Administrative errors involving statute of limitations issues are one of the most common attorney malpractice claims. By one estimate at least 1 in 5 attorney malpractice claims involves a statute of limitations. While determining the statue in a given state is relatively easy. Applying it to the facts involved can be tricky. In addition to applying the statute, the attorney must know and understand the contract that may or may not also apply to the statute.
In the case of Hahn v Dewey & LeBoeuf Liquidation Trust a 2012 $7 million was owed the IRS because according to the plaintiffs receiving flawed tax advice in the 2000 to 2001 timeframe. The case was brought in New York that has a 3 year statute of limitations period. New York applies an “occurrence” rule to legal malpractice cases. The “occurrence” rule states that the time starts when the act occurred that caused the error, not when the error is discovered.
The New York Supreme Court dismissed the action based on the alleged malpractice was time barred. The Plaintiffs applied and the Appellate Court upheld the Supreme Court’s dismissal. The Appellate Court stated that “what is important is when the malpractice was committed, not when the client discovered it.”
Knowing the applicable statute of limitation period is important for attorneys to know so that they can properly advise clients and also to properly set up their calendaring for the case. It is important for the attorney to not only know the applicable statute, but also to review and apply any contract that may also apply. Attorneys need to be prepared for when the statute of limitations bell tolls for them.