Firm News

NY – The “Reasonable Strategic Explanation” Defense

By Will Jordan

Yesterday’s post brought us the Judgmental Immunity Doctrine. Today, we have a similar concept: the “reasonable strategic explanation” defense. In a recent case out of New York, the client brought a legal malpractice claim against the attorneys who negotiated the license and sale of intellectual property he developed. The client alleged the attorneys committed malpractice by failing to include a provision protecting the client’s financial interest in the intellectual property in the event the buyer became insolvent or filed for bankruptcy protection. The attorneys established, however, that (1) they had recommended a bankruptcy/buyback provision be included in the agreement; (2) the buyer refused to include the provision; and (3) the client knew of the buyer’s refusal and proceeded with the sale anyway. In affirming summary judgment, the court stated: “Even assuming, arguendo, that [the lawyers] should have advised [the client] not to execute the agreement without the bankruptcy/buyback provision, we conclude that [the lawyers] established a ‘reasonable strategic explanation’ for the alleged negligence.”

Melnick v. Farrell, C.A. 14-02068 (N.Y. Supreme Court, Appellate Division, May 1, 2015).

Read the full opinion here.