Commission on Evaluation of Rules of Professional Conduct
Commission Members Present:
Chief Justice E. Norman Veasey, Chair
Lawrence J. Fox
Albert C. Harvey
Geoffrey C. Hazard, Jr.
Judge Patrick E. Higginbotham
W. Loeber Landau
Margaret C. Love
Susan R. Martyn
David T. McLaughlin
Richard E. Mulroy
Lucian T. Pera
Judge Henry Ramsey, Jr.
Laurie D. Zelon
Seth Rosner, Board of Governors
William Smith, National Organization of Bar Counsel
Samuel Dash, CPR Governing Committee
Mark I. Harrison, Association of Professional Responsibility Lawyers
Louise L. Hill, Chair, Commission on Advertising
Nancy J. Moore
Carl A. Pierce
Jeanne P. Gray
Ellyn S. Rosen
Charlotte K. Stretch
The Commission meeting was held on Friday, January 30, 1998, from 9:00 a.m. to 5:00 p.m, and on Saturday, January 31, 1998, from 9:00 a.m. to 3:00 p.m.
I. Report of the Chair
Chief Justice Veasey welcomed the three new members of the Commission, Judge Patrick Higginbotham, David McLaughlin, and Richard Mulroy.
Chief Justice Veasey reported that the Standing Committee on the Rules of Professional Conduct of the Judicial Conference is studying whether there should be a model rule on professional conduct for federal courts. One possibility under consideration is for state rules to govern except in certain core areas. Rule 4.2 would be included as a core area under this alternative. The Standing Committee has referred the matter to the relevant advisory committees of the Judicial Conference for further study.
Chief Justice Veasey also reported on the progress of the Conference of Chief Justices Working Group on the National Study and Action Plan on Attorney Conduct and Professionalism. The Working Group distributed surveys to the highest court in each state requesting information about professionalism programs in the jurisdiction. Recommendations based on the survey results are now being drafted to present to the Conference at its meeting in August. The Working Group will hold a conference call in February to discuss the recommendations, which cover the areas of professionalism, educational initiatives, lawyer assistance, bar admissions, litigation reform, discipline, and public outreach.
Chief Justice Veasey provided a summary of the discussion at the meeting of the Center for Professional Responsibility Governing Committee regarding Model Rules 8.4 and 4.2. He reported that he advised the Governing Committee that the ABA House of Delegates should go ahead and consider pending changes to the Model Rules without waiting for the Commission's review of a particular Rule, but that the Commission would not be bound by any action prior to the Commission's review.
The Commission then discussed whether to undertake consideration of two proposed Rule changes. The discussion on Model Rule 8.4 included questions regarding the substance of the Rule, the long history of attempts to change it, the need to bring the discussion of the Rule to some kind of resolution, the role of the Commission in reviewing matters before the House of Delegates, the need to take an orderly approach to reviewing the Rules, and questions regarding the ABA political process. A motion was made and seconded to inform the House of Delegates that discussion of Rule 8.4 is within the Commission charter, that the Commission will study the Rule in a comprehensive way, that the Commission understands if the House feels it needs to take action prior to Commission review, that the Commission will not be constrained by action taken before its review, and that the Commission takes no position on the proposal before the House. After some discussion, the motion was tabled until further information could be learned about the status of the proposal before the House of Delegates.
With respect to Rule 4.2, Chief Justice Veasey explained that the Conference of Chief Justices decided that it does have an important responsibility to assist state supreme courts in ethics matters, particularly in this type of special situation, but that the Conference is not interested in engaging in the writing of ethics rules as a general matter. He noted that the Conference recognizes the role of the ABA and intends to work in harmony with it in this and other areas of mutual interest. He also reported that the Conference has extended the time for comment on the proposed change to Rule 4.2 to June 1, 1998.
Discussion on whether the Commission should turn to consideration of Rule 4.2 included concerns that decisions need to be made on other Rules (e.g., 1.1, 1.3, 1.6, 1.7 and 1.13) before looking at 4.2, the need to be flexible and consider the impact of the Rules on the practicing bar, the difficulty in advancing a new position on Rule 4.2 after a decision is made on the Chief Justices' proposal, the lack of sufficient time to make a significant contribution, and the possibility that the Commission is an excellent forum in which to forge a compromise on this Rule. The Commission decided to defer a final decision on whether to expedite consideration of Rule 4.2 until the end of the meeting on Saturday.
