Legal Ethics - L. Ray Patterson and William P. Smith Iii

• Publication year: 2000

Legal Ethicsby L. Ray Patterson^* and

William P. Smith, III"^**

I. Introduction

Two events of particular importance to Georgia lawyers occurred during the survey period. First, the Supreme Court of Georgia adopted The Georgia Rules of Professional Conduct on June 12, 2000 to become effective January 1, 2001. The basis for the new rules is the American Bar Association ("ABA") Model Rules of Professional Conduct, adopted by the ABA in 1983 to supersede the ABA Model Code of Professional Responsibility. The new code will replace both the Georgia Code of Professional Responsibility and the Standards of the State Bar Rules. Second, the American Law Institute adopted the Restatement of the Law Governing Lawyers ("Restatement"). While the Restatement will not be binding on lawyers, it undoubtedly will be a document of immense influence on courts and lawyers. It is the first document in which lawyer's law has been collected and integrated as a separate body of law. Georgia lawyers would be well advised to familiarize themselves with the Restatement.

II. Liability to Third Parties

The term "legal ethics" has a long history in American jurisprudence,¹ but as the Restatement proves, it is in the process of being superseded by the more meaningful term "lawyer's law." The difference in terminology can make a difference in the perspective of lawyers and courts. Most lawyers and judges view legal ethics as governing the lawyer's duties to, and relationship with, the client. The term "lawyer's law" recognizes that the lawyer has duties to others as well. Thus, it is interesting to note that in regard to one case, Bowen v. Hunter, Maclean, Exley & Dunn,² had the Georgia Court of Appeals followed the Restatement, it would almost surely have reached a different result as to the liability of the lawyer defendant to third parties. The relevant section of the Restatement is as follows:

Sec. 73. Duty of Care to Certain Non-Clients

For purpose of liability under Sec. 71, a lawyer owes a duty to use care within the meaning of Sec. 74:

(4) to a non-client when and to the extent that:

(a) the lawyer's client is a trustee, guardian, executor, or fiduciary acting primarily to perform similar functions for the non-client;

(b) circumstances known to the lawyer make it clear that appropriate action by the lawyer is necessary with respect to a matter within the scope of the representation to prevent or rectify the breach of a fiduciary duty owed by the client to the non-client, where (i) the breach is a crime or fraud or (ii) the lawyer has assisted or is assisting the breach;

(c) the non-client is not reasonably able to protect its rights; and

(d) such a duty would not significantly impair the performance of the lawyer's obligations to the client.³

Note the Restatement provides that a lawyer owes a duty of care when the client is an administratrix and the lawyer knows appropriate action is necessary to prevent or rectify the breach of a fiduciary duty the client owes to the nonclient when the breach is a fraud or the lawyer assists in the breach.⁴ This circumstance is essentially the fact pattern in Bowen.⁵

Plaintiffs were the mother and sister of an intestate decedent, and the lawyer represented the decedent's widow, who was the administratrix of the estate. The widow had signed a prenuptial agreement that barred her from inheriting any portion of her husband's estate. The mother and sister asked the widow's lawyer if there was a prenuptial agreement.⁶ The lawyer acknowledged there was "such a contract (he did not draft it), but could not deliver a copy to them without his client's permission, which [she] declined to give."⁷ In an earlier stage of the proceedings, the trial court had ruled the mother and sister had standing to enforce the prenuptial agreement.⁸ The Georgia Supreme Court affirmed the ruling in Sieg v. Sieg.⁹ The parties eventually settled that case, and nine months later, the mother and sister sued the lawyer and his law firm for malpractice and breach of fiduciary duty. The trial court bifurcated the trial, separating the issue of the validity of the agreement from the liability of the lawyer. The jury determined the prenuptial agreement was invalid, and the court granted summary judgment to defendants on the breach of fiduciary duty claim.¹⁰

