Commission on Evaluation of Rules of Professional Conduct

Meeting Minutes
Friday, May 5 - Sunday, May 7, 2000
Memphis, Tennessee

Commission Members Present:
E. Norman Veasey, Chair
Lawrence J. Fox
Albert C. Harvey
Geoffrey C. Hazard, Jr.
Margaret C. Love
Susan R. Martyn
David T. McLaughlin
Richard E. Mulroy
Lucian T. Pera
Henry Ramsey, Jr.
Laurie D. Zelon

Seth Rosner, Board of Governors

Nancy J. Moore
Carl A. Pierce

Jeanne P. Gray
Charlotte K. Stretch
Susan M. Campbell

See list following minutes.

The Commission meeting was held on Friday, May 5, from 8:30 a.m. to 3:00 p.m., Saturday, May 6, from 8:30 a.m. to 3:00 p.m. and Sunday, May 7, from 8:00 a.m. to 12:00 p.m. in Memphis, Tennessee.

I. Administrative Matters

Al Harvey will work with Marina Jacks regarding details of the October Report.

II. Minutes

The minutes of the previous meeting were approved as submitted.

III. Rule 1.7

The Commission continued its discussion of Rule 1.7 that was begun at the previous meeting.

The Reporter noted that in the current draft the word "duties" has been replaced by the word "responsibilities" in paragraph (a)(2). A member felt that "duties" may need to be changed in other places as well.

A member asked if the term "confirmed in writing" is clear. Confirmed by whom? He felt that the Rule was not clear without reference to the Rule 1.0 (Terminology). He noted that the structure of Rule 1.0 makes it look like the client is acting but in fact the lawyer is acting. Another member suggested that the word "consent" be made the subject of the sentence to cure the problem. The Commission agreed.

A suggestion was made to delete "same litigation" because "tribunals" was added in paragraph (b)(3). A member noted, however, that it is possible to have multiple tribunals in the same litigation. The Commission agreed not to change the paragraph. A member noted that inclusion of both terms makes it clear that this change from the current Model Rule is an expansion and not just a change in terminology.

The Commission did not agree with a suggestion to end paragraph (b)(3) after the word "lawyer."

[4] The Commission agreed to change the word "against" to "involving" in the first sentence of the Comment. The Commission agreed to add "ordinarily" in the final sentence of the Comment and to add "may not" before "require." This change clarifies that while there may not be a direct adversity conflict in the example given in the Comment, there may be a material limitation conflict that may require consent.

The Commission discussed whether it would be preferable to limit the concept of direct adversity to litigation where there is a formal alignment of parties and oversight by the court. Some members felt it would be more clear to think of direct adversity as involving litigation and then add that there can be nonconsentable conflicts in other settings as well. A member observed that such a construction would imply that all direct adversity conflicts are nonconsentable which is not the case. Others added that direct adversity conflicts arise all the time in non-litigation contexts and that to use a term other than "direct adversity" to describe those conflicts would be to deny the natural meaning of the term. The consensus was that the broader use of "direct adversity" should be used.

A motion was made and seconded to amend proposed Comment [4a] to read:

Although direct adversity conflicts arise most frequently in litigation, they also arise in transactional matters. For example, if a lawyer is asked to represent a seller in negotiations with a buyer represented by the lawyer not in this transaction but in another, unrelated matter, the lawyer could not undertake the representation without the informed consent of each client.

The motion passed 7 to 0.

A member suggested that the end of Comment [1] include a cross-reference to Rule 1.18 on Prospective Clients.

A member suggested new language for Comment [11] to clarify that the client must have a reasonable opportunity to consider the risks and alternatives. The amendment was to break the fourth sentence into two. The new sentence would be: The lawyer should also afford the client an opportunity to reasonably consider the risks and alternatives and to raise questions and concerns.

A member felt that the Commission should clarify in Comment [3] which representation the lawyer must withdraw from. The member had the same concern about Comments [20], [23], and [28]. The Reporter will review the Comments. A member suggested that explanatory language should be added to Rule 1.16 and that the comments in 1.7 could refer to Rule 1.16. An observer added that the new language should conform to the new language in Comment [1] of Rule 1.9.

