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‘Overwhelmed’ email draws suit against prominent franchisee attorney


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Beth Ewen

Well-known franchisee attorney J. Michael Dady and his law firm, Dady & Gardner in Minneapolis, are being sued for alleged malpractice by a group of Coffee Bean & Tea Leaf franchisees.

They claim Dady & Gardner gave them bad advice and then left them in the lurch by withdrawing from the case days before a crucial hearing, forcing them to settle. They’re seeking more than $11 million in damages.

The plaintiffs are New Amsterdam Coffee & Tea Co., franchisees operating New Jersey Coffee Bean stores that faltered and who hired Dady & Gardner to represent them in court. “That arbitration came crashing down—less than one month before the arbitration hearing—when Dady claimed to be so ‘overwhelmed’ by the case that he needed to withdraw as counsel immediately,” says the lawsuit. “Dady literally abandoned his client on the eve of trial.

“Even before Dady’s meltdown,” the lawsuit alleges, “defendants also provided negligent legal advice that caused plaintiffs to sustain more than $3 million in avoidable operational losses. In fact, defendants performed substandard legal work at every turn.”

Skip Miller, a partner at Miller Barondess in Los Angeles who is pressing the suit, said in an interview: “Mr. Dady held himself out as an expert in franchise law and franchise litigation … and then the lawsuit spells out that he was anything but.”

First time for everything

Asked how he was doing when he returned my call, in late March, Michael Dady replied, “Very good in general,” but “not very good” in one instance, “since I got sued by a client for the first time in my 40-year career.”

“What’s being said by the new lawyer is the opposite of what’s occurred,” Dady said, adding he had to speak with his malpractice insurance carrier first before deciding whether to say more.

Later that week he sent a statement via email, which said in part: “This lawsuit by a former client is quite surprising and very disappointing for all of us. In this once-in-a-career circumstance, a temporary acute medical condition required me, but not my firm, to personally withdraw from my continued representation of this client.

“While my partners and I have strong disagreements with the factual allegations and legal claims made in the complaint … we believe that we are duty bound to honor the legal process and to decline further comment at this time.” He said his firm was preparing an answer to the complaint to file with the court, which at press time was not yet done.

“In the meantime, we will do our best to let all our clients and referral sources know, by word and deed, that the 10 members of our firm are able and committed to continue to do our best to help all of our clients maximize their ability to accomplish their objectives, as effectively and as efficiently as we can.”

Dady wrote the firm was “honored to have been recognized for the quality of our legal work for franchisees by many publications over the years, including Franchise Times.”

Dady was named to the Franchise Times Legal Eagles list, which recognizes the top attorneys in franchising based on nominations by clients and peers, every year since the ranking began in 2004. For this year’s list, published in April, nominations included tributes from prominent franchise attorneys at outside firms.

“Michael is one of the premier franchisee attorneys in the country,” wrote one nominator. Greensfelder’s Leonard Vines wrote:

“Founder of one of the country’s top franchisee boutiques; handles major, precedent-setting litigation throughout the country; innovative and practical.”

Arthur Pressman, a partner at Nixon Peabody who teaches ethics at Boston University School of Law, replied tersely when asked via email to comment in general on the lawsuit—how common are malpractice allegations against attorneys, what is the protocol if someone has to withdraw from a case, I queried via email. “I have it; I’ve read it, and I’m not going to comment,” he wrote back.

‘Quite shocked’

Michael Garner agreed to talk, but he freely admits he is not unbiased. First, he provided expert testimony on behalf of the franchisor, Coffee Bean & Tea Leaf Co., in the original arbitration that led to this lawsuit. Second, Garner used to be Dady’s partner at the Minneapolis boutique, splitting from the firm after a dispute with Dady and forming his own firm, Garner & Ginsburg. (Yes, the names are confusing, but note that Ron Gardner with a ‘d’ is Dady’s current partner.)

Garner said it “absolutely” is unusual to see a malpractice case against attorneys, because they “can be very difficult to prove. As lawyers, we’re in the business of making judgments most of the time. We can exercise our best judgment and end up being dead wrong. So usually, just because somebody loses a case or gets a bad result doesn’t mean that the attorney didn’t do their job or did their job in a professionally irresponsible manner.”

What stands out in this case is the way Dady withdrew, according to the lawsuit via an email that he sent to his local co-counsel. “It’s the damnedest thing I’ve seen. I don’t understand,” Garner said. “If that was indeed the case that he was up against the wall and had all these deadlines, I don’t think the thing you want to do is start writing an email that basically confesses the wrong.”

The email from Dady, dated April 19, 2016, and sent to his local co-counsel, says this, according to the lawsuit: “I woke up in the middle of the night with that very crystal thought—I am overwhelmed. I cannot do, in a professionally responsible way, everything that needs to be done between now and the hearing, and during the hearing itself.”

For Skip Miller, the attorney at Miller Barondess who is pressing the case for the plaintiffs, that remains the smoking gun. “We were quite shocked by the whole thing,” Miller said, adding “of course” there is a protocol that can be followed if an attorney must withdraw from a case. “It’s ethically required to effectuate a smooth transition so the client’s rights are not prejudiced. You can’t just abandon a client.”

Beth Ewen is editor-in-chief of Franchise Times, and writes the Continental Franchise Review® column in each issue. Send interesting legal and public policy cases to bewen@franchisetimes.com.

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