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End-of-life notice: American Legal Ethics Library

As of March 1, 2013, the Legal Information Institute is no longer maintaining the information in the American Legal Ethics Library. It is no longer possible for us to maintain it at a level of completeness and accuracy given its staffing needs. It is very possible that we will revive it at a future time. At this point, it is in need of a complete technological renovation and reworking of the "correspondent firm" model which successfully sustained it for many years.

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Arizona Legal Ethics

I. CLIENT-LAWYER RELATIONSHIP

1.1   Rule 1.1 Competence

1.1:100   Comparative Analysis of Arizona Rule

1.1:101      Model Rule Comparison

The 2003 amendments to the Arizona Rules of Professional Conduct made no changes to the text of this Rule. There were minor changes to the Comments to the Rule, including a clarification that agreements with clients about the scope of a representation may limit matters for which the lawyer is responsible. A new Comment [7] explains that defense lawyers in capital cases, whether retained or appointed, are to comply with the standards for appointment of counsel set forth in the Arizona Rules of Criminal procedure.

The Comment to AZ-ER 1.1 contains a paragraph 7, not contained in the Comment to MR 1.1, which provides that defense lawyers in capital cases, whether appointed or retained, are to comply with the standards for appointment of counsel set forth in the Arizona Rules of Criminal Procedure.

1.1:102      Model Code Comparison

DR 6-101(A)(1) of the former Model Code of Professional Responsibility provided that a lawyer should not accept an engagement in a matter "which he knows or should know that he is not competent to handle, without associating himself with a lawyer who is competent to handle it." The Arizona Supreme Court, however, did not adopt this particular provision of the Model Code. Arizona did adopt DR 6-101(A)(2) which required a lawyer to engage in "preparation adequate in the circumstances."

1.1:200   Disciplinary Standard of Competence

  • Primary Arizona References: AZ-ER 1.1
  • Background References: ABA Model Rule 1.1, Other Jurisdictions
  • Commentary: ABA/BNA § 31:201, ALI-LGL § 28, Wolfram § 5.1
  • AZ Commentary: State Bar of Arizona Manual on Professionalism (1992) 69-74

AZ-ER 1.1 requires that, at a minimum, a lawyer who accepts an engagement by a client must have "the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation." See Toy v. Katz, 192 Ariz. 73, 85, 961 P.2d 1021, 1033 (App. 1997). Despite the fact that providing a client with competent representation is at the very heart of a lawyer's professional obligations, violations of AZ-ER 1.1 appear to be one of the more frequently cited bases, generally in conjunction with violations of other provisions of the Arizona Rules of Professional Conduct, for the imposition of discipline on Arizona lawyers. Unfortunately, in many instances, the Opinion of the Supreme Court and/or the Order of the Disciplinary Commission imposing discipline for such violations does not describe the underlying conduct in any detail beyond characterizing it as a "failure to provide clients with competent and diligent representation." See Matter of Woltman, 181 Ariz. 525, 892 P. 2d 861 (1995); Matter of Woltman, 178 Ariz. 548, 875 P.2d 781 (1994); Matter of Elowitz, 177 Ariz. 340, 866 P.2d 1326 (1994); Matter of Evans, 175 Ariz. 404, 857 P. 2d 1258 (1993); Matter of Brown, 175 Ariz. 134, 854 P.2d 768 (1993); Matter of Soelter, 175 Ariz. 139, 854 P.2d 773 (1993); Matter of Loftus, 171 Ariz. 672, 832 P.2d 689 (1992); Matter of Engan, 170 Ariz. 409, 825 P.2d 468 (1992); Matter of Rantz, 169 Ariz. 56, 817 P.2d 1 (1991); Matter of Gaynes, 168 Ariz. 574, 816 P.2d 231 (1991); Matter of Young, 164 Ariz. 502, 794 P.2d 135 (1990).

Whether a lawyer has the requisite knowledge and skill to undertake a particular engagement depends upon a variety of factors, including the lawyer's general experience, how complex or specialized the matter is, whether the lawyer is able to devote the time and effort necessary to prepare adequately and whether the lawyer can refer the matter to an associate, or consult with or associate another lawyer of established competence in the area. A lawyer may be competent in one or more areas of the law and still lack the "requisite ability" in others. The Arizona Supreme Court has made clear, however, that the standard for the imposition of discipline for failure to provide competent representation is higher than the standard for imposing malpractice liability.

In Matter of Curtis, 184 Ariz. 256, 908 P.2d 472 (1995), the Court disagreed with a recommendation of the Disciplinary Commission that Curtis be suspended and placed on probation, and ordered a sanction of public censure and suspension instead. The proceeding arose out of Curtis' representation of one client who had hired a contractor to construct a swimming pool at the client's residence. After discovering that the job was more difficult than originally anticipated, the contractor ceased work and declared bankruptcy. There was a dispute between Curtis and the client concerning the scope of his engagement to deal with this situation. Curtis claimed that he had only been hired to look into the contractor's bankruptcy filing, did so, discovered that the contractor had no assets and advised the client that further action would be futile. The client claimed that Curtis was hired to secure a lift of the bankruptcy stay so that the client could pursue a claim against the Contractor's Recovery Fund. The Hearing Officer agreed with the client, as did the Court, and found that Curtis' failure to do what he was retained to do constituted a violation of AZ-ER 1.1. The Court went on to observe, however:

Neither failure to achieve a successful result nor mere negligence in the handling of a case will necessarily constitute an ER 1.1 violation. We recognize the important distinction between conduct by an attorney that is simply negligent and conduct that rises to the level of an ethical violation. Clearly, the Bar must be vigilant in guarding the rights of clients, "but care should be taken to avoid the use of disciplinary action . . . as a substitute for what is essentially a malpractice action . . ." Thus, although not every negligent act violates an ethical rule, neglect in investigating the facts and law necessary to present a client's claim crosses the fine line between simple neglect and conduct warranting discipline.

We conclude that Respondent's actions or inactions went beyond mere lack of success or an act falling below the applicable standard of care. Respondent could not provide competent representation because he failed to have, attempt to obtain, or apply the "legal knowledge, skill, thoroughness and preparation reasonably necessary" for his representation of Client in this matter. ER 1.1 (emphasis added). Respondent may not have known what to do or how to do it, but for whatever reason he did not attempt a thorough review of the matter and did not prepare or do anything beyond a cursory check of the bankruptcy file. Respondent ultimately did no more than tell Client what he knew before hiring Respondent. We conclude that Respondent violated ER 1.1.

Id., 184 Ariz. at 261-62; 908 P.2d at 477-78 (citations omitted) (emphasis in original). The Court did not elaborate, either in this or any other Opinion, upon the difference between the amount and character of evidence required to warrant the imposition of discipline for violating AZ-ER 1.1, and that sufficient to sustain a malpractice verdict.

The Court has indicated, however, albeit by negative implication, that AZ-ER 1.1 does not necessarily require that a lawyer have both knowledge and skill in the particular area of law involved in an engagement at the time the lawyer accepts it, provided that the lawyer takes the necessary steps to acquire that knowledge and skill as the engagement progresses. In Matter of Cardenas, 164 Ariz. 149, 791 P.2d 1032 (1990), Cardenas had been charged with a variety of ethical violations, and had failed to answer or appear. The Hearing Committee and the Disciplinary Commission both recommended that Cardenas be suspended for six months and one day. The Supreme Court disagreed and ordered that Cardenas be disbarred. Among the charges brought against Mr. Cardenas was that he had violated AZ-ER 1.1 in his representation of a Mr. Tim Harvey in a personal injury action. The Court noted that Mr. Cardenas accepted the engagement, even though he had no prior experience in civil cases, and admitted that he was not knowledgeable concerning civil matters. He then failed to advise Mr. Harvey of settlement offers made by the defendants, failed to file a Motion to Set and Certificate of Readiness, with the result that the action was dismissed, and failed to advise Mr. Harvey of that. He then prosecuted an appeal from the dismissal, again without consulting with Mr. Harvey, and failed to pay the filing fee, which resulted in the dismissal of the appeal. In its discussion of why a more severe sanction than that of suspension was warranted, the Court observed:

A lawyer should no more take a case for which he is not competent than a medical doctor should perform surgery for which the doctor is unprepared to perform.

In the instant case, respondent made no effort to become competent. He made no effort to educate himself as to the matter not did he consult with a lawyer of established competence. We believe respondent was not only not competent to take the case but remained not competent to handle the matter in violation of ER 1.1 of the Rules of Professional Conduct.

Id., 164 Ariz. at 151, 791 P.2d at 1034.

As noted earlier, there have been a number of published disciplinary dispositions which involved the imposition of discipline for violations of AZ-ER 1.1, but generally in cases where violations of other provisions of the Arizona Rules of Professional Conduct were found to have occurred as well. Not surprisingly, to the extent it can be discerned from the published dispositions, the nature of the conduct that has been found to violate AZ-ER 1.1, taken together, represents a virtual potpourri of incompetent conduct. In Matter of Brady, 186 Ariz. 370, 923 P.2d 836 (1996), Brady was ordered disbarred for a variety of ethical violations resulting from his abandonment of his law practice. The violations of AZ-ER 1.1 consisted of his failing to prepare a petition for post-conviction relief which he had been engaged to pursue, failing to interview witnesses and to secure expert testimony in a matter which required it, and failing to file an appellate brief on time and then failing to appear for oral argument. In Matter of Peartree, 180 Ariz. 518, 885 P.2d 1083 (1994), Peartree was found to have violated AZ-ER 1.1 when after securing a judgment in favor of a partnership client, which was affirmed by the Arizona Court of Appeals:

Peartree did not collect on the judgment entered against the defendant and failed to record the judgment; in fact, he took no reasonable steps to protect the partnership's interest in the judgment. For example, the judge indicated that the supersedeas bond posted by the defendants could be increased if it became inadequate. Due to accruing interest on the judgment, the bond amount did become inadequate, but Peartree made no effort to have the bond increased. Peartree's general failure to take any action subsequent to the trial ultimately prejudiced the partnership's efforts to collect on the judgment.

180 Ariz. at 519, 885 P. 2d at 1084.

In Matter of Higgins, 180 Ariz. 396, 884 P.2d 1094 (1994), Higgins was found to have violated AZ-ER 1.1 in his handling of a divorce for a Mrs. D. Higgins secured a favorable result for his client, and the trial court directed Higgins to prepare and file a form of decree. Higgins failed to do so, and opposing counsel did, but that decree contained materially different provisions that were detrimental to Higgins' client. Higgins failed to file an objection, and the decree was entered in March 1989. Higgins finally filed a motion to set the decree aside in July 1989, but the trial court denied it as untimely and the Court of Appeals affirmed that disposition. In Matter of Chard, 180 Ariz. 1, 881 P.2d 333 (1994), violations of AZ-ER 1.1 were found from Chard's failure to determine the correct statute of limitations applicable to certain clients' claims he had been retained to pursue, so that they were dismissed as untimely filed. In Matter of Engan, 180 Ariz. 13, 880 P.2d 345 (1994), the violation of AZ-ER 1.1 appeared to be that Engan had failed to advise a client he was representing on a DWI charge of her trial date, and then failed to appear himself, so that a warrant was issued for her arrest.

In Matter of Feeley, 180 Ariz. 41, 881 P.2d 1146 (1994), Feeley was ordered disbarred for a number of ethical violations, including violations of ERs 1.1, 1.3 and 1.4. The Disciplinary Commission found that, during the course of handling two matters, Feeley failed to notify clients that he had been suspended and they should seek replacement counsel, took directly contrary positions in the very same bankruptcy proceeding, failed to obtain and record security agreements in connection with the sale of a business, and withdrew funds from his trust account to pay himself attorneys' fees, without consulting with the client involved. In Matter of Secrist, 180 Ariz. 50, 881 P.2d 1155 (1994), Secrist was found to have violated AZ-ER 1.1 when he advised one client that she could discharge her student loan in bankruptcy, which was inaccurate, promised to file an adversary proceeding to accomplish that and failed to do so, and failed to file a plan in a separate bankruptcy proceeding for another client, resulting in its dismissal.

In Matter of Kaplan, 179 Ariz. 175, 877 P.2d 274 (1994), the AZ-ER 1.1 violation consisted of the fact that Kaplan filed a collection action for a client, was unable to locate and serve the debtor defendant, failed to advise the client of that, and thereafter ceased pursuing the matter, without the client's informed consent. In Matter of Kobashi, 177 Ariz. 584, 870 P.2d 402 (1994), Kobashi accepted an engagement to file a personal injury action on behalf of a client who had been injured in an automobile accident, and failed to do so prior to the expiration of the statute of limitations, so that the action was dismissed and his client was deprived of a remedy.

