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Working With a Net – Attorney Immunity For Texas Transactional Lawyers

Working With a Net – Attorney Immunity For Texas Transactional Lawyers
Kellysitting (2)

Kelly Christy

Associate

If you are a transactional attorney, you can now rest easy knowing that the attorney immunity doctrine protects you from claims brought by the other party in the transaction so long as your conduct meets the recent standard announced by the Texas Supreme Court. Before May of this year, transactional attorneys had been left wondering whether the attorney immunity doctrine extended outside the litigation context. This placed transactional attorneys in a tough situation which required attorneys to fulfill their ethical obligation to zealously represent their clients while also subjecting themselves to the risk of liability to the other side in commercial transactions.

The Texas Supreme Court had previously made clear that the attorney immunity doctrine provides substantial protections against opposing parties when litigators zealously advocate for their clients in litigation matters. See Cantey Hanger, LLP v. Byrd, 467 S.W.3d 477 (Tex. 2015).  However, prior to May 21, 2021, the Texas Supreme Court had not addressed whether attorney immunity also applies to transactional matters, leaving the courts of appeals to make guesses concerning the scope of the doctrine. See Troice v. Greenberg Traurig, LLP, 921 F.3d 501, 506 (5th Cir. 2019) (discussing the trend among the courts of appeals toward viewing immunity in a comprehensive manner which “most likely…includes the multitude of attorneys that routinely practice and advise clients in non-litigation matters”).

However, in its recent decision, the Texas Supreme Court finally clarified the issue and held that attorney immunity applies in all adversarial contexts in which an attorney must zealously and loyally represent his or her client, so long as the conduct constitutes the “kind” of conduct attorney immunity protects. Haynes & Boone, LLP v. NFTD, LLC, 631 S.W.3d 65 (Tex. 2021). Thus, attorney immunity protects an attorney against a non-client’s claim when the claim is based on (1) conduct that constitutes the provision of “legal” services involving the unique office, professional skill, training, and authority of an attorney and (2) conduct that the attorney engages in to fulfill the attorney’s duties in representing the client within an adversarial context in which the client and the non-client do not share the same interests and therefore the non-client’s reliance on the attorney’s conduct is not justifiable. Id.

Not only did the Court clearly expand immunity to protect attorney conduct in the transactional context, but the Supreme Court reiterated just how far attorney immunity reaches when an attorney is performing the kind of legal services to which the defense applies. The Court emphasized, “even conduct that is wrongful in the context of the underlying suit is not actionable if it is part of the discharge of the lawyer’s duties in representing his or her client.” See Cantey Hanger, LLP v. Byrd, 467 S.W.3d 477 (Tex. 2015) (holding that an attorney who committed fraud by falsifying his client’s bill of sale of an airplane was protected by attorney immunity because the attorney was acting on his client’s behalf). Additionally, the Supreme Court has expressly declined to recognize an exception for fraud claims when the alleged fraudulent conduct is connected with representing a client.  Bethel v. Quilling, Selander, Lownds, Winslett & Moser, P.C., 595 S.W.3d 651, 654  (Tex. 2020).

Although attorney immunity now broadly protects attorneys in both the litigation and transactional context, the attorney-immunity defense is not without its limits. Where an attorney is not acting on behalf of his or her client, the conduct is considered foreign to the duties of an attorney and is not shielded from liability. Haynes & Boone 631 S.W.3d 65 (Tex. 2021). This includes where an attorney is acting in a fraudulent scheme with his client rather than acting solely on the client’s behalf. In another decision issued the same day as the Haynes & Boone decision, the Supreme Court clarified further on the attorney-immunity defense’s limits. See Landry’s, Inc. v. Animal Legal Def. Fund, 631 S.W.3d 40 (Tex. 2021).

In Landry’s, attorneys for the Animal Legal Defense Fund (“ALDF”) published statements to the press and on social media alleging that the Houston Aquarium and its owner (Landry’s, Inc.) violated the Endangered Special Act based on its alleged mistreatment of tigers. Landry’s sued the ALDF attorneys for defamation and business disparagement. The Court held that attorney immunity does not protect a lawyer who issues a press statement because such statements “do not partake of the office, professional training, skill, and authority of an attorney.” Id. The Court stressed that anyone could publicize a client’s allegations to the media and that they commonly do so without the protection of immunity. Id. The Court concluded that some conduct remains actionable even if done on behalf of a client if the conduct does not require the office, professional training, skill, and authority of an attorney. Id.

If you are a transactional attorney, you are now afforded the benefits and privileges under the attorney immunity doctrine. However, you should be aware of the limits placed on this defense by the Supreme Court in Haynes & Boone and Landry’s. Notably, know that this defense only extends to a non-client’s claim where you were acting on behalf of your client, using the unique office, professional skill, training, and authority of an attorney, and where you were representing your client within an adversarial context in which your client and the non-client did not share the same interests.

ABOUT THE AUTHOR: Kelly M. Christy is an Associate at Rapp & Krock, PC in the Litigation group.

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