Trusts and estates practitioners often provide joint representation to married couples as they create their estate plans. Questions as to the existence of joint representation may arise if husband and wife retain the same estate planning attorney, but do not meet or communicate with counsel together; instead, creating their own separate estate plans. These were the circumstances in the recent case of Leff v Fulbright & Jaworski, LLP, et. al. (Sup Ct, New York County 2009), in which a widow brought a legal malpractice action against her estate planning attorneys in the context of their actions as counsel to her late husband. The result is food for thought, and perhaps may encourage attorneys and their married clients to assume more clearly defined roles.
Joel B. Leff (“Decedent”) died in 2002 with an estate valued at approximately $90 million. In 1974, the Decedent entered into a Separation Agreement as part of a divorce settlement with his first wife, with whom he had a son. Said Agreement provided that the Decedent would bequeath to his son by Will no less than one-half of his probate estate, assuming his first wife remarried. Years later, the Decedent retained an estate planning attorney, who had no involvement in the drafting of the Separation Agreement. A copy of the Separation Agreement was given to the attorney, and remained in his file throughout his representation of the Decedent.
In 1998, the Decedent married Plaintiff. Prior to their marriage, they entered into a prenuptial agreement providing that each spouse “would have the right to dispose of his or her property . . . as each party sees fit,” but further stated that the Decedent would bequeath the marital residence and devise a specific amount to Plaintiff (id. at 2). Thereafter, the Decedent, represented by Defendants, executed a number of Wills and Codicils. At no time in the drafting of these instruments were the terms of the Separation Agreement considered by Decedent or his attorneys.
The Decedent’s testamentary instruments were drafted without his wife’s knowledge or involvement, with the exception of two instruments: (1) a codicil in anticipation of the couple’s trip to Cambodia, which, by its terms, expired upon their return; and (2) an unsigned Will bequeathing to Plaintiff one-half of his adjusted gross estate, which the Decedent gave to Plaintiff as an anniversary present. At the time of this gift, the Decedent reassured Plaintiff, by letter, that she would be informed if he were to execute a new Will that reduced her interest in his estate. Throughout this period, Plaintiff was also represented by Defendants in connection with her own estate plans, and jointly with her husband in connection with the purchase of an apartment.
It was only after the Decedent’s death that the Separation Agreement surfaced in Defendants’ file, in response to a claim by his son for one-half of the probate estate. The estate settled with the Decedent’s son, as a creditor of the estate, for approximately $20 million. Plaintiff subsequently sued Defendants for legal malpractice, claiming a loss of approximately $9 million due to their failure to inform Decedent about the existence of the Separation Agreement; she alleged that the Agreement should have been considered, resulting in alternative planning options to allow the Decedent to fulfill his intent as expressed in his Will. Defendants moved to dismiss, contending that they owed no duty to Plaintiff with regard to Decedent’s estate planning, as they never represented the couple jointly in this capacity. The Court agreed.
Despite Plaintiff’s contentions that she and the Decedent were represented jointly by Defendants, the Court explained that “[a] party’s ‘subjective belief as to the existence of an attorney-client relationship is not dispositive’” (id., quoting Weadick v Herlihy, 16 AD3d 223, 224 [1st Dept 2005]). Moreover, the Court rejected Plaintiff’s reliance on Prudential Ins. Co. of America v Dewey, Ballantine, Bushby, Palmer & Wood, 80 NY2d 377 (1992), in which it was recognized that the concept of privity was expanded to encompass the relationship between an attorney and a third party. In distinguishing Prudential, the Court explained that Plaintiff could not overcome the law that “a beneficiary has no cause of action against the attorney who negligently drafted a will” (Leff v Fulbright & Jaworski, LLP, et. al., citing Spivey v Pulley, 138 AD2d 563 [2d Dept 1988]).
In its decision, the Court relied upon Mali v De Forest & Duer, 160 AD2d 297 (1st Dept 1990). There, it was held that estate planning attorneys had no duty to a decedent’s son, a beneficiary of his father’s Will, despite the fact that the attorneys advised the son as to his own estate planning and were longtime advisors to the family (id., citing Mali v De Forest & Duer, 160 AD2d 297, 298). The Court also rejected Plaintiff’s arguments that “near privity” was created between her and Defendants with respect to the Decedent’s estate planning because the Defendants explained to her the import of one of the Decedent’s Wills, and occasionally updated her about the amount of her legacy upon her husband’s death. This relationship with respect to the Decedent’s estate plan was interpreted by the Court to be merely “fleeting contacts” (Leff v Fulbright & Jaworski, LLP, et. al. at 15).
Additionally noteworthy is that, in a footnote, the Court refused to embrace the discussions by the American College of Trust and Estate Counsel and the American Bar Association that “in the absence of an agreement to the contrary’ a husband and wife represented by the same counsel be presumed as joint clients” (id. at 15, fn 2). Thus, it was held that Defendants could not be liable to Plaintiff for any mistakes that they may have committed in their representation of the Decedent.
Notwithstanding the lack of privity, the Court further determined that “[Plaintiff’s] case falters inexorably on the issue of causation, simply because Plaintiff cannot prove that she would have received more money from [Decedent] ‘but for’ Defendants’ failure to inform [Decedent] of the existence and import of the Separation Agreement” (id. at 16)
Query, if the Court had determined that an attorney-client relationship had existed, permitting Plaintiff’s claim of legal malpractice, should the Court have so quickly dismissed her case on the issue of causation? Perhaps a hearing would have been beneficial prior to making such a determination. Plaintiff may have had adequate evidence to demonstrate alternative actions that could have been taken by Defendants, i.e., writings demonstrating that lifetime gifts to the Decedent’s son were advancements, or maybe the creation of trusts. It is a moot point here, but something to be considered for future cases.