Legal Malpractice Law Review : Professional Responsibility Case Summaries & Commentary : Bennett J. Wasserman : LegalMalpractice.com : Lawyer Malpractice & Legal Ethics

Rathblott v. Levin, 697 F. Supp. 817 (D.C. N.J. 1988)

NJ Underlying Probate Action

Student Contributor: Christopher S. Henn

Facts: The decedent, an attorney, suffered esophageal cancer for ten years until his passing. During his final days he executed several wills with the aid of the defendant, a partner in the decedent’s law firm. The last will was unsuccessfully challenged by the decedent’s children from his former marriage against his wife.

The wife, who had been successful in the underlying probate action, alleged that the defendant had been negligent in preparing the wills by (1) failing to establish testamentary capacity, and (2) by choosing Florida as decedent’s domicile instead of New Jersey. Due to this alleged negligence, the plaintiff averred that she suffered expenses in defending the will contest that effectively nullified her husband’s estate.

On plaintiff's motion for summary judgment, the defendant’s primary defense was that he owed no duty to the plaintiff, since she had no attorney-client relationship with him.

Issue: Whether the lack of privity is a defense to a legal malpractice action?

Ruling: The United States District Court, District of New Jersey recognized that:

[a] defendant owes a duty of care to take reasonable measures to avoid the risk of causing economic damages…to particular plaintiffs…comprising an identifiable class with respect to whom defendant knows or has reason to know are likely to suffer such damages from its conduct.

             ***

[There is no] valid legal difference between a plaintiff who loses the right to one-half of an estate and a plaintiff who loses one-half of an estate in protecting her rights. If either was caused by an attorney's negligence in drafting, that attorney should be liable.

The Court qualified its holding to the facts of this particular case and provided:

The extent to which this opinion represents an expansion of the exception to the privity requirement stems wholly from the unusual facts in this case…

Lesson: If an attorney knows or should know that individuals other than his client will suffer damages as a result of his negligence on a particular matter, he may be held responsible for their losses despite the lack of an attorney-client relationship.

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Holvenstot v. Nusbaum, et al., N.J. App. Div., September 21, 2010 (Unpublished)

NJ: Underlying probate action

Facts: This action sought an appeal from an order granting Defendants’ motion for summary judgment and, thereby, dismissing Plaintiff’s complaint that sought damages from legal malpractice and misrepresentation. A malpractice claim was brought by Plaintiff based on services rendered by Nusbaum to Plaintiff’s mother prior to her death. Plaintiff claims that Nusbaum breached his duties to Plaintiff’s mother that, in turn, caused Plaintiff damages. A misrepresentation claim was based on an allegation that Nusbaum provided false information in opposition to a guardianship action that Plaintiff previously filed. Nusbaum provided a certification in opposition to the guardianship action that included a representation that Plaintiff’s mother executed a new will that disinherited him, which Plaintiff claimed was false.

Issue: Whether Plaintiff’s claims against Defendant for malpractice survive summary judgment?

Ruling: The Appellate Court held that Defendants were entitled to judgment as a matter of law on plaintiff’s legal malpractice claim, since there is no evidence that there was an attorney-client relationship or some independent basis for concluding that Nusbaum and his firm owed a duty to Plaintiff. The only facts relevant to Plaintiff’s relationship with Nusbaum and the firm are that Nusbaum represented Plaintiff in a municipal court matter previously, Plaintiff accompanied his mother when she sought advice from Nusbaum about property she owned, and that he was the intended beneficiary of her will.

However, by assuming responsibility for representing Plaintiff in municipal court, Nusbaum did not undertake a broader and ongoing duty to his former client in unrelated matters. Moreover, when an attorney undertakes preparation of a will, the attorney’s professional and fiduciary duties are owed to the testator and not the testator’s potential beneficiaries. Even when an attorney undertakes to represent the executor of a will, the attorney may not act in furtherance of the interests of the testator’s beneficiaries when those interests are inconsistent with the testator’s interest as expressed in the will.

