An attorney advising a client has no duty to a third party affected by that advice unless there is a “showing that the legal advice was foreseeably transmitted to or relied upon by a third party or the third party was or were intended beneficiaries of a transaction to which the advice pertained.” (Goodman v. Kennedy (1976) 18 Cal.3d 335, 339.) In such a circumstance, the third party becomes a client of the attorney and must be cleared for conflicts of interest and the relationship is subject to all professional responsibilities and ethical considerations.
Thus, it is imperative the attorney identifies all of the actual clients to the transaction and explains the potential conflicts of interest that will require a waiver after informed consent.
Clear and Unambiguous Intent
Determining whether an attorney should be held liable to a third party requires the balancing of several factors, including:
- the extent to which the transaction was intended to affect the third party;
- the foreseeability of harm;
- the degree of certainty that the third party suffered injury;
- the closeness of the connection between the defendant’s conduct and the injuries suffered;
- the moral blame attached to the defendant’s conduct; and,
- the policy of preventing future harm.
(Biakanja v. Irving (1958) 49 Cal.2d 647, 650 (enumerating factors; duty found). Later cases have considered two additional factors: the likelihood that the imposition of liability might interfere with the attorney’s ethical duties to the original client (Goodman, 18 Cal.3d at 344; St. Paul Title Co. v. Meier (1986) 181 Cal.App.3d 948, 952) and whether imposition of a duty would impose an undue burden on the profession (Lucas v. Hamm (1961) 56 Cal.2d 583.)
Reliance by Third Party was Foreseeable
In addition, Courts have also found a duty of care to third persons if the attorney expected that the legal advice given to the client would be transmitted to or relied on by the non-client. (Courtney v. Waring (1987) 191 Cal.App.3d 1434.)
And the attorney who performs work for someone else at the request of a client when the client has or may have an interest in the outcome must treat the two matters as dual representation cases requiring compliance with conflict-of-interest rules.