In Matter of Wurtz, 177 Ariz. 586, 870 P.2d 404 (1994), Wurtz was found to have violated AZ-ER 1.1 by accepting engagements by, and retainers from, many clients although he apparently had no intention of carrying out the representation, and in fact failed to do so. In one case, he abandoned the matter with the result that a $17,000 default judgment was entered against his client. In Matter of O'Brien-Reyes, 177 Ariz. 586, 870 P.2d 404 (1994), Ms. O'Brien-Reyes was publicly censured for ethical violations in connection with her handling of three separate matters. She was found to have violated AZ-ER 1.1 in one matter in which she failed to file a timely appeal from a client's DUI conviction, and then failed to file a motion to reconsider until four months later. In Matter of Carrasco, 176 Ariz. 459, 862 P.2d 219 (1993), the Disciplinary Commission found that Carrasco had violated AZ-ER 1.1 when he waited until the very last minute to file a personal injury action on behalf of a client, and then failed to serve it within one year, so that the case was dismissed for lack of prosecution.

In Matter of Fioramonti, 176 Ariz. 182, 859 P.2d 1315 (1993), the Supreme Court ordered that Fioramonti be suspended for three years for his handling of one matter. Fioramonti had been retained by a client to defend litigation in which both the client and the client's ex-wife had been named as defendants. Fioramonti filed an answer on the ex-wife's behalf without contacting her or advising her that she was a defendant in litigation and that he was representing her, and without determining what defenses she might have available. As a consequence, he admitted that she had executed the instrument which was the basis of the suit, which was inaccurate, and failed to raise the defense that she had not been properly served. The Court found that, among other things, this conduct violated AZ-ER 1.1.

In Matter of Feeley, 176 Ariz. 196, 859 P.2d 1329 (1993), the Commission ordered that Feeley, who had already been suspended, be disbarred for a variety of ethical violations, including violations of ERs 1.1, 1.3 and 1.4. The latter violations seem to stem from the fact that, in one case he was handling, Feeley filed a complaint seeking damages suffered during a burglary from an insurance carrier, and included allegations concerning the manner in which the burglary occurred which were directly contradicted by the police report and the investigating officer's deposition. He then failed to respond to the defendant's motion for summary judgment, which was consequently granted.

In Matter of Riddle, 175 Ariz. 379, 857 P.2d 1233 (1993), the Commission found that Riddle had failed to provide competent representation in his handling of a medical malpractice action, where he failed to respond to a set of requests for admissions, and failed to secure an expert witnesses, both of which furnished the grounds for the award of summary judgment against his client. Similarly, in Matter of Cassalia, 173 Ariz. 372, 843 P.2d 654 (1992), the Commission found violations of AZ-ER 1.1 from the fact that, in one litigation matter Cassalia was handling, he failed to respond to a request for production and two motions to compel, which resulted in his clients' answer being stricken, and an award of damages being entered against them.

In Matter of Offenhartz, 173 Ariz. 382, 843 P.2d 1274 (1992), Offenhartz was publicly censured for violations of ERs 1.1 and 1.3 arising from his conduct of the defense of a client on a charge of child molestation. The Commission found that Offenhartz had failed to object to the introduction by the prosecution of testimony from the client's psychologist, and had failed to object to the prosecution's calling of a defense investigator as a witness and to the examination of that witness on matters of defense strategy. In Matter of Laws-Coats, 172 Ariz. 514, 838 P.2d 1275 (1992), Ms. Laws-Coats was suspended for one year and placed on supervised probation thereafter for violations of, among other rules, ERs 1.1, 1.4 and 1.5, arising out of her handling of certain litigation for a client in which she was sanctioned for discovery abuse and ran up a legal bill of over $700,000, which greatly exceeded the amount in controversy in the matter.

In Matter of Coburn, 171 Ariz. 533, 832 P.2d 186 (1992), the Disciplinary Commission ordered Coburn suspended for one year. Among the transgressions with which Coburn was charged was that he failed to handle one matter competently and diligently. In that matter, Coburn filed a personal injury action for one client, allowed it to be dismissed for lack of prosecution, resulting in a judgment for costs against his client, refiled it without consulting with the client, and recorded a lis pendens even though the suit had nothing to do with title to real property. In Matter of Coffey, 171 Ariz. 544, 832 P.2d 197 (1992), Coffey was found to have violated AZ-ER 1.1 by taking over a year to prepare and file a complaint for one client, failing to respond to a motion for summary judgment, and failing to promptly pay creditors of an estate.

In Matter of Lincoln, 170 Ariz. 267, 823 P.2d 1275 (1992), Lincoln was found to have violated AZ-ER 1.1 in his representation of an estate. The Disciplinary Commission and the Court found that Lincoln had (1) failed to competently and diligently represent the estate's interests, (2) failed to file a Notice to Creditors, (3) failed to advise the estate to obtain a tax identification number, (4) failed to contact financial institutions at which the decedent had maintained accounts, and (5) failed to seek refunds of prepaid rents by the decedent. In Matter of Mulhall, 170 Ariz. 152, 822 P.2d 947 (1992), Mulhall was ordered disbarred for a host of ethical violations, including violations of AZ-ER 1.1. The latter arose out of his failure to comply with discovery requests and failure to respond adequately to a motion for summary judgment in one matter.

In Matter of Grant, 169 Ariz. 498, 821 P.2d 159 (1991), the Court approved a recommendation of the Disciplinary Commission that Grant be disbarred for a number of ethical violations. The Court noted, as being representative of Grant's pattern of conduct, that he had violated AZ-ER 1.1 by accepting engagements to pursue claims on behalf of one client, Aetna, and then failing to make sure they were filed within the period prescribed by the applicable statute of limitations. In Matter of Hiser, 168 Ariz. 359, 813 P.2d 724 (1991), Hiser was found to have violated AZ-ER 1.1 by failing to settle an estate within a reasonable period of time. In Matter of Espino, 168 Ariz. 139, 811 P.2d 1076 (1991), the Court suspended Espino and placed him on two years' supervised probation for violations of ERs 1.1, 1.3, 1.4, 1.15 and 1.16, arising out of his representation of two clients. In representing the first client, Espino had failed to raise meritorious objections to his adversary's claims for costs to be awarded under Rule 68, Ariz.R.Civ.P., and failed to collect the funds that had been awarded to his client. In the second matter, the Court merely observed that Espino had failed to diligently investigate his client's claims.

In Matter of Henry, 168 Ariz. 141, 811 P.2d 1078 (1991), the Court approved a recommendation of the Disciplinary Commission that Henry be disbarred. Henry had been charged in a complaint containing two counts, both of which alleged that he had failed to competently and diligently handle matters for clients, and had failed to answer or appear. The first count alleged that Henry had been retained to handle a probate matter and had filed the probate papers, but then did nothing further. The second count alleged that Henry had been retained to recover damages for back rent and damages to a mobile home, and had done no work on the matter at all. In Matter of Galusha, 164 Ariz. 503, 794 P.2d 136 (1990), the Court approved a recommendation of the Disciplinary Commission that Galusha be disbarred. In this proceeding, which was the third brought against Galusha in three years, the Commission found that Galusha had accepted an engagement to perform lien and collection work for a client, and then failed to place liens on two construction jobs, with the result that the client lost its lien rights. He then failed to return the client's file, after admitting that he was not equipped to perform the work.

In In re Ireland, 146 Ariz. 340, 706 P.2d 352 (1985), which arose under DR 6-101(A)(1) of the former Model Code of Professional Responsibility, the lawyer was disciplined for failing to act competently on handling a personal injury claim and misrepresenting the status of the matter to the lawyer's clients. Similarly, in In re Burns, 139 Ariz. 487, 679 P.2d 510 (1984), a lawyer was disciplined for failing to ascertain the legal status of an Air Force lien on a client's tort recovery.

In Arizona Ethics Opinion No. 97-06, the Committee on the Rules of Professional Conduct ("the Committee") determined that a lawyer who has a client considering entering into a cooperation agreement with a law enforcement agency has an ethical obligation to determine all relevant facts that should be weighed in making such a decision, including the availability of protection for the client, and must advise the client of the risks associated with the client's proposed cooperation. In Arizona Ethics Opinion No. 90-10, the Committee ruled that a Public Defender whose estimated caseload greatly exceeded the standards established by the Arizona Supreme Court has an ethical duty to decline new cases or withdraw from pervious appointments until the caseload is reduced to a manageable size. Similarly, in Arizona Ethics Opinion No. 86-04, the Committee had ruled that an attorney who has entered into a contract to prosecute criminal cases with the city attorney's office has a continuing ethical duty to accept no more cases than can be competently prosecuted at a given time.

One additional issue that has arisen under AZ-ER 1.1 in the criminal context is whether either an allegation, or a determination, in a post-conviction relief proceeding brought pursuant to Rule 32 of the Arizona Rules of Criminal Procedure, that a defendant received "ineffective assistance of counsel" necessarily indicates that the convicted client's former counsel's representation fell below the standards of AZ-ER 1.1. The Supreme Court addressed that issue expressly in Matter of Wolfram, 174 Ariz. 49, 847 P.2d 94 (1993), in which it eventually approved a recommendation of the Disciplinary Commission that Wolfram be suspended for eighteen months for his handling of a matter in which he was representing a client charged with felony child abuse. Wolfram admitted that he failed to adequately prepare and present his client's defense, in that he failed to interview the prosecution's witnesses, failed to review the grand jury transcript, failed to review the medical evidence, failed to interview prospective witnesses identified in police reports, failed to consult with his client on whether to have the jury instructed on lesser included offenses, and failed to challenge certain jurors for cause. Wolfram claimed that this was all part of a deliberate trial strategy, but was found in a subsequent Rule 32 proceeding to have rendered ineffective assistance of counsel to his client. The Court, however, declined "to adopt a per se rule that successful post-conviction relief based on ineffective assistance of counsel automatically results in an ethical violation, or, conversely, that a denial of post-conviction relief will always insulate an attorney from professional discipline." As the Court explained:

When a disciplinary proceeding follows successful post-conviction relief based on ineffective assistance of counsel, we consider the outcome of the Rule 32 Petition as final with regard to the question of whether a lawyer's representation was illegally ineffective and prejudicial but do not necessarily equate such a finding with a violation of our ethical rules. Although a Rule 32 proceeding and a subsequent disciplinary proceeding may share the same universe of facts, this court must independently determine, under the proper standard, the existence of those facts salient to the disciplinary matter and whether those facts, even if identical to those established in the post- conviction proceedings, warrant discipline.

174 Ariz. at 53-54, 847 P.2d at 98-99.

The Court rejected the argument that there could be no ethical violation because Wolfram had been acting in good faith, reasoning that the ethical violations charged did not require a showing of intentional conduct. Then reviewing the record independently, the Court concluded that Wolfram's preparation was clearly deficient in light of what was at stake, and the things he admittedly did not do could not be reconciled with any sensible defense strategy. Similarly, in Matter of Offenhartz, 173 Ariz. 382, 843 P.2d 1274 (1992), the Disciplinary Commission publicly censured Offenhartz for violations of ERs 1.1 and 1.3 for his mishandling of the defense of a client on a child molestation charge. Although noting that the trial court, in a Rule 32 Petition proceeding in the case, had found that Offenhartz' client had received ineffective assistance of counsel which was "pervasive" during the course of the entire trial, the Commission nevertheless made its own independent determination whether discipline was also warranted.

Consistently with these principles, in Arizona Ethics Opinion No. 98-02, the Committee ruled that the filing of an affidavit of ineffective assistance of counsel does not necessarily require lawyers aware of it to report the allegedly ineffective lawyer under AZ-ER 8.3. To the contrary, a lawyer who becomes aware of the filing of such an affidavit must use the analysis set forth in AZ-ER 8.3 and determine on a case-by-case basis whether the claimed ineffective assistance raises a substantial question as to the defense counsel's honesty, trustworthiness, or fitness. In an earlier Opinion, Arizona Ethics Opinion No. 84-18, the Committee had determined that an attorney had no duty to inform the court about a colorable claim of ineffective assistance of counsel if the conduct of the other attorney involved did not amount to a violation of an ethical rule.

1.1:300   Malpractice Liability

  • Primary Arizona References: AZ-ER 1.1
  • Background References: ABA Model Rule 1.1, Other Jurisdictions
  • Commentary: ABA/BNA § 301:101, ALI-LGL § 71-76 , Wolfram § 5.6
  • AZ Commentary: Ronald E. Mallen & Jeffrey M. Smith, Legal Malpractice § 18.7 (3rd ed. 1989)

The Arizona Court of Appeals has observed, on one occasion, that: "A claim for legal malpractice is no different from a claim for negligence." Molever v. Roush, 152 Ariz. 367, 371, 732 P.2d 1105, 1109 (App. 1986). That statement is accurate in the sense that the elements of a claim for legal malpractice - the existence of a duty, breach of that duty, causation and damages - are the same elements that must be shown in an ordinary negligence action. It is an oversimplification, however, to the extent it is interpreted as ignoring the fact that legal malpractice claims are rendered somewhat more complex by the fact that the defendant is a member of a profession and subject to developed rules concerning obligations to clients.