Before turning to a discussion of the Rules under consideration at this meeting, one Commission member requested that the Commission discuss the priority of issues to be discussed in light of the time period available. Discussion included views on whether the Commission's approach should be comprehensive or more moderate. Prof. Martyn suggested that the Commission should be maximalist in addressing issues - that it should look at every issue, compare state variations, etc. - but should be minimalist in its redraft. She pointed out that the Model Rules are a quasi-criminal code and that they should present concise rules with clear signals regarding appropriate behavior. Other members pointed out practical limitations on the Commission's study including the funding and length of time available and how much change the House of Delegates and state supreme courts will be able to digest. The Commission agreed that the Rules should provide guidance to practicing lawyers, but noted that the exact scope of the project cannot be precisely determined before beginning the process.
II. Minutes of Previous Meetings
The minutes of the Committee meeting of October 17 - 18, 1997, were approved with the correction of a typographical error.
III. Model Rule 1.6
Proposed Rule 1.6(b):
(b) A lawyer shall not [knowingly][intentionally] reveal information relating to the representation of a client by the lawyer or by a law firm with which the lawyer is associated, unless
(1) the client consents after consultation with the lawyer; or
(2) the client has impliedly authorized the lawyer to make such disclosure in order to carry out the representation of the client; or
(3) the disclosure is for a proper professional purpose, the lawyer reasonably believes that there is no significant risk that the disclosure will [materially] disadvantage the client, and the client has not prohibited the lawyer from making the disclosure in question; or
(4) the disclosure is permitted by paragraph (c) or required by paragraph (d).
1. Information relating to representation of a client
Prof. Pierce began the discussion of Rule 1.6 by asking the Commission to consider whether any change should be made in the terminology describing the type of information covered by the Rule. Prof. Pierce pointed out several variations on the Model Rule format including the ALI Restatement and the Model Code. The Commission discussed whether the current Rule is difficult to understand and whether it is being followed in practice. The Commission favored keeping the current language and providing greater explanation in the Comment. The Commission also agreed that the definition of lawyer should clarify that it includes partners, associates, temporary lawyers, lawyers in an "of counsel" relationship, and law firms.
2. Knowingly or intentionally
The Commission discussed whether to add an element of knowledge to the Rule. One member pointed out that the use of knowingly in the Code was deleted because lawyers have a fiduciary duty to their clients. Only one Commission member favored use of the word knowingly. During the discussion it was noted that imputation does not apply in Rule 1.6. One member suggested that the Commission may want to consider creating a new Rule on temporary lawyers and recommended that the Commission obtain more information about this new phenomenon.
3. The client consents after consultation
The Commission discussed the definition of consultation, and that it must be consistent throughout the Rules. It was suggested that the definition of consultation should include information and advice. Mr. Smith pointed out that the current standard is difficult for disciplinary counsel to enforce and provides the least amount of public protection of all the alternatives. He felt the consent should be in writing. Other members suggested that this area might be appropriate for a best practices comment. Prof. Pierce stated that his next draft will maintain the same black letter language and will include a comment on best practice stating that the consent should preferably be in writing. He will also amend the definition of consultation to include advice. [The Commission later decided during the discussion of Rule 1.7 to use the term informed consent. See discussion under IV.2.]
4. disclosures impliedly authorized to carry out the representation
The Commission reviewed Prof. Pierce's proposed redraft which reads: the client has impliedly authorized the lawyer to make such disclosure in order to carry out the representation of the client. Several members objected to the change because implied authorization does not come only from the client. Others felt the Rule should be more client-oriented by deleting the word impliedly. One member pointed out that implied authorization does not include particularly sensitive material where client consent would be indicated. The Commission concluded that the black letter Rule should not change but that the Comment should elaborate on the necessity to discuss certain types of things with the client. It was also noted that the proposed paragraph (a) [which has not yet been discussed] would explain the need to consult with the client about the lawyer's obligations.
