What's Your Liability for Client Communications to Third Parties?
Among President Trump's covfefe's, dictating Donald Trump Jr.'s statement about a meeting with a Russian lawyer registers high on the Richter scale.
The exact impact will be determined by history. Right now, it's big enough that the special counsel has convened a grand jury amidst growing evidence concerning the Russia affair.
It is a lesson for Trump but also for attorneys who dictate information for clients that is destined for third parties.
Duty to Third Parties
Although attorneys generally owe no duty to third parties because of a lack of contractual privity, that changes under certain circumstances. Under California Business & Professions Code Section 6068(d), for example, an attorney should never mislead a judge or judicial officer.
"This limitation delineates conduct at the far end of the unacceptable spectrum -- an attorney's duty not to misrepresent facts," Jennifer Becker wrote for the State Bar of California. "An attorney who steps over this ethical line dealing with third parties is not always protected from liability."
Basically, courts draw the line at unethical and illegal acts. Attorneys essentially owe a duty to the the truth and to the law.
"An attorney who engages in criminal activity, whether or not it's prosecuted as a crime, is not entitled to expeditious dismissal of third-party claims," Becker said.
Attorney Opinion Letters
In some fields of law, attorneys write opinion letters that they know are intended for third parties. Lawyers in mergers and acquisitions, financing and loan agreements, and buy-sell transactions often provide opinion letters to confirm legal and factual matters.
"Increasingly, when something goes wrong with the transaction, aggrieved buyers and lenders are seeking recourse, not just against the seller or borrower but also against the law firm that wrote the opinion letter," according to FindLaw's Corporate Counsel.
In National Bank of Canada v. Hale & Dorr, for example, attorneys provided an opinion letter for the borrower. When the borrower defaulted on the $55 million loan, the bank sued the lawyers for negligent misrepresentation.
The court denied the law firm's motion for summary judgment, concluding that the bank was a third-party beneficiary of the firm's contract with the borrower.
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