From a taxpayer win involving an intrafamily transfer to the vacating of a Centers for Medicare and Medicaid (CMS) final rule and a prohibition on contractual limitations of damages for intentional torts, we have recently seen significant developments in estate planning, elder and special needs law, and business law.

To ensure that you stay abreast of these legal changes, we have highlighted some noteworthy developments and analyzed how they may impact your practice.

Estate Planning

Taxpayer Win: Intrafamily Loan Charging Applicable Federal Interest Rate Not a Gift

Estate of Galli v. Comm’r, No. 7003-20 (Tax Ct. Mar. 5, 2025)

In 2013, Barbara Galli transferred $2.3 million to her son Stephen in a transaction they called a loan. They signed a simple note dated February 25, 2013, with a term not to exceed nine years and an interest rate of 1.01 percent (which reflected the applicable federal rate (AFR) at that time). Interest was to be paid annually, with a balloon payment of the principal at the end of the term. No gift tax return was filed to report the transaction. Stephen made interest payments according to the loan terms in 2014, 2015, and 2016, and Barbara reported the interest payments as income on her personal income tax returns.

When Barbara died in 2016, the unpaid portion of the loan was reported on the estate tax return, and Stephen inherited the note pursuant to Barbara’s estate plan. The Internal Revenue Service (IRS) issued notices of deficiency for nonpayment of gift tax (arguing that the loan was, at least partially, a gift) and underpayment of estate tax arising from the transaction, arguing that the note resulted in a taxable gift of the amount of $869,000, valued to reflect the risk of nonpayment, which was previously unreported and subject to estate tax. The IRS asserted that the note did not include certain terms typically used in commercial lending transactions and that there was no proof that Stephen was able to or intended to repay the loan or that Barbara expected to be repaid. It acknowledged that Stephen had made annual payments of interest as required by the terms of the note.

In the Tax Court, Stephen, as the executor of Barbara’s estate, moved for summary judgment in the gift tax case and partial summary judgment in the estate tax case. He contended that the IRS had not recharacterized the entire transfer as a gift, but only partially as a gift. Stephen argued that the transaction was a loan, not a gift, because the note charged at least the minimum interest required by I.R.C. § 7872(c): Because the AFR was used, the transfer was a pure loan and no gift occurred. Because the transfer was not a gift, Barbara was not required to file a gift tax return reporting it. In addition, it did not have to be reported on her estate tax return as a previously unreported gift.

The Tax Court agreed with Stephen that the IRS was asserting that the $2.3 million transferred was only partially a gift, either because of the low interest rate or because it viewed the reported value on the estate tax return as an admission that it was partially a gift. Further, the court found that the IRS’s papers opposing Stephen’s motion for summary judgment were inadequate because the only proof submitted was a declaration of the uncontested fact that Barbara had not filed a gift tax return reporting the transaction (and she would not have been required to file a gift tax return if it was a loan). Therefore, the court determined that the IRS had not tried to recharacterize the entire transaction as a gift, and even if it had, the proof submitted was inadequate.

Moreover, the court agreed with Stephen’s assertion that below-market interest rates are governed by I.R.C. § 7872. The court cited precedent in which it had determined that section 7872 provides comprehensive treatment of below-market loans for income and gift tax purposes. The loan charged the AFR, so it was not a below-market loan to which section 7872 applies. The court would not recharacterize a loan as a partial gift if it carried a below-market interest rate equal to or above the AFR. Under section 7872, the transaction between Barbara and Stephen was not a gift at all. Accordingly, the court granted Stephen’s motions for summary judgment in the gift tax case and partial summary judgment in the estate tax case.

Takeaways: Intrafamily loans are subject to heightened scrutiny by the IRS. In Estate of Bolles v. Comm’r, No. 22-70192, 2024 WL 1364177, at *1 (9th Cir., Apr. 1, 2024), the Ninth Circuit Court of Appeals held that “[i]ntrafamily transactions are presumed to be gifts; for an intrafamily payment to be considered a loan, there must have been a bona fide creditor-debtor relationship between the two parties characterized by a real expectation of repayment and intent to enforce the collection of the indebtedness” (citations omitted). To overcome the presumption that such transactions are gifts rather than loans, lenders must document not only the terms of the loan but also its treatment as a loan (for example, through the execution of a promissory note and charging at least the AFR for interest) and to steadfastly demonstrate their expectation of repayment and enforcement of the terms of the loan. In Estate of Galli, Stephen made annual payments of interest as required by the terms of the note, and Barbara included the payments on her personal income tax returns. In addition, no gift tax return was filed to report the transaction, which Barbara and Stephen did not regard as a gift. In contrast, in In re Estate of Bolles v. Comm’r, the Ninth Circuit found that certain payments made by a mother to her son were gifts rather than loans where the son did not make any repayments and signed an acknowledgment that he was unable to repay the amounts transferred (See our May 2024 monthly recap for additional discussion of Estate of Bolles).

