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Contents

I. When is the attorney-client relationship established? 1

II. Role of the Attorney 3

A. Lawyer as Advocate 3

1. Nonadjudicative Proceedings 3

B. Lawyer as Advisor 3

1. The Client's Intended Crime or Fraud 4

C. Lawyer as Negotiator 4

D. Lawyer as Provider of Evaluation for Use by Third Persons 5

E. Lawyer as Third-Party Neutral 5

III. Representing Clients with Diminished Capacity 6

IV. Duties to Third Parties (Non-Clients) 7

A. Intended Beneficiaries; or 7

1. Will Cases 8

2. Predecessor and Successor Counsel: 8

B. Reliance on Information Supplied by Counsel 8

1. Advice to Clients 8

2. Information to Third-Parties 9

C. Liability to Third Parties for Intentional Torts 9

1. Fraud 9

2. Malicious Prosecution 10

When is the attorney-client relationship established?

Definition of client: CEC section 951 defines "client" as "a person who, directly or through an authorized representative, consults a lawyer for the purpose of retaining the lawyer or securing legal advice or advice from him in his professional capacity."

An attorney client relationship can be formed in a number of ways:

1) Usual manner (express consent) - where the prospective client indicates requests legal advice and the attorney agrees to provide the advice and a contract is signed.

2) By court appointment;

3) When the lawyer fails to manifest a lack of consent, and the lawyer reasonably should know that the potential client reasonably relies on the lawyer to provide the services.

- Here, the lawyer's conduct may constitute implied assent, or principles of promissory estoppel may create a duty to the potential client.

An attorney may have ethical obligations to a prospective client even though the attorney did not agree to represent the person and did not accept a fee.

- The fiduciary relationship existing between lawyer and client extends to preliminary consultation by a prospective client with a view to retention of the lawyer, although actual employment does not result.

Attorneys must be cautious in how they handle initial interviews with prospective clients, and must be careful in regard to general advice given in informal situations.

1) First, the attorney must keep the prospective client's confidences.

- In this regard, the prospective client will be treated as if her were an actual client, and the lawyer must honor the private nature of the communication.

2) Second, the attorney is disqualified from representing any future client whose interests may be adverse to those of the prospective client in a substantially related case, unless both parties consent.

In order to establish the existence of an implied attorney-client relationship, a prospective client must show that:

1) confidential information was provided to the lawyer, and

2) the prospective client did so with the reasonable belief that the lawyer was acting as his or her attorney.

Confidential information provided to the lawyer:

With regard to the first element, if no confidences are divulged, there is no implied relationship.

It is the lawyer's responsibility (and burden) to clarify between the lawyer and layperson whether information imparted will be held in confidence.

The attorney should state clearly to the prospective client that the initial meeting is purely preliminary and not to share any confidential information.

Providing confidential information to the lawyer is a necessary, but not a sufficient, condition for finding an attorney-client relationship existed.

Reasonable belief by prospective client of representation

There must also be a reasonable belief on the part of the prospective client that the attorney is representing his or her legal interests.

The belief of the attorney that there was no attorney-client relationship is immaterial.

In cases where an attorney has received confidential information, if no advice was given, and no action taken by the lawyer on behalf of the prospective client, there is no cause of action for malpractice or breach of fiduciary duty available against the lawyer, unless the confidences are not protected.

ABA MR 1.18 protects information revealed by the prospective client from disclosure or use by the attorney.

Role of the Attorney

Lawyer as Advocate

Nonadjudicative Proceedings

What are the attorney's ethical responsibilities when representing a client before such councils, or before legislatures, administrative agencies, or other rule-making deliberative tribunals?

ABA MR 3.9 directly addresses this topic. In essence, the attorney must "disclose that the appearance is in a representative capacity," and must deal honestly and truthfully in the presentation of the facts.

- Rule 3.9 does not apply when the attorney is advocating for the client in a representational capacity if the client's interests are pitted against those of the government.

- Model Rules 4.1 - 4.4, which apply in these situations, state similar obligations of honesty, truthfulness, and disclosure of the fact that the lawyer is acting in a representative capacity.

