The Potential Impact of the Restatement (third) of the Law Governing Lawyers
| Publication year | 1996 |
| Pages | 83 |
1996, September, Pg. 83. The Potential Impact of the Restatement (Third) of the Law Governing Lawyers
Over the next five years, the practice of law could undergo notable developments if the American Law Institute's ("ALI") Restatement (Third) of the Law Governing Lawyers ("Proposed Restatement")(fn1) is finalized. These developments could actually change the relationship between lawyers and their clients, and also could create some obligations to third parties peripherally affected by the lawyer's work product.
This article discusses the Proposed Restatement and its potential impacts on the practice of law, so that lawyers can be aware of and plan for them.
In May 1996, the ALI approved a proposed final draft of several chapters of what will eventually be the Proposed Restatement. It is expected that the final draft of these chapters will be adopted and formally published in 1997 or 1998. The major consequence of this effort will be to enlarge the ambit of the Rules of Professional Conduct ("Rules") from disciplinary regulations to black letter standards of acceptable practice and lawyerclient relationships. As will be discussed later in this article, this change could have a significant impact on the trial of a legal malpractice lawsuit.
The ALI has a long history of influence on American jurisprudence. It was founded in 1923 to promote the clarification and simplification of the law and to try to adapt the law better to social needs. In 1986, the ALI council approved a suggestion that such clarification and simplification might be appropriate with respect to the law governing lawyers, and the Proposed Restatement project was born.(fn2)
The ALI's various Restatements have had a profound influence in many areas of law. Many important legal developments were given conceptual expression in the Restatements. In some cases, these developments have dramatically altered the course of social and business activity.
For example, in this author's experience, there is no doubt that judicial acceptance of strict product liability was strongly influenced, or perhaps entirely caused, by the ALI codification of § 402A of the Restatement (Second) of the Law of Torts.(fn3) The ALI's description of strict liability facilitated its adoption throughout the country, with courts taking it almost as a legislative pronouncement.(fn4)
There are other equally significant legal developments that have been either influenced by or even created out of principles codified in the various Restatements; for instance, the concepts of negligent misrepresentation(fn5) and of liability for aiding and abetting in the breach of fiduciary obligations.(fn6) In a Colorado case, Mehaffy, Rider, Windholz & Wilson v. Central Bank Denver, N.A.,(fn7) the court fashioned a new cause of action that nonclients may bring against attorneys, based entirely on § 552 of the Restatement (Second) of Torts.(fn8)
The lesson from all of this is that the Restatement has a pervasive influence on the judicial process. As lawyers anticipate the formal publication of the Proposed Restatement, this history is particularly significant. The Proposed Restatement, as it stands, is not entirely an exposition of existing or prevailing law, but varies in several important respects from Colorado law and from the prevailing law in many jurisdictions.
The Proposed Restatement, even in its preliminary form, has already had a significant impact. As indicated by Appendix I to this article (on page 87), some parts of the Proposed Restatement are still in tentative draft. The proposed final draft of several chapters was approved by the general membership in May 1996. Several other chapters were considered at the June 1996 meeting of the members' consultive group in Preliminary Draft No. 12.
None of the chapters is yet complete and final. Nonetheless, more than forty courts around the United States, both state and federal, have used or relied on specific pronouncements in the Proposed Restatement in dealing with a myriad of questions arising out of the practice of law. Some of these graphically demonstrate how significant this Proposed Restatement will be.
In the Second Circuit, the government brought a civil action against the International Brotherhood of Teamsters and a host of colorful individuals. The court relied on the Proposed Restatement, among other things, for guidance to determine when a client is bound by the lawyer's acceptance of a consent decree.(fn9) The union's attorneys had represented to the court that their client agreed to be bound by the decree prepared by the government attorneys in order to settle the claims against the union.
The court cited Restatement of the Law Governing Lawyers, Ch. 2, §§ 38 and 39 (Tentative Draft No. 5, 1992), as authority for the proposition that an attorney does have apparent authority to bind the client to a consent decree. The court also cited the introductory note to Chapter 2 of the Proposed Restatement for the proposition that the lawyer-client relationship is essentially one of principal and agent, and, therefore, actual authority may be inferred from the principal's words and conduct. According to the opinion, this ruling was made in spite of the rather general rule that only the client can finally accept any sort of settlement and the attorney's acceptance of settlement should not be binding on the client without the client's express consent,(fn10) that is, the client's own personal representation to the court or the client's signature on the settlement document.
In a legal malpractice action decided in 1994, the Fifth Circuit cited the Proposed Restatement as authority.(fn11) The case dealt with a lawyer who had initially drafted the partnership agreement for two individuals and, thereafter, represented only the partnership. The court literally quoted § 26 of the Proposed Restatement(fn12) and found that representation of the partnership itself does not include representation of the individual partners. Curiously, the quoted § 26 has changed and is now in a somewhat different form from the version quoted in the opinion.(fn13)
The Eastern District of New York used the Proposed Restatement to help resolve a claim between a former client and an attorney over what the client claimed was a nonrefundable retainer.(fn14) Using § 46 of the Proposed Restatement as authority, the court distinguished between special and general retainers. It approved the concept of general retainers in relationships where the consideration is the attorney's agreement to be available to the client for...
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