When someone intends to make a sizeable purchase in New York, they need to remember the old adage that buyers should beware. Those seeking to sell something will often lie or exaggerate in hopes of making a little money. The process of due diligence involves carefully researching a possible transaction to determine if the representations made by a seller are accurate and whether a particular transaction would be beneficial for the buyer.
Large transactions, such as purchasing a business, yacht or real property often require extensive due diligence, and the average buyer may feel overwhelmed by all the research required. Those preparing for a large transaction may hire an attorney to perform their due diligence. But what happens if a lawyer cuts corners and fails to uncover concerning elements before a significant transaction occurs?
Unprofessional services could constitute legal malpractice
When a client schedules a meeting and tells them that they want to invest in a business, the attorney should warn them of the possible risks. It will be their job to help the client make a decision that will be in their best interests based on the details of the circumstances. Carefully fulfilling due diligence requirements is one of the ways in which a lawyer could protect clients from a very dangerous transaction. Busy professionals will count on their lawyers to do the necessary research.
However, if the attorney doesn’t review the title records for a property or fails to talk to the employees at a company, they could overlook something relatively major that could impact the benefits the buyer actually acquires from the transaction. Provided that the information is accessible with proper research, the lawyer’s failure to look into the situation and advise their client properly could potentially constitute malpractice.
If another reasonable attorney would have made different choices and if there are provable negative consequences, a lawyer’s failings during the due diligence process could be actionable. Disappointed clients who suffered a major loss could potentially pursue a claim against their lawyer to hold them financially accountable for the impact of their professional failings.
Most attorneys do carry special insurance that will help compensate clients affected by professional failures and omissions. Recognizing that a lawyer’s mistakes and shortcomings directly contributed to an unfavorable outcome might motivate a client to review the situation more carefully and possibly consider filing a legal malpractice lawsuit against their former lawyer with the assistance of a new one.