Unfortunately, it has become routine that a lawyer who sues to recover fees will likely be faced with a legal malpractice counterclaim. When issues of malpractice and the right to recover fees become intertwined, even a modest success by the former client raises the possibility of an award of attorneys’ fees in New Jersey under Saffer v. Willoughby, 143 N.J. 256 (1996). However, a recent New Jersey intermediate appellate court decision provides comfort that where the central dispute relates to the recovery of attorneys’ fees, former clients should not expect the recovery of all fees they incurred, even if the services related to the alleged malpractice and fee claims cannot be easily differentiated.
On February 22, 2016, the Superior Court of New Jersey, Appellate Division, in an unreported decision in the matter of Atl. Research Corp. v. Robertson, Freilich, Bruno & Cohen, LLC, No. A-2286-13T4, 2016 N.J. Super. Unpub. LEXIS 373 (App. Div. Feb. 22, 2016), affirmed that trial courts are not obligated to award a former client all fees incurred in litigating intertwined malpractice and fee claims if the ultimate success on the malpractice claim is a modest one. In Robertson, a defunct law firm sought to enforce an attorneys’ lien in excess of $1,000,000.00. The former client challenged the firm’s right to fees and alleged malpractice resulting from the handling of the client’s case while the firm was active, and in neglecting the matter after the firm ceased operation.
After trial, the jury returned a verdict concluding that the firm had deviated from accepted professional standards, and that the deviation caused the client approximately $50,000.00 in damages. The jury also rejected the firm’s claim for additional unpaid fees. The client then sought over $560,000.00 in attorneys’ fees and more than $39,000.00 in costs by way of a post-trial fee application under Saffer. The trial court awarded only $28,100.00 in fees to the client.
The Appellate Division affirmed the fee award even in light of its recognition that the work counsel did on both the fee oriented claims and the malpractice claim were not easily distinguishable and were intertwined. Importantly, the Appellate Division approved of the trial judge’s decision to “weigh the relative importance to plaintiff of succeeding on its legal malpractice claim as opposed to defeating [the lawyer’s] attorney lien claim,” and noted in its Opinion that the former client’s “interest in recovering money for its legal malpractice claim was of minor importance in comparison with defending against [the lawyer’s] claim for over $1 million.”
It has become common that former clients challenging a lawyer’s fee will use allegations of malpractice, which are themselves often centered around the reasonableness of the fees at issue, and the fee shifting principles under Saffer, as leverage in the fee dispute. The Robertson Opinion represents an important recognition that the attorneys’ fees available under Saffer must be clearly linked to established claims of legal malpractice, especially where the central dispute concerns the reasonableness of a lawyer’s fee.