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NJ: "Settle and Sue": One Lawyer Watches and Waits for the Supreme Court to Rule

On January 20, 2010, I argued amicus curiae in the New Jersey Supreme Court on behalf of Trial Attorneys of New Jersey (“TANJ”) in the matter of Guido v. Duane Morris, A-31-09. The central issue is this: Under what circumstances should clients be permitted to “settle and sue” their lawyer  for legal malpractice after voluntarily entering into the settlement. As a decision has not yet been rendered, this post is limited to some of the issues raised by the Court at argument. It seems clear though from the Justices’ questions that a clarification of the relevant principals of law may soon be coming. Puder v. Buechel, 183 N.J. 428 (2005) would seem to have largely foreclosed many such suits. But subsequent Appellate Division decisions suggest that Puder’s scope is not so sweeping. 

At the outset, the Court pressed counsel for the law firm–Duane Morris,  to define the relief being sought for attorneys who find themselves defending malpractice claims arising out of advice they gave in connection with a settlement. More than one Justice asked if the law firm was urging the Court to find that an attorney can never be sued for malpractice if his or her client knowingly and voluntarily enters into a settlement agreement. Counsel responded no, but argued that if a settlement was placed on the record, before a legal malpractice claim is brought, the prospective plaintiff should have to return to the trial court  to seek to vacate the settlement.

Questions from the Court suggested concern about the impact on the other party to a settlement. Counsel appearing amicus curiae was asked directly what impact a pre-condition requiring litigants to challenge the underlying settlement would have on the other party to the settlement. Several Justices questioned whether such a requirement would be futile in most instances.

One Justice suggested that the decision in Puder  which  dismissed a legal malpractice claim arising out of a settlement, could be an exception to the holding of Ziegelheim v. Apollo, 128 N.J. 250 (1992), allowing such a legal malpractice to go forward.

Since the Puder decision, there has been much debate about the effect of a settlement on a subsequent legal malpractice claim. Given the questions from the Court though,  it seems that clarification will be forthcoming.

As one of the lawyers who had the privilege to argue before the Court, I now watch and wait for the decision. What effect that decision  will have on “settle and sue” legal malpractice cases will most certainly be a topic for a separate post. Stay tuned.




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