Fee Shifting in Malpractice Cases

The concept of fee shifting in the field of legal malpractice may not be well known or understood if you don’t practice in New Jersey.  That is because New Jersey is one of the only states to employ this unique fee structure.  The so-called “Saffer rule” was created by the NJ Supreme Court decision in Saffer v. Willoughby, in which the Court held that clients may recover as consequential damages the legal expenses and attorneys’ fees they incur in prosecuting a malpractice claim against their former attorney. Recently, the NJ Supreme Court heard oral argument in the case of Innes v. Marzano-Lesnevich, to determine whether attorney-defendants can be liable for attorneys’ fees as consequential damages to a non-client under Saffer.

The case stems from an international child abduction.  The child’s parents had an agreement that forbade either parent from taking her outside the United States without the other’s written consent.  As a result of the agreement the child’s passport was to be held in trust.  Father brought a negligence suit against his former wife’s attorney, Marzano-Lesnevich, alleging that Attorney wrongly released his daughter’s passport, allowing the mother to take the child to Spain.  Father brought the negligence suit on his own and on behalf of his daughter.

The case proceeded to trial where the jury returned a verdict in excess of $1.4 million in favor of Father, which included his counsel fees and costs.  The trial and appellate courts both allowed Father to recover his costs based upon the Saffer rule.  However, now on appeal to the NJ high court, the Court is set to decide whether Saffer fees can be extended to third party attorneys with no privity of contract.

It remains to be seen where the Court will draw the line.  If the Court upholds the decision it could open up attorneys to much broader liability.  Not only will it make it easier for non-clients to file lawsuits it adds another layer of potential damages facing attorneys in malpractice cases.  It also exposes attorneys to additional liability that is not seen in other professions.   A concern of course is if the decision stands will it ultimately be expanded to include other professions? The decision could greatly impact the future of malpractice claims. Stay tuned as we keep our eyes on this important case.

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