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). There are two policy reasons behind this holding: 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 occurring outside of the context of litigation is protected by the general rule of immunity or whether such non-litigation conduct is an exception. 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 taking place outside of litigation should by immunized.
Cantey Hanger and Attorney Conduct Outside of Litigation
The attorney conduct at issue in Cantey Hanger related to a bill of sale 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 therefore 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 continued to dispute whether the general rule of immunity applies to conduct outside of litigation and what conduct qualifies as being outside of the litigation context.
NFTD and the Supreme Court of Texas
An opinion issued in December by the Houston Fourteenth District Court of Appeals tees up this open question for decision by the Supreme Court of Texas. In NFTD, LLC v. Haynes & Boone, LLP, No. 14-17-00999-CV, the attorney conduct in question had to do with alleged concealment and false representations made by attorneys who were involved in an asset purchase agreement. The trial court had dismissed the claim against the attorneys after concluding that attorney immunity was applicable. The 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 to discipline 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.