New Jersey Law Journal

Debate Resumes Over Shortening Legal Malpractice Suit Time Limits

New Jersey Law Journal — Monday, February 10, 2014

David Gialanella, New Jersey Law Journal

A renewed effort to chop New Jersey's legal malpractice statute of limitations down to two years from the current six is underway in the Legislature.

Lawyers debated the issue along familiar battle lines at a meeting of the Assembly Judiciary Committee on Monday, though no vote was taken.

The bill, A-1254, introduced Jan. 14 by Assembly Speaker Vincent Prieto, D-Bergen, is the latest push in a legislative effort that began six years ago.

The change would put the legal malpractice time restriction in sync with that of medical malpractice and align New Jersey with other states where aggrieved clients have less time to sue.

Proponents point out that malpractice plaintiffs, despite the smaller window, still would be protected by the discovery rule, by which the clock is tolled until the plaintiff has actual or constructive knowledge of the injury.

The bill also would overrule Saffer v. Willoughby, 143 N.J. 256 (1996) — which permits fee shifting in legal malpractice cases — by barring fee awards except where allowed by statute or rule.

At Monday's hearing, Fruqan Mouzon testified on behalf of the New Jersey State Bar Association, which has backed the legislation from the start.

"The courts have determined that legal malpractice is more akin to an economic harm," to which a six-year limit typically applies, said Mouzon, a partner at Gibbons in Newark. "We think it's way too long...much longer than" Pennsylvania, where it's two years, and New York, Connecticut and Delaware, where it's three years, he said.

Mouzon said fee-shifting, which isn't allowed in suits against other types of professionals, "hurts settlement chances," "drives up litigation costs" and "incentivizes the attorney to charge more."

"You would be surprised at how much more legal expenses get when the attorney and the client think someone else is paying for it," he added.

Bennett Wasserman of Davis, Saperstein & Salomon in Teaneck — one of the proposal's most vocal detractors over the years — said the change, contrary to proponents' claims, would yield more litigation. "It will create a kneejerk reaction — 'we've got to file before we know anything about the case,'" said Wasserman, who represents legal malpractice plaintiffs.

States with shorter limitations periods have higher litigation rates, steeper insurance premiums and costlier judgments, Wasserman claimed, adding that New Jersey premiums have stayed flat.

He added that Saffer fees, because they reimburse for a prior lawyer's errors, are really compensatory in nature — and aren't awardable in cases that settle.

"Attorneys — unlike most other professionals in the state — we are fiduciaries," Wasserman said. "We have to put the clients' interests ahead of our own. And to get the benefit of an abbreviated statute of limitations, just so we won't be held accountable...that's just not fair. Lawyers are supposed to worry about their clients before they worry about themselves."

Jonathan Koles testified against the bill on behalf of the New Jersey Association for Justice (NJAJ), the state's principal plaintiffs' lawyers group, calling it "a giveaway to the Bar Association."

"This bill is intended to limit the rights that consumer now have, in exchange for nothing," said Koles, past NJAJ president and a partner at Koles, Burke & Bustillo in Jersey City. "We think that's fundamentally unfair."

Also testifying in opposition were Consumers for Civil Justice and New Jersey Citizen Action, both public interest groups.

Groups supporting the bill include: Trial Attorneys of New Jersey, which represents practitioners on the plaintiff and defense side, the New Jersey Chamber of Commerce, the New Jersey Business & Industry Association and numerous professional groups.

Committee members from both parties, though they didn't vote Monday, appeared at least receptive to the legislation.

Assemblywoman Holly Schepisi, R-Bergen, of counsel at Schepisi & McLaughlin in Englewood Cliffs, expressed concern that fee-shifting, combined with lawsuits' "nuisance value," encourages malpractice cases to settle for more than they might be worth.

Assemblyman Michael Patrick Carroll, R-Morris, a Morristown solo, called it "misapplication of common sense" for financial injuries to have a six-year limit while bodily injuries have only two years.

Committee chairman John McKeon, D-Essex, a partner at Hardin, Kundla, McKeon, Poletto & Polifroni in Springfield, said the change "would certainly be a good thing for the consumers of...malpractice insurance."

"Frankly, the insurance will be cheaper for all these groups," he said. "The quid pro quo for that, of course, is that individuals who might be aggrieved by any of those professions will only have two years."

Aside from lawyers, the bill would apply to architects, dentists, engineers, physicians, podiatrists, chiropractors, registered professional nurses, health-care facilities, physical therapists, land surveyors, registered pharmacists, veterinarians and insurance brokers.

The two-year limit also would apply to contractors, subcontractors and property owners as defined in the law regulating construction liens.

Prior iterations, which date back to 2008, have advanced through committee but never received a floor vote in either chamber.

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