Pursuant to the Professional Code of Responsibility, lawyers owe a certain legal duty to their clients throughout the span of their representation. In certain circumstances this duty can be extended to non-clients. The issue of liability to non-clients was recently addressed following the actions of Mayer Brown, LLP (“Mayer Brown”), and the resulting malpractice suit filed against Mayer Brown which was based upon Mayer Brown’s inadvertent termination of certain liens granted by General Motors (“GM”) in favor of J.P. Morgan Chase (“JPM”). Specifically, the allegations of misconduct arose form actions in connection with a loan and the related “Term Loan Agreement.”
In June 2016, the Northern District of Illinois was cautious of extending an attorney’s liability to an “unlimited and unknown number of potential plaintiffs” when addressing the malpractice suit brought by the non-client members of the Term Loan Agreement. In finding that no duty existed to allow for a malpractice suit to continue, the Northern District focused on the intent of the hiring, specifically the “primary and direct purpose” of Mayer Brown’s hiring, which the court found was not to benefit the members of the Term Loan Agreement (the “Term Loan Members”). Shortly after the decision from the Northern District of Illinois, the Term Loan Members filed an appeal with the United States Court of Appeals for the Seventh Circuit.
While the Northern District of Illinois’ decision focused on the “primary and direct purpose” of the hiring, this memo will discuss an issue that the two parties are currently arguing on the appeal to the Seventh Circuit. The Term Loan Members are attempting to establish that Mayer Brown had a duty to the Term Loan Members, although they were not Mayer Brown’s clients. Specifically, the Term Loan Members are arguing that the transaction should be considered non-adversarial and therefore a duty would exist to non-clients. Mayer Brown, however, is arguing that the transaction was adversarial in nature, and therefore did not create a duty.