ABSTRACT
It is a very common practice for clients to consult their lawyers for legal opinion in order to determine their legal status. Legal opinions of lawyers should be considered in the scope of proxy relationship between lawyers and their clients. Therefore, the liability of a lawyer for providing a legal opinion is a general liability arising from emanating from Article 112 of the Turkish Code of Obligation No. 60981 (“TCO”), which is titled “Failure to Fulfill of Obligations”. This article maintains that a lawyer can be held liable only when his fault is proven, in case the client suffers from lawyer’s misleading opinion.
I. INTRODUCTION
Many real or legal persons seek legal consultancy from experts in their practice area to determine their present or potential legal status in their legal relationships, request information concerning possible legal risks and how to prevent or minimize these risks. Giving expert opinions on legal issues is a right which has been only granted to lawyers by Article 35 of Turkish Lawyer Code No 11362 (“TLC”). According to that article, which is titled “Duties Only to be Performed by Lawyers”, lawyers have the duty of care in performing acts covered by this article. It is necessary to examine liabilities of lawyers resulting from their legal opinions in order to understand what kind of legal remedies the clients relying on a lawyer’s opinion have to protect themselves.
In this article, legal characters of lawyers’ legal opinions, liability of lawyers in different cases, and the conditions to hold a lawyer liable for an incorrect legal opinion and relevant results will be analyzed.
II. LEGAL NATURE OF LAWYER’S OPINION
Legal opinion is an expert opinion prepared by a lawyer at client’s request in order to analyze his/her legal status. It is necessary to determine the legal nature to comprehend the scope and conditions of the lawyer’s liability. In order to come to a conclusion in this issue, the subject should be examined by taking provisions concerning retainer relationship regulated in the TCO as well as the position of lawyers which is regulated in the TLC into account.
A. Analysis from the Perspective of Attorney’s Retainer Agreement
1. In General
Attorney’s retainer agreements are one of the works and services agreements regulated under the TCO. These agreements are described as “agreement that lawyer undertakes to do a work or transaction of client” in Article 502 of the TCO. An agreement shall not fall in the scope of another works and services agreement to be considered as an attorney’s retainer agreement3. Within this respect, advocacy, being a profession which offers professional expertise, does not correspond to service agreements, agreements of work, or another work and services agreement type. Therefore, it is proper to accept that the relationship between the lawyer and the client is a proxy relationship and the legal basis of this relationship is an attorney’s retainer agreements.
As it is stated under Article 35 of the TLC, giving opinions on legal matters, bringing suits and advocacy before courts and other judicial institutions, preparing documents related with these works, and pursuing legal works are works which can be practiced only by lawyers. The same article also regulates that lawyers can carry out transactions in government agencies, however it is not an exclusive authority. Lawyers perform all of these works in the scope of attorney’s retainer agreements.
2. Analysis from the Perspective of the Elements of Attorney’s Retainer Agreement
a. Undertaking the Obligation of Works and Services
Lawyer’s main responsibility arising from attorney’s retainer agreement is carrying out works or services, which are assigned by his client, in accordance with the terms of that agreement4. These works and services generally consist of making transactions in the presence of third persons on behalf of or for the sake of his client with by using his representation authority. The most significant examples of the proxy relationships which representation authority of lawyer exists are pursuing lawsuits and making transactions in government agencies.
In addition to the above, there are some proxy relationships which do not generate any representation authority5. The relationships between a doctor and a patient or a psychologist and his client can be given as examples for this kind of relationship. In this manner, a lawyer rendering a legal opinion to his client is one of the proxy relationships which does not include any representation authority. In the respective relationship, lawyer undertakes a work of a client which cannot be handled by the client.
b. Performing Work in Line with the Intention and Interest of the Client and Concluding a NonFixed Term Agreement
In principle, the work which is subjected to a retainer agreement should be performed in line with the interest of the client, even though the lawyer also has interests in it6. Moreover, in most of the Supreme Court Decisions relating to this subject, the works performed without looking after the interest of the clients are considered abuse of rights and found illegal7.
In addition to abovementioned, the work shall be performed in conformity with the intention of the client. Likewise, the lawyer is obliged to act according to the direct instructions of the client pursuant to the Article 505 of the TCO with the heading of “Fulfillment in Accordance with the Instructions”. Therefore, except the situations specified in the law, lawyers cannot perform any works or transactions against the intention of the client by disregarding instructions of the client. Otherwise, as it is stated in the relevant article, the lawyer’s liabilities cannot be considered fulfilled until he compensates the damages arising from the work or the transaction, even if the relevant work or the transaction is performed.
