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Thursday, June 17, 2010

New York's High Court Revives Estate's Legal Malpractice Suit

High Court Revives Estate's Legal Malpractice Suit
The New York Law Journal by Joel Stashenko - June 17, 2010

ALBANY, NY - An estate can bring a legal malpractice claim against an attorney for negligence in the planning of the estate, the New York Court of Appeals decided unanimously today. Previous appellate rulings, including the one reversed by the Court today in Estate of Saul Schneider v. Finmann, 104, had invoked strict privity to block estate planning malpractice suits against attorneys commenced by the personal representatives and beneficiaries of estates. But that approach is unfair to estates, Judge Theodore T. Jones Jr. wrote for the Court. Today's Court of Appeals decisions will begin on page 25 in the print edition of tomorrow's Law Journal. "This rule effectively protects attorneys from legal malpractice suits by indeterminate classes of plaintiffs whose interests may be at odds with the interests of the client-decedent," he wrote. "However, it leaves the estate with no recourse against an attorney who planned the estate negligently." Judge Jones added, "We now hold that privity, or a relationship sufficiently approaching privity, exists between the personal representative of an estate and the estate planning attorney." The ruling reinstates the malpractice claim by the estate of Saul Schneider against Victor M. Finmann, a Garden City attorney who provided legal services to Mr. Schneider on several issues, including estate planning. At issue are taxes the estate faced on a $1 million life insurance policy that Mr. Schneider took out on himself in 2000. Before Mr. Schneider's death in 2006, he transferred the policy to two limited partnerships controlled by Mr. Schneider and then back to himself, all on the advice of Mr. Finmann. The attorney told him that transferring the policy would reduce his estate's tax liability upon his death, according to the Court's ruling today. Mr. Finmann successfully argued for rejection of the malpractice claim before the Supreme Court and the Appellate Division, Second Department, contending that privity did not exist between himself and Mr. Finmann's estate. Any damages suffered by the estate due to the attorney's bad advice occurred after Mr. Schneider's death and were not suffered by Mr. Schneider while he was alive, the attorney argued. The Second Department in Estate of Schneider v. Finmann, 60 AD 2d 892 (2009), refused to set aside the state's "well-established rule" that attorneys cannot be held liable to third parties for malpractice "absent fraud, collusion, malicious acts or other special circumstances." But the Court of Appeals disagreed. "The personal representative of an estate should not be prevented from raising a negligent estate planning claim against the attorney who caused harm to the estate," Judge Jones wrote. "The attorney estate planner surely knows that minimizing the tax burden of the estate is one of the central tasks entrusted to the professional." Joel Stashenko can be reached at


realist said...

It's not really malpractice, it's CRIMINAL !

Anonymous said...

must be slow news day or nothing going on as this does not appear to be an article based on corruption in the courts - informative article nonetheless but just saying

ProbUsedtheHearingInfo2 said...

Senate Democratic leader John Sampson has been fingered by investigators as the leaker of confidential bidding information to the lobbyist for the politically connected firm that won the contract to run video slots at Aqueduct, sources told The Post.

Anonymous said...

I hope that the Estate recovers all the legal fees that it was foreced to spend to get this win. The lawyers ripoff Estates left and right and put people in the poor house.

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See Video of Senator John L. Sampson's 1st Hearing on Court 'Ethics' Corruption

The first hearing, held in Albany on June 8, 2009 hearing is on two videos:

               Video of 1st Hearing on Court 'Ethics' Corruption
               The June 8, 2009 hearing is on two videos:
               CLICK HERE TO SEE Part 1
               CLICK HERE TO SEE Part 2