Most attorneys hope to receive a telephone call on behalf of a large corporation from its national outside counsel, who happens to be a law school classmate or a former colleague or cocounsel, asking the attorney to serve as local counsel in a recently filed lawsuit. Such a call may be very welcome, as it could offer the prospect of a new case and an ongoing new client relationship, not to mention the opportunity to reconnect with a former classmate or compatriot. Local counsel assignments, however, can also bring with them peculiar risks of legal malpractice about which the local attorney—and his or her law firm—should be reminded. Chief among them is the risk that, following an unanticipated poor outcome, the client seeks to hold responsible the local counsel for mistakes made by national counsel, when local counsel until then thought his or her role did not include primary responsibility for the litigation and instead was limited to that of “mailbox” local counsel. Unless the local counsel’s scope of representation is reasonably limited by the client with informed consent, local counsel’s expectation alone may not be enough to avoid liability in the event of malpractice. The American Bar Association Model Rules, state rules of professional conduct, and a series of cases, both new and old, serve as a reminder of the duties of local counsel, and the potential malpractice risks of such assignments.”
The Default Duties of “Local Counsel”
Serving merely as “local counsel” or “secondary counsel” does not ipso facto limit an attorney’s duties to the client. The Model Rules, in setting forth the duties of attorneys to clients, certainly do not distinguish between “national counsel” on the one hand and “local counsel” or “secondary counsel” on the other hand. Indeed, all attorneys are required to “act with reasonable diligence and promptness in representing a client” (Model Rule 1.3) and to “provide competent representation” (Model Rule 1.1). Further, under Model Rule 1.4, all attorneys are required to “reasonably consult with the client about the means by which the client’s objectives are to be accomplished” and to “keep the client reasonably informed about the status of the matter.” Model Rules of Prof’l Conduct R. 1.4(a)(2)–(3). The Model Rules do not on their face make any exception for attorneys merely acting as “local counsel.”
State rules of professional conduct in many instances are based on the Model Rules. See, e.g., Montejo v. Louisiana, 556 U.S. 778, 790 (2009) (noting that “nearly all States have adopted into law [the Model Rules] in whole or in part”). It is therefore not surprising that at least some states’ rules of professional conduct mirror the Model Rules in not distinguishing between the duties of lead counsel, on the one hand, and the duties of local counsel, on the other. Attorneys in any state may be required to act with reasonable diligence and promptness, to consult with their clients about the objectives of the litigation, and to keep clients reasonably informed about the status of the matter, regardless of whether they consider themselves lead counsel or merely local counsel. Although a detailed survey of each state’s rules of professional conduct is beyond the scope of this article, it should not be surprising that attorneys in every state may be required to act with reasonable diligence, consult with their clients about objectives of the representation, and keep their clients reasonably informed. Attorneys, of course, should refer to the applicable state rules and interpretive guidance to ascertain their precise duties.
If that call from your law school classmate or former colleague comes, it will be helpful to keep in mind that these rules exist, and are not by their terms somehow inapplicable to local counsel, merely because you consider yourself to be acting in a local counsel or secondary role. The recent federal case of Superior Diving v. Watts, Nos. 05-197, 08-5095, 2011 WL 34339663 (E.D. La. Aug. 8, 2011), underscores this point. There, the court considered an argument by local counsel that the malpractice claim against him was untimely. Id. at *5. The client argued in response that he had no reason to file his claim earlier, because the client “thought [local counsel] was simply ‘local counsel,’ a virtual messenger boy with an office across the street from the Courthouse, who had no direct involvement in the investigation and prosecution of [the client’s] claim,” and was only later disabused of this notion. The court was unconvinced, concluding without qualification that the “professional status” of “‘virtual messenger boy’. . . does not exist for members of the bar who serve as counsel of record for a client.” Id. The court continued, casting aside as irrelevant any agreements or division of labor made merely among counsel, and concluded that “all counsel had a professional duty to the client in the prior attorney-client relationship between [the client] and his former counsel.” Id. (emphasis in original). Although the issue in Watts focused not on the merits of the malpractice claim but on whether it was filed timely, the broad language in Watts confirming the “professional status” and “professional duty” of “all attorneys,” including local counsel, underscores that the rules of professional conduct may apply in full, even to local counsel, regardless of the attorney’s or even the client’s expectations.
Defining the “Local Counsel” Role
The “default” rules noted above are broad when compared with many local counsel’s actual expectations, particularly where local counsel expects to serve merely as a “mailbox” and where he or she expects national counsel to have primary responsibility for the litigation. Attorneys would do well to keep in mind this disparity when deciding to accept representation of a client in a local counsel role. The disparity raises issues for clients as well. The competence, diligence, and client communication rules, applied literally to a matter in which both national counsel and local counsel have been hired, may seem to require that local counsel duplicate what lead counsel already has done, in order to discharge local counsel’s broad duties under the applicable rules of professional conduct. But is local counsel really required to “keep the client reasonably informed about the status of the matter” or to “consult with the client about the means by which the client’s objectives are to be accomplished,” when the lead counsel already has done so?
