THE ZONE OF protection lawyers have traditionally enjoyed, distancing and shielding them from liability for their clients’ actions, has been carefully articulated with the publication of the Restatement of the Law (Third) Governing Lawyers.

A lawyer’s exposure to non-client third parties for claims of malpractice involving the lawyer’s own negligent acts is a subject frequently addressed by courts. In Simpson v. Calivas, 139 N.H. 1 (1994), for example, the New Hampshire Supreme Court held that an attorney who drafted a will owed a duty of reasonable care to intended beneficiaries. The Restatement of the Law (Third) Governing Lawyers deals with such claims in detail, and a prior article by us considered this subject. With respect to tort claims based on theories other than negligence, such as the intentional bad acts of fraud or conversion, the Restatement generally strips attorneys of any presumptive shield for their actions, and subjects them to liability to non-clients on the same terms as govern non-lawyers. Lawyers are still immune from claims where they reasonably could not and did not know of such actions taken by clients.

Section 56 of the Restatement provides that "a lawyer is subject to liability to a client or non-client when a non-lawyer would be in similar circumstances." The attorney/client relationship is no protection from liability if a lawyer either commits or assists a client in the commission of a fraud or conversion of another’s property.

The Restatement expresses what courts have consistently held. For example:

• Where it was alleged that a law firm aided and abetted a client’s fraud and the firm knew or should have known of the client’s fraudulent misrepresentations, a motion to dismiss failed. See Norman v. Brown, 693 F.Supp. 1259 (D. Mass. 1988).
• A law firm was held liable to a non-client, a creditor of the firm’s client, where the firm released to the client funds the firm received from an insurance company after a favorable judgment, despite knowledge of a prior valid assignment to the client’s creditor. Bonanza Motors, Inc. v. Webb, 657 P.2d 1102 (Idaho Ct. Appeals 1983).

Thus, lawyers should not assume their duty to a client completely outweighs an obligation to avoid harm to a non-client.

While a lawyer’s status does not provide an automatic defense against non-client’s claims such as fraud or conversion, the Restatement does set out defenses and exceptions to liability for certain types of claims brought by non-clients.

Section 57 of the Restatement suggests that a lawyer has an absolute privilege to publish material concerning a non-client where the publication is reasonably considered part of a proceeding in which the lawyer is participating, is published to someone involved in the proceeding, and the material is related to the proceeding. Cf. McGranahan v. Dahar, 119 N.H. 758 408 A.2d 121 (1979). This section also provides that a lawyer is not liable to a non-client for malicious prosecution or related types of claims, if the lawyer has "probable cause" for acting. This section further provides that advising a client on matters involving contractual relations should not ordinarily subject an attorney to liability.

The Restatement purports to summarize existing law. Hence, it is not surprising to see that courts allow a certain zone of protection to lawyers acting as advocates:

• An attorney was not liable for tortious interference with contract where the lawyer advised student clients to withdraw from college. See Brown Mackie College v. Graham, 981 F.2d 1149 (10^th Cir. 1992).
• A law firm was not liable for helping a client violate antitrust laws by threatening and bringing lawsuits and forcing compliance with franchise arrangements. See Brown v. Donco Enterprises, Inc., 783 F.2d 644 (6^th Cir. 1986).
• A law firm was not liable for federal securities law or state law fraud claims where the firm allegedly failed to disclose material information in an offering memorandum. See Austin v. Bradley, Barry & Tarlow, 836 F.Supp. 36 (D. Mass. 1993).

Allowing limited immunity in these situations permits a lawyer to continue to represent clients with appropriate zeal. The Restatement appears to recognize that other methods exist to control improper lawyer conduct.

The Restatement makes it clear that lawyers can be subject to civil liability to non-clients under many of the same circumstances as non-lawyers. In situations where attorneys actively assist clients to commit tortious conduct, courts have imposed liability. Nevertheless, the Restatement provides certain defenses where lawyers act merely as advocates for clients.

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