Legal Malpractice in Franchising
Lawyers not familiar with the wide array of franchising laws and regulations face the prospect of serious malpractice liability for injuries caused by their failure to know and follow the law. Carmen D. Caruso has prosecuted, defended and served as an expert witness in these cases:
- The president of the State Bar in Nebraska enlisted Carmen to join the team defending a law firm charged with legal malpractice in negligently preparing franchising agreements and disclosure documents for their client, a local coffee shop business that sought to launch a national franchising program, and then allegedly trying to cover up their errors. There was no cover-up, and the damage claim was wildly inflated. The key to the defense was to establish (through depositions) that the franchisees in this system were unhappy because the franchisor had made false earnings claims, which was not the fault of his lawyer, and not the result of non-compliance with the FTC Franchise Rule.
- In a legal malpractice action pending in the Illinois state courts, Carmen rendered expert opinions that the lawyer/defendant should have recognized that his client had purchased a franchise.
- Carmen initiated claims for legal malpractice against a prominent Intellectual Property law firm initially retained to protect the patents and trademarks of a “green” technology start-up company, but then expanded its scope of representation to prepare a franchise agreement for its client to use in selling franchises, without complying with the FTC Franchise Rule and applicable state laws. These claims were settled on the eve of trial.
- Carmen has rendered valuable “second opinions” to clients concerned with ethical and competency issues arising in representation by other lawyers in the franchising sphere.
- Carmen has identified errors of judgment and conflicts of interest by lawyers representing his opponents in franchising cases and has exploited these problems for his clients’ benefit.