Opinion Letter’s Disclaimer Dooms Malpractice Claim Against Law Firm In Tax Shelter Case

Can a commodities trader sue a law firm for legal malpractice for allegedly supporting a tax shelter plan that the Internal Revenue Service found unacceptable because it utilized excessive amounts of whole life insurance, where the law firm had issued an opinion letter expressing that it was legal? Not where the opinion letter contained a caveat that it was solely for the benefit of the pension company and its professional advisers – and not for employers. At least, that’s what a New York State appellate court has just ruled, in Denenberg v. Rosen, 2010 N.Y. Slip Op. 00081 (App. Div. 1st Dep’t Jan. 7, 2010).

According to the appellate court, the opinion letter was insufficient to support an attorney-client relationship, considering the letter stated it was for the pension compay solely and contained disclaimers cautioning readers to procure tax advice tailored to their specific plan.
 
Attorneys involved include Catherine R. Keenan, K & L Gates; Robert A. Calinoff, Calinoff & Katz; Robert P. Levine; Joshua G. Herman, Douglas E. Whitney, and Daniel N. Jocelyn, McDermott Will & Emery; Michael W. Freudenberg and Kevin J. Harrington, Harrington, Ocko & Monk; and James B. Fiscella and Richard E. Schrier, Schrier Fiscell & Sussman.