The Business Litigation Blog

Collusion Over Cameras: New York Legal Malpractice Triggered Over Deceit

A New York federal judge has ruled that a lawyer and his firm may be sued under the state’s attorney deceit statute for alleged false statements made during the lawsuit.  According to U.S. District Judge Paul Crotty, such a suit could go forward even if there was no pattern of misrepresentation on the part of the attorney.  Under New York’s Judiciary Law Statute §487, it is a misdemeanor for an attorney to use deceit or collusion with an intent to deceive a court or any party.  In the case at issue, Canon USA Inc. v. Divinium Technologies, Canon USA alleges that an attorney and his law firm helped their clients defraud Canon by obtaining a business equipment dealership after Canon had refused to grant said dealership due to prior arrests for fraud.  Specifically, the lawyer at issue filed an affidavit by the corporation’s nominal president denying the fact that the same lawyer had prepared papers revealing corporate stock was being held for those clients.  Judge Crotty’s ruling allows for potential §487 lawsuits alleging “sufficiently egregious” actions committed by an attorney motivated by intent to deceive the court.  This ruling opens the door to more retaliatory lawsuits by litigants against their adversary’s counsel.  The fact that malpractice insurance does not cover attorneys for violation of §487, and injured parties can be entitled to treble damages under civil actions brought under the statute, means that attorneys now face huge financial costs in such actions and will be motivated to quickly settle with the injured parties.  

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