5. proposed subparagraph (b)(3): proper professional purpose
Prof. Pierce explained that the ALI Restatement includes an exception for proper professional purpose. He asked if the Commission wanted to include a similar provision, though not as broad. The Commission discussed what would be covered by such an exception, such as a lawyer seeking ethics consultation from another lawyer, or a lawyer disclosing his client list to a prospective employer. Several members questioned how this type of disclosure/consultation is justified under the current Rules and the scope of the permitted disclosure. One member questioned what the word proper added to the meaning. Ms. Love informed the Commission that the Standing Committee on Ethics and Professional Responsibility is drafting an ethics opinion on ethics consultation. One member cautioned that mentor relationships with other lawyers, such as the sharing of professional lore, should be treated differently from an actual lawyer relationship where a lawyer may seek consultation on a matter of professional ethics. Another added that any consultation for the benefit of the client should only be made with the consent of the client.
The Commission agreed that an exception in general terms for professional purpose should be added to subsection (c), where it would be constrained by the requirement of reasonable necessity, and should include an example (such as conflicts of interest or obtaining legal advice) which limits the generality of the Rule but leaves room for other situations to be covered. In addition, the comment should mention that when a lawyer retains another lawyer to provide advice on a matter, the second lawyer becomes burdened by the fiduciary responsibilities to the first lawyer's client.
6. proposed subparagraph (b)(4): the disclosure is permitted by paragraph (c) or required by paragraph (d)
Prof. Pierce indicated that he wished to delete this proposal and the Commission concurred.
7. disclosure of information generally known
Prof. Pierce advised the Commission that the ALI Restatement exempts information that is generally known from its definition of confidential information. One member pointed out that confidentiality is driven by the nature of the relationship not by the nature of the information. Another added that this is a client protection rule, not a lawyer protection rule. The Commission was opposed to adding this exemption to the Model Rules.
IV. Model Rule 1.7
Proposed Rule 1.7:
(a) A lawyer shall not represent a client if there is a significant risk that the lawyer's own interests or the lawyer's duties to another client, a former client, or a third person will materially and adversely affect the representation of the client, except as permitted in (b).
(b) A lawyer may represent a client notwithstanding a significant risk of material and adverse effect if
(1) the representation:
(i) is not prohibited by law;
(ii) does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation; and
(iii) does not involve circumstances rendering it reasonably unlikely that the lawyer will be able to provide adequate representation to one or more of the affected clients; and
(2) each affected client [or former client] consents to the representation after receiving reasonably adequate information about the material risks of the representation.
1. proposed change in the structure of the Rule:
Prof. Moore asked the Commission to first consider her proposal to collapse subsections (a) and (b) into a single subsection using the Restatement standard (with minor modifications). Prof. Hazard informed the Commission that the Kutak Commission did draft a unitary rule but added subsection (a) to create a bright line for direct adversity conflicts. He agreed with the proposal to collapse the two sections and liked the Restatement standard.
The Commission discussed some of the confusion lawyers have with this Rule: some lawyers never read past subsection (a) and do not comprehend the entire Rule and some lawyers do not understand how the Rule relates to transactional v. litigation practice. In response to a question about the unique Rule in the District of Columbia, Ms. Love explained that the Rule is intended to distinguish as nonconsentable the situation where a lawyer appears on both sides. Prof. Moore felt that situation needed to be made more clear in the Model Rules; her proposed Rule (b)(ii) is designed to cover that situation.
Prof. Moore observed that the analysis of 1.7 has four steps: 1) know who your client is; 2) identify whether a conflict is potentially impermissible; 3) determine whether the conflict is consentable or not; and 4) obtain informed consent if the conflict is consentable.
The Commission generally liked the collapsed Rule but made several suggestions for the next draft. One member questioned what type of conflict would affect the representation adversely but not materially. Another argued that there should not be a material component for direct adversity. A suggestion was made that the Rule should differentiate in (a) the lawyer's own interests from the lawyer's duties to others. An observer voiced his concern that the proposed Rule seems to say that even if the lawyer thinks there is a material risk, the lawyer may obtain consent to proceed. Another member commented that the Rule should be clarified to reflect: 1) when a lawyer may not ask for consent, 2) when a lawyer is required to obtain consent, and 3) when a lawyer is not required to ask for consent.