Lastly it should be noted that, the attorney’s retainer agreement is a ‘non-fixed term contract’, and this constitutes the most significant feature of it. This feature distinguishes the attorney’s retainer agreement from other service agreements8. As a matter of fact, according to the reasons for the termination of a proxy which are stated in the Articles 512 and 513 of the TCO, the attorney’s retainer agreements can only be terminated in the cases of the death of the client, client’s bankruptcy, release or resignation of the lawyer.
c. Undertaking the Work rather than the Certain Result
In the attorney’s retainer agreement, the lawyer does not undertake to accomplish a certain objective or guarantee the work to be concluded in the direction of the client’s intention. He is only liable to perform the work specified in the agreement9. Thus, by performing that particular work, the lawyer’s liability will be considered fulfilled, regardless of the result. For instance, in an attorney’s retainer agreement concerning litigation, the lawyer is only obliged to follow the proceedings and to exercise due diligence; nothing changes even if the result does not meet his client’s expectations.
III. TERMS AND CONDITIONS OF THE LIABILITY REGARDING LEGAL OPINION
A. In General
Although the liabilities of the lawyers are regulated in the provisions related to proxy of the TLC and the TCO, there is not a direct provision regulating the liability of lawyers. As a consequence of the principle stipulating the application of general provisions when there is not a specific regulation, the general provisions in the TCO shall be taken into consideration with regard the liability of lawyer in rendering legal opinion.
Article 112 of the TCO titled “Failure to Fulfill the Obligations”, sets forth a general provision related to compensation. According to this provision, the debtor is obliged to recover the relevant damages of the creditor unless the debtor proves that none of the relevant damages arose from his fault, in case of the debtor fails to fulfill its obligations or performs a deficient work. In other words, in order to be obliged to pay a compensation as a result of the failure to perform the obligations, a legal obligation had to be regulated, that obligation have to be never or deficiently fulfilled, a damage must be occurred and that damage have to be attributable to the failure of the debtor.
B. Conditions for Liability
1. A Valid Obligation
Pursuant to the Article 112 of the TCO, to consider the debtor responsible for the failure to fulfill his obligation, first of all, there must be a valid relationship generating that obligation. Similarly, in order to ground the liability of the lawyer regarding his legal opinion, there shall be a valid attorney’s retainer agreement between the client and the lawyer, and the lawyer shall undertake the liability of rendering legal opinion within this agreement.
2. Defective Performance
When there is a valid obligation, that obligation can only arise from the debtor’s failure to fulfill the obligations or the defective performance10. In terms of lawyer’s liability arising from the obligation to render a legal opinion, he can be considered liable only if he does not deliver the legal opinion or not fulfill his obligations. The most significant issue that should be mentioned here is the duty of care of the lawyer. If the lawyer does not act according to his duty of care while rendering his opinion, for example, if there is a lack of information about a major legal provision relating to the client’s problem, the lawyer’s performance will be deemed defective and this act will be considered as breach of duty of care. Therefore, it is very important for the lawyers to address all concerns in the legal opinion.
3. Fault
In order for the creditor to be entitled to compensation, the debtor had to be found faulty for not acting properly in fulfilling his obligation. However, if the lawyer himself is not at fault, the liabilities regulated under the Article 112 of the TCO shall not arise. On the other hand, the lawyer shall be liable for his negligence, faulty or defective performance which influencing the legal opinion. For instance, the lawyer will be at fault in case he does not inform the client about an illegal provision of a relevant contract. However, the lawyer’s opinion cannot be considered defective provided that the fault is caused by wrong information received from the client and the lawyer does not have an opportunity to confirm it.
Another important issue concerning the fault of the lawyer is the non-liability agreements which are set forth in Article 115 of the TCO. According to this provision, a contract excluding liability for minor fault in terms of the occupations requiring expertise cannot be executed; otherwise it will be null and void. As the advocacy is such an occupation, the lawyer shall be responsible for any kind of faults regardless of its extent11.
4. Damages
Another requirement for holding responsible the debtor for not fulfilling the obligation properly is the existence of damage suffered by the creditor. In other words, if the client does not suffer damage because of the legal opinion, the lawyer cannot be held liable. As an example, we may suppose that the lawyer does not notify his client regarding the difficulty of the sale procedure of a mortgaged real estate which is under co-ownership and put in pledge upon condition for the payment of the money. In such a case, provided that the debt is collected by the client without the foreclosure of mortgage, the lawyer will not be held liable even though he is at fault.