Lesson: In order for a legal malpractice claim to survive summary judgment, there must be evidence of an attorney client relationship or some independent basis to show that a duty was owed. 

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Gregg v. Lindsay, 437 Pa. Super. 206 (Pa. Super. Ct. 1994)

PA: Underlying Wills Transaction

Student Contributor: Melissa Goldberg

Facts: Defendant drafted a will for Blain, which was duly executed. Blain was admitted to the hospital where he was confined to the Intensive Care Unit. While there, Blain was visited by his longtime friend, Plaintiff. According to Plaintiff's subsequent testimony, he raised with Blain the matter of a will; and after some discussion, Blain directed him to contact Defendant and have him draft a new will making a substantial bequest to Plaintiff and also naming Plaintiff as executor. Thereafter, Plaintiff called Defendant and told him that Blain was in the Intensive Care Unit, was in serious condition, and desired a new will, which was to be drafted and executed the same day. To emphasize the need for haste, but without any authority from Blain, Plaintiff told Defendant that if a new will could not be drafted and executed the same day, he, Plaintiff, would find another lawyer to do the job. A new will was unable to be drafted and executed WW before Blain died.

Issue: Should standing be expanded to allow recovery where, as here, (1) the new will was never executed by the testator, and (2) the facts send a mixed signal regarding the person to whom the lawyer owed a primary duty of loyalty?

Result:  The executed will must firmly have evidence of the existence of the third party beneficiary contract intended to benefit the legatee. Here, however, there was no executed will that could clearly establish intent by the testator to benefit a third person.
1) there was no breach of contract between the decedent and his lawyer.
2) It was Plaintiff and not Blain who had called Lindsay and who had directed him regarding the preparation of a will.
3) Lindsay's first direct contact with Blain came later the same day when Lindsay took the will, which he had prepared to Blain's hospital room.

Lesson: To permit a third person to call a lawyer and dictate the terms of a will to be drafted for a hospitalized client of the lawyer and to find therein a contract intended to benefit the third person caller, even though the will was never executed, would severely undermine the duty of loyalty owed by a lawyer to the client and would encourage fraudulent claims.  

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U.S. v. Costanzo, 625 F.2d 465 (D.N.J., 1980)

3d Cir.  Underlying Criminal Defense (Attorney-Client Relationship and Duty of Confidentiality) 

Student Contributor: Maninder (Meena) Saini

Facts: Defendant (Costanzo), a government informant, was convicted of conspiracy to possess and possession of stolen checks. In the past, the defendant was represented by attorney (Frank Paglianite) on various civil and criminal matters. Additionally, the defendant consulted Paglianite on numerous illegal activities. Paglianite even arranged for the defendant’s bail after his arrest on the instant matter. The defendant retained another attorney to represent him with the conspiracy charge because Paglianite had a conflict of interest in this matter. The defendant alleged that he discussed trial strategies and tactics with Paglianite during the trial proceeding in which Paglianite relayed that information to F.B.I. agents. The defendant claimed that Paglianite was an informant of the F.B.I during the course of their relationship. Defendant appealed from an order of the district court denying both his motions for a new trial and to vacate the sentence he was then-currently serving. The Appeals Court remanded for an evidentiary hearing as to defendant’s claim of a Sixth Amendment violation.

Issue: Did the defendant make disclosures to Paglianite in his capacity as attorney-adviser with the expectation that it was confidential?

Ruling: The  court held that the fact the attorney was not representing defendant in the instant action does not preclude a finding that an attorney-client relationship existed. A relationship between an attorney and client does not need a payment of fee or a formal contract to be formed. The relationship can be formed implicitly, and any communications are privileged when they concern legal advice of any kind sought from an attorney in such capacity.

Lesson:  The question of whether a person is a client or not is crucial to the issue of what duties the lawyer owes to that person. A relationship can form when the clients seeks legal advice from a lawyer in a professional capacity. Attorneys have an ethical duty of confidentiality not to disclose information received from clients.  The rule of confidentiality is to encourage clients to fully and truthfully disclose information relevant to their case. Attorneys cannot take that information and relay it to others for their disadvantage without impeding their role and the administration of justice.

