August 16, 2018 feature

Law Firm at Risk for Nonspecific Scope of Representation

Unbundled legal services offer new opportunities and challenges

By Adam E. Lyons

An appellate decision shows the pitfalls of attempting to limit the scope of attorney representation without a clear agreement identifying those limitations. The holding highlights the need for practitioners to take specific precautions to avoid vexatious and lengthy litigation over the scope of representation.

Limiting the scope of attorney representation

Limiting the scope of attorney representation

Photo Illustration by Elmarie Jara | iStockphoto by Getty Images

The Genesis of the Problem

Genesis Merchant Partners, L.P. v. Gilbride, Tusa, Last & Spellane, LLC began as what appears to have been a successful attorney-client relationship. Genesis, the client, is a combination of venture capital firms. Between 2008 and 2011, the client agreed to make four secured loans to a third party to finance the purchase of several portfolios of life insurance policies. The polices were to serve as partial security for the loans.

The client retained a law firm to represent it in connection with the loans. The firm drafted the loan documents, including a collateral assignment and UCC-1 financing statement for each loan. The firm thereafter filed the UCC-1 statement for each loan. However, no one filed the collateral assignments for the loans.

After the third party defaulted, the client attempted to collect on the life insurance policies. The insurers refused to pay because there was no record of the collateral assignments.

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