November 05, 2015 Top Story

Ethics Opinion Provides Guidance for Local Counsel Representation

Limited local counsel representation agreements may not also curtail ethical obligation

Cynthia Ford

Attorneys acting as local counsel may limit their scope of representation by agreement but not the scope of their ethical duties, according to The New York City Bar Association's Committee on Professional Ethics . Recognizing the risks posed by undefined local counsel arrangements, Formal Opinion 2015-4 expressly permits limited scope representation by local counsel, who usually serve as attorneys of record but lack primary responsibility for case handling and client communications. The opinion also clarifies the role and ethical obligations of local counsel and serves as an important reminder of the potential pitfalls of such relationships.

Defining the Limits on Limited Scope Representation

The opinion emphasizes that though a limited scope representation is permissible and may have the practical effect of reducing liability by limiting the tasks undertaken by local counsel, the attorney cannot contractually limit his liability nor contract away his or her ethical duties. Specifically, the opinion holds that an attorney retained as local counsel may limit the scope of representation so long as the agreement complies with New York Rules of Professional Conduct Rule 1.2(c). Rule 1.2(c) permits limited scope 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.”

According to the opinion, informed consent requires disclosure of the matters that will be excluded from the engagement, the material risks, any reasonably foreseeable consequences, as well as the reasonably available alternatives. The consent need not be in writing, though the Committee recommends that local counsel enter into an independent written retainer agreement with the client. A written agreement between local counsel and lead counsel may also fulfill this requirement if the lead counsel obtains the requisite informed client consent.

The opinion further states that limitations on representation must be “reasonable” under the circumstances and provides examples of what is and is not permissible. For instance, local counsel may properly limit representation solely to the preparation and filing of a pro hac vice motion for an out-of-state attorney who then handles all subsequent filings. Similarly, local counsel may limit representation to review of the legal analysis in a motion drafted by lead counsel and exclude a duty to verify the supporting facts, though the attorney may not ignore obvious factual inaccuracies. An attorney may also delegate client communications to the lead counsel but must bypass lead counsel and communicate directly with the client in circumstances where the lead counsel fails to adequately update the client.

By contrast, the attorney may not contractually limit his duty to comply with ethical obligations. Thus, local counsel may not exclude ethical duties to avoid filing frivolous claims, to act competently and diligently, or to communicate with the client on significant developments. Nor may an attorney contract to limit compliance with applicable court rules or legal malpractice liability under New York Rules of Professional Conduct Rule 1.8(h).

Potential Pitfalls

Significantly, the opinion does not cover all potential issues impacting the responsibilities and liabilities of local counsel, according to leaders of the ABA Section of Litigation. “This opinion helps minimize the risk to local counsel, but there is still risk,” says Brian F. Toohey, Cleveland, OH, cochair of the Multi-Jurisdictional Practice Subcommittee of the Section of Litigation's Ethics & Professionalism Committee. The opinion is “very useful in terms of ethics, but it does not exhaust the field of concerns” for local counsel, agrees Barry E. Cohen, Washington, D.C., cochair of the Multi-Jurisdictional Practice Subcommittee of the Section's Ethics and Professionalism Committee.

“For instance, I don’t think you can opt out from [Federal Rule of Civil Procedure] Rule 11,” explains Cohen. Additionally, the opinion does not explain the effect, if any, of a limited scope representation on local counsel's duties to opposing counsel, he adds. Nor does the opinion address possible issues arising out of indemnification clauses in limited scope agreements between local and lead counsel, according to Toohey.

Advice for Practitioners

Overall, the opinion is a “good thing for New York local counsel, allowing them potentially to transfer responsibility for informed consent and client communication in general to lead counsel,” observes Toohey. “New York historically has not been friendly to out-of-state lawyers. New York did not adopt the ‘safe harbor’ provisions in [ABA] Model Rule 5.5 for out-of-state counsel coming into a Model Rule state,” Toohey notes. “Because there remains considerable risk in local counsel arrangements even where limited representation agreements are in effect, it is crucial to weigh the potential positive and negative consequences before accepting a local counsel role,” advises Toohey.

Cynthia Ford is a contributing editor for Litigation News.

Keywords: local counsel, limited representation, ethics, representation agreement

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