This is apparent from the Court of Appeals' subsequent, and more fulsome, articulation of the elements that must be shown to sustain a claim for legal malpractice, in Phillips v. Clancy, 152 Ariz. 415, 733 P.2d 300 (App. 1986):

As in any negligence action, a plaintiff in a legal malpractice action must show the following basic elements: duty, breach of duty, causation and damages . . . One claiming legal malpractice must therefore establish (1) the existence of an attorney-client relationship which imposes a duty on the attorney to exercise that degree of skill, care and knowledge commonly exercised by members of the profession, (2) breach of that duty, (3) that such negligence was a proximate cause of resulting injury, and (4) the fact and extent of the injury.

Id., 152 Ariz. at 418, 733 P.2d at 303 (citation omitted). See also Toy v. Katz, 192 Ariz. 73, 961 P.2d 1021 (App. 1997); Collins v. Miller & Miller, Ltd., 189 Ariz. 387, 943 P.2d 747 (App. 1996). As distinguished from an "ordinary negligence" case, in a legal malpractice case, both the standard of care and whether the defendant attorney's conduct fell below it will generally have to be shown by expert testimony. Baird v. Pace, 156 Ariz. 418, 752 P.2d 507 (App. 1987). That will not be the case, however, "where the negligence is so grossly apparent that a lay person would have no difficulty recognizing it." Asphalt Engineers, Inc. v. Galusha, 160 Ariz. 134, 135-35, 770 P.2d 1180, 1182-83 (App. 1989). Expert testimony may also not be required where the claim against the attorney alleges breach of contract rather than professional negligence. Id. But see discussion in Section 1.1:380, infra, of the limited circumstances under which a claim for breach of contract will lie against an attorney for failure to carry out an engagement competently.

Legal malpractice claims are regarded as personal injury claims, which may not be assigned in Arizona. Botma v. Huser, 202 Ariz. 14, 39 P.3d 538 (App. 2002). An invalid assignment, however, does not extinguish the claim, which may still be brought by and for the benefit of the malpractice claimant rather than the assignee. Id. Similarly, legal malpractice claims may not be enforced through subrogation. Capitol Indemnity Corp. v. Fleming, 203 Ariz. 589, 58 P.3d 965 (App. 2002).

1.1:310      Relevance of Ethics Codes in Malpractice Actions

One Arizona appellate court has held, in Elliott v. Videan, 164 Ariz. 113, 791 P.2d 639 (1989), that the violation of an ethical rule may be some evidence to be considered in determining whether an attorney committed malpractice. Whether that remains the law in Arizona has not been definitively decided. The Elliott decision involved a construction of former Rule 19 of the Rules of the Arizona Supreme Court, which was effectively replaced by Rule 42 of those Rules, which adopted a modified version of the Model Rules of Professional Conduct. The Preamble to the Arizona Rules of Professional Conduct says the following concerning the proper scope of their application:

Violation of a Rule should not itself give rise to a cause of action against a lawyer nor should it create any presumption in such a case that a legal duty has been breached. In addition, violation of a Rule does not necessarily warrant any other nondisciplinary remedy, such as disqualification of a lawyer in pending litigation. The Rules are designed to provide guidance to lawyers and to provide a structure for regulating conduct through disciplinary agencies. They are not designed to be a basis for civil liability. Furthermore, the purpose of the Rules can be subverted when they are invoked by opposing parties as procedural weapons. The fact that a Rule is a just basis for a lawyer's self-assessment, or for sanctioning a lawyer under the administration of a disciplinary authority, does not imply that an antagonist in a collateral proceeding or transaction has standing to seek enforcement of the Rule. Nevertheless, since the Rules do establish standards of conduct by lawyers, a lawyer's violation of a Rule may be evidence of breach of the applicable standard of conduct.

Preamble, Rule 42, Rules of the Arizona Supreme Court (emphasis supplied).

Consistently therewith, it has also been held that an allegation of unethical conduct will not in and of itself support a cause of action for legal malpractice. Lansford v. Harris, 174 Ariz. 413, 850 P.2d 126 (App. 1992). One authority has suggested that limiting the use of claimed ethical violations as the basis for legal malpractice actions is appropriate for several reasons: (1) the drafters of the ethical rules did not intend to be creating standards for imposing malpractice liability in civil litigation, (2) the procedural and substantive rules governing the establishment of a disciplinary violation do not coincide with the rules governing proof of a civil cause of action for legal malpractice, (3) the objectives of the ethical and disciplinary rules are to protect the public and the identification of issues appropriate for disciplinary consideration does not necessarily include consideration of whether actual cognizable damage was caused to a client, and (4) the ethical rules may be invoked for purposes of disqualification merely on the basis of an appearance of impropriety, while tort liability requires a much greater showing. Ronald E. Mallen & Jeffrey M. Smith, Legal Malpractice, § 18.7, p. 580 (3rd ed. 1989).

1.1:320      Duty to Client

There have been various different articulations of the lawyer's duty to clients, and the relevant standard of care, in legal malpractice cases. In Molever v. Roush, 152 Ariz. 367, 370, 732 P.2d 1105, 1108 (App. 1986), the Court characterized the attorney's duty as being "to act as a reasonably careful and skillful attorney." See also Martin v. Burns, 102 Ariz. 341, 429 P.2d 660 (1967); Sarti v. Udall, 91 Ariz. 24, 369 P.2d 92 (1962). In Phillips v. Clancy, 152 Ariz. 415, 418, 733 P.2d 300, 303 (App. 1986), the Court characterized the attorney's duty as being "to exercise that degree of skill, care, and knowledge commonly exercised by members of the profession . . ." See also Toy v. Katz, 192 Ariz. 73, 961 P.2d 1021 (App. 1997); Collins v. Miller & Miller, Ltd., 189 Ariz. 387, 943 P.2d 747 (App. 1996). The Court of Appeals elaborated, to some degree, on this articulation of the applicable standard, in Baird v. Pace, 156 Ariz. 418, 752 P.2d 507 (App. 1987):

That standard [for legal malpractice] requires an attorney to act for his client in a reasonably careful and skilled manner in view of his special professional knowledge . . . He must ". . . possess such a reasonable knowledge of the law as is ordinarily possessed by other attorneys, and to discover those additional rules of law which, although not commonly known, may be readily found by standard research techniques."

Id., 156 Ariz. at 420, 752 P.2d at 509 (citations omitted).

In Toy v. Katz, 192 Ariz. 73, 85, 961 P.2d 1021, 1033, the Court cited AZ-ER 1.1 as authority for the proposition that the defendant attorney "was bound to discharge his professional responsibilities competently with the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation." To the extent that suggests that the standard for imposing malpractice liability is equivalent to the standard for imposing discipline for a violation of AZ-ER 1.1, it is inconsistent with the decision of the Arizona Supreme Court in Matter of Curtis, 184 Ariz. 256, 908 P.2d 472 (1995). That proceeding arose out of Curtis' representation of one client who had hired a contractor to construct a swimming pool at the client's residence. After discovering that the job was more difficult than originally anticipated, the contractor ceased work and declared bankruptcy. There was a dispute between Curtis and the client concerning the scope of his engagement to deal with this situation. Curtis claimed that he had only been hired to look into the contractor's bankruptcy filing, did so, discovered that the contractor had no assets and advised the client that further action would be futile. The client claimed that Curtis was hired to secure a lift of the bankruptcy stay so that the client could pursue a claim against the Contractor's Recovery Fund. The Hearing Officer agreed with the client, as did the Court, and found that Curtis' failure to do what he was retained to do constituted a violation of AZ-ER 1.1. The Court went on to observe, however:

Neither failure to achieve a successful result nor mere negligence in the handling of a case will necessarily constitute an ER 1.1 violation. We recognize the important distinction between conduct by an attorney that is simply negligent and conduct that rises to the level of an ethical violation. Clearly, the Bar must be vigilant in guarding the rights of clients, "but care should be taken to avoid the use of disciplinary action . . . as a substitute for what is essentially a malpractice action . . ." Thus, although not every negligent act violates an ethical rule, neglect in investigating the facts and law necessary to present a client's claim crosses the fine line between simple neglect and conduct warranting discipline.

We conclude that Respondent's actions or inactions went beyond mere lack of success or an act falling below the applicable standard of care. Respondent could not provide competent representation because he failed to have, attempt to obtain, or apply the "legal knowledge, skill, thoroughness and preparation reasonably necessary" for his representation of Client in this matter. ER 1.1 (emphasis added). Respondent may not have known what to do or how to do it, but for whatever reason he did not attempt a thorough review of the matter and did not prepare or do anything beyond a cursory check of the bankruptcy file. Respondent ultimately did no more than tell Client what he knew before hiring Respondent. We conclude that Respondent violated ER 1.1

Id., 184 Ariz. at 261-62; 908 P.2d at 477-78 (citations omitted) (emphasis in original). The Court did not elaborate, either in this or any other Opinion, upon the difference between the amount and character of evidence required to warrant the imposition of discipline for violating AZ-ER 1.1, and that was sufficient to sustain a malpractice verdict.

As distinguished from an "ordinary negligence" case, in a legal malpractice case, both the standard of care and whether the defendant attorney's conduct fell below it will generally have to be shown by expert testimony. Baird v. Pace, 156 Ariz. 418, 752 P.2d 507 (1987). That will not be the case, however, "where the negligence is so grossly apparent that a lay person would have no difficulty recognizing it." Asphalt Engineers, Inc. v. Galusha, 160 Ariz. 134, 135-35, 770 P.2d 1180, 1182-83 (App. 1989). Expert testimony may also not be required where the claim against the attorney alleges breach of contract rather than professional negligence. Id. But see the discussion in Section 1.1:380, infra, of the limited circumstances under which a claim for breach of contract will lie for a lawyer's failure to carry out an engagement competently.

Finally, "the law does not presume that an attorney is guilty of malpractice merely because his or her client is dissatisfied with the result. Rather, the law presumes that the attorney has discharged his or her duty." Molever v. Roush, 152 Ariz. 367, 371, 732 P.2d 1105, 1109 (App. 1986).

1.1:330      Standard of Care

There have been various different articulations of the lawyer's duty to clients, and the relevant standard of care, in legal malpractice cases. In Molever v. Roush, 152 Ariz. 367, 370, 732 P.2d 1105, 1108 (App. 1986), the Court characterized the attorney's duty as being "to act as a reasonably careful and skillful attorney." See also Martin v. Burns, 102 Ariz. 341, 429 P.2d 660 (1967); Sarti v. Udall, 91 Ariz. 24, 369 P.2d 92 (1962). In Phillips v. Clancy, 152 Ariz. 415, 418, 733 P.2d 300, 303 (App. 1986), the Court characterized the attorney's duty as being "to exercise that degree of skill, care, and knowledge commonly exercised by members of the profession . . ." See also Toy v. Katz, 192 Ariz. 73, 961 P.2d 1021 (App. 1997); Collins v. Miller & Miller, Ltd., 189 Ariz. 387, 943 P.2d 747 (App. 1996). The Court of Appeals elaborated, to some degree, on this articulation of the applicable standard, in Baird v. Pace, 156 Ariz. 418, 752 P.2d 507 (App. 1987):

That standard [for legal malpractice] requires an attorney to act for his client in a reasonably careful and skilled manner in view of his special professional knowledge . . . He must ". . . possess such a reasonable knowledge of the law as is ordinarily possessed by other attorneys, and to discover those additional rules of law which, although not commonly known, may be readily found by standard research techniques."

Id., 156 Ariz. at 420, 752 P.2d at 509 (citations omitted).

In Toy v. Katz, 192 Ariz. 73, 85, 961 P.2d 1021, 1033, the Court cited AZ-ER 1.1 as authority for the proposition that the defendant attorney "was bound to discharge his professional responsibilities competently with the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation." To the extent that suggests that the standard for imposing malpractice liability is equivalent to the standard for imposing discipline for a violation of AZ-ER 1.1, it is inconsistent with the decision of the Arizona Supreme Court in Matter of Curtis, 184 Ariz. 256, 908 P.2d 472 (1995). That proceeding arose out of Curtis' representation of one client who had hired a contractor to construct a swimming pool at the client's residence. After discovering that the job was more difficult than originally anticipated, the contractor ceased work and declared bankruptcy. There was a dispute between Curtis and the client concerning the scope of his engagement to deal with this situation. Curtis claimed that he had only been hired to look into the contractor's bankruptcy filing, did so, discovered that the contractor had no assets and advised the client that further action would be futile. The client claimed that Curtis was hired to secure a lift of the bankruptcy stay so that the client could pursue a claim against the Contractor's Recovery Fund. The Hearing Officer agreed with the client, as did the Court, and found that Curtis' failure to do what he was retained to do constituted a violation of AZ-ER 1.1. The Court went on to observe, however:

Neither failure to achieve a successful result nor mere negligence in the handling of a case will necessarily constitute an ER 1.1 violation. We recognize the important distinction between conduct by an attorney that is simply negligent and conduct that rises to the level of an ethical violation. Clearly, the Bar must be vigilant in guarding the rights of clients, "but care should be taken to avoid the use of disciplinary action . . . as a substitute for what is essentially a malpractice action . . ." Thus, although not every negligent act violates an ethical rule, neglect in investigating the facts and law necessary to present a client's claim crosses the fine line between simple neglect and conduct warranting discipline.

