January 01, 2021 The TECHSHOW Issue

Ethics in the Time of COVID

The rules of professional conduct still apply in the pandemic and post-pandemic new normal. This article examines a sampling of pertinent rules.

Roberta Tepper
Model Rule 1.6, requiring lawyers to keep all information relating to a representation confidential, does not have a remote working exception.

Model Rule 1.6, requiring lawyers to keep all information relating to a representation confidential, does not have a remote working exception.

via Dane_Mark / DigitalVision Vectors / Getty Images

The year 2020, aka “Law in the Time of COVID” (with apologies to Gabriel Garcia Márquez), was a time of extreme and rapid change. Lawyers had to quickly adapt to shelter-in-place orders and the challenges of working remotely, and address business continuity and succession planning. Innovative lawyers shifted their business models, offering new services and options to their clients. The one thing that hasn’t changed? The duty of lawyers to adhere to the mandates and restrictions of the rules of professional conduct.

Confidentiality

Lawyers who had been steady brick-and-mortar practitioners were suddenly forced into working at home all while spouses and children were also confined at home and seemingly ever-present. Internal and external meetings and hearings were moved to video tools like Zoom. Confidentiality that was automatic in an office setting became a challenge, with family members popping in and out of home offices and work areas. But Model Rule 1.6, requiring lawyers to keep all information relating to a representation confidential, does not have a remote working exception.

Lawyers already practicing in a cloud environment had it easier; all they had to do was keep their families away from their work computers. But how many lawyers were prepared for the need for confidentiality during video or phone calls at home? Lawyers with home offices with doors did better, but lawyers who set up ad hoc work areas faced challenges. Model Rule 1.6 is more expansive than the lawyer-client privilege. All information relating to and gained pursuant to the representation is confidential; this is true even when the information is publicly available if it is not widely known.

Law-Related Businesses

Innovative lawyers and firms pivoted into law-related services. Some lawyers stepped into the DIY market, offering virtual services including document preparation. Others began to offer new services, like getting their firm qualified to provide online notary services, and then have discovered that there was a market for them.

Lawyers offering law-related services should familiarize themselves with Model Rule 5.7, and their state’s version, regulating law-related services “that might reasonably be performed in conjunction with and in substance . . . related to the provision of legal services and that are not prohibited as unauthorized practice of law when provided by a nonlawyer.” Model Rule 5.7 is important because lawyers stepping out of traditional lawyering roles need to be deliberate about choices they make in offering new services.

The crux is whether the lawyer wishes to provide these nontraditional services as a service offered by a lawyer/firm or set up a business that is separate and distinct. This choice will dictate whether the rules of professional conduct apply. Lawyers wishing to offer services that are not permitted, such as co-owning businesses with nonlawyers, will need to separate such services from their own identity as a lawyer or law firm.

Alternative Fees

As individuals and business entities struggle financially in the wake of the economic disruption of the pandemic, the impetus to explore alternative fees is strong. Already common alternatives to the billable hour include flat fees or contingent fees, but there are others, including subscriptions (a regular fee for which the client obtains specific services); sliding scale/income-based fees; fee ranges (that includes a minimum and maximum); fee caps (hourly rates charged up to an agreed maximum); base fees plus a success fee; or risk collars (an hourly fee, with adjustments for billing over/under budget).

The first ethics question is whether the type of alternative fee you are considering is permitted in your jurisdiction. While some rules are almost universal, some states may not permit every possible type of fee. If you aren’t sure, call your state or local bar and ask its practice management advisor, or ethics counsel, to check.

Model Rule 1.5 is the touchstone for attorney’s fees. While the rule requires that the scope of representation and the rate or basis of the fee be communicated to the client, it only recommends that it be done in writing barring specific situations. The best practice is to always use a written fee agreement or engagement letter. If you don’t already have one that may be customized to each client, there’s no time like the present to get that drafted as a template.

Model Rule 1.5(a) contains factors that determine whether a fee is reasonable; lawyers are familiar with most of them, but some are less commonly remembered, including whether the lawyer may have to refuse other work, the customary fee in the area, and the amount in controversy and the results obtained. The rule exists to protect the client against unreasonable fees, including situations where the fee is shared among attorneys. Model Rule 1.5 is not, however, the only relevant rule to consider.

As lawyers consider alternative fees, particularly ones that reward the lawyer’s success or relative frugality, other rules are also applicable. Model Rule 2.1 requires that a lawyer exercise independent professional judgment and render candid advice. In doing so, lawyers must apply this mandate in conjunction with Model Rule 1.7(a)(2), which provides a concurrent conflict of interest may exist if there is a significant risk that the lawyer’s representation will be materially limited by the personal interest of the lawyer.

Does this mean that contingent fees cannot be charged since, as ads and bus benches remind us, “we don’t get paid unless you get paid”? Of course not, but it does place the onus on the lawyer to be certain that their own financial interests do not cause them to compromise their representation, their client’s best interest or the quality of their representation in pursuit of a fee. This is an exercise in self-evaluation, but one that must be undertaken.

Model Rule 1.8(a) regulates the relationship between lawyer and client when they enter into a business, property or financial transaction. Therefore, some possible alternative fees cannot be contemplated, such as taking a possessory or pecuniary interest adverse to the client, like literary or media rights. Barter of goods or services for fees is typically considered a prohibited business transaction due to the speculative value of the goods or services and the unequal bargaining power between the lawyer and the client; this is also part of the underlying resistance to allowing attorneys to accept cybercurrency as fees. The best practice is for lawyers to be transparent about their potential conflicts of interest so they may be resolved, and if necessary waived by informed consent of the client, at the outset. Of course, there are some fees strictly prohibited as a matter of public policy (Model Rule 1.5), such as a contingent fee in a divorce or criminal case.

Alternative financing, or litigation financing, may also provide a situation fraught with ethical pitfalls for lawyers. Since the alternative or litigation financing will be paying the lawyer’s fee, lawyers should be wary when asked by clients for advice on whether to seek out this option. The interplay of Model Rules 1.2 and 1.7(a)(2) as well as Model Rule 1.8 is particularly pertinent in these circumstances. Lawyers whose clients avail themselves of this option should never accept a referral fee and should recommend that the client seek independent advice on whether such financing is a good choice. Because sharing privileged attorney-client information, as well as information relating to the representation covered by the more expansive protection of Model Rule 1.6, may be required by the financer, lawyers need to advise their clients of the possible waiver of those protections and insist on a third-party confidentiality agreement.

As lawyers go forward into the new normal, seeking to serve their clients and offer them a range of services and fee options, and as they continue to work remotely or virtually, they must do so advisedly keeping in mind the mandates of the rules of professional conduct, their own state’s ethics opinions and guidance. The new normal is a continually evolving journey; the rules of professional conduct are our guideposts.

Roberta Tepper

Director

Roberta Tepper is the director of lawyer assistance programs at the State Bar of Arizona, where she advises lawyers on practice management, wellness and well-being. She is the co-chair of TECHSHOW 2021. Roberta.Tepper@staff.azbar.org

 

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