Back in the summer I wrote a post discussing the impacts of the Thorsen decision by the Supreme Court of Virginia. In Thorsen, a testator wanted to leave her estate to a charity if her daughter did not survive her. The lawyer erred in drafting the will. When the testator died several years later (with her daughter having predeceased her), the testator’s property went to other people, contrary to her intentions. The charity, the intended beneficiary, sued the lawyer, asserting breach of contract for legal services.
Thorsen was notable in that it held that Virginia common law permits intended third party beneficiaries (even contingent beneficiaries) of contracts to sue to enforce a contract for legal services and even a will itself. Thorsen also held that the statute of limitations for a legal malpractice claim (relating to the drafting of a will) did not begin to run when the will was drafted by the lawyer. Instead, the statute of limitations began to run when the testator died, which, in Thorsen, was about five years after the will had been written. Ultimately, the Supreme Court of Virginia affirmed a monetary judgment of over $600,000.00 against the lawyer.
Thorsen was a serious wake-up call to estate planners in Virginia and beyond. It also further opened the door for intended (and disappointed) will beneficiaries to sue the will-drafting lawyer. As we thought may happen, the General Assembly of Virginia took action during its recent session to fix the Thorsen decision legislatively.
The General Assembly of Virginia’s legislative fix for Thorsen was to create a new statute: Virginia Code § 64.2-520.1. The statute provides in part that “an action . . . resulting from legal malpractice concerning the individual’s estate planning . . . shall accrue upon completion of the representation during which the malpractice occurred.” Va. Code § 64.2-520.1(A). This language seems to make clear that the statute of limitations for a legal malpractice claim (relating to estate planning) begins to run once the legal representation between lawyer and testator is over (in contrast to the decision in Thorsen, which held that the clock began to run at the testator’s death).
Additionally, an action relating to legal malpractice for estate planning can only be maintained by the individual or individual’s representative, unless there is some written agreement between the lawyer and the testator that explicitly grants standing to some other person to sue. Va. Code § 64.2-520.1(B). This language seeks to prevent third party beneficiaries of wills from suing to enforce legal services contracts (or wills) as a result of their mere disappointed expectations. Even if a person is an intended third party beneficiary of the legal services contract, such a person will no longer be able to sue the will drafter unless there is some written agreement, between the drafter and the testator, which grants the third party standing to sue.
The statute also expressly creates a five year statute of limitations for a legal malpractice claim (for estate planning) when there is a written contract between lawyer and testator, and a three year statute of limitations for such a claim when there is no written contract. Va. Code § 64.2-520.1(C).
The statute also states that no malpractice action can be maintained for damages that could reasonably be avoided or those which result from a law change after the representation. Va. Code § 64.2-520.1(D). This language seems to insulate a drafting lawyer from liability when (i) errors in the will could be fixed by reasonable efforts, or (ii) when the estate plan contained in the will is negatively impacted by a later change in the law.
Even with these changes, estate planners are not out of the woods quite yet. While this statutory fix appears beneficial for estate planners, it is important to note that the statute does not affect suits which were filed before July 1, 2017. In other words, if someone has filed or will file suit alleging legal malpractice (for estate planning) after the Thorsen decision and before July 1, 2017, then Thorsen applies and the legislative fix will not. Va. Code § 64.2-520.1(E)(2).
Additionally, if a person’s legal malpractice claim accrues before July 1, 2017, and would be barred by the statutory fix if the suit was filed after July 1, 2017, it will be governed by the Thorsen era legal framework, not the statutory fix, provided the suit is filed before July 1, 2018. Va. Code § 64.2-520.1(E)(3). In other words, the General Assembly is giving pre-July 1, 2017 legal malpractice (for estate planning) plaintiffs an additional year to bring their suits under the Thorsen legal framework.