Legal Memorandum: Recovery of Damages in a Legal Malpractice Action

Issue: Are the damages that a plaintiff may recover from an attorney in a malpractice action limited to the amount of the insurance coverage the defendant in the underlying tort action had at the time of the accident, or can the property he/she acquired after the accident be considered when assessing the amount of damages?

Although New York case law does not definitively answer the question presented here, the Appellate Division, 4^th Department, considered a very similar situation earlier this year.  In McKenna v. Forsyth & Forsyth, 720 N.Y.S.2d 654 (App. Div. 4^th Dep’t 2001), the court reinforced that when a cause of action is lost as the result of an attorney’s negligence, the client’s injury is measured by the amount that would have been collected on that lost cause of action, and that the client bears the burden of proving that amount.  Id. at 654.  The court’s discussion in that case sheds some light on the question of whether later-acquired assets have relevance to the collectibility of a judgment in the lawsuit that underlies a legal malpractice action.

In McKenna, the plaintiff was injured in a motor vehicle accident and retained the defendant law firm to represent him in connection with the accident.  Id. at 655-56.  The defendants failed to bring suit before the statute of limitations expired, and, the plaintiff sued them for legal malpractice.  Id. at 656.  The case went to trial, and the jury found that the plaintiff had sustained $535,251 in damages as a result of the accident.  In the second stage of the bifurcated trial, the plaintiff presented evidence that the defendant driver had a $50,000 liability policy at the time of the accident, owned a home with a mortgage, and had never filed for bankruptcy.  The defendant law firm countered with evidence that the […]