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Hofstra Law School: Lawyer Malpractice Class #2.

I.   What does it take to form a client-lawyer relationship?

Restatement of the Law Governing Lawyers (ALI 2000) (hereafter RLGL)

§ 14. Formation of a Client-Lawyer Relationship
A relationship of client and lawyer arises when:
(1) a person manifests to a lawyer the person’s intent that the lawyer provide legal services for the person; and either
a. the lawyer manifests to the person consent to do so; or
b. the lawyer fails to manifest lack of consent to do so, and the lawyer knows or reasonably should know that the person reasonably relies on the lawyer to provide the services;
(2) a tribunal with power to do so appoints the lawyer to provide the services.

It really takes very little to start a Client-Lawyer Relationship. That may be good in terms of getting clients.  But it can be very risky in terms of incurring liability for malpractice to the client.  Ultimately,  the question to ask is: Who is my client?  

One party's unilateral beliefs and actions , standing alone, does not necessarily confer upon him or her the status of client. 

Moran v. Hurst, 32 AD3d 909, 822 NY2d 564

Solondz v. Barash, 225 AD2d 996, 639 NYS2d 410

Read Pam Bresnahan's article from the American Bar Association Journal about how little it takes.

Then, read each of the following cases:

In re Palmieri, 76 N.J. 51 (1978)

Procanik v. Cillo, 226 N.J. Super 132 (1988)

Togstad v. Vesely, Otto, Miller et al, 291 N.W. 2d 686 (1980)

Jordan v. Lipsig Sullivan, et al 689 F. Supp. 192 (DNY 1988)

How to you document the start of the Client-Lawyer Relationship ?

Rules of Professional Conduct (hereafter RPC)

RPC 1.5 Fees
(b) When the lawyer has not regularly represented the client, the basis or rate of the fee shall be communicated in writing to the client before or within a reasonable time after commencing the representation.

The New York Rule:

22 NYCRR §1215.1
(a)…an attorney who underakes to represent a client and enters into an arrangement for, charges or collects any fee from a client shall provide to the client a written letter of engagement before commencing the representation, or within a reasonable time thereafter (i) if otherwise impracticable or (ii) if the scope of services to be provided cannot be determined at the time of the commencement of representation. For purposes of this rule, where an entity (such as an insurance carrier) engages an attorney to represent a third party, the term “client” shall mean the entity that engages the attorney. Where there is a significant change in the scope of services or the fees to be charged, an updated letter of engagement shall be provided to the client.

(b) the letter of engagement shall address the following matters:
(1) Explanation of the scope of the legal service to be provided;
(2) Explanation of attorney’s fees to be charged, expenses and billing practices; and, where applicable, shall provide that the client may have a right to arbitrate fee disputes…

(c ) Instead of providing the client with a written letter of engagement, an attorney may comply with the provisions of subdivision (a) by entering into a signed written retain agreement with the client before or within a reasonable time after commencing the representation, provided the agreement addresses the matters set forth in subdivision (b).

§ 1215.2 Exceptions
This section shall not apply to (1) representation of a client where the fee to be charged is expected to be less than $3000, (2) representation where the attorney’s services are of the same general kind as previously rendered to and paid for by the client, or (3) representation in domestic relations matters…, or (4) representation where the attorney is admitted to practice in another jurisdiction and maintains no office in the State of New Yoir, or where no material portion of the services are to be rendered in New York.

CAVEAT: Failure to have a written engagement letter or agreement does not prevent a client-lawyer relationship from coming in to existence. But it can certainly have a negative impact if the client refuses to pay you for any reason and you have to sue the client to pay you (not a good idea in any event, which we'll discuss, soon enough.)

The existence of a client-lawyer relationship does not depend on a formal retainer or the payment of a fee. 

Moran v. Hurst, 32 AD3d 909, 822 NYS2d 564

Tropp v. Lumer, 2005 NY Slip Op. 872 (App. Div.)

