Disciplinary Proceedings and New York’s “Dead Man Statute”

To all prospective client and attorney relationships–note to self– get the fee agreement in writing, because the terms can come back from the grave to bite you.

In New York State there is a rule of evidence known as CPLR ยง 4519 (the “Dead Man’s Statute”), which is designed to protect the dead from transactions that occurred during their life. Although there are many exceptions to the general rule that an interested party may not testify as to transactions with the deceased, there are many ways that the rule can change the outcome of litigation, including disciplinary or legal malpractice claims against attorneys.

In one reacent case, a long time client of a New York attorney died, leaving a sizeable estate. The attorney represented the estate in the sale of the family home and kept in contact with the Decedent’s daughters, who were co-administrators. Eleven days after their mother’s death, the attorney issued a check payable to himself, and did so several more times over the course of 13 months to the tune of $100,000 from his escrow account.

Upon learning of the sizeable fees paid to himself, the daughters demanded an accounting and a check for the remaining monies. In response, the attorney conceding that he did not have a fee agreement in writing, and claimed that the now dead mother had either given the money as a gift or orally told him that the fees were for legal work performed, and the daughters filed a complaint with the Departmental Disciplinary Committee.

The Committee charged the attorney with various charges of misconduct: for conduct involving dishonesty, fraud, deceit, or misrepresentation, in violation of DR 1-102(A)(4); misappropriation of funds in violation of DR 9-102(A); violation of DR 9-102(B)(4) regarding (4) engaging in conflict of interest in violation of DR 5-101(A); conduct reflecting adversely on Zalk’s fitness as a lawyer in violation of DR 1-102(A)(7).

During the hearing, the referee took testimony about the transactions with the dead mother on the ground that the plain language of the Dead Man’s Statute did not preclude the attorney from relying on his conversations with the deceased to describe the fee arrangement because an attorney’s disciplinary proceeding was not,”against the executor, administrator or survivor of the deceased person.”

On appeal, the Appellate Division found that the attorney engaged in professional misconduct, and ruled that the Dead Man’s Statute precluded him from using his testimony to disprove the charges.

In reversing, New York’s highest court, the Court of Appeals found that the Dead Man’s Statute only applied to testimony “against the executor, administrator or survivor” of the deceased. By the court’s reasoning, the attorney was testifying as a witness on his own behalf against the disciplinary charges, and therefore could offer testimpony that would that potentially cut against the parties’ interests in the contingent future proceeding. For you attorneys out there, the case is cited at In re Zalk, 2008 WL 2367490 (N.Y. 2008).

The bottom line– get your fee arrangement in writing.