Attorneys owed a fiduciary duty to clients with respect to sale of clients’ shares in an apartment complex to attorneys.
The Supreme Court, Appellate Division, Second Department, recently held that a group of attorneys owed a fiduciary duty to their clients with respect to the sale of their clients’ shares in an apartment complex to the attorneys. The Court reasoned that although the attorneys had not been retained to represent the clients in that specific transaction, they had an ongoing attorney-client relationship with the clients during which time they drafted several wills for them and represented them in other transactions. It is important to note that only “a fiduciary relationship” is required – i.e. the relationship is not act specific. Under New York law, an attorney who seeks to avail himself of a contract made with his client, is bound to establish affirmatively that it was made by the client with full knowledge of all the material circumstances known to the attorney, and was in every respect free from fraud on his part, or misconception on the part of the client, and that a reasonable use was made by the attorney of the confidence reposed in him.