Malpractice Liability to Third Parties
1. An attorney represents a wife in divorce and custody proceedings. In the negotiated divorce decree there is a provision stating that the children should be the beneficiaries of all of the husband's life insurance policies. The attorney negligently fails to discover that the husband has a life insurance policy with his employer and so fails to notify the employer and the insurer that the beneficiaries should be changed. The ex-husband dies, and the life insurance proceeds flow to the listed beneficiary in the policy, the ex-wife. The children sue the lawyer for malpractice. Assuming that the attorney was negligent, may they recover?
2. An attorney is asked by his client to draft an opinion letter concerning whether there are liens on some property owned by the client. The attorney knows that the letter is to be given to X, who intends to loan money to the client, provided that the debt can be secured by the property. The attorney negligently drafts the letter, stating that the property has no liens on it, when in fact it does. X decides for other reasons that it cannot make the loan, but tells another company, Y, that it should make the loan to X because it may be secured by the property. Y makes the loan to the client. The client defaults and Y sues the attorney for negligent misrepresentation. What result?