The rabbi would be liable if there was gross neglect, for then he/she would be violating the Biblical statement "Do not place a stumbling block before the blind" ( Lev 19.14). However, the later Talmudic development of the law of torts is rather confused; we have two concepts, garmi which includes those actions directly responsible for damage, and gerama or matters in which the action is indirect ( Encyclopedia Talmudit Vol 6; Ramban Dina Degarmi; Shulhan Arukh Hoshen Mishpat 386). The general rule which we may abstract from the many cases cited in the literature is as follows: If the individual in question is an expert and the advice which is followed is based upon his expertise, then he would be liable. As for example, a coin appraiser who has been shown a coin and has declared it good, but subsequently it was discovered to be bad coinage. If he has been paid for his advice, then he is liable. If he has not been paid, then he is not liable. On the other hand, if he is not an absolute expert, but the individual who came stated that he was relying on this person's opinion alone, then he is also liable ( Yad Hil. Shirut.5). We can see from this that the matters which are involved are: (a) The expert status; (b) the exchange of money for the advice and evaluation; (c) the agreement between the individuals that this person is the only one to be asked for advice.
In the case of counseling ordinarily done by rabbis, there is no exchange of funds. The rabbi makes no pretense to being an expert in the field. In addition to that, a rabbi would and should not permit himself/herself to be placed in a position of being the only person consulted, particularly in a difficult matter. It is our common practice to refer difficult matters onward and even in other counseling situations to provide only tentative advice. Furthermore, following the rabbinic advice is entirely voluntary. This is not like a business transaction in which the paths are much clearer; it involves a great many areas: (a) theological issues; (b) to what extent was the party being counseled completely forthcoming; (c) was there an opportunity to see other parties or to gather additional information about this matter, (d) the party seeking counseling remains completely independent and may accept or reject the advice. From a traditional point of view, therefore, there is little or no ground for a suit to be brought against a rabbi as the counseling situation leaves so many areas open.