When Does the Clock Start?

Determining the length of the statute of limitations is easy but the trick often comes in figuring out when the statutory period begins running. In the legal malpractice context, this may often present the difference between dismissal or protracted litigation. A recent New York Supreme Court decision has shed some further light on why it remains important for all parties to know the applicable statute and accrual date, and highlights yet another situation in which a Court will employ a jurisdictional accrual rule to bar a claim.

Hahn v Dewey & LeBoeuf Liquidation Trust arose out of the liquidation of the Dewey & LeBeouf law firm.  The 2014 Complaint alleged that three other prominent national law firms committed legal malpractice by providing erroneous tax advice to Plaintiffs in 2000 – 2001. Plaintiffs claim that they relied on this flawed advice which eventually resulted in a 2012 penalty of $7 million owed to the IRS. The Supreme Court dismissed the Complaint as time-barred under New York’s three-year statute of limitations period. The Plaintiffs appealed.

New York applies the occurrence rule to its legal malpractice cases, which states that a claim accrues at the time of the commission of the alleged malpractice regardless of when the injury is identified or when it has made itself apparent. Here, even though the penalty wasn’t assessed until 2012, and Plaintiffs argued they did not discover the error until years later, the Appellate Court agreed with the Supreme Court’s dismissal of the Complaint as time-barred. The Appellate Court noted that “what is important is when the malpractice was committed, not when the client discovered it.”

The Court found that all of the facts relevant to the cause of action were known when the Defendants issued opinion letters and rendered advice in 2000 and 2001, not when the assessments were finally made in 2012. The Court noted that the applicable malpractice limitations period and accrual date were not peculiarly within Defendants’ knowledge and that “the exercise of ordinary intelligence” could have provided Plaintiffs with the same information.

Certainly, the Defendants benefited from the applicable New York law which is an important lesson. It is incumbent upon all practitioners, defense and plaintiff alike, to know the applicable limitations period for all claims in order to properly advise the client.


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