Establishing the Attorney-Client Relationship – from the Attorney’s Perspective

Understanding the Requirements for a Legal Malpractice Case – Part 5

How could my client sue me?

In Part 4 of this series, we discussed the attorney-client relationship from the client’s perspective. While there is some useful information in there for lawyers, it’s worth dedicating this final article of the series to helping you ensure that all your attorney-client relationships are entered into knowingly and intentionally.

Even responding to the simplest call or a request for information from a prospective client may create the impression of a duty to that prospect, or even worse, cause a conflict that would keep you from representing other clients. The latter does occur occasionally, especially for those attorneys with higher profile experience. Ending an attorney-client relationship can be equally challenging but also equally critical. It is essential to terminate any duty created. You may think your job is done, but would your client agree?

Here is an example that calls into question whether an attorney-client relationship has ended. You be the judge, and I will provide some commentary below.

Did the attorney’s duties end when he intended?

A business seller hired a lawyer to handle the business sale. A large part of the sale was financed by the seller (client), so the lawyer filed the required U.C.C. financing statements to secure a blanket lien on business assets. The lawyer never told the client that the statements needed to be renewed every 5 years. The statements were not renewed, so other subsequently filed U.C.C. statements took priority. The client realized the mistake only after the buyer filed for bankruptcy. The client was only able to recover a small percentage of the purchase price from the bankruptcy proceedings, so he sued his lawyer.

And the legal malpractice votes are in…..

Did the client have a valid claim against the lawyer? Yes, although it took a Georgia Supreme Court decision to settle the issue. The real question was whether the lawyer’s duty to the client ended after the lawyer filed the initial U.C.C. financing statements. The answer – no! This is the landmark case of Barnes v. Turner. I cover this in a CLE seminar series on Risk Management and Professional Ethics that we conduct for local Bar Associations, and I am always surprised at how few lawyers know about the case.

The lawyer thought his job was done and his duty to the seller client ended when the original U.C.C. statements were filed, and the (then) four year legal malpractice statute of limitations applied. Lower courts agreed but the Georgia Supreme Court did not. It held that, since the lawyer failed to mention the renewal and failed to advise the client that he would not renew the financing statements on the client’s behalf, the lawyer undertook a duty to renew the financing statements. The client could have reasonably relied on the lawyer even though there was no written documentation.

In this case, the statute of limitations began to run when the lawyer failed to renew the financing statements five years later – not when the lawyer filed the original U.C.C. financing. This has been termed the springing statute of limitations. You can view the Supreme Court opinion by clicking here: Barnes v. Turner, 606 S.E. 2d. 849 (Ga. 2004), although please note that this site uses pop-up advertising windows.

Clearly defining the beginning and the end of the attorney-client relationship

Here are some specific tactics to help you clearly delineate when an attorney-client relationship will begin and end.

• Check for conflicts before the consultation. Get the names of all involved parties and witnesses (individuals and businesses). Run your conflict check before discussing case facts, so if the check comes up positive you can’t later be conflicted out.
• Train a non-lawyer to run the conflict check. Then you can make a neutral determination and decide whether to have substantive conversations about the facts with the prospective client.
• Use engagement letters. These are required for contingency cases, but use them for all cases. To avoid any confusion, define the beginning and end point of the representation, and also address specifically what you will and will not do.
• Use non-engagement letters with every potential client. This is especially important when documents are promised but never received, when a prospect sends documents via email, or when a prospect just drops off a file at your door—yes, this does happen.
• Use disengagement letters to end the relationship/duty. This is one of the top mistakes I see that gets lawyers into hot water – when the lawyer thinks he’s done, but the client does not.

Remember that attorney-client relationships and conflicts are not mutually exclusive. Using the above tactics, supported with consistent documentation, can help a lawyer avoid claims or quickly resolve them if they do occur. Also remember that you may not have an attorney-client relationship, but still be conflicted out of subsequent representation by listening to facts from the prospect.

Don’t let a prospective client unknowingly or intentionally put you in these situations. When in doubt, seek the advice of someone with specific experience in the nuances of attorney-client relationships and legal malpractice.