The assertion of a breach of contract claim against an attorney for excessive billing does not result in the waiver of the attorney-client privilege..

March 31, 2014 | Professional Liability | Complex Torts & Product Liability | Insurance Coverage

The assertion of a breach of contract claim against an attorney for excessive billing does not result in the waiver of the attorney-client privilege as to successor counsel

Waiver of the attorney-client privilege often arises in attorney-client disputes, where “the defendant asserts a claim that in fairness requires examination of protected communications… [t]he key to a finding of implied waiver is some showing by the party arguing for a waiver that the opposing party relies on the privileged communication as a claim or defense or as an element of a claim or defense.” While a waiver of attorney?client privilege may often be found in billing and/or malpractice disputes between attorneys and their former clients, such disputes do not necessarily warrant a waiver of the client’s privilege, particularly as to successor counsel.

In Shaub and Williams, LLP v. Augme Technologies, Inc., 2014 U.S. Dist. LEXIS 34438 (S.D.N.Y. Mar. 17, 2014), the law firm of Shaub and Williams had asserted a claim for the recovery of unpaid legal fees against their former client in connection with their representation of the client in an underlying patent litigation. The client asserted counterclaims against the attorneys for legal malpractice and breach of contract based upon excessive billing. Following a motion for summary judgment, the Court dismissed the client’s legal malpractice claim, holding that the client had failed to plead facts adequate to demonstrate that, but for the attorneys’ misconduct, the outcome of the underlying litigation would have been different. However, the Court sustained the counterclaim for breach of contract, allowing the client to proceed on a theory that the attorneys had engaged in excessive billing.

Shaub and Williams sought discovery from successor counsel, who had taken over representation of the client in the underlying patent litigation following Shaub and Williams’ termination. Shaub and Williams argued that successor counsel’s communications and work product were relevant because the client had alleged that successor counsel had been required to correct Shaub and Williams’ purported errors. However, the Court rejected this contention, noting that the only remaining counterclaim was for breach of contract, and that accordingly, successor counsel’s materials were not relevant to the defense of such a claim. Moreover, the Court noted that, while the client’s affirmative defense of dismissal for good cause alleged that Shaub and Williams misunderstood the underlying patent litigation, Shaub and Williams had failed to show why it needed to be provided with the facts providing that its misunderstanding was wrong and supporting the allegedly correct understanding of the litigation. The Court likewise denied Shaub and Williams’ application to depose successor counsel.

Practice Note: Where an attorney?client dispute is limited to issues regarding billing, a Court may decline to find a broad waiver of the attorney?client privilege with respect to successor counsel’s representation of the client in an underlying litigation.

Reprinted with permission from the April 2014 lpl eAdvisory – ABA Standing Committee on Lawyer’s Professional Liability.  All rights reserved.

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