5. Causal Connection
In order for the debtor to be liable for the damage of the creditor, the damage should arise from the failure to exercise due diligence in fulfilling his obligations. In case the creditor suffers damage as a consequence of another reason, the debtor will not be held responsible for the damages even if he does not fulfill his obligations properly. It should be underlined that the lawyer only be responsible for the damages that his client suffered as a consequence of the acts in compliance with the legal opinion. For instance, if he does not notify his client that the unilaterally termination clause in a contract may be found illegal and the client, who trusts that opinion, terminates the contract but pays compensation, the lawyer will be liable for the damage. Nonetheless, if there is not a direct causal link between the damage suffered by the client and lawyer’s fault, and if it arises from the commercial risks taken by the client, the lawyer shall have no liability even though he provides an incorrect opinion.
6. Results Arising from Obligations
The private law sanction which will be enforced to the debtor, who does not exercise due diligence in fulfilling his obligations, is to be sentenced to pay compensation. Pursuant to Article 114 of the TCO, “The debtor is generally liable for his all kinds of faults. The scope of the liability of the debtor is determined in accordance with the special qualifications of the work. If the work does not provide a benefit for the debtor, the liability shall be evaluated more loosely”. That liability pertains to the positive damages.
Provided that the client suffers damage as a result of the lawyer’s failure to exercise due diligence in fulfilling his obligations, the client may request compensation for the damage which would not have occurred if the lawyer had given a properly prepared legal opinion. For example, when we examined a situation where a merchant requests a legal opinion from his lawyer, in exchange for 15.000 TL, regarding a contract relating to a business which the merchant plans to invest 450.000 TL and estimates to get 1.200.000 TL; if the work is illegal but the lawyer renders an opposite legal opinion, the lawyer will be liable for the damage. However, if the client does not make profit and only withdraws 200.000 TL from his investment, the damage, that he lawyer is liable for, is limited only with 250.000 TL. In other words, while assessing the damage of the client, the loss of the profit will not be taken into account. Since, if the lawyer would have rendered a correct legal opinion, the client would not have invested in such a business lost money12.
IV. CONCLUSION
Rendering a legal opinion is a work which requires legal expertise. The authority to prepare legal opinions belongs strictly to lawyers. Today, there are some lawyers whose practice focuses particularly on providing legal opinions. However, that job has several risks which need to be taken into account. For that reason, lawyers should inform their clients about all kinds of risks and act in line with their duty of care while rendering their legal opinions. Otherwise they may confront claims requested for compensation of the damages arising from their defective legal opinions.
BIBLIOGRAPHY
Cevdet Yavuz, Faruk Acar, Burak Özen, Türk Borçlar Hukuku Özel Hükümler, Istanbul 2014
Halûk Tandoğan, Borçlar Hukuku Özel Borç İlişkileri, Istanbul 2010
M. Kemal Oğuzman, M. Turgut Öz, Borçlar Hukuku Genel Hükümler, Istanbul 2011
Mustafa Alper Gümüş, Borçlar Hukuku Özel Hükümler, Istanbul 2012
Nilgün Başalp, Sorumsuzluk Anlaşmaları. Istanbul 2011
Onur Boz, Avukatın Malpraktis Sorumluluğu, Master Thesis, Çankaya University, Ankara 2011
FOOTNOTE
1 The Official Gazette (OG) dated 04.02.2011 and numbered 27836. It entered into force on the date of 01.07.2012.
2 OG dated 07.04.1969 and numbered 13168. It entered into force on the date of 07.07.1969.
3 Cevdet Yavuz, Faruk Acar, Burak Özen, Türk Borçlar Hukuku Özel Hükümler, Istanbul 2014, p. 1160.
4 Mustafa Alper Gümüş, Borçlar Hukuku Özel Hükümler 2. Cilt, Istanbul 2012, p. 140.
5 Yavuz, Acar, Özen, p. 1157.
6 Halûk Tandoğan, Borçlar Hukuku Özel Borç İlişkileri 2nd Volume, Istanbul 2010, p. 360-361.
7 For instance, Supreme Court Assembly of Civil Chambers dated 17.6.1992, 1-279/391: “Principally the attorney performs the work in favor of the client. (…) in the case of the Attorney would dispose of a work and/or a transaction which is not in favor of the client, the relevant transaction would be within the scope of the abuse of rights and the client would not be liable for the results of the relevant work and/or transactions.”
8 Yavuz, Aca, Özen, p. 1163.
9 Onur Boz, Avukatın Malpraktis Sorumluluğu, Master’s Thesis, Çankaya University, Ankara 2011, p. 27.
10 M. Kemal Oğuzman, M. Turgut Öz, Borçlar Hukuku Genel Hükümler, Istanbul 2011, p. 424.
11 Nilgün Başalp, Sorumsuzluk Anlaşmaları, Istanbul 2011, p. 188-189.
12 Boz, p. 94 “Positive damage is the material damage of the client which is required in the compensation cases filed in respect of the contractual responsibility of the lawyer.”
