April 09, 2020

Ethics 2000 Final Rules

Part Two

PREAMBLE: A LAWYER'S RESPONSIBILITIES

[1] A lawyer , as a member of the legal profession, is a representative of clients, an officer of the legal system and a public citizen having special responsibility for the quality of justice.

[2] As a representative of clients, a lawyer performs various functions. As advisor, a lawyer provides a client with an informed understanding of the client's legal rights and obligations and explains their practical implications. As advocate, a lawyer zealously asserts the client's position under the rules of the adversary system. As negotiator, a lawyer seeks a result advantageous to the client but consistent with requirements of honest dealings with others. As intermediary between clients, a lawyer seeks to reconcile their divergent interests as an advisor and, to a limited extent, as a spokesperson for each client. A As an evaluator, a lawyer acts as evaluator by examining a client's legal affairs and reporting about them to the client or to others.

[3] In addition to these representational functions, a lawyer may serve as a third-party neutral, a nonrepresentational role helping the parties to resolve a dispute or other matter. Some of these Rules apply directly to lawyers who are or have served as third-party neutrals. See, e.g., Rules 1.12 and 2.4. In addition, there are Rules that apply to lawyers who are not active in the practice of law or to practicing lawyers even when they are acting in a nonprofessional capacity. For example, a lawyer who commits fraud in the conduct of a business is subject to discipline for engaging in conduct involving dishonesty, fraud, deceit or misrepresentation. See Rule 8.4.

 

 

[3] [4] In all professional functions a lawyer should be competent, prompt and diligent. A lawyer should maintain communication with a client concerning the representation. A lawyer should keep in confidence information relating to representation of a client except so far as disclosure is required or permitted by the Rules of Professional Conduct or other law.

[4] [5] A lawyer's conduct should conform to the requirements of the law, both in professional service to clients and in the lawyer's business and personal affairs. A lawyer should use the law's procedures only for legitimate purposes and not to harass or intimidate others. A lawyer should demonstrate respect for the legal system and for those who serve it, including judges, other lawyers and public officials. While it is a lawyer's duty, when necessary, to challenge the rectitude of official action, it is also a lawyer's duty to uphold legal process.

[5] [6] As a public citizen, a lawyer should seek improvement of the law, access to the legal system, the administration of justice and the quality of service rendered by the legal profession. As a member of a learned profession, a lawyer should cultivate knowledge of the law beyond its use for clients, employ that knowledge in reform of the law and work to strengthen legal education. In addition, a lawyer should further the public's understanding of and confidence in the rule of law and the justice system because legal institutions in a constitutional democracy depend on popular participation and support to maintain their authority. A lawyer should be mindful of deficiencies in the administration of justice and of the fact that the poor, and sometimes persons who are not poor, cannot afford adequate legal assistance , and . Therefore, all lawyers should therefore devote professional time and resources and use civic influence in their behalf to ensure equal access to our system of justice for all those who because of economic or social barriers cannot afford or secure adequate legal counsel. A lawyer should aid the legal profession in pursuing these objectives and should help the bar regulate itself in the public interest.

[6] [7] Many of a lawyer's professional responsibilities are prescribed in the Rules of Professional Conduct, as well as substantive and procedural law. However, a lawyer is also guided by personal conscience and the approbation of professional peers. A lawyer should strive to attain the highest level of skill, to improve the law and the legal profession and to exemplify the legal profession's ideals of public service.

[7] [8] A lawyer's responsibilities as a representative of clients, an officer of the legal system and a public citizen are usually harmonious. Thus, when an opposing party is well represented, a lawyer can be a zealous advocate on behalf of a client and at the same time assume that justice is being done. So also, a lawyer can be sure that preserving client confidences ordinarily serves the public interest because people are more likely to seek legal advice, and thereby heed their legal obligations, when they know their communications will be private.

[8] [9] In the nature of law practice, however, conflicting responsibilities are encountered. Virtually all difficult ethical problems arise from conflict between a lawyer's responsibilities to clients, to the legal system and to the lawyer's own interest in remaining an upright ethical person while earning a satisfactory living. The Rules of Professional Conduct often prescribe terms for resolving such conflicts. Within the framework of these Rules, however, many difficult issues of professional discretion can arise. Such issues must be resolved through the exercise of sensitive professional and moral judgment guided by the basic principles underlying the Rules. These principles include the lawyer's obligation zealously to protect and pursue a client's legitimate interests, within the bounds of the law, while maintaining a professional, courteous and civil attitude toward all persons involved in the legal system.