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Beneficiary’s Action to Enforce Trust as Written and Intended by Grantor Did Not Trigger In Terrorem Clause

Carlson v. Colangelo, No. 38, 2025 WL 1127765 (N.Y. Apr. 17, 2025)

Donald Dempsey and Kristine Carlson had a romantic relationship from 2004 until Donald died in 2015; much of that time included Kristine providing full-time care for Donald, who was seriously ill. In 2013, Kristine sold her home and moved into Donald’s home at his request. In addition, she had a business relationship with Donald, having transferred $100,000 to Dempsaco LLC (Dempsaco), a business Donald had formed to purchase commercial real estate. 

Crissy Colangelo, Donald’s daughter from a prior relationship, was named as the executor of Donald’s will and as the trustee of his revocable trust. The terms of both the will and the trust provided that Kristine would receive Donald’s home, and Crissy would receive Donald’s entire interest in Dempsaco. Under the terms of the will, if Crissy were to sell Dempsaco, then Kristine would receive $350,000 from the proceeds of that sale; under the terms of the trust, Donald expressed his wish that Crissy provide an “income stream” to Kristine of up to $350,000 as a one-time payment. The trust included an in terrorem clause stating that any challenger who attempted to contest “any aspect” of the trust or set aside, nullify, contest, or void distributions made pursuant to the trust agreement “in any way” would be treated as though they predeceased Donald. Carlson v. Colangelo, No. 38, 2025 WL 1127765, at *2 (N.Y. Apr. 17, 2025).

Approximately two and a half years after Donald’s death, Crissy’s counsel sent a letter to Kristine informing her of the bequests of the home and the income stream, but stated that Donald had used precatory language regarding the distribution of the income stream and that there were insufficient funds to pay any amount to Kristine. The letter included a demand that Kristine release Crissy from liability and waive all rights to the stream of income in exchange for a transfer of Donald’s home to her. Kristine refused and instead asked that the home and the income stream be distributed to her and that she be provided a copy of the trust document. After Crissy failed to make the distributions or provide the trust document, Kristine filed an action for damages and injunctive relief, including a distribution of the home, a declaration that she was entitled to the income stream, a declaration that she had a 50 percent membership in Dempsaco by virtue of her $100,000 investment in 2005, and several other claims.

Crissy asserted that Kristine’s claim that she had a 50 percent interest in Dempsaco triggered the in terrorem clause. The court granted summary judgment in favor of Chrissy, ruling that it was indisputable that Kristine had contested the distribution of 100 percent of Donald’s interest in Dempsaco to Chrissy as specified in the trust. The Appellate Division affirmed on appeal, and the New York Court of Appeals granted Kristine leave to appeal.

The New York Court of Appeals, which is New York’s highest court, concluded in a 4-3 decision that Kristine had not attempted to challenge the terms of the trust or nullify the trust. Rather, she sought to enforce the trust as written and intended by Donald. The court noted that, at least in New York, in terrorem clauses in trusts, like those in wills, are not favored and must be strictly construed. The trust did not declare that Donald was the sole member of Dempsaco or that he owned a 100 percent interest in it. Therefore, Kristine’s request to declare her interest in Dempsaco did not undermine the distribution of Donald’s interest to Crissy as provided in the trust because Kristine had not challenged Donald’s interest but only sought the interest she alleged was hers. Further, the lower court’s conclusion that Kristine had not established an interest in Dempsaco did not affect the court’s analysis, which was based on the nature of Kristine’s claim, not its merits. Thus, the court determined that Kristine had not forfeited her claims, and she was entitled to summary judgment on her claim for title to the home. There were issues of fact regarding some remaining causes of action. The court ruled that the Appellate Division’s order should be modified accordingly. 

