2:2 Establishing Whether There Is an Attorney-Client Relationship

• Jurisdiction: Arizona

§ 2:2 Establishing Whether There Is an Attorney-Client Relationship

A dispute over whether an attorney/client relationship exists almost always arises under one of two fact patterns:

1. a lawyer represents a client in various matters and then finds it to be in the lawyer’s interest to represent someone else against the client or to put the attorney’s interests ahead of the client’s interests; or

2. a lawyer does work for two or more people, fails to make it clear who he or she is representing, the individuals later have a falling out and one sues the lawyer for negligence, arguing that the lawyer failed to protect his or her interests.

The paradigmatic example of the first fact pattern arose in Elliot v. Videan.^[9] In that case, attorney Morris handled a guardianship, a child support matter and a domestic relations case for the client.^[10] The client then came to Morris with a valuable invention and asked for his advice.^[11] The client and Morris formed a business to market the product, in which they held equal shares.^[12] A few years later, Morris facilitated the purchase of a majority share in the business by wealthy outside investors.^[13]

Attorney Morris then assisted the outside investors in firing his client from the company and devised a legal theory which the outside investors used to avoid paying monies to the client.^[14] When the client sued for malpractice, Morris responded that at least with regard to the business dealings at issue, his relationship with the client was that of business partner, not attorney-client and he could therefore not be liable for legal malpractice.^[15]

The Arizona Supreme Court disagreed, holding that the “attorney-client relationship is an ongoing relationship giving rise to a continuing duty to the client unless and until the client clearly understands, or reasonably should understand, that the relationship is no longer to be depended on.”^[16]

Addressing the same issue in another case, the Arizona Supreme Court stated an attorney-client relationship exists “when ‘it may fairly be said that because of other transactions an ordinary person would look to the lawyer as a protector rather than as an adversary,’” provided that such a belief is “objectively reasonable.”^[17]

The court of appeals in Elliot further held that representing both his client and the outside investors, failing to advise the client to seek independent counsel when entering into a business relationship with the client and failing to...