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Lawyer-Client Relationships May Be Over Before They Started

In Atkinson v. Haug, it was shown that an attorney's firm can only be held liable under a theory of vicarious liability if the Defendant Attorney was shown to be acting within the scope of his employment or with apparent authority from that firm. The mere fact that the defendant, Daniel M. Haug happened to be a lawyer did not necessarily mean that everything he said was "legal advice." Since there was no evidence that Haug was acting within the scope of his employment at his law firm John T. Acton, P.C ("Acton"), vicarious liability did not exist. 

Joseph B. Atkinson, Jr. entered into a partnership agreement for an apartment complex with Haug, who at the time was his friend and business associate. Haug was also a lawyer at Acton. The business investment ultimately failed, and Atkinson brought a legal malpractice action against Haug for misrepresentation and professional negligence, in an effort to recoup his losses. Atkinson also sued Acton, Haug's firm, under the theory of vicarious liability, claiming that Haug offered faulty business advice within the scope of his employment at Acton. The trial court entered summary judgment in favor of Acton and Atkinson appealed.

In this case, the court stated the test set down in Sheinkopf v. Stone, that absent an express contract, an implied attorney-client relationship will be found if:

1) the purported client sought advice or assistance from the attorney;

2) the advice sought was within the attorney's professional competence;

3) the attorney expressly or impliedly agreed to render such assistance; and

4) it is reasonable for the putative client to believe the attorney was representing him.

927 F.2d 1259 (1st Cir. 1991). Further the court in this case stated that, "the purported client's subjective belief that an attorney-client relationship exists is not sufficient, absent the other three factors, to create the attorney-client relationship with the corresponding duty."

For a firm to be found liable for the tortious or negligent conduct of one of its attorneys, it must be established the attorney-employee was acting within the scope of his employment or apparent authority. Moreover, where an agent acts in his own interest and commits a fraud for his own benefit in a matter which is beyond the scope of his employment, the principal who has received no benefit therefrom will not be held liable for the agent's tortious act.

In this case, there was no express legal agreement, no fee arrangement or retainer, no discussion of legal consequences of the deal, and no indication that Atkinson asked Haug for legal advice. Therefore, there was no express or implied lawyer-client relationship. A subjective belief that a lawyer-client relationship exists is an insufficient basis to defeat summary judgment. If there was no lawyer-client relationship, it follows that Acton could not be held vicariously liable.

The take away from this point is simple, that just because you work with a partner who happens to be an attorney, this does not always mean that everything he or she says is legal advice. The best method to go about a partnership, whether it be with an attorney or anyone else is to put in writing exactly what the relationship between the partners is and make sure that both sides have read everything so they both know ahead of time exactly what they are in for.

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