It is not unusual for attorneys to fulfill all or a portion of a client’s wishes. This could violate the fiduciary responsibility that the client owes to an unrelated party. The third-party may claim that the client has violated the fiduciary’s obligations. However, can this third party also be able to sue the attorney for participation in the client’s actions?

A director or officer of a company can set the business of a competitor and then direct the company’s business to the competing business. Suppose the director or officer hires an attorney to help establish the business. The attorney is aware that the new business is likely to be used to take advantage of opportunities. Can the business take legal action against the attorney who helped establish the business? What happens if the attorney, the owner of the company that is being formed or is employed by the company in a non-legal capacity?

It is evident, at a minimum, under specific theories, third parties may be held accountable for their participation in fiduciary violations by the person liable for fiduciary obligations. Does the third party have to be an attorney? Before Cantey Hanger LLP (Cantey Hanger, LLP) v. Byrd, 467 S.W.3d 477 (Tex. 2015), It was not clear in Texas the possibility that a person could bring a lawsuit against an attorney who is not representing the client for negligence, such as false representation or aiding and aiding fraud or breach of the fiduciary obligation. Some courts permitted the claim if the attorney was guilty of or taking part in fraud. Others did not.

The plaintiff in Cantey Hanger alleged that lawyers who represented her husband in divorce proceedings committed fraud by graduating a sale bill to avoid tax liability due to the sales of the aircraft by her spouse to her. Id. at 479-80. at 479-80. Texas Supreme Court held that attorney immunity did not apply to the case because “[e]ven the conduct is ‘wrongful within the scope of a lawsuit is not an actionable matter if it is not a part of the lawyer’s responsibilities in representing their client. ‘” Id. At 481. Here are the most important excerpts of the report:

Texas common law is established that an attorney doesn’t oblige a professional duty of care to any third party who suffers harm due to the attorney’s incompetence in representing clients. Barcelo v. Elliott, 923 S.W.2d 575, 577 (Tex. 1996) See also McCamish, Martin, Brown & Loeffler v. F.E. Appling Interests 991 S.W.2d 787 792 (Tex. 1999) (explaining that the absence of privity prevents attorneys’ obligation to non-clients in the event of legal mistakes). Yet, Texas courts have developed an affirmative defense that is more extensive in safeguarding attorneys from responsibility to clients who are not their clients, following the broad declaration made over 100 years back that “attorneys are permitted to practice their profession and to counsel their clients and intervene in any defense or pretense of defense, but without being accountable for any the damages.” Kruegel v. Murphy, 345 S.W. 343, 345 (Tex. Civ. App. 1910, with writ ref, ‘d). This attorney immunity defense is designed to guarantee “loyal and faithful an aggressive representation for attorneys working to represent clients.” Mitchell v. Chapman 10, S.W.3d 810 812 (Tex. App.–Dallas 2000, pet. denied).

To this end, there is a consensus in the appellate courts that, in general, attorneys are exempt from civil liability for non-clients “for actions that are taken as a result of representing clients in court.” Alpert v. Crain, Caton & James, P.C., 178 S.W.3d 398, 405. (Tex. App.–Houston [1st Dist.] 2005, pet. denied) See also Toles 2005, Pet. denied; see also Toles. Toles, 113 S.W.3d 899 910 (Tex. App.–Dallas 2003, no pet. ); Renfroe v. Jones & Assocs., 947 S.W.2d 285 287-88 (Tex. App.–Fort Worth 1997, Pet. denied). Even ” wrongful actions with in connection with the action” can’t be brought into action if it’s “part of the exercise of the lawyer’s responsibilities as a lawyer representing his customer.” Toles, 113 S.W.3d at 910-11;

In contrast, attorneys aren’t legally protected from liability to non-clients for their conduct if they cannot be considered “the type of conduct which an attorney is engaged in the course of performing his duties towards his clients.” Dixon Fin. Servs., 2008 Tex. App. LEXIS 2064 2008 WL 746548 at *9; the case of Chapman Children’s Trust v. Porter & Hedges, L.L.P. 32 S.W.3d 429, 442 (Tex. App.–Houston [14th Dist.] 2000, pet. refused) (noting the fact that “it is the nature of the conduct that determines the conduct, not whether the behavior is exemplary or not”).

The focus in evaluating an attorney’s liability to a non-client is “on the nature and not the form of the lawyer’s conduct” an all-inclusive fraud exception would substantially weaken the defense. Dixon Fin. Servs., 2008 Tex. App. LEXIS 2064, 2008 WL 746548, at *8. Simply naming an attorney’s behavior “fraudulent” is not sufficient and shouldn’t remove it from the realm of representation for clients or render this “foreign to the responsibilities as the attorney.” Alpert, 178 S.W.3d at 406 (citing Poole, 58 Tex. at 137). See also Dixon Fin. Servs., 2008 Tex. App. LEXIS 2064 2008 WL 746548 at *9 (“Characterizing the actions of an attorney in advancing the rights of his client as defamatory does not alter the law that states that an attorney is not found liable for not performing his obligations to his client.”)

