness of the malpractice. According to that principle of law, the statute of limitations would have begun to run, at the latest, on June 8, 2001, when [the defendant law firm] delivered the opinion letter. Plaintiffs argue that the continuous treatment doctrine tolled the limitations period. That doctrine appreciates the client's dilemma if required to sue the attorney while the latter's representation on the matter at issue is ongoing. However, the tolling it allows only applies to the specific matter out of which the malpractice claim arises; it does not apply merely because the lawyer and client had a continuing relationship pursuant to which they would have occasion to deal with each other from time to time.

Plaintiffs contend that their retainer agreement with [the defendant law firm] establishes continuous representation since it preserved the firm's right to represent [a third-party] in unrelated matters notwithstanding its ongoing representation of plaintiffs. However, what controls is not what a retainer agreement might say, but rather whether a client is acutely aware of the need for further representation on the specific subject matter underlying the malpractice claim. In Shumsky, the retainer agreement supported the plaintiff's continuous representation argument where it made specific reference to the action he had retained the attorney to commence and prosecute. Thus, the Court of Appeals deemed the representation to be continuous until such time as the plaintiff should have realized that the attorney had implicitly withdrawn from representation by refusing to return his telephone calls seeking to ascertain the status of the action. Here, the retainer agreement is distinguishable from the agreement in Shumsky because, notwithstanding the ongoing representation" language, there was no concrete task defendants were likely to perform after they delivered the opinion letter. Accordingly, while there was certainly the possibility that the need for future legal work would be required with respect to the tax strategy, plaintiffs could not have acutely anticipated the need for further counsel from defendants that would trigger the continuous representation toll.

(Internal quotations and citations omitted) (emphasis added).