Cleveland partner Phillip M. Callesen and associate James W. May co-authored an article for the Ohio Bar Association’s January/February 2009 edition of Ohio Lawyer, titled "Potential Legal Opinion Liability for Ohio Business Lawyers."
According to the authors, lawyers know that one of the biggest risks of practicing law is that a client may sue the lawyer for malpractice. Business lawyers frequently do something that exposes them to a lawsuit by a third-party deliver legal opinions. In many situations, a lawyer might provide a legal opinion regarding his or her client for the benefit of a third party. The authors go on to say that many business deals, especially those involving mergers and acquisitions, require lawyers to provide legal opinions regarding their client to non-clients.
Callesen and May cite the 2004 Massachusetts case of Dean Foods v. Arthur J. Pappathanasi where prior to the sale of its business, the seller retained a law firm to represent the business in a government investigation into an alleged kickback scheme. The government inquiry which included a grand jury subpoena, was unknown to the purchaser and unresolved at the time of the business’ sale. The same law firm represented the seller in the business sale and the government inquiry. Although partners at the law firm representing the seller were aware of the government investigation, the firm provided a legal opinion stating that it did not know of any pending investigation against the seller. After closing the sale, the business was charged with, and pleaded guilty to, conspiracy to defraud the Internal Revenue Service. The purchaser sued under a cause of action for negligent misrepresentation and prevailed against the seller's law firm for $7.2 million–the amount of the fine levied against the business.
Because Ohio law does not yet have a published opinion with facts similar to Dean Foods, the authors ask if a result like Dean Foods is possible in Ohio. The remainder of the article analyzes Ohio cases on legal malpractice and negligent misrepresentation and reviews the Ohio Rules of Professional Conduct.
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