Divorce DecreeAfter winning more than $250,000 at trial, the fiancée of a deceased postal worker came up short in the District of Columbia Court of Appeals based on lack of privity between her and the lawyers who mishandled the decedent’s divorce.

In Scott v. Burgin, the fiancée and the decedent had lived together for years, and he had filled out forms to make her the beneficiary of his Post Office retirement benefits.  In January 2006, the fiancée met with a lawyer, asked him to handle decedent’s divorce from his wife, and discussed the pension issue with him.  By then, decedent already had terminal bone cancer.

A year later, decedent himself met with the lawyer, and signed a retainer agreement — but it took 11 more months and repeated contacts from the fiancée before the lawyer finally served a divorce complaint on decedent’s wife.  When decedent died in April 2008, he was still married, and therefore the Post Office denied the fiancée’s claim to survivor benefits.  The benefits went to decedent’s wife, instead.

Reversing the trial court, the court of appeals held that the fiancée lacked standing and was not within the lawyer’s “ambit of care.”  Reciting the well-established rule, the court said that lawyers have duties to their clients, not to third parties.  But notwithstanding a lack of privity, third party claims can be sustained where the malpractice plaintiffs are the direct and intended beneficiaries of the lawyer’s services.

The classic situation, the court held, arises in the context of will-drafting, where the lawyer has a duty of care to the intended beneficiaries, and the beneficiaries have a direct benefit consisting of a legally enforceable right to their inheritance.   In contrast, the court said, a divorce decree does not provide a direct benefit to the fiancée of the divorcing client.  Rather, the aim of the divorce is the end of the marriage, and the only parties directly concerned are the married couple and their minor offspring.

If the fiancée were allowed to recover here, the court said, it would expose lawyers to “unforeseen and unmanageable liability” to anyone who would indirectly benefit from the end of the client’s marriage — such as a frustrated creditor whose debtor would have been paid but for the mishandled divorce.

The take-away from this case:   The trend in modern cases is to recognize that a lawyer has a duty of care that can extend beyond those strictly in privity with the lawyer-client contract.  But different jurisdictions approach the question in different ways that can result in different outcomes.  The District of Columbia Court of Appeals in Scott cited and distinguished the intended-beneficiary situation, and thus the lawyer escaped liability.  The intended-beneficiary exception to the rule of privity is common across the U.S.  But other jurisdictions have considered or adopted different approaches, such as California’s multi-criteria balancing test, set out in 1961 in Lucas v. Hamm.  Therefore, evaluating your risk of exposure to claims from third parties requires careful analysis.