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Screen nonlawyer employees for conflicts of interest: Part 2

By Peter Geraghty
Director, ETHICSearch

and

Susan J. Michmerhuizen
ETHICSearch Research Counsel

In last month's Eye on Ethics column, “Screen Nonlawyer Employees for Conflicts of Interest,” we talked about how a lateral hire of a nonlawyer employee, such as a secretary or paralegal might under Model Rule 1.10 Imputation of Conflicts of Interest: General Rule potentially result in a finding of imputed disqualification for the firm, and how in many, although not all jurisdictions, effective screening provisions can prevent it. In this month's column, we discuss how different state bar ethics opinions, rules of professional conduct and case law address both the appropriateness and effectiveness of screening for nonlawyers.

Analysis

There is not a great deal of guidance on what constitutes an effective screen for a nonlawyer.

Paragraph [4] of the Comment to Rule 1.10 states that a nonlawyer's involvement in a matter while employed at another firm is not imputed to other members of the firm so long as the nonlawyer is screened from the matter:

[4] The rule in paragraph (a) also does not prohibit representation by others in the law firm where the person prohibited from involvement in a matter is a nonlawyer, such as a paralegal or legal secretary. Nor does paragraph (a) prohibit representation if the lawyer is prohibited from acting because of events before the person became a lawyer, for example, work that the person did as a law student. Such persons, however, ordinarily must be screened from any personal participation in the matter to avoid communication to others in the firm of confidential information that both the nonlawyers and the firm have a legal duty to protect. See Rules 1.0(k) and 5.3. (emphasis added). Just what the elements of the screening applicable to nonlawyers is not spelled out.

Some guidance on screening for nonlawyers can be taken from the 2009 amendment to Model Rule 1.10 to permit the screening of lawyers in the lateral hiring context. The ABA Standing Committee on Ethics and Professional Responsibility's Report to the ABA House of Delegates that explains the rationale for this amendment is available here.

Subpart (a)(2) of Model Rule 1.10 gives some specifics on screening for lawyers, as does the Comment to the Rule. Rule 1.10 (a) states:

(a) While lawyers are associated in a firm, none of them shall knowingly represent a client when any one of them practicing alone would be prohibited from doing so by Rules 1.7 or 1.9, unless

(1) the prohibition is based on a personal interest of the disqualified lawyer and does not present a significant risk of materially limiting the representation of the client by the remaining lawyers in the firm; or

(2) the prohibition is based upon Rule 1.9(a) or (b) and arises out of the disqualified lawyer's association with a prior firm, and

i) the disqualified lawyer is timely screened from any participation in the matter and is apportioned no part of the fee therefrom;

(ii) written notice is promptly given to any affected former client to enable the former client to ascertain compliance with the provisions of this Rule, which shall include a description of the screening procedures employed; a statement of the firm's and of the screened lawyer's compliance with these Rules; a statement that review may be available before a tribunal; and an agreement by the firm to respond promptly to any written inquiries or objections by the former client about the screening procedures; and

(iii) certifications of compliance with these Rules and with the screening procedures are provided to the former client by the screened lawyer and by a partner of the firm, at reasonable intervals upon the former client's written request and upon termination of the screening procedures.

Paragraphs [9] and [10] of the Comment to Rule 1.10 provide further guidance:

[9] The purpose of screening is to assure the affected parties that confidential information known by the personally disqualified lawyer remains protected. The personally disqualified lawyer should acknowledge the obligation not to communicate with any of the other lawyers in the firm with respect to the matter. Similarly, other lawyers in the firm who are working on the matter should be informed that the screening is in place and that they may not communicate with the personally disqualified lawyer with respect to the matter. Additional screening measures that are appropriate for the particular matter will depend on the circumstances. To implement, reinforce and remind all affected lawyers of the presence of the screening, it may be appropriate for the firm to undertake such procedures as a written undertaking by the screened lawyer to avoid any communication with other firm personnel and any contact with any firm files or other materials relating to the matter, written notice and instructions to all other firm personnel forbidding any communication with the screened lawyer relating to the matter, denial of access by the screened lawyer to firm files or other materials relating to the matter and periodic reminders of the screen to the screened lawyer and all other firm personnel.