Lawyer as Advisor

ABA MR 2.1 encourages the attorney acting as an advisor to make independent professional judgments and provide candid advice. The advice should not be restricted to purely legal matters, but may include "moral, economic, social and political factors" relevant to the client's concerns.

When these factors are outside the attorney's expertise/competence, the lawyer may want to recommend that the client consult with, or authorize the attorney to consult with, a non-lawyer specialist.

Where the client's intended conduct may cause legal harm, the attorney should volunteer cautionary advice.

While an attorney may not assist the client in wrongdoing for which the attorney could also be liable, the attorney may, and should, counsel the client on the legal, moral, and social consequences of the intended conduct.

The Client's Intended Crime or Fraud

Is there a point where lawyers should be ethically restrained from giving truthful information about the law to clients?

- The CRPC does not have a section dealing directly with the limitations on providing truthful information to clients who will use the information for illegal purposes.

- MR 1.2(d) states that a lawyer "shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal or fraudulent, but a lawyer may discuss the legal consequences of any course of conduct with a client…"

- MR 1.0 requires "actual knowledge" but this can inferred from the circumstances.

Where the lawyer has, without inquiry, recklessly and consciously disregarded information that plainly suggests that a crime or fraud is involved…the facts may present a violation of MR 1.2(d).

Lawyer as Negotiator

May negotiators communicate deliberate deceptions, intentionally incomplete or ambiguous statements, or knowing omissions?

Making false statements is forbidden, but it is generally considered acceptable to use deceptive tactics intended to conceal the truth.

Deceptive tactics that are not considered improper

1) Puffing - what distinguishes puffing from lying is that the statement is not expected to be believed in what might be considered a "literal" sense

2) Bluffing

3) Exaggeration - also known as "posturing" or "strategic misrepresentations"

4) Omission by Non-disclosure - the negotiator fails to reveal certain facts that might influence the acceptance of the agreement - while negotiators are not required to reveal everything that is relevant, a line may be drawn when the omissions conceal material facts.

5) Omission by Silence - where the negotiator receives an offer indicating that the opponent is mistaken as to an important aspect of the proposed deal, but the negotiator does not correct the mistaken belief, and instead says nothing.

ABA MR 4.1 identifies two pieces of dishonesty that are forbidden: (1) false statements of material facts or law; and (2) failure to disclose material facts when "disclosure is necessary to avoid assisting a criminal or fraudulent act by a client" unless the disclosure would violate MR 1.6 protecting confidential communications.

Comment 1 says that a lawyer "has no affirmative duty to inform an opposing party of relevant facts," however, a misrepresentation can occur "by partially true but misleading statements or omissions that are the equivalent of affirmative false statements."

Comment 2 states that estimates of price or value, and a party's intentions regarding an acceptable settlement, are not ordinarily matters of fact.

Lawyer as Provider of Evaluation for Use by Third Persons

Lawyers may sometimes be requested by a client to provide an evaluation, such as an opinion letter or an assessment of the client's title to property, that will be used by third persons.

First and foremost, the lawyer must be assured that the evaluation will not harm the client's interests. If that possibility exists, the client must be fully consulted and must provide informed consent before the evaluation may be disseminated to third parties who are expected to rely on it. When an evaluation is supplied, it should contain a description of any limitations that prevented the lawyer from conducting a complete examination of the facts.

MR 4.1 creates obligations to third parties of truthfulness and honesty.

Supplying the evaluation may create a duty to the third parties who foreseeably rely on it.

Lawyer as Third-Party Neutral

The lawyer acting as mediator or arbitrator for persons with whom there is not attorney-client relationship is governed by MR 2.4. MR 2.4(b) requires the lawyer to "inform unrepresented parties that the lawyer is not representing them." It must be clear to the parties that the lawyer's role is not to protect their interests, but to help resolve the underlying dispute.

Comment 3 suggests that the unrepresented parties be informed that the attorney-client privilege does not apply.

