Estate Beneficiaries Can Sue Executor's Attorney For Failure To Stop Executor From Looting Estate Assets
On December 28, 2022, an appellate court upheld a Westchester County bench trial verdict of $1,856,699 against an attorney in favor of an estate despite the lack of privity. The defendant attorney was retained by the first executor to facilitate the administration of the estate of plaintiff's father who had passed away leaving millions to his family. The first executor was removed for cause and the second executor filed the legal malpractice suit. The Court found that special circumstance existed allowing the attorney to be sued by someone who had not hired him, specifically: failing to "arrange or direct the former executor to arrange for a professional accounting"; submitting a proposed accounting he admitted was "terrible"; standing by silently while the first executor transferred assets to himself and others; and, continued to disburse estate funds to the first executor "despite his knowledge that the former was engaging in self-dealing and looting".
What should the attorney do when he becomes aware that the executor who hired him is ripping off the beneficiaries of the estate? The appellate court recommended withdrawal from the representation and/or notify the Surrogate's Court or opposing counsel. The appellate court concluded that this "constitutes the type of fraud, collusion, malicious acts or other special circumstances" for which an attorney may be liable to the beneficiaries of an estate even though they did not retain the attorney themselves. Interestingly, the cause of action alleging a violation of Judiciary Law Section 487 was unsuccessful. Betz v Blatt, 2022 NY Slip Op 07430