Concept
Identifying the Nonclient
Lawyer's duty and standard of care to nonclients
Identifying the Nonclient
Before asking whether a lawyer owes a duty to someone outside the client-lawyer relationship, decide whether the plaintiff is outside it at all. In most cases the duty of care requires an attorney-client relationship, and the exceptions to that rule are narrow.1 A plaintiff who proves a relationship needs no exception, and the ordinary malpractice analysis governs the claim. A plaintiff who cannot prove one must find an exception. A mistake at this stage sends the whole answer in the wrong direction: an essay that hunts for a third-party theory on behalf of someone who was in fact the lawyer's client solves a problem that never existed and skips the analysis that does govern.
Client identity is contested in three recurring settings. In the first, a relationship is implied from what the parties said and did, though no retainer was signed and no fee was charged. In the second, an organization hires the lawyer. The client is then the organization itself, acting through its authorized constituents, so the officers, employees, and owners who deal with the lawyer are not automatically clients too. In the third, the person who pays the lawyer is not the person the lawyer represents, so payment and representation must be analyzed separately.
In all three settings the answer turns on the dealings between the parties, not on a label either side attaches afterward. A lawyer who says, “I never represented you,” and a plaintiff who says, “I always thought you were my lawyer,” both make claims that a court will test against what was requested, what was done, and what a reasonable person in the plaintiff's position would have understood. The implied relationship comes first, because it is the most common way for a plaintiff who never signed an engagement agreement to turn out to be a client.
Implied Client Relationships
Most client-lawyer relationships begin with an engagement agreement, but none is required. A relationship may arise by implication from what the parties say and do, and the lawyer then owes the person the same duty of care that an express client would receive.2 Courts look for two manifestations. The person must show, by words or conduct, that the lawyer should act on the person's behalf, and the lawyer must accept. Acceptance may be explicit, or it may be inferred from silence when the lawyer knows, or reasonably should know, that the person is reasonably relying on the lawyer for legal services.3 Restatement of the Law Governing Lawyers § 14(1)(b) takes the same approach, and the Massachusetts decision in Miller v. Mooney puts the lawyer's side as a failure to head off known reliance: a relationship may be shown where the person reasonably relies on the attorney and the attorney, “aware of such reliance, does nothing to negate it.”4
Courts are in effect searching for an implied contract under which the lawyer will perform legal work, and the search rests on consent and reliance.5 The acceptance-or-silence requirement keeps a lawyer from taking the benefit of a consultation, such as the chance to size up a matter or to steer the person away from other help, while disclaiming responsibility for what the person did in reliance. Fees play no gatekeeping role. Neither payment nor a signed retainer is necessary, though a court may weigh both as evidence, because the question is whether the lawyer undertook to help. Paperwork bears on that question; it does not answer it.6 Togstad v. Vesely, Otto, Miller & Keefe is the usual anchor. A person consulted a lawyer about a potential medical malpractice claim, and the Minnesota Supreme Court treated seeking and receiving advice as enough where a reasonable person would rely on it.7 Edmonds v. Williamson reached a similar result for the husband of an injured party in a products liability matter, who signed no retainer and paid no fee but accepted the lawyer's services.8
Many courts hold that a unilateral belief, or an unreasonable one, that the lawyer is representing the person creates no relationship, and many require a concrete communication from the plaintiff asking the lawyer to represent them.9 A private assumption gives the lawyer nothing to answer. Silence counts as acceptance only when the lawyer knows or should know of the reliance, and a lawyer who has never heard from the plaintiff has no such knowledge. If assumptions alone created duties, anyone who heard that a lawyer was working on something nearby could claim professional care. An exam stem that says the plaintiff “assumed” or “believed” the lawyer was handling the matter is testing this limit. The analysis turns on what the plaintiff said to the lawyer and what the lawyer knew.
Implied-relationship claims depend on what was said, what the lawyer knew, and whether the reliance was reasonable, so the facts are usually in dispute. Whether a duty exists is a question of law for the court, but a number of courts leave contested facts about the relationship to the jury. A lawyer facing an implied-relationship claim therefore often cannot win on summary judgment.10 Appellate courts reversed summary judgment for the lawyers in Mansur v. Podhurst Orseck and Bloom v. Hensel because a triable issue existed about whether the plaintiffs were clients, and the court in Dixon Ticonderoga found a fact question whether the lawyer agreed to pursue a claim or knew or should have known the client thought so.11 Togstad itself is treated as a case in which the existence of the relationship was a question of fact.12 A strong answer to an implied-relationship problem therefore lays out the facts that point each way and does not announce the result as settled.
Receiving a lawyer's work product does not make the recipient a client. The Restatement makes clear that a relationship formed by agreement or by mistake requires a request for representation.13 A person handed a copy of a document the lawyer prepared for someone else, who never asks the lawyer to represent them, stands outside the relationship whatever use they make of the document. The document tells the lawyer nothing about the recipient, since it carries no authorization and no known reliance. That recipient is a nonclient and must find one of the exceptions taken up in later sections.
Entity Constituents
ABA Model Rule of Professional Conduct 1.13(a) answers the client-identity question for corporations and other legal entities: “A lawyer employed or retained by an organization represents the organization acting through its duly authorized constituents.”15 An organization can act only through people, so a lawyer who takes instructions, gathers facts, and delivers advice necessarily deals with officers, employees, and owners. The rule treats those people as the channel through which the entity speaks, which leaves the entity itself as the client. The duty of care therefore runs to the entity, and the individuals who deal with the lawyer each day are owed no duty on that basis alone.16
The rule takes this shape because an entity holds interests that can diverge from those of the people who run it. An officer may favor a transaction that protects his own position while the enterprise is better served by a different course. Treating the entity as the client keeps the lawyer's loyalty pointed at the enterprise and not at whoever gives instructions that day. It also avoids a worse alternative. If every constituent who spoke with the lawyer became a client, the lawyer would owe undivided loyalty to a crowd of people with potentially conflicting claims.