May a lawyer who has served as a third-party neutral later agree to represent one of the parties in the same manner?

- MR 1.2 requires written informed consent from all parties.

- MR 1.12(b) prohibits the lawyer from negotiating for employment with any of the parties while the lawyer is serving as a third-party neutral.

Representing Clients with Diminished Capacity

ABA MR 1.14 encourages lawyers to maintain as normal relationship as possible, including the preservation of the client's confidences and secrets.

If the lawyer believes that the client is at risk of "substantial physical, financial, or other harm" requiring that some action be taken, and that the normal attorney-client relationship cannot be maintained, ABA MR 1.14(b) authorizes the lawyer to consult with those able to protect the client, such as family members, protective agencies, or support groups and the lawyer may seek to have a guardian or conservator appointed.

But what if these actions would involve the disclosure of confidential information?

ABA MR 1.14(c) states that the lawyer is "impliedly authorized under Rule 1.6(a) to reveal information about the client, but only to the extent necessary to protect the client's interests."

Comment 8 authorizes this limited disclosure even when the client directs the lawyer to the contrary.

California has not addressed the problem of the disabled client in its ethics rules.

California Ethics Opinion on Sexually Abused Minors

LA County Bar Association Ethics Opinion addressed the problem when a minor-client confesses to the attorney that she is being sexually abused by her father but the minor client adamantly refuses permission for the attorney to report the abuse.

An attorney is ethically obligated to follow the instructions of a minor client to maintain in confidence a communication between the attorney and the minor in which the minor discloses that the minor has been the victim of sexual abuse, provided the attorney properly discusses the matter with the minor and the attorney reasonably believes that the minor client is competent to make an informed decision.

If the attorney reasonably believes that the minor is not competent to make an informed decision on the matter, the attorney may seek to undertake appropriate action to protect the minor, including seeking the appointment of a guardian ad litem.

If a guardian ad litem is appointed for the minor, the attorney may ethically disclose the minor's confidential information to the guardian ad litem and should follow the instructions of the guardian ad litem, even if those instructions conflict with those of the minor client.

Duties to Third Parties (Non-Clients)

Third parties to whom an attorney may owe a duty generally fall into several categories:

1) Prospective clients (see above);

2) Intended beneficiaries; or

3) Persons foreseeably receiving information supplied by the attorney

Intended Beneficiaries; or

o Lucas v. Hamm (CA)

- The California Supreme Court set forth a six-factor test to determine whether a duty is owed to third-parties: (1) the extent to which the transaction was intended to affect the third-party; (2) the foreseeability of the harm to the third-party; (3) the degree of certainty that the third-party has suffered injury; (4) the closeness of the connection between the attorney's conduct and the plaintiff's injury; (5) the policy of preventing future harm; and (6) whether the recognition of liability would impose an undue burden on the profession.

After Lucas, attorneys have been held liable to third parties in transactions which were intended directly to benefit the third party - the predominant inquiry is whether the principal purpose of that attorney's retention was to provide legal services for the benefit of the third party.

Who are intended beneficiaries of a lawyer's services?

- To be an intended beneficiary, the benefit must be both intended and an objective of the particular service the attorney was retained to perform.

There is no duty owed to an unintended beneficiary.

In a criminal case, the defendant is the sole intended beneficiary.

Because an adverse party is not an intended beneficiary of the attorney's services, and because an attorney owes a duty of undivided loyalty to the client, an attorney has no duty to protect the interests of an adverse party.

There is no duty owed to third parties who deal at arm's length with the attorney's client.

Will Cases

An attorney owes a duty of care to intended beneficiaries to advise the testator-client of the law governing the property the client intended to bequeath in the will.

A duty to a third-party beneficiary will not be recognized if there is doubt about whether the third party was the decedent's intended beneficiary.

There is no duty to correct mistakes or ambiguities in the testator-client's designation of a beneficiary.

There is no duty owed to a beneficiary to ascertain the decedent's testamentary capacity.

