Representing clients who have more familiarity with the law and complex business issues is often a different experience than that of representing a client who is wholly unfamiliar with the law. Such sophisticated clients may wish to be more involved in the day-to-day decisions of their matter, or alternatively might not need as much hand-holding or explaining from their lawyers as other clients.

This difference raises a question—does a lawyer’s duty or the standard of care change in any way when representing a so-called sophisticated client? There are areas where courts will make this inquiry, such as in looking at conflict waivers and other parts of the lawyer-client engagement process. In addition, some courts also take into account a client’s sophistication when addressing disputes between the client and their lawyer.

A Client’s Sophistication May Play a Role at the Representation’s Start

One required element of legal-malpractice claims is that a client must prove that the lawyer’s alleged negligence caused the underlying negative result. However, that client’s sophistication may be taken into consideration when a court reviews whether, but for the alleged negligence, the client would have prevailed in an underlying litigation or matter.

In a recent legal-malpractice lawsuit in the District of Columbia, an agent of a high-profile celebrity sued the lawyers that represented her in an underlying breach-of-contract claim against that celebrity. She argued that she had lost the underlying breach-of-contract claim, in which it was found that the agent had signed a release and was barred from suing her celebrity client, due to the fault of her lawyers.

The court granted summary judgment to the law firm in the legal malpractice action, finding that, even absent the alleged malpractice, the agent could not have prevailed in the underlying claim in light of the release. In so doing, the court considered the agent’s business sophistication to reject her defense that she had been fraudulently induced into signing the underlying release, confirming that her own conduct was the cause of her loss.

Accordingly, a client’s sophistication even before the start of the at-issue legal representation may play a role in protecting lawyers from the client’s prior business decisions.

Considerations for the Strategy of the Representation

Generally, lawyers are shielded from liability where an allegation of negligence regarding their professional judgment is at play. In such situations, courts will often conclude that there can be no legal-malpractice liability for a lawyer’s strategic decision that was reasonable and supported (even if, in retrospect, it turned out to be the wrong call). A similar defense arises where a sophisticated client was involved in selecting or approving the strategy and made aware of the risks.

Another example of courts taking a client’s sophistication into consideration arises in the context of future-conflict waivers, in which, as part of an engagement, a client agrees to waive certain types of conflicts of interest if they arise in the future. In a recent case in Florida, a major national brand filed a motion to disqualify its former law firm (a large national firm) from representing an adverse party.

When the law firm noted that the brand had signed a waiver regarding future conflicts, the court agreed in upholding the waiver. Among other things, the court focused on the sophistication of the client, the size of their in-house legal team, their use of dozens of outside law firms and the fact that the client was represented by independent counsel in executing the waiver. As a “sophisticated consumer of legal services,” the brand’s waiver was enforceable.

Documenting a Client’s Involvement May Help Both the Client and the Lawyer

A legal-malpractice case sometimes involves an evidentiary review of the client’s understanding of the law or of the selected strategy, especially for more sophisticated clients. Thus, if there is a later dispute over what the client understood or consented to, having evidence in hand showing the client’s understanding, acquiescence or sophistication can go a long way.

Documenting the level of the client’s involvement in close to real time can also be a reminder to the client of the decisions they made and why. Although the absence of such documentation in a subsequent legal malpractice case does not confirm a breach of the standard of care, lacking this evidence could make it harder for the lawyer to explain what really happened.

Even if the evidence does not extinguish liability altogether, it might help to mitigate potential damages. For example, in a recent New York case, the court reviewed a communication by lawyers to their client with a marked-up version of a key lease amendment.

The court concluded that this communication was not sufficient to show that the lawyers adequately advised the client of the significance of their edits, but the court did conclude that the client’s level of sophistication and understanding in reviewing the amendment could be evidence to support mitigation of damages. Although the lawyers involved claimed that they had given oral advice to the client on this issue, the court could not rely on that to rule as a matter of law that there had been no negligence.

By being aware of these issues, lawyers working with sophisticated clients can help ensure that those clients receive the support they need, while also helping to manage risk for themselves associated with working with experienced clients.