In the recently decided legal malpractice case of Cottone v. Fox Rothschild, LLP, the New Jersey Appellate Division found that lawyers may have a duty to explain settlement terms, even if the terms are perfectly clear, to a sophisticated client. The plaintiff, a businessman, claimed that his attorney committed legal malpractice by failing to explain an unambiguous settlement term. That settlement term allegedly defeated one of his settlement objectives.
In a legal malpractice action, the Court must explore a number of issues relating to an attorney’s representation of a client through negotiation and execution of an agreement. Such legal malpractice issues include: (a) whether the attorney determined the client’s business objectives through appropriate consultation; (b) whether the attorney provided advice to the client on various legal and strategic issues bearing on those objectives; (c) whether the attorney scrutinized any proposed agreement to ensure that it met the client’s objectives; and (d) whether the attorney actually explained the agreement to the client. The Court emphasized that not all such actions are always required but that an attorneys failure to take such steps can give rise to a legal malpractice claim.
In Cottone, the Appellate Division reversed a dismissal of the plaintiff’s legal malpractice claim. The Appellate Division found that an attorney may have a duty to explain even unambiguous terms in an agreement to a client. Plaintiff Cottone alleged that his counsel missed a key term and failed to explain it to him, which resulted in substantial damages under his legal malpractice claim.
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