When an attorney represents a soon-to-be testator, and there are problems after death, several principles of legal malpractice law arise: privity, statute of limitations, proximate cause. Here is a NJ case which discusses several of the issues and gives a well written account of how the principles play out.
Plaintiff is a surviving child, and is joined by her two sisters. Result is that the estate may have a cause of action, and one sister may have an individual cause of action, but that the two remaining sisters lose.
"Given the wording of the agreement prepared by defendants, Clara may have had a reasonable expectation of representation as an "individual" as well as executrix. Cf. President v. Jenkins, 180 N.J. 550, 562-63 (2004) (insurance policy); Schor v. FMS Financial Corp., 357 N.J. Super. 185, 193-94 (App. Div. 2002) (need for extrinsic evidence). Defendants do not claim they expressly advised her that their representation was limited to her duties and responsibilities as executrix, irrespective of the impact on her as an individual or tax consequences to her personally, and thus it could have been "reasonable" for her to have so understood the retainer. See Restatement (Third) of the Law Governing Lawyers, § 19 (2000); id. at § 19 cmt. c. See also R.P.C. 1.2(c). Moreover, as the Restatement now confirms,
In trusts and estates practice a lawyer may have to clarify with those involved whether a trust, a trustee, its beneficiaries or groupings of some or all of them are clients and similarly whether the client is an executor, an estate, or its beneficiaries. In the absence of clarification the inference to be drawn may depend on the circumstances and the law of the jurisdiction.
[Restatement, supra, § 14 cmt. f.]
See also American College of Trust and Estate Counsel, ACTEC Commentaries on the Model Rules of Professional Conduct, Commentary on MRPC 1.2 (3d ed. 1999). Defendants had an obligation to define the scope of their representation of Clara more clearly. Accordingly, we reverse the grant of summary judgment as to Clara.
B.
The claim of Clara’s sisters requires a different evaluation. As such, it must be asked if the "non-clients will rely on the attorneys’ representations and the non-clients are not too remote from the attorneys to be entitled to protection." Petrillo, supra, 139 N.J. at 483-84; see also Stewart, supra, 142 N.J. Super. at 593. The non-clients in this case are beneficiaries, and the tax burden affected them individually, if not differently. In deciding the issue before us, the overarching inquiry "involves a weighing of the relationship of the parties, the nature of the risk, and the public interest in the proposed solution." Estate of Fitzgerald, supra, 336 N.J. Super. at 468 (quoting Barner, supra, 292 N.J. Super. at 261 (quoting Goldberg v. Hous. Auth. of Newark, 38 N.J. 578, 583 (1962))). See also Banco Popular N. Am. v. Gandi, 184 N.J. 161, 179-81 (2005); Hopkins v. Fox & Lazo Realtors, 132 N.J. 426, 439 (1993); Restatement, supra, §§ 51, 56 cmt. c. As such, we must consider whether the beneficiaries’ interest is adverse to the testator’s intent or the interest of the Estate and what the reasonable expectation of the sisters may have been.
Plaintiffs contend that "Lolio was certainly aware of the identity of the two other beneficiaries" and that the beneficiaries’ "familial relationship to the executrix . . . is certainly not ‘too remote’ to absolve [him] from liability for deviations from accepted standards of legal practice[.]" They further assert that Clara "certainly invited her two sisters to rely upon Mr. Lolio’s opinion and actions in assisting [Clara] in settling their deceased mother’s estate[,]" and that Clara "owed a fiduciary duty to her two sisters of which Mr. Lolio was certainly aware, and his failure to advise that the use of the IRA moneys to pay federal estate taxes exposed Clara Heffernan to liability for breach of her fiduciary duties . . . ."