AL: Underlying collection action
Facts: Attorney, Math, practices law in Alabama. He filed a collection action against Smith in Montgomery District Court on behalf of his client, Max Federal Credit Union, Attorney obtained a default judgment against Smith in the amount of $2,767.71. Smith moved to set aside the judgment due to ineffective service of process. The district court granted the motion, set aside the judgment and scheduled the case for a later date. Even though the judgment was set aside, Attorney recorded the default judgment anyway. When the district court later heard the merits of the case, it entered a final judgment against Smith. This created two identical judgments against Smith. Attorney made no attempts to correct this error. Smith claims that Attorney’s recording of the judgment that had been set aside was fraudulent and had an adverse effect on him and sought damages in the amount of $25,000. Attorney argued that Smith had claims of legal malpractice and that the ALSLA required Smith to support his claims with expert testimony. Attorney argues that because claims arose from his rendition of legal services, the ALSLA is the exclusive remedy. Attorney further contends that because Smith was never his client and he never provided legal services to him, he owed no duty to Smith.
Issue: Whether a nonclient, who has never received legal services from an attorney, but who has alleged injury resulting from an attorney’s performance of legal services to a third party is entitled to a remedy?
Ruling: Yes. The ALSLA creates only one form and cause of action against legal service providers in the state of Alabama: the legal-service-liability action. However, the court ruled that if a party is not a client, and no privity exists, the ALSLA does not apply and is not the exclusive remedy.
Lesson: A third party who has not received legal services but was adversely affected by the attorney’s providing legal services can still recover under common-law negligence or fraud. The ALSLA is not an exclusive remedy nor is it a bar against non-client claims against lawyers.