A motion to strike the second sentence of Comment [13] on the basis that a client can never understand the material risks in a prospective waiver situation failed for lack of a second. Other members felt that the lawyer can explain the types of things that will come up, as the comment suggests.

Several members objected to the new language in the middle of the third sentence of Comment [13] because independent representation should only be one factor to be considered in determining whether consent was effective. The Reporter will review the sentence.

A motion to add a clause in Comment [19] stating that a lawyer cannot take a representation against an affiliate if it would be directly adverse to the client failed.

A member stated that she will provide a revision of the proposed bracketed language in Comment [21] to the Reporter.

The Commission agreed with a suggestion to change "not uncommon" to "is governed by paragraph (a)(2)" in Comment [22].

A member noted that the changes to Comment [4a] may necessitate changes to Comment [25]. He added that he does not agree with the proposition in the first sentence that conflicts of interest in contexts other than litigation may be difficult to assess. The Commission agreed to delete that sentence.

A member observed that Comments [25] - [27] are a general look at non-litigation conflicts, specifically material limitation conflicts. He felt that the first sentence of [25] did not strike the correct tone. The Commission agreed that additional headings might make the Comments easier to read. A member added a reminder that the Comments should track the black letter rule.

IV. Rule 1.8

A member suggested alternate language for paragraph (a)(3) to reduce the paragraph to one sentence: "the client gives informed consent in writing to the essential terms of the transaction and the lawyer's role in the transaction, including whether the lawyer is representing the client's interests in the matter." [Note: The Commission voted at the previous meeting to delete the language "or otherwise looking out for" that appears in brackets in this draft.]

The Commission agreed that the writing in paragraph (a)(3) should be signed by the client.

A member suggested that the non-underlined material in the middle of Comment [1] be moved to the end of the Comment.

A member suggested that a cross-reference to Rule 1.14 be added in Comment [12].

The Commission discussed at length the concept of third-party direction and Comments [14] and [15]. Some members felt that the example in [14] was incorrect because it would be inappropriate to seek client consent where a lawyer feels that his independent judgment has been interfered with. Others felt the example was not about consenting to a conflict but about allocation of authority between lawyer and client. A member noted that the lawyer must inform the client of the insurance company's direction and then proceed after consultation with the client. The client must decide whether to proceed in spite of the possibility that the insurance company will not pay for an additional deposition.

A motion was made to delete "direction" from 1.8(f). Several members thought that inclusion of "direction" was important to make clear that if a third-party payor is trying to direct the lawyer, the client must give consent. They also felt that this only clarifies what previously was implicit. Others felt that the inclusion implied a safe harbor that does not in fact exist. A member stated that use of the term "direction" implies legitimate authority of a greater magnitude than is permissive. The motion failed with a vote of 3 to 7.

An observer requested a clarification on whether the lawyer must get consent from the client every time the lawyer gets direction from the insurance company. She did not think consent would always be necessary, especially if the lawyer agreed with the direction. The Reporter will add something in the Comment.

The Commission agreed with a suggestion that the Comment clarify that where informed consent is required, the existence of some form of consent in the insurance contract does not necessarily equal informed consent. A member noted that whether such consent is effective is beyond the scope of these Rules.

The Reporter noted that the term "confirmed in writing" that has been adopted in Rule 1.7 should also be used consistently in Rule 1.8. A member also noted that the formulation "informed consent in writing" in Comment [10] should be explained with reference to Rule 1.0. Also in Comment [10], the Commission agreed that the words "in conflict with the client" should be replaced by "differ from those of the client" in the third sentence.

A member suggested that cross-references in 1.8(b) may need to be changed. He suggested that the black letter text say simply "or as otherwise permitted or required by these Rules," with more specificity being provided in the Comment. He noted that references to Rules 1.2(d) and 3.4 may need to be added.

In response to a question, the Reporter explained that the different formulation regarding consent in 1.8(b) was intentional.

The Commission did not agree with a suggestion from an observer that officers in an organization should not be included in the prohibition in 1.8(k) on sex with clients and that only Rule 1.7(a)(2) should apply.

A member moved to delete the exemption for pre-existing relationships. After discussion he withdrew his motion.

