Firm Rebuked Over "Frivolous" Attempt
to Recoup Costs From Former Client

By Noeleen G. Walder
New York Law Journal
New York Lawyer
October 13, 2009

A Manhattan judge has taken to task some well-known personal injury attorneys for what she called a "nonsensical and frivolous" bid to recoup the costs of an unsuccessful medical malpractice action.

"[T]he following illustrates why members of the public may hold cynical views of the legal profession," Supreme Court Justice Emily Jane Goodman began her ruling in Kremen v. Benedict P. Morelli & Associates, 101739/06.

Victoria Kremen underwent a double mastectomy after allegedly being misdiagnosed with breast cancer. She accused Morelli Ratner and the now defunct Schapiro & Reich of mishandling the action she brought against her doctors, a suit that was ultimately dismissed because the 2 1/2-year statute of limitations had expired.

Morelli Ratner was formerly known as Benedict P. Morelli & Associates.

Ms. Kremen also lost her bid to sue the attorneys for legal malpractice on the ground that they had failed to preserve her case. Now, Morelli Ratner is pressing a counterclaim against Ms. Kremen to recoup $6,000 the lawyers spent in advancing her medical malpractice case.

In criticizing the "experienced tort firm" for failing to understand the "terms of their own retainer agreement" and for bringing "wasteful" litigation, Justice Goodman rejected the counterclaim.

In an interview, David Ratner of Morelli Ratner, said the judge had "overlooked the fact that under New York law a client is always responsible for disbursements," unless there is an agreement to the contrary.

Mr. Ratner said the firm will appeal the ruling, but he promised to donate any recovered disbursements to charity.

"We don't need the money," he said.

Justice Goodman previously had ruled that the legal malpractice case could proceed. But the Appellate Division, First Department, concluded that Ms. Kremen had not diligently pursued her own medical malpractice claim and did not have standing to pursue the legal malpractice case.

In her latest decision, Justice Goodman argued the firm was not entitled to the $6,000.

"[D]espite being an experienced tort firm active in the field of personal injury, defendants obviously are not familiar with the terms of their own retainer agreement," Justice Goodman wrote.

According to the decision, the retainer provided that expenses and costs incurred in the prosecution of the suit would be "reimbursed as a lien against the total gross recovery of the action."

But the judge concluded that "since there was no recovery in the underlying medical malpractice action…there can be no claim for disbursements under the retainer."

She also rejected the attorneys' reliance on a sentence in the retainer that stated that if lawyers other than Morelli Ratner were retained, all disbursements incurred by Morelli must be immediately repaid.

Even though another firm had appealed the dismissal of Ms. Kremen's medical malpractice case, the judge observed that Morelli Ratner had not been replaced in the initial medical malpractice suit.

"Where a fee agreement does not reference the taking of an appeal as part of the scope of the representation, prosecution of an appeal is not within the scope of the agreement," Justice Goodman concluded.

Calling the lawyers' argument "nonsensical and frivolous," the judge gave the firm until Oct. 16 to submit a memorandum explaining why they should not be sanctioned and made to pay Ms. Kremen's legal fees.

Richard Frank of Manhattan, who represented Ms. Kremen, was out of the country and unavailable for comment.