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Nebraska Supreme Court Clarifies Lawyers' Duties to Statutory Beneficiaries in Wrongful Death Cases

Nebraska Supreme Court Clarifies Lawyers' Duties to Statutory Beneficiaries in Wrongful Death Cases

A personal representative’s failure to prosecute an action for wrongful death led to professional negligence litigation. The PR’s lawyer did not undertake the prosecution, permitted the statute of limitations to expire, and the statutory beneficiaries, who could not bring the claim on their own but were the beneficiaries of it, lost the right to sue.

In Perez v. Stern, 279 Neb 187, ___ NW2d ___ (2010), the court observed that the question of a legal duty’s existence is one of law. Whether a legal duty exists to support a claim for negligence must be determined by the court alone and not a jury.

The court observed the well established rule a lawyer owes the duty to his or her client to use reasonable care and skill in the discharge of his or her duties. Ordinarily, this duty does not extend to third parties, absent facts establishing a duty to them.

But, the court continued that an evaluation of an attorney’s duty of care to a third party must be determined by balancing 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 the third party suffered injury;
(4) The closeness of the connection between the attorney’s conduct and injuries suffered;
(5) The policy of preventing future harm; and
(6) Whether recognition of liability under the circumstances would impose an undo burden on the profession.

The court noted the starting point for analyzing an attorney’s duty to a third party is whether the third party was a direct and intended beneficiary of the attorney’s services. It noted, in a wrongful death case, the PR must prosecute the claim for the benefit of the beneficiaries who are not empowered to sue on their own, but are the statutory recipients of the fruits of the wrongful death labors.

The court noted an attorney’s agreement with a client determines the scope of the duty to third party beneficiaries, generally, and due care must be used to protect the interests of intended beneficiaries of attorney-client professional relationship agreements. Where a PR hires a lawyer to sue for wrongful death, the third party beneficiaries of the contract are the statutory beneficiaries of the estate.

The court noted an attorney could limit the scope of his or her representation by obtaining the informed consent of the statutory beneficiaries, but only by doing so.

Finally, the court noted the law will not impose any duty from an attorney to a third party if the duty would potentially conflict with duties the attorney owes to the identified, direct client. Where the circumstances present, the attorney has a duty to perceive and disclose the conflict.

Perez is an issue of important first impression. The Supreme Court’s opinion cited jurisprudence from other jurisdictions and addressed an issue of first impression in Nebraska practice.

Finally the court concluded, under Neb Rev Stat § 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.”

This meant the statutory beneficiaries, who were not the clients named in the agreement, were entitled to prosecute a claim for professional negligence against the lawyer for the PR who failed to prosecute the wrongful death claim timely or competently.

January, 2010

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