Plaintiffs concede that there was no attorney-client relationship, but contend that no such relationship is required in New Mexico to recover for legal malpractice. Both sides rely on Holland v. Lawless, 95 N.M. 490, 623 P.2d 1004 (Ct.App. 1981). The plaintiff in Holland v. Lawless had entered into an agreement for a lease with an option to buy with an administrator of an estate, through the estate's attorney, defendant Lawless.

Defendants are correct that "[n]o formal contract, arrangement or attorney fee is necessary to create the relationship of attorney and client." Holland v. Lawless, 1981-NMCA-004, ¶ 5, 95 N.M. 490, 494, 623 P.2d 1004, 1008. However, the "mere fact" that an attorney discussed a legal matter with a person is "not enough to establish the relationship," and this "mere fact" is all Defendants' evidence shows.

A plain reading of the engagement letter as a whole establishes that, as a matter of law, Plaintiffs intended to contract only with Lewis which would provide legal services through Gulley and that Gulley was acting solely in a representative capacity when he negotiated, drafted, and signed the engagement letter.See Holland v. Lawless, 1981-NMCA-004, 95 N.M. 490, 494 (the existence of a contract establishing an attorney-client relationship "is generally an issue and question of law."). Moreover, under Arizona law on limited liability partnerships, contractual obligations incurred by a limited liability partnership belong solely to the limited liability partnership and a partner is not personally liable for those obligations.

Thus, an attorney in discharging professional duties on behalf of his client cannot be held liable for negligence toward an adverse party. See Tappen, 599 F.2d at 378; see also Holland v. Lawless, 95 N.M. 490, 623 P.2d 1004 (Ct. App.), cert. denied, 95 N.M. 593, 624 P.2d 535 (1981); SCRA 1986, 16-301 to 309. As a matter of public policy in order to maintain and enforce the fidelity and duty of the attorney toward the client, we cannot jeopardize the integrity of the adversarial system by imposing a professional duty on an attorney toward an adverse party.

In the first case, Holland v. Lawless, the plaintiff sued an attorney and an administrator of a decedent's estate for legal malpractice. 623 P.2d 1004 (N.M. 1981). The attorney, who represented the estate, entered into an oral lease of residential property with plaintiff.

See, e.g., In re ML-Lee Acquisition Fund II, L.P., 848 F. Supp. 527, 555 (D. Del. 1994); Kline v. First W. Gov't Sec., 794 F. Supp. 542, 555 (E.D. Pa. 1992); Buford White Lumber Co. v. Octagon Properties, Ltd., 740 F. Supp. 1553, 1562 (W.D. Okla. 1989); Bush v. Rewald, 619 F. Supp. 585, 596 (D. Haw. 1985); Mark Twain Kansas City Bank v. Jackson, Brouillette, Pohl Kirley, 912 S.W.2d 536, 539-40 (Mo. Ct. App. 1995); McFarlin v. Watts, 895 S.W.2d 687, 690 (Tenn. Ct. App. 1994); Holland v. Lawless, 623 P.2d 1004, 1010-11 (N.M. Ct. App. 1981). Several jurisdictions have held that an attorney can be liable to a nonclient for negligent misrepresentation, as defined in section 552, based on the issuance of opinion letters.

In Stinson v. Brand, 738 S.W.2d 186 (Tenn. 1987), the court adopted Restatement (Second) of Torts, supra, § 522 in perceiving possible negligence from failure to tell elderly vendors who relied on them that a mortgage interest upon sale reflected by the mortgage should be recorded. The New Mexico court similarly applied Restatement (Second) of Torts, supra, § 522 to a misconceived real estate transaction to provide a viable case against the participating lawyer in Holland v. Lawless, 95 N.M. 490, 623 P.2d 1004 (1981). A uniform thread in those jurisdictions which abjured limiting liability by privity is that responsibility still depends on an examination of the transaction.

Molycorp contends the court erred by failing to find as a matter of law the existence and terms of a contract. In support of this contention, Molycorp cites Holland v. Lawless, 95 N.M. 490, 623 P.2d 1004 (Ct.App.) cert. denied, 95 N.M. 593, 624 P.2d 535 (1981), a case involving, inter alia, a dispute over whether an attorney-client relationship existed. The court held that the existence of a contract establishing such a relationship is generally an issue and question of law.

{28} This Court has explained before that "the liability of the surety depends upon the liability of the principal." Holland v. Lawless, 95 N.M. 490, 497, 623 P.2d 1004, 1011 (Ct.App. 1981). By failing to contest the entry of default, Great American allowed Mountain Shadow's liability, and thus its own liability, to be established.

The attorney-client relationship is governed by a blend of both contract and tort law. The attorney-client relationship is generally created by contract. Holland v. Lawless, 95 N.M. 490, 494, 623 P.2d 1004, 1008 (Ct.App. 1981) (noting that unless appointed by the court, the attorney-client relationship is created by contract). Once that relationship is created, the law imposes a duty of reasonable care on the attorney, which forms the basis for a malpractice action.