Risk Update

Risk Roundup — Client Poaching as Tortious Interference, Liability Insurance, and Police Suing Prosecutors (Canadian Conflicts)

A few interesting risk updates that have caught my eye. First, in Canada: “Police cannot sue Crown attorneys over handling of criminal cases, SCC rules” —

  • “Police cannot sue Crown attorneys over their handling of criminal cases, the Supreme Court of Canada ruled today in a decision that reinforced the mutually independent relationship between police and Crown attorneys.”
  • “In an 8-1 decision in Ontario (Attorney General) v. Clark that concerned Crown liability, the Supreme Court found that police cannot sue Crown attorneys for misfeasance of public office, i.e., for the misuse or abuse of power in public office.”
  • “‘Piercing the immunity of Crown prosecutors to make them accountable to police officers puts them in perpetual potential conflict with their transcendent public duties of objectivity, independence and integrity in pursuit of ensuring a fair trial for the accused and maintaining public confidence in the administration of justice,’ wrote Justice Rosalie Abella in her reasons for the majority.”
  • “‘Beyond the risk of actual conflict between the prosecutors’ core duties and their risk of liability to the police, the appearance of such a conflict would be equally damaging to the integrity of the administration of justice,’ wrote Justice Abella. ‘As the joint interveners the Canadian Association of Crown Counsel and the Ontario Crown Attorneys’ Association put it, permitting police lawsuits against Crown prosecutors would suggest to the public and to accused persons that police were ‘policing prosecutions’ through the use of private law, imperiling public confidence in the independent and objective ability of prosecutors to conduct fair trials.'”
  • “The case in question involved three Toronto police officers who in June 2009 arrested two men in connection with a complaint of armed robbery and forcible confinement. After they had each given statements, the accused claimed the officers had assaulted them during their arrests; the officers denied the allegations and provided the Crown Attorney with exculpatory evidence supporting their position.”
  • “…The police officers then commenced an action against the Attorney General for Ontario, alleging that the Crown Attorneys didn’t pursue or put forward available evidence that contradicted the assault claims of the accused, and that the Crown’s actions and omissions caused irreparable harm to their reputations. They alleged negligence and misfeasance in public office.”
  • “Two exceptions have been recognized to Crown liability: first, where the Crown has acted with malice in the context of a malicious prosecution claim, and second, where the Crown has intentionally withheld disclosure in a criminal proceeding, which is contrary to an accused person’s constitutionally protected right to full disclosure. So, the accused does have a right to sue Crown attorneys through the tort of malicious prosecution, Cavalluzzo notes.”

And two interesting catches by the Legal Profession Blog: “Poaching Of Clients As Tortious Interference” —

  • “A defamation claim has failed but a tortious interference claim survives in a suit brought against attorneys who had taken cases from the plaintiff law firm. So held the New York Appellate Division for the First Judicial Department”
  • “As to the tortious interference claim, the parties do not challenge the court’s articulation of the elements of such a claim in the context of terminable-at-will retainer agreements, namely, that the defendant’s conduct must constitute a crime or an independent tort (see e.g. Steinberg v Schnapp, 73 AD3d 171, 176 [1st Dept 2010]).”
  • “We find that the complaint, as augmented by affidavits submitted in opposition to defendants’ motions to dismiss, and in conjunction with the undisputed proof of the four clients who substituted plaintiff for either the Schweitzer firm or the Garcia firm, states at a minimum a cause of action for tortious interference premised on violations of Judiciary Law §§ 479 and 482, which are unclassified misdemeanors (Matter of Ravitch, 82 AD3d 126, 127 [1st Dept 2011]; Matter of Boter, 46 AD3d 1, 3 [1st Dept 2007]).”
  • “Affidavits show that defendants’ efforts to lure away plaintiff’s clients involved the use of case runners to solicit business on their behalf. Although the affidavits by the unnamed Clients 1-5, who remained plaintiff’s clients, do not alone support the tortious interference claim, they shed light on the tactics to which defendants were apparently willing to resort, as does the affidavit by the Schwitzer firm’s former employee, which is consistent with those by Clients 1-5.”

No Privity, No Recovery, When Law Firm Seeks Payment From Client’s Insurer” —

  • “A law firm may not recover its legal fees from its client’s insurer according to a decision of the New York Appellate Division for the First Judicial Department”:
    • “Plaintiff law firm lacks standing to recover its legal fees under the insurance policy, to which it is not a named party (Miller & Wrubel, P.C. v Todtman, Nachamie, Spizz & Johns, P.C., 106 AD3d 446 [1st Dept 2013]). Plaintiff was merely an ‘incidental beneficiary to its client’s malpractice insurance policy’ (id.). Thus, the motion court properly found that plaintiff’s sole recourse was against the insured, its client, and not its client’s insurance provider.”
    • “Plaintiff’s argument that it had a direct contract with defendant on account of the various correspondence between itself and one of defendant’s employees also fails. Indeed, these letters merely confirm, consistent with the policy’s requirement that the insurer’s consent of the insured’s choice of counsel not be “unreasonably withheld,” that defendant consented to the insured’s continued retention of plaintiff.”
    • “The motion court also properly dismissed plaintiff’s claim for unjust enrichment, which required a showing, among other things, that defendant was enriched (Mandarin Trading Ltd. v Wildenstein, 16 NY3d 173, 182 [2011]). It is undisputed that defendant will pay the full limit of the policy to reimburse the insured for its defense and settlement costs of the covered claims, regardless of whether those costs were incurred by plaintiff or the other lawyers that the insured retained. Further, the retainer agreements between plaintiff and the insured govern this dispute, which provides a further basis for affirming the order (Clark-Fitzpatrick, Inc. v Long Is. R.R. Co., 70 NY2d 382, 388 [1987]).”
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