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This case, William L. Gunlicks v. Mayer Brown LLP, 2014 IL App (1st) 130845-U, is far too important to be reported in an unpublished opinion. Sadly, the opinion is unpublished for reasons that are unfathomable. The compliant alleges that Mayer Brown breached the duty of care in representing the plaintiff after he had agreed to the entry of a cease-and-desist order.

Gunlicks was a client of Mayer Brown. He was accused by the Securities and Exchange Commission (SEC) of violating Section 17(a)(2) of the Securities Act of 1933. Gunlicks was the founder, CEO and director of Founding Partners Capital Management Company, an investment adviser. In 2007, the SEC and Gunlicks entered into a cease-and-desist order that required “Gunlicks to cease from violating Section 17(a)(2) of the [1933 Act]. According to the cease and desist order, the SEC found that Gunlicks violated Section 17(a)(2) when he ’caused Founding Partners to have Stable-Value pay an undisclosed fee to Stewards and had Equity Fund and Stable-Value engage in transactions that were not consistent with their offering memoranda including transactions with entities under common control with Founding Partners.'” Opinion at ¶ 8.

In 2009, the SEC commenced an onsite compliance examination of Founding Partners’ records to determine if Founding Partners was in compliance with the cease-and-desist order. Shortly thereafter, the SEC filed a complaint for injunctive relief against Founding Partners and Gunlicks. The complaint alleged numerous securities law violations by the Defendants. As might be expected, the litigation went poorly for Founding Partners and Gunlicks.

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Scott v. Burgin, DC: Court of Appeals 2014 – Google Scholar.

The issue of privity frequently arises in legal malpractice litigation. A party lacks privity when the party did not have an attorney-client relationship with the lawyer. Recently, the privity rule has been relaxed by courts to allow lawsuits for legal malpractice by some persons who did not have an attorney-client relationship, such as the beneficiaries of an estate plan. Thus, a lawyer who breaches the duty of care in drafting an estate plan can sometimes be subject to suit by the beneficiaries who lost their inheritance.

Here, the plaintiff was the girlfriend of the decedent. She alleged that the lawyers for Kenneth Woodruff were negligent in failing to prosecute his divorce action against his wife. Burgin alleged that, had the divorce been obtained, she would have been eligible to receive certain retirement benefits upon Woodruff’s death.

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The case is North Carolina State Bar v. Paul T. Jackson, 14 DHC 20.

The case is part of a growing trend to bring disciplinary charges against prosecutors who fail to disclose exculpatory evidence.

The important facts, as set forth in the complaint, are alleged to be as follows:

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I last discussed this problematic topic on June 30th. This unpublished decision, Godbold v. Karlin & Fleisher, LLC, 2014 IL App (1st) 131523-U, illustrates a malpractice trap contained in Illinois law.

Usually, the rule in Illinois is that you must wait to file your malpractice action until you lose the underlying lawsuit. However, you should not wait to sue while the underlying decision is on appeal. That is the unfortunate mistake that the lawyers made in the Godbold case.

Underlying Case – Plaintiff Missed the Statute of Limitations

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BEFORE THE HEARING BOARD.

This is a rare case where a prosecutor is being accused of wrongdoing for failing to disclose that a witness changed his story and for allegedly misleading the court about the witness’ testimony.

What is odd about the case is that the ARDC chose this prosecutorial misconduct case to prosecute. This appears to be the first such case brought by the ARDC.

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BEFORE THE HEARING BOARD.

I have a strong opinion on this case – this is a dreadful act of overreaching by the ARDC. Ms. Naughton and a friend were accused of disorderly conduct after a Cubs game in 2012. In 2013, she was tried and acquitted of all charges.

Now, in an atrocious abuse of prosecutorial discretion, the ARDC has filed charges alleging the same facts as were alleged in the criminal case.

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Illinois has two statutes that establish time limits for when you can sue for legal malpractice. The statute of limitations gives the plaintiff two years from the time the negligence was discovered. However, the statute of repose bars any claim unless the negligent act occurred within six years of the filing of the lawsuit.  This means that you have two years from the time you discovered the injury to file a lawsuit, unless the negligent act of the lawyer is more than six years old.

What happens when you believe that your lawyer’s advice caused you to be sued? The Illinois courts have held in several such cases that the plaintiff is not required to sue for malpractice immediately. Instead, the plaintiff can wait until the underlying litigation is resolved. One such case is Warnock v. Karm Winand and Patterson, 1-06-0341, 876 N.E.2d 8 (2007).  The plaintiffs hired the defendant law firm to handle a real estate closing. The closing was to occur in April 2000. Plaintiffs claimed that the buyer (Mr. and Mrs. Brown) defaulted and plaintiff attempted to retain the earnest money. On August 1, 2000, the Browns filed suit, claiming that that plaintiffs had no right under the contract to withhold the earnest money.

Question – were the plaintiffs required to file suit against their lawyer when they were sued?  Did plaintiffs malpractice claim arise on August 1, 2000? Or did the claim arise when the plaintiffs lost the underlying case?

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Mandatory Sentencing for Medical Marijuana – NYTimes.com.

This is a New York Times story on the prosecution of a family growing marijuana. They claim the marijuana is for medical purposes. The feds disagree. In the end, a jury will decide the fate of these people.

This case raises an ethical question for lawyers. Let’s say you are a lawyer in Colorado or Washington state. Someone comes in to the office and proposes a new company to sell medical marijuana. You form an entity. You write an operating agreement and you assist the client in setting up what appears to be a lawful business. Also, assume your clients obtain a state license and comply with all of the laws of their state.

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ESTATE OF LIFTIN v. US, Court of Appeals, Federal Circuit 2014 – Google Scholar.

This appeal is slightly off topic, but is relevant to the area of legal malpractice liability. The Estate filed its federal estate tax return five months late. The IRS then assessed a 25% percent penalty, in the amount of $135,714.45.

The Estate claimed that it had a legitimate reason to delay filing the estate tax return, namely that it had received legal advice not to file the return from its lawyers. The issue is whether counsel’s advice gave the executor of the estate “reasonable cause” to delay filing. The trial court found no reasonable cause and the Federal Circuit affirmed. Tax counsel allegedly advised waiting to file the return until the decedent’s widow became a United States citizen. Tax counsel also advised delaying the filing until certain information had become available.

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BEFORE THE HEARING BOARD.

This case results from an error in judgment that took place in 2003, more than 11 years ago. A lawyer instructed a staff member to falsely attest that certain persons had witnessed the signing of a will. This is one of the easiest of disciplinary cases for the administrator to prove.

Here are the pertinent allegations:

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