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April 20, 2020

NYS Attorneys Not Liable for Failing to Act Outside Scope of Engagement

In a recent successful decision1 obtained by Barclay Damon LLP, the Southern District of New York affirmed New York State’s longstanding principle that an attorney may not be held liable for failing to act outside the scope of a specific retainer agreement. The court further affirmed the perfect vision of hindsight may not be utilized when deciding whether an attorney committed legal malpractice.

A NYS law firm was engaged in mid-2001 by Australian counsel to urgently file a national phase patent application under 35 U.S.C. § 371 on behalf of its Australian client and to keep the application in place absent further instruction. Acting on these directives, the NYS law firm immediately filed a national phase patent application, which was successfully obtained in December 2014 after a vigorous prosecution that included significant—and unforeseeable—delay at the US Patent and Trademark Office (USPTO).   

Fifteen years after the initial engagement, the Australian client filed an instant lawsuit alleging that, but for the NYS law firm’s alleged negligence, the Australian client would be entitled to an additional three and a half years of patent term. The Australian client argued the firm erred in filing the national phase application as it had been directed and should have filed a bypass continuation application under 35 U.S.C. § 111. The bypass continuation application would have added additional patent term because of the significant delay by the USPTO. The Australian client further argued the firm should have, at the very least, counseled them on the benefits and disadvantages of filing each type of application.

In granting summary judgment dismissing the action, the court held the limited scope of the engagement did not impose an additional obligation upon the NYS law firm to advise the Australian client about matters outside the scope of that engagement. The Australian client retained the firm for a very specific purpose: to enter the national phase and keep the application in place. The firm successfully accomplished its limited scope of engagement. It had no obligation to the client beyond this.

The court further recognized that any theoretical advantages or disadvantages of filing a different type of patent application would have been wholly speculative at the time and further affirmed longstanding NYS law: “An attorney is not held to a standard of infallibility, and the perfect vision of hindsight is an unreliable test for determining the past existence of legal malpractice.”  Malpractice is measured by circumstances at the time of the occurrence without utilizing knowledge and facts gained after the fact.

This case emphasizes the limited duty of attorneys when the engagement is narrowly drawn. Good risk management requires a carefully drawn engagement agreement so there can be no misunderstanding about what services the attorney will and will not provide.

Barclay Damon LLP will continue to provide updates on relevant case law as it is decided. 

Portus Sing. PTE Ltd. V. Kenyon & Kenyon LLP, 2020 US Dist. LEXIS 55449 (SDNY 2020).

If you have any questions regarding the content of this alert, please contact Ryan Altieri, associate, at raltieri@barclaydamon.com or another member of the firm’s Torts & Products Liability Defense or Professional Liability Practice Areas.

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