[9] [10] The legal profession is largely self-governing. Although other professions also have been granted powers of self-government, the legal profession is unique in this respect because of the close relationship between the profession and the processes of government and law enforcement. This connection is manifested in the fact that ultimate authority over the legal profession is vested largely in the courts.

[10] [11] To the extent that lawyers meet the obligations of their professional calling, the occasion for government regulation is obviated. Self-regulation also helps maintain the legal profession's independence from government domination. An independent legal profession is an important force in preserving government under law, for abuse of legal authority is more readily challenged by a profession whose members are not dependent on government for the right to practice.

[11] [12] The legal profession's relative autonomy carries with it special responsibilities of self-government. The profession has a responsibility to assure that its regulations are conceived in the public interest and not in furtherance of parochial or self-interested concerns of the bar. Every lawyer is responsible for observance of the Rules of Professional Conduct. A lawyer should also aid in securing their observance by other lawyers. Neglect of these responsibilities compromises the independence of the profession and the public interest which it serves.

[12] [13] Lawyers play a vital role in the preservation of society. The fulfillment of this role requires an understanding by lawyers of their relationship to our legal system. The Rules of Professional Conduct, when properly applied, serve to define that relationship.

 

SCOPE

[13] [14] The Rules of Professional Conduct are rules of reason. They should be interpreted with reference to the purposes of legal representation and of the law itself. Some of the Rules are imperatives, cast in the terms "shall" or "shall not." These define proper conduct for purposes of professional discipline. Others, generally cast in the term "may," are permissive and define areas under the Rules in which the lawyer has professional discretion to exercise professional judgment. No disciplinary action should be taken when the lawyer chooses not to act or acts within the bounds of such discretion. Other Rules define the nature of relationships between the lawyer and others. The Rules are thus partly obligatory and disciplinary and partly constitutive and descriptive in that they define a lawyer's professional role. Many of the Comments use the term "should." Comments do not add obligations to the Rules but provide guidance for practicing in compliance with the Rules.

[14] [15] The Rules presuppose a larger legal context shaping the lawyer's role. That context includes court rules and statutes relating to matters of licensure, laws defining specific obligations of lawyers and substantive and procedural law in general. The Comments are sometimes used to alert lawyers to their responsibilities under such other law.

[16] Compliance with the Rules, as with all law in an open society, depends primarily upon understanding and voluntary compliance, secondarily upon reinforcement by peer and public opinion and finally, when necessary, upon enforcement through disciplinary proceedings. The Rules do not, however, exhaust the moral and ethical considerations that should inform a lawyer, for no worthwhile human activity can be completely defined by legal rules. The Rules simply provide a framework for the ethical practice of law.

[15] [17] Furthermore, for purposes of determining the lawyer's authority and responsibility, principles of substantive law external to these Rules determine whether a client-lawyer relationship exists. Most of the duties flowing from the client-lawyer relationship attach only after the client has requested the lawyer to render legal services and the lawyer has agreed to do so. But there are some duties, such as that of confidentiality under Rule 1.6, that may attach when the lawyer agrees to consider whether a client-lawyer relationship shall be established. See Rule 1.18. Whether a client-lawyer relationship exists for any specific purpose can depend on the circumstances and may be a question of fact.

[16] [18] Under various legal provisions, including constitutional, statutory and common law, the responsibilities of government lawyers may include authority concerning legal matters that ordinarily reposes in the client in private client-lawyer relationships. For example, a lawyer for a government agency may have authority on behalf of the government to decide upon settlement or whether to appeal from an adverse judgment. Such authority in various respects is generally vested in the attorney general and the state's attorney in state government, and their federal counterparts, and the same may be true of other government law officers. Also, lawyers under the supervision of these officers may be authorized to represent several government agencies in intragovernmental legal controversies in circumstances where a private lawyer could not represent multiple private clients. They also may have authority to represent the "public interest" in circumstances where a private lawyer would not be authorized to do so. These Rules do not abrogate any such authority.

[17] [19] Failure to comply with an obligation or prohibition imposed by a Rule is a basis for invoking the disciplinary process. The Rules presuppose that disciplinary assessment of a lawyer's conduct will be made on the basis of the facts and circumstances as they existed at the time of the conduct in question and in recognition of the fact that a lawyer often has to act upon uncertain or incomplete evidence of the situation. Moreover, the Rules presuppose that whether or not discipline should be imposed for a violation, and the severity of a sanction, depend on all the circumstances, such as the willfulness and seriousness of the violation, extenuating factors and whether there have been previous violations.