The trial court relied on the fact that "Georgia has not addressed the issue of whether the attorney of a fiduciary-such as the administrator of an estate-owes a fiduciary duty in turn to heirs at law"¹¹ and concluded there was no fiduciary or confidential relationship between plaintiffs and the lawyer.¹² The duty a lawyer owes to a client and the fiduciary relationship a client maintains with a nonclient, however, are two different issues, as the four conditions of Restatement section 73(4) make clear. The client was an administratrix; appropriate action by the lawyer was necessary to rectify the breach of a fiduciary duty owed by the client; the nonclient was not reasonably able to protect its rights; and the duty did not impair the performance of the lawyer's obligation to the client unless the lawyer was to act as a shield for the client's conduct if inconsistent with her obligations as administratrix.¹³

As indicated in Restatement section 73(4)(b), the basic issue in Bowen was not the lawyer's duty but instead the widow's duty as administratrix. Did she have a duty to show the agreement to the mother and sister, and was there a duty to reveal the agreement to the probate court? The court of appeals made no mention of this point. Presumably, the administratix did owe a duty to the probate court to provide it with all relevant documents, and the document in issue was clearly relevant to the administration of the estate. Had the agreement been filed with the court, it probably would have been a matter of public record available to the mother and sister.

Bowen is, thus, a classic example of faulty analysis. The issue was not the lawyer's duty but the client's duty. Consider the widow's duty as a widow and as an administratrix. As widow she presumably had no legal duty to show the mother and sister the agreement; as administratrix she clearly did. The point the court overlooked is that the lawyer was representing the widow as administratrix, and the lawyer's duty in acting for a client is determined by the client's duty. This duty follows from the fact that the client is the principal and the lawyer is the agent: The principal's duty determines the agent's duty. Lawyers selectively use this idea, and seldom is it articulated. Indeed, the lawyer used it in Bowen when he said he could not deliver the document without the client's permission. Thus, he relied on the client's decision not to deliver the contract as the reason for not delivering it himself.¹⁴

However, another proposition about the nature of the client is relevant. There are two kinds of clients: a client in an individual capacity and a client in a representative capacity. Here, the widow as administratrix was a client in a representative capacity, but the lawyer treated her as a client in an individual or personal capacity. Presumably this was because the legal culture emphasizes the duty of loyalty to the client above all else due to the influence of codes of ethics. These codes emphasize the lawyer's duties to the client: the duty of competence, the duty of communication (keeping the client informed), the duty to avoid conflicts of interest, and the duty of confidentiality. These duties correlate to the client's rights. But the lawyer also acts for the client in relation to others, and the source of these duties is the client's duties. The client's duties, in turn, are determined by the law, and insofar as the lawyer is concerned, they are derivative duties. Thus, because the widow as administratrix had a duty to the potential heirs, the lawyer also had that duty.

This analysis explains the Restatement provision quoted above, and it is unfortunate that the ruling in Bowen is contrary to that provision. There is, however, another reason to regret the case. It sends the wrong message to lawyers, which is that the lawyer's duty of loyalty to the client gives the lawyer license to serve as the client's agent in disregarding both the law and the client's duty to the court.

III. The Duty to the Court

The court in Bowen did not apply the proposition that the client's duties determine the lawyer's duties when the lawyer acts for the client. The same court, however, applied this proposition in another case, although under a different rule, which concerned the duty to inform the court of adverse authority. Georgia Receivables, Inc. v. Kirk¹⁵ involved an assignee of a health spa contract who brought an action to enforce the contract. The trial court granted defendant summary judgment under the applicable statute in accord with three decisions involving the same plaintiff.¹⁶ In the words of the court: "With regard to the matter at hand, the same issues which were dispositive herein were raised by the same attorneys [for the same plaintiff] in the same manner in at least three appeals previously decided by this Court," all of which were decided adversely to plaintiff.¹⁷

The court denied plaintiff's motion to withdraw the appeal and considered whether it should impose sanctions for a frivolous appeal against plaintiff and its counsel.¹⁸ Because of the motion to dismiss, the court decided not to impose penalties, but it took "[the] opportunity to remind counsel of their obligations to supplement the pleadings before this Court upon receipt of notice of legal authority directly adverse to their position or to withdraw their appeal."¹⁹ The court also noted the lawyers violated several other rules by making arguments that were without merit and by breaching their duty to the court to give "notice of the pendency of the several cases involving the same issue, the same appellant, and the same attorney at the time they filed the...