Another member moved to delete paragraph (k) entirely. He argued that 1.7(a)(2) provides sufficient protection. Others felt that a per se rule is important to flag this issue for lawyers. An observer felt that this provision will be divisive. He felt that the discipline rules are not the place to educate lawyers. The motion failed with a vote of 4 to 6.

The Reporter advised the Commission that a new Comment discussing paragraph (l) will be written. A member asked the Reporter to review Comment [19] as there may be an implication in the second sentence that lawyers with 1.8(l) conflicts are not governed by Rules 1.7, 1.9 and 1.10.

V. Rule 1.9

The Reporter noted that in accord with the Commission's decision at the previous meeting, paragraph (c)(2) has been restored.

The Commission agreed to change the title of the Rule to "Duties to Former Clients."

The Commission unanimously approved a motion to delete "to the representation" from paragraph (a) and paragraph (b)(2). 

The Reporter will conform the language in Comment [1] to the text usage of "confirmed in writing."

A member noted that two stricken sentences in Comment [1] were relied on in a recent ethics opinion, 99-415. The Commission felt that no action was necessary in response.

A member suggested that Comment [1] be reworded for more clarity by first stating the principle to provide a frame of reference for the example. He suggested that the first sentence state: "After termination of the lawyer-client relationship a lawyer has certain duties with respect to confidentiality and conflicts of interest." A member felt it might be helpful to then state that the lawyer's continuing duties extent to the same or substantially related matters.

 A member state that the fourth sentence in Comment [4] should state that the former client "is not required" rather than "may not be required. She felt that the use of "may" in this instance was too weak.

A member felt that better bookend examples in the last sentence of Comment [4] may be necessary. Another member suggested: "mere possession of general knowledge is generally not sufficient but specific information of relevant practices and procedures generally is." The Reporter observed that the word "disqualifying," which is used in the draft under discussion, can be misunderstood. She suggested that the term should be used carefully. Another member stated it might be better not to use an organizational client in the example. The Reporter will revise the sentence.

VI. Rule 1.10

The Reporter will review the relationship between Rule 1.10 and Rule 1.8(l).

The Commission asked the Reporter to look at Comment [1] regarding firms trading under the same name. A member suggested using the word "lawyers" instead of "practitioners" in the third sentence.

A member questioned the reference to screening and the example of advance waivers at the end of Comment [9]. The Commission agreed to delete the last sentence of the Comment.

A member suggested that the use of "reasonably should know" in paragraph (a) is correct for a disqualification motion but "know" should be used in the context of discipline. The Commission referred this point to the subcommittee that is looking at scienter in the Rules.

The Commission agreed to change the title of the Rule to "Imputation of Conflicts."

The Reporter noted that a reference to Comment [13] of Rule 1.7 was added to Comment [10].

VII. Preamble

A member felt that the reference to "securities fraud" should be deleted and that a less specific example should be used in Comment [2a], (e.g., for example, a lawyer who commits fraud other than in representing a client.)

A member suggested that the structure of the last sentence of Comment [2] should parallel the other sentences. ("As evaluator...")

The Commission did not agree with a suggestion to add the word "meaningful" before "communication" in Comment [3].

VIII. Scope

No changes to the draft were suggested.

IX. Rule 1.0

Fraud: The Commission wanted to put lawyers on notice that the definition of fraud has changed significantly in the last few decades and that "intent to deceive" is no longer a necessary element in many cases (e.g., consumer fraud). The members agreed that the definition of fraud should refer to applicable substantive law since the definition in the current Rules ("conduct having a purpose to deceive and not merely negligent misrepresentation or failure to appraise another of relevant information") is not in accord with the case law.

Some members suggested that the rules include two separate definitions of fraud to distinguish acts by the lawyer, which for purposes of discipline would include an intention to deceive, and acts by the client. He suggested that regarding questions of fraud it is important to distinguish between conduct by the lawyer and conduct the lawyer is facilitating. A member requested that the Reporters search the Rules for the use of the word "fraud" to determine if such a distinction would be helpful.

A member suggested that the definition for purposes of lawyer conduct should be: ".. conduct that is fraudulent under the substantive or procedural law of the applicable jurisdiction and that has an intent to deceive. It does not include merely negligent misrepresentation or negligent failure to appraise another of relevant information." The Commission agreed with this formulation.