We conclude that Respondent's actions or inactions went beyond mere lack of success or an act falling below the applicable standard of care. Respondent could not provide competent representation because he failed to have, attempt to obtain, or apply the "legal knowledge, skill, thoroughness and preparation reasonably necessary" for his representation of Client in this matter. ER 1.1 (emphasis added). Respondent may not have known what to do or how to do it, but for whatever reason he did not attempt a thorough review of the matter and did not prepare or do anything beyond a cursory check of the bankruptcy file. Respondent ultimately did no more than tell Client what he knew before hiring Respondent. We conclude that Respondent violated ER 1.1

Id., 184 Ariz. at 261-62; 908 P.2d at 477-78 (citations omitted) (emphasis in original). The Court did not elaborate, either in this or any other Opinion, upon the difference between the amount and character of evidence required to warrant the imposition of discipline for violating AZ-ER 1.1, and that sufficient to sustain a malpractice verdict.

As distinguished from an "ordinary negligence" case, in a legal malpractice case, both the standard of care and whether the defendant attorney's conduct fell below it will generally have to be shown by expert testimony. Baird v. Pace, 156 Ariz. 418, 752 P.2d 507 (1987). That will not be the case, however, "where the negligence is so grossly apparent that a lay person would have no difficulty recognizing it." Asphalt Engineers, Inc. v. Galusha, 160 Ariz. 134, 135-35, 770 P.2d 1180, 1182-83 (App. 1989). Expert testimony may also not be required where the claim against the attorney alleges breach of contract rather than professional negligence. Id. But see the discussion in Section 1.1:380, infra, of the limited circumstances under which a claim for breach of contract will lie for a lawyer's failure to carry out an engagement competently.

Finally, "the law does not presume that an attorney is guilty of malpractice merely because his or her client is dissatisfied with the result. Rather, the law presumes that the attorney has discharged his or her duty." Molever v. Roush, 152 Ariz. 367, 371, 732 P.2d 1105, 1109 (App. 1986).

1.1:335      Requirement of Expert Testimony

As distinguished from an "ordinary negligence" case, in a legal malpractice case, both the standard of care and whether the defendant attorney's conduct fell below it will generally have to be shown by expert testimony. Baird v. Pace, 156 Ariz. 418, 752 P.2d 507 (1987). That will not be the case, however, "where the negligence is so grossly apparent that a lay person would have no difficulty recognizing it." Asphalt Engineers, Inc. v. Galusha, 160 Ariz. 134, 135-36, 770 P.2d 1180, 1182-83 (App. 1989). Expert testimony may also not be required where the claim against the attorney alleges breach of contract rather than professional negligence. Id. But see the discussion in Section 1.1:380, infra, of the limited circumstances under which a claim for breach of contract will lie for a lawyer's failure to carry out an engagement competently.

1.1:340      Causation and Damages

Among the elements that the plaintiff must show in a legal malpractice action is that the plaintiff's attorney's negligence was the "proximate cause" of damages which the plaintiff suffered. Toy v. Katz, 192 Ariz. 73, 961 P.2d 1021 (App. 1997); Collins v. Miller & Miller, Ltd., 189 Ariz. 387, 943 P.2d 747 (App. 1996); Phillips v. Clancy, 152 Ariz. 415, 733 P.2d 300 (App. 1986); Molever v. Roush, 152 Ariz. 367, 732 P.2d 1105 (App. 1986); Tennen v. Lane, 149 Ariz. 94, 716 P.2d 1031 (App. 1985). The causation element, however, is more akin to a "but for" causation showing than the traditional proximate causation. As the Court observed in Molever v. Roush, 152 Ariz. 367, 732 P.2d 1105:

Assuming therefore an attorney's breach of a duty to his or her client, the client's recovery depends on a showing that "but for" the alleged negligence of the attorney the injury complained of would not have occurred.

Id., 152 Ariz. at 374, 732 P.2d at 1112. Where the alleged negligence is claimed to have resulted in the client's loss of a claim, such as by failing to file it prior to expiration of the statute of limitations, or failing to prosecute a timely appeal, etc., the trial of the legal malpractice claim entails not only the trial of the plaintiff client's claim of negligence against the attorney, but also a trial of the merits and value of the claim that was allegedly lost due to that negligence - what is commonly referred to as the "case within the case." Phillips v. Clancy, 152 Ariz. 415, 733 P.2d 300 (App. 1986); Molever v. Roush, 152 Ariz. 367, 732 P.2d 1105 (App. 1986). The plaintiff must show that, but for the attorney's professional negligence, the plaintiff would have prevailed on the claim that was lost. Collins v. Miller & Miller, Ltd., 189 Ariz. 387, 943 P.2d 747 (App. 1996); Asphalt Engineers, Inc. v. Galusha, 160 Ariz. 134, 770 P.2d 1180 (App. 1989). If the plaintiff is successful in making that showing, then the plaintiff can recover, as damages in the malpractice action, any amounts which the trier of fact in the malpractice case determines would have been awarded to the plaintiff on the lost claim, including punitive damages. Elliott v. Videan, 164 Ariz. 113, 791 P.2d 639 (App. 1989). Punitive damages can also be recovered on the professional negligence claim as well, assuming the standards for recovering such damages are satisfied. Id.

Proof of damages is a necessary element of a claim for legal malpractice, and the damages must be ascertainable and non-speculative to be recoverable. Monthofer Investments Limited Partnership v. Allen, 189 Ariz. 422, 943 P.2d 782 (App. 1997).

1.1:350      Waiver of Prospective Liability [see 1.8:910]

With respect to agreements prospectively limiting a lawyer's liability to a client for malpractice, AZ-ER 1.8(h) imposes two separate requirements: (1) the agreement must be permitted by law, and (2) the client must be represented by independent counsel in entering into the agreement. It is not a violation of this provision of the Rule for a lawyer to include a mandatory arbitration provision, provided: (1) the clause is fair and reasonable to the client, (2) the clause or agreement fully discloses the advantages and disadvantages of arbitration, (3) the attorney affords the client a reasonable opportunity to seek the advice of independent counsel, and (4) the client consents to the arbitration agreement in writing. Arizona Ethics Opinion No. 94-05. A prosecutor and defense counsel may enter into a plea agreement in which the defendant waives any future claim of ineffective assistance of counsel without prospectively limiting defense counsel's malpractice liability. Arizona Ethics Opinion No. 95-08.

1.1:360      Settlement of Client's Malpractice Claim [see 1.8:920]

The second clause of AZ-ER 1.8(h) makes agreements settling a client's malpractice claim against a lawyer improper unless the lawyer advises an unrepresented client or former client in writing that he or she should seek independent representation in connection with the settlement. It is not a violation of this provision of the Rule for a lawyer to include a mandatory arbitration provision, provided: (1) the clause is fair and reasonable to the client, (2) the clause or agreement fully discloses the advantages and disadvantages of arbitration, (3) the attorney affords the client a reasonable opportunity to seek the advice of independent counsel, and (4) the client consents to the arbitration agreement in writing. Arizona Ethics Opinion No. 94-05. An attorney may not, however, settle a fee dispute with a client on the condition that the client agree not to file a complaint against the attorney with the disciplinary authorities. Arizona Ethics Opinion No. 91-23.

1.1:370      Defenses to Malpractice Claim

Quite obviously, one of the defenses to a malpractice claim brought by a client is that there was no breach of duty to that client because the lawyer's conduct satisfied the applicable standard of care. In addition, where the claim is brought by a plaintiff who was not the defendant attorney's client, an available defense is that the attorney owed no duty to the plaintiff. See discussion in Section 1.1:410, infra.

One case has suggested that an attorney cannot be held liable for malpractice for what amounts to a mere "error in judgment." Elliott v. Videan, 164 Ariz. 113, 117, 791 P.2d 639, 643 (App. 1989). Arizona has explicitly recognized the doctrine that an attorney cannot be held liable "for a mistake in a point of law that has not been settled by the highest court of the jurisdiction and upon which reasonable lawyers may differ." Martin v. Burns, 102 Ariz. 341, 343, 429 P.2d 660, 662 (1967); Monthofer Investments Limited Partnership v. Allen, 189 Ariz. 422, 943 P.2d 782 (App. 1997). The point of law in question, however, must truly be unsettled, and the defense may not be applicable where there is a statutory provision that settles it which could be found through adequate research. Baird v. Pace, 156 Ariz. 418, 752 P.2d 507 (App. 1987). In addition, the attorney must select a course of action that is both reasonable and prudent given that the law in the area in question is unsettled. Collins v. Miller & Miller, Ltd., 189 Ariz. 387, 943 P.2d 747 (App. 1996).

Another defense to claims of legal malpractice which has been litigated with some frequency, or has at least generated a number of reported appellate dispositions, is that of the statute of limitations. The statute of limitations applicable to claims of legal malpractice is the general negligence statute, A.R.S. § 12-542, which prescribes that a claim must be brought within two years after it accrues. In both tort and contract actions, however, Arizona applies the "discovery rule" with respect to the running of the statute limitations, which provides that a cause of action only accrues when the plaintiff knows, or by the exercise of reasonable diligence should have known, of the defendant's wrongful conduct. Gust Rosenfeld & Henderson v. Prudential Insurance Co. of America, 182 Ariz. 586, 898 P.2d 964 (1995); Logerquist v. Danforth, 188 Ariz. 16, 932 P.2d 281 (App. 1996); Floyd v. Donahue, 186 Ariz. 409, 923 P.2d 875 (App. 1996). The "discovery rule" requires only the discovery of the facts which give rise to a cause of action rather than the discovery of the legal significance of those facts. Doe v. Roe, 191 Ariz. 313, 955 P.2d 951 (1998); Kowske v. Life Care Centers of America, 176 Ariz. 535, 863 P.2d 254 (App. 1993). For the statute to commence to run, it is not necessary that the claimant know all the facts; all that is required is that the claimant know enough facts as would prompt a reasonable person to investigate and discover the full extent of the claim. Doe v. Roe, 187 Ariz. 605, 931 P.2d 1115 (App. 1996). The "discovery rule" has consistently been applied for purposes of determining when a claim for legal malpractice accrued and whether the statute of limitations with respect to it has expired. Arizona Management Corporation v. Kallof, 142 Ariz. 64, 688 P.2d 710 (App. 1984); Long v. Buckley, 129 Ariz. 141, 629 P.2d 557 (App. 1981); Chalpin v. Brennan, 114 Ariz. 124, 559 P.2d 680 (App. 1976).

In legal malpractice actions, the statute of limitations begins to run when a cause of action accrues, which requires not only professional negligence but damages as well. Arizona Management Corporation v. Kallof, 142 Ariz. 64, 688 P.2d 710 (App. 1984). In the legal malpractice context, the "discovery rule" requires not only the discovery of the facts giving rise to the claim, but also the discovery of causation and damage as well, for the statute to commence to run. Commercial Union Insurance Company v. Lewis & Roca, 183 Ariz. 250, 902 P.2d 1354 (App. 1995). A cause of action for legal malpractice, accordingly, accrues when the client both: (1) has sustained appreciable, non-speculative harm as the result of such malpractice, and (2) knows, or in the exercise of reasonable diligence, should know, that the harm or damage was the result of the attorney's negligence. Kiley v. Jennings, Strouss & Salmon, 187 Ariz. 136, 927 P.2d 796 (App. 1996); Reed v. Mitchell & Timbanard, P.C., 183 Ariz. 313, 903 P.2d 621 (App. 1995); Commercial Union Insurance Company v. Lewis & Roca, supra. Minor damages which are not the loss anticipated to result from the malpractice, or which are incurred in attempting to avoid damage, however, may not be sufficient to commence the running of the statute. Myers v. Wood, 174 Ariz. 434, 850 P.2d 672 (App. 1992).

Where the claimed malpractice occurred during the course of litigation, the cause of action accrues when the plaintiff knew or reasonably should have known of the malpractice and when the plaintiff's damages are certain and not contingent on the outcome of an appeal. Lansford v. Harris, 174 Ariz. 413, 850 P.2d 126 (App. 1992); see also Myers v. Wood, supra. The claim cannot accrue until an adverse judgment becomes final, either upon the rendering of the final appellate decision, or the expiration of any available time for taking an appeal. Id. Where there is an appeal that is resolved by the Court of Appeals, and no petition for review by the Arizona Supreme Court is filed, the appellate process is not complete, and the statute of limitations with respect to any malpractice that may have occurred during the course of the litigation, does not begin to run, until the Court of Appeals issues its formal mandate. Joel Erik Thompson, Ltd. v. Holder, 192 Ariz. 348, 965 P.2d 82 (App. 1998). The same rule applies for claims of malpractice occurring in criminal cases - the cause of action does not accrue, and the statute does not begin to run, until the criminal proceedings during which the claimed malpractice took place are finally resolved. Glaze v. Larsen, 203 Ariz. 399, 55 P.3d 93 9App. 2002). The rule does not necessarily apply, however, where the litigation in which the malpractice allegedly occurred was settled. Althaus v. Cornelio (Penn-America Insurance Co.), 203 Ariz. 597, 58 P.3d 973 (App. 2002).

