Duty creep: the expanding obligations of attorneys to nonclients

You are drafting an estate plan for your client and your client's daughter asks you some questions about her inheritance. Your client encourages you to answer her daughter's questions since she trusts your ability to clearly explain legal documents. Your client's daughter walks away from the conversation with an understanding of what she will inherit, which may prove false only after her mother has passed.

Your client is selling her coastal residence. A prospective buyer, unrepresented by counsel, contacts you to inquire whether the backyard is permitted for the installation of landscaping which will alter the native foliage. Answering the question facilitates your client's objective of selling her property but also opens you up to a potential claim that you provided legal advice to a nonclient.

From the first day of law school, the primacy of an attorney's duty to the client is enshrined in our minds like a sacrament, our professionalism measured by the crucible of undivided loyalty. It may surprise attorneys to learn that nonclients can sue them for legal malpractice, but it happens with regularity.

For example, in the recently decided Gordon v. Ervin Cohen & Jessup LLP (2023) 88 Cal.App.5th 543, testamentary beneficiaries sued their grandmother's attorney for legal malpractice, arguing documents drafted by the attorney failed to adhere to their grandmother's intentions. The attorney moved for summary judgment, arguing he did not owe a duty to the plaintiffs. The trial court granted summary judgment and the Court of Appeal affirmed. However, the Court of Appeal noted in its opinion that attorneys can owe duties to third party beneficiaries if the client's intent to benefit that third party is "clear," "certain," and "undisputed."

The Gordon case highlights the trend of duty creep, i.e., plaintiffs seeking to expand the duties owed by attorneys to nonclients. The Gordon court's caveat that liability would extend to a decedent's beneficiaries only when the client's intent is "clear" is cold comfort to attorneys subjected to a legal malpractice claim by a nonclient they have never met. In the estate planning context, where the parties are arguing about the intent of a deceased client, clarity of intent may not readily be established.

Duty creep pervades most practice areas. In Sabadia v. Holland & Knight, LLP, 2018 WL 1581377 (Cal. Ct. App. Apr. 2, 2018), plaintiffs claimed to have lost $16 million in cash and incurred an additional $18 million in loan obligations from a series of real estate investments that H&K structured on behalf of its client, a real estate developer. Plaintiffs alleged H&K had acted as their attorney as well, arguing that H&K had never explicitly told plaintiffs it was not their attorney; identified itself as "special counsel"; stated it was acting at the request of plaintiffs; and H&K's client, the property developer, had introduced the attorney from H&K to plaintiff as "our attorney." Plaintiffs alleged H&K never advised plaintiffs regarding the hazards of the loan guarantees plaintiffs had signed, and sued H&K for, among other things, legal malpractice, breach of fiduciary duty, and fraudulent concealment. Though H&K denied it had acted as plaintiffs' counsel, the jury found H&K represented plaintiffs and violated professional duties owed them. The jury returned special verdicts in favor of plaintiffs and awarded damages totaling $34.5 million. The Court of Appeal vacated the $34.5 million verdict, concluding that plaintiffs did not show H&K's conduct proximately caused plaintiffs to lose the value of their investments and failed to prove their damages.

When an attorney knows, or should know, that nonclients will rely on the attorney's representations and the nonclients are not too attenuated from the attorney's conduct, the door is opened to a legal malpractice claim by a nonclient. To ward off frivolous malpractice claims based upon a purported implied-in-fact attorney-client relationship, a few recommendations:

• If an attorney is contacted by a third party to her client's transaction, the attorney should make clear that the attorney does not represent the third party.

• If a nonclient asks the attorney questions that call for a legal conclusion, regardless of what information the attorney imparts, the attorney should tell the nonclient to seek independent advice of counsel.

• Retainer letters should clearly state the scope of services the attorney has agreed to render.

• Put it in writing - too many legal malpractice lawsuits have survived summary judgment because the parties were squabbling about a phone conversation which the plaintiff claims never transpired.

Duty creep will continue to gnaw at the boundary between client and nonclient. Attorneys should always be mindful of their conduct and words to avoid accidentally creating an attorney-client relationship. Even when an attorney is careful, a disgruntled nonclient can wreak havoc by filing a frivolous malpractice lawsuit that takes years to resolve. Protect your clients. Please protect yourself as well.