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Professional Liability Alert: The Unintended Attorney Client Relationship

Mar 30, 2016
By Eric Berg

Introduction

Most lawyers have a reasonably clear understanding of what is required of them when they agree to represent a client—they make sure to obtain a written Fee Agreement, signed by both attorney and client, defining the parties’ respective rights and obligations with respect to the assignment. But are there other scenarios under which an attorney client relationship can be established, absent a written agreement between the parties? For the unsuspecting lawyer, the answer is a resounding yes. There are all sorts of situations whereby the lawyer, perhaps inadvertently, says and does things that can cause an attorney-client relationship to be created without anyone ever signing a single piece of paper. Being aware of California law on this topic is critical in protecting yourself from having to untangle a professional relationship you never sought to create in the first place.

Three Scenarios

Consider the following situations:

1. You’re at a party, and a guest finds out you are a lawyer. The guest then asks to speak to you privately, and you agree. The guest then shares information about his legal situation with you, and you offer some general advice about how you might go about resolving the situation. You say goodnight.

2. You have a former client for whom you successfully handled a real estate transaction five years ago pursuant to somewhat general and vague attorney client fee agreement. The same client now comes to you and says he has a potential personal injury case, but the accident happened almost two years ago; does he have a potential statute of limitations problem? You tell the former client that various limitations periods may apply to this case and he may be running out of time to pursue legal action. The former client thanks you, and the conversation ends. The relevant limitations period expires, and no case has been filed.

3. You have an initial consultation with a prospective client at your office. Facts about the case are discussed, and you offer some general ideas about possible ways to handle the issue. The prospective client leaves the meeting believing that you are going to be his lawyer. You leave the meeting assuming that the client is going to consider your advice and let you know if he wants to “formally” engage you. You don’t hear from the prospective client again, but in the meantime a critical case deadline passes.

Has an attorney-client relationship been formed in any of the above scenarios? For the unwary California practitioner, the answer, unfortunately, is “maybe.”

What’s the Relevant Law in California?

The attorney-client relationship is created by contract, either express or implied. (Neel v. Magana, Olney, Levy, Cathcart & Gelfand (1971) 6 Cal.3d 176, 181 [98 Cal.Rptr. 837]; Houston General Insurance Co. v. Superior Court (1980) 108 Cal.App.3d 958, 964 [166 Cal.Rptr. 904]; Miller v. Metzinger (1979) 91 Cal.App.3d 31, 39-40 [154 Cal.Rptr. 22].) The distinction between express and implied-in-fact contracts “relates only to the manifestation of assent; both types are based upon the expressed or apparent intention of the parties.”Responsible Citizens v. Superior Court (Askins) (1993) 16 Cal.App.4th 1717, 1732 [20 Cal.Rptr.2d 756], quoting 1 Witkin, Summary of Cal. Law (9th ed. 1987) Contracts, § 11, p. 46.

Notwithstanding the absence of an express agreement between the parties, their conduct, in light of the totality of the circumstances, may nevertheless establish an implied-in-fact contract creating an attorney-client relationship. (Cf. Del E. Webb Corp. v. Structural Materials Co. (1981) 123 Cal.App.3d 593, 611 [176 Cal.Rptr. 824]; see Kane, Kane & Kritzer, Inc. v. Altagen (1980) 107 Cal.App.3d 36, 40-42 [165 Cal.Rptr. 534]; Miller v. Metzinger, supra, 91 Cal.App.3d 31, 39-40.) (See also Civ. Code, § 1621 (“An implied contract is one, the existence and terms of which are manifested by conduct.”).)

Neither a retainer nor a formal agreement is required to establish an implied attorney-client relationship. (Farnham v. State Bar (1976) 17 Cal.3d 605, 612 [131 Cal.Rptr. 661]; Kane, Kane & Kritzer v. Altagen, supra, 107 Cal.App.3d 36.)

A number of factors, including the following, may be considered in determining whether an implied-in-fact attorney-client relationship exists:

Whether the attorney volunteered his or her services to a prospective client;

Whether the attorney agreed to investigate a case and provide legal advice to a prospective client about the possible merits of the case;

Whether the attorney previously represented the individual, particularly where the representation occurred over a lengthy period of time or in several matters, or occurred without an express agreement or otherwise in circumstances similar to those of the matter in question;

Whether the individual sought legal advice from the attorney in the matter in question and the attorney provided advice;

Whether the individual paid fees or other consideration to the attorney in connection with the matter in question;

Whether the individual consulted the attorney in confidence; and

Whether the individual reasonably believes that he or she is consulting a lawyer in a professional capacity.