The Commission agreed that the definition for purposes of client conduct would be: "... conduct that is fraudulent under the substantive or procedural law of the applicable jurisdiction." The Reporter noted that the purpose of this change is to put lawyers in a position of not being able to assist client conduct. A member suggested that the expanded definition of fraud for client conduct be highlighted in the Reporter's Explanation memo. Another member observed that those who do not like the fraud exceptions in Rule 1.6 will undoubtedly have comments on this.

A member was concerned that the change puts an enormous burden on lawyers to be aware of all applicable substantive law. A member responded that lawyers needed to be on notice of the expanded concept of fraud in the relevant case law.

The Reporter suggested that since the term "fraud" is only used in relation to lawyer conduct in Rule 8.4(c), it would be better to remove the term from that Rule as it is redundant in that context in any event. A member noted that lawyers can be civilly and criminally liable even though they may not be subject to discipline for certain conduct. A member who opposed deletion of a definition of lawyer fraud noted that the Rules are used in other contexts as well.

Firm: The Commission agreed with a suggestion to delete the underlined language at the end of the definition.

Informed Consent: The Commission reconsidered its decision at the previous meeting to delete any reference to the lawyer having to communicate information. A motion to change the definition back to its prior formulation passed 8 to 1. A member suggested the comment state that the communication can depend on what the client knows.

A member suggested that the last sentence be reworded to avoid the word "comply." The Reporter suggested that a separate definition of "confirmed in writing" would be helpful.

An observer felt it would be helpful to have a comment explaining tribunal. He felt that a comment could clarify that agency rule-making is not covered and could clarify what binding means. He will provide language to the Reporter.

The Commission agreed to restore to Comment [5] the language that refers to relative sophistication of the client or other person as a relevant factor in determining how much information the lawyer must communicate.

X. Rule 1.1

A member suggested amending the second sentence of Comment [2] by adding at the beginning of the sentence, "In certain circumstances,...". A motion to delete the entire sentence failed. The Commission agreed with the proposed amendment.

The Reporter suggested changing the first sentence of Comment [3] by moving the last phrase (where referral to or consulting or association with another lawyer would be impractical, to the beginning of the sentence after the phrase, "In an emergency,. . ". The Commission agreed.

The Commission did not agree with a suggestion to change "should" in Comment [6] to "must."

XI. Rule 1.3

A member noted the concern of a commentator that the statement in Comment [1] that a lawyer is not bound to press for every advantage may imply that the lawyer is sacrificing the accomplishment of the client's objectives. The Commission agreed to replace the third and fourth sentences with: "Although the lawyer must act with reasonable diligence to accomplish the client's objectives, the lawyer is not bound to press for every advantage that might be realized for the client." The Reporter noted that the notion of client direction is covered in Rule 1.2.

A member felt that the word "should" should be restored at the beginning of Comment [1] and objected to the word "may" in the second half of the sentence.

A member suggested broadening the last sentence of Comment [3] and replacing the word "acceding" in that sentence.

A member asked if some of the language in Comment [4] should be in Rule 1.16. The Reporter will work on a compressed version of the Comment.

A member suggested that Comment [4] might also include a sentence stating that where a lawyer has agreed to provide limited legal services in accordance with Rule 1.2(c), those services terminate when the representation is over. A member pointed out that this is different from proposed Rule 6.5.

XII. Rule 1.13

The Commission did not agree with a suggestion by a commentator to return to a previous draft that included specific language permitting a lawyer to disclose constituent wrongdoing. The Reporter felt that the situations that would be covered are rarely encountered and that disclosure is not necessarily foreclosed by Rule 1.13.

The Commission agreed with a suggestion to modify Comment [6] regarding the identity of a government client.  The Reporter will point out in the Comment that the issue is a question of law beyond these rules.

XIII. Rule 1.14

The Reporter noted that several commentators provided excellent suggestions for language changes.

One Commentator renewed a request that the Commission recommend adoption of the principle of least restrictive alternatives, either in paragraph (b) or in the Comment. The Commission felt it was important not to second guess the lawyer in a disciplinary context.

XIV. Rule 1.16

The Commission agreed to delete the word "unforeseeable" in paragraph (b)(6).

