Many seasoned attorneys in practice today were not yet admitted to the bar when the Supreme Court held, in 1995, that the entire controversy doctrine (ECD) barred a legal malpractice action because it wasn’t commenced during the very proceeding in which the attorney represented the client and committed the alleged malpractice. If you had been admitted when Circle Chevrolet was decided, see Circle Chevrolet Co, v Giordano, Halleran & Ciesla, 142 N.J. 280 (1995), you will never forget the consternation it caused. But the concerns dissipated just two years later when the court decided Olds v Donnelly, 150 N.J. 424 (1997), which held that the ECD did not require a client to file the malpractice action in the underlying action in which the attorney represented the client. The ECD otherwise remained an important part of our procedural jurisprudence designed to avoid piecemeal litigation and unnecessary resources, while promoting judicial efficiency and reduction of delay in adjudicating cases.
The principle as it applies to legal malpractice actions is not dead, however, and the recent Supreme Court opinion in Dimitrakopoulos v Borrus, Golden, Foley, Vignuolo, Hyman & Stahl, decided on March 7, 2019, reminds us of the need to remain vigilant from the point of view of both client and practitioner.
There, former clients filed a malpractice case against former counsel over three years following conclusion of the attorneys’ collection action for unpaid legal fees. The court concluded that a collection action brought by a law firm against the former clients is not the type of “underlying action” that excepts application of the doctrine. It “does not raise the privilege and loyalty concerns that warranted the exception to the entire controversy doctrine recognized in Olds.” But the court emphasized that “[i]n appropriate settings, a court may apply the [ECD] to preclude a legal malpractice claim that a client has declined to assert in the attorney’s action to collect unpaid legal fees.” The client would have to have known, or reasonably know, “of the claim during the pendency of the collection action,” and the collection action would have to be found to constitute a forum that provided “a fair and reasonable opportunity to have fully litigated” the malpractice claim. As the collection action was not an “underlying action” but the record in Borrus did not indicate when the malpractice action accrued and if the clients therefore had a “fair and reasonable opportunity” to have litigated the malpractice claim in the collection action, the Supreme Court remanded for further proceedings.
On remand, the trial court has to consider when the malpractice cause of action accrued and whether there was a fair and reasonable opportunity to have raised and litigated it in the collection action. A Lopez hearing as to discovery of the alleged malpractice and claim of waiver of the malpractice action must be considered. We are reminded by the court that each case is fact specific, but we all should be generally aware of the ECD and its potential application even in the context of legal malpractice.