YourABA June 2011 Masthead

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The ABA Ethics 20/20 releases draft proposals for comment

By Peter H. Geraghty
Director, ETHICSearch

Created in 2009, the ABA Ethics 20/20 Commission has been examining the impact of technology and the globalization of the practice of law on the legal profession. Where appropriate, the commission will make recommendations to the House of Delegates at the August 2012 Annual Meeting.

On May 2, the commission released draft proposals on outsourcing, confidentiality-related ethics issues arising from lawyers’ use of technology and issues relating to inbound foreign lawyers. Co-chairs Jamie S. Gorelick and Michael Traynor’s memorandum regarding these proposals is located here. Comments on these proposals are welcome and should be emailed to Senior Research Paralegal Natalia Vera at Natalia.vera@americanbar.org or by fax at 312/988-5280 by July 15. 

Outsourcing

The commission’s draft proposal on outsourcing is available here.

The commission began by noting that lawyers, law firms and corporate counsel have been steadily increasing their use of outsourced services from providers located both in the United States and overseas. The commission also noted that while the ABA Standing Committee on Professional Responsibility has issued Formal Opinion 08-451 Lawyer’s Obligations When Outsourcing Legal and Nonlegal Support Services (2008)and several other state and local bar associations have issued ethics opinions on the topic, the ABA Model Rules do not specifically address outsourcing.

In this draft proposal, the commission concluded that changes to the black letter Model Rules are not necessary (with the exception of a minor change to Rule 5.3 changing its title from Responsibilities Regarding Non Lawyer Assistants to Nonlawyer Assistance; the reason for this change being to clarify that the Rule applies not only to services provided by individuals but also by nonlawyer entities such as cloud computing providers and e-discovery vendors.). It did, however, state that the comments to the some of the rules should be clarified so that lawyers could better understand their ethical obligations with respect to outsourcing. The commission stated:

…In particular, the resolutions that accompany this Report propose three changes. First, the Commission proposes a new comment to Model Rule 1.1 that identifies the factors that lawyers need to consider when retaining lawyers outside the firm to assist on a client’s matter (i.e., outsourcing legal work to other lawyers). Second, the Commission proposes new comments to Model Rule 5.3 in order to identify the factors that lawyers need to consider when using nonlawyers outside the firm (i.e., outsourcing work to nonlawyer service providers). Finally, the Commission proposes a new sentence to Comment [1] to Model Rule 5.5 in order to clarify that lawyers cannot engage in outsourcing when doing so would facilitate the unauthorized practice of law. In each of these cases, the Commission’s goal is to clarify how existing rules and principles apply to the particular context of outsourcing.

The commission's Outsourcing Working Group included representatives from the ABA Standing Committee on Ethics and Professional Responsibility and the ABA Sections of Litigation and International Law also conducted its own. During its research and study of this issue, the commission also learned that many outsourcing providers have procedures in place to protect client confidentiality, to check for conflicts of interest, and also to educate their employees about U.S. law and the rules of professional conduct.

Two important principles informed the commission’s deliberations. First, that the Model Rules, while critical, are not the only source of guidance for matters involving professional responsibility. Court rules, statutes and other laws that define the obligations of lawyers are also relevant. Secondly, it is the comments to the Model Rules that are often used to provide this type of guidance.

In conclusion, the commission stated that it did not expect that its proposals would be the final word on outsourcing, and believed that continuing study of the practice would be essential. To that end, it proposes the establishment of a user-friendly website that would be created and managed by the ABA Center for Professional Responsibility that would make information available both to those that engage in outsourcing and to those that study it.

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Confidentiality-related ethics issues arising from lawyers’ use of technology

The commission’s draft proposal is located here.

The commission conducted an extensive study into how lawyers have been using new and emerging technologies in their day-to-day practice, and also the types of security measures lawyers use to protect client confidences. The commission heard testimony from lawyers who use such technology and also from the providers of such services. The commission’s Technology Working Group that studied these issues included members from the ABA Law Practice Management Section, the ABA Standing Committee on Ethics and Professional Responsibility and the Young Lawyers Division.