[18] [20] Violation of a Rule should not itself give rise to a cause of action against a lawyer nor should it create any presumption in such a case that a legal duty has been breached. In addition, violation of a Rule does not necessarily warrant any other nondisciplinary remedy, such as disqualification of a lawyer in pending litigation. The Rules are designed to provide guidance to lawyers and to provide a structure for regulating conduct through disciplinary agencies. They are not designed to be a basis for civil liability. Furthermore, the purpose of the Rules can be subverted when they are invoked by opposing parties as procedural weapons. The fact that a Rule is a just basis for a lawyer's self-assessment, or for sanctioning a lawyer under the administration of a disciplinary authority, does not imply that an antagonist in a collateral proceeding or transaction has standing to seek enforcement of the Rule. Accordingly, nothing in the Rules should be deemed to augment any substantive legal duty of lawyers or the extra-disciplinary consequences of violating such a duty. Nevertheless, since the Rules do establish standards of conduct by lawyers, a lawyer's violation of a Rule may be evidence of breach of the applicable standard of conduct.

[19] Moreover, these Rules are not intended to govern or affect judicial application of either the attorney-client or work product privilege. Those privileges were developed to promote compliance with law and fairness in litigation. In reliance on the attorney-client privilege, clients are entitled to expect that communications within the scope of the privilege will be protected against compelled disclosure. The attorney-client privilege is that of the client and not of the lawyer. The fact that in exceptional situations the lawyer under the rules has a limited discretion to disclose a client confidence does not vitiate the proposition that, as a general matter, the client has a reasonable expectation that information relating to the client will not be voluntarily disclosed and that disclosure of such information may be judicially compelled only in accordance with recognized exceptions to the attorney-client and work product privileges.

[20] The lawyer's exercise of discretion not to disclose information under Rule 1.6 should not be subject to reexamination. Permitting such reexamination would be incompatible with the general policy of promoting compliance with law through assurances that communications will be protected against disclosure.

[21] The Comment accompanying each Rule explains and illustrates the meaning and purpose of the Rule. The Preamble and this note on Scope provide general orientation. The Comments are intended as guides to interpretation, but the text of each Rule is authoritative. Research notes were prepared to compare counterparts in the ABA Model Code of Professional Responsibility (adopted 1969, as amended) and to provide selected references to other authorities. The notes have not been adopted, do not constitute part of the Model Rules, and are not intended to affect the application or interpretation of the Rules and Comments.

 

Preamble and Scope

Reporter's Explanation of Changes

PREAMBLE:

[1] This addition reflects the resolution that was adopted by the ABA House of Delegates at its Annual Meeting in New York in August 2000.

[2] The reference to the lawyer as intermediary was deleted in accordance with the Commission's decision to delete Rule 2.2. The change in the last sentence is stylistic only and conforms the style of this sentence to that of the preceding sentences.

[3] This is an entirely new paragraph. It addresses the lawyer's role as third-party neutral, a role that is now addressed in Rules 1.12 and 2.4. In addition, it reminds lawyers that there are other rules that apply to lawyers when they are not active in the practice of law or to practicing lawyers when they are acting in a nonprofessional capacity.

[6] The additions regarding the lawyer's duty to promote improved access to justice reflect the resolution that was adopted by the ABA House of Delegates at its Annual Meeting in New York in August 2000. The addition regarding the lawyer's duty to further the public's understanding of and confidence in law reflects the resolution that was adopted by the ABA House of Delegates at the Midyear Meeting in Dallas in February 2000.

[9] The change from "upright" to "ethical" is stylistic. The remainder of the changes reflect the Commission's belief that the Rules do not always prescribe terms for resolving conflicts between a lawyer's competing responsibilities and interests, although they often do. The last sentence is an attempt to give lawyers further guidance in how the basic principles underlying the Rules may help resolve such conflicts.

SCOPE:

[14] The change in the third sentence is designed to clarify what is meant by "professional discretion."

[15] The addition describes material that was added to a number of Comments throughout the Rules. Given the growth in the law governing lawyers, the Commission believes that these references are helpful to practicing lawyers, particularly where the obligations under such law are more onerous than the obligations reflected in the Rules.

[16] The prior paragraph was split to better reflect the two separate thoughts in each paragraph.

[17] Under Rule 1.18 it is now clear that there are duties under these Rules that attach prior to the formation of the client-lawyer relationship.

[18] The Commission believes that the deleted sentence is an inaccurate statement of the responsibilities of government lawyers, who do not ordinarily represent "the public interest" at large. The Commission believes that the identity of a government client is more accurately described in the ABA Standing Committee on Ethics and Professional Responsibility's Formal Opinion 97-405, which relies on the reasonable understandings of the lawyer and responsible government officials. The Commission intends to incorporate the principles underlying Opinion 97-405 in revisions to Comment [6] to Rule 1.13.

