A dispute exists among the bench and bar as to whether attorney immunity from suit by a non-client is limited to conduct that is related to litigation.
In 2015, the Supreme Court of Texas recognized that attorneys do not owe a professional duty of care to third parties who may be damaged by the attorney’s negligent representation of a client. Cantey Hanger, LLP v. Byrd, 467 S.W.3d 477, 481 (Tex. 2015). The policy reasons behind this holding is that attorneys owe duties of loyalty to their clients and that loyalty shouldn’t be compromised by imposing conflicting duties to non-clients. Thus, the Court outlined a general rule that attorneys are immune from civil liability to non-clients. There are at least two important parameters to this general rule. First, the lawyer must have been acting within the scope of his or her representation of the client at the time in question. Second, the activity in question must be of a type that lawyers ordinarily perform.
Whether there are exceptions to this general rule and what those exceptions might be has been the subject of a number of state and federal court opinions. Most notably is the question of whether attorney conduct that is unrelated to litigation is protected by immunity. The reason this question even exists is because of a dispute found in the majority and dissenting opinions in Cantey Hanger. The justices in the Cantey Hanger case disagreed over (1) whether the attorney’s conduct in Cantey Hanger occurred in the context of litigation; and (2) whether attorney conduct that is unrelated to litigation should by immunized.
The attorney conduct at issue in Cantey Hanger involved a bill of sale that was drawn up to facilitate the transfer of title of an airplane from one party to another. Because the transfer of title had been ordered by a final divorce decree, a majority of the justices held that the conduct occurred “in connection with” litigation and was subject to the general rule of immunity. The majority therefor concluded that it was not necessary to decide whether immunity applies to conduct outside of the litigation context. Four justices dissented and asserted their view that the conduct was not conduct occurring in a litigation context. These justices also would have held that attorney immunity did not apply. Because of this 5-4 split on the court, litigants in legal malpractice cases have frequently disputed whether the general rule of immunity applies to conduct unrelated to litigation and what conduct qualifies as being unrelated to litigation.
An opinion issued in December by the Houston Fourteenth District Court of Appeals tees up this disputed issue for decision by the Supreme Court of Texas. In NFTD, LLC v. Haynes & Boone, LLP, No. 14-17-00999-CV, the attorney conduct at issue involved alleged concealment and false representations made by attorneys who handled an asset purchase agreement. The trial court had dismissed the claim against the attorneys after concluding that attorney immunity was applicable. The non-client plaintiffs appealed.
The court of appeals reversed the trial court’s judgment after concluding that attorney immunity does not apply. The court of appeals took the Cantey Hanger majority at its word that the court was not deciding whether attorney immunity applied to conduct occurring outside of litigation. The court rejected the idea that fidelity to the client was alone enough to impose immunity even outside of the litigation context. The court observed that a litigation context allows for other remedies for disciplining an attorney that do not exist outside of the litigation context. The court rejected holdings by federal courts that immunity applies even in the non-litigation context.
The defendant attorneys in the NFTD case are in the process of seeking review of the court of appeals’ decision by the Supreme Court of Texas. Stay tuned for updates.