Reynolds v. Lyman, 903 F.3d 693 (2018)

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Brian Reynolds sued the law firm Henderson & Lyman, which represented various LLC’s he co-owned and managed, and one of its lawyers.  Reynolds accused H&L of giving negligent advice to the LLC’s that led him to violate federal disclosure laws.  The District Court granted summary judgment in favor of H&L, explaining that “Reynolds could not bring a malpractice suit on his own behalf because he did not have a personal attorney-client relationship with H&L.”  Id. at 695.  Reynolds appealed.

The Seventh Circuit affirmed, describing the attorney-client relationship as a “voluntary, contractual relationship that requires the consent of both the attorney and client.”  Id.  Given Reynold’s admission that he never asked H&L to represent him, that no one at H&L said anything suggesting it thought it represented him, and that Reynolds never entered into an agreement with H&L to that effect, the Seventh Circuit held that no attorney-client relationship existed. Reynolds argued that, as part-owner and manager of the LLC’s, his interests and theirs were “so closely bound […] as to be functionally indistinguishable.”  Id. at 696.  However, the court rejected this argument.  “‘Simply because the [officers of a business entity] were at risk of personal liability,’” it explained, “‘does not transform the incidental benefits of [the law firm’s] representation of [the business entity] into direct and intended benefits for [the officers].’”  Id. at 696, quoting Reddick v. Suits, 2011 IL App (2d) 100480, ¶ 44.  Rather, the only time an Illinois attorney owes a duty of care to a third party is “when the attorney was hired for the primary purpose of benefiting that third party.”  Id.

Reynolds v. Lyman, 903 F.3d 693 (2018)

(This is for informational purposes and is not legal advice.)

 

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