Duties to Non-Clients: The Exception, Not the Rule
The standard malpractice claim pits former client against professional. In most scenarios, the client alleges that the professional’s conduct fell below the acceptable standard and/or below the expectations set forth in the engagement contract. On occasion, non-clients test the waters and sue professionals under various theories. However, the knee-jerk defense to claims from non-clients is usually lack of privity. Lack of privity is often a successful defense but there are exceptions to the general rule. Professionals must be aware of these exceptions and take into account non-clients who may have standing to assert a malpractice claim.
A recent case before South Carolina’s Supreme Court highlights a scenario in which an attorney was subject to liability by a non-client. In that case, the plaintiff filed a legal malpractice claim against the defendant attorney due to an alleged drafting error in preparing the plaintiff’s uncle’s trust. As a result of the attorney’s alleged error, the plaintiff alleges that she was disinherited from her uncle’s estate which contravened the uncle’s intentions.
The trial court dismissed the claim because there was no attorney-client relationship. The court also dismissed the plaintiff’s intended beneficiary argument. The plaintiff appealed.
On appeal the Supreme Court reversed. The court held that the plaintiff alleged facts sufficient to overcome the privity requirement. The court reasoned that where a client hires counsel to document an estate for the benefit of heirs, the attorney’s obligations are to carry out the client’s intent – an intent is directly and inescapably for the benefit of the third-party beneficiaries. The court maintained that in these circumstances, retaining strict privity would serve to improperly immunize this particular subset of attorneys from liability for professional negligence. The court ultimately stated that it would join the majority of states that have recognized causes of action in this instance and that doing so is the just result.
This decision is the exception to the general rule applied to all professionals but is often the case for estate planning attorneys. The decision highlights the limited instances in which an attorney owes a duty to non-clients. All professionals should consider the possibility that non-clients are relying on their services and may have expectations arising from a client engagement. In those scenarios, professionals should pause and, when appropriate, clearly communicate to the non-client that there is no professional relationship. In this manner, professionals may reduce their exposure to liability from non-clients.