Cal. State Bar Form. Opn. 2003-161.

This final listed factor is called out in Opinion 2003-161 as being of particular relevance:

“One of the most important criteria for finding an implied-in-fact attorney-client relationship is the consulting individual’s expectation – as based on the appearance of the situation to a reasonable person in the individual’s position. [citations]. Although the subjective views of attorney and client may have some relevance, the test is ultimately an objective one. [citations] The presence or absence of one or more of the listed factors is not necessarily determinative. The existence of an attorney-client relationship is based upon the totality of the circumstances.”

It is important to keep in mind that not every contact with an attorney results in the formation of an attorney-client relationship. In a frequently cited case, the court found that it was not sufficient that the individuals asserting the existence of an attorney-client relationship “‘thought’ respondent was representing their interests because he was an attorney.” (Fox v. Pollack, supra, 181 Cal.App.3d 954, 959.) The court noted that “they allege no evidentiary facts from which such a conclusion could reasonably be drawn. Their states of mind, unless reasonably induced by representations or conduct of respondent, are not sufficient to create the attorney-client relationship; they cannot establish it unilaterally.” Ibid. [Emphasis added].

With this underlying legal authority in mind, what is the potential problem for the lawyer in each of the scenarios discussed at the beginning of this article?

In the first scenario, the parties excused themselves to a private room, which begins to look very much like a “confidential” communication. The lawyer compounds the problem by volunteering legal advice to the guest.

In the second scenario, the parties had a pre-existing attorney client relationship. While the attorney may have concluded that his work was done when the real estate transaction at issue concluded, the client may have walked away thinking that he still had an ongoing relationship with the lawyer such that the lawyer would be representing him for all of his legal needs going forward. And the lawyer did not do himself any favors by offering even a general opinion on a looming statute of limitations issue that the former client was facing.

In the third scenario, while the meeting can certainly be couched as an “initial consultation”, it is certainly a meeting being held in the lawyer’s professional capacity, and there was both the seeking and giving of legal advice during the consultation.

What’s the Solution?

For the confused practitioner, there are some basic best practices that can be utilized to lessen the risk of an unintended professional entanglement. Here are some suggestions:

1. Do not give legal advice outside your field of expertise. Although it is obvious to most attorneys that a lawyer who does family law is not qualified to discuss the particulars of tax law, it is not obvious to all laypersons. If you are discussing an area outside your normal field, clearly indicate that fact: “I am not a tax lawyer and I don’t know enough about tax law to properly advise you. You should really talk to a tax professional about whether you are properly deducting that expense.”

2. Make sure your retainer agreements are precise about what you will and will not be representing the client on. Too many retainer agreements suffer from being overly vague and broad as to the scope of services. If the document creates any doubt in the client’s mind about what you will and will not be offering advice on, you have a problem. Do not be afraid to spell out in the Agreement precisely what it is that you will NOT representing the client on (e.g., “this Agreement does not cover any appeals.” )

3. Make it clear immediately during the initial conversation that the person may have a legal problem that he or she should consult with a lawyer about. If that lawyer is you, offer to schedule an appointment in your office and discuss what you will charge.

4. Encourage the questioner to seek formal advice quickly, especially if there is a statute of limitations affecting a possible claim.

5. Always follow up in writing. Reiterate what you advised, your understanding of the facts that you relied on in formulating the advice, the existence of the statute of limitations, and the importance of obtaining competent legal advice. If you are not undertaking the representation, spell that out with precision in the written communication.

6. Remember that whatever the prospective client told you is presumed to be in strictest confidence. You cannot share gossip with friends simply because you learned about it in casual conversation. If the other party reasonably believed the information was subject to the attorney-client privilege, then it was. This is so even if you expressly decline representation.

Conclusion

The State Bar Formal Opinion referenced above sums up the issue, but only to a point: “Lawyers should be sensitive to the potential for misunderstandings when approached by members of the public in non-office settings.” With all due deference to the State Bar, a “misunderstanding” may be the least of the attorney’s troubles. It is scary to contemplate legal malpractice liability to someone you do even regard as your client, and therefore have not taken steps to protect that person’s interests. A little caution on the front end, however, can go a long way towards avoiding long term unintended consequences.

Posted in Business Litigation.