Senate Bill S2661

                                 BILL NUMBER:  S2661

 TITLE OF BILL :

An act to amend the civil practice law and rules, in relation to the
attorney-client privilege

 PURPOSE :

To clarify in statute the existing case law relative to the inference
which a trier of fact may draw when a beneficiary objecting to an
accounting is met with a claim of attorney-client confidential
privilege.

 SUMMARY OF PROVISIONS :

CPLR 4503(a) is amended to add a new subdivision iii which provides
that where the privilege for confidential communications is asserted,
the trier of fact may draw the strongest inference against the
personal representative that the opposing evidence in the record
permits.

The present bill also makes a technical correction to the 2002
amendment to clarify that the protection of the attorney-client
privilege extends to trustees of lifetime trusts.

              

 EXISTING LAW :

Case law permits this inference, see Commissioner of Social Services
v. Philip De G., 59 N.Y.2d 137, 141 (1983). In light of the 2002
statutory change, placing the inference in statute provides additional
clarity to litigants, advocates and the court.

 JUSTIFICATION :

Until 2002, a beneficiary who objected to the accounting of a
fiduciary (executor, administrator, or trustee) was entitled, despite
the claim of attorney-client privilege, to require the disclosure of
communications between an attorney and such fiduciary concerning the
administration of the estate or trust, where there was a "showing of
good cause", i.e., where such disclosure was necessary to the
establishment of the claim of the beneficiary. Hoopes v. Carota, 74
NY2d 716 (1989).

As stated by Professor Alexander in the McKinney's Commentaries to
CPLR 4503 (C4503:5), this so-called "fiduciary exception" of Hoopes v.
Carota

"has been largely eliminated with respect to communications between
counsel and the personal representatives of decedents' estates
(including testamentary trustees). A 2002 amendment to CPLR 4503 adds
a new subdivision (2) to paragraph (a) providing that the beneficiary
of an estate is not entitled to have access to privileged
communications between the personal representative of the estate and
the representative's attorney merely because a fiduciary relationship
exists between the representative and the beneficiary. CPLR 4503(a)(2)
(A)(ii). The new provision also explicitly states that a beneficiary
is not, solely because of his or her beneficiary status, the client of
the personal representative's attorney. CPLR 4503(a)(2)(A)(i)."

The basic rationale of the 2002 amendment was that fiduciaries should
be able to consult with their attorneys on the same basis as other
clients. Moreover, the sponsors of the 2002 amendment specifically
stated as a reason in support of the amendment that the interests of
the beneficiaries were protected by, inter alia, the ability of the
fact finder to draw an adverse inference against the fiduciary if the
fiduciary asserted the attorney- client privilege to prevent
disclosure of relevant communications.  In order to balance the
interests of the beneficiaries with those of the fiduciary, the
present bill makes clear that such adverse inference may be drawn by
the finder of fact, and specifically describes the inference in the
terminology employed by the New York Court of Appeals in Commissioner
of Social Services v. Philip De G., 59 N.Y.2d 137, 141 (1983).

The present bill also makes a technical correction to the 2002
amendment to clarify that the protection of the attorney-client
privilege extends to trustees of lifetime trusts.

 LEGISLATIVE HISTORY :

2007-08, S.1971, Passed Senate both years
2005-06, S.4701

 FISCAL IMPLICATIONS :

None.

 EFFECTIVE DATE :
Immediately.