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

 Hofstra Law School Class #5

Read: Fortney & Johnson, Legal Malpractice Law, Ch. 4, pp. 101-116; 421-424. 

Restatement of Law Governing Lawyers

§49. Breach of Fiduciary Duty--Generally

In addition to the other possible bases of civil liability described in §§48 [professional negligence] 55[breach of contract and equitable relief] and 56 [liability to a non-client], a lawyer is civilly liable to a client if the lawyer breaches a fiduciary duty to the client set forth in §16(3) and if that failure is a legal cause of injury with the meaning of §53, unless the lawyer has a defense within the meaning of §54. 

 

§16  Lawyer's Duties to a Client--Generally

To the extent consistent with the lawyer's other legal duties and subject to other provisions of this Restatement, a lawyer must, in matters within the scope of the representation:

(1) proceed in a manner reasonably calculated to advance a client's lawful objectives, as defined by the client after consultation;

(2) act with reasonable competence and diligence;

(3) comply with obligations concerning the client's confidences and property, avoid impermissible conflicting interests, deal honestly with the client, and not employ advantages arising from the client-lawyer relationship in a manner adverse to the client; 

(4) fulfill valid contractual obligations to the client. 

The Lawyer's Fiduciary Duties: "The 4 C's":

 1. Communicate

RLGL  §20 A Lawyer's Duty to Inform and Consult with a Client

(1) A lawyer must keep a client reasonably informed about the matter and must consult with a client to a reasonable extent concerning decisions to be made by the lawyer... 

(2) A lawyer must promptly comply with a client's reasonable requests for information. 

(3) A lawyer must notify a client of decisions to be made by the client...and must explain a matter to the extent reasonably necessary to permit the client to make informed decision regarding the representation. 

 * * *

RPC 1.4 Communication

(b) A lawyer shall keep a client reasonably informed about the status of a matter and promptly comply with reasonable requests for information.

(c) A lawyer shall explain a matter to the extent reasonably necessary to permit the client to make informed decision regarding the representattion. 

 

Rizzo v. Haines, 555 A.2d 58 (Pa. 1989). (duty to disclose settlement offers to client)

FDIC v. Clark, 978 F.2d 1541 (10th Cir.1992) (duty to inform board of directors of a corporate officer's fraud).

2. Conflict Avoidance (duty of loyalty)

Maritrans v. Pepper Hamilton & Scheetz, 529 Pa. 241, 602 A.2d 1277 (1992)

Matter of Silverman, 113 NJ 198 (1988) (doing business with clients)

3. Confidentiality

Profit Sharing Trust v. Lampf Lipkind, 267 NJ Super 174 (Law Div. 1993)

4. Competence

Starron v. Weinstein, 305 N.J.Super. 263, 701 A.2d 1325 

Various courts have used other terms synonymous or encompassed by the "4 C's" to describe the fiduciary duty, or at least, the context within which various allegations of the breach of fiduciary duty has arisen. You should be familiar with these terms and recognize them as examples of breaches of the fiduciary duty:  "self-dealing"; "failure to exercise independent professional judgment"; "duty of loyalty"; "duty of candor"; "abuse of a position of trust"; "putting the interests of the lawyer ahead of the clients"; "misuse or abuse of client's confidential information". 

Here's a question to consider: If a lawyer overcharges a client, are there any circumstances where could be considered a breach of fiduciary duty?  I'd like to hear your thoughts on this. 

Share your comments, questions and input.  Just click the "Comment" button.

Prof. W. 

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Robert A. Borissoff v. Taylor & Faust et al., 33 Cal. 4th 523 (Cal. 2004)

CA Underlying probate matters

Student Contributor: Evan Michael Hess

Facts: A special administrator in probate court retained the Defendants Taylor and Faust to provide assistance in tax matters relating to the execution of a will. Without authorization, the administrator borrowed approximately $115,000 from the estate for personal reasons. After some time, the administrator sought assistance from Defendant Faust. Faust later informed the administrator that he could no longer provide representation. Representation was then assumed by attorney McGovern. An IRS form was not filed by McGovern, which would have extended for three years the estate’s rights to claim a tax refund for administrative expenses related to the will contest. A malpractice action was initiated against Faust and McGovern, to which both Defendants asserted affirmative defenses that that they owed no duty as attorneys to plaintiff, with whom they did not stand in privity of contract, and that the statute of limitations barred plaintiff's claims. The Court of Appeals agreed, as did the trial court, that the Plaintiffs lacked standing to sue the defendants.

Issue: May the successor fiduciary of an estate in probate assert a professional negligence claim against attorneys retained by a predecessor fiduciary to provide tax assistance for the benefit of the estate?

Ruling: Yes. The Supreme Court held that:

1) “[the probate] code's relevant provisions strongly support the inference that a successor fiduciary does have standing to sue an attorney retained by a predecessor fiduciary to give tax advice for the benefit of the estate”;
2) “While privity of contract may not exist, the successor has the same powers and duties as the predecessor, including the power to sue”; and
3) the successor’s fiduciary must have standing to sue the predecessor’s attorney for malpractice if the successor is to have standing to sue for the same.

Lesson: Even if  privity of contract does not exist, if an attorney breaches a duty to a predecessor, a successor fiduciary may sue the attorney for malpractice.

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In re Estate of Westin, 874 A.2d 139, 2005 PA Super 158 (Pa. Super. Ct. 2005)

PA Underlying Will Probate

Student Contributor: John Anzalone

Facts: Creditors of an estate bring suit to remove  Attorney as the executor of the estate because of the embezzlement of the estate's funds by an employee of the law firm. The lower court held that the request to remove Executor Attorney was moot since he voluntarily agreed to withdraw.

Issue: Did the Orphan's Court err in refusing the creditor's request to remove the Executor Attorney as executor of the estate?

Ruling: In reversing the lower court, the Superior Court held that the lower court should have dismissed the Executor Attorney and appointed a new executor, based on the following considerations:
1) The court  can remove an executor of an estate when that executor's personal interests conflict with the estates and "cannot be served simultaneously."
2) Here, the estate has an action against the executor for the embezzlement from the account maintained by the executor for the estate. There is a conflict of interest here because the Executor Attorney would have to sue himself and his law firm on behalf of the estate to protect the estate's interests.

Lesson: Even where an attorney-executor recognizes his conflict of interest and resigns, the court can still officially remove him and appoint another in his place.  Here is another example of the sometimes troubling issues raised when an attorney who prepares a will, names himself as Executor and serves in that role. 

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