Legal Malpractice

Decedents, Estates and Legal Malpractice

By (Andrew Lavoott Bluestone)

The rule of privity in legal malpractice is very strong.  It exists as a "bright line" that admits of few exceptions. One recent anomaly is that of decedents, estates and standing.  In an article from today's NYLJ. Raymond Radigan and Jennifer F. Hillman,  write the following:

"In a significant decision this summer, Schneider v. Finmann, 15 NY3d 306 (2010), the Court of Appeals loosened the privity requirements in legal malpractice actions. Specifically, in Schneider, the Court of Appeals held for the first time that a personal representative has the same ability to sue the attorney who performed estate planning services as the decedent. The Court's rationale was that the personal representative "stands in the shoes" of the decedent and thus "has the capacity to maintain the malpractice action on the estate's behalf." Id. at 309."

In Schnieder we see:  "Strict privity, as applied in the context of estate planning malpractice actions, is a minority rule in the United States[1]. In New York, a third party, without privity, cannot maintain a claim against an attorney in professional negligence, "absent fraud, collusion, malicious acts or other special circumstances" (Spivey v Pulley, 138 AD2d 563, 564 [2d Dept 1988]). Some Appellate Division decisions, on which the Appellate Division here relied, have applied strict privity to estate planning malpractice lawsuits commenced by the estate's personal representative and beneficiaries alike (Deeb v Johnson, 170 AD2d 865 [3d Dept 1991]; Spivey, 138 AD2d at 564; Viscardi v Lerner, 125 AD2d 662, 663-664 [2d Dept 1986]; Rossi v Boehner, 116 AD2d 636 [2d Dept 1986]). This rule effectively protects attorneys from legal malpractice suits by indeterminate classes of plaintiffs whose interests may be at odds with the interests of the client-decedent. However, it also leaves the estate with no recourse against an attorney who planned the estate negligently."

"We now hold that privity, or a relationship sufficiently approaching privity, exists between the personal representative of an estate and the estate planning attorney. We agree with the Texas Supreme Court that the estate essentially "`stands in the shoes' of a decedent" and, therefore, "has the capacity to maintain the malpractice claim on the estate's behalf" (Belt v Oppenheimer, Blend, Harrison & Tate, Inc., 192 SW3d 780, 787 [Tex 2006]). The personal representative of an estate should not be prevented from raising a negligent estate planning claim against the attorney who caused harm to the estate. The attorney estate planner surely knows that minimizing the tax burden of the estate is one of the central tasks entrusted to the professional. Moreover, such a result comports with EPTL § 11-3.2(b)[2], which generally permits the personal representative of a decedent to maintain an action for "injury to person or property" after that person's death."

Full post as published by New York Attorney Malpractice Blog on November 22, 2010 (boomark / email).