As a result of these deliberations, the commission is proposing that several of the ABA Model Rules be amended and identified four areas in the Rules that would benefit from such amendments. The first of these include the Rules that implicate screening, 1.10 Imputation Of Conflicts Of Interest: General Rule, 1.11 Special Conflicts Of Interest For Former And Current Government Officers And Employees, 1.12 Former Judge, Arbitrator, Mediator Or Other Third-Party Neutral and 1.18 Duties To Prospective Client. The commission’s amendments to these rules would make clear that a screen must protect against the sharing of tangible as well as electronic information. For example, the commission’s proposed amendment to paragraph 9 of the Comment to Rule 1.0(K) states that a screen should deny access by a screened lawyer to protected electronic information.

The second area includes competence. Thus, the commission proposes to amend paragraph 6 of the Comment to Rule 1.1Competence to include a provision that would state that competence requires that lawyers have a basic understanding of the risks and benefits of technology.

The third area involves confidentiality, and their proposed amendments to Rule 1.6Confidentiality of Information includes the addition of a new subpart (c ) to the Rule that would state that “A lawyer shall make reasonable efforts to prevent the inadvertent disclosure of , or unauthorized access to, information relating to the representation of a client.” Amendments to paragraph 16 of the Comment to the Rule would provide additional guidance.

Fourth, the commission proposes adding language to Model Rule 4.4Respect for Rights of Third Persons that would make it clear that inadvertently disclosed information can include electronic data. The commission also included language in the Comment to Rule 4.4 that makes clear that metadata is covered under the Rule when the lawyer knows or has reason to believe that the document has been inadvertently sent.

Similar to the proposal on outsourcing, the commission has requested that the ABA Center for Professional Responsibility create a user-friendly website that would act as a clearinghouse of information for lawyers who are interested in current developments confidentiality issues relating to lawyers’ use of technology. The website would also provide regularly updated information about security standards and would list any standards setting organizations so that lawyers can ensure that their security measures comply with those standards.

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Model Rule 5.5; In-house counsel registration

The commission also released its draft proposals regarding Model Rule 5.5 and In-House Counsel Registration.

Some of the issues the commission identified for consideration in its Preliminary Issues Outline in 2009 were as follows:

Model Rule 5.5(c), which authorizes multijurisdictional practice of law by U.S. lawyers, does not include temporary practice by foreign lawyers. The ABA adopted a separate Model Rule for Temporary Practice by Foreign Lawyers. Most jurisdictions that have adopted Model Rule 5.5 have not, however, adopted the corollary foreign temporary practice rule. Should the ABA amend Model Rule 5.5 to include lawyers from outside the U.S.? Should the scope of authority be the same for them as for U.S. lawyers?

The commission created the Working Group on Inbound Foreign Lawyers to study these issues with input from the ABA Standing Committees on Ethics and Professional Responsibility, and Professional Discipline, as well as the ABA Sections of International Law and Real Property, Trust and Estate Law and others. It also heard testimony from interested parties and has received numerous comments.

One of the amendments the commission proposes would incorporate of the ABA Model Rule for Temporary Practice by Foreign Lawyers into Rule 5.5 as subparts (e) and (f).

In 2002, the ABA House of Delegates adopted the Multijurisdictional Practice Commission’s recommendations to adopt amendments to Model Rule 5.5. One of the amendments was the addition of subpart (c) that authorized the temporary provision of legal services by lawyers who were not admitted to practice in the jurisdiction, but did not extend this authorization to foreign lawyers. At the same time, the MJP’s Model Rule for Temporary Practice by Foreign Lawyers was also adopted by the House with no opposition. Since 2002, the commission noted that 44 jurisdictions have adopted a version of Rule 5.5 that is either identical to or substantially similar to the ABA Model Rule. This contrasts with the Model Rule on Temporary Practice by Foreign Lawyers; currently only six jurisdictions permit temporary practice by foreign lawyers. The commission believes that the primary reason that temporary practice authority has not been widely adopted is due to the fact that the ABA’s temporary practice for foreign lawyer rule was adopted as a separate Model Rule and not as an amendment to Model Rule 5.5.

