Analogy is a familiar tool in legal analysis.  An analogy to legal malpractice insurance coverage law helps to understand the holding in Matter of Neuberger Berman Trust Co., N.A.  2016 NY Slip Op 32277(U)  November 10, 2016  Surrogates’s Court, New York County  Docket Number: 1983-0735 D Judge: Nora S. Anderson.

One of the more prominently litigated features of legal malpractice insurance is the “notice” issue.  Attorneys are required, under their policies, to notify the carrier at the earliest possible opportunity about a claim, and even about a potential claim.  Carriers have successfully declined and avoided coverage based upon “late notice.”

In this case, the law firm wishes to avoid disclosing certain documents, and claims them to be “work-product” prepared in contemplation of litigation.  They say that as soon as a possible error became known, they were on notice, and everything created after that date is privileged.

“Decedent Irma Croll died in 2001. In her will, she named NB and Schlesinger as coexecutors of her estate; NB and Schlesinger were also co-trustees of her IV trust. HGG served as counsel to NB and Schlesinger in the administration of the estate and the trust. By letter dated December 9, 2011, counsel for three of the trust beneficiaries informed NB that the Generation Skipping Transfer (“GST”) tax may have been incorrectly calculated on the federal estate tax return filed in 2003, resulting in a tax overpayment. After confirming that the estate had overpaid its taxes by $2.9 million, NB commenced the Supreme Court action transferred here against HGG and Schlesinger’s estate. While not disputing the tax error, HGG moved to dismiss NB’s malpractice claim as time-barred. Meanwhile, NB petitioned for judicial settlement of its accounts as co-executor and as co-trustee. When Schlesinger died on April 24, 2012, the fiduciary of his estate petitioned for judicial settlement of Schlesinger’s account as cotrustee.”

“Third, HGG argues that it is not required to produce documents created after December 9, 2011, because, on that date, counsel for the beneficiaries first raised concerns over the GST tax, at which point HGG “became the object of a potential malpractice claim.” HGG asserts that all documents created after that date constitute work-product prepared in anticipation oflitigation. NB counters that HGG cannot reasonably have anticipated litigation simply based on the letter from beneficiaries’ counsel, which merely requested an explanation as to how the tax was calculated and noted their inability to “reconcile the numbers.” NB asserts that it was not until May 2012, when NB and HGG received another letter from the beneficiaries’ counsel pointing to the incorrect GST calculation and directing NB and HGG to preserve all relevant documents, that HGG had a reasonable basis for anticipating litigation. In support of its claim that HGG was still acting as its counsel during March and April of 2012, NB submits e-mails between NB and HGG during that time regarding the tax calculation. However, those e-mails merely demonstrate a joint effort to respond to the beneficiaries’ inquiry and do not necessarily lead to the conclusion that HGG was still representing NB. After receiving the first letter from beneficiaries’ counsel, HGG could have reasonably anticipated that it might be subject to liability on the tax issue. Therefore, the court cannot discount the possibility that an otherwise responsive document generated after December 9, 2011, might be deemed privileged. The court directs HGG to produce all documents and ESI that are either responsive to the subpoena duces tecum or subject to the court’s 2015 order. To the extent that HGG withholds any document on the ground that it is privileged, it must submit a privilege log containing the identifying information set forth in CPLR 3122(b ). ”