Such duplication would obviously be wasteful and unwanted by many clients. Not surprisingly, the Model Rules and some state rules provide a simple way to avoid such waste and to minimize the disparity between the broad duties imposed by the Model Rules and their state analogues, on the one hand, and the typical expectations of local counsel, on the other. Model Rule 1.2(c) and its state analogues allow attorneys and their clients to contractually limit the scope of their representation: “A lawyer may limit the scope of the representation if the limitation is reasonable under the circumstances and the client gives informed consent.” See also, e.g., Indiana Rules of Prof’l Conduct R. 1.2(c) (“A lawyer may limit the scope and objectives of the representation if the limitation is reasonable under the circumstances and the client gives informed consent.”); New York Rules of Prof’l Conduct R. 1.2(c) (“A lawyer may limit the scope of the representation if the limitation is reasonable under the circumstances, the client gives informed consent and where necessary notice is provided to the tribunal and/or opposing counsel.”). It is important to note, as the rule states clearly, the limitation must be “reasonable.” Equally important, this limitation rule does not apply automatically where an attorney is acting merely as local counsel. Rather, it applies only after the client—not the national counsel—provides informed consent, commonly in the engagement letter between counsel and the client. Model Rules of Prof’l Conduct R. 1.2.
The informed consent requirement of Rule 1.2 seems simple enough, and it obviously would be wise to obtain informed consent from the client where local counsel expects to have a limited role in the litigation and state law allows the scope of the representation to be limited. Some states’ rules may not allow local counsel to limit the scope of his or her representation, or may frown on limitations that go too far. See, e.g., Alaska R. Civ. P. 81(a)(3) (“Local counsel shall be primarily responsible to the court for the conduct of all stages of the proceedings, and their authority shall be superior to that of attorneys permitted to appear [pro hac vice].”). It is therefore important to refer to state rules to determine the types of acceptable limitations on the representation.
In practice, however, the informed consent rule may often be ignored or forgotten by local counsel. In certain instances, it may be the national counsel who selects local counsel, and the national counsel may control access to the client or forbid access by local counsel altogether. Local counsel may in such situations find it more difficult to obtain a signed engagement letter from the client or to ensure that the client’s consent was informed.
More commonly, local counsel may not be merely a “mailbox” early on in litigation. Where the national counsel is less familiar—or unfamiliar altogether—with the judge in a newly filed case, both the client and national counsel may initially involve local counsel in discussions about litigation strategy or coordination with codefendants’ counsel, many of whom may also be local and therefore known to local counsel. It is at this stage of the representation—while local counsel’s role is more prominent—that the engagement letter often is drafted and signed by the client. Hopeful for continued prominent responsibility in the litigation, local counsel may craft a broad engagement letter and understandably would hesitate to damage the possibility of greater future responsibility by informing the client in the engagement letter that, in effect, he or she is merely a “mailbox” and will only follow the orders of national counsel. Although the prospect of greater responsibility may be a good reason for not narrowing the scope of the representation, local counsel should know that the consequence of such a decision is the potential broader application of the rules of professional conduct, even though local counsel’s role later becomes much more limited. If the narrowing of local counsel’s duties does in fact occur, it may be wise when allowed by state law to revisit the broadly worded engagement letter and to obtain the client’s informed consent to a revised engagement letter that better reflects the local counsel’s newly limited role.
This is not to say that there is no support for limited duties of local counsel to their clients, even where a decision has been made not to limit the scope of the representation by contract. One of the leading cases regarding the duties of local counsel generally is Macawber Engineering, Inc. v. Robson & Miller, 47 F.3d 253 (8th Cir. 1995), in which the scope of local counsel’s representation took center stage. There, the local counsel was sued by a former client who lost the underlying case after the lead counsel failed to respond to certain requests for admission. The plaintiff argued that the local counsel role “carried with it some inherent duty to monitor [lead counsel’s] handling of the requests for admission.” Id. at 257. Relying on the fact that the “scope of the attorney-client relationship between [the client] and [local counsel] was limited,” the Eighth Circuit Court of Appeals rejected the plaintiff’s argument for an expansive duty on local counsel. Id. at 256–57. Although the case relies on the fact that the local counsel’s role was contractually limited, the court nonetheless went one step further. Interpreting Minnesota law, the court stated unequivocally that “local counsel does not automatically incur a duty of care with regard to the entire litigation. When the client vests lead counsel with primary responsibility for the litigation, the duty of local counsel is limited.” Id. at 257. The court expounded on the policy reasons for imposing only a limited duty on local counsel, focusing on the litigation costs to the client and the court’s desire not to require or encourage “a local attorney to review lead counsel’s work.”
