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NY Court of Appeals holds that a client's failure to appeal bars a legal malpractice action only where the client was likely to have succeeded on appeal in the underlying action.

Addressing a question of first impression in Grace v. Law, et al., the Court of Appeals adopted the plaintiff-client's contention that a "likely to succeed" standard should be applied, rejecting the defendant-attorneys' contention that a malpractice claim should be barred when the client fails to pursue a nonfrivolous or meritorious appeal that a reasonable lawyer would pursue.

In doing so, the Court noted that the First and Fourth Departments have examined similar circumstances presented in the settlement context and the decisions generally stand for the proposition that an attorney should be given an opportunity to vindicate him or herself on appeal of an underlying action before being subjected to a legal malpractice suit.

In Grace v. Law, the Appellate Division had adopted the "likely to succeed" standard employed by Nevada and Florida with a proximate cause element, and the Court of Appeals "agree[d] that this is the proper standard, and that prior to commencing a legal malpractice action, a party who is likely to succeed on appeal of the underlying action should be required to press an appeal. However, if the client is not likely to succeed, he or she may bring a legal malpractice action without first pursuing an appeal of the underlying action."

The Court concluded that, on balance, this standard is the most efficient and fair to all parties by allowing the appellate courts to correct trial court errors and allowing attorneys to avoid unnecessary malpractice suits by giving them a chance to change their clients' unfavorable result. The Court rejected the argument by the lawyers, who were defending themselves, that the "likely to succeed" standard will require courts to speculate on the success of an appeal, stating that the courts engage in this type of analysis when deciding malpractice actions generally. The Court also rejected the nonfrivolous/meritorious appeal standard in the belief that it "would require virtually any client to pursue an appeal prior to suing for legal malpractice."

In Grace v. Law, the plaintiff lost the sight in one eye allegedly because of a delay by his ophthalmologist in detecting his glaucoma. Grace retained two firms at times to pursue an administrative appeal or medical malpractice action against the Veteran's Administration and the doctor. The federal court dismissed plaintiff's claims against the doctor and the University of Rochester as time-barred and dismissed the claims against the VA for lack of jurisdiction under the Federal Tort Claims Act because the doctor was an independent contractor and not a VA employee. The court left one claim against the VA for failing to schedule a follow-up appointment for Grace in a timely manner when he first came for treatment.

Instead of discontinuing the medical malpractice action, as the law firm then recommended because of its expense and uncertain prospect, Grace commenced a legal malpractice action against the two firms.

Applying the "likely to succeed" standard to the merits, the Court of Appeals concluded that the defendants failed to establish that plaintiff would have been successful on appeal in demonstrating that the doctor was a VA employee rather than an independent contractor that counsel was required to name as a defendant separate from the VA.

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