One member observed that a lawyer has no duty to reveal an indirect or immaterial conflict to the client, arguing that this would confer too great a veto power on the client and would curtail the independent practice of law. It was pointed out that most clients have no understanding of these niceties. Some members felt that too much self-protection for lawyers is built into this Rule.
Prof. Pierce indicated that he did not like the objective test (reasonably believes) in the current (a)(1). He suggested that the proposed subsection (a) should be amended to read: .. if there is a significant risk that the representation will be directly adverse to another client or would be materially limited by.....
Prof. Moore suggested a reformulation of the Rule as follows: subsection (a) would set forth the standard (which would describe the universe of potentially impermissible conflicts of concurrent clients); subsection (b) would indicate that, notwithstanding (a), a lawyer may obtain consent from each client unless the conflict is nonconsentable; and (c) would explain nonconsentable conflicts (when a lawyer may not even request consent). Thus, (b) would cover waiver situations, and (c) would be a limitation on (b). She suggested that the new subsection (a) would incorporate the proposal made by Prof. Pierce. She proposed that the definition of direct adversity include material and adverse effect.
The Commission agreed that this formulation would be helpful because many practicing lawyers have trouble understanding the difference between permissible and impermissible conflicts.
In response to questions about the current (b) and the proposed (a), Prof. Hazard explained that the two formulations invite different pathways of thought. The present (b) points to prospective representation of incoming clients while the new formulation looks at the effect of the prospective representation on existing clients. The new approach moves directly to the question of the existing client; if the representation will have a materially adverse affect on a current client, the lawyer cannot take the new client because the lawyer's obligations to the new client will be limited. He suggested that the Comment point out that this is not a substantive change but a change in the sequence of analysis with no change in outcome.
One member proposed that the new (c) covering nonconsentability should be first. The Commission suggested that Prof. Moore prepare two alternatives for consideration.
As a final consideration regarding the architecture of the Rule, one member suggested that the third of the three categories of nonconsentable conflicts listed in Prof. Moore's proposal be split into two categories. The Commission discussed the differences between the three categories. One member pointed out that the third category is a catch-all provision. Another added that because it is a catch-all, the third category must meet standards of fairness and due process. One member pointed out that a particular conflict, such as representing both parties in a divorce, might be prohibited by law in one state, and therefore subject to discipline under the first section, but would only be subject to discipline under the third category in a state where such representation is not prohibited by law. One observer advised the Commission that a recent case in Arizona held that, while a particular action would not be disciplined because the conduct had not previously been addressed, such conduct would be disciplined in the future. One member commented on the dynamic effect of the Rule: when a court declares something to be a violation under category three, it becomes a category one matter. Several members agreed that conduct would usually have to be egregious to be disciplined under the third category.
Prof. Pierce expressed his concern with the term adequate representation in the third category. He asked if adequate representation was different from competent representation. Prof. Moore stated that it focused on, given the limitations, whether the lawyer represented the client adequately. The Commission suggested that Prof. Moore try to use a different word than adequate or competent.
The Commission discussed whether the Comment to the current Rule regarding the disinterested lawyer, (unless a disinterested lawyer would conclude the client should not agree to the representation), could be imported into the third category. It was suggested that the Comment state that reasonable refers to the view of a disinterested lawyer.
2. consent after consultation
Prof. Moore asked the Commission to consider whether to change the current standard of consent after consultation to the Restatement formulation of informed consent. Mr. Smith commented that the current Rule invites a swearing contest. One member noted that the term consultation does not seem to convey the imparting of information. Another added that informed consent has a fairly clear meaning while consultation is more vague. The Commission agreed that the Rule should make clear that the lawyer must disclose the risks involved with each of the alternatives, as well as provide advice. The Commission also agreed that the term "informed consent" should be included in the definitions section of the Rules and should be used throughout the Rules. In addition, the definition should be repeated in the comments to both confidentiality and conflicts of interest.
One member questioned whether the appropriate standard is the reasonable client or the reasonable lawyer. Another expressed the concern that a reasonable client standard significantly increases the disclosure required. There was a consensus that reasonable client is the correct standard. One member pointed out that appropriate disclosure is a proper consequence where a lawyer is going to take on something that has a significant and adverse effect on a client.
