Attorney-Client Privilege

Attorney Aiding and Abetting and Assignment of Malpractice Claims

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Rabbi Stanley Kroll (“Kroll”) had a thirty-year employment contract with his Synagogue. The contract included a deferred compensation plan (the “Plan”) to fund Kroll’s retirement.  The Synagogue was allowed to amend the Plan unilaterally, but not in any way that divested credits to the account or rights to which Kroll would be entitled if the Plan were terminated before an amendment took effect.  Id. at 1.  The Synagogue asked Kroll to retire six years early. Kroll agreed, but on his last day, a Synagogue officer told him that a tax issue had arisen, promising it would be resolved.  Kroll found out later that the issue had not been resolved, thereby subjecting his deferred compensation to heavy taxes and penalties.  Moreover, the Synagogue did not have sufficient funds to pay Kroll, and had amended the Plan to eliminate benefits to which Kroll would otherwise be entitled. Kroll sued the Synagogue, which settled and assigned to him all causes of action related to the Plan that it might have against the law firm it used to amend it: Cozen O’Connor (“Cozen”). Kroll then sued Cozen on multiple counts, but Cozen moved to dismiss. The motion was granted in part and denied in part.

To begin, the Court noted that legal malpractice claims may not be assigned in Illinois except under three exceptions.  However, none of these exceptions applied. It explained that “Kroll is a stranger to [the Synagogue] and Cozen’s attorney-client relationship and was owed no duty by Cozen.”  Id. at 4.  The Court also granted dismissal of Kroll’s aiding and abetting breach of fiduciary duty claim.  It said that no fiduciary duty existed between Kroll and the Synagogue, so Cozen could not have aided a breach of that duty. Id. at 7.  The Court dismissed Kroll’s fraudulent concealment claim as well, since Kroll did not allege facts sufficient to explain how a Cozen attorney used his position of superiority and legal knowledge to take advantage of Kroll’s trust and confidence in him, “especially given that [the attorney] represented the opposing party.”  Id. at 8, emphasis in original.

Conversely, the Court rejected Cozen’s argument that Kroll’s claims were barred by Illinois’ two-year statute of limitations for claims arising out of an attorney’s performance of professional services.  Here, it held that Kroll had demonstrated possible equitable tolling or estoppel when he asserted that a Synagogue officer misled him about resolving the tax issue and that a Cozen attorney misrepresented the enforceability of the Plan’s amendment.  Id. at 5.  Kroll’s claim that Cozen aided and abetted the Synagogue’s fraud was allowed to stand as well.  The Court, quoting an Illinois case, saw “no reason to impose a per se bar that prevents imposing liability upon attorneys who knowingly and substantially assist their clients in causing another party’s injury.”  Id. at 6. Here, the Court agreed that Kroll had pleaded facts sufficient to assert the Synagogue’s fraud and Cozen’s assistance therein.

Rabbi Stanley Kroll, Plaintiff, v. Cozen O’Connor, 2020 WL 919005

(This is for informational purposes and is not legal advice.)

Daily v. Greensfelder, Hemker & Gale, P.C. 2018 IL App (5th) 150384, appeal denied sub nom. Daily v. Greensfelder, Hember & Gale, P.C., 98 N.E.3d 39 (Ill. 2018):

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This case came to the Fifth District on a “friendly contempt” for failure to comply with a discovery order.  The Fifth District held that a breach of fiduciary duty claim put “at issue” a client’s communications with its attorneys because those communications were necessary to determine who contributed to the alleged breach of fiduciary duty and the relative contribution of each.

Daily v. Greensfelder, Hemker & Gale, P.C.

(This is for informational purposes and is not legal advice.)

Recent Illinois Case: Janousek v. Katten Muchin Rosenman LLP

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The First District affirmed the grant of summary judgment on statute of limitations grounds. The court held that the plaintiff’s suspicions that his attorney was aiding and abetting a client’s breach of fiduciary duty was sufficient knowledge to commence the statute. The court also held that the defendant attorneys did not improperly use the attorney client privilege to shield relevant information plaintiff needed to discover his claim.

Janousek v. Katten Muchin Rosenman LLP, 2015 IL App (1st) 142989

(This is for informational purposes and is not legal advice.)

Recent Illinois Case: Bay Group Health Care LLC v. Ginsberg Jacobs LLC

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Malpractice case dismissed because purported “clients” (guarantors of loan) did not believe bank’s lawyers were representing them pursuant to a confession of judgment clause in loan documents. Portion of release in settlement agreement between bank and guarantors that released former agents and legal representatives of bank did not specifically release bank’s attorneys; portion of release that specifically mentioned attorneys did not apply to former attorneys; and interaction of two clauses meant that former attorneys were not released.

Bay Group Health Care LLC v. Ginsberg Jacobs LLC, 2015 WL 5174006.

(This is for informational purposes and is not legal advice.)

Attorney-Client Privilege Applies to Communications of Attorneys Inside a Law Firm Who Seek Legal Advice From Their Colleagues About a Malpractice Claim  

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by Alex Berg, Attorney, Novack and Macey LLP

Alexander Berg - Aug 2012
Alexander L. Berg

The First District Court of Appeals held in two cases from 2012 that the attorney-client privilege applies to individual attorneys inside a law firm who seek legal advice from their colleagues regarding a potential malpractice claim against them or their firms.  See MDA City Apartments LLC v. DLA Piper LLP, 2012 IL App (1st), 111047; Garvy v. Seyfarth Shaw LLP, 2012 IL App (1st), 110115.

In both cases, the court examined the scope of the attorney-client privilege when a law firm faces a malpractice claim by a former client.  First, the court in each case discussed the fiduciary-duty exception to the attorney-client privilege and the plaintiff’s argument in each case that this exception requires production of communications between a law firm and its inside and outside counsel.  Each court, however, held that Illinois does not recognize the exception.  MDA City Apartments, 2012 IL App (1st), 111047, ¶¶ 15-18; Garvy, 2012 IL App (1st), 110115, ¶¶ 32-35.

Moreover, the Courts held that, even if Illinois recognized the fiduciary-duty exception to the attorney-client privilege, a law firm’s communications with both its inside and outside counsel relating to a malpractice claim are privileged.  MDA City Apartments, 2012 IL App (1st), 111047, ¶ 18; Garvy, 2012 IL App (1st), 110115, ¶ 35.

(This is for informational purposes and is not legal advice.)

MDA City Apartments LLC v. DLA Piper LLP (US), 2012 IL App (1st) 111047, 967 N.E.2d 424, 359 Ill. Dec. 694

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MDA City Apartments LLC v. DLA Piper LLP (US), 2012 IL App (1st) 111047, 967 N.E.2d 424, 359 Ill. Dec. 694 (Illinois has not adopted fiduciary duty exception to attorney-client privilege)