Published on:

Virginia Court Holds That An Intended Third Party Beneficiary May Sue Estate Planner For Legal Malpractice

This is another chapter in the long-running battle between beneficiaries of estates and estate planning attorneys. For much of the 19th century if a lawyer made an error in the drafting of an estate planning document, the intended beneficiary could not sue for legal malpractice because the intended beneficiary was not “in privity” with the lawyer. The words “in privity” meant that the intended beneficiary did not have a direct attorney-client relationship with the lawyer. (Of course, in most estate planning matters, the only person with an attorney-client relationship is deceased by the time the error is discovered).

The privity rule was extremely beneficial to attorneys because it meant that they could rarely be sued for legal malpractice. In recent years, courts have chipped away at the privity rule. The courts have acted from the obvious concern that the lawyer who makes a mistake depriving a beneficiary of an inheritance should not be able to hide behind a technicality to escape liability.

In this case, the plaintiff was the Richmond Society for the Prevention of Cruelty to Animals or RSPCA. RSPCA alleged that there was an error in the drafting of a will and the error caused it to lose an expected inheritance of real property.

The Virginia Supreme Court agreed with the RSPCA that it was an intended third party beneficiary of the contract between the lawyer and the client and held that enforcing the contract would serve to carry out the wishes of the deceased client. The court explains its holding that the RSPCA was an intended beneficiary of the lawyer-client contract and had standing to file suit.

Here, the facts sufficiently allege that the contract was entered into for the benefit of Dumville’s mother and the RSPCA. The RSPCA sufficiently alleges that Dumville “sought to confer a benefit” to the RSPCA upon her death; that she sought Thorsen’s professional expertise to accomplish this task; that Dumville and Thorsen contracted so that Dumville would confer a benefit, and that Thorsen accepted that obligation, thus creating the clear and definite intent to create a benefit to the RSPCA. When, according to the allegations, Thorsen accepted the contract to prepare Dumville’s will as she specified, the RSPCA became not only the intended beneficiary of Dumville’s will but also the intended beneficiary of her contract of employment with Thorsen. Copenhaver, 238 Va. at 368-69, 384 S.E.2d at 596-97. In sum, despite the practical difficulties in being able to prove such a case, the RSPCA alleges many of the elements set forth in the successful Copenhaver hypothetical.

Accordingly, while we have suggested in the past that such a cause of action could exist under properly pled facts, today we affirmatively acknowledge the RSPCA’s pleading as sufficient to allege a cause of action for breach of contract-professional negligence on behalf of a third-party beneficiary of the contract between the testator and her attorney. The RSPCA has standing to proceed.

The court also rejected the lawyer’s argument that the RSPCA was a contingent beneficiary of the estate and should not be allowed to sue. A contingent beneficiary is a beneficiary who inherits if some condition is fulfilled. The court rejected this argument as well and held that this was a question for the finder of fact.

In sum, this is another in the long line of cases that have gradually whittled away the privity rule in legal malpractice litigation against estate planning attorneys.

Edward X. Clinton, Jr.

Source: Thorsen v. RICHMOND SOCIETY FOR PREVENTION OF CRUELTY TO ANIMALS, Va: Supreme Court 2016 – Google Scholar