The United States Court of Appeals for the Seventh Circuit has affirmed a summary judgment for an attorney in a legal malpractice action. In Rosenbaum v. White, a client hired an attorney to form a new business venture, which would rehabilitate and then resell real estate.
The client recruited a group of investors, who purchased membership interests in an LLC, which the client intended to form. He hired an attorney to prepare LLC documents for the investment offering. The attorney also spoke at a recruiting seminar about the implications of investing in an LLC and relevant securities laws.
The venture failed, and the investors brought an action against the attorney claiming he was responsible for their losses. They argued that an attorney-client relationship existed and it continued beyond the drafting of the documents. The investors claim was largely based on statements made by the client at the seminar about the attorney “working” for him and for the investors. The attorney moved for summary judgment in the case and the trial court granted his motion. The investors appealed.
The appellate court affirmed the lower court ruling, finding that there was no attorney-client relationship. In its decision, the court relied on the fact that the attorney sufficiently clarified at the seminar that his role was limited to the drafting of the LLC documents and that he only represented the LLC. Furthermore, there was language in the investment documents, which put the investors on notice that they were not represented by the attorney. Therefore, any reliance by the investors on statements by the attorney to the effect that he was acting as their representative was unreasonable.
Decision: Rosenbaum v. White