Takeaways: The Carlson court noted that the purpose of an in terrorem clause was to discourage challenges contrary to the trustmaker’s distributive intent and that Kristine’s action, which sought to enforce the trust’s provisions, was not a challenge to Donald’s plan. Rather, it would be contrary to Donald’s intent to deny Kristine, a named beneficiary, the opportunity to file an action to receive the assets he set aside for her. Therefore, actions aimed at requiring a trustee to fulfill their duties or provide an accounting will not trigger an in terrorem clause. In contrast, the dissent asserted that the broad in terrorem clause, which prohibited any challenge or contest to the distribution of any of Donald’s assets in any way, had been triggered by Kristine’s action, which it described as “direct challenges to the Trust’s distribution of decedent’s assets and attempt to void such distribution, in violation of the clear terms of the in terrorem clause.” Id. at *11.

Elder Law and Special Needs Law

Third Circuit Remands Case for Analysis of Free Speech Implications of New Jersey Statute Prohibiting Compensation for Helping Veterans Submit Claims for Benefits

Veterans Guardian VA Claim Consulting LLC v. Platkin, No. 24-1097, 2025 WL 968517 (3rd Cir. Apr. 1, 2025).

Federal law requires those who act as agents or attorneys who assist with Veterans benefits to be accredited and prohibits them from charging for their services before the Department of Veterans Affairs (VA) makes an initial benefits decision, but it does not provide the VA with the power to enforce those rules. To provide an enforcement mechanism, New Jersey passed a law prohibiting any person from receiving compensation (1) for assisting with claims for Veterans benefits except as allowed by federal law and (2) for any services rendered before an appeal of the VA’s initial decision to the Board of Veterans’ Appeals. Under N.J. Stat. § 56:8-228(c), violations are considered violations of New Jersey’s Consumer Fraud Act, which allows private action.

Veterans Guardian is a national consulting company that, for a fee, provides Veterans with advice on claiming disability benefits. John Rudman and Andre Soto were Veterans in New Jersey who planned to use Veterans Guardian’s services. However, Veterans Guardian stopped doing business in New Jersey due to concerns that its business model violated the New Jersey statute. Veterans Guardian, Rudman, and Soto filed suit against New Jersey’s attorney general in federal district court seeking a preliminary injunction, asserting that the New Jersey law violated their First Amendment rights. The court denied the preliminary injunction, and they appealed to the Third Circuit Court of Appeals.

In its review, the Third Circuit examined the entire record independently because the case involved the First Amendment. Although the plaintiff typically must show they are likely to succeed on the merits to get a preliminary injunction, in First Amendment cases, the burden of proof is on the government to show the plaintiff is unlikely to succeed on the merits. 

The court determined that the district court erred in deciding that the New Jersey statute did not implicate the First Amendment and the plaintiffs were unlikely to succeed on the merits. Rather, there was a reasonable probability that Veterans Guardian could show that its services were speech and that the New Jersey law burdened its speech by prohibiting it from charging for that speech. The court rejected New Jersey’s arguments that the statute only targeted charging money and that Veterans Guardian’s speech was integral to illegal conduct. 

In addition, the court determined that the case should be remanded so the district court could determine whether the New Jersey statute, which incorporates federal accreditation requirements, was a neutral licensing scheme regulating professional conduct that would warrant less scrutiny than other professional speech and whether the law was content-neutral based on its effect on speech. The court also remanded the case to the district court to analyze the constitutionality of the two sections of the New Jersey law separately, rather than only addressing the provision restricting those who can charge for services to those who are accredited. The court expressed serious doubt about the constitutionality of the statute’s prohibition on charging for counseling before an appeal, stating that it must satisfy some level of heightened scrutiny, which should be determined on remand. The court did not address the constitutionality of the federal law, but noted the following: 

though New Jersey says federal law outlaws Veteran Guardian’s activities, that federal law is equally subject to the First Amendment. Veterans Guardian does not challenge the federal scheme, and we take no position on whether it is valid. But states cannot immunize their laws from constitutional scrutiny by pointing to a federal scheme that may suffer the same constitutional defects. To hold otherwise would let states end-run around the First Amendment.

Veterans Guardian VA Claim Consulting LLC v. Platkin, No. 24-1097, 2025 WL 968517, at *4 (3rd Cir. Apr. 1, 2025).

In addition, the court indicated that, on remand, the district court must find more facts to determine whether New Jersey’s law was tailored to pursue its interest in protecting Veterans from fraud and predatory pricing or if less restrictive alternatives were available, and it should analyze nonmerit factors in weighing whether a preliminary injunction should be granted. Thus, the court vacated and remanded to the district court.

