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NJ: The Lawyer/Broker Conflict

Lovett v. Estate of Lovett, 250 N.J. Super. 79, 593 A.2d 382 (Ch. Div. 1991)

NJ: Underlying will and estate contest

Student Contributor: James Quinn

Facts: Plaintiffs are two former guardians and children of decedent, who passed away during this action. They allege malpractice by attorney in drafting a more simple will for their father, eliminating a more complex will that had been in existence. They are additionally claiming attorney (“defendant”) committed malpractice by allowing decedent’s wife to have power of attorney over the decedent. There were tape recordings of dialogue during the drafting of new testamentary writings, and decedent’s wife remained mostly quiet during drafting. However, she sold three properties of decedent using her power of attorney. Defendant acted as lawyer and broker, taking commission instead of attorney fees for sale of properties. Wife passed away, the plaintiffs obtained guardianship over their father, and began this action against defendant.

Issues: 1. Plaintiffs allege negligence, stating that defendant should have had separate counsel review documents, should have held all will conversations outside presence of decedent’s wife, and gotten a psychiatric evaluation to prevent will challenges
2. Did defendant breach his ethical duty by acting as lawyer and broker for sale of home, and accepting commission instead of legal fees?

Rulings:  1. Defendant was not negligent in executing the new will. Although plaintiff relies on numerous instances, their claims lacks direct proof. The actions taken by defendant were proper with regard to the will, there did not exist a conflict of interest by granting power of attorney to wife and writing husband’s will, a lawyer’s search for information need to be reasonable to inform his client, and The court wrote:

“I am not persuaded that [the lawyer]  did not employ the knowledge, skill and ability ordinarily possessed and exercised by other members of the Bar similarly situated. Nor have I concluded that the prudence and care that he did exercise was unreasonable. Plaintiffs have therefore failed to satisfy me by the preponderance of the evidence that defendant’s actions constituted legal malpractice” (92-93)

2. An attorney cannot act as broker and attorney in the same transaction. Simply labeling commission as fees will not immunize the attorney from an ethical violation. In doing so, he violated an ethical obligation to his client. The steps by the defendant were not ancillary to his role as attorney. However, the plaintiffs failed to establish legal malpractice was proximate cause of plaintiff’s losses. Defendant was barred from receiving commission for sales.

Lesson: Plaintiffs in legal malpractice case must show direct proof to show breach of attorney-client relationship. That breach must demonstrate the lawyer did not employ knowledge, skill and ability of similarly situated. Additionally, an attorney should never act as broker and attorney in real estate transaction. Attorney will be barred from collecting fees, and if proximate cause is shown to plaintiff losses.

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Posted in: Fiduciary Duty, New Jersey, Standard of Care, Substantial Factor-Proximate Cause, Wills Trusts & Estates