The consequence for a malpractice claim is direct. A lawyer who represents an entity can be sued for malpractice by the entity, but not by its chief executive, its general counsel, a lower-level employee, or a shareholder merely because that person dealt with the lawyer.17 Courts have applied this reasoning to deny claims by constituents in decisions such as In re Banks and Bovee v. Gravel.18
The implied-relationship analysis still applies to a constituent, but it demands more than ordinary dealings. A constituent who instructs the lawyer on the entity's business is presenting the entity's request, and the lawyer's acceptance of that request runs to the entity. To become a personal client, the constituent needs something further: a request that the lawyer act for the constituent individually, together with the lawyer's acceptance or the lawyer's silence in the face of known and reasonable reliance.
The rule is explicit that this further step is available. A lawyer may represent one or more constituents of the organization in addition to the organization, either by express agreement or by implication, and when that happens both the entity and those constituents are owed a duty enforceable in a malpractice case.19 Model Rule 1.13(g) permits the dual representation but cautions that it requires compliance with the conflict-of-interest rules.20
The link between the two relationships runs in one direction only. A lawyer who represents a constituent does not, by virtue of that relationship alone, also represent the organization.21 An exam stem that describes an executive consulting a lawyer about the executive's own problem therefore does not make the company that lawyer's client. When a stem has an officer, employee, or owner suing the lawyer the company hired, ask first whom the lawyer represented. If the answer is the entity alone, the individual is a nonclient and must look to the exceptions taken up in later sections.
Fee Payors and Insureds
A lawyer's fee is not required to make someone a client, and the rule has a flip side: paying a fee does not make the payor a client either.23 When a lawyer is retained to represent one person and another person or entity pays the bill, the payor is not a client on that basis alone. The payor is owed no duty enforceable in a malpractice action unless an express agreement says otherwise or other facts create an implied relationship.24 Restatement of the Law Governing Lawyers § 134 addresses third-party payors, and decisions applying the rule cite it.25
Payment and representation answer different questions. Payment shows who funds the work. It does not show whom the lawyer agreed to serve, whose confidences the lawyer is keeping, or whose judgment the lawyer is protecting. If a check were enough to create client status, a parent, an employer, or a friend who covered a retainer would acquire a malpractice claim against a lawyer who owed undivided loyalty to someone else. The lawyer would then face the same divided loyalty that the privity rule exists to prevent. The implied-relationship test still governs the payor. The payor must have manifested that the lawyer should act for the payor personally, and the lawyer must have accepted, either expressly or by staying silent while knowing of reasonable reliance. A court may weigh payment as a fact, but payment does not complete that showing.
In Fox v. White a stepfather paid the legal fees for his stepson's representation, and the lawyer represented only the stepson. When the stepfather later sued the lawyer for malpractice, the court affirmed dismissal because he was a third-party fee payor and not a client.26 The same line of decisions includes a man who paid the fees for the divorce representation of the woman he later married in Krug v. Krug, and a payor of a wife's fees in a divorce action in Helms v. Helms.27 Divorce is a setting in which the payor's interests may diverge sharply from the represented party's, which shows why the check cannot carry the payor into the relationship.
An exam stem in which a relative, an employer, or a friend pays for someone else's representation is therefore testing whether anything beyond the payment ties the payor to the lawyer. If the payor only wrote the check, the payor is a nonclient who must look to the exceptions taken up later. If the payor asked for the lawyer's own advice and received it, or signed an engagement that names the payor, the payor is a client by agreement or implication.
Insurance defense adds a second layer to the fee-payor problem, because the payor is a business with its own stake in how the case is handled. An insurer that agrees to defend a policyholder typically selects and pays a lawyer to represent the insured against a claim. Jurisdictions divide on whom that lawyer represents. The traditional view treats the lawyer as thrust into a tripartite relationship in which the insurer and the insured are both clients.29 Many courts still follow it, including Nevada Yellow Cab Corp. v. Eighth Judicial District Court and Spratley v. State Farm Mutual Automobile Insurance Co.30 Beginning with a 1991 Michigan decision, Atlanta International Insurance Co. v. Bell, a growing number of jurisdictions have held that the insured is the only client.31
The split exists because the insurer's role is real. It pays, it often has a financial stake in the outcome, and it deals with the lawyer throughout the case, yet the insured is the person whose liability is on the line and whose interests can diverge from the insurer's. Courts disagree about whether that involvement makes the insurer a second client or leaves it in the position of a payor. We take no side in that disagreement, because an exam answer depends on the rule the governing jurisdiction follows, and a problem that does not identify the rule can be analyzed under both.
The two approaches produce the same result for the insured and different results for the insurer. Under either approach the insured has standing to sue the lawyer for malpractice, even though the insurer pays the bills.32 Under the dual-client approach the insurer is similarly situated, because it is itself a client. Under the sole-client view the insurer starts as a fee payor and holds no claim from the payment alone. It may still sue for malpractice if the retainer agreement makes it a client, or if a relationship arises by implication, as where the lawyer has given legal advice directly to the insurer.33 Those are the same two routes open to any fee payor.