It isn’t an exclusion to immunity for attorneys; instead, the defense doesn’t apply to fraudulent behavior beyond the realm of legal representation of his client. Similarly, it doesn’t extend to other illegal actions that are not within the boundaries of expression. Attorneys who assert an affirmative defense of immunity to an attorney are required to show that the alleged wrongdoing, regardless of whether or not it’s deemed fraudulent, is in the performance of his obligations to his customer.

Id. at 481-484.

Based on the ruling In Cantey Hanger in Cantey Hanger, if an attorney is doing the work a lawyer is expected to undertake, the attorney-independence defense will apply. This defense also applies to helping and abetting fraud and breach of fiduciary duty. See Kastner v. Jenkens & Gilchrist, P.C., 231 S.W.3d 571, 577-78 (Tex. App.–Dallas 2007); Span Enters. v. Wood, 274 S.W.3d 854, 859 (Tex. App.–Houston [1st Dist.] 2008).

In Bethel v. Quilling, Selander, Lownds, Winslett & Moser, P.C., the Court extended the Cantey Hanger rule to the allegations of criminal behavior. 595 S.W.3d 651, 657-58 (Tex. 2020). The plaintiff asked the Court “to acknowledge the exception” to immunity for attorneys “whe[nan outside party claims that an attorney was involved in criminal acts during the process of litigation.” The Court agreed. The Court declined to make an exception or an absolute rule, as this would allow plaintiffs to avoid the attorney immunity defense by using a sophisticated pleading–“by simply claiming that an attorney’s conduct was ‘criminal. ‘” Id. The Court did not adopt a categorical exemption for criminal activity because this would be contrary to the purpose of the attorney immunity defense. Instead, the Court determined that conduct that is believed to be criminal “is not exempted from the protections provided by attorney civil immunity if the conduct is in connection to representing a client in the course of litigation.” In d. We explained that lawyers performing their job are not subject to civil liability because non-clients claims their actions were illegal, fraudulent, or even illegal. Id.

In 2021 in 2021 in 2021, the Texas Supreme Court further clarified the ruling in Cantey Hanger, stating it follows that “When an attorney is involved personally in a fraudulent business plan alongside his client instead of on behalf of his client, the attorney will not be found guilty of denying his responsibility since such actions are unrelated to the responsibilities that attorneys.’” Haynes & Boone, LLP v. NFTD, LLC, 631 S.W.3d 65, 777 (Tex. 2021) (quoting Poole v. Hous. & T.C. Ry. Co., 58 Tex. 134, 137 (1882)). The Court in Haynes & Boone, LLP, also expanded the Cantey Hanger holding to extend to the transactional work that an attorney is responsible for and litigation activities covered within Cantey Hanger. Cantey Hanger’s opinion:

Today, we have confirmed that attorney immunity applies to claims that arise out of litigation, as the conduct is similar to the “kind” that we have discussed above. We arrive at this conclusion because there is no significant distinction between the context of litigation and the non-litigation setting. We have granted immunity to attorneys at all. We have recognized the immunity of attorneys since attorneys are required to effectively, efficiently, and vigorously defend their clients’ rights while abstaining from any conflicting obligations or obligations towards themselves or others.

Id. at 79.

In the most recent case, Taylor in Taylor. Tolbert, the Court examined whether there is an exception to immunity in civil suits claiming that lawyers have committed a crime as defined by law. No. 20-0727, 2022 Tex. LEXIS 385 (Tex. May 6, 2022). The Court debated the immunity defense in the following manner:

The common law attorney-immunity defense applies to legal work in “all situations where attorneys are required to faithfully and zealously represent the client”; however, only if the legal claim against the attorney is dependent on “the nature of the actions” attorneys perform while fulfilling their professional duties towards clients. In the opposite case, if an attorney is involved in conduct that isn’t a “lawyerly job” and is “entirely different from the duties of an attorney” or is outside the realm of representation of clients, The defense against attorney immunity is not applicable.

To determine if the conduct constitutes “the type” immunity covers that it is, the question is based on the kind of conduct, not the actual wrongdoing of the behavior. If the defense prevails to counsel, they are protected from liability in a civil lawsuit but not “other ways” in place “to hinder and rectify” wrongdoing or bad faith, including discipline, sanctions, or criminal sanctions, as appropriate.

It is not the type of conduct that attorney immunity covers “simply because attorneys are often involved in the same practice” or that an attorney was involved in the act on behalf of a client. Instead, the show must require “the particular lawyerly capabilities” and the attorney’s expertise in the capacity of an attorney. For instance, an attorney who makes public statements to the media or on social media on behalf of clients behalf “not have the office or professional training, skills and the authority as an attorney’” because “[a]nyone–including press spokespersons, agents, or those with no experience or qualifications–can make public the client’s claims with the help of the media.” It is only permissible if the attorney is fulfilling “lawyerly” obligations to their client

The other consequence of this rule is that lawyers won’t be protected by civil immunity for conduct “entirely out of the scope as an attorney.” “Foreign in the duties of an attorney” does not mean that there is something an experienced attorney shouldn’t perform. It simply means that the attorney has acted in a way that is not consistent with their role and an attorney’s capacity. This is why the question of the possibility of counsel claiming immunity is contingent on the work being carried out, not the fact that the conduct in question was exemplary.

