RISKS IN INFORMAL CONSULTATIONS

By Thomas P. Sukowicz, Director of Lawyers Risk Management Services, Hinshaw & Culbertson 

There are risks involved in informal communications with persons about their legal matters. If a person reasonably believes that a lawyer is providing legal advice, or if the lawyer possesses confidential information from a person seeking legal advice, the law may recognize that person as a client of the lawyer, at least for certain purposes. If the lawyer has given legal advice, the lawyer could be liable for malpractice if it turns out that the advice was wrong. If the lawyer has received confidential information from a person who was seeking legal advice, the lawyer may be precluded from representing someone adverse to that person in a matter related to that which was the subject of the confidential information. If the lawyer reveals or uses such confidential information, he may be sued for breach of fiduciary duty.

The Attorney-Client Relationship
A "client," for many purposes, is not just a person whom the lawyer believes he or she represents, but anyone who claims to have sought out the lawyer to obtain professional advice or who claims to have provided confidential information to a lawyer in connection with seeking such advice or assistance, unless the lawyer can prove otherwise.

The existence of an attorney-client relationship may be inferred by the parties' conduct and surrounding circumstances. Rallis v. Cassady, 100 Cal.Rptr.2d 763 (Cal.App. 2000). Generally, the test for determining whether an attorney-client relationship was created is that of the client's "reasonable belief." The individual's belief that he is consulting a lawyer in his legal capacity may be subjective, as long as it is reasonable and is coupled with a manifestation of his intention to seek professional legal advice. Bartholomew v. Bartholomew, 611 So.2d 85 (Fla.App. 1992). Thus, the two indicia of a reasonable belief that there is an attorney-client relationship are that the putative client believes he is consulting a lawyer and provides confidential information that will be protected by the attorney-client privilege.

Rejected Prospective Clients
A lawyer who declines to represent an individual who has provided the lawyer with confidential information may be considered to be the individual's attorney, at least for purposes of conflicts of interest or disqualification, although actual employment does not result. People ex rel. Department of Corporations v. Speedee Oil Change Systems, Inc., 980 P.2d 371 (Cal. 1999).

The receipt of confidential information from a prospective client means that the lawyer may not, thereafter, represent a party adverse to the rejected prospective client in the same or substantially related legal matter. The conflict of interest created by that situation could also result in the loss of legal fees.

If a lawyer declines to represent a prospective client, but gives gratuitous advice that turns out to be wrong, the lawyer can be liable for the damage caused by reliance on his erroneous advice. For example, in Togstad v. Vessely, 291 N.W.2d 686 (Minn. 1980), a lawyer, after consulting with a prospective client, declined to take a case, but added that he did not think the case was worth pursuing. He did not tell the prospective client to obtain the opinion of another lawyer or that, if she wanted to pursue the claim, he must do it before the statute of limitations expires. The client relied on the lawyer's opinion that the case was not worth pursuing, and did nothing for several months. When she eventually consulted another attorney, she was informed that the case was worth pursuing but that the statute of limitations had expired (after her consultation with the first lawyer). In the subsequent legal malpractice case, the jury also agreed that the case had merit and rendered a verdict against the lawyer in the amount of $649,500.

Sometimes, however, meeting with a prospective client to discuss possible representation creates a duty on the part of the lawyer to provide critical information such as the imminent expiration of the statute of limitations. In Miller v. Metzinger, 91 Cal.App.3d, 154 Cal.Rptr. 22 (1979), the plaintiff had consulted the attorney shortly before the statute ran. Although it was disputed that Metzinger notified the plaintiff of the firm's decision to decline the case prior to the expiration of the statute of limitations, the court held that it would be a breach of duty to fail to inform the client of the statute issue and of the need to protect the case by filing within the prescribed time.

Unrepresented Parties
An unrepresented party to a transaction, even if adverse to the lawyer's actual client, may sometimes claim, after something has gone wrong, that he believed the lawyer who represented another party was also representing him. He may have a reasonable basis for that belief because the lawyer has provided legal advice to him, or has done or said thing to lead him to form that belief. Under the Model Rule 4.3 and the rules of most jurisdictions, if there is any ambiguity as to whether there is an attorney-client relationship, it always devolves on the lawyer clarify the relationship.