Jane Street Co. v. Rosenberg & Estis, PC, 192 AD2d 451, 587 NYS 2d 17. 

 II.   What does it take to define or limit the scope of the client-lawyer relationship?

RLGL § 19. Agreement Limiting Client or Lawyer Duties

(1) Subject to other requirements stated in this Restatement, a client and lawyer may agree to limit a duty that a lawyer would otherwise owe to the client if:

(a) the client is adequately informed and consents; and 

(b) the terms of the limitation are reasonable in the circumstances. 

(2) A lawyer may agree to waive a client's duty to pay or other duty owed to the lawyer. 

                                                          * * *

RPC 1.2 (c) A lawyer may limit the scope of the representation if the limitation is reasonable under the circumstances and the client gives informed consent. 

How broad is the scope of the client-lawyer relationship? These next linked cases will give you some insight into  how to narrow the  scope of the relationship and whether that can save  save you from liability for professional mistakes outside the scope of the relationship. 

Campbell v. Fine Olin, 168 Misc. 2d 305 (NY 1996)

Greenwich v. Markhoff, 650 N.Y.S.2d 704 (App Div. 1996)

Lerner v. Laufer, 359 N.J. Super. 201, 819 A.2d 471 (App Div. 2003)

Estate of Albanese v. Lolio, 393 NJ Super 355 (App Div. 2007)

III.   What does it take to End the Client-Lawyer Relationship?

RLGL § 31. Termination of a Lawyer's Authority

RLGL § 32. Discharge by a Client and Withdrawal by a Lawyer

RLGL § 33. A Lawyer's Duties When a Representation Terminates

RPC  1.16  Declining or Terminating Representation

Gilles v. Wiley, Malehorn & Sirota, 345 N.J. Super 119 (App Div. 2001)

Disengagement Letters

Suggested Readings: Fortney & Johnson, Legal Malpractice Law, Ch. 3 pages 35-50.  

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With this post, Legal Malpractice Law Review  inaugurates a new section called "Brain Teasers".

 All too often, common transactions we  come across  give rise to complicated legal malpractice (and ethics) issues. With "Brain Teasers" we challenge you to see the issues and discuss how you would approach their resolution. Feel free to post  and share with all of us your comments.

If you have a "Brain Teaser" to share, please email it to us at: experts@legalmalpractice.com. Make sure to use fictitious names. And we'll post it so that everyone can benefit. 

And now, Bill Freivogel, shares with us the Inaugural "Brain Teaser":

Eighteen months ago Tom represented the borrower in a loan transaction. Tom’s client is now in deep trouble and may be headed for bankruptcy court. One of the bankruptcy lawyers in the firm, Bob, while reviewing the loan transaction, notices that the remedies opinion in Tom’s closing opinion did not contain a critical provision dealing with bankruptcy. Bob goes to Tom and asks whether that omission was intentional. In looking at his notes Tom quickly realizes that his assistant had misinterpreted one of his edits. This could further complicate life for Tom’s already shaky client and for Tom’s law firm. Tom goes to his firm’s general counsel, Barbara and asks for guidance. Barbara pulls in another partner, Jerry, for a second opinion about what should have been done.

While the above scenario raises many issues, here are a few. First, what, if anything, must Tom tell his client? The trickier question is when must Tom tell his client. Second, are any of the communications that have just occurred within Tom’s law firm among Tom, Bob, Bill, Barbara, and Jerry, protected by the attorney-client privilege? This second issue will almost certainly arise if either Tom’s client or the lender sues Tom and his law firm for the mistake. Last, when, if ever, should the law firm notify its malpractice carrier or broker. What should the notice say?

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A relationship of client and lawyer arises when:

1. a person manifests to a lawyer the person's intent that the lawyer provide legal services for the person; and either

• (a) the lawyer manifests to the person consent to do so; or
• (b) the lawyer fails to manifest lack of consent to do so, and the lawyer knows or reasonably should know that the person reasonably relies on the lawyer to provide the services; or

2. a tribunal with power to do so appoints the lawyer to provide the services.

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