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Colorado Supreme Court’s Baker Opinion Affirms Narrow Window of Liability for Attorneys

  • January 20th, 2016
  • Miles Buckingham
  • Comments Off on Colorado Supreme Court’s Baker Opinion Affirms Narrow Window of Liability for Attorneys

 

On January 19, 2016, the Colorado Supreme Court issued its Opinion in Baker v. Wood, Ris & Hames, 2013 SC 554. In its Opinion the Court reexamined the issue of whether an attorney may be held liable to a non-client for legal malpractice and affirmed Colorado’s history of (by-and-large) classifying malpractice claims by non-clients as untenable. Notably, the Court determined Baker sitting en banc.

Historically, in Colorado, attorneys have been liable to non-clients only for fraud, malicious conduct, and negligent misrepresentation resulting in business-related pecuniary losses. In ruling on Baker, the Colorado Supreme Court affirmed rulings from the Court of Appeals which found in the ordinary course of practice, there is no legal duty of care owed by an attorney without an attorney-client relationship. This lack of duty outside the context of the attorney-client relationship has become known as the “strict privity rule.”

The strict privity rule is grounded upon a number of policy considerations, including consideration of the consequences of extending an attorney’s liability to a group of unforeseeable and potentially unlimited number of third parties. Such exposure would do harm to an attorney’s duty of undivided trust and loyalty to the client.

In Baker, the Court considered whether non-client intended beneficiaries of a client-testator’s estate had standing to bring legal malpractice claims against the attorney who drafted the client-testator’s estate planning documents. The Baker Plaintiffs argued that the strict privity rule should not apply to intended beneficiaries of a client’s will, because under such circumstances, the client’s interests are indistinguishable from those of the beneficiaries, and the policy considerations which underlie the strict privity rule are both limited and inapplicable.

In declining to create an exception to the strict privity rule on the facts presented in Baker, the Court first noted that an attorney’s preoccupation with potential third-party claims might diminish the quality of services provided to the client. Second, the Court held that expanding attorney liability to non-clients could result in adversarial relationships between an attorney and third parties, and give rise to conflicting duties on the part of the attorney. Third, the Court disagreed with the idea that restricting an attorney’s third-party liability to the client’s intended beneficiaries would constrain its otherwise unlimited nature. Finally, the Court concluded that under the circumstances in the case, an exception to the strict privity rule would contravene the cardinal rule that a testator’s intent should be ascertained from the testamentary instrument itself, and not from external sources.

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