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Economy Worsens, More Lawyers Being By Alana Roberts MIAMI - All State Auto Transport bought a 2.8-acre commercial property in Miami last year for a used-car dealership. But the company claims it wouldn’t have gone through with the $1.5 million deal if it knew Miami-Dade County would have some costly strings attached. All State turned around and sued its lawyer Joseph Castiglione of Miramar and his former firm, Aimee Juvier P.A., in April in Miami-Dade Circuit Court alleging malpractice over the purchase. The company claimed it wouldn’t have bought the property at 2101 NW 95th St. if Castiglione had advised it needed to obtain county approval for a connection to a sewer main. All State’s costs rose on construction of a sewer line extension and lift station, the company alleged in its complaint. Castiglione wrongly advised the client that no sewer extension or lift station would be required if no building permits were requested, All State claimed in its complaint. The company later learned after seeking to have water service established in its name that it was required to have the sewer extension and lift station in order to use the property as planned, it said. Castiglione declined to comment for this story. But in his answer to the lawsuit, he maintained the due diligence requested by All State was outside the scope of his engagement, he had no duty to guarantee that the client wouldn’t be required to obtain the approval from the government entity, that it didn’t qualify as legal advice and was as easily available to the client as it was to him. Miami attorney Warren Trazenfeld, who sues lawyers for malpractice, offered the case he brought against Castiglione as an example of an uptick in legal malpractice complaints in the deflated real estate market. "In a rising market it would have gone unnoticed. In this market it becomes a real problem," he said. With financial losses piling up in the downturn, real estate lawyers have increasingly become a target of legal malpractice claims, said Bill Loucks, president of Orlando-based Florida Lawyers Mutual Insurance. He said the firm has had a 13 percent increase in real estate-related claims since January. But he said that isn’t entirely related to the real estate market collapse. "The economy has had an indirect impact on claims, primarily on the real estate practice area," he said. "Attorneys whose primary practice is centered around real estate went through a real estate boom. ... When the real estate market fell apart, then there was a lot of very close inspection of lawyer-prepared documents." Clients of the insurer, which writes legal malpractice insurance, tend to be firms with small numbers of lawyers and solo practitioners. An American Bar Association study of legal malpractice claims supports Loucks’ observations. Claims in real estate work grew 4 percent from 2004 to 2007 compared with the previous four-year period, according to the report released in September, Many claims against lawyers include allegations of errors in transactions ranging from conflicts of interest and closing mistakes to poorly drafted contracts and zoning and escrow issues, the study said. "Certainly real estate problems are coming out of the woodwork in all kinds of areas. That will continue," Trazenfeld said. "The rising market covered up a lot of legal malpractice. Now that there’s a downturn in the market all of the malpractice," claims are sprouting. One group of clients that are suing real estate attorneys are title insurance firms that have been accused of making legal errors in transactions. Title insurers often turn around and sue their title insurance agents, who typically are lawyers. "Title insurance companies are getting much more aggressive about suing agents," Trazenfeld said. Condo depositors trying to back out of contracts are another example of clients suing attorneys for malpractice, Loucks said. Attorneys involved in commercial real estate transactions also have been targeted. Another Trazenfeld case is a malpractice suit filed in April in Miami-Dade Circuit Court on behalf of Manada Corp. against Coconut Grove attorney Louis M. Hillman-Waller and his firm, Zamora Hillman & Veres. Manada’s complaint said he advised the company to sign a lease with an inaccurate legal description, and it ended up leasing an entire piece of property instead of the portion it wanted. Hillman-Waller’s negligence forced the company into unnecessary litigation with another company over the property, the complaint alleged. Hillman–Waller said this case is unrelated to the real estate market collapse. "It was a lease issue. It had nothing to do with market conditions, or the financial and economic situation we’re in right now," he said. "It has nothing to do with the downturn in the real estate market." His attorney, Gary Shendell, managing partner of Boca Raton-based Shendell & Pollock, did not return calls for comment by deadline. In answer to the complaint, Hillman-Waller denied giving negligent advice on the lease. He said Manada was negligent, failed to mitigate its own damages and is barred from bringing the malpractice case because the parties settled the underlying dispute. Other practice areas that are attracting more malpractice claims are trusts and estates and divorce, malpractice lawyers say. Andrew Hall, a partner with Miami’s Hall Lamb & Hall, who represents plaintiffs in malpractice cases, said the growth in disputes isn’t just related to the economy. He said legal malpractice claims have been a growing problem for years. "I think the growth comes as a function of a societal change in the attitude towards lawyers," he said. "It used to be, ‘We hate all lawyers, but by the way there’s a great guy.’ But today it’s, ‘We hate all lawyers, and my lawyer isn’t any better than they are.’ We’re doing it to ourselves as lawyers. This has been building for over 20 years." Hall attributes the increase to a changing approach to the practice of law as a business. He said one example of that changing approach is stricter billable hour goals firms require of their attorneys. Stringent billable hour requirements result in "a whopping big bill," for the client, he said. "You’re creating your own doom because you’re setting higher standards for yourselves by what you’re charging." Ultimately those higher bills can place a strain on the relationship between attorneys and their clients, Hall said. A malpractice dispute often is accompanied by a dispute over unpaid legal bills. Trazenfeld said attorneys should communicate regularly with their clients about legal needs as well as bills to help avoid a legal showdown over money. If worse comes to worst, the attorney can resign from the case. "You can always fire the client," he said. Maurice "Manny" Garcia, a Fort Lauderdale attorney with Greenspoon Marder who handles legal malpractice defense work, said lawyers should thoroughly evaluate the credit worthiness of potential clients and check past relationships between the client and lawyers. "You need to be very diligent with respect to intake," he said. "Has the client sued other lawyers? Has the client been with other law firms and left them with unpaid invoices?"
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