Sunday, June 19, 2011

Giving Would-Be Clients Bad Information Is Not Negligent Misrepresentation

When Jack Steele was injured in an automobile accident, he and his wife purportedly met with an attorney to discuss filing a negligence suit against the other driver. The Steeles claim that the attorney provided them with incorrect information regarding a statute of limitations, which caused them to miss a filing deadline. The Colorado Supreme Court held that the Steeles could not sue the attorney for negligent misrepresentation:

Negligent misrepresentation requires, in part, that the misrepresentation be “for the guidance of others in their business transactions.” We hold as a matter of law that an initial consultation to discuss a potential civil lawsuit is not sufficient to meet the element “guidance of others in their business transactions”; therefore, the Steeles did not plead sufficient facts to state a claim of negligent misrepresentation.

Next, we address the court of appeals’ reliance on section 15(1)(c) of the Third Restatement, which imposes liability for legal malpractice in the absence of an attorney-client relationship. We hold that a claim of negligent misrepresentation may not be founded upon the requirement in section 15(1)(c) of the Third Restatement that attorneys owe a duty of reasonable care to prospective clients.

Nonetheless, it’s wise to advise students to be careful about giving casual advice to non-clients.


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