Opinion ID: 1182126
Heading Depth: 2
Heading Rank: 2

Heading: Attorney's Duties Toward Third Parties.

Text: Even in the absence of an attorney/client relationship, however, liability could still exist in this case. We next turn to whether Cody owed a duty of care to the Bohns even though they were not his clients. Traditionally, a rule of strict privity limited an attorney's liability for malpractice. Under this rule, a malpracticing attorney could be held liable only to the attorney's own clients. See Stangland v. Brock, 109 Wn.2d 675, 680, 747 P.2d 464 (1987). [6] Privity of contract, however, is no longer required in all cases. Under certain circumstances, an attorney may be held liable for malpractice to a party the attorney never represented. Two theories provide the basis for this expanded liability. Stangland, at 680. First, an attorney may be held liable for negligence toward third party beneficiaries of an attorney/client relationship. Stangland, at 681; Bowman v. John Doe, 104 Wn.2d 181, 188, 704 P.2d 140 (1985). Second, an attorney may be held liable under a multifactor balancing test developed in California. This test involves analysis of the following six factors: the extent to which the transaction was intended to affect the plaintiff; the foreseeability of harm to the plaintiff; the degree of certainty that the plaintiff suffered injury; the closeness of the connection between the defendant's conduct and the injury; the policy of preventing future harm; and the extent to which the profession would be unduly burdened by a finding of liability. The inquiry under this multi-factor test has generally focused on whether the attorney's services were intended to affect the plaintiff. (Citations omitted.) Stangland, at 680; see also Bowman, at 187-88. Under the multifactor test, genuine issues of material fact exist as to whether Cody owed a duty of care to the Bohns. Each factor of that test will be examined separately. 1. Intent to affect the Bohns. A reasonable factfinder could infer from the evidence that Cody intended to affect the Bohns when he discussed the consequences of the proposed security arrangement for the $50,000 loan. An inference can reasonably be drawn from the evidence that Cody only told a portion of the truth in order to increase the likelihood that the Bohns would loan the money to the Folletts. 2. Foreseeability of harm. A reasonable factfinder could also infer that Cody's misleading statements would foreseeably harm the Bohns. First, given Lucille Bohn's apparent inexperience in financial affairs and given that she was lending money to her own daughter, it was certainly foreseeable that she would rely on Cody's statements about the fulfillment deed rather than seek verification elsewhere. Moreover, Cody was fully aware of the Folletts' recent financial difficulties, having represented them in at least two actions against their creditors. He knew that the Folletts had not been able to arrange conventional financing and that the IRS was having difficulties collecting payments from the Folletts in the year immediately preceding his misleading statements. Given this knowledge, a factfinder could find it foreseeable that Cody's statements would harm the Bohns. 3. Certainty of harm. The Bohns lost $50,000  their life savings  in this transaction. 4. Proximity of harm. The Bohns' harm was proximately caused by the combination of the Folletts' failure to repay the money they borrowed and the failure of the fulfillment deed to provide any security. Based on the record so far developed in this case, we conclude that although Cody was not responsible for his clients' failure to repay the Bohns, he was directly responsible for the Bohns' reliance on the ineffective security and he had reason to know that the Folletts' financial situation was such that the security might actually be needed. Under these facts, Cody's conduct is proximately connected to the Bohns' harm. 5. Policy of preventing harm. This factor weighs strongly in favor of finding a duty. Based on the record so far developed in this case, we conclude the misleading nature of Cody's statements would justify imposing a duty of care, taking into account the amount of money here at stake, the foreseeability of the damages that the Bohns could suffer in this transaction, the foreseeability of their reliance, the familial relationship between the Folletts and the Bohns, and Lucille Bohn's express statements to Cody that she would make the loan only if she received absolute security. The policy of preventing harm under these circumstances is strong indeed. 6. Burden on the legal profession. Balanced against the importance of providing a remedy to those harmed by attorneys is the recognition that imposing liability could place an undue burden on practicing attorneys. Attorneys have a duty of zealously representing their clients within the bounds of the law. When their clients have opposing interests with third parties, attorneys are supposed to represent their clients' interests over the interests of others. Imposing liability in the present case will not unduly burden an attorney's duty to represent his or her own clients. Under the extreme facts of this case, we hold simply that an attorney should advise the unrepresented party to seek independent counsel before the attorney discusses the transaction with that party. It was not enough in this case that Cody told Bohn that he was not acting as her attorney. This information does not sufficiently convey to the general public the adversarial stance an attorney must take toward those having interests different from the client's own interests. Moreover, if the attorney undertakes to tell part of the story to an unrepresented party with whom the attorney's client is doing business, the attorney must take reasonable steps to tell the whole story, not just the self-serving portions of it. Because a duty could still exist between Cody and the Bohns, the Bohns' contract and negligence causes of action were improperly dismissed.