NJ: Underlying divorce proceeding
Facts: Mr. and Mrs. Lerner decided to divorce and went through the process of a mediated property settlement agreement (PSA). Upon completing the drafting of the PSA, Mrs. Lerner hired Attorney Laufer order to review the PSA. Lerner got Laufer’s name from a list of divorce law specialists recommended by the mediator. Lerner met with Laufer however before retaining him, Laufer produced a letter for her to sign which acknowledged the circumstances of the retention and the limitations to the scope of services he would provide. The Court felt it worthwhile to quote Laufer’s letter in full:
Dear Mrs. Lerner:
This letter will confirm that you have retained my law firm for the purpose of reviewing a Property Settlement Agreement that was the product of divorce mediation conducted by Mr. Brett J. Meyer, Attorney at Law of the State of New York.
This letter will further confirm that I have not conducted any discovery in this matter on your behalf. I have not reviewed income tax returns or other financial documentation to confirm or verify your husband’s income for the past several years. I have no information concerning the gross and net values of the properties in Summit, Belmar, Teluride, Colorado or Short Hills, New Jersey. I have seen no information concerning the value of the stock in Marisa Christina, Inc. or the other corporations referred to on Page 10 of the Property Settlement Agreement. In addition, I have not had the opportunity to review any documentation concerning the respective incomes, assets, liabilities or other financial information in your case.
Based upon the fact that I have not had an opportunity to conduct full and complete discovery in this matter, including but not limited to appraisals of real estate and business interests, depositions and interrogatories, I am not in a position to advise you as to whether or not the Agreement is fair and equitable and whether or not you should execute the Agreement as prepared. Accordingly, it is difficult for me to make a recommendation as to whether you should accept the sum of $500,000.00 and 15% of the stock that the two of you have acquired during the marriage in consideration for waiving your right to 85% of the stock that was acquired during the marriage.
In sum, I am not in a position to make a recommendation or determination that the Property Settlement Agreement as prepared represents a fair and reasonable compromise of the issues concerning equitable distribution or whether the amount of alimony and/or child support that you will receive under the terms of the Agreement is an amount that would be awarded to you if, in fact, this matter proceeded to trial.
This letter will confirm that I have reviewed and suggested various modifications to the PropertySettlement Agreement to the mediator. I have discussed the contents of the Agreement with you, and in your opinion you are satisfied that the Agreement represents a fair and reasonable compromise of all issues arising from the marital relationship. You have indicated to me that you are entering into the Agreement freely and voluntarily and that you have been satisfied with the services of the mediator in this matter. You have further indicated to me that the Agreement will be providing you with a substantial amount of assets in excess of Three Million Dollars, and that you will be receiving alimony payments as specifically set forth in Paragraph 5 of the Property Settlement Agreement.
After reviewing the Agreement with you and Mr. Meyer, I am satisfied that you understand the terms and conditions of the Agreement; that you feel that you are receiving a fair and equitable amount of the assets that were acquired during the marriage; and that the amount of support that is provided in the Agreement will, in fact, provide you with an income that will allow you to maintain a respectable lifestyle.
This letter will also confirm that you are accepting my services based upon the representations specifically set forth above and that under no circumstances will you now or in the future be asserting any claims against me or my firm arising from the negotiation or execution of your Property Settlement Agreement.
Thank you for the opportunity to be of service to you in this matter, and if I can be of any future assistance, please do not hesitate to contact me.
Mrs. Lerner read and signed the letter and five days later, she signed a retainer agreement engaging Laufer’s services. The retainer agreement contained the following language:
The legal services which I anticipate will be rendered to you will involve legal research and fatual investigation as to (i) assets which you owned at the time you were married, assets which were acquired over the course of the marriage; (ii) income and your ability/need for support; (iii) grounds for divorce; (iv) custody and visitation, and (v) payment of counsel fees and costs.
A final PSA was ultimately signed and an uncontested divorce was granted. The PSA was incorporrated in the final judgment. Soon after the judgment, one of the marital assets–the Marisa Christina corporation was about to proceed to a public offering. Mrs. Lerner alleged she was defrauded because during the mediation she was led to believe that a decision was made not to take it public. Mrs. Lerner hired another attorney and moved to set aside the judgment of divorce as fraudulent and it was granted. The parties then engaged in further mediation and agreed on a modified PSA. The divorce action was re-filed and granted.
Mrs. Lerner then brought a malpractice action against Laufer alleging he was negligent in failing to conduct discovery, failure to retain experts to value the assets subject to equitable distribution and in negotiating and preparing the PSA that was signed by the parties. As a result, she alleged she sustained financial
Issue: Whether and to what extent, an attorney may limit the scope of his representation of a matrimonial client in reviewing a mediated PSA and whether the limitation will protect the lawyer from liability to the client.
Ruling: RPC 1.2(c) allows an attorney to limit the scope of the services he will provide to his client so long as he has informed consent from the client. The Court felt that the expert witness in the malpractice action did not give a good enough reason that this standard should not apply to attorneys who represent clients who are going through mediation as part of a divorce proceeding. Here, Laufer, with Mr. Lerner’s consent after consultation, properly limited the scope of his representation under RPC 1.2(c), to a review of the terms of the mediated agreement without going outside its four corners.
Lesson: An attorney should always be very explicit when limiting the scope of his services. He should make sure to adequately consult with and inform the client of these limits. In New Jersey, the term "Laufer letter" has become popular for the detailed and explicit letter that an attorney must use to comply with the mandate of PRC 1.2(c) in limiting the scope of an attorney’s services to the client. In all cases, the client must fully understand those limitations and how the limitations may affect their legal interests. The limitations must, in all cases, be reasonable.
Posted in: New Jersey