The Commission did not agree with a comment that paragraph (b)(7) provides too much discretion to the lawyer. The Commission felt that there is no indication that the paragraph has been problematic.

The Commission agreed with a proposal to add a cross-reference to Rules 1.2(c) and 6.5 in Comment [1].

A commentator suggested that the Commission address the problem of ghost-writing by lawyers in Comment [2]. A member pointed out that courts have differed widely in their approach to ghost-writing: some say it is fraud; some say they just want to know if a lawyer assisted; some say that if a lawyer helped the lawyer is representing the client. The Commission felt that this issue was more properly addressed by court rule.

XV. Rule 1.17

The Commission did not agree with a commentator's proposal that fee increases be permitted in paragraph (d) if a fee increase was permitted by the seller's retainer agreement or if the client specifically approves an increase after the sale. The Reporter felt that the change was unnecessary because the Rule does not preclude the purchaser from proposing and the client from voluntarily agreeing to a modification of the agreement.

The Commission disagreed with the addition of a provision that would confer upon the buyer the right to refuse to represent one of the seller's clients if the client was unwilling to pay the purchaser's normal fees. The Commission felt that this suggestion undercut the protection intended by paragraph (d).

XVI. Rule 2.1

The Commission did not agree with a suggestion to add a reference to "diagnostic interviews" to Comment [5].

XVII. Rule 3.6

Some commentators and some members objected to the deletion of subparagraph (6) of Comment [5]. Several members indicated a preference for including paragraph (6) even though it is inconsistent with the text of the Rule. A motion to restore subparagraph (6) passed 6 to 3. A member suggested revisiting this issue at another meeting.

XVIII. Rule 4.1

One commentator urged the Commission to adopt a proposal in an earlier draft to require disclosure if "required by law." The Commission felt this was unnecessary because disclosures required by law are covered in Rule 1.6.

The Commission agreed that the Commentary should refer to the definition of fraud.

A member suggested the use of a word other than "tantamount" in Comment [1].

The Commission discussed the interplay between Rule 1.6 and Rule 4.1. A member suggested deleting paragraph 4.1(b) because the issue is already covered in Rule 1.2(d) and Rule 1.6. Another member stated that if 4.1(b) is retained, the Rule would make mandatory that which is permissive in 1.6. He added that it would be helpful to tell lawyers in one place there is a set of situations where they are permitted to disclose and a smaller set where they are obliged to disclose. He suggested this be put in a Comment with appropriate cross-referrals. A member felt that if Rule 4.1(b) is deleted, some historical perspective should be provided to explain the deletion.

An observer was concerned that the Commission was severely limiting the situations where disclosure by the lawyer is mandatory. A member responded that he believed a lawyer may be required to disclose in order to avoid "assisting" under paragraph 1.2(d). He added that a lawyer can be "assisting" if the lawyer lends credibility to the transaction. The observer noted that a lawyer can withdraw but has no disclosure obligation under 1.2(d). He felt that 4.1(b) is not equivalent to 1.2(d) so deleting 4.1(b) would not be appropriate.

A Reporter stated that there would be only a very small subset of situations where withdrawal plus silence would result in assisting.

The Reporter suggested bringing back drafts with 4.1(b) deleted for consideration.

XIX. Rule 4.2

Chief Justice Veasey recused himself and Mr. Hazard chaired the discussion on Rule 4.2. A member noted that the DOJ would like something in the Comment about supervision. The chair pointed out that there are institutional reasons to supervise the FBI agents and strong legal reasons not to. He felt that the DOJ lawyers tend to be risk averse. A member asked why the DOJ lawyers should be treated differently. A representative of the DOJ responded that they do have a unique role in criminal and civil law enforcement. The Commission felt that the second sentence of Comment [3] could be placed in a separate Comment with new language added. The chair invited the DOJ to send a letter with suggested language for the new Comment.

A member observed that the beginning of Comment [3] should be softened so it does not imply that the right to petition gives people a blank check to contact any government employee. A member suggested adding a new sentence after the first sentence to the effect, But not all communications will be permitted and that the two sentences be moved to a separate Comment.

