III. Co-counsel Referral Liability and Joint or Vicarious Liability
In many co-counsel representations, both lawyers have an attorney-client relationship with their mutual client. The lawyers are fellow agents of the client, with each owing the client independent duties of care, confidentiality, and loyalty. But the question of how the co-counsel relationship is formed is important. Sometimes the client retains multiple lawyers for a single matter. Often, the client retains one lawyer who, with the client's consent, associates another lawyer with desired expertise. In other matters, the lawyer securing co-counsel intends that the lawyer she involves will be principally responsible for the matter. Some lawyers market their services as co-counsel to other lawyers. Regardless of how the first lawyer identifies co-counsel or the nature of their relationship thereafter, the first lawyer may face liability for negligent referral if the second lawyer breaches duties to the client. Lawyers may also face joint or vicarious liability for co-counsel's errors. Finally, in local counsel relationships, questions may surface concerning the existence and scope of the local counsel's duties to the client and to the court.
A. Referral Liability
When lawyers arrange for co-counsel to represent clients, they are serving as their clients' agents and, accordingly, owe their clients a duty of care in the process. This is true regardless of whether the original lawyer cedes responsibility for the matter after making the referral or retains some level of responsibility in cooperation with co-counsel; the lawyer's duty relates to the referral itself.123 Certainly, then, lawyers should refer their clients' matters only to other lawyers whom they reasonably believe to be competent to handle them.
In Tormo v. Yormark,124 Karen Tormo was injured in a New Jersey boating accident in early July 1968. Tormo's father consulted his regular lawyer, Edward Devlin, about the accident. Time crept by and Devlin was unable to settle Tormo's accident claim. In June 1970, Devlin, who was licensed to practice only in New York, asked New Jersey lawyer Milton Yormark to sue on behalf of Tormo in New Jersey. Devlin had briefly met Yormark in late July 1968 when Yormark approached him about the accident.125 Yormark claimed to have gotten Devlin's name from Tormo's father, said that he specialized in personal injury litigation, and expressed an interest in handling the case.126 In making the referral, Devlin's inquiry into Yormark's qualifications consisted of looking in a legal directory to confirm his admission to practice in New Jersey.127 Devlin did not discover—as was prominently and repeatedly reported in the Newark newspaper—that Yormark had been indicted in 1969 for insurance fraud.128 He would be convicted on those charges, sentenced to prison in January 1971, and disbarred in February 1972. In the interim he settled Tormo's accident claim for $150,000 and stole the settlement funds.
Tormo sued the banks involved in the disposition of her settlement funds in federal court in New Jersey. The banks in turn filed a third-party action against Devlin for negligence in selecting and supervising Yormark.129 Devlin moved for summary judgment on the banks' claims. With respect to the negligent referral allegations, Devlin argued that he was not liable because he did not have actual knowledge of Yormark's indictment and, as a New York lawyer, knowledge of the indictment could not be imputed to him.
The court was persuaded by Devlin's argument. While Devlin, as his client's agent, had a duty to exercise care in retaining Yormark to "ensure that he was competent and trustworthy," he could not be held to have breached that duty for failing to inquire into Yormark's background beyond his active bar registration.130 Yormark's indictment was reported in New Jersey, but there was no evidence that it was reported more widely. In the court's view, Devlin's liability would at least require the latter.131As the court explained:
A contrary conclusion would subject out-of-state lawyers to possible liability for negligence for failure to consult not only a New Jersey lawyer's personal references and the legal ethics committee in the county in which he practices, but also the offices of local prosecutors. Yet a reference may be unaware of an attorney's criminal misadventure, and proceedings before the State's committee on ethics are required to be kept confidential. . . . Thus the burden of these additional inquiries greatly exceeds the risk that a referring attorney may cause harm to his client by entrusting his affairs to a lawyer who is known to be licensed by the State. . . . Devlin relied, in making the referral, upon the State's judgment that Yormark was fit to practice law. State regulation of the legal profession is extensive. . . . Under the circumstances, he could not be found negligent simply for failing to make further inquiries into Yormark's background.132
Unfortunately for Devlin, the court's favorable ruling concerning Yormark's criminal history did not completely answer the question of his potential liability. Yormark initially told Devlin that he had obtained his name from Tormo's father.133 Devlin should have realized that ethics rules prohibited such solicitation.134 The court expressed its belief that soliciting clients is a serious ethics breach and lawyers who do this are unworthy of the trust and confidence essential to an attorney-client relation-ship.135 A lawyer who knowingly entrusted a client's representation to a lawyer who he had reason to believe had solicited the client "would be clearly negligent in making the referral at all, or in doing so without advising his client of his suspicions."136 As a result, Devlin's potential liability presented a question of fact for the jury.137
Tormo is an interesting case because of its timing. It was decided in 1975, before the Internet and the widespread use of computerized legal research services. Today, a lawyer in Devlin's shoes would be able to locate reports of Yormark's alleged dishonesty nearly effortlessly.
