Unlike some other torts, the class of plaintiffs who can bring legal malpractice claims against attorneys is fairly limited. Generally speaking, legal malpractice claims can only be raised by a limited set of people to whom an attorney owes a legal duty to exercise ordinary care, skill and diligence in the performance of professional services. However, there are other situations in which a court may find that an attorney owes a duty to nonclients or third parties.
Typically, the existence of a duty owed by an attorney to a client or third party occurs in one of three ways. First, and most commonly, an attorney will agree to undertake a legal representation for a client, often by issuing an engagement letter. In this sort of "express" attorney-client relationship, it is often indisputable that an attorney-client relationship of some kind exists.
Second, an attorney-client duty can be found in a situation in which an attorney acts in a way that causes a person to reasonably believe that the attorney is representing them. In such circumstances, an "implied" attorney-client relationship could be sufficient to sustain a legal malpractice claim. A court will typically look at whether the attorney's advice was sought and provided such that a reasonable person would believe that an attorney-client relationship existed. Indeed, the analysis often looks at the facts from the potential client's perspective.
Third, there are some common-law duties that can be owed to third parties when the professional is aware that those third parties will rely upon the professional's advice. For the doctrine of "foreseeable reliance" to apply, the attorney typically must be aware that a third party will rely on her or his advice or opinions.
There are several ways to limit or even avoid the risks that can be associated with intentional or, even, unintentional attorney-client duties. For express attorney-client relationships, most attorneys will use an engagement letter or a fee contract to specify the exact terms of the representation, thereby limiting the risk that a client will expect the attorney to take on unspecified tasks. Implied or other unintended representations can be avoided with the use of disclaimers.
Below are some steps to consider to help reduce the risk.
Engagement Letters and Fee Contracts
To reduce the risk of claims by nonclients, an engagement letter can identify each client by name and capacity. To eliminate any misunderstanding, the engagement letter may also state that the firm does not represent any person or entity that has not been specifically identified as a client and that no duties have been undertaken or assumed for any person or entity that has not been specifically identified as a client. Such language can help avoid implied and unintended attorney-client relationships.
Another way to help reduce the risk of an unintended attorney-client relationship is to consider the use of non-assignability language in an engagement letter. This language would state that a claim for legal malpractice could not be assigned by the client to an unrelated third party. Although many jurisdictions do not permit assignments of such claims given the unique nature of the attorney-client relationship, some jurisdictions still permit assignments. By including this language, attorneys may be able to ensure that they are held only to the duties implicated by the unique attorney-client relationship.
File Closing Letters
When it comes time to terminate an attorney-client relationship, the use of a file closing letter can help provide clear guidance to both the client and the attorney. Closing a file can impact any applicable statute of limitation and can also terminate an attorney's duty to a former client. It can cease the obligation to disclose or provide information, such as intervening change in applicable law, and helps avoid a "springing" statute of limitations.
What a file closing letter needs to include will depend on the needs of the law practice and the unique circumstances of the representation. Many will consider whether to include an accounting of all funds received, confirmation that the representation has ended (typically as of the date of the letter, if not before), notice that the attorney or law firm will no longer be providing any legal services absent a further retention, and a description of the attorney's or law firm's document retention policies.
Closing files helps marks the end of an attorney's duty, and thus is another way to limit the possibility of receiving a claim from a third party.
Generally speaking, a plaintiff cannot recover in a legal malpractice action unless there is an attorney-client relationship with the attorney-defendant. However, in some contexts, courts may find that an attorney owes duties to nonclients. One way to minimize risks of such claims is to use disclaimers when dealing with nonclients.
For implied attorney-client relationships, the attorney can communicate to the nonclient that the firm does not represent the nonclient as an attorney and that the nonclient is entitled to obtain counsel of his or her choice if he or she so desires. This may be helpful in contexts in which, for example, an attorney represents a company but not the individual employees of that company.
A disclaimer can also be used to defeat a claim of foreseeable reliance. A disclaimer, in some instances attached to a piece of work product, can alert any third party that he or she may rely upon the information at their peril. The disclaimer can also state that no duties are assumed, intended, or created by the communication. The disclaimer can also state that if the third party has not executed a fee contract or an engagement letter, the firm does not represent the third party as the third party's attorney. The third party can be encouraged to retain counsel of his or her choice.
By implementing these recommended steps, attorneys can limit or even avoid the risk of potential claims brought by a nonclient.
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