A member suggested deleting exceptional in Comment [4]. Another member who objected to the deletion was concerned that there is no standard for when a court applies the exception. The Reporter noted that many commentators felt that the Comment was too narrow. A member indicated that when she suggested adding court order to the Rule she intended it as a mechanism for explication of authorized by law. Others felt that court order can be used to override the rule. A motion to retain court order on the supposition that it implies an independent authority passed 5 to 3 with 1 abstention. In light of that decision, the chair felt that the Comments needed to be clarified to explain that a court order can be used 1) for an interpretive ruling regarding scope of authorized by law, or 2) to justify contact in exceptional circumstances (e.g., contact with criminal accused; or serious breach of fiduciary duty such as failure to communicate a settlement offer).

XX. Rule 5.6

A member asked if the Rule goes too far in allowing lawyers to protect themselves. He felt that the purpose of the Rule is to preserve a client's choice of lawyer. The Commission felt that no change to this Rule was necessary at this time.

XXI. Rules 7.1 - 7.5

No changes were proposed on Rules 7.1, 7.3, 7.4 and 7.5.

The Commission agreed with a suggestion by the Commission on Responsibility in Client Development to delete paragraph (b) of Rule 7.2.

XXII. Rules 8.1 and 8.2

No changes were proposed on Rule 8.1.

Based on comments received, the Commission agreed to delete the proposed additional language in paragraph (a) of Rule 8.2. Most commentators did not feel the change was helpful.

XXIII. Rule 8.3

The Commission did not agree with the suggestion of some commentators that the reference to Rule 1.6 should be deleted from the Rule. A motion was made to add a statement that a lawyer may not condition settlement of a civil suit on an agreement not to report a lawyer's misconduct. Other members felt it was easy to evade such a provision. A disciplinary counsel pointed out that where client assistance is needed to prove a case, if the client does not wish to cooperate the case cannot be won in any event. The motion failed.

XXIV. Rule 8.4

The Commission approved a redraft of Comment [1] proposed by the Reporter.

The Commission did not agree with a suggestion to add a law enforcement exception at the end of Comment [1].

The Commission did not agree with a suggestion to amend the last sentence of paragraph (a) by adding or a client's agent after client. The Commission did not agree with the proposition that there was no distinction between an investigator being directed or supervised by a client or directly by the lawyer. As an alternative a member suggested that the Commission consider eliminating the phrase or do so through the acts of another. Another member agreed that deletion of the agency language would be an improvement. The Reporter felt that it was helpful to point out that agency rules apply. A member suggested that the point about the application of agency rules is relevant throughout the Rules and should perhaps be placed in general comment to that effect. He also noted his disagreement with those who have stated that the client is the agent of the lawyer.

XXV. Rules 5.4 and 5.7

The Commission agreed to defer consideration of any changes to these Rules until after the House of Delegates takes action on any pending changes regarding multidisciplinary practice. The Commission agreed that other than any possible changes to Rules 5.4 and 5.7 that the Ethics 2000 Commission may recommend after full consideration of multidisciplinary practice, the Commission has no recommendations for changes to these two Rules. The Commission will circulate a memorandum inviting comment on any aspect of these Rules not related to multidisciplinary practice.

XXVI. Rule 1.6

The Commission agreed unanimously to change shall to may in paragraph 1.6(c). Several members pointed out that if the lawyer does not disclose (to comply with these Rules or with other law or a court order) the lawyer won't be disciplined under 1.6 but may still be required to disclose by other law.

The Reporter indicated that he will change the reference in Comment [14] to Rules 3.3 and 4.1 after the Commission finalizes its discussion on those rules.

A member suggested deletion of clearly in the last sentence of Comment [15]. Another suggested deletion of the sentence. The Reporter will reexamine the sentence. A member suggested changing provide to require in the first line of the Comment.

A member noted that the last line of Comment [16] should say Unless review is sought, rather than Unless appeal is taken, because review is sometimes available through means other than appeal. The Commission did not agree with the suggestion of another member to delete the sentence since many lawyers feel they have to seek review no matter how hopeless the case.

XXVII. Mandatory Malpractice Insurance

The Commission considered a recommendation to amend Rules 1.4 and 7.2 to require disclosure of the lack of malpractice insurance. The Commission felt that it did not have sufficient information about issues related to mandatory malpractice insurance and the problem that is being addressed. The Commission also felt that this problem should be addressed outside of the disciplinary rules.

