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Lawyers’ malpractice insurers have been complaining for five years that a New Jersey Supreme Court decision authorizing fee awards to plaintiffs has created a booming market out of marginal claims. Now they’ve seized an opportunity to take their complaints back to the justices. Three insurance companies that represent hundreds of firms in New Jersey filed an amicus brief on Nov. 2 saying that Saffer v. Willoughby, 143 N.J. 427 (1996) — the fee-switching decision that plaintiffs’ lawyers love — is creating windfalls, and therefore litigation, that the justices never envisioned. “The Court did not intend to devise a punitive system of recovery that unfairly and unconstitutionally discriminates against members of the legal profession,” the carriers say in a brief filed in Gontarski v. Kaye, A-004436-00T3, an Appellate Division case. Since Saffer, malpractice plaintiffs’ lawyers have said the decision is perfectly clear and needs no interpretation. It means that any reasonable fee they charge is recoverable from the defendant lawyer. In effect, the court created a new cause of action and it’s irrelevant whether the plaintiffs get more money in their pockets than they would have if the underlying case had been handled correctly. The plaintiffs’ bar also says that in supreme court cases since Saffer the justices had chances to modify their ruling and didn’t. Defense lawyers counter that those cases weren’t on point and that Saffer should stand for the proposition that clients who have to sue should get enough in the fee-switching process to make them whole and no more. That’s the interpretation the trial judge chose in Gontarski. The plaintiff’s appeal is a good vehicle for a review of Saffer, says the amicus brief’s author, Christopher Carey, because it’s the first case hinging solely on fees that hasn’t been settled. Jeffrey Gontarski of Marlboro, N.J., sued his lawyer, Short Hills, N.J., solo practitioner Marc Kaye, for missing the statute of limitations in an automobile injury case. Kaye’s carrier admitted liability and agreed to pay Gontarski the stipulated damages from the accident, $70,000. Unlike most malpractice cases, there was no fee in the underlying case to haggle over because Gontarski hadn’t paid Kaye a penny. Kaye declined comment last week. After the settlement, Gontarski’s malpractice lawyer, Steven Rothblatt, a solo practitioner in Piscataway, N.J., applied for fees under Saffer, saying his client was entitled to his one-third contingency fee in addition to the $70,000 settlement. Malpractice defense lawyer H. Frank Carpentier, of Asbury Park, N.J.’s Carton, Arvanitis, McGreevy, Argeris, Zager & Aikins, argued that the settlement plus fees would be a windfall for Gontarski. Here’s why: If Kaye had done everything correctly, Gontarski would have received two-thirds of $70,000 and Kaye one-third. With the $70,000 malpractice settlement, Gontarski can now give Rothblatt the one-third he would have given Kaye. He doesn’t need more to make him whole. Monmouth County Superior Court Judge Robert O’Hagan agreed. “Here, plaintiff is not able to point to any additional fees incurred as a result of the negligence of the defendant attorney,” O’Hagan said in March. “Therefore, there are no damages occasioned as a consequence of the defendant’s legal malpractice, and plaintiff is entitled to no additional fees.” Rothblatt, who is appealing the decision, says he will oppose the request for amicus status by Carey’s clients, Great American Insurance Company of Cincinnati, TIG Insurance Co. of Dallas and Westport/ERC Insurance Co. of Overland Park, Kan. Rothblatt says the application wasn’t timely in a case that’s already been briefed by the direct participants. Carey, a partner at Morristown, N.J.’s Graham, Curtin & Sheridan, says he doesn’t see how Rothblatt is prejudiced and that the courts will benefit from the carriers’ perspective. But even if the insurance companies don’t get to intervene, the issues have been fully framed in briefs by Rothblatt and Carpentier. Two lawyers who have represented malpractice plaintiffs, Jeffrey Donner, a partner at Newark’s Stryker, Tams & Dill who won Saffer, and Martin Indik of Princeton’s Indik & McNamara, agree with Rothblatt that Saffer doesn’t need clarification. That’s because the justices clearly meant to carve an exception to the so-called American Rule, which says litigants pay their own lawyers absent a fee-switching statute, they say. “They’re in denial about it,” Indik says of the defense bar. Rothblatt and Indik note that the Saffer Court used the words “in addition” to describe those fees, clearly holding, as Rothblatt says in his brief, “the attorney’s fees are recoverable in the legal malpractice action even though no attorney’s fees were paid in the underlying action.” Carpentier argues that the words “in addition” don’t mean that the client gets an additional fee; it means there’s an additional rationale — besides precedents — for awarding fees. Another issue is whether the reasoning in Saffer was grounded in public policy. “The supreme court is charged with the duty of regulating New Jersey lawyers and by making this exception to the American Rule the court is showing it wants to hold lawyers to a higher standard,” Indik says. As Rothblatt put it in his brief, “The [New Jersey] Supreme Court was making new law, creating a new element of damages in cases against attorneys who do not do their jobs properly.” They point to a supreme court decision in July, In re Lash, A-125, in which the justices mentioned Saffer and subsequent decisions and said, “such an award is directly contrary to the American Rule’s prohibition, but was authorized in those cases due to the significance of the attorney client relationship.” Carpentier and Carey say, however, that Lash didn’t hinge on fee switching, that the language cited by the plaintiffs was dicta and that Gontarski is the first case that addresses the central issue. Carey suggests that if there is a public policy reason for fee switching, the supreme court should make it explicit rather than rely on the terse pronouncement in Saffer and the equally terse reaffirmation in subsequent cases. He says one possibility would be a ruling that reaffirms the fundamental principle of Saffer, but prohibits what the defense bar calls “double dipping.” The goal, he says, “is to get some reasonable case law as to what applies.” Carey says there are no statistics to prove that Saffer has spurred suits against lawyers, but he says there’s no doubt that fee switching has prolonged cases and hindered settlements. Plaintiffs’ lawyers who might have agreed to quick settlements before Saffer now hold out for larger sums, knowing they will be compensated for their time if they go to trial and win even nominal damages. Rothblatt, meanwhile, seems embarrassed at being the champion of malpractice claimants’ privileges. “I’m a personal injury lawyer, not a malpractice lawyer and now I’m caught in the spotlight,” he says. “I only took the case because it looked like a personal injury matter.”

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