In view of the commission’s findings that the number of foreign lawyers who seek to provide legal services to their clients in the United States has greatly increased over the past eight years since the MJP proposals were adopted, and also in view of the fact that the concept of the temporary provision of legal services by foreign lawyers is already ABA policy, the commission recommends the incorporation of the ABA Model Rule for the Temporary Provision of Legal Services into ABA Model Rule 5.5.

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Foreign in-house counsel

Another of the issues identified in the commission’s Preliminary Issues Outline of 2009 was “whether the ABA should include foreign lawyers within the scope of Model Rule of Professional Conduct 5.5’s practice authorization for in-house counsel and its Model Rule for Practice and Registration of in-house counsel.”

The commission proposes amending subpart (d) of Model Rule 5.5 that authorizes lawyers who are not licensed to practice in a particular jurisdiction to act as in house counsel to include foreign lawyers. The commission stated:

…Some feel that including foreign lawyers within the scope of Model Rule 5.5(d) presages undesired and increased foreign lawyer presence in the U.S. The Commission disagrees with this position. The available data regarding the global legal services market, including that described above, indicates that these lawyers are already here and serving as in-house counsel. Their multinational corporation clients, regardless of size, have a need for legal services provided by counsel of their choice. Further, since 1993, when it first adopted the Model Rule for Licensing and Practice of Foreign Legal Consultants, the ABA has recognized that there are benefits to allowing foreign lawyers limited practice authorization in the U.S. The Commission believes that it is best to acknowledge these realities and to regulate these lawyers while they are here in the U.S.

In House Counsel Registration

The commission also proposed amendments to the Registration of In–House Counsel Rule that was submitted by the ABA Section of Legal Education and Admissions to the Bar and adopted by the ABA House of Delegates in 2008.

Due to the fact that the Registration of In-House Counsel Rule was based upon the Model Rule 5.5(d) in-house counsel exception, the commission considered amendments to the Rule in conjunction with its proposed amendments to Model Rule 5.5. Part of the rationale behind the Model Rule for Practice and Registration of In-House Counsel was to ensure that a lawyer, who acts as in-house counsel for a corporation in states where s/he is not licensed to practice, complies with all MCLE requirements in the jurisdiction, that they comply with the jurisdiction’s rules of professional conduct and are subject to discipline.

Based on the working group’s recommendations, and in view of the ever increasing number of foreign lawyers who currently act as in-house counsel in the United States, the commission proposes amending the Model Rule for Practice and Registration of In-House Counsel to include foreign lawyers.

Pro hac vice

The commission is also proposing changes to the ABA Model Rule on Pro Hac Vice Admission. In 2002, the ABA House of Delegates adopted the Model Rule on Pro Hac Vice admission that was proposed by the ABA Multijurisdictional Commission. The Model Rule as adopted applied only to U.S. lawyers.

The commission noted that due to the increased globalization of the economy and communications, there has been a corresponding increase in litigation involving assets that are located in foreign countries. Foreign trade accounts for trillions of dollars, both in imports from and exports to foreign countries. Also, the population in the United States has seen a steady increase in the number of foreign-born citizens

For these reasons, the commission proposes that the Model Rule for Pro Hac Vice Admission be amended to provide limited practice authority to foreign lawyers, and it believes that its proposed amendments will provide adequate protections for clients, courts and the public. Some of these protections include the fact that the authorization to practice is limited to a particular matter and is supervised; the foreign lawyer bears the burden of demonstrating to the judge that the authorization is warranted; local counsel is of record and is accountable to the client and the court for the admittee’s conduct; and the foreign lawyer is subject to the disciplinary authority of the jurisdiction.

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