In a case of first impression, New York State’s highest court set a new standard in legal malpractice actions when the client fails to appeal the underlying action. The New York Court of Appeals held that a client’s failure to appeal will only bar a legal malpractice action when the client was “likely” to have succeeded on appeal in the underlying action. The Court’s decision is significant because it contradicts prior New York Appellate Division cases which generally stand for the proposition that a plaintiff’s legal malpractice action will be barred by the failure to pursue a “non-frivolous” appeal, regardless of the appeal’s chances of success. This new standard places an additional burden on legal malpractice defendants to prove not only that a plaintiff failed to pursue a non-frivolous appeal, but also that the appeal was likely to succeed.
In Grace v. Law, 2014 NY Slip Op. 07089, plaintiff brought a medical malpractice action after an alleged late diagnosis resulting in plaintiff losing sight in one eye. In the legal malpractice action, certain defendants asserted that plaintiff was estopped from sustaining the legal malpractice claim because he failed to appeal the underlying action. The New York Supreme Court (trial court) denied all defendants’ motions for summary judgment. The Appellate Division affirmed the Supreme Court order, noting that several sister states previously rejected a per se rule that the failure to appeal an underlying action would thereafter bar a legal malpractice action, despite other courts holding that the appeal need only be non-frivolous to estop a claim.
On appeal, the Court of Appeals of New York held that a client’s failure to appeal the underlying action will only bar a subsequent legal malpractice action when the client was likely to have succeeded on appeal. In so holding, the Court adopted the “likely to succeed” standard employed by the Appellate Division, stating that where a client is likely to succeed on appeal in an underlying action, the client should be required to pursue the appeal. Where, on the other hand, a client is unlikely to succeed on appeal (despite the appeal being non-frivolous), the client may bring suit for legal malpractice without first having pursued the appeal. Thus, where the defendants failed to provide sufficient evidence that plaintiff would have been successful on appeal in the underlying matter, the Court found that defendants had failed to meet their summary judgment burden. As a result, plaintiff was permitted to pursue his legal malpractice action against defendant counsel despite failing to appeal the underlying ruling.
This decision provides guidance in understanding the potential for legal malpractice claims that can arise despite a client’s failure to appeal an underlying action. With the burden on the attorney at the summary judgment stage, the attorney must seek discovery on the merits of an appeal in the underlying case.