Contractual Provisions Disclaiming Attorney-Client Relationship Fail To Let Lawyer Off The Hook

Suppose a contract includes the following provisions:

  • "Founder is relying solely on her legal counsel and not on any statements or representations of the Company's legal counsel for legal advice with respect to this investment . . . ."
  • "[name of counsel] has served as outside general counsel to the Company and has negotiated the terms of this agreement solely on behalf of the Company.
  • "The Company and each Founder hereby . . . acknowledge that with respect to the agreement, [name of counsel] has represented solely the Company, and not any Founder or any director, officer, member, manager or employee of the Company or any Founder . . . ."

Now, suppose that Founder is unhappy and sues the law firm for professional negligence and attaches a copy of the agreement to the complaint.  Will the law firm be able to demur successfully to the complaint on the basis of the contractual "admissions"?

In Connelly v. Hayashi, 2013 Cal. App. Unpub. LEXIS 5201 (July 24, 2013), the Court of Appeal answered "not necessarily".  While the usual rule in California is that facts in an exhibit to a complaint will trump contrary facts alleged in a complaint, this is not the case when the plaintiff alleges that exhibit had been procured by fraud.

Note that the opinion was not certified for publication. California Rules of Court, Rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b).