Legal Malpractice Can Lawyers Be Sued By

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Legal Malpractice Can Lawyers Be Sued By PROFESSIONAL LIABILITY Legal Malpractice Can Lawyers Be Sued by By Daniel S. Strick Non-Clients? and Jordan S. Tafflin Attorneys should focus During the course of the representation of a client, an on steps to minimize or attorney may commit legal malpractice with respect to the avoid exposure, as it is prosecution, defense, or appeal or the preparation of trans- becoming apparent that actional documents. Indeed, the attorney’s actions may constitute legal malpractice by failing to action against that attorney absent fraud the courts will continue use the skill, prudence, and diligence that or collusion. Nation Savings Bank v. Ward, attorneys of ordinary skill and capacity 100 U.S. 195 (1879). This rule was premised to expand lawyers’ would use in performing their legal tasks. upon two basic concerns. First, “absent a However, can an attorney be liable to a non- requirement of privity, parties to a con- liabilities to non-clients. client for legal malpractice? tract for legal services could easily lose Generally, legal malpractice consists of control over their agreement.” Schriener three elements: (1) existence of an attorney- v. Scotbille, 410 N.W. 2d 679 (Iowa 1987). client relationship creating a duty of care, Second, “imposing a duty to the general (2) breach of that duty, and (3) proximate public upon lawyers would expose lawyers causation. McGrogan v. Till, 771 A.2d 1187 to a virtually unlimited potential for lia- (N.J. 2001). An attorney generally owes a bility.” Id. duty to perform diligently and with a high Since the Supreme Court’s decision in degree of “fidelity and good faith.” Gilles Ward, however, numerous courts have con- v. Wiley, Malehorn & Sirota, 783 A.2d 756 tinually chipped away at the “black letter (N.J. App. Div. 2001); see also Steiner v. law,” carving out a number of exceptions to Markel, 968 A.2d 1253 (Pa. 2009). To fulfill this rule. As such, the majority rule today his or her duties, an attorney must exercise is attorneys, in certain circumstances, do that degree of reasonable knowledge and owe a duty to non-clients. As a result, it is skill that lawyers of ordinary ability and important to understand the various argu- skill possess and exercise. Id. ments supporting strict privity in legal- Over 100 years ago, the United States malpractice actions and those supporting Supreme Court held that a third party a relaxing of strict privity. The primary not in privity of contract with an attor- ethical considerations that underlie the ney could not maintain a legal malpractice various arguments for and against strict ■ Daniel S. Strick and Jordan S. Tafflin are senior associates at Lucas and Cavalier LLC in the firm’s Philadelphia office. Their practices primarily focus on a variety of professional liability claims throughout Pennsylvania and New Jersey. Mr. Strick currently serves as the publications chair of DRI’s Professional Liability Committee. © 2012 DRI. All rights reserved. For The Defense ■ July 2012 ■ 55 PROFESSIONAL LIABILITY privity are (1) the duty of loyalty owed to a (Neb. 2004). They argue that an attorney S.W.3d 615 (Mo. App. 2010); Grimes v. Saik- client, and (2) the concept of avoiding con- can prevent the loss by exercising adequate ley, 904 N.E.2d 183 (Ill. App. 2009); Chang flicts of interest. Not surprisingly, there are diligence or implementing precaution- v. Lederman, 172 Cal. App.4th 67 (2009); advocates on both sides of this hotly con- ary procedures designed to discover neg- Donahue v. Shughart, Thomson & Kilroy, tested issue. ligence before any resulting harm, and P.C., 900 S.W.2d 624 (Mo. 1995). Proponents of strict privity argue that should therefore bear the loss. Opponents An attorney’s knowledge that third par- greater attorney liability could adversely of the strict privity rule also advocate that ties will be affected by the representation affect the overall approach of how a lawyer increasing attorney liability will result in of the client is not in and of itself sufficient counsels his or her client. They argue that more careful legal representation, a higher to create a duty of care to the third party. degree of professional care, and greater dil- B.L.M. v. Sabo & Deitsch, 55 Cal. App. 4th igence. The role of an attorney should be 823 (1997). An essential predicate for estab- more like that of an advisor and consultant lishing an attorney’s duty of care under an An attorney’s knowledge rather than a mere scrivener. Charleson v. “intended beneficiary” theory is that both Hardesty, 839 P.2d 1303 (Nev. 1992). Fur- the attorney and the client must intend for that third parties will thermore, it has been argued that expand- the third party to be a beneficiary of legal ing liability for attorneys will bring all services that the attorney was to render. Id. be affected by the professionals under the same standard, The