This is due to the clients’ interests requiring that lawyers “competently effectively, efficiently and with zealously defend their client’s interests while abstaining from any conflicting obligations or obligations they have to them or others.” To ensure that there is no chilling effect on the lawyer’s dependable performance in the obligation, attorneys should be able to exercise legal rights they consider essential and appropriate for their clients without the threat of civil liability hovering over them and impacting their decisions. Attorney immunity promotes “loyal, faithful and aggressive representation” through “essentially . . . Eliminating the fear of personal liability,” which in turn “alleviating for an attorney the fear of being liable to be sued or be held accountable to a client who is not the client for the services provided . . . an ardent representation.” This way, defense is not just for lawyers but for their clientele who are confident that counsel is pursuing clients’ best interests, not the attorney’s.

Id. Id. Court admitted it was confirmed that “there is a wide array of criminal behavior that is not covered by the “scope of representation for clients and is therefore outside the scope of the duties of an attorney” and “when it is so, the circumstances don’t provide an exception in defense of immunity. Rather this kind of conduct is deemed to fail to meet the criteria to invoke immunity defense in the first place.” The Court ruled. “[O]ur strategy for applying the attorney-immunity defense is functional rather than qualitative, making an attorney’s improper behavior apprehensible to public remedies.” Id.

The Court also ruled that attorneys’ common law defense of immunity could still be applied to state laws (unless the statute explicitly rescinds the reason). Id. The Court declared:

This does not mean that any conduct that is criminalized under this statute will be exempt from civil liability or without consequences. In Bethel, although criminal behavior is not explicitly excluded from the defense of attorney immunity, it is also not protected by security. Illegal activity may be out of the scope of the exemption for attorneys; however, even if it is not, “nothing in our attorney-immunity law affects the attorney’s criminal liability if the behavior is a crime.”

Id. Concerning federal statutes in the case, the Court found “that attorney immunity in the sense that it is recognized and defined in Texas law, isn’t an exception to the wiretap laws of federal law since the common law defense in a state does not have any application to the federal laws.” Id.

Based on the initial research, any of the attorneys’ claims who work for clients (whether illegal, tortious as well as criminal) are covered under immunity granted to attorneys and would exclude any involvement in a breach of fiduciary duty case. However, suppose the alleged misconduct involves the attorney directly receiving the benefit of the transaction or being a part of the deal (as opposed to being an attorney on behalf of the transaction as a participant). In that case, the immunity will not be applicable. See, e.g., Olmos v. Giles, No. 3:22-CV-0077-D, 2022 U.S. Dist. LEXIS 777134 (N.D. Tex. April 28, 2022) (refused to dismiss the breach of fiduciary duty claim and the misrepresentation claim of attorneys when it was not clear if the defendant’s attorneys were an element of the deal).

Another subject that needs to be addressed is the effect on the attorney-client privilege when an attorney engages in criminal or fraud actions. The request of the attorney-client cannot be respected in cases where “the professional services provided by the attorney were sought out or sought to assist or permit any person to commit something that the client reasonably could have believed to be an offense or fraud.” Tex. R. Evid. 503 (d)(1). As one Court describes:

The exception is only applicable if (1) an initial argument is presented about possible fraud or a crime, or (2) it is possible to establish a connection between the document that is at issue as well as the primary evidence provided. A prima facie proof is considered sufficient when it provides the evidence that, if taken as accurate by a trier of facts, could establish the elements that constitute a crime or fraud that “was taking place or was likely to occur at the time the document was written.” A court can review the document to determine if prima facie evidence is established.

The first step is looking at the scope of the fraud component in the exception to the rule against fraud and crime. The Texas Rules of Evidence do not specify what is meant under Rule 503(d)(1) with the words “to commit . . . Fraud.” Black’s Law Dictionary defines fraud as “A deliberate misrepresentation of the factual information or the concealment of a significant fact that causes someone else to take action in a detrimental way to the victim.” It is a Texas criminal tort known as fraud that requires evidence of concealment, misrepresentation, or not disclosing. The concept of fraud is legal and is, therefore, based on the notion of concealment or misrepresentation. This definition also dovetails with the apparent reasoning behind the inclusion of fraud in the exception: keeping client communications confidential-pursuant to the attorney-client privilege -the attorney whose client intends to make a misrepresentation or concealment helps prevent the injured party from learning the truth about the misrepresentation or concealment. In this case, the attorney’s silence aids the client in the commission of the offense. This isn’t always the case for other types of tort (not caused by fraud or concealment) and is why this isn’t the exception for committing a crime or tort.