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NE: Attorneys Owe A Duty to Direct Beneficiaries

Perez v. Stern, 777 N.W.2d 545 (Neb. 2010).

Facts: Plaintiff, Guido, was the personal representative of Martinez. In that capacity, she pursued a wrongful death claim on behalf of his estate. She subsequently alleged that the attorney, Stern, committed legal malpractice when Stern breached her duty to timely prosecute the wrongful death claim. She also alleged that Stern owed an independent duty to the minor children, and that the statute of limitations was tolled on their legal malpractice claims. 

Stern, on the other hand, argued that because the children, who were minors at the time, never had their own claims for relief in the underlying wrongful death action, they lacked standing to bring professional negligence claims against Stern.

Issue: Did Stern owe a duty to Guido’s children as beneficiaries of the estate of her deceased husband? 

Ruling: Yes: 

In coming to this determination, the Court considered these factors: 

(1) the extent to which the transaction was intended to affect the third party, (2) the foreseeability of harm, (3) the degree of certainty that the third party suffered injury, (4) the closeness of the connection between the attorney’s conduct and the injury suffered, (5) the policy of preventing future harm, and (6) whether recognition of liability under the circumstances would impose an undue burden on the profession.

The Court noted, however, that an attorney is free to limit his scope of representation: 

An attorney may limit the scope of his or her representation by obtaining the informed consent of his or her client. For example, it has been held that the attorneys for the decedent’s heirs in a wrongful death action owed no duty to the decedent’s mother, where the personal representative specifically told the attorneys and the mother that he did not want them to represent her.

The Court further stated that the beneficiary must be "intended" and not "incidental," i.e. second wife is incidental beneficiary of divorce proceeding. Of course, the Court also recognized that no duty is owed to a third-party that has a conflicting or adverse interest to that of the client. 

Where a direct beneficiary is at issue, however, "it is entirely in keeping with the fiduciary and ethical duties attorneys owe their clients to require an attorney, who has been informed of the client’s intent to benefit a third party, to exercise reasonable care and skill in that regard." With regard to the instant action, the Court held: 

In fact, under Nebraska’s wrongful death statute, there could be no other purpose to Stern’s representation. A wrongful death claim is brought in the name of the decedent’s personal representative "for the exclusive benefit" of the decedent’s next of kin. The personal representative’s sole task is to distribute any recovery in accordance with the statute, to the discrete and identifiable class of beneficiaries that the Legislature has specifically designated. Under § 30-810, the only possible purpose of an attorney-client agreement to pursue claims for wrongful death is to benefit those persons specifically designated as statutory beneficiaries. The very nature of a wrongful death action is such that a term is implied, in every agreement between an attorney and a personal representative, that the agreement is formed with the intent to benefit the statutory beneficiaries of the action.

Lesson: Under Nebraska law, an attorney owes a duty to all intended, direct beneficiaries of his service, unless he effectively limits the scope of his representation. 

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Posted in: Nebraska