Strict privity of contract requirements make legal malpractice different from all other types of litigation. Even in products liability, which once rested completely and solely upon privity of contract as a prerequisite, things have loosened. Betz v Blatt, 2022 NY Slip Op 07430 Decided on December 28, 2022 Appellate Division, Second Department, which has a very rich appellate history, and is already widely cited for its previous decisions, defines the “fraud, collusion, malicious acts or other special circumstances” exception to privity.

“After a nonjury trial, the Supreme Court found that the defendant committed legal malpractice with respect to the decedent’s estate, but that the plaintiff did not establish a violation of Judiciary Law § 487. The court awarded the plaintiff damages as against the defendant in the principal sum of $1,856,699.36. The defendant appeals.

Although an attorney representing the executor of an estate, generally, is not liable to the beneficiaries of the estate (see Kramer v Belfi, 106 AD2d 615, 616), as the attorney does not represent the estate itself (see Betz v Blatt, 116 AD3d at 816; Matter of Hof, 102 AD2d 591, 593), when fraud, collusion, malicious acts, or other special circumstances exist, an attorney may be liable to those third parties, even though not in privity with them, for harm caused by professional negligence (see Davis v Farrell Fritz, P.C., 201 AD3d 869, 871; Betz v Blatt, 160 AD3d at 698).

Here, although the defendant was not in privity with the estate, the evidence nevertheless established the existence of special circumstances subjecting him to liability (see Betz v Blatt, 160 AD3d at 698; Betz v Blatt, 116 AD3d at 816). At trial, the defendant admitted that, even though he was “not competent to do accountings,” he did not arrange or direct the former executor to arrange for a professional accounting. Further, despite his admitted unfamiliarity with probate law, it was apparent to the defendant that the proposed accounting he circulated on behalf of the [*2]former executor was “terrible.” Nevertheless, the defendant neither alerted the Surrogate’s Court nor opposing counsel to the accounting problem.

Significantly, the defendant admitted that he was aware that the payment of estate funds by the former executor to the former executor and the former executor’s children amounted to self-dealing, but that the defendant took no action other than providing advice to the former executor—which the defendant further admitted he knew would be ignored. Moreover, although the defendant testified that the former executor’s conduct was “shocking,” he nonetheless continued to disburse estate funds to the former executor—including funds from the sale of a parcel of real property which formed the estate’s primary asset. The defendant’s failure to notify the Surrogate’s Court or withdraw as counsel upon discovering the self-dealing and misconduct of the former executor, together with the fact that the defendant fostered the former executor’s self-dealing and misconduct by continuing to disburse estate assets to the former executor despite his knowledge that the former executor was engaging in self-dealing and looting, constitutes the type of “fraud, collusion, malicious acts or other special circumstances” for which an attorney may be held liable to third parties not in privity (Betz v Blatt, 160 AD3d at 698).

“Damages in a legal malpractice action are designed ‘to make the injured client whole'” (Marinelli v Sullivan Papain Block McGrath & Cannavo, P.C., 205 AD3d 714, 716, quoting Campagnola v Mulholland, Minion & Roe, 76 NY2d 38, 42). “‘The plaintiff is required to plead actual, ascertainable damages that resulted from the attorneys’ negligence'” (Marinelli v Sullivan Papain Block McGrath & Cannavo, P.C., 205 AD3d at 716, quoting Bua v Purcell & Ingrao, P.C., 99 AD3d 843, 847). Here, the plaintiff presented ample evidence establishing both her damages and the defendant’s contribution to them.”