clear absence of mutual intent on the eliminating the special privileges that part of the lawyer and the client is critical representation of the attorneys enjoy above other professionals, to whether the third party can maintain a such as physicians and accountants. viable legal malpractice claim. An attor- client is not in and of itself In light of the above, this article lays ney’s undertaking of a duty to the third out some of the numerous interpretations party must be the result of a conscious sufficient to create a duty made by different courts regarding the decision. Zenith Ins. Co. v. O’Connor, 148 strict privity rule, including some that fol- Cal. App. 4th 998 (2007); Donahue, 900 of care to the third party. low the rule and some that do not. S.W.2d at 629 (the first factor a non-client must demonstrate includes a showing that Jurisdictions Permitting Non- it cannot be characterized as an incidental relaxing strict privity would create con- Client Legal Malpractice Claims or indirect beneficiary). flicts of interest among clients and third There are many jurisdictions that allow parties, ultimately exposing attorneys to third parties to bring legal malpractice Jurisdictions Not Permitting Non- broad potential liability, and that the strict claims where no attorney- client relation- Client Legal Malpractice Claims privity rule is efficient as it limits would- ship is formed. In these jurisdictions, the There are several jurisdictions that require be plaintiffs and removes the fear of poten- attorney may be liable to a third party the existence of an attorney- client relation- tial liability. Guy v. Liederbach, 459 A.2d where the third party was an intended ben- ship in order for an attorney to be liable for 744 (Pa. 1983). Further, advocates of the eficiary of the attorneys’ services or where legal malpractice. In order to establish lia- strict privity requirement argue because it was reasonably foreseeable that negligent bility for professional negligence or legal an attorney’s primary purpose is to repre- service or advice to or on behalf of the cli- malpractice, the plaintiff must show the sent his or her client’s interests zealously, ent could cause harm to others. Waggoner existence of a duty owed to them by the if courts relax strict privity rules then con- v. Snow, Becker, Kroll, Klaris & Krauss, 991 attorney, a breach of that duty, and dam- flicts between a duty to a client and duties F.2d 1501 (9th Cir. 1993). There are six con- ages arising from the breach. Banc One to third parties will result. Id. They claim siderations courts analyze to determine Capital Partners Corporation v. Kneipper, that attorneys cannot maintain the same whether a duty arises absent privity of 67 F.3d 1187 (5th Cir. 1995). Allen v. Steele¸ standard of care to a third party as the contract and not based upon the attorney- 252 P.3d 476 (Colo. 2011). Under Texas attorney maintains to a client, and as a client relationship. These considerations law, there is no attorney- client relationship result, expanding liability may cause attor- are “(1) the extent to which the transaction absent a showing of privity of contract, and neys to adopt overprotective practices and was intended to affect the plaintiff; (2) the an attorney owes no professional duty to conservative approaches in dealing with foreseeability of harm to the plaintiff; a third party or non-client. First National their own clients out of a fear of potential (3) the degree of certainty that the plaintiff Bank of Durant v. Trans Terra Corporation liability to non- clients. Id. suffered injury; (4) the closeness of the con- International, 142 F.3d 802 (1998); Ryddle Opponents of the strict privity rule nection between the defendant’s conduct v. Morris, 675 S.E.2d 431 (S.C. 2009) (find- argue that the most significant policy rea- and the injury; (5) the policy of prevent- ing before a claim for malpractice may be son in favor of abandoning the outmoded ing future harm; and (6) whether recog- asserted, there must exist an attorney- strict privity rule is that otherwise, “the nition of liability under the circumstances client relationship.). injury or property loss would fall to the vic- would impose an undue burden on the pro- Nonetheless, most of these jurisdictions tim, his or her family members, or the tax- fession.” Goldberg v. Frye, 217 Cal. App. 3d find a narrow set of circumstances in which payers.” Swanson v. Ptak, 682 N.W.2d 225 1258, 1268 (1990); France v. Podleski, 303 an attorney can be liable to a third party. 56 ■ For The Defense ■ July 2012 These circumstances arise when the attor- actions, is subject to liability for cial transactions… the law promotes the ney has committed fraud or a malicious pecuniary loss caused to them by important social policy of encouraging or tortious act, including negligent mis- their justifiable reliance upon the the flow of commercial information upon representation.
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