[10] In order to be effective, screening measures must be implemented as soon as practical after a lawyer or law firm knows or reasonably should know that there is a need for screening.

 

Subpart (k) of Rule 1.0 Terminology states:

“Screened” denotes the isolation of a lawyer from any participation in a matter through the timely imposition of procedures within a firm that are reasonably adequate under the circumstances to protect information that the isolated lawyer is obligated to protect under these Rules or other law.

 

Note that the state versions of Rule 1.10 can vary considerably. A chart prepared by the ABA Policy Implementation Committee on the state-by-state status of 1.10 provisions on the screening for lateral hires is available here. Additional charts that compare state rules of professional conduct with the ABA Model Rules are available here.

ABA, state and local bar association ethics opinions

In addressing screening of nonlawyers, many state bar ethics opinions look to Model Rule 5.3 Responsibilities Regarding Nonlawyer Assistants, which requires a lawyer who has supervisory authority over nonlawyer employees to “make reasonable efforts to ensure that the firm has in effect measures giving reasonable assurance that the person's conduct is compatible with the professional obligations of the lawyer” as a source of authority for the establishment of a screen. Paragraph [1] of the Comment to Rule 5.3 embellishes this point, stating:

A lawyer must give such assistants appropriate instruction and supervision concerning the ethical aspects of their employment, particularly regarding the obligation not to disclose information relating to representation of the client, and should be responsible for their work product. The measures employed in supervising nonlawyers should take account of the fact that they do not have legal training and are not subject to professional discipline.

ABA Informal Opinion 88-1526 shared the view that a nonlawyer's ethical obligations derive from their employer and should be implemented by that supervisory lawyer:

…Model Rule 5.3 imposes general supervisory obligations on lawyers with respect to nonlawyer employees and agents. The obligations include the obligation to make reasonable efforts to ensure there are measures in effect to assure that the nonlawyer's conduct is compatible with the professional obligations of the lawyer. ABA Informal Opinion 88-1526

Examples of state bar opinions that rely on Rule 5.3 to protect the confidences of a nonlawyer's former employer's clients include South Carolina Bar Ethics Opinion 93-29
(rules on imputed disqualification do not apply when nonlawyer personnel move among firms; the necessary protections for client confidentiality in that situation are found in Rule 5.3, which governs supervision of nonlawyer employees):
New York State Bar Association Opinion 774 (2004) (under DR 1-104 of the then in effect New York Code of Professional Responsibility lawyers have a duty to make reasonable efforts to ensure that nonlawyers do not disclose information relating to the representation of the lawyers' clients while in the lawyer's employ and afterwards.)

See also Oregon State Bar Opinion 2005-44 (2005) (law firm may employ a nonlawyer on a part-time basis even though the nonlawyer is also working part time for an opposing firm if the law firm takes reasonable care to make sure that he has not worked on or acquired information about any matters on which the two firms' clients are adverse. Imputed disqualification rules do not apply to nonlawyers.)

As the Comment to Rule 5.3 states, instruction and supervision of nonlawyers is crucial to avoid the disclosure of confidential information. See Mississippi State Bar Ethics Comm., Op. 258 (2011) (supervisory lawyers should caution nonlawyer employees not to disclose any information relating to the representation of the former employer's clients, and not to be involved in any matter that the employee worked on or acquired information about at the former firm).

Screening mechanisms for nonlawyers

Some state bar opinions provide specific guidance as to how to set up a screen. See e.g. Los Angeles County Bar Association Opinion 524 (2011), in which to Los Angeles Committee stated:

When a hiring firm determines that a new hire or prospective employee has been exposed to confidential information likely to be material to a matter at the new firm, one option is to seek the consent of the former employer before making the hire. (See, e.g., Complex Asbestos, 232 Cal.App.3d at 593 n9 (suggesting consent and noting that Rule 2-100 would preclude the hiring attorney from seeking the consent directly from the opposing party).

