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Lawyer Who Represented LLC Owed No Duty To Its Manager

The Illinois Appellate court recently affirmed a grant of summary judgment in the case captioned Requet v. Stengel, Bailey & Robertson, 2023 IL App (3d) 210203-U. The opinion is unpublished, but it is worth reading. Requet was the managing member of PVY Development, an LLC engaged in developing and selling Walgreens stores. PVY retained the law firm of Coyle, Gilman, Stengel, Bailey and Robertson. Coyle personally converted funds belonging to PVY. Coyle was eventually disbarred. Stengel, Bailey & Robertson (Law Firm) formed in 2008 when those partners separated from Coyle. Requet sued numerous defendants, including the law firm, for legal malpractice, negligence, fraud and breach of fiduciary duty. Law Firm moved for summary judgment on the ground that there was no attorney client relationship between Requet and Coyle. Therefore, Law Firm owed no duty to Requet.

Requet argued based on Pelham v. Griesheimer, 92 IL 2d 13 (1982) that even though he was not a client of the law firm, it owed him a duty. To bring himself within the Pelham line of cases, Requet was required to show that the primary purpose of the attorney client relationship between Coyle and PVY was to benefit Requet. The Appellate Court agreed that Requet had not made that showing and affirmed the grant of summary judgment.

The reasoning:

¶ 13 Requet simply does not make this showing and instead asks this court to “widen the window” Pelham created and allow his claim because (1) the allegation that Coyle’s actions were intentional, which was far more serious of a wrong compared to allegations of negligence or ordinary legal malpractice; and (2) he had a decades long relationship with Coyle. Requet essentially asks this court to create a new factor-based test to fit the specific circumstances of his case to establish an attorney-client relationship. We fail to see how it would be appropriate to do so when the supreme court has already created a narrow exception. Additionally, the supreme court did not suggest that either of these factors had any bearing on its decision in Pelham. Thus, we decline to expand the exception created in Pelham as we find no legal basis to do so.

¶ 14 Since Requet fails to meet the exception to establish an attorney-client relationship, the general rule applies in that an “attorney for a corporation, even a closely held one, does not have a specific fiduciary duty toward the individual shareholders.” Hager-Freeman v. Spircoff, 229 Ill. App. 3d 262, 277-78 (1992). Therefore, the court did not err as a matter of law when it granted the firm’s motion for summary judgment.

Conclusions: without an attorney-client relationship, there is no duty. Requet made a novel and interesting argument, but the Illinois courts rejected that argument on the basis that it does not fit within the Pelham line of cases. This is a correct understanding of law. Extending the attorney-client relationship to protect a manager of a company would result in many bad results as lawyers would be forced to protect managers who were not acting in the best interests of the organization. Lawyers would be required to violate Rule 1.13 of the Rules of Professional Conduct whenever the manager’s actions harmed the organization. This expansion of the attorney-client relationship would not work. In sum, an excellent appellate opinion.

Should you have a question about the attorney-client relationship, do not hesitate to contact me.

Ed Clinton, Jr.

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