[20] These changes reflect the decisions of courts on the relationship between these Rules and causes of action against a lawyer, including the admissibility of evidence of violation of a Rule in appropriate cases.

[19] and [20] These paragraphs were deleted because they merely repeat what is stated elsewhere in the Rules, primarily in the Comment to Rule 1.6.

[21] This material was deleted because the research notes have been superseded by the Legal Background sections of the Annotated Model Rules of Professional Conduct.

 

RULE 1.0: TERMINOLOGY

(a) "Belief" or "believes" denotes that the person involved actually supposed the fact in question to be true. A person's belief may be inferred from circumstances.

"Consult" or "consultation" denotes communication of information reasonably sufficient to permit the client to appreciate the significance of the matter in question.

(b) "Confirmed in writing," when used in reference to the informed consent of a person, denotes informed consent that is given in writing by the person or a writing that a lawyer promptly transmits to the person confirming an oral informed consent. See paragraph (e) for the definition of "informed consent." If it is not feasible to obtain or transmit the writing at the time the person gives informed consent, then the lawyer must obtain or transmit it within a reasonable time thereafter.

(c) "Firm" or "law firm" denotes a lawyer or lawyers in a private firm, law partnership, professional corporation, sole proprietorship or other association authorized to practice law; or lawyers employed in a legal services organization or the legal department of a corporation or other organization and lawyers employed in a legal services organization. See Comment, Rule 1.10.

(d) "Fraud" or "fraudulent" denotes conduct having that is fraudulent under the substantive or procedural law of the applicable jurisdiction and has a purpose to deceive and not merely negligent misrepresentation or failure to apprise another of relevant information.

(e) "Informed consent" denotes the agreement by a person to a proposed course of conduct after the lawyer has communicated adequate information and explanation about the material risks of and reasonably available alternatives to the proposed course of conduct.

(f) "Knowingly," "known," or "knows" denotes actual knowledge of the fact in question. A person's knowledge may be inferred from circumstances.

(g) "Partner" denotes a member of a partnership and , a shareholder in a law firm organized as a professional corporation , or a member of an association authorized to practice law.

(h) "Reasonable" or "reasonably" when used in relation to conduct by a lawyer denotes the conduct of a reasonably prudent and competent lawyer.

(i) "Reasonable belief" or "reasonably believes" when used in reference to a lawyer denotes that the lawyer believes the matter in question and that the circumstances are such that the belief is reasonable.

(j) "Reasonably should know" when used in reference to a lawyer denotes that a lawyer of reasonable prudence and competence would ascertain the matter in question.

(k) "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.

(l) "Substantial" when used in reference to degree or extent denotes a material matter of clear and weighty importance.

(m) "Tribunal" denotes a court, an arbitrator in a binding arbitration proceeding or a legislative body, administrative agency or other body acting in an adjudicative capacity. A legislative body, administrative agency or other body acts in an adjudicative capacity when a neutral official, after the presentation of evidence or legal argument by a party or parties, will render a binding legal judgment directly affecting a party's interests in a particular matter.

(n) "Writing" or "written" denotes a tangible or electronic record of a communication or representation, including handwriting, typewriting, printing, photostating, photography, audio or videorecording and e-mail. A "signed" writing includes an electronic sound, symbol or process attached to or logically associated with a writing and executed or adopted by a person with the intent to sign the writing.

Commentary

Confirmed in Writing

[1] If it is not feasible to obtain or transmit a written confirmation at the time the client gives informed consent, then the lawyer must obtain or transmit it within a reasonable time thereafter. If a lawyer has obtained a client's informed consent, the lawyer may act in reliance on that consent so long as it is confirmed in writing within a reasonable time thereafter.

Firm

[2] Whether two or more lawyers constitute a firm within paragraph (c) can depend on the specific facts. For example, two practitioners who share office space and occasionally consult or assist each other ordinarily would not be regarded as constituting a firm. However, if they present themselves to the public in a way that suggests that they are a firm or conduct themselves as a firm, they should be regarded as a firm for purposes of the Rules. The terms of any formal agreement between associated lawyers are relevant in determining whether they are a firm, as is the fact that they have mutual access to information concerning the clients they serve. Furthermore, it is relevant in doubtful cases to consider the underlying purpose of the Rule that is involved. A group of lawyers could be regarded as a firm for purposes of the Rule that the same lawyer should not represent opposing parties in litigation, while it might not be so regarded for purposes of the Rule that information acquired by one lawyer is attributed to another.

