July 23, 2012 Top Story

Ethics Commission Recommends Updates to Model Rules

Proposals target technology, lawyer mobility, and outsourcing

Sara E. Costello

The ABA Commission on Ethics 20/20, after a lengthy review of the Model Rules of Professional Conduct, has released proposed revisions to update the Model Rules. The Commission’s recommendations address several areas, including the effect of new technology on the practice of law, the increasing number of lawyers who practice in multiple jurisdictions, and the outsourcing of legal work. The ABA House of Delegates will consider the proposals at the ABA Annual Meeting in August 2012.

Proposals Address the Impact of Technology 

Acknowledging that “technology has irrevocably changed and continues to alter the practice of law in fundamental ways,” including impacts on client confidentiality, the Commission recommends amending Rule 1.6. The new rule would require lawyers take “reasonable measures” to protect confidential information that is stored electronically.

Advances in technology have also created many new marketing opportunities for lawyers, “such as law firm websites, blogs, social and professional networking sites, pay-per-click ads, pay-per-lead services, and online videos.” As guidance on the use of these tools, the Commission proposes amendments to Rules 1.18 (duties to prospective client), 7.2 (advertising), and 7.3 (direct contact with prospective clients). The amendments will, among other things, “clarify when electronic communications give rise to a prospective client-lawyer relationship.”

An Affirmative Obligation to “Keep Abreast” of Technology

The Commission also reviewed the ethical duty of competence in a digital age. Proposed changes to Rule 1.1’s comments emphasize that lawyers “should keep abreast of changes in the law and its practice, including the benefits and risks associated with relevant technology.”

The recommended changes to Rule 1.1’s comments are “important and good,” says Michael P. Downey, St. Louis, cochair of the ABA Section of Litigation’s Legislation and Rules Subcommittee of the Ethics and Professionalism Committee. “Lawyers have to think about the implications” of using new technology, he notes. Although they are “carefully drafted,” Downey predicts that the proposed changes “will run into opposition because people are very worried” about creating potential liability.

The Commission Recognizes Greater Lawyer Mobility 

“Globalization and technology have transformed the legal marketplace and fueled more cross-border practice and lawyer mobility,” the Commission notes. Thus, the Commission makes several recommendations designed to assist lawyers practicing in multiple jurisdictions. A new standalone ABA Model Rule on Practice Pending Admission would allow a lawyer who has been practicing for 3 of the last 5 years to practice in a new jurisdiction while pursuing admission in that jurisdiction.

The Commission also recommends that the Rule for admission by motion be amended to reduce the “time in practice requirement” from “5 of 7 years to 3 of 5 years.” The Commission urges the 11 jurisdictions that “have not adopted any admission by motion procedure” to adopt the rule and eliminate reciprocity requirements. The proposed change appears to be “rationally based on evidence,” says Neil Lloyd, Chicago, cochair of the Section of Litigation’s Legislation and Rules Subcommittee of the Ethics and Professionalism Committee. Lloyd notes, however, that it “may not get traction with the jurisdictions who have not adopted” a similar rule.

To assist lawyers pursuing employment and firms considering a merger, the Commission proposes amending Rule 1.6 to “give lawyers limited authority to disclose discrete categories of information to another firm to ensure that conflicts of interest are detected.” The Commission’s recommendations will be of “strong interest to a number of law firms that are hiring laterals,” Lloyd observes. The Section of Litigation’s Special Committee submitted critical comments on the proposed amendment, noting, among other things, that it does not require that clients be informed of disclosures between the firms.

Outsourcing of Legal Services Addressed

Because “lawyers are increasingly outsourcing legal and law-related work, both domestically and offshore,” the Commission suggests that some comments “be clarified to help lawyers better understand how ethically to retain outside lawyers and nonlawyers.” The Commission proposes new comments to Rule 1.1 highlighting the factors that lawyers need to consider when outsourcing work to other lawyers. The comments emphasize that a client’s consent should be obtained “before retaining nonfirm lawyers to assist on a client’s matter.”

The Commission also recommends that the title of Rule 5.3 be changed to “Responsibilities Regarding Nonlawyer Assistance.” Proposed changes to the rule’s comments emphasize that “lawyers should make reasonable efforts to ensure that nonlawyers outside the firm provide their services in a manner that is compatible with the lawyer’s own professional obligations.” To “make clear that lawyers cannot engage in outsourcing in a manner that would facilitate the unauthorized practice of law,” the Commission proposes amending Rule 5.5’s comments.

Nonlawyer Ownership of Law Firms

Along with the above recommendations on technology, lawyer mobility, and outsourcing, the Commission considered whether “to propose changes to ABA policy prohibiting nonlawyer ownership of law firms.” According to a statement released on April 16, 2012, the Commission has decided not to recommend any changes to this policy.

In general, the Commission has done a “good job” of recommending “practical and palatable changes” that will be accepted by state bars, Downey predicts. But on the issue of nonlawyer ownership, the Commission has left some “loose ends,” he says. “Ultimately, the legal profession may realize that it would be served by permitting greater nonlawyer ownership” of law firms.

The Commission’s Future Work

The Commission continues work on “additional recommendations it will ask the House of Delegates to consider in February 2013.” For example, it is considering “how to provide practical guidance about choice of law problems that are arising because some jurisdictions” allow nonlawyer ownership of firms. At its October 2012 meeting, the Commission will decide whether to submit proposals on this issue to the ABA House of Delegates.

The Commission’s Working Group on Uniformity, Choice of Law, and Conflicts of Interest also recently released an issues paper exploring how to clarify when a lawyer’s virtual presence in a jurisdiction becomes “sufficiently systematic and continuous,” under Rule 5.5(b), “to require a license in that jurisdiction.” Comments on this topic can be submitted to Senior Research Paralegal Natalia Vera by July 31, 2012.

Sara E. Costello is an associate editor for Litigation News.

Keywords: ABA Commission on Ethics 20/20, Model Rules of Professional Conduct, litigation

EDITOR'S NOTE: On Monday, August 6, 2012, the ABA's policy-making House of Delegates voted to approve several of the proposed changes discussed above. They did not adopt all of the comments and recommendations. The final version, as passed by the House of Delegates, can be found here.

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