The Virginia Supreme Court recently upheld a legal malpractice judgement against James B. Thorsen, an estate lawyer whose error in drafting a will 13 years ago will cost him and his law firm over half a million dollars. As the lone dissenting voice, Justice Elizabeth A. McClanahan anticipates that the seemingly incalculable and unlimited financial risks this decision recognizes will lead to a flood of new litigation and a mass exodus of estate planners from the practice area. However, her dire predictions appear to ignore two simple legal realities.
First, as noted by the Court, the particulars of this case fit within what has already been established as a narrow exception to the rule on third-party legal malpractice liability to third parties as outlined nearly 30 years ago in the Copenhaver v. Rogers opinion. Having taken nearly three decades to produce a fact pattern meeting the narrow Copenhaver exception, one need not rush to conclude the sky is falling.
Second, the opinion itself suggests how attorneys can easily avoid similar claims of breach of contract founded upon professional negligence in this practice area and protect themselves against Thorsen-like liability. One need simply include straightforward language in estate planning retainer agreements that expressly (a) disavows third-party beneficiary liability and (b) acknowledges and confirms that no specific third-party beneficiary motivated the creation of the attorney-client relationship. Of course, for good measure, if there are one or more specific individuals identified at the outset of a new attorney-client estate-planning relationship who might be perceived as a potential third-party beneficiary, one might consider the “belt and suspenders” approach of affirmatively identifying any such individual(s) in a follow-up provision expressly identifying the individual(s) (“by way of example but not limitation”).
As the General Assembly’s next session will, in all probability, include one or more measures to address Thorsen and close this previously widely-unrecognized liability loophole, estate planning practitioners are urged to review and modify engagement letters immediately and keep your eyes on Richmond in the coming months for further guidance. In the meantime, you can read the Thorsen decision here. If you have questions or comments about this or any other potential estate and trust disputes, please contact me here.
ABOUT TOM REPCZYNSKI
Tom Repczynski is an Estates and Trust litigator, real estate litigation lawyer, and Principal with Offit Kurman’s Bankruptcy and Restructuring Practice Group. A creditor-side bankruptcy attorney, Tom focuses his practice in general commercial and civil litigation with an emphasis on fiduciary disputes, creditors’ rights enforcement, and real estate related matters of all types. Tom represents an array of lenders, businesses, and individual clients from across the country in federal, bankruptcy, and state courts as well as ADR and administrative proceedings with a broad range of estate and trust (i.e. inheritance related) disputes and general business contract and tort issues. Tom’s bankruptcy-related experience has most recently emphasized non-debtor spouse priority claim matters (advising and assisting divorce/family law counsel), commercial landlord and Chapter 7 panel trustee representation, and includes nearly 20 years of preference claims defense, and other secured, unsecured, and priority creditor representation in Chapter 7, Chapter 11, and Chapter 13 bankruptcy proceedings with both local and national implications.
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