The Commission next considered whether the disclosure should be in writing. One member asked whether such a provision should be in the Best Practice section. Ms. Zelon pointed out that a writing is required in California and she strongly supports adding this provision to the Model Rules. She added that such a requirement is good for both the client and the lawyer. Another member suggested that the Comment explain that the Rule does not determine the malpractice case where there is admissible proof that disclosure was given. The Commission asked Prof. Moore to prepare alternative drafts for the next meeting.
A suggestion was made that the Comment should also clarify that having a writing is not dispositive on the question of disclosure. The Commission did not agree with a suggestion that a provision be added stating that if a writing is signed by the client it is presumed to be valid.
V. Commission on Advertising
Chair Veasey introduced Prof. Hill, Chair of the ABA Commission on Advertising. Prof. Hill informed the Commission that the Advertising Commission is examining ways in which emerging technologies may call for modifications of the rules that govern client development endeavors through the Internet. She will forward the Advertising Commission's draft white paper on these issues as soon as it is available.
VI. Work Plan
Chief Justice Veasey asked the Commission to consider the order in which additional Rules and issues should be discussed. The Commission decided that Prof. Pierce should next work on Rule 1.9(c), and Prof. Moore should work on Rule 1.8. They agreed that Rule 1.8(b) should be moved to Rule 1.6 and that the remaining conflicts issues addressed in Rule 1.8 should be grouped by type. It was further suggested that Rule 1.8 be renamed Specific Applications, to clarify its focus. The Commission also agreed to reserve time to discuss imputation at the next meeting.
Prof. Moore suggested that the Commission discuss the issue of a lawyer as a witness should be incorporated into Rule 1.7 because it has both a conflicts aspect and a role aspect.
The Commission next reexamined the issue of whether it should consider Rules 8.4 and 4.2 out of order. The Commission reviewed the issues discussed on Friday morning regarding Rules 4.2 and 8.4 and discussed the impact that considering these Rules would have on the Commission's work plan. Mr. Harvey, who also serves on the Standing Committee on Ethics and Professional Responsibility, suggested that the Ethics Committee take the lead in examining Rule 8.4 because it has been working with the issue for an extended period of time. The Commission determined that it would proceed with its work plan and will also set aside approximately two hours at its next meeting to discuss Rule 4.2. Prof. Pierce will draft something for discussion on Rule 4.2. In addition, if time permits, Prof. Moore will look at Rule 8.4.
The Commission requested that each Reporter prepare a proposed outline and timetable of issues to be discussed at least through 1998. The Reporters will post their ideas on the listserv. Ms. Stretch was asked to post an agenda of what will be discussed at the next meeting.
The Commission asked Ms. Stretch to maintain a compendium of comments received, to reduce any lengthy submissions to summary form, and to provide the Commission with a running tally of the types of comments received.
Mr. Smith offered to send the Commission a copy of the National Organization of Bar Counsel's report on current developments in professional responsibility. He also advised the Commission that NOBC has a web site at www.nobc.com.
Judge Higginbotham indicated that he would also post information about Ethics 2000 and requests for comments on the web page of the American Inns of Court.
Ms. Stretch advised the Commission that letters to members of the House of Delegates, chairs of Sections, Committees and other ABA entities, chairs of affiliated and other legal organizations, presidents and executive directors of state and local bar associations and various other legal, professional and consumer organizations seeking comments on the Rules of Professional Conduct and suggestions for new rules have been mailed.
The Commission next discussed the hearing to be held on Friday, May 29, 1998 during the National Conference on Professional Responsibility in Montreal. The Commission indicated its preference for written submissions from those who wish to testify. Several suggestions were made regarding hearing procedures. The Commission also discussed whether any drafts would be circulated prior to the hearing and whether the hearing would focus mainly on confidentiality and conflicts of interest. It was pointed out that if the Commission has only a limited number of hearings, it should accept testimony on any aspect of the Rules at all of the hearings. The Commission will decide after its April meeting whether any drafts are ready for circulation. Chief Justice Veasey asked Mr. Hazard, Ms. Love, and Prof. Martyn to assist Ms. Stretch in planning the hearing.
Charlotte K. Stretch