XXVIII. Rule 1.5

A motion was made and seconded to reinstate the first sentence of the stricken language in Comment [4]: "A lawyer should not exploit a fee arrangement based primarily on hourly charges by using wasteful procedures." A member stated that charging excessive fees was one of the largest problems he had observed. He felt the sentence put lawyers on notice and was helpful. The Commission agreed to reinstate the sentence. Regarding the second stricken sentence, ("When there is doubt whether a contingent fee is consistent with the client's best interest, the lawyer should offer the client alternative bases for the fee and explain their implications.", a member felt it would be better to point out, perhaps in Comment [2], that there are circumstances in which it would be unreasonable to charge the conventional one-third percentage contingency and the lawyer must propose something else. He added that the alternative might be a smaller percentage so the sentence is not accurate. He noted that many consumers believe that a one-third contingency is "law" so it is particularly important to point out that such a contingency might be unreasonable.

The Commission agreed that the Comment should explain what is meant by "where appropriate" in paragraph (a) (e.g., that not every factor is relevant in every case). A member was concerned that it might be interpreted to mean that in some cases none of the factors are relevant.

A motion was made to amend the text to specifically permit contingent fees in post-decree family law matters when status is not an issue. After some discussion the motion was withdrawn because the Commission felt that the topic was adequately covered in the Comment.

A member suggested that "to be obtained" be added at the end of the first sentence of Comment [4a]. He also suggested that the Comment state that contingent fees are permitted in the recovery of post-judgement balances, etc., because they do not implicate the same policy concerns.

A member proposed that the text of paragraph (e) should include a requirement that the client consent to the share to be given each lawyer. He noted that having to disclose is a disincentive to refer but clients might be surprised to find out about the shares. A member was concerned that lack of disclosure would encourage more "mail-drop" lawyers. One member stated that if a lawyer refers a matter to a competent lawyer and that lawyer makes a mistake, the first lawyer is not generally found liable. A member responded that a referral is sort of an ad hoc joint venture so all lawyers remain responsible. Several members were concerned about the incentives or disincentives built into this rule. The Commission voted 5 to 4 to require disclosure of the shares to each lawyer.A member suggested that the phrase "except where the lawyer will charge a regularly represented client on the same basis or rate" should be clarified by "as previously charged" or something similar.

A member felt that changes to the scope should be included in the last sentence requiring that changes to the basis or rate be communicated in writing. The Reporter stated that the commentators have said that the scope changes too frequently to require that all changes be in writing.

XXIX. Rule 1.15

The Commission agreed to delete the word substantially at the end of paragraph (c) and to address the issue in the Comment.

The Reporter advised the Commission that a number of states have added provisions in Rule 1.15 to permit lawyers to deposit money in their trust account to cover bank fees. The Commission agreed to add a new paragraph (b) stating that a lawyer may deposit funds in an account for the limited purpose of minimizing bank charges.

The Commission asked the Reporters to consider further whether any reference to IOLTA was necessary in the Rule.

XXX. Rule 1.18

The Commission approved the change from consults to discusses in paragraph (a) because consults presupposes a relationship. The Commission agreed to make the same change in paragraph (b).

The Commission agreed with a suggestion to add to the black letter that the screening must be timely.

XXXI. Rule 4.4

A member noted that Comment [6] in Rule 4.2 should be amended to conform to the language in Comment [1] of Rule 4.4.

XXXII. Rule 7.6

The Commission agreed to state in its final Report that in view of the recent approval of Rule 7.6 by the House of Delegates the Commission reports this Rule without change. The Commission decided to take no other action on this Rule.

Respectfully Submitted,

Charlotte Stretch
Susan Campbell


Dane S. Ciolino, Lousiana State Bar Association
Steve Csontos, Department of Justice
Claudia Flynn, Department of Justice
Jack Gardner, National Association of Bond Lawyers
Noel Hensley, Southwestern Legal Foundation
Joseph R. Lundy, Attorneys' Liability Assurance Society
Robert E. O'Malley, Attorneys' Liability Assurance Society
Bruce Ross, Real Property, Probate and Trust Law Section
Bill Smith, National Organization of Bar Counsel


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