The holding in Macawber seems to be in tension with the view that attorneys undertake the standard duties to clients unless “reasonably limited” by the client providing informed consent. For one, the opinion appears to start from the premise that no duties are owed by the local counsel to the client, whereas the Model Rules and many state rules suggest that “a duty of care with regard to the entire litigation” exists unless contractually limited. In addition, the Macawber opinion appears to focus, at least in part, on the relationship between lead counsel and the client in determining the duties of local counsel, whereas the Model Rules and many state rules focus more on the informed consent between the local counsel and the client. Macawber nonetheless provides an example of how, under one state’s law, a contractual limitation with the client may not be necessary to limit the duties of local counsel and may provide hope to local counsel embroiled in malpractice litigation where his or her engagement letter does not limit the scope of the representation.
But Is a Contractual Limitation Enough?
Although Macawber suggests that a contractual limitation between local counsel and the client may not be necessary to limit the duties of local counsel, it seems obvious that where local counsel expects to act merely as a “mailbox,” he or she should so limit the scope of representation, where state law allows, and obtain the client’s informed consent. In certain circumstances, however, informed consent by a client for reasonable limitations may not be enough.
The Fifth Circuit most recently considered the duties of local counsel in Curb Records v. Adams & Reese L.L.P., 203 F.3d 828 (5th Cir. 1999) (per curiam) (unpublished). Curb Records was a suit for legal malpractice against the local counsel arising from counsel’s involvement in defending a copyright action. In the underlying case, local counsel was hired by national counsel and was specifically instructed by national counsel not to “deal directly with the client.” Id. at *1. The national counsel also specifically instructed local counsel “that his role was limited to filing and forwarding pleadings, discovery, and orders.” Id. Thereafter, national counsel, with the knowledge of local counsel, “failed to respond to a series of court ordered discovery requests.” Id. As a sanction, the court struck Curb Records’ affirmative defenses, forcing it into an unfavorable settlement.
After the unfavorable settlement, Curb Records filed suit against the local counsel, which moved for summary judgment. Local counsel argued that “no malpractice occurred: Under the instructions given to them by lead counsel—that they were to have no direct contact with the client—[local counsel] had no duty to bypass lead counsel and communicate directly with the client regarding lead counsel’s failure to respond to discovery orders.” Id. at *2. The district court granted summary judgment, finding that the agreement between the lead attorney and local counsel did not impose an obligation on local counsel to bypass lead counsel and contact the client directly about the requests for admission.
A panel of the Fifth Circuit reversed, concluding that “local counsel has an inherent and nondelegable duty to report directly to its client any known instances of malfeasance or misfeasance on the part of lead counsel that an objectively reasonable lawyer in the locality would conclude are seriously prejudicial to the client’s interests.” Id. at *6. This conclusion is most remarkable for the fact that it does not include any exceptions for situations where the scope of representation by local counsel has been appropriately limited. Indeed, the panel found this duty existed despite what appears to be undisputed evidence that local counsel was instructed not to contact the client.
In finding this duty, the panel looked primarily to the Louisiana Rules of Professional Conduct and general statements in case law describing attorneys’ duties to clients. Id. at *4. Like the ABA Model Rules, Louisiana’s rules imposed a duty on all counsel “‘to keep [the] client reasonably informed about the status of [the] matter’ and to ‘give the client sufficient information to participate intelligently in decisions concerning the objectives of the representation and the means by which they are to be pursued.’” Id. at *6. Relying on these and similar rules, the court concluded that, despite the fact that “local counsel’s direct obligations to the client are substantially lessened” where “it is clear that . . . the client has vested lead counsel with primary responsibility for controlling and conducting the litigation,” there were certain duties imposed on local counsel beyond those for which she contracted. The court explained that the “Louisiana Rules of Professional Conduct do not allow local counsel to turn a blind eye toward the willful disregard of court orders by lead counsel when it should be evident to him that such conduct will seriously prejudice the client’s interest.” Id.
Under Curb Records, it is possible thateven where the representation is appropriately narrowed, local counsel still may owe the client duties not expressly contemplated by the engagement letter. Where local counsel is aware of actions outside the “spectrum of norms” that “will seriously prejudice the client’s interests,” local counsel must speak up and inform the client directly of the lead counsel’s actions, regardless of contractual limitation of the local counsel’s duties. Id.
Curb Records, of course, is an outlier, involving what the Fifth Circuit panel thought was serious malfeasance by the national counsel. In such scenarios as well as in perhaps more common ones, it remains a good idea for local counsel to reasonably limit the scope of his or her representation, where the state rules of professional conduct allow. Doing so is one way to limit the chances of regretting that call from your old colleague or law school classmate.
Keywords: litigation, ethics and professionalism, Model Rules of Professional Conduct, malpractice, lead counsel, secondary counsel, national counsel, informed consent, engagement letter
Stephen L. Miles is an associate with Barrasso Usdin Kupperman Freeman & Sarver, LLC, in New Orleans, Louisiana.
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