If consent is not available, the hiring firm can fulfill its obligation to ensure that its employees comply with duties of confidentiality by obligating the new hire to refrain from divulging confidential information, and by screening the new hire, so that the new hire cannot provide or receive information regarding the matter from which he or she is screened. Elements of an adequate screen include written notification to all legal staff to isolate the screened employee from communication regarding the matter, prevention of the screened employee's access to the relevant files, admonishment of the employee not to discuss the prior matter with the new firm, and a search of the firm's records to ensure that all cases on which the new employee's former firm is opposing counsel are identified. Complex Asbestos, 232 Cal.App.3d at 593-94, 596.5 The Committee believes that electronic security is also an important element of an effective screen. Electronic files should be password-protected and the password withheld from screened employees. Effective practices may also include documenting the continued existence and impermeability of the screen, for example, by periodic electronic or written reminders to all staff or by requiring periodic certification by screened staff that they have not breached the screen.

ABA Informal Opinion 88-1526 set forth the following guidelines for setting up a screen for nonlawyers:

…With respect to new employees who formerly worked for other lawyers, these measures should involve admonitions to be alert to all legal matters, including lawsuits, in which any client of the former employer has any interests. The nonlawyer should be cautioned: (1) not to disclose any information relating to the representation of a client of the former employer; and (2) that the employee should not work on any matter on which the employee worked for the prior employer or respecting which the employee has information relating to the representation of the client of the former employer. When the new firm becomes aware of such matters, the employing firm must also take reasonable steps to ensure that the employee takes no action and does no work in relation to matters on which the nonlawyer worked in the prior employment, absent client consent after consultation. – ABA Informal Opinion 88-1526

See also Maine Ethics Opinion 186 (relying substantially on ABA Informal Opinion 88-1526's analysis) (2004) that stated:

Screening means shielding the nonlawyer staff person from any personal participation in the matter and taking additional steps to avoid any violation by that person of a lawyer's obligations under the Code of Professional Responsibility.

A minority of jurisdictions approach the disqualification issue directly through their versions of Rule 1.10. See, e.g., Alabama State Bar Opinion RO-02-01 (2002) (previous hitnonlawyernext hit employee of a law firm must be held to the same standard as a lawyer in determining whether a conflict of interest exists when the nonlawyernext hit changes firms); Tennessee Ethics Opinion 2003-F-147 (2003) (imputed disqualification rule, which permits screening to avoid imputation of conflicts, applies not only to lawyers switching firms but also to nonlawyer employees).

Case law

Some recent case law also endorses the idea of formalizing screening rules for nonlawyers. See, Zimmerman v. Mahaska Bottling Co., Kan., No. 83,554, (2001) (Kansas Rule of Professional Conduct 1.10(b) applies to nonlawyernext hit employees as well);

In re Columbia Valley Healthcare System LP, Tex., No. 08-0995, (2010) (formal, institutionalized screening measures rather than oral screening instructions should be instituted by a firm employing a paralegal who previously worked for the other side).

See also Stewart v. Bee-Dee Neon & Signs Inc., Fla. Dist. Ct. App. 1st Dist., No. 1D99-801, (2000). Stewart makes the distinction between the supervisory duty a lawyer has and the stricter screening measures found in rule 1.10. The Stewart court stated that the law firm has an independent duty under Rule 5.3 to instruct the departing nonlawyer not to reveal confidential information regarding the former firm's clients. Additionally, the firm should consider advising the hiring firm to isolate the nonlawyer employee. Protective measures should include “admonishing the nonlawyer employee not to discuss the case with anyone in the hiring firm, restricting the nonlawyer employee from access to the computer and paper files related to the case, and prohibiting all attorneys and nonlawyer employees of the hiring firm from discussing the case with, or in the presence of, the nonlawyer employee.”

Conclusion

As illustrated in the above discussion, state rules of professional conduct, ethics opinions and case law all provide guidance on both the appropriateness and effectiveness of screening for non lawyers when they move from one firm to another. These sources of authority can vary state by state. If these questions ever arise in your practice, check your local rules, ethics opinions and case law. You might also consider contacting your state or local bar association for further guidance and information.

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