October 13, 2016 Top Story

Court Declines to Expand Attorney Duty of Care to Non-Clients

Law firm has no duty of care absent intent to benefit a non-client plaintiff

Kristin L. Jordan

The U.S. Court of Appeals for the Second Circuit issued a decision making it more difficult for plaintiffs pursuing malpractice claims against lawyers that the plaintiffs did not retain. The appellate court held attorneys owe no duty of care to non-clients that are not intended beneficiaries of an attorney-client relationship. This case highlights attorneys' increasing avoidance of the foreseeability of reliance analysis in legal malpractice lawsuits.

The Underlying Transaction

The defendant law firm in Oakland Police & Fire Ret. Sys. v. Mayer Brown, LLP released the wrong security interest while handling a loan closing. The firm represented General Motors (GM) on the payoff of the "synthetic lease," a $300 million loan from a syndicate of lenders secured by twelve GM properties. JP Morgan was a significant lender and administrative agent for the synthetic lease. GM retained the defendant firm to prepare documents for the payoff of the remaining $150 million of the synthetic lease, of which $55 million would go to JP Morgan as a lender.

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