[3] With respect to the law department of an organization, including the government, there is ordinarily no question that the members of the department constitute a firm within the meaning of the Rules of Professional Conduct. There can be uncertainty, however, as to the identity of the client. For example, it may not be clear whether the law department of a corporation represents a subsidiary or an affiliated corporation, as well as the corporation by which the members of the department are directly employed. A similar question can arise concerning an unincorporated association and its local affiliates.

[4] Similar questions can also arise with respect to lawyers in legal aid and legal services organizations. Depending upon the structure of the organization, the entire organization or different components of it may constitute a firm or firms for purposes of these Rules.

Fraud

[5] When used in these Rules, the terms "fraud" or "fraudulent" refer to conduct that is characterized as such under the substantive or procedural law of the applicable jurisdiction and has a purpose to deceive. This does not include merely negligent misrepresentation or negligent failure to apprise another of relevant information. For purposes of these Rules, it is not necessary that anyone has suffered damages or relied on the misrepresentation or failure to inform.

Informed Consent

[6] Many of the Rules of Professional Conduct require the lawyer to obtain the informed consent of a client or other person (e.g., a former client or, under certain circumstances, a prospective client) before accepting or continuing representation or pursuing a course of conduct. See, e.g, Rules 1.2(c), 1.6(a) and 1.7(b). The communication necessary to obtain such consent will vary according to the Rule involved and the circumstances giving rise to the need to obtain informed consent. The lawyer must make reasonable efforts to ensure that the client or other person possesses information reasonably adequate to make an informed decision. Ordinarily, this will require communication that includes a disclosure of the facts and circumstances giving rise to the situation, any explanation reasonably necessary to inform the client or other person of the material advantages and disadvantages of the proposed course of conduct and a discussion of the client's or other person's options and alternatives. In some circumstances it may be appropriate for a lawyer to advise a client or other person to seek the advice of other counsel. A lawyer need not inform a client or other person of facts or implications already known to the client or other person; nevertheless, a lawyer who does not personally inform the client or other person assumes the risk that the client or other person is inadequately informed and the consent is invalid. In determining whether the information and explanation provided are reasonably adequate, relevant factors include whether the client or other person is experienced in legal matters generally and in making decisions of the type involved, and whether the client or other person is independently represented by other counsel in giving the consent. Normally, such persons need less information and explanation than others, and generally a client or other person who is independently represented by other counsel in giving the consent should be assumed to have given informed consent.

[7] Obtaining informed consent will usually require an affirmative response by the client or other person. In general, a lawyer may not assume consent from a client's or other person's silence. Consent may be inferred, however, from the conduct of a client or other person who has reasonably adequate information about the matter. A number of Rules require that a person's consent be confirmed in writing. See Rules 1.7(b) and 1.9(a). For a definition of "writing" and "confirmed in writing," see paragraphs (n) and (b). Other Rules require that a client's consent be obtained in a writing signed by the client. See, e.g., Rules 1.8(a) and (g). For a definition of "signed," see paragraph (n).

Screened

[8] This definition applies to situations where screening of a personally disqualified lawyer is permitted to remove imputation of a conflict of interest under Rules 1.10, 1.11, 1.12 or 1.18.

[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.

 

Model Rule 1.0

Reporter's Explanation of Changes

TEXT:

The Commission recommends removing the Terminology section from the introductory sections of the Rules and putting it in a new Rule 1.0. The purpose of this change is to give the defined terms greater prominence and to permit the use of Comments to further explicate some of the provisions.

1. Delete "consult" or "consultation"

The Commission recommends deletion of the term "consent after consultation" in favor of "informed consent," which is defined in paragraph (e). This change is being made throughout the Rules. No change in substance is intended.

2. Paragraph (b): "Confirmed in writing"

The Commission has proposed requiring a lawyer to obtain the informed consent of a client or other person, "confirmed in writing," in some circumstances. See, e.g., Rule 1.7. The term "writing" is defined in paragraph (n).

3. Paragraph (c): "Firm" or "law firm"

These changes conform the definition to the changes made in the Comment to Rule 1.10. The Commission is also recommending that the material presently in the Rule 1.10 Comment be moved to the Comment under this Rule. See Comments [2] - [4]. The phrase "including the government" has been added to Comment [3] to clarify that legal departments of government entities are included within the definition of "firm." The reference to "other association authorized to practice law" was added to encompass lawyers practicing in limited liability entities. No change in substance is intended.

