Attorney Liability for Reliance on Client Statements
LACBA Update, April 2007
By Jeremiah Reynolds, an attorney at Kinsella Weitzman Iser Kump & Aldisert LLP in Santa Monica. He is a member of LACBA’s Professional Responsibility and Ethics Committee. The views expressed are his own and not those of his law firm or the committee.
Attorneys often rely upon factual information provided by their clients. What happens when that information later proves to be incorrect? Can an attorney be sanctioned under Rule 11 of the Federal Rules of Civil Procedure or California Code of Civil Procedure Section 128.7 for relying on incorrect information supplied by a client? Can an attorney later be found liable for malicious prosecution for bringing a lawsuit based upon incorrect information provided by a client?
Both Rule 11 and Section 128.7 place a duty on attorneys and litigants to conduct a reasonable inquiry into the factual and legal bases for all claims asserted in a pleading before filing. (Estate of Blue v. County of Los Angeles, 120 F.2d 982, 985 (9th Cir. 1997).)1 Whether an attorney has performed a “reasonable inquiry” is evaluated based upon what would be expected of a competent attorney. (United States v. Stringfellow, 991 F.2d 225, 226-227 (9th Cir. 1990).)
However, Rule 11 and Section 128.7 expressly recognize that the particular circumstances of each case will determine whether a reasonable inquiry was performed. (Fed. R. Civ. P. 11(b); Code Civ. Proc. §128.7(b).) Thus, in evaluating the reasonableness of an inquiry (or lack thereof), courts will look to a variety of factors such as: how much time was available to investigate (R. K. Harp Invest. Co. v. McQuade, 825 F.2d 1101, 1103 (7th Cir. 1987)); the extent of the attorney’s involvement in the case (Artco Corp. v. Lynnhaven Dry Storage Marina, Inc., 898 F.2d 953, 956 (4th Cir. 1990)); the attorney’s level of experience (Lieb v. Topstone Indus. Inc., 788 F.2d 151, 158 (3rd Cir. 1986)); the case’s complexity (Insurance Benefit Admins. Inc. v. Gavin, 871 F.3d 1354, 1358 (3rd Cir. 1989)); and the extent to which the attorney was forced to rely on his or her client for factual information (Id.).
Several circuits have held that an attorney may rely upon the objectively reasonable representations of a client. (Dubois v. USDA, 270 F.3d 77, 83 (1st Cir. 2001); Hadges v. Yonkers Racing Corp., 48 F.3d 1320, 1329 (2nd Cir. 1995); R. K. Harp, 825 F.2d at 1103.) For example, it may be reasonable to rely on a client’s statements when they are supported by other evidence known to the attorney at the time of filing. (Hadges, 48 F.3d at 1329; R. K. Harp, 825 F.2d at 1103.) An attorney also may rely upon a client’s statements when the claims are highly technical and depend upon the particular expertise of the client. (Dubois, 270 F.3d at 83 (government counsel reasonably relied on technical expertise of forest service in crafting litigation position because forest service was recognized expert on environmental issues, and counsel had no reason to question its claims).)
However, the instances when an attorney is forced to rely solely on information provided by a client should be rare and based upon extenuating circumstances such as lack of time to investigate the facts. (Worldwide Primates, Inc. v. McGreal, 87 F.3d 1252, 1255 (11th Cir. 1996).) And “[w]hen an attorney must rely on his client, he should question him thoroughly, not accepting his version on faith alone....” (Gartenbaum v. Beth Israel Med. Ctr., 26 F. Supp. 2d 645, 646-47 (S.D.N.Y. 1998).) Moreover, the attorney should never “totally rely on the uncorroborated word of h[is] client and hearsay witnesses for all of the key contentions of the case.” (Id. at 647.)
In actions for malicious prosecution, courts have set a higher bar for finding attorneys liable for relying on information provided by their clients. As the court of appeal explained in Morrison, in determining whether probable cause exists to bring a claim, an attorney is entitled to rely on the client’s statements—not just the “objectively reasonable representations” of the client—unless the statements are known to be false. “Usually, the client imparts information upon which the attorney relies in determining whether probable cause exists to initiate a proceeding. The rule is that the attorney may rely on those statements as a basis for exercising judgment and providing advice, unless the client’s representations are known to be false.” (Morrison v. Rudolph, 103 Cal. App. 4th 506, 513 (2002) (overruled in part on other grounds by Zamos v. Stroud, 32 Cal. 4th 958, 973 (2004))(quoting Mallen & Smith, Legal Malpractice (5th ed. 2000)); see also Swat-Fame Inc. v. Goldstein, 101 Cal. App. 4th 613, 625 (2002) (overruled in part on other grounds by Zamos v. Stroud, 32 Cal. 4th 958, 973 (2004)).)2
The reason that courts have made it more difficult for attorneys to be found liable for malicious prosecution can largely be explained by the fact that malicious prosecution is a “disfavored action,” and “strong public policy of this state favors open access to the courts for the resolution of conflicts....” (Downey Venture v. LMI Ins. Co., 66 Cal. App. 4th 478, 513 (1998).)
Although an attorney is technically permitted to rely on the “objectively reasonable representations” of a client for purposes of complying with Rule 11 or Section 128.7 and all information provided by a client (not known to be false) for purposes of determining whether probable cause exists to bring a claim, the careful attorney should always seek to corroborate a client’s statements with other sources of information. Thus, in the absence of extenuating circumstances, an attorney should attempt to do the following during the prefiling investigation: review key documents relevant to a claim (Insurance Benefit Admins., 871 F.3d at 1357 (affirming sanctions where attorney failed to review available documents that refuted client’s representations)); interview important witnesses and prior counsel in related proceedings (Wigod v. Chicago Mercantile Exch., 981 F.2d 1510, 1523 (7th Cir. 1992) (sanctions upheld where attorney made no effort to meet with witnesses or prior counsel in related proceeding)); and, in some instances, verify information against public records (Callahan v. Schoppe, 864 F.2d 44, 45-46 (5th Cir. 1989) (sanctions affirmed where attorney sued wrong party and could have learned of mistake by consulting publicly available records)). These steps will greatly reduce the potential that an attorney will be sanctioned under Rule 11 or Section 128.7 or face an action for malicious prosecution.
1 “Section 128.7 was adopted specifically to apply Federal Rule of Civil Procedure 11, as amended in 1998.” (See Sen. Com. on Judiciary, Committee Report for 1993 Cal. Assem. Bill no. 3594 [1993-1994 Reg. Sess.]; Crowley v. Katleman, 8 Cal. 4th 666, 690, fn. 13.) Because Section 128.7 is patterned directly after Rule 11, federal cases construing Rule 11 are considered persuasive authority in California courts.
2 Moreover, the California Supreme Court has held that an attorney’s failure to conduct a reasonable investigation cannot serve as an independent basis for establishing lack of probable cause in an action for malicious prosecution. Sheldon Appel v. Albert & Oliker, 47 Cal. 3d 863, 883 (1989). However, a lack of investigation can be used as evidence that the attorney initiated the action with malice. Id.