Takeaways: In addition to New Jersey, several other states, including Illinois, Iowa, Maine, Massachusetts, Michigan, New York, and Washington, have enacted legislation prohibiting persons from receiving compensation for advising or assisting a person regarding any Veterans benefits matter except as allowed by federal law and imposing penalties for violations. The federal district court’s decision on remand in Veterans Guardian regarding the constitutionality of the New Jersey statute’s prohibition on charging for counseling will likely impact the outcome of similar lawsuits brought in other states with similar statutes. If the New Jersey statute is struck down and the constitutionality of the federal scheme is called into question, attorneys may have greater opportunities to assist Veterans with benefits claims, including those for Pension with Aid and Attendance, and charge for services rendered.  

CMS Final Rule Regarding Minimum Staffing Requirements for Nursing Facilities Vacated

American Health Care Ass’n v. Kennedy, 2:24-CV-114-Z-BR, 2025 WL 1032692 (N.D. Tex. April 7, 2025).

In May 2024, the Centers for Medicare and Medicaid (CMS) released a final rule requiring nursing facilities to have a registered nurse on site 24 hours a day, seven days a week, to provide direct resident care (the 24/7 requirement). The final rule also required all nursing facilities to comply with several hours-per-resident-day (HPRD) ratios, setting baseline staffing requirements.

The plaintiffs filed a motion for summary judgment against CMS, asserting that the 24/7 requirement impermissibly altered the statutory baseline, which required nursing facilities to use the services of a registered nurse for eight consecutive hours a day, seven days a week. In addition, the plaintiffs argued that the HPRD requirements set forth in the final rule replaced the flexible standard established by Congress (i.e., that nursing facilities were required to provide nursing services sufficient to meet the needs of their patients) with inflexible standards applicable to all facilities that did not accommodate the wide variation in resident needs in different locations and facilities.

The court granted the plaintiffs’ motion for summary judgment, ruling that in establishing the 24/7 requirement, CMS effectively amended the statute by replacing the minimum hours set by Congress with its own preferred minimum. Relying on section 706 of the Administrative Procedure Act (APA) and the US Supreme Court’s ruling in Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2024), the court held that CMS had not merely explained the details of the statute in the final rule, but instead had replaced the statutory baseline established by Congress with its own. The court noted that the affected nursing facilities could fully comply with the statute as written and yet still violate the regulation. As a result, the court determined that the 24/7 requirement could not stand.

Similarly, the court held that by establishing one set of rules applicable to all nursing facilities, the HPRD requirements effectively eliminated the statutory requirement that the nursing needs of a facility’s residents be considered in setting minimum staffing standards. Thus, CMS had impermissibly stripped away statutory text in establishing the HPRD requirements.

As a result, the court granted the plaintiffs’ motion for summary judgment. The court determined that vacatur was the appropriate remedy for unlawful agency action, but limited the vacatur to the 24/7 requirement and the HPRD requirements of the final rule.

Takeaways: See our May 2024 monthly recap for additional information about the CMS final rule. Many in the long-term care industry were concerned that the rule’s unintended consequences would be that nursing facilities would have to reduce the number of beds available or even close due to their inability to hire adequate numbers of nurses to meet the mandates. There is currently a shortage of nurses, and many nurses do not choose careers in long-term care facilities, making it difficult for long-term care facilities to comply with the mandate. Advocates for the change, however, argued that these long-needed patient care considerations would have resulted in better outcomes in an industry often prone to cutting corners in search of profit maximization. 

It is unclear whether the Trump administration will appeal the ruling. Legislation to prevent the CMS final rule has been introduced in both the House of Representatives and the Senate, and advocates for those bills have stated that the legislation is still needed to preclude the enforcement of provisions not vacated in the American Health Care Ass’n case. In a separate case being considered by the US District Court for Northern Iowa, a group of state attorneys general and others have asked for relief from the entire final rule (see State of Kansas et al. v. Becerra et al., 1:24-cv-001100 (N.D. Iowa Oct. 8, 2024)).