4. Paragraph (d): Clarify that "fraud" refers to conduct characterized as fraudulent under other applicable law

The present definition is ambiguous because it does not clearly state whether, in addition to the intent to deceive, the conduct must be fraudulent under applicable substantive or procedural law. In other words, it is possible that conduct might be considered "fraudulent" merely because it involves an intention to deceive, even if it does not violate any other law. The Commission recommends clarifying that the conduct must be fraudulent under applicable substantive or procedural law.

5. Paragraph (e): "Informed consent"

The Commission recommends that throughout the Rules the phrase "consent after consultation" be replaced with "gives informed consent." The Commission believes that "consultation" is a term that is not well understood and does not sufficiently indicate the extent to which clients must be given adequate information and explanation in order to make reasonably informed decisions. The term "informed consent," which is familiar from its use in other contexts, is more likely to convey to lawyers what is required under the Rules. No change in substance is intended.

6. Paragraph (g): "Partner": Added reference to "member of an association authorized to practice law"

As with the change to paragraph (c), this reference was added to encompass lawyers practicing in limited liability entities.

7. Paragraph (k): "Screened"

The current Model Rules do not impute conflicts of interest in certain situations when the personally disqualified lawyer is screened from any participation in the matter. See Rules 1.11(b) (former government lawyers) and 1.12(c)(1) (former judges). The Commission is proposing similar treatment of other situations involving a conflict of interest on the part of one lawyer in a firm. See Rules 1.10(c) (lateral lawyers), 1.12(c)(1) (former third-party neutrals) and 1.18(d)(1) (discussions with prospective clients). The Commission is recommending that the requirements of an effective screen be set forth in this paragraph and in the accompanying Comments.

8. Paragraph (m): "Tribunal"

This term was not previously defined. The Commission recommends including a definition and including not only courts but also binding arbitration and legislative bodies, administrative agencies or other bodies acting in an adjudicative capacity.

9. Paragraph (n): "Writing" or "written"

Given the Commission's recommendation that writings be required in more circumstances, it also recommends that the term be defined and that the definition include tangible or electronic records. With respect to electronic records, the paragraph provides a definition of "signed" that includes methods intended as the equivalent of a traditional signature. The electronic signature provisions are modeled on the Uniform Electronic Transactions Act.

COMMENTARY:

[1] This new Comment was added to clarify that if it is not feasible to obtain or transmit a writing at the time a person gives informed consent, a lawyer may undertake or continue representation based on the oral informed consent, so long as the writing is obtained or transmitted within a reasonable time thereafter.

[2] This paragraph was taken from the Comment to Rule 1.10. It is unchanged, except for the addition of a reference to paragraph (c).

[3] This paragraph was taken from the Comment to Rule 1.10. The only change is stylistic, and no substantive change is intended.

[4] This paragraph was taken from the Comment to Rule 1.10. The Commission concluded that the current Comment is confusing. The revision is intended to clarify that organizational structure will determine whether the entire organization or different components will constitute a firm or firms for purposes of these Rules.

[5] Under applicable substantive law, "fraud" may not be actionable unless someone relied on a misrepresentation or failure to inform and consequently suffered damages. This paragraph makes it clear that reliance is not required for purposes of the disciplinary rules, which focus entirely on the nature of the conduct in question.

[6] This new Comment provides cross-references to Rules requiring the lawyer to obtain the informed consent of the client or another person within the meaning of this Rule. It also explains the requirements of lawyer communication under the Rule.

[7] This new Comment explains what is required in order to constitute a manifestation of consent by the client.

[8] - [10] These new Comments provide cross-references to Rules that provide for screening and explain in more detail what measures may be adequate to assure an effective screen.

 

RULE 1.1: COMPETENCE

A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation.

Commentary

Legal Knowledge and Skill

[1] In determining whether a lawyer employs the requisite knowledge and skill in a particular matter, relevant factors include the relative complexity and specialized nature of the matter, the lawyer's general experience, the lawyer's training and experience in the field in question, the preparation and study the lawyer is able to give the matter and whether it is feasible to refer the matter to, or associate or consult with, a lawyer of established competence in the field in question. In many instances, the required proficiency is that of a general practitioner. Expertise in a particular field of law may be required in some circumstances.

[2] A lawyer need not necessarily have special training or prior experience to handle legal problems of a type with which the lawyer is unfamiliar. A newly admitted lawyer can be as competent as a practitioner with long experience. Some important legal skills, such as the analysis of precedent, the evaluation of evidence and legal drafting, are required in all legal problems. Perhaps the most fundamental legal skill consists of determining what kind of legal problems a situation may involve, a skill that necessarily transcends any particular specialized knowledge. A lawyer can provide adequate representation in a wholly novel field through necessary study. Competent representation can also be provided through the association of a lawyer of established competence in the field in question.