Lawyers who intend to refer clients to other lawyers should attempt to learn as much as they reasonably can about those lawyers. This may be unnecessary if the lawyer being referred is an established collaborator of the referring lawyer or is well known to the referring lawyer. Otherwise, reasonable due diligence would seem to require a referring lawyer to (a) confirm that the second lawyer is admitted to practice in the jurisdiction; (b) conduct an Internet search of the second lawyer by name; (c) conduct a Lexis or Westlaw search of the second lawyer in federal and state databases; (d) review the second lawyer's Martindale-Hubbell listing and possibly examine ratings assigned to the second lawyer by other lawyer-rating organizations; and (e) appropriately question the second lawyer about his or her qualifications to undertake the representation. With respect to the final step, the second lawyer's ethical duty of honesty entitles the referring lawyer to rely on the second lawyer's answers absent contrary indications.138 Beyond these basic measures, qualifications such as fellowship in the esteemed American Academy of Appellate Lawyers, American College of Trial Lawyers, or American College of Trust and Estate Counsel are reasonable indicators of a lawyer's worthiness for referral, as is membership in some other selective professional associations or societies. If reasonably possible, a lawyer considering a referral should talk to lawyers who are familiar with the second lawyer. These lawyers may know things about the second lawyer that are not apparent from other sources, or that might be masked by the second lawyer's reputation. Overall, these steps impose a minimal burden on a referring lawyer.
Lawyers often tout their membership in The Best Lawyers in America or designations as Super Lawyers or the like as evidence of their professional expertise and capabilities. Do such honors or publicity provide a basis for determining that a lawyer is qualified to receive a referral? The answer depends on the method for bestowing the honor or recognition.139 If the designation or recognition is a product of peer review or nomination, then it may be a reasonable indicator of the subject lawyer's professional capabilities. If the designation itself can essentially be purchased as a form of professional advertising, then it indicates only the lawyer's willingness to self-promote. At base, these types of designations or recognition are simply one factor among several that a lawyer may consider when making a referral.
In any event, a lawyer may be held liable for a client's negligent referral only if it can be shown that she knew or reasonably should have known that the lawyer to whom the referral was made posed a foreseeable risk of harm to the client in the representation.140 Absent some contrary history, it is not foreseeable that a lawyer to whom a referral is made will miss routine deadlines or fail to make scheduled appear-ances.141 Referring lawyers must be able to assume some rudimentary competence on the part of lawyers to whom they send matters, lest they be burdened with a continuing duty of supervision leading to duplicative work and increased costs to clients. Referring a client to another lawyer, or even engaging another lawyer on a client's behalf, does not imply a duty by the referring lawyer to supervise the second lawyer in that representation.142
Where a referral does not involve a lawyer's existing client, but rather a prospective client with whom the first lawyer never establishes an attorney-client relationship, far less is required of the referring lawyer. Consider, for example, the situation in which a prospective client calls a lawyer concerning possible representation in a matter, but the lawyer is either unable or unwilling to accept the matter and simply provides the...
