An archetypal fiduciary relationship is that between attorney and client, and the handling of client funds is a potential hornets’ nest of fiduciary-duty liability for attorneys. In Lin v. Lau, 210 A.D.3d 817 (2d Dep’t 2022), the Appellate Division, Second Department, refused to dismiss a lawsuit against an attorney arising from the attorney’s alleged mishandling of client funds. The lesson of this case is simple but perhaps too often overlooked: attorneys must never act cavalierly in forming an attorney-client relationship, and must always be exacting when holding client funds in trust. Additionally, this case shows that attorneys who mishandle client funds face liability for breaching their fiduciary duties even in the absence of a formal attorney-client relationship.
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