[3] In an emergency a lawyer may give advice or assistance in a matter in which the lawyer does not have the skill ordinarily required where referral to or consultation or association with another lawyer would be impractical. Even in an emergency, however, assistance should be limited to that reasonably necessary in the circumstances, for ill-considered action under emergency conditions can jeopardize the client's interest.

[4] A lawyer may accept representation where the requisite level of competence can be achieved by reasonable preparation. This applies as well to a lawyer who is appointed as counsel for an unrepresented person. See also Rule 6.2.

Thoroughness and Preparation

[5] Competent handling of a particular matter includes inquiry into and analysis of the factual and legal elements of the problem, and use of methods and procedures meeting the standards of competent practitioners. It also includes adequate preparation. The required attention and preparation are determined in part by what is at stake; major litigation and complex transactions ordinarily require more elaborate extensive treatment than matters of lesser complexity and consequence. An agreement between the lawyer and the client regarding the scope of the representation may limit the matters for which the lawyer is responsible. See Rule 1.2(c).

Maintaining Competence

[6] To maintain the requisite knowledge and skill, a lawyer should keep abreast of changes in the law and its practice, engage in continuing study and education and comply with all continuing legal education requirements to which the lawyer is subject. If a system of peer review has been established, the lawyer should consider making use of it in appropriate circumstance.

 

Model Rule 1.1

Reporter's Explanation of Changes

TEXT:

The Commission is not recommending any change to the text of the Rule.

COMMENTARY:

[5] The Commission recommends the addition of a sentence indicating that a Rule 1.2(c) agreement to limit the scope of a representation will limit the scope of the matters for which the lawyer is responsible. Given the increase in the number of occasions in which lawyers and clients agree to a limited representation, the Commission thought it important to call attention to the relationship between Rules 1.1 and 1.2(c). No change in substance is intended.

A minor change was made to make explicit that the duty to be prepared and thorough varies with the complexity of the matter as well as what is at stake. No change in substance is intended.

[6] The changes in the first sentence are intended to identify three distinct aspects of continuing education that are needed to maintain the knowledge and skill requisite for the competent representation of clients. The second sentence has been deleted because it is a precatory aspiration rather than a specification of conduct thought necessary for the competent representation of a client. No change in substance is intended.

 

RULE 1.2: SCOPE OF REPRESENTATION AND ALLOCATION OF AUTHORITY BETWEEN CLIENT AND LAWYER

(a) A Subject to paragraphs (c) and (d), a lawyer shall abide by a client's decisions concerning the objectives of representation , subject to paragraphs (c), (d) and (e), and , as required by Rule 1.4, shall consult with the client as to the means by which they are to be pursued. A lawyer may take such action on behalf of the client as is impliedly authorized to carry out the representation. A lawyer shall abide by a client's decision whether to accept an offer of settlement of settle a matter. In a criminal case, the lawyer shall abide by the client's decision, after consultation with the lawyer, as to a plea to be entered, whether to waive jury trial and whether the client will testify.

(b) A lawyer's representation of a client, including representation by appointment, does not constitute an endorsement of the client's political, economic, social or moral views or activities.

(c) A lawyer may limit the objectives scope of the representation if the limitation is reasonable under the circumstances and the client consents after consultation gives informed consent.

(d) A lawyer shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal or fraudulent, but a lawyer may discuss the legal consequences of any proposed course of conduct with a client and may counsel or assist a client to make a good faith effort to determine the validity, scope, meaning or application of the law.

(e) When a lawyer knows that a client expects assistance not permitted by the rules of professional conduct or other law, the lawyer shall consult with the client regarding the relevant limitations on the lawyer's conduct.

Commentary

Scope of Representation Allocation of Authority between Client and Lawyer

[1] Both lawyer and client have authority and responsibility in the objectives and means of representation. The Paragraph (a) confers upon the client has the ultimate authority to determine the purposes to be served by legal representation, within the limits imposed by law and the lawyer's professional obligations. Within those limits, a client also has a right to consult with the lawyer about the means to be used in pursuing those objectives. At the same time, a lawyer is not required to pursue objectives or employ means simply because a client may wish that the lawyer do so. A clear distinction between objectives and means sometimes cannot be drawn, and in many cases the client-lawyer relationship partakes of a joint undertaking. In questions of means the lawyer should assume responsibility for technical and legal tactical issues, but should defer to the client regarding such questions as the expense to be incurred and concern for third persons who might be adversely affected. Law defining the lawyer's scope of authority in litigation varies among jurisdictions. The decisions specified in paragraph (a), such as whether to settle a civil matter, must also be made by the client. See Rule 1.4(a)(1) for the lawyer's duty to communicate with the client about such decisions. With respect to the means by which the client's objectives are to be pursued, the lawyer shall consult with the client as required by Rule 1.4(a)(2) and may take such action as is impliedly authorized to carry out the representation.