1.1:380      Liability to Client for Breach of Contract, Breach of Fiduciary Duty, and Other Liabilities

The Arizona courts have generally charted a relatively consistent course on the issue of whether and, if so, under what circumstances, a claim that an attorney failed to properly discharge his or her professional obligations can be brought as a claim for breach of contract, rather than (or in addition to) as a claim sounding in tort for professional negligence. In Long v. Buckley, 129 Ariz. 141, 629 P.2d 557 (App. 1981), the issue arose in the context of whether plaintiffs could sustain their claim against Buckley, which was essentially one for professional negligence, as timely filed by relying on the longer (six-year) statute of limitations applicable to actions based upon a written contract, A.R.S. § 12-548. While Division 1 of the Court of Appeals made the observation that: "legal malpractice usually consists of both a tort and a breach of contract," Id., 129 Ariz. at 145, 629 P.2d at 561, it suggested that there should be a limitation on the circumstances in which such a claim would be deemed to be one truly sounding in contract - when "the act which is alleged to give rise to the breach must bear some connection to the writing itself." Id., 129 Ariz. at 146, 629 P.2d at 562. The Court eventually held that the six-year contract action statute of limitations would not apply where the contract relied upon was simply a general retainer agreement which did not specify how the representation was to be carried out. Id. That holding was reiterated in Towns v. Frey, 149 Ariz. 599, 721 P.2d 147 (App. 1986), where the Court stated:

Legal malpractice usually consists of both a tort and a breach of contract . . . If one is going to assert a breach of contract claim against a lawyer, the contract relied upon must itself contain an undertaking to do the thing for the nonperformance of which the action is brought.

Id., 149 Ariz. at 601, 721 P.2d at 149 (citation omitted).

In Barmat v. John and Jane Doe Partners A-D, 155 Ariz. 519, 747 P.2d 1218 (1987), the Arizona Supreme Court addressed the question "whether a legal malpractice action Ťarises out of a contract' so as to be eligible for an award of attorney's fees pursuant to A.R.S. § 12-341.01(A)." Id., 155 Ariz. at 520, 747 P.2d at 1219. The Court eventually answered the question posed in the negative:

We agree that the law implies a contract between lawyer and client, including an implied covenant of competent and ethical representation . . . We do not believe, however, that the breach of an implied covenant in a contract implied in law necessarily brings the action within the statute.

Id., 155 Ariz. at 521, 747 P.2d at 1220 (citation omitted). The same result was reached in Environmental Liners, Inc. v. Ryley, Carlock & Applewhite, 187 Ariz. 379, 387, 930 P.2d 456, 464 (App. 1996):

When it is the gravamen of a legal malpractice claim that a lawyer has violated his implied duty to provide reasonably competent and ethical services, that claim sounds in tort, not in contract, and does not support the award of attorneys' fees under A.R.S. § 12-341.01

The most recent and definitive discussion of the issue is found in Collins v. Miller & Miller, Ltd., 189 Ariz. 387, 943 P.2d 747 (App. 1996). After observing (somewhat inaccurately) that the issue had been addressed previously only in the context of other professions or where the issue was whether the provisions of A.R.S. § 12-341.01 applied, the Court concluded:

. . . even where there is an express contract between the professional and the client, an action for breach of that contract cannot be maintained if the contract merely requires generally that the professional render services. Only if there is a specific promise contained in the contract can the action sound in contract, and then only to the extent the claim is premised on the nonperformance of that promise.

Id., 189 Ariz. at 395, 943 P. 2d at 755 (citations omitted).

In discharging certain of the responsibilities that arise by reason of the formation of an attorney-client relationship, and particularly those regarding the safeguarding of a client's funds and property that come into the attorney's possession, an attorney has fiduciary obligations to the client and can be found liable if those obligations are breached. See Ross v. Bartz, 158 Ariz. 305, 762 P.2d 592 (1988); Trebilcox v. Brown & Bain, P.A., 133 Ariz. 588, 653 P.2d 45 (App. 1982). In Matter of Estate of Shano, 177 Ariz. 550, 869 P.2d 1203 (App. 1993), the Court held that the attorney for the special administrator of an estate owes a "derivative fiduciary duty to the successors to decedent's estate." Id., 177 Ariz. at 554, 869 P.2d at 1207. The remedy imposed there for breach of that duty was disqualification of the attorney involved, and denial of an award of attorneys' fees for services rendered to the estate. There was no need to discuss, and the Court did not discuss, whether a breach of that "derivative" duty would, under other circumstances, support a claim for damages. See also Wetherill v. Basham, 197 Ariz. 198, 3 P.3d 1118 (App. 2000).

The Court of Appeals recently had the opportunity to clarify the apparent breadth of the holding in Shano, in its decision in In the Matter of the Estate of Fogelman, 197 Ariz. 252, 3 P.3d 1172 (App. 2000). In Fogelman, the Court reiterated that the attorney representing the personal representative or administrator of an estate owes a "derivative fiduciary duty" of fairness and impartiality to beneficiaries and successors, but explained that such duty was one imposed by Arizona's Probate Code, and not the Arizona Rules of Professional Conduct. The Court specifically held that successors and beneficiaries of an estate are not clients of the lawyer representing the personal representative. On the other hand, the "derivative duty" imposed by the Probate Code may represent a "material limitation" on the lawyer's ability to represent the interests of clients the lawyer represents on other matters who are also involved in the probate proceedings, and create a conflict of interest under AZ-ER 1.7.

In Wilmot v. Wilmot, 203 Ariz. 565, 58 P.3d 507 (2002), the Court held that the statutory plaintiff in a wrongful death action essentially acts as a trustee/fiduciary for all the statutory beneficiaries, and the role of the lawyer representing that statutory plaintiff is, inter alia, to assist him or her in performing those fiduciary duties. Similarly, in Capitol Indemnity Corp. v. Fleming, 203 Ariz. 589, 58 P.3d 965 (App. 2002), the Court held that, when an attorney undertakes to represent the guardian of an incompetent person, the attorney assumes a relationship not only with the guardian, but also with the ward, but does not undertake a duty to the surety for the guardian or the conservator.

As discussed more extensively in Section 1.1:520, infra, a lawyer can be subject to liability for malicious prosecution, abuse of process and/or participation in a client's fraud on creditors. See Giles v. Hill Lewis Marce, 195, Ariz. 358, 988 P.2d 143 (App. 1999); McElhanon v. Hing, 151 Ariz. 386, 728 P.2d 256 (App. 1985), affirmed in part and vacated in part on other grounds 151 Ariz. 403, 728 P.2d 73 (1986). At least one case has suggested that, if the requisite elements can be shown, a lawyer may be held liable for common law fraud for activities arising out of an engagement as well. Neville v. Vingelli, 170 Ariz. 570, 572, 826 P.2d 1196, 1198, fn. 1 (App. 1991).

1.1:390      Liability When Non-Lawyer Would Be Liable

Although no Arizona case addresses the issue squarely, the language of the appellate opinions in cases involving claims against members of the legal profession suggests that, with the possible exception of tort claims for professional negligence, lawyers are subject to liability on other categories of tort claims, for breaches of contract and for violations of statutes that afford private remedies under the same circumstances, and under the same standards, as non- lawyers. In cases where a cause of action for breach of an engagement agreement may be brought (see discussion in Section 1.1:380, supra), a lawyer's potential liability would seem to be the same as that of any non-lawyer who enters into a contract to render specific personal services, or to render personal services in a specified manner. Similarly, the test for whether and when a lawyer has committed a breach of fiduciary duty in the misappropriation or mishandling of client funds or property is essentially the same as the test for imposing liability on a non-lawyer trustee who assumes similar responsibilities. See Ross v. Bartz, 158 Ariz. 305, 762 P.2d 592 (App. 1988),; Trebilcox v. Brown & Bain, P.A., 133 Ariz. 588, 653 P.2d 45 (App. 1982).

1.1:400   Liability to Certain Non-Clients

1.1:410      Duty of Care to Certain Non-Clients

The issue of the circumstances under which a third party, not the attorney's client, may sue an attorney for malpractice has had an involved history in Arizona. The issue was first addressed by Division 1 of the Arizona Court of Appeals in Chalpin v. Brennan, 114 Ariz. 124, 559 P.2d 680 (App. 1976), which involved a malpractice claim brought against Brennan, whose client was Mobile Gardens Incorporated, by a purchaser of stock in that corporation who claimed that the attorney had prepared, on behalf of the corporation, certain documents which contained material misrepresentations of fact upon which Chalpin had relied in making the stock purchases. Although the Court distinguished several California cases which had imposed a requirement or privity between the malpractice plaintiff and the defendant attorney, the Court went on to hold that such a limitation on malpractice claims was appropriate under the circumstances in the case before it:

To impose upon counsel the responsibility of fully representing his client's interests in a contractual situation and at the same time making him liable to a third party to the transaction for fraud and misrepresentations under a malpractice theory we believe to be unreasonable and unwise. A holding to the contrary could conceivably encourage a party to contractual negotiations to forego personal legal representation and then sue counsel representing the other contracting party for legal malpractice if the resulting contract later proves disfavorable in some respect.

We believe the soundest rule to be applied to the facts of this case is set forth in a line of cases which refuses to grant a cause of action for malpractice to an individual who is not a client or in privity with the attorney.

Id., 114 Ariz. at 126, 559 P.2d at 682 (citations omitted). See also Wetherill v. Basham, 197 Ariz. 198, 3 P.3d 1118 (App. 2000). Very shortly thereafter, Division 2 of the Court of Appeals reached what seemed to be the precisely opposite result, in Fickett v. Superior Court of Pima County, 27 Ariz.App. 793, 558 P.2d 988 (1976).

Fickett involved an action filed by the present conservator of an incompetent's estate against the former guardian and that guardian's attorneys, claiming that Fickett, as the attorney for the former guardian, had been negligent in failing to discover that the guardian had embarked upon a scheme to liquidate the guardianship estate by misappropriation and conversion of funds to his own use, and by making improper investments. The Pima County Superior Court denied summary judgment in favor of Fickett, rejecting the argument that absent a showing of fraud or collusion, the attorney owed no duty to the ward and a cause of action for malpractice could not be maintained. The Court of Appeals affirmed that determination, holding:

The general rule for many years has been that an attorney could not be liable to one other than his client in an action arising out of his professional duties, in the absence of fraud or collusion . . . In denying liability of the attorney to one not in privity of contract for the consequences of professional negligence, the courts have relied principally on two arguments: (1) That to allow such liability would deprive the parties to the contract of control of their own agreement; and (2) that a duty to the general public would impose a huge potential burden of liability on the contracting parties.

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We cannot agree with petitioners that they owed no duty to the ward and that her conservator could not maintain an action because of lack of privity of contract. We are of the opinion that the better view is that the determination of whether, in a specific case, the attorney will be held liable to a third person not in privity is a matter of policy and involves the balancing of various factors, among which are the extent to which the transaction was intended to affect the plaintiff, the foreseeability of harm to him, the degree of certainty that the plaintiff suffered injury, the closeness of the connection between the defendant's conduct and the injuries suffered, the moral blame attached to the defendant's conduct, and the policy of preventing future harm.

Id., 27 Ariz. App. at 794-95, 558 P.2d at 989-90. The Court, rather than abolishing a privity requirement entirely, however, allowed the action by the successor conservator to proceed on the basis that when an attorney undertakes to represent the guardian of an incompetent, that attorney assumes a relationship not only with the guardian but also with the ward. See also Capitol Indemnity Corp. v. Fleming, 203 Ariz. 589, 58 P.3d 965 (App. 2002). That rationale is consistent with a later holding that an attorney for the Special Administrator of an estate has a "derivative fiduciary duty" to the successors to the estate. Matter of Estate of Shano, 177 Ariz. 550, 869 P.2d 1203 (App. 1993). The so-called "Fickett test" was subsequently applied, however, to deny standing to a workmen's compensation carrier to pursue a malpractice claim against the attorney for parties to whom it was paying benefits for his failure to file an action against a potentially liable third party before the expiration of the statute of limitations. Travelers Insurance Company v. Breese, 138 Ariz. 508, 675 P.2d 1327 (App. 1983). The Court's rationale was that the carrier, Travelers, was not intended to be the prime beneficiary of the attorney-client relationship between the attorney and the compensation claimants, and it was not foreseeable that the attorney's failure to file the third-party action on time would prejudice any rights of Travelers.

Subsequently, in Donnelly Construction Co. v. Oberg/Hunt/Gilleland, 139 Ariz. 184, 677 P.2d 1292 (1984), the Supreme Court expressly rejected the imposition of any requirement of privity to maintain an action for professional negligence, and disapproved prior decisions, including Chalpin v. Brennan, supra, which had purported to impose one. The only appellate decision dealing with the impact of Donnelly on legal malpractice claims is Franko v. Mitchell, 158 Ariz. 391, 762 P.2d 1345 (App. 1988), which was an appeal from a summary judgment entered in favor of a lawyer, Mitchell, on breach of contract and legal malpractice claims brought by a Ms. Franko. Franko had agreed to loan her boyfriend, Markoff, a sum of money, and Markoff had asked Mitchell to draw up the promissory note evidencing the obligation to Franko. Both Markoff and Franko went to Mitchell's office to review and sign the note. Markoff subsequently defaulted and disappeared. The Court held that there was a genuine issue of material fact as to whether an attorney-client relationship had been formed between Mitchell and Franko, which required the reversal of the summary judgment entered below.

The Court then went on to discuss Franko's contention that she was entitled to bring a legal malpractice action against Mitchell even if she was not his client. Noting that the Supreme Court had in Donnelly abolished any requirement of privity in professional negligence cases, the Court ruled that Franko's ability to pursue malpractice claims against Mitchell would turn on the application of the test announced in Fickett v. Superior Court, supra. The Court then offered the following explanatory comment concerning the "Fickett test":

We are of the opinion, however, that the test utilized in Fickett does not create a distinct duty of care towards a third party, as Franko suggests, but instead allows a third party in certain situations to sue an attorney for negligence to his client. That is, under the Fickett test any duty owed by an attorney to a third party is derivative of the duty owed by that attorney to his client.

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In essence, the Fickett test is merely a framework for determining the particular circumstances under which a third party may sue an attorney for malpractice in the place of the client. That is, in some situations, an attorney owes a duty to a third party to use ordinary skill, care and diligence in rendering professional services to his client. Absent even an allegation of negligence between Mitchell and Markoff, Franko's reliance on Fickett to extend liability to Mitchell is inappropriate.

Id., 158 Ariz. at 400-01, 762 P.2d at 1354-56.

In its decision in Paradigm Insurance Co. v. Langerman Law Offices, 200 Ariz. 146, 24 P.3d 593 (2001), the Supreme Court specifically disapproved of language in Franko which suggested that an allegation that the attorney was negligent in the representation of the attorney's client was a necessary predicate for a third party's claim against the attorney for malpractice. In that case, which involved the issue whether an insurer who had retained an attorney to conduct the defense of its insureds could pursue a claim for malpractice against that attorney, the Court held that the existence of a duty to the insurer was governed by the provisions of Section 51(3) of the Restatement (Third) of the Law Governing Lawyers. Under that Section, a lawyer owes a duty of care to a nonclient when and to the extent that (a) the lawyer knows that the client intends that the lawyer's services benefit the nonclient, (b) imposing such a duty would not significantly impair the lawyer's ability to discharge the lawyer's obligations to the client, and (c) the absence of such a duty would make enforcement of the lawyer's obligations to the client unlikely.

In Kremser v. Quarles & Brady, L.L.P., 201 Ariz. 413, 36 P.3d 761 (App. 2001), the Court also held that a lawyer will be subject to a duty of care to a non-client under the circumstances delineated in Section 51 of the Restatement (Third) of the Law Governing Lawyers. In Kremser, the Court held that a lawyer will owe a duty of care to a non-client whose interests are not adverse to those of the lawyer's client, where the lawyer invites the non-client to rely on the lawyer's opinion or provision of legal services, even if the non-lawyer is represented by counsel in the transaction in connection with which the services are offered.

1.1:420      Reliance on Lawyer's Opinion [see also 2.3:300]

It is relatively common for lawyers to be engaged by a client to render an opinion with respect to certain aspects of a transaction into which the client proposes to enter, e.g., that it has been duly authorized, that it complies with certain legal requirements, etc., under circumstances where the lawyer knows, or it is readily apparent, that the opinion will be provided to third parties for the purpose of facilitating the completion of the transaction.

AZ-ER 2.3 itself addresses one specific instance where a lawyer may be engaged to provide an opinion, or evaluation, concerning a client matter for a third party. Whether the rendering of such an opinion, or the performance of such an evaluation will expose the attorney engaged for that purpose to potential liability to third parties with whom the client shares the opinion, or for whose benefit the evaluation is performed, if the opinion or evaluation is negligently prepared, raises squarely the issue of the circumstances under which an attorney can be subjected to malpractice liability in favor of a person or entity who was not the attorney's client. The Comment to AZ-ER 2.3 itself observes that: "When the evaluation is intended for the information or use of a third person, a legal duty to that person may or may not arise.", but states that that legal question is beyond the scope of the Rule. There are a number of Arizona decisions, however, which do address that question.

The issue was first addressed by Division 1 of the Arizona Court of Appeals in Chalpin v. Brennan, 114 Ariz. 124, 559 P.2d 680 (App. 1976), which involved a malpractice claim brought against Brennan, whose client was Mobile Gardens Incorporated, by a purchaser of stock in that corporation who claimed that the attorney had prepared, on behalf of the corporation, certain documents which contained material misrepresentations of fact upon which Chalpin had relied in making the stock purchases. Although the Court distinguished several California cases which had imposed a requirement or privity between the malpractice plaintiff and the defendant attorney, the Court went on to hold that such a limitation on malpractice claims was appropriate under the circumstances in the case before it:

To impose upon counsel the responsibility of fully representing his client's interests in a contractual situation and at the same time making him liable to a third party to the transaction for fraud and misrepresentations under a malpractice theory we believe to be unreasonable and unwise. A holding to the contrary could conceivably encourage a party to contractual negotiations to forego personal legal representation and then sue counsel representing the other contracting party for legal malpractice if the resulting contract later proves disfavorable in some respect.

We believe the soundest rule to be applied to the facts of this case is set forth in a line of cases which refuses to grant a cause of action for malpractice to an individual who is not a client or in privity with the attorney.

Id., 114 Ariz. at 126, 559 P.2d at 682 (citations omitted). Very shortly thereafter, Division 2 of the Court of Appeals reached what seemed to be the precisely opposite result, in Fickett v. Superior Court of Pima County, 27 Ariz.App. 793, 558 P.2d 988 (1976).

Fickett involved an action filed by the present conservator of an incompetent's estate against the former guardian and that guardian's attorneys, claiming that Fickett, as the attorney for the former guardian, had been negligent in failing to discover that the guardian had embarked upon a scheme to liquidate the guardianship estate by misappropriation and conversion of funds to his own use, and by making improper investments. The Pima County Superior Court denied summary judgment in favor of Fickett, rejecting the argument that absent a showing of fraud or collusion, the attorney owed no duty to the ward and a cause of action for malpractice could not be maintained. The Court of Appeals affirmed that determination, holding:

The general rule for many years has been that an attorney could not be liable to one other than his client in an action arising out of his professional duties, in the absence of fraud or collusion . . . In denying liability of the attorney to one not in privity of contract for the consequences of professional negligence, the courts have relied principally on two arguments: (1) That to allow such liability would deprive the parties to the contract of control of their own agreement; and (2) that a duty to the general public would impose a huge potential burden of liability on the contracting parties.

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We cannot agree with petitioners that they owed no duty to the ward and that her conservator could not maintain an action because of lack of privity of contract. We are of the opinion that the better view is that the determination of whether, in a specific case, the attorney will be held liable to a third person not in privity is a matter of policy and involves the balancing of various factors, among which are the extent to which the transaction was intended to affect the plaintiff, the foreseeability of harm to him, the degree of certainty that the plaintiff suffered injury, the closeness of the connection between the defendant's conduct and the injuries suffered, the moral blame attached to the defendant's conduct, and the policy of preventing future harm.

Id., 27 Ariz. App. at 794-95, 558 P.2d at 989-90. The Court, rather than abolishing a privity requirement entirely, however, allowed the action by the successor conservator to proceed on the basis that when an attorney undertakes to represent the guardian of an incompetent, that attorney assumes a relationship not only with the guardian but also with the ward. That rationale is consistent with a later holding that an attorney for the Special Administrator of an estate has a "derivative fiduciary duty" to the successors of the estate. Matter of Estate of Shano, 177 Ariz. 550, 869 P.2d 1203 (App. 1993). The so-called "Fickett test" was subsequently applied, however, to deny standing to a workmen's compensation carrier to pursue a malpractice claim against the attorney for parties to whom it was paying benefits for his failure to file an action against a potentially liable third party before the expiration of the statute of limitations. Travelers Insurance Company v. Breese, 138 Ariz. 508, 675 P.2d 1327 (App. 1983). The Court's rationale was that the carrier, Travelers, was not intended to be the prime beneficiary of the attorney-client relationship between the attorney and the compensation claimants, and it was not foreseeable that the attorney's failure to file the third-party action on time would prejudice any rights of Travelers.

Subsequently, in Donnelly Construction Co. v. Oberg/Hunt/Gilleland, 139 Ariz. 184, 677 P.2d 1292 (1984), the Supreme Court expressly rejected the imposition of any requirement of privity to maintain an action for professional negligence, and disapproved prior decisions, including Chalpin v. Brennan, supra, which had purported to impose one. The only appellate decision dealing with the impact of Donnelly on legal malpractice claims is Franko v. Mitchell, 158 Ariz. 391, 762 P.2d 1345 (App. 1988), which was an appeal from a summary judgment entered in favor of a lawyer, Mitchell, on breach of contract and legal malpractice claims brought by a Ms. Franko. Franko had agreed to loan her boyfriend, Markoff, a sum of money, and Markoff had asked Mitchell to draw up the promissory note evidencing the obligation to Franko. Both Markoff and Franko went to Mitchell's office to review and sign the note. Markoff subsequently defaulted and disappeared. The Court held that there was a genuine issue of material fact as to whether an attorney-client relationship had been formed between Mitchell and Franko, which required the reversal of the summary judgment entered below.

The Court then went on to discuss Franko's contention that she was entitled to bring a legal malpractice action against Mitchell even if she was not his client. Noting that the Supreme Court had in Donnelly abolished any requirement of privity in professional negligence cases, the Court ruled that Franko's ability to pursue malpractice claims against Mitchell would turn on the application of the test announced in Fickett v. Superior Court, supra. The Court then offered the following explanatory comment concerning the "Fickett test":

We are of the opinion, however, that the test utilized in Fickett does not create a distinct duty of care towards a third party, as Franko suggests, but instead allows a third party in certain situations to sue an attorney for negligence to his client. That is, under the Fickett test any duty owed by an attorney to a third party is derivative of the duty owed by that attorney to his client.

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In essence, the Fickett test is merely a framework for determining the particular circumstances under which a third party may sue an attorney for malpractice in the place of the client. That is, in some situations, an attorney owes a duty to a third party to use ordinary skill, care and diligence in rendering professional services to his client. Absent even an allegation of negligence between Mitchell and Markoff, Franko's reliance on Fickett to extend liability to Mitchell is inappropriate.

Id., 158 Ariz. at 400-01, 762 P.2d at 1354-56. Application of the "Fickett test," as the Franko v. Mitchell decision suggests is now required could lead to the imposition of liability for professional negligence upon an attorney for the negligent preparation of an evaluation, in favor of the third party for whose use it was prepared. (The Supreme Court's subsequent disapproval, in its decision in Paradigm Insurance Co. v. Langerman Law Offices, 200 Ariz. 146, 24 P.3d 593 (2001), of certain language in the Franko decision would not seem to affect this conclusion.)

Another potential basis for liability to a third party for the negligent preparation of an evaluation could be provided by the decision in Standard Chartered PLC v. Price Waterhouse, 190 Ariz. 6, 945 P.2d 317 (App. 1996). Among the many issues raised and discussed in that appeal was whether a third party, who was not a client of an auditor, could maintain a cause of action for professional negligence against the auditor, on the basis of a claim that the third party plaintiff had received and relied upon the auditor's audit opinion. Noting that the Supreme Court in the Donnelly decision had abolished privity requirements for professional negligence claims, the Court of Appeals nevertheless expressed the view that it did not view the Donnelly decision as extending potential professional liability to include all foreseeable injuries to all foreseeable victims which proximately result from negligent performance of their professional services.

The Court went on to conclude that, where the claim is that a third party relied on an audit opinion that was the product of a negligently conducted audit, the essence of the cause of action was not one for negligence, but rather for negligent misrepresentation, recognized in Section 552 of the Restatement (Second) of Torts, and in an earlier Arizona case. The Court pointed that, in the Comments to Section 552, the Restatement had rejected pure foreseeability as the proper range of an auditor's liability, but had instead stated that liability could only be imposed where the maker of the alleged negligent misrepresentation intended it to reach and influence a particular person or persons, known to the professional, or a group or class of persons, distinct from the much larger class who might reasonably be expected sooner or later to have access to the information and foreseeably to take some action in reliance upon it.

In the case where an attorney agrees to and does perform an evaluation of a client matter for the use of a third party, or renders a legal opinion knowing it will be given to parties other than the client who requested it, and commits negligence during the course of doing so with the result that the opinion or evaluation is inaccurate, that attorney may, if the Court follows the teachings of Franko v. Mitchell, have malpractice exposure to the recipient of the evaluation for whose use it was prepared, if that person suffered damages as a consequence. Alternatively, if the Court applies the rationale of the Standard Chartered decision to that situation, then the attorney may have exposure to a claim for negligent misrepresentation brought by the third party recipient, which would require proof that the third party in fact reasonably relied upon it.

In Kremser v. Quarles & Brady, L.L.P., 201 Ariz. 413, 36 P.3d 761 (App. 2001), the Court held that a lawyer will be subject to a duty of care to a non-client under the circumstances delineated in Section 51 of the Restatement (Third) of the Law Governing Lawyers. Under that Section, a lawyer will owe a duty of care to a non-client whose interests are not adverse to those of the lawyer's client, where the lawyer invites the non-client to rely on the lawyer's opinion or provision of legal services, even if the non-lawyer is represented by counsel in the transaction in connection with which the services are offered.

Finally, it has always been the case that an attorney may be the subject of a suit for either malicious prosecution or abuse of process brought by a plaintiff who was the adverse party to the attorney's client in litigation. The most recent decision on that point is Giles v. Hill Lewis Marce, 195 Ariz. 358, 988 P.2d 143 (App. 1999). In McElhanon v. Hing, 151 Ariz. 386, 728 P.2d 256 (App. 1985), affirmed in part and vacated in part on other grounds 151 Ariz. 403, 728 P.2d 273 (1986), the Court of Appeals held that the rationale of permitting attorneys to be held liable for committing the intentional torts of abuse of process and/or malicious prosecution would also support the imposition of liability upon an attorney who knowingly prepared for a client a fraudulent conveyance in an action brought by the defrauded creditors:

The privilege an attorney has for his actions in representing a client is a qualified one that does not extend to the intentional torts of malicious prosecution and abuse of process. Nor should the privilege apply to the intentional acts of furthering and participating in a fraudulent conveyance.

Id., 151 Ariz. at 394, 728 P.2d at 394. See also Boone v. Superior Court In and For Maricopa County, 145 Ariz. 235, 242, 700 P.2d 1335, 1342, fn.2 (1985). The two decisions which initially recognized this rule, Lewis v. Swenson, 126 Ariz. 561, 617 P.2d 69 (App. 1980) and Bird v. Rothman, 128 Ariz. 599, 617 P.2d 1097 (App. 1981), cert. denied 454 U.S. 865, 102 S.Ct. 327, 70 L.Ed.2d 166 (1981), stressed, however, that malicious prosecution and abuse of process were intentional torts, and liability could not be imposed upon attorneys under such claims upon the basis of a showing of merely negligent conduct. It would seem to follow from these precedents that if an attorney intentionally prepared a false and misleading evaluation for the use of a third party, that attorney would have liability to the third party for doing so.

1.1:430      Assisting Unlawful Conduct [see also 1.2:600-1.2:630]

AZ-ER 1.2(d) provides that a lawyer shall not assist a client, or advise a client, to engage in conduct the lawyer knows is criminal or fraudulent. A lawyer may, however, discuss with the client the legal consequences of a proposed course of action. The Comment to AZ-ER 1.2 elaborates on the distinction between these two situations as follows:

A lawyer is required to give an honest opinion about the actual consequences that appear likely to result from a client's conduct. The fact that a client uses advice in a course of action that is criminal or fraudulent does not, of itself, make a lawyer a party to the course of action. However, a lawyer may not knowingly assist a client in criminal or fraudulent conduct. There is a critical distinction between presenting an analysis of legal aspects of questionable conduct and recommending the means by which a crime or fraud might be committed with impunity.

Comment, AZ-ER 1.2, á 10.

In McElhanon v. Hing, 151 Ariz. 386, 728 P.2d 256 (App. 1985), affirmed in part and vacated in part on other grounds 151 Ariz. 403, 728 P.2d 273 (1986), the Court of Appeals held that the rationale of permitting attorneys to be held liable for committing the intentional torts of abuse of process and/or malicious prosecution would also support the imposition of liability upon an attorney who knowingly prepared for a client a fraudulent conveyance in an action brought by the defrauded creditors:

The privilege an attorney has for his actions in representing a client is a qualified one that does not extend to the intentional torts of malicious prosecution and abuse of process. Nor should the privilege apply to the intentional acts of furthering and participating in a fraudulent conveyance.

Id., 151 Ariz. at 394, 728 P.2d at 394. See also Boone v. Superior Court In and For Maricopa County, 145 Ariz. 235, 242, 700 P.2d 1335, 1342, fn.2 (1985). There are no other Arizona authorities that discuss the issue whether an attorney may be held civilly liable for assisting a client in unlawful conduct.

In Arizona Ethics Opinion No. 95-02, the Committee on the Rules of Professional Conduct ("the Committee") considered whether a criminal defense attorney is required to provide information regarding the attorney's client's intent to appear at trial upon the request of court personnel. The Committee determined that, if a lawyer has actual knowledge that a client will not appear at trial, and the client's failure to appear is wilful, then the attorney must advise the court of that circumstance. Similarly, in Arizona Ethics Opinion No. 92-02, the Committee considered whether a lawyer has an ethical obligation to reveal a client's correct name to the court. The Committee was responding to an inquiry from a lawyer who had been retained by a "John Doe" for representation in a criminal matter. While out on bail, the client was arrested on other charges and told the arresting authorities his name was "John Smith." The inquiring lawyer was subsequently retained to represent this individual in the second criminal matter, and learned during the course of this engagement that the individual's true legal name was "John Smith." The Committee determined that the attorney was obligated to advise the client that the attorney could not use the client's false name in proceedings before the court and that, if the client refused to use his correct name, the attorney must seek to withdraw. The lawyer, however, could not disclose the client's use of a false name and, if the motion to withdraw was denied, the attorney must proceed with the representation, but without using the false name. See also In re American Continental Corporation/Lincoln Savings and Loan Securities Litigation, 794 F. Supp. 1424 (D. Ariz. 1992).

In Arizona Ethics Opinion No. 2000-04, the Committee considered an inquiry from an attorney whose client desired to record conversations between the client's child and the child's other parent. After initially concluding that it would be unethical to do so, the Committee issued an amended Opinion holding that the attorney could ethically advise the client that she could record a conversation in which one party has not given consent to the recording, if the attorney concluded that the recording would not be prohibited by federal or state law. The Committee cautioned, however, that if the attorney concluded that the proposed conduct would be illegal under federal or state law, then the attorney could not advise the client to record the conversations.

In Arizona Ethics Opinion No. 2001-04, the Committee considered the obligations of a lawyer in a civil case who receives from a client documents containing privileged or otherwise confidential information which the client had obtained from an employee of the adverse party. On that issue, the Committee concluded that the lawyer must refrain from examining the materials or making use of them, notify (with the client's consent) opposing counsel of the receipt of them, and either abide by opposing counsel's instructions as to the disposition of them or seek a ruling from the court. If the client refuses to consent to notifying opposing counsel, the lawyer may not do so, but must still refrain from examining or using the materials. If the lawyer does so, withdrawal is not required. The Committee went on to observe that, if there is evidence that the client has some complicity in obtaining the materials, and intends to continue to do so, the lawyer must counsel the client about the legal consequences of that course of conduct and instruct the client to discontinue. If the client refuses to do so, then the lawyer may, but is not required to, advise the adverse party or the authorities. The lawyer must also refuse to accept any additional documents of that nature obtained by the client.

In Arizona Ethics Opinion No. 88-08, the Committee responded to an inquiry from a lawyer representing the wife in pending divorce proceedings. The wife had revealed to the attorney that she had surreptitiously tape recorded a conversation between her spouse and his lawyer in which the spouse had discussed the existence of additional assets that had not been disclosed but would ordinarily be subject to division in the divorce proceedings. The Committee concluded that the lawyer could seek to locate and/or force the disclosure of the existence of the additional assets, but could not use the tape recording as evidence that they existed, as that would constitute ratifying or assisting the client in conduct that might be fraudulent or criminal. The Committee also indicated that the lawyer must explain to the wife the limitations on the lawyer's ability to use the tape recording.

In Arizona Ethics Opinion No. 87-05, the Committee analyzed whether an attorney can ethically advise a client arrested for driving under the influence of alcohol to refuse to submit to blood, breath or urine tests. The Committee determined that it would not be unethical to so advise the client, as the client has a statutory right to refuse to take such tests, but that the best course of action was for the lawyer to advise the client of the option to refuse the tests, and the legal consequences of doing so, and to allow the client to make his or her own decision on the issue.

1.1:440      Knowledge of Client's Breach of a Fiduciary Duty [see also 1.13:520]

A lawyer engaged in the representation of a client who has fiduciary duties to others may, under certain circumstances, be subject to obligations to the third parties for whom the lawyer's client has fiduciary responsibilities. Indeed, one of the first decisions to discuss the issue of whether there should be a privity requirement as a predicate for pursuing a legal malpractice claim, Fickett v. Superior Court of Pima County, 27 Ariz.App. 793, 558 P.2d 988 (1976) arose out of such a situation. Fickett involved an action filed by the present conservator of an incompetent's estate against the former guardian and that guardian's attorneys, claiming that Fickett, as the attorney for the former guardian, had been negligent in failing to discover that the guardian had embarked upon a scheme to liquidate the guardianship estate by misappropriation and conversion of funds to his own use, and by making improper investments. The Pima County Superior Court denied summary judgment in favor of Fickett, rejecting the argument that absent a showing of fraud or collusion, the attorney owed no duty to the ward and a cause of action for malpractice could not be maintained. The Court of Appeals affirmed that determination, holding:

The general rule for many years has been that an attorney could not be liable to one other than his client in an action arising out of his professional duties, in the absence of fraud or collusion . . . In denying liability of the attorney to one not in privity of contract for the consequences of professional negligence, the courts have relied principally on two arguments: (1) that to allow such liability would deprive the parties to the contract of control of their own agreement; and (2) that a duty to the general public would impose a huge potential burden of liability on the contracting parties.

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We cannot agree with petitioners that they owed no duty to the ward and that her conservator could not maintain an action because of lack of privity of contract. We are of the opinion that the better view is that the determination of whether, in a specific case, the attorney will be held liable to a third person not in privity is a matter of policy and involves the balancing of various factors, among which are the extent to which the transaction was intended to affect the plaintiff, the foreseeability of harm to him, the degree of certainty that the plaintiff suffered injury, the closeness of the connection between the defendant's conduct and the injuries suffered, the moral blame attached to the defendant's conduct, and the policy of preventing future harm.

Id., 27 Ariz. App. at 794-95, 558 P.2d at 989-90. The Court, rather than abolishing a privity requirement entirely, however, allowed the action by the successor conservator to proceed on the basis that when an attorney undertakes to represent the guardian of an incompetent, that attorney assumes a relationship not only with the guardian but also with the ward.

Similarly, in Matter of Estate of Shano, 177 Ariz. 550, 869 P.2d 1203 (App. 1993), the Court approved the disqualification of an attorney who was simultaneously acting as co-counsel for the appointed special administrator of an estate, and the proponent of and beneficiary under a holographic will of the decedent which was being contested in the proceedings involved. The Court noted that the attorney for a special administrator of an estate, or a personal representative, has a derivative fiduciary duty to the successors to the estate, including the surviving spouse. Id. The Court concluded that the attorney's simultaneous representation of a personal representative and of the beneficiary under a separate, and contested, will violated that derivative fiduciary duty, and was a conflict of interest that impaired the attorney's ability to represent the beneficiary client, because the latter representation would be materially limited by the attorney's fiduciary responsibilities to the other prospective beneficiaries. Id.

The Court of Appeals recently had the opportunity to clarify the apparent breadth of the holding in Shano, in its decision in In the Matter of the Estate of Fogelman, 197 Ariz. 252, 3 P.3d 1172 (App. 2000). In Fogelman, the Court reiterated that the attorney representing the personal representative or administrator of an estate owes a "derivative fiduciary duty" of fairness and impartiality to beneficiaries and successors, but explained that such duty was one imposed by Arizona's Probate Code, and not the Arizona Rules of Professional Conduct. The Court specifically held that successors and beneficiaries of an estate are not clients of the lawyer representing the personal representative. On the other hand, the "derivative duty" imposed by the Probate Code may represent a "material limitation" on the lawyer's ability to represent the interests of clients the lawyer represents on other matters who are also involved in the probate proceedings, and create a conflict of interest under AZ-ER 1.7.

1.1:450      Failing to Prevent Death or Bodily Injury

Unlike its counterpart in the Model Rules, AZ-ER 1.6(b) requires that a lawyer reveal otherwise confidential information relating to the representation of a client "to the extent the lawyer reasonably believes necessary to prevent the client from committing a criminal act that the lawyer believes is likely to result in death or substantial bodily harm. There are no reported cases where an injured third party sought to impose civil liability on a lawyer for failure to honor this obligation, and permitting such a cause of action to be maintained would appear to be inconsistent with the rule of Lansford v. Harris, 174 Ariz. 413, 850 P.2d 126 (App. 1992), that an allegation of unethical conduct or breach of an ethical duty will not in and of itself provide a basis for a claim of legal malpractice.

