Our building is being sued for something that is beyond the expertise of a typical board lawyer. Do we need to hire an outside attorney?
Some legal issues that come up in the course of running an apartment building as a co-op or condo board will be outside of the realm of what the board's usual lawyer is qualified to do, and that's okay, says Steve Wagner, a founding partner of the law firm Wagner Berkow specializing in co-op and condo representation, and a longtime member of the board of his Manhattan co-op. Tax certiorari work and union labor disputes, for example, are not things he typically works on. The trick for the board, he says, is figuring out where your lawyer's skills and experience lie, and what position, if any, they should take in representing your building on a specific matter.
Don't be afraid to ask the attorney outright
"Ask the attorney, 'Is this the kind of case that you handle? How many of these cases have you handled? And do you feel comfortable handling it?'" Wagner says. “And find out who in the firm is going to handle it and what his or her experience is. I think these are all fair things to ask."
Further, he recommends inquiring about three things when the issue of a lawyer's qualifications for work on a specific issue comes up:
1) The work background and education of the attorney
2) What are their areas of expertise in the law? For example, is it mostly transactions and co-op and condominium law? Do they know personal injury? Also, within that, do they litigate and try cases? Or does their work mostly consist of meetings, memos and document preparation?
3) Perhaps most importantly, do you feel comfortable with them? This only the board making the decision can answer.
The insurance factor
Outside forces can complicate the equation, too.
Some legal matters, such as negligence claims, are typically referred to a building's insurance company.
"In these cases, the insurance carrier typically assigns counsel that handles personal injury defense. Sometimes the law firms are ‘house counsel’ to the insurance carrier and handles these types of cases all the time," Wagner says. “The insurance policy may allow the co-op or condo to choose counsel. And if the insurance company issues a ‘reservation of rights’ letter, the co-op or condo has the right to select counsel as a matter of law.”
On the other hand, some common types of lawsuits like those accusing a board of breaching its fiduciary responsibility are more likely to fall within a building board attorney's realm of experience, and if the policy allows it, that lawyer's work on the issue may be covered at least in part by the insurance.
"I have been brought in on a number of cases where the insurance carrier reserved the right to choose counsel,” Wagner says. “This does not mean that the insurance company has to pay the rates that the lawyer usually charges. There’s some negotiation about what the carrier pays and whether the co-op will pay the difference."
The background option
Even if a board or an insurance company decides that a board's regular lawyer shouldn't run a given legal job, it still may make sense for the lawyer to stay in the background, providing institutional knowledge about the building's history when needed, and following to make sure that a case doesn't go off the rails legally in ways imperceptible to the board.
Take personal injury lawsuits: Wagner says that insurance companies typically assign lawyers to these whose main business is personal injury law. Still, "In those cases, subject to knowing who the attorney is and watching the work that he or she does personally, I often stay involved in the cases," he says. "Those attorneys can handle it less expensively in many instances, and just as well as a typical co-op condo attorney’s firm can."
Teamwork makes the dream work
Building a legal team rather than choosing an outside firm or a board's main lawyer exclusively may be the way to go, Wagner says.
"There’s a comfort factor with your attorney, and a trust factor," he says. "The fact that that attorney may not be the right attorney to do that type of litigation does not mean that your regular attorney should not be involved at all. I’m of the mind that the more people looking at a problem the better."
Personally, Wagner says he has experience as a litigator from before when he started to specialize in co-ops and condos, so he's comfortable in a courtroom. Also, over four decades of practice, he has developed a fluency in dealing with mold remediation, land use, noise issues, construction, and all kinds of regulated housing, among other issues outside the standard purview of a board attorney.
When dealing with a mold issue in collaboration with an insurance company, "I might be able to help the insurance company in the construction issues," he says. "For example, it's good to be able to underscore steps taken by the board that were helpful in eliminating the mold conditions. We can discuss different protocols for remediation and how to avoid liability. And if there is a lawsuit brought later on, I will be able to greatly assist the attorney handling it, if I’m not handling it myself, in putting together facts that help in the defense."
He could also, even if he was not the attorney, bring in experts in New York mold remediation, and/or review reports generated about the remediation to see if there are any obvious holes.
"I don’t need to be the lead attorney," he says. "I will often tell my clients about an outside lawyer, 'It’s fine, I know him. He’s done these cases before. He’s good. I’ll watch it from the background and make sure everything’s being handled properly."
“Being a litigator is also a big help when handling a Pullman case,” says Wagner: “The steps taken by the board prior to litigation require the board to afford the offensive tenant-shareholder his due process rights. Knowing what happens in a courtroom is very, very helpful.”
Legal muscle memory
The lawyer who has a history with the building is useful as a repository of information about the building if nothing else. Continuing on the mold example, Wagner says, "If there’s been a long history of remediation a certain way, but for this particular client they’re doing it a different way, I can say, 'That’s going to be examined by the attorneys for the plaintiff. Just be aware of that.'"
This is helpful because, he says, "Boards get new members and over time can change completely. Sometimes boards just don’t remember everything they’ve done. They are volunteers, doing board work in their spare time. It’s adding corporate knowledge for the co-op or condo."
New York City real estate attorney Bonnie Reid Berkow is a founding partner of Wagner, Berkow & Brandt with more than 30 years of experience litigating in state and federal courts in New York state, including cases involving breach of contract, fraud and breach of fiduciary duty, in addition to real estate disputes and commercial actions. To submit a question for this column, click here. To ask about a legal consultation, send an email or call (646) 780-7272.
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