In Guido v. Duane Morris, LLP, 202 N.J. 79 (2010), the New Jersey Supreme Court recently addressed the issue of whether a party’s acceptance of a settlement bars a malpractice suit against the lawyer who counseled the settlement. That same issue was previously considered by the Court in Puder v. Buechel, 183 N.J. 428 (2005), and Ziegelheim v. Apollo , 128 N.J. 250 (1992), with different results. Although the Court had allowed the malpractice suit to go forward in Ziegelheim , it precluded the party from asserting a malpractice claim in Puder. The Court in Guido made it clear that Ziegelheim sets forth the general rule that a prior settlement is not a bar to the prosecution of a subsequent legal malpractice claim, and that the holding in Puder represents an exception to that rule.
The Guido Court also made it absolutely clear that a malpractice plaintiff need not first move to vacate or modify the settlement in the underlying lawsuit before instituting a malpractice action against the attorneys who allegedly provided negligent advice or other legal services. Since the plaintiff in Ziegelheim had moved unsuccessfully to set aside the settlement agreement, this was an issue of first impression for our Supreme Court. In ruling that a motion to vacate or modify the settlement was not required, the Guido Court rejected the position advocated by defendant Duane Morris, as well as the Trial Attorneys of New Jersey and the New Jersey State Bar Association. Both organizations filed amicus briefs asking the Court to impose a bright-line rule requiring all malpractice plaintiffs to first seek to vacate or modify the settlement before asserting a malpractice claim. The Court reasoned that such a motion should not be a prerequisite since it may have no reasonable expectation of success, and because the law “does not compel one to do a useless act.”
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