An illustration of the problems that arise when the identity of the client is not clear is the case of Kotzur, v. Kelly, 791 S.W.2d 254 (Tex. App. 1990), in which an attorney was retained by a man who was selling land to his two sons. The sons did not retain another attorney. When they later learned of a lien on the property, they sued the lawyer for malpractice. One of the sons testified that he believed the lawyer was also representing them "as far as getting the papers legally fixed up." Although the lawyer asserted that he was not their attorney, he testified, "I didn't feel I was dealing with two different parties here," and admitted that he prepared the transaction documents on a "family-type basis." He also received from the sons $750 as attorneys fees. The court found that he was the sons' attorney. 

When an officer, director or other constituent of the corporation believes that the lawyer also represents his interests, the lawyer may be subject to a suit for malpractice if the individual does not believe his interests were properly protected. Again, however, the belief must be a reasonable one. In Bartholomew v. Bartholomew, 611 So.2d 85 (Fla.App. 1992), the attorney represented a corporation and one of the two shareholders, the wife of the other shareholder. The husband claimed that the attorney also represented him because he had spoken with the attorney "several times on the golf course," during which time he "felt . . . freely [sic] to talk just business in general." Although the court applied the "reasonable belief" test, it found that the husband did not have a reasonable belief that the attorney represented him. The lawyer could have avoided having to defend himself if he had taken steps to clarify who was, and who was not, his client. 

Informal Contacts
Lawyers are frequently approached at family gatherings and other social events by someone asking if he or she can "run something by" the lawyer. If the lawyer listens to the story, an attorney-client relationship may have been created. As noted above, one of the indicia of a reasonable belief that there is an attorney-client relationship is that the putative client believes he is consulting a lawyer. In the social setting, the putative client went to a non-legal setting for a social event, not to a place where he expected to receive legal services such as a law office. On the other hand, he probably did approach the lawyer knowing that the person was a lawyer.

The second indicia of a reasonable belief that there is an attorney-client relationship is that the putative client provides confidential information that will be protected by the attorney-client privilege. In a social setting, with many other people around, there is probably no reasonable expectation that any information is intended to be confidential, unless the lawyer and the guest go off to a private place to discuss the matter. Whether an attorney-client relationship has been created may depend on the specific facts of the case, but the risk is there.

A telephone conversation may be sufficient to create an attorney-client relationship if the prospective client provides confidential information. If the conversation is brief, the prospective client provides only general information and the lawyer gives only his mental impressions without having been called upon to formulate a legal strategy, it is unlikely that a court will find that an attorney-client relationship was formed. In re Marriage of Zimmerman, 20 Cal.Rptr.2d 132 (Cal.App. 1993).

Web sites and e-mail communications may be used to establish an attorney-client relationship when the two indicia of such a relationship may be met. The prospective client may go to the web site because it is that of a lawyer. If the web site invites people to send legal inquiries by e-mail, that invitation may create a reasonable belief that the lawyer will respond. the prospective client may provide confidential information, expecting a legal opinion. The risk is there.

Risk Management Solutions
The basic risk management principle that may best assist in avoiding claims from informal consultations is to make it a point never to give advice unless you have already agreed to accept the representation. Do not provide specific advice about the statute of limitations, but only state that claims may become time-barred, so it is important to seek the advice of another lawyer immediately.

Avoid listening to confidential information about a person's legal matter at a social event. When approached by someone in such a setting, consider declining to listen at all, and asking that person to call your office to make an appointment. Explain that all legal matters are taken seriously, and you do not give "off-the-cuff" legal advice. Make it clear that you do not create attorney-client relationships outside of the office.
When you have consulted with a prospective client and have declined to represent him or her, consider making a record of the declination by sending a non-engagement letter. Such a letter should clearly and unambiguously state that you are not representing that person and that you are not expressing an opinion about the merits of her case. 

If you have received confidential information from a person you declined to represent, place that person's name in your conflict of interest data base. If a party adverse to that person seeks your representation in the matter that was the subject of the confidential information, you may be precluded from representing that adverse party.

If you have a web site, do not invite inquiries about legal issues. Consider adding a disclaimer that the web site is not intended to form an attorney-client relationship and that no such relationship will be formed until you perform a conflicts check and agree to the representation. State that no confidential information should be provided until you agree to represent the prospective client.

Taking these precautions may help you avoid a claim by someone you never thought was your client.