Best Practices for Avoiding Attorney Liability to Non-Clients

Traditionally, the attorney-client relationship requires an express agreement between the attorney and client. However, an attorney-client relationship may be inferred or implied from the “totality of the circumstances,” including a course of conduct, communications between the parties, and a putative client’s reasonable expectations. Therefore, when an attorney deals with a non-represented party, an attorney-client relationship can arise without the attorney’s knowledge, intent, or consent. In those circumstances, the attorney often is not representing the interests of that party, and very well may be taking actions that are contrary tothat party’s interests. Such situations are rife with legal-malpractice exposure.

The risk of developing an unintended attorney-client relationship occurs most frequently in transactional matters, where one party has counsel and the other does not. The other party may believe he or she does not need counsel because his or her interests are similarly aligned. Other risk factors include circumstances where a non-client will derive benefits from the contemplated transaction, such as working-interest owners or joint-venture partners. Likewise, unintended attorney-client relationships can arise when there is a lack of clarity concerning whether the attorney represents an entity or its managers or constituents.

Any doubt concerning the existence of an attorney-client relationship will likely be resolved in favor of the putative client. Defending such matters can be particularly difficult, because if the jury finds an attorney-client relationship, the attorney then, by definition, was acting with a conflict of interest—by preferring the interests of one client over another. Jurors are often incensed by attorneys who act with a conflict of interest, and in some cases, have significantly inflated damage awards due to their outrage.

There are several measures an attorney can and should take to prevent unintended attorney-client relationships. They include:

1. The Engagement Letter. This document, delivered at the outset of the relationship, should define who the attorney represents, and, when necessary, who the attorney does not represent. In the case of the entity representation, Rule 1.13(f) of the Model Rules of Professional Conduct requires the attorney to make clear that he or she represents the organization rather than its agents or employees, when their interests diverge. While such a letter probably will not be shared with non-clients, it provides contemporaneous documentation of who the lawyer intended and understood his or her client to be.
2. The Declination Letter. When an attorney turns down a representation, or the potential client decides not to hire the attorney, the attorney should send a letter confirming that the attorney has not accepted any responsibility for the matter. Nonetheless, the attorney may need to advise the non-client of any pending deadlines or limitations issues in that same letter.
3. The Disengagement Letter. At the end of an attorney-client relationship, the attorney should send a letter confirming that the matter has been concluded and the attorney no longer has responsibility for protecting the client’s interests in future matters.
4. The “I Am Not Your Lawyer” Letter. If at any time a non-client says something or takes action that suggests he or she may believe that he or she has an attorney-client relationship, the attorney should immediately advise the non-client in writing that the non-client is mistaken. Contemporaneous written communications are the best policy, and can head off future disputes and uncertainties. Attorneys should take extra caution when communicating with unrepresented non-clients, and send “I Am Not Your Lawyer” letters whenever there is any chance that the non-represented party may have some misunderstanding concerning the attorneys’ duties and obligations.

The above-described communications do not have to be adversarial or unpleasant. In fact, they can be short and polite statements, provided they make clear that the attorney represents only the interests of the client, and not the non-client. Attorneys should use the protective measures described above consistently in their practices.