Business Law

California Statute Prohibits Contractual Limitations of Damages for Willful Injury to the Person or Property of Another

New England Country Foods v. VanLaw Food Prods., No. S282968, 2025 WL 1190980 (Cal. Apr. 24, 2025)

New England Country Foods (NECF), a Vermont company, sold barbecue sauce to Trader Joe’s. Initially, NECF made the barbecue sauce in-house, but it later entered into a three-year contract with VanLaw Food Products (VanLaw) to manufacture and ship the barbecue sauce to Trader Joe’s and provide billing services. The contract prohibited VanLaw from reverse-engineering the barbecue sauce. In addition, the contract included a limitation on liability clause, allowing only direct damages and injunctive relief.

NECF filed an action against VanLaw in federal district court, alleging that as the end of the contractual term approached and negotiations for renewal were underway, VanLaw had taken steps to clone NECF’s barbecue sauce and sell it directly to Trader Joe’s. NECF and VanLaw did not renew their contract. NECF asserted that VanLaw’s plan to clone the barbecue sauce led to the end of its long-term relationship with Trader Joe’s. VanLaw could not clone the barbecue sauce, and Trader Joe’s stopped selling it.

NECF’s claims against VanLaw included breach of contract, intentional interference with contractual relations, intentional and negligent interference with prospective economic relations, and breach of fiduciary duty. It sought $6 million for lost profits and punitive damages. VanLaw filed a motion to dismiss the complaint based on the contractual provisions limiting damages, which the federal district court granted. The court determined that the lost profits and punitive damages NECF sought were barred by the contractual limitation that allowed only direct damages. It rejected NECF’s assertion that Ca. Civil Code § 1668 prohibited the limitation on damages, holding that section 1668 only disallows contracts that completely exempt parties from liability—not those that merely limit damages. 

NECF appealed to the Ninth Circuit Court of Appeals, which certified the following question to the California Supreme Court: “Is a contractual clause that substantially limits damages for an intentional wrong but does not entirely exempt a party from liability for all possible damages valid under California Civil Code Section 1668?” New England Country Foods v. VanLaw Food Prods., S282968, 2025 WL 1190980, at *2 (Cal. Apr. 24, 2025).

Section 1668 provides that “[a]ll contracts which have for their object, directly or indirectly, to exempt anyone from responsibility for his own fraud, or willful injury to the person or property of another, or violation of law, whether willful or negligent, are against the policy of the law.” The California Supreme Court noted that the case involved the prohibition in section 1668 against releases of liability for willful injury to the person or property of another. The court assumed without deciding that NECF’s claims for intentional interference with contractual relations, intentional interference with prospective economic relations, and breach of fiduciary duties alleged willful injury under section 1668.

In its opinion, the court refused to adopt a case-by-case approach urged by VanLaw that would prevent the application of section 1668 in cases involving private commercial entities that bargained for a release of willful injury and instead concluded categorically that such releases are against the policy of the law. 

Based on the language and purpose of section 1668, public policy discouraging willful tortious conduct, and case law precedent, the court determined that limitations on damages for willful injury to the person or property of another were prohibited by section 1668 in the same circumstances as full releases. The court concluded that the legislature “did not intend to allow parties to privately negotiate how much they are willing to pay to inflict willful injury.” Id. at 5. The court found that the phrase “exempt . . . from responsibility” in section 1668 did not refer only to provisions that release all liability. Id. Therefore, a limitation on damages that otherwise would be available for tortious conduct was a release of responsibility within section 1668. 

The court clarified that section 1668 did not preclude parties from limiting their liability for pure breaches of contract in circumstances not involving the violation of an independent duty that falls within the scope of section 1668. This is true even when the breach of contract is willful or a contract is breached for unethical or nefarious reasons. When a claim involves only a breach of contractual obligations, releases are governed by contract principals such as unconscionability. The court found that this conclusion is consistent with the California Uniform Commercial Code, which applies to certain commercial transactions and allows parties to contracts to exclude consequential damages and limit their remedies.

Takeaways: In light of the court’s ruling in New England Country Foods, contracts governed by California law should be reviewed to ensure that contractual provisions limiting damages do not contravene section 1668. 

Virginia and Wyoming Enact Statutory Restrictions on Noncompetition Covenants; Kansas Restraint of Trade Act Does Not Prohibit Noncompetition Covenants

Wyo. Stat. § 1‑23‑108 (2025); S.B. 1218, 2025 Reg. Sess. (Va. 2025); S.B. 241, 2025-2026 Leg. Sess. (Kan. 2025)

Wyoming. Wyo. Stat. § 1‑23‑108 provides that any covenant not to compete that restricts a person’s right to receive compensation for the performance of skilled or unskilled labor is void. There is an exception for executive and management personnel and officers and employees who constitute professional staff to executive and management personnel. The statute also provides that covenants not to compete that restrict a physician’s right to practice medicine are void. The law, which will not apply retroactively, was signed by Governor Mark Gordon on March 19, 2025, and will take effect July 1, 2025.