1.1:500   Defenses and Exceptions to Liability

  • Primary Arizona References: AZ-ER 1.1
  • Background References: ABA Model Rule 1.1, Other Jurisdictions
  • Commentary: ABA/BNA § 301:1001, ALI-LGL §§ 76, 78, Wolfram § 5.6, Restatement of Torts (Second) § 586 (1977), Restatement of Torts § 587 (1938)

1.1:510      Advocate's Defamation Privilege

Arizona's recognition of an absolute privilege (i.e., immunity from liability) for an attorney to make otherwise defamatory statements in connection with the conduct of judicial proceedings has evolved as derivative of the related absolute privilege accorded to parties in litigation at common law. The first recognition of these related privileges came in Stewart v. Fahey, 14 Ariz.App. 149, 481 P.2d 519 (1971), which concerned whether there could be liability for slander of title for statements made in a lis pendens recorded in connection with a judicial proceeding. Relying on authorities from other jurisdictions, and Section 587 of the Restatement of Torts, the Court held that the allegedly defamatory statements were absolutely privileged:

At common law, parties to judicial proceedings were granted an absolute privilege to use defamatory language because of the overriding public interest that persons should speak freely and fearlessly in litigation, "uninfluenced by the possibility of being brought to account in an action for defamation." . . . As the rule is stated in Restatement of Torts § 587 (1938):

"A party to a private litigation * * * is absolutely privileged to publish false and defamatory matter of another in communications preliminary to a proposed judicial proceeding, or in the institution of or during the course and as a part of a judicial proceeding in which he participates, if the matter has some relation thereto."

Id., 14 Ariz.App. at 150-51, 481 P.2d at 520-21. (Citation omitted). (The result in this case has subsequently been "overruled" by statute. See A.R.S. § 33-420).

In Todd v. Cox, 20 Ariz.App. 347, 512 P.2d 1234 (1973), the Court of Appeals considered whether the absolute privilege accorded parties to litigation extended to witnesses and, if so, whether that would encompass an affidavit submitted by an attorney in support of a motion for new trial in a criminal case. The Court answered both questions in the affirmative, relying primarily on the position articulated in Section 588 of the Restatement of Torts:

"A witness is absolutely privileged to publish false and defamatory matter of another in communications preliminary to a proposed judicial proceeding and as a part of a judicial proceeding in which he is testifying, if it has some relation thereto."

Id., 20 Ariz.App. at 348, 512 P.2d at 1235. The Court stressed, however, that in order to qualify for the absolute privilege, the allegedly defamatory statement must have some relationship to the judicial proceeding in connection with which it was made. The Court of Appeals elaborated on the scope of the privilege, and the limitations on its applicability, in its subsequent decision in Sierra Madre Development Inc. v. Via Entrada Townhouses Ass'n., 20 Ariz.App. 550, 514 P.2d 503 (1973):

We are of the opinion that a defamatory statement contained in the pleadings should be absolutely privileged if it is connected with, has any bearing on, or is related to the subject of inquiry. A party should be privileged to plead any claim or defense containing defamatory statements so long as it is not completely frivolous. . .

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We note that this privilege is not unlimited. Defamatory statements which are clearly unconnected with the subject of inquiry or which state a totally frivolous claim or defense are not accorded the privilege.

Id., 20 Ariz.App. at 553-54, 514 P.2d at 506-07. In its subsequent decision in Bailey v. Superior Court In and For Santa Cruz County, 130 Ariz. 366, 636 P.2d 144 (App. 1981), the Court of Appeals noted that the scope oof the privilege was not limited to allegedly defamatory statements made about parties to the proceedings:

The defamatory statements can be about a stranger to the proceedings provided they bear a relationship to the proceedings.

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The defense of absolute privilege is available if the defamatory statements have some relation to the proceedings, even though they may not constitute evidence relevant and material from a strictly legal evidentiary viewpoint.

Id., 130 Ariz. at 368, 636 P.2d at 146 (citations omitted).

In the interim, the Court of Appeals issued a decision, Lewis v. Swenson, 126 Ariz. 561, 617 P.2d 69 (App. 1980), which implicitly recognized that the absolute privilege extended to statements made by attorneys in connection with judicial proceedings. This was an action by a personal representative of a decedent against the attorney who had represented the physician in a medical malpractice action previously brought by the decedent, and against the expert witness who had testified on the physician's behalf, on the grounds that the attorney's failure to prevent the expert witness from mentioning malpractice insurance before the jury, which resulted in a mistrial, had caused the estate to incur unnecessary expenses in subsequent prosecution of the claim. The Court of Appeals held that the complaint failed to state a claim, reasoning as follows:

For the same reasons of public policy which dictate granting an absolute privilege to witnesses and attorneys from suits for defamation for statements made in the course of trial, we believe there is a privilege to attorneys at trial to ask questions of witnesses which have a relation to the proceedings without fear of subjecting themselves to a civil action for damages by an opposing litigant if the answer to the question ultimately results in a mistrial. If the question asked is improper or irrelevant, the opposing litigant may object to the question. If the question is proper and no objection to it is made, the answer to it cannot give rise to a cause of action by the opposing litigant against the attorney, irrespective of his motive in asking the question. To hold otherwise would have a chilling effect on the ability of counsel to vigorously represent the client.

Id., 126 Ariz. at 565, 617 P.2d at 73.

This implicit recognition that the absolute privilege would be available to attorneys who made allegedly defamatory statements in connection with judicial proceedings became explicit in the Arizona Supreme Court's decision in Green Acres Trust v. London, 141 Ariz. 609, 688 P.2d 617 (1984), which concerned whether statements made by attorneys to a newspaper reporter in a "press briefing" concerning an action the attorneys were preparing to file were actionable as defamatory. The Court initially observed that the attorneys in question were entitled to an absolute privilege for any allegedly defamatory statements made in connection with judicial proceedings:

An attorney's absolute privilege to defame in connection with a judicial proceeding is addressed by Restatement (Second) of Torts § 586, which provides:

"An attorney at law is absolutely privileged to publish defamatory matter concerning another in communications preliminary to a proposed judicial proceeding, or in the institution of, or during the course and as a part of, a judicial proceeding in which he participates as counsel, if it has some relation to the proceeding.

Id., 141 Ariz. at 613, 688 P.2d at 621. The Court went on to hold, however, that the purposes served by the privilege would not be served by granting immunity for statements made outside of judicial proceedings, and that the "press briefing" that gave rise to the case before it could not be considered part of the anticipated judicial proceedings the attorneys were discussing: "We conclude that no absolute or qualified privilege to defame protected the lawyer defendants in their communications with the newspaper reporter under the circumstances of this case." Id., 141 Ariz. at 619, 688 P.2d at 627. The Court of Appeals recently reaffirmed that the privilege is not a license for attorneys to defame, and to benefit from the judicial proceedings immunity doctrine, an attorney's extra-judicial statement must be both related to litigation and made in furtherance of it, and the recipient of the communication must have some relationship to the proceeding. Recorp Partners, Inc. v. Gust Rosenfeld, P.L.C., 198 Ariz. 230, 8 P.3d 418 (App. 2000).

In a similar vein, the Court of Appeals has held that the absolute privilege is not available to protect defamatory statements made by a witness testifying in administrative proceedings. Melton v. Slonsky, 19 Ariz.App. 65, 504 P.2d 1288 (1973). That Court has also held, however, that the absolute privilege does attach to an attorney's response to a complaint filed with the disciplinary authorities of the State Bar:

Because the Arizona State Bar acts in a judicial capacity in dealing with attorneys' conduct, an absolute judicial privilege protects anyone who files a complaint with the organization. . . Persons making allegedly defamatory statements in connection with a judicial proceeding are protected "so long as such statements bear some relationship to the proceeding." . . . If the statements are related to the proceeding, the privilege applies despite the fact that Merrill's defamatory statements were made in a response to, rather than in, a bar complaint.

Ashton-Blair v. Merrill, 187 Ariz. 315, 317, 928 P.2d 1244, 1246 (App. 1996).

1.1:520      Wrongful Use of Civil Proceedings; Abuse of Process; False Arrest

It has always been the case that an attorney may be the subject of a suit for either malicious prosecution or abuse of process brought by a plaintiff who was the adverse party to the attorney's client in litigation. The most recent decision on that point is Giles v. Hill Lewis Marce, 195 Ariz. 358, 988 P.2d 143 (App. 1999). In McElhanon v. Hing, 151 Ariz. 386, 728 P.2d 256 (App. 1985), affirmed in part and vacated in part on other grounds 151 Ariz. 403, 728 P.2d 273 (1986), the Court of Appeals held that the rationale of permitting attorneys to be held liable for committing the intentional torts of abuse of process and/or malicious prosecution would also support the imposition of liability upon an attorney who knowingly prepared for a client a fraudulent conveyance in an action brought by the defrauded creditors:

The privilege an attorney has for his actions in representing a client is a qualified one that does not extend to the intentional torts of malicious prosecution and abuse of process. Nor should the privilege apply to the intentional acts of furthering and participating in a fraudulent conveyance.

Id., 151 Ariz. at 394, 728 P.2d at 394. See also Boone v. Superior Court In and For Maricopa County, 145 Ariz. 235, 242, 700 P.2d 1335, 1342, fn.2 (1985). The two decisions which initially recognized this rule, Lewis v. Swenson, 126 Ariz. 561, 617 P.2d 69 (App. 1980) and Bird v. Rothman, 128 Ariz. 599, 617 P.2d 1097 (App. 1981), cert. denied 454 U.S. 865, 102 S.Ct. 327, 70 L.Ed.2d 166 (1981), stressed, however, that malicious prosecution and abuse of process were intentional torts, and liability could not be imposed upon attorneys under such claims upon the basis of a showing of merely negligent conduct. It would seem to follow from these precedents that if an attorney intentionally prepared a false and misleading evaluation for the use of a third party, that attorney would have liability to the third party for doing so.

1.1:530      Assisting Client to Break a Contract

There are no Arizona authorities that specifically discuss the issue whether an attorney can be subjected to civil liability for assisting a client in breaking a contract. In McElhanon v. Hing, 151 Ariz. 386, 728 P.2d 256 (App. 1985), affirmed in part and vacated in part on other grounds 151 Ariz. 403, 728 P.2d 273 (1986), the Court of Appeals held that the rationale of permitting attorneys to be held liable for committing the intentional torts of abuse of process and/or malicious prosecution would also support the imposition of liability upon an attorney who knowingly prepared for a client a fraudulent conveyance in an action brought by the defrauded creditors:

The privilege an attorney has for his actions in representing a client is a qualified one that does not extend to the intentional torts of malicious prosecution and abuse of process. Nor should the privilege apply to the intentional acts of furthering and participating in a fraudulent conveyance.

Id., 151 Ariz. at 394, 728 P.2d at 394. See also Boone v. Superior Court In and For Maricopa County, 145 Ariz. 235, 242, 700 P.2d 1335, 1342, fn.2 (1985). The Court did, however, rely strongly on the fact that the allegation was that the attorney was at least assisting, and possibly actively participating in, the client's fraud.

1.1:600   Vicarious Liability [see 5.1:500]

Under AZ-ER 5.1(c), a partner in a firm will be responsible for the misconduct of another lawyer in the firm if (1) the partner ordered the conduct involved or, with knowledge of the specific conduct involved, ratified it, or (2) learns of the misconduct at a time when its consequences can be avoided or mitigated, but fails to take reasonable remedial action. In addition, under the doctrine of Matter of Galbasini, 163 Ariz. 120, 786 P.2d 971 (1990), a partner in a firm could be found to have violated the provisions of AZ-ER 5.1(a) if the partner fails to take any precautionary steps at all to see that that the firm has taken measures to ensure that lawyers in the firm comply with their ethical obligations, even if no ethical violations by other lawyers in the firm occur.

If the misconduct is such that it also results in malpractice liability to the client then all partners in the firm will be jointly and severally liable for any judgment entered in favor of the client. Clogher v. Winston & Strawn, 181 Ariz. 372, 891 P.2d 240 (App. 1995). In fact, it has been held that, under Arizona's partnership statutes and common law, punitive damages may be awarded vicariously against a partnership for acts of a partner performed in the ordinary course of the partnership's business. Hyatt Regency Phoenix Hotel Company v. Winston & Strawn, 184 Ariz. 120, 907 P.2d 506 (App. 1995), cert. denied 517 U.S. 1234, 116 S.Ct. 1877, 135 L.Ed.2d 173 (1996). Thus, it is not uncommon to find that many Arizona law firms have organized, or reorganized, themselves as either "limited liability corporations" or "limited liability partnerships" to avoid this exposure.