Client Responsibility for Lawyer Conduct: Examining the Agency Nature of the Lawyer-client Relationship

• Publication year: 2021

86 Nebraska L. Rev. 346. Client Responsibility for Lawyer Conduct: Examining the Agency Nature of the Lawyer-Client Relationship

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Grace M. Giesel*

Client Responsibility for Lawyer Conduct: Examining the Agency Nature of the Lawyer-Client Relationship

TABLE OF CONTENTS

I. Introduction ................................................... 347 R
II. Agency Concepts as Applied to Attorneys ........................ 350R
A. The Nature of Agency ........................................ 350 R
B. Types of Agents ............................................. 351 R
C. Actual and Apparent Authority ............................... 353 R
D. Tort Responsibility ......................................... 356 R
III. Client Responsibility for Tortious Conduct of
Attorneys ...................................................... 359 R
A. Basic Liability Concepts Applied ............................ 359 R
B. Recent Case Law ............................................. 361 R
1. Traditional Approach ..................................... 361 R
2. Reserved Approach ........................................ 364 R
3. Very Limited Approach .................................... 367 R
C. Why Do Some Courts Deviate from Traditional
Agency Law? ................................................. 370 R
IV. Client Responsibility for Settlements by Counsel ............... 371 R
A. Settlement is the Client's Decision ......................... 371 R
1. Model Rules of Professional Conduct ...................... 371 R
2. The Restatement (Third) of the Law Governing Lawyers .................................................. 372 R
B. Case Law .................................................... 373 R
C. Variation from Agency Principles ............................ 376 R
V. Client Responsibility for Attorney Waiver of the
Attorney-Client Privilege ...................................... 378 R
A. The Parameters of the Privilege ............................. 378 R
B. The Privilege is the Client's Privilege ..................... 381 R
C. Authority to Assert the Privilege ........................... 381 R

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1. Agency ................................................... 381 R
2. Model Rules of Professional Conduct ...................... 382 R
3. The Restatement (Third) of the Law Governing Lawyers .................................................. 383 R
4. Agency and the Recognition of Clients' Rights are Consistent ........................................... 383 R
D. Authority to Waive .......................................... 384 R
1. Agency ................................................... 384 R
2. The Restatement (Third) of the Law Governing Lawyers .................................................. 385 R
3. Most Courts' Holdings are Consistent with Agency Principles ........................................ 386 R
4. Some Courts Do Not Apply Traditional Agency Concepts ................................................. 390 R
E. The Policies ................................................ 393 R
VI. Conclusion ..................................................... 394 R

I. INTRODUCTION

In the 1962 decision of Link v. Wabash Railroad Co.,(fn1) the United States Supreme Court reviewed a district court's sua sponte dismissal of a diversity negligence action. Six years after the plaintiff filed the matter, the district court scheduled a pretrial conference and gave counsel two weeks notice of the scheduled conference. On the day of the conference, plaintiff's counsel called the court to say that he would be unable to attend the conference, giving the impolitic reason that he was busy preparing some documents for the state supreme court. The attorney did not attend the conference, and the district court dismissed the matter for failure to appear and prosecute the claim. In reviewing the district court dismissal, the Supreme Court stated the following:

There is certainly no merit to the contention that dismissal of petitioner's claim because of his counsel's unexcused conduct imposes an unjust penalty on the client. Petitioner voluntarily chose this attorney as his representative in the action, and he cannot now avoid the consequences of the acts or omissions of this freely selected agent. Any other notion would be wholly inconsistent with our system of representative litigation, in which each party is deemed bound by the acts of his lawyer-agent and is considered to have "notice of all facts, notice of which can be charged upon the attorney."(fn2)

When discussing the attorney-client relationship, the legal community and society at large commonly refer to attorneys as "representing" clients. Such statements informally recognize the formal relationship lawyers and clients have as agents and principals. There

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is no disagreement on this basic premise.(fn3) In the usual and customary manner of legal reasoning, identifying lawyers as the agents of their client-principals invokes the established body of agency law that has developed from - and applies to - other agent-principal relationships. This body of law generally leads to the result reached by the Supreme Court in Link: that the client is responsible for the attorney's actions in the context of the representation.

Yet, some modern courts have not found the client responsible for the attorney's actions. These courts do not treat the attorney-client relationship as they do other agent-principal relationships. For example, courts often do not apply the standard agency concepts in addressing whether the client should be responsible for the attorney's tortious actions. Likewise, courts often do not apply standard agency doctrine, or they do so very conservatively, when the question is whether a settlement agreed to by the attorney binds the client. Finally, some courts seem to apply a modified agency doctrine to the question of whether an attorney has waived the attorney-client privilege. In each of these settings, courts disregard traditional agency principles, breaking the link between client and attorney and insulating the client from responsibility for the attorney's actions.

These contexts may not be the only ones in which agency principles are given cramped application when the agent and principal are an attorney and a client.(fn4) These examples are, however, significant because each setting involves important countervailing interests. The interest of an innocent third party is at issue in the tort scenario. In the settlement context, the interest of the innocent third party as well as the systemic interest in encouraging settlements are both at play. Further, in the attorney-client privilege setting, the systemic interest

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in favor of disclosure of relevant information is present. One would expect courts to protect these countervailing interests. Yet, courts repeatedly sacrifice these interests along with agency principles in order to reach a result that protects the client.

Courts' reluctance to apply agency doctrine in the traditional manner appears to be motivated by a desire either to limit - or to eliminate entirely - a client's responsibility for an attorney's actions. The minimization of client responsibility is not an unintended consequence. The courts seemingly seek to protect clients from their own lawyers' actions - even at the expense of innocent third parties and the judicial system. While courts may be acting with great intentions, such special treatment for clients is misguided. The attorney-client relationship needs no special rules that apply only to it. The client neither needs nor deserves special protection. The wronged client has the protection of both the attorney discipline system and a malpractice action. One must also recognize that clients in today's legal services market are often sophisticated users of legal services and in control not only of global decisions relating to the representation, but also of more instrumental or ministerial decisions. These clients should be held accountable for their agent's actions. There is no unfairness in doing so.

One must question the propriety of the balance struck by these courts in the situation of lawyer-agents and client-principals when the balance is different for other agent-principal situations. Agency law has developed so as to strike the proper balance between the interests of the principal, the interests of the agent, and the interests of third parties such as the judicial system or other individuals dealing with the agent. Protecting client interests by making the client less responsible for the attorney's actions no doubt protects the client's specific interest in the short run. In the long run, however, such a stance provides little incentive for client monitoring of attorney conduct and fewer consequences for substandard lawyer conduct. In addition, at least in the tort scenario, the court's current treatment of the lawyerclient relationship provides no encouragement for the client to urge the lawyer to pursue goals properly. In all settings, special rules protecting clients provide much room for mendacious and inappropriate client behavior. This protection of the client seems especially odd in light of the fact that attorneys are fiduciaries, and, unlike many other types of agents, are governed by a code of ethical conduct apart from the general duties of an agent.

In addition to the specific effects created by treating the attorneyclient relationship differently from other agent-principal relationships, this special treatment creates great confusion in terms of the law that should apply to the attorney-client relationship in general. Attorneys are declared to be agents, and clients are declared to be

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principals, but general agency principles may or may not apply to them. Additionally, the general law of agency becomes less clear as the cases involving attorneys are factored into the...