Example: Attorney Fee Liability for Overreaching in Counterclaim

In today’s Blog entry, we take a look at a situation where the defendants were successful in having the plaintiff’s case dismissed, but nevertheless face liability for plaintiff’s attorneys’ fees because the court found their counterclaim to be frivolous.

Plaintiff sued her attorneys for legal malpractice over the handling of her medical malpractice case. Her former attorneys responded with a counterclaim seeking reimbursement of the $6,000 they spent pursuing plaintiff’s medical malpractice case.

The court dismissed plaintiff’s action because she waited to long to sue and missed the deadline for commencing her suit that was specified in the relevant statute of limitations. The defendants were not entirely off the hook, however, because of their counterclaim. That counterclaim was based on the theory that state law (in this case NY), requires that clients always be responsible for disbursements. (Disbursements are out of pocket expenses such as filing fees and other non-lawyer costs, such as copying.)

Arguably, the contingency fee agreement should have been written in such a way that the plaintiff could, at least technically, have been responsible for disbursements. In the matter before the court, however, the relevant question was not what a properly drafted retainer agreement should have said, but what the retainer agreement drafted by the defendants actually said. Looking to the plain language of the retainer agreement, the court concluded that disbursements could only be recovered by defendants if defendants achieved a recovery for plaintiff in her medical malpractice action or if the plaintiff replaced defendants as counsel. Since there was no recovery in the medical malpractice case, and since plaintiff never replaced defendants as counsel in that case, there was no contractual right to disbursements in the retainer agreement.

The court further found that, because defendants were sophisticated plaintiffs attorneys, they should be treated as though they were aware that their counterclaims were unsupportable in light of the retainer agreement that they drafted. That rendered their counterclaim “nonsensical and frivolous” and paved the way for a recovery of attorney fees, associated with the defense of the counterclaim, by the plaintiff.

The information contained in this blog is not legal advice and should not be relied on as such. For legal advice or for answers to specific questions, please contact the blog's author.