High court stands firm on legal-malpractice exception

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The Wisconsin Supreme Court recently declined to add to the types of the non-clients who can sue lawyers for legal malpractice.

In general, now it’s only clients who can sue their lawyers for legal malpractice. However, Wisconsin courts have carved out an exception for estate-planning matters. More specifically, the court in Auric v. Continental Casualty Co. decided that beneficiaries of wills may sue attorneys who had negligently drafted or supervised the execution of a will. However, in order to win their cases, beneficiaries must show that a lawyer’s alleged failure clearly thwarted the intentions of the person who had whatever will is in question drawn up.

In a decision issued on Tuesday, the justices stood firm on the Auric exception and dismissed a legal-malpractice case filed by five siblings against a lawyer involved in a law firm that had administrated their father’s estate.

The father, Charles MacLeish, had a one-page will that, executed in 1967, called for his estate to pay both his debts and funeral expenses and then for any remaining property then to be given to his wife. If his wife died, whatever remained of the estate would then be placed in a trust until his youngest child either graduated with a bachelor’s degree or told the trustee of the estate that he does not want to pursue a college education. At either point, the trust would be terminated, and whatever remained of the estate would be divided equally among his four children.

When MacLeish died in 1984, Forrest Hartmann, an attorney at Boardman & Clark and the former partner of the lawyer who had drafted MacLeish’s will, handled the administration of the estate. He advised MacLeish’s wife, Thelma MacLeish, to treat Charles’ assets as if they had passed directly to her so she could make full use of the federal government’s estate-tax marital deduction. She took his advice. As a result, Charles’ estate was not subject to the federal estate tax in 1984. However, it became subject to that tax when Thelma died.

When Thelma MacLeish died in 2008, Charles’ estate had grown in value, from $608,000 to $2.7 million. Thelma’s estate had to pay $261,343 in federal estate tax.

In 2012, the couple’s four children sued Boardman & Clark in Dane County Circuit Court for legal malpractice, contending that the tax could have been avoided had Hartmann administered the estate differently. More specifically, they argued that upon Charles’ death, his assets should have first been placed into a trust. The failure to do this imposed additional, avoidable taxes and expenses on his wife’s estate, they contended.

Boardman & Clark called for the lawsuit to be dismissed, pointing to the Auric exception. The will, the firm contended, did not clearly call for setting up a trust upon Charles MacLeish’s death and Hartmann’s administration of the will did not thwart Charles MacLeish’s intent.

In 2016, Dane County Circuit Court Judge Josann Reynolds sided with the firm. The children appealed, and the Court of Appeals last March upheld Reynolds’ decision. They appealed again, this time to the Wisconsin Supreme Court, which chose to hear the case in September.

Going before the high court, the children contended the justices should adopt Section 48 of the Third Restatement of the Law Governing Lawyers, which would allow prospective clients and certain non-clients to sue lawyers. The children also contended that the Court of Appeals had applied the Auric exception incorrectly when it found that the failure to place Charles MacLeish’s assets into a trust had not thwarted his intent.

The high court on Tuesday rejected that argument. In a unanimous decision written by Justice Ann Walsh Bradley, the justices found the language of the will had not restricted how Charles MacLeish’s assets were to be transferred to his wife. For that reason, his intent was not thwarted.

The high court also clarified that the Auric exception applies to the administration of an estate as well as the drafting of a will.

The justices also rejected the petitioner’s proposal to add to the types of non-clients who can sue a lawyer for malpractice. The court laid out several reasons for this decision, including that the Auric exception is grounded in the constitutional right to make a will and have it carried out as intended.

“Adopting the Restatement would unmoor the exception to nonliability from its constitutional foundation and potentially open liability of attorneys to third parties in a variety of contexts beyond the facts of this case,” Bradley wrote. Follow @erikastrebel