Virginia. S.B. 1218 amends Va. Code § 40.1-28.7:8, which prohibits employers from entering into or enforcing a noncompetition covenant with low-wage employees, to expand the previous definition of low-wage employees from those who earn less than the average weekly wage and certain types of interns, apprentices, and independent contractors to also include employees classified as nonexempt under the federal Fair Labor Standards Act—that is, those who are “entitled to overtime compensation under the provisions of 29 U.S.C. § 207 for any hours worked in excess of 40 hours in any one workweek.” The amended law, which will not apply retroactively, was approved by Governor Glenn Youngkin on March 24, 2025, and will take effect July 1, 2025.

Kansas. Kan. S.B. 241 amends Kan. Stat. Ann. § 50-163 to identify circumstances where nonsolicitation agreements are conclusively presumed to be enforceable. It also provides that the Kansas Restraint of Trade Act shall not be construed to prohibit “any . . . covenants not to compete.” The law, which will not apply retroactively, was signed by Governor Laura Kelly on April 10, 2025, and will take effect July 1, 2025.

Takeaways: Many states have recently enacted laws disfavoring covenants not to compete and providing that they are unenforceable in certain contexts. Kansas’s statute is unusual in that it expressly states that covenants not to compete are not prohibited under its Restraint of Trade Act. 

Important Related Legal Developments

ABA Issues Opinion Addressing Withdrawal from Representation When No Material Adverse Effect on Client

ABA Comm. on Ethics and Pro. Resp., Formal Op. 516 (Apr. 2, 2025)

On April 2, 2025, the American Bar Association (ABA) issued Formal Opinion 516, in which it provided guidance about when a lawyer may voluntarily and unilaterally withdraw from an ongoing representation without violating ABA Model Rule of Professional Conduct 1.16(b)(1), which states: “Except as stated in paragraph (c), a lawyer may withdraw from representing a client if withdrawal can be accomplished without material adverse effect on the interests of the client.” (emphasis added)

The ABA opinion explains that a material adverse effect is an effect related to the client’s interests in the matter in which the lawyer represents the client and, despite the lawyer’s efforts to remediate any negative consequences, their withdrawal will significantly

• impede the forward progress of the client’s legal matter,
• increase the cost of the matter, or 
• jeopardize the client’s ability to accomplish the objectives of the representation.

In the opinion, the ABA noted that some courts have applied the “hot potato” doctrine, which bars lawyers from withdrawing from a representation to litigate against the former client or keep a more lucrative client happy (i.e., dropping a client like a hot potato). ABA Comm. on Ethics and Pro. Resp., Formal Op. 516, at 6 (Apr. 2, 2025). However, the ABA stated that Rule 1.16(b)(1) and other ABA Rules of Professional Conduct do not incorporate the doctrine: to the contrary, a lawyer’s motivation for invoking Rule 1.16(b)(1) is irrelevant (although motivation is relevant to withdrawal under other provisions of Rule 1.16(b), which primarily articulates withdrawals for articulated causes). The ABA does recognize that “Courts are . . . free to exercise their supervisory authority over trial lawyers by disqualifying those who drop a client ‘like a hot potato’ to advocate against that client in another
case. . . . But it does not necessarily follow that the lawyer’s withdrawal, for a purpose of which courts may disapprove, constitutes a violation of the Rules of Professional Conduct for which a lawyer could be professionally sanctioned.” ABA Comm. on Ethics and Pro. Resp., Formal Op. 516, at 8 (Apr. 2, 2025).

Takeaways: Although Formal Opinion 516 offers some guidance about when a lawyer can withdraw from a representation, the opinion included a dissent stating that it does not provide sufficient guidance for lawyers who wish to end their representations and could make it more difficult for them to end a representation, even of dormant clients. In addition, the dissent criticized the opinion as not sufficiently addressing the application of the “hot potato” doctrine and potentially “misleading lawyers about the law.” Id. at 9. According to the dissent, the opinion is also incomplete because it does not offer guidance about mandatory withdrawals under Rule 1.16(a).