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Malpractice fight Time is of the essence – Effort to shorten statute of limitations for claims is dividing Jersey’s lawyers

Thomas Prol, president of the New Jersey State Bar Association.-(PHOTO BY AARON HOUSTON)

A legislative bout that began eight years ago to shorten New Jersey’s statute of limitations for malpractice claims filed against professionals is starting another round.

The latest iteration of the bill, A1982, sponsored by Assembly Speaker Vincent Prieto (D-Secaucus), requires certain civil actions against licensed persons to be brought within two years, putting many professions on the same footing as doctors.

Thomas Prol, president of the New Jersey State Bar Association, said his organization has long spearheaded the effort in an attempt to clear up the state’s litigious landscape.

“(Often), when an attorney goes out to collect on their bill, they get a counterclaim for malpractice, and most are completely bogus, but it’s a way for that professional to be stopped in collecting the hard-earned money they did the work for,” Prol said.

But advocates of the bill don’t want to pigeonhole it as being just for legal professionals, either, because it would also affect, in part, engineers, architects, contractors and even some health care professionals, such as dentists.

Trade groups associated with those professions have signed on as supporters of the legislation, which has been introduced to the Senate Judiciary Committee, the place it has historically been stalled.

“This is really meant to equalize the playing field for all professions,” Prol said. “We’re leading the charge on it, but we’ve gotten good feedback from a lot of industry groups.”

There is also major opposition to the bill from New Jersey Association for Justice, the state’s principal plaintiffs’ lawyers group.

“This bill will restrict the ability of clients harmed by malpractice from seeking justice for that harm done,” said Kevin Costello, one of the association’s vice presidents. “Just because it’s good for some lawyers, doesn’t mean it’s good for people.”

Marcus Rayner, president at the New Jersey Civil Justice Institute, a group supporting the legislation, claims that a policy referred to as the discovery rule curbs potential for harm.

Settling issues

Given that litigation has been trending in the direction of settling out of court, with only a small percentage continuing through a jury trial, it makes sense that legal malpractice claims would follow suit.

Marie Mathews, member of the firm at Chiesa Shahinian & Giantomasi P.C., said there has been an uptick in the amount of malpractice claims filed against lawyers who settled cases in a way that a client later believes wasn’t in his or her best interest. The claims generally assert that if a client had been advised of some fact, then that client wouldn’t have settled or would have insisted on a higher dollar amount in the agreement.

But proving that an adversary in the original litigation would have accepted a higher settlement, or that a jury trial would’ve yield better results, is no easy matter.

“It’s a counter-factual — you can’t prove what didn’t happen,” Mathews said. “So you have to have someone to opine on what could’ve happened.”

Mathews said these malpractice claims are dependent on expert witnesses that can argue that the settlement was the wrong strategy call. There’s a lot of people looking for this kind of work, Mathews said, which has contributed to the uptick in this type of claim.

She added that, while these claims are a source of concern for law firms, individual lawyers may not often consider the potential of settlement-related malpractice. But it’s certainly not a phenomenon that’s on its way out.

“The way things are going, with far less cases going to trial … there’s going to be less cases of people saying lawyers botched a trial, because trials are fewer in number than settlements,” she said. “I don’t expect (that to) change in the future. So the uptick is likely to continue.”

The discovery rule makes it so that, if a person was not aware that he or she had a cause for a malpractice claim, the statute of limitations is not imposed until the person could have reasonably discovered it. As the bill is written, the rule still applies with the shorter statute of limitations.

“Two years is ample, considering that,” Rayner said.

Rayner also pointed out that lawyers in New Jersey are much more likely than those in other states to file a claim with a malpractice insurer. He believes the longer statute of limitations contributes to New Jersey’s excessive malpractice litigation.

Bennett Wasserman, chairman of Davis, Saperstein & Salomon P.C.’s legal malpractice section, argues that the bill, rather than helping the situation, would have the exact opposite effect.

“It will increase litigation,” Wasserman said. “We did a study when (the first iteration of this) bill came out and we demonstrated that, if you shorten the statute of limitations in New Jersey, what you will find is there will be a reflexive action — with people filing more legal malpractice cases before they’ve had an opportunity to investigate them.”

An adversary of the legislation as long as it has existed, Wasserman claims it would serve as a handout to the bar association, ushering in an influx of frivolous malpractice cases.

“When attorneys take malpractice claims, they utilize that (six-year statute of limitations) time to examine whether it is a bona fide claim, and if it isn’t, it doesn’t get filed,” he said. “Shortening the statute of limitations would deprive the litigants of that investigation period.”

Supporters of the bill contend that it just brings the Garden State in line with each of its neighbors.

New York and Pennsylvania have three-year and two-year statutes of limitations, respectively, for claims based in tort. Both states apply the discovery rule as well.

When measured in terms of malpractice insurance, the impact of this is that New Jersey’s rates are anywhere from 46 to 69 percent above those in New York, depending on the size of the firm, according to the bar association. Compared with Pennsylvania, New Jersey’s insurance rates range from 17 to 40 percent higher.

In short, supporters make the case that getting this legislation enacted after an almost decade-long fight for it would make malpractice insurance more affordable for small professional service firms with already-limited resources.

“We believe it’s the right thing to do from a legislative point of view because it helps small businesses operate better,” Prol said.

E-mail to: brettj@njbiz.com
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Brett Johnson