California decisions recognize an enforceable duty of care in cases involving a negligently drafted or executed testamentary instrument when the plaintiff was an expressly named beneficiary of an express bequest. Conversely, when the claim is that a will or trust, although properly executed and free of other defects, did not accurately express the testator's intent, no duty or liability to the non-client potential beneficiary has been recognized.

- That is, where there is a question about whether the third-party beneficiary was, in fact, the decedent's intended beneficiary - where intent is placed in issue - the lawyer will not be held accountable to the potential beneficiary.

Predecessor and Successor Counsel:

Successor counsel owes no duty to the predecessor counsel because that would divide the loyalty owed to the client (CA).

Reliance on Information Supplied by Counsel

Advice to Clients

o Goodman v. Kennedy (CA)

- Whether or under what circumstances does an attorney's duty of care in giving legal advice to a client extends to persons with whom the client in acting upon such advice deals wholly at arm's length?

- The attorney has no such duty in the absence of any showing that the legal advice was foreseeably transmitted to or relied upon by the third-party or that the third-party was an intended beneficiary of a transaction to which the advice pertained.

The Goodman court specifically noted that an attorney owes a duty of care to a third party in providing the advice to the client if reliance by the third party upon the advice is the end and aim of the transaction. Mere foreseeability is not sufficient to impose a duty.

Information to Third-Parties

Two bases may be found in California law for imposition of liability to a third party based upon a duty owed to this non-client.

1) First, where the third party was an intended beneficiary of the transaction involving the services or advice, as in Lucas v. Hamm.

- In these cases, the third party receiving a benefit is the reason the attorney's services were retained by the client.

2) Second, where the advice given to the client was intended to be transmitted and relied upon by a third party, or where it was reasonably foreseeable that such reliance would occur because that is the end and aim of the transaction, as stated in Goodman v. Kennedy.

Also, in each case where the duty to third parties is recognized, the lawyer's work or advice is not confidential to the client, but rather is intended or likely to be shared with the third party.

Liability to Third Parties for Intentional Torts

An attorney may be liable to non-clients for fraud and other intentional torts because a duty is always owed to others to refrain from intentionally tortious conduct.

Fraud

A fraud claim against a lawyer is no different from a fraud claim against anyone else. If an attorney commits actual fraud in his dealings with a third party, the fact that he did so in the capacity of attorney for a client does not relieve him of liability.

While an attorney's professional duty of care extends only to his own client and intended beneficiaries of his legal work, the limitations on liability for negligence do not apply for liability for fraud.

Accordingly, a lawyer communicating on behalf of a client with a non-client may not knowingly make a false statement of material fact to the non-client and may be liable to a non-client for fraudulent statements made during business negotiations.

The elements of fraud are:

1) A false representation;

2) Made with knowledge of the falsity and an intent to deceive;

3) That induces reliance; and

4) Causes damage

Active concealment or suppression of facts is the equivalent of a false representation.

Furthermore, even where no duty to disclose would otherwise exist, "where one does speak he must speak the whole truth to the end that he does not conceal any facts which materially qualify those stated. One who is asked for or volunteers information must be truthful, and the telling of a half-truth calculated to deceive is fraud."

Malicious Prosecution

Despite the undivided loyalty owed to the client, an attorney may be liable to third parties in an action for malicious prosecution, which is not barred by the litigation privilege (contained in Cal. Civil Code §47(b), which makes any relevant publication or broadcast - i.e., a statement - privileged for tort liability - usually, defamation - if it is made in any legislative, judicial or other official proceeding).

o Zamos v. Straud (CA)

- The tort of malicious prosecution includes claims that an attorney continues to prosecute after learning that it is not supported by probable cause.

- Prior cases had involved commencing, bringing, or initiating an action without probable cause and had not addressed the question whether a malicious prosecution action may be available when an attorney commences a lawsuit properly but then continues to prosecute it after learning it is not supported by probable cause.

However, only those actions that any reasonable attorney would agree are totally and completely without merit may form the basis for a malicious prosecution suit. This standard applies both to the initiation of suit as well as the continuation of a suit.

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