Sage Realty Corp. v. Proskauer Rose Goetz & Mendelsohn L.L.P.

In 1994, Sage Realty Corp. (Sage) (plaintiff) retained the law firm Proskauer Rose Goetz & Mendelsohn LLP (Proskauer) (defendant) for a highly complicated, $175 million real estate mortgage-financing matter (the mortgage-finance matter). On Sage’s behalf, Proskauer had to form numerous entities and restructure ownership interests in New York properties, engage in negotiations, and close the transaction. The mortgage-finance matter closed in 1995, and Sage fully paid Proskauer’s legal fees totaling about $1 million. Subsequently, Sage and Proskauer had a falling out, and Sage hired the law firm Nixon, Hargrave, Devans & Doyle LLP (Nixon) to replace Proskauer on ongoing compliance work. Nixon asked Proskauer to transfer Sage’s files to Nixon. Proskauer delivered voluminous closing binders as well as client-supplied papers and correspondence. Proskauer refused, however, to turn over its attorney work product, including legal memoranda, contract drafts, negotiation notes, and emails with third parties. Represented by Nixon, Sage sued Proskauer to obtain the additional documents, arguing that Sage still had financial-compliance and tax-reporting obligations related to the properties and that Nixon needed to have a complete understanding of the transactional history. Proskauer responded that it was not required to supply attorney work product. The trial court agreed with Proskauer, and the appellate division affirmed, concluding that work product is an attorney’s private property. The New York Court of Appeals agreed to review the matter.