S.O.L.: The Continuous Representation Doctrine

Statute of limitations laws are intended to protect defendants from stale and meritless claims. Moreover, these statutes pressure plaintiffs to institute supported causes of action while the evidence is ripe. Certainly, these statutes are an ally to the defense bar and can be a major obstacle for plaintiffs. A plaintiff asserting a professional malpractice claim may attempt to circumvent a time-bar defense through the continuous representation doctrine.  The argument is that the continuing professional-client relationship delays the accrual of a claim. This theory was recently asserted successfully in New York against an attorney.

In the underlying dispute, the town of Amherst retained Counsel to terminate a town employee during a “Section 75” hearing. The termination was subsequently nullified because counsel for the town did not properly commence the hearing. Counsel again represented the town during a second Section 75 hearing.  The result was the same and the employee was terminated. The town later retained the same Counsel again when the employee challenged the termination, which was upheld. It was only after this representation ended when the town sued its former counsel for malpractice.

Counsel raised the statute of limitations defense. In New York, malpractice claims must be filed within three years of the alleged malpractice.  At the trial level, the court held that the malpractice occurred more than three years before commencing suit. The court dismissed the town’s claims against its former counsel.

On appeal, the Appellate Division assessed whether Counsel’s representation of the town was continuous, or, if it was not, when it ceased. The Appellate Division ultimately reversed the trial court and held that a triable issue of fact existed as to whether the continuous representation doctrine applied to toll the statute.  In its holding, the court noted that the two Section 75 hearings occurred after the alleged malpractice, but the hearings were the result of Counsel’s original negligence.

Interestingly, the court concluded that although there were separate engagement letters for each aspect of the representation, the court could not determine as a matter of law whether Counsel’s acts were sufficiently interrelated so that representation was part of a continuing, interconnected representation. Notwithstanding the fact that Counsel correctly noted that the continuous representation doctrine requires that there be “continuing trust and confidence in the relationship between the parties,” the court concluded that there were triable issues of fact with regard to whether that trust was lost.

To avoid a similar situation in your own practice, remember these tips, that will assist in determining when a statute of limitations for a legal malpractice claim can be deemed expired:

1. Document diligently.  Be clear about the scope of services which you intend to provide to a client. This scope of services should be clearly designated in the agreement itself. Because a client may utilize your firm for many cases or projects, it is vital to be clear about when each case is “closed” in order that all parties will be on the same page when it comes to important legal limits, such as a statute of limitations.

2. Cut it off clearly.  Clearly document the termination of a representation of a client.  Even if you have entered into multiple retainer agreements with a client, a court, like the court in this case, may assess whether there is still a fact issue that can be said to exist concerning whether the representation giving rise to the malpractice claim was continuing, even in the periods between retainer agreements.

3. Reconfirm in writing.  If a matter is truly concluded, take steps to avoid a claim of continuous representation.  If a non-litigation matter ends and no controversy remains, confirm that fact in writing to the client and utilize some internal mechanism to administratively “close the file.” If the client later contacts you with issues related to (but not directly concerning) the earlier matter, open a new file under a different billing number and prepare a new engagement letter, specifically stating that the more recent representation involves a new and different subject matter.  This practice is even more crucial in a general retention, when you represent a client in a range of matters over a lengthy period.