[2] On occasion, however, a lawyer and a client may disagree about the means to be used to accomplish the client's objectives. Clients normally defer to the special knowledge and skill of their lawyer with respect to the means to be used to accomplish their objectives, particularly with respect to technical, legal and tactical matters. Conversely, lawyers usually defer to the client regarding such questions as the expense to be incurred and concern for third persons who might be adversely affected. Because of the varied nature of the matters about which a lawyer and client might disagree and because the actions in question may implicate the interests of a tribunal or other persons, this Rule does not prescribe how such disagreements are to be resolved. Other law, however, may be applicable and should be consulted by the lawyer. The lawyer should also consult with the client and seek a mutually acceptable resolution of the disagreement. If such efforts are unavailing and the lawyer has a fundamental disagreement with the client, the lawyer may withdraw from the representation. See Rule 1.16(b)(4). Conversely, the client may resolve the disagreement by discharging the lawyer. See Rule 1.16(a)(3).

[3] At the outset of a representation, the client may authorize the lawyer to take specific action on the client's behalf without further consultation. Absent a material change in circumstances and subject to Rule 1.4, a lawyer may rely on such an advance authorization. The client may, however, revoke such authority at any time.

[2] [4] In a case in which the client appears to be suffering mental disability, the lawyer's duty to abide by the client's decisions is to be guided by reference to Rule 1.14.

Independence from Client's Views or Activities

[3] [5] Legal representation should not be denied to people who are unable to afford legal services, or whose cause is controversial or the subject of popular disapproval. By the same token, representing a client does not constitute approval of the client's views or activities.

Services Limited in Objectives or Means Agreements Limiting Scope of Representation

[4] [6] The objectives or scope of services to be provided by a lawyer may be limited by agreement with the client or by the terms under which the lawyer's services are made available to the client. For example, a retainer may be for a specifically defined purpose. Representation provided through a legal aid agency may be subject to limitations on the types of cases the agency handles. When a lawyer has been retained by an insurer to represent an insured, for example, the representation may be limited to matters related to the insurance coverage. The A limited representation may be appropriate because the client has limited objectives for the representation. In addition, the terms upon which representation is undertaken may exclude specific objectives or means that might otherwise be used to accomplish the client's objectives. Such limitations may exclude objectives or means actions that the client thinks are too costly or that the lawyer regards as repugnant or imprudent.

[7] Although this Rule affords the lawyer and client substantial latitude to limit the representation, the limitation must be reasonable under the circumstances. If, for example, a client's objective is limited to securing general information about the law the client needs in order to handle a common and typically uncomplicated legal problem, the lawyer and client may agree that the lawyer's services will be limited to a brief telephone consultation. Such a limitation, however, would not be reasonable if the time allotted was not sufficient to yield advice upon which the client could rely. Although an agreement for a limited representation does not exempt a lawyer from the duty to provide competent representation, the limitation is a factor to be considered when determining the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation. See Rule 1.1.

[8] Although paragraph (c) does not require that the client's informed consent to a limited representation be in writing, a specification of the scope of representation will normally be a necessary part of the lawyer's written communication of the rate or basis of the lawyer's fee as required by Rule 1.5(b). See Rule 1.0(e) for the definition of "informed consent."

[5] [9] An agreement All agreements concerning the scope of a lawyer's representation of a client must accord with the Rules of Professional Conduct and other law. Thus, the client may not be asked to agree to representation so limited in scope as to violate Rule 1.1, or to surrender the right to terminate the lawyer's services or the right to settle litigation that the lawyer might wish to continue. See, e.g., Rules 1.1, 1.8 and 5.6.

Criminal, Fraudulent and Prohibited Transactions

[6] [10] A Paragraph (d) prohibits a lawyer from knowingly counseling or assisting a client to commit a crime or fraud. This prohibition, however, does not preclude the lawyer is required to give from giving an honest opinion about the actual consequences that appear likely to result from a client's conduct. The Nor does the fact that a client uses advice in a course of action that is criminal or fraudulent does not, of itself , make a lawyer a party to the course of action. However, a lawyer may not knowingly assist a client in criminal or fraudulent conduct. There is a critical distinction between presenting an analysis of legal aspects of questionable conduct and recommending the means by which a crime or fraud might be committed with impunity.

 

 

[7] [11] When the client's course of action has already begun and is continuing, