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An Unprecedented Limitation of the Continuous Representation Doctrine

April 24, 2017

The "continuous representation doctrine" is a rule that extends the accrual date for legal claims against professionals (i.e., the date from which the Statute of Limitations period is measured), based on the judicially-recognized principle "that a person seeking professional assistance has a right to repose confidence in the professional's ability and good faith, and realistically cannot be expected to question and assess the techniques employed or the manner in which the services are rendered."  Shumsky v Eisenstein, 96 N.Y.2d 164, 167 (2001). "The doctrine also appreciates the client's dilemma if required to sue the [professional] while the latter's representation on the matter at issue is ongoing." Id. Under the continuous representation doctrine, the accrual date does not occur until the matter is concluded. 

 

Last week, the Appellate Division of the First Department announced what could be read as a significant limitation on the continuous representation doctrine, without citing any precedent that justifies the limitation. In Aaron v. Deloitte Tax LLP, 2017 NY Slip Op 03051, the Court held a tax-planning client's claim against Deloitte to be time-barred, based on a provision in the parties' engagement letter that required any suit to be brought "within one year of the accrual of the cause of action."  The Court rejected any application of the continuous representation doctrine, reasoning that "the limitations period was contractual, not statutory, and was reasonable." Id.

 

As precedent for its determination, the Court relied upon Executive Plaza, LLC v. Peerless Ins. Co., 22 N.Y.3d 511, 518 (2014), which generally affirms the enforceability of "an agreement which modifies the Statute of Limitations by specifying a shorter, but reasonable, period within which to commence an action." Id. (emphasis in original). Executive Plaza, however, says nothing about the continuous representation doctrine, nor about the well-established legal principle that it is unreasonable as a matter of law to expect a client to commence suit during the course of a professional engagement on a particular matter. Rather, Executive Plaza was decided in a wholly-different context involving a unique set of facts concerning the timeliness of an insurance claim. Thus, the Court's application of Executive Plaza to Aaron is somewhat perplexing. The Aaron case lacks as justification any precedent for the principle that a plaintiff may implicitly waive the protections of the continuous representation doctrine simply by agreeing to a shorter limitations period.

 

The Aaron decision is problematic because it suggests that professionals may avoid the effect of the continuous representation doctrine simply by contractually altering the duration of the limitations period.  This, however, conflates two separate issues: the accrual date for the claim (which is extended as a matter of law by the continuous representation doctrine, and which was not addressed by the engagement letter at issue in Aaron) and the duration of the limitations period (which was amended -- and shortened -- by the engagement letter in Aaron).  These are separate issues that the Court should have analyzed separately.

 

When, as in Aaron, the duration of the limitations period is shortened by agreement, there is arguably an even stronger than usual argument that the client should receive the benefit of the continuous representation doctrine, because there is a smaller window within which the client can reasonably be expected to bring suit:  i.e., instead of the traditional three-year limitations period after termination of a professional representation, the client has only one year.  Perhaps the client could have expressly agreed to waive the continuous representation doctrine.  But if such a waiver were to occur, it would be reasonable to require that it conform to traditional principles of waiver, i.e., it should have been a clear waiver, knowingly and voluntarily given.  Waiver of an extension to the accrual date (occasioned by the continuous representation doctrine) should not implicitly be found based on an agreement to shorten the duration of the limitations period itself.

 

We represent clients who have been damaged as a result of the negligent services provided by professionals. The legal standards for such claims -- particularly claims of legal malpractice -- are quite stringent.  Given the substantive challenges associated with obtaining relief for clients who have received sub-par services, the courts should be reluctant to cut back on the procedural protections afforded to clients who rely upon their professionals.

 

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