Attorney Liability to Non-clients: Avoiding the Traps
| Publication year | 2013 |
| Pages | 73 |
| Citation | Vol. 42 No. 4 Pg. 73 |
BY Eric J. Moutz, Briony A. Schnee.
Departments Whoops�Legal Malpractice Prevention
This Department is sponsored by the CBA Lawyers’ Professional Liability Committee to assist attorneys in preventing legal malpractice. For information about submitting a manuscript or topic suggestion, contact Andrew McLetchie—(303) 298-8603, a_mcletchie@fsf-law.com; or Reba Nance—(303) 824-5320, reban@cobar.org.
About the Authors
Eric J. Moutz is the founder of The Law Offices of Eric J. Moutz, LLC. He specializes in complex business litigation and professional liability, with an emphasis on cases involving significant financial or reputational exposure—eric@moutzlaw.com, www. moutzlaw.com. Briony A. Schnee is an attorney with Burleson, LLP— briony_schnee@yahoo.com.
Attorneys often focus their concerns about professional liability on their duties to current and former clients. However, it is becoming increasingly common for attorneys to be sued by non-clients for acts committed in the course of legal practice. It is impossible to formulate a foolproof way of avoiding such claims, but there are some general guidelines that may protect an attorney against the most common and dangerous theories of liability. Fortunately, these guidelines track simple ethical and common sense principles to which all attorneys should aspire in their practice as a matter of course. First, an attorney should deal carefully and honestly with everyone, including opposing parties and non-clients. Second, an attorney should avoid assisting existing clients in tortious or improper conduct. Third, an attorney should ensure that unrepresented persons, especially prospective clients, clearly understand the attorney’s role and responsibilities.
Liability for Providing False or Inaccurate Information
An attorney, like anyone else, may be held liable to any third party for malicious or tortious acts.[1] The risk of committing most torts is obvious and relatively easy to mitigate; however, attorneys are most likely to risk exposure when they confuse tortious misrepresentation with zealous advocacy, or mistakenly believe they owe no duty of care to non-clients.
The first situation generally arises when an attorney believes that his or her ethical duties of loyalty to a client justify omitting material information in discussions with a third party. Although some decisions contain language that lends credence to this point of view or that recognizes that attorneys enjoy a qualified privilege for acts taken in furtherance of representing a client, [2] the approach followed by most Colorado courts is that tortious conduct is not protected simply because the attorney is acting as an advocate of the client.[3] Attorneys may even owe an affirmative duty of disclosure to non-clients when disclosure is necessary to ensure the impression and representations the attorney has made are not misleading.[4] This effectively means that an attorney could under the right circumstances be held liable to a non-client for failing to provide complete or accurate information in the course of representing his or her own clients.
An attorney also may be held liable to non-clients for negligent misrepresentation.[5] The best known situation where such a claim arises is when an attorney offers an erroneous legal opinion to a non-client to convince that party to close a transaction with the attorney’s client.[6]However, the tort is not limited to these circumstances, and is likely to be valid whenever an attorney makes a statement that he or she knows (or should know) a third party will rely on in a commercial or business matter.[7] Fortunately, there are some limitations on this theory of liability. For example, the recent case of Allen v. Steele[8] held that an attorney will not be liable for negligent misrepresentations made in the course of an initial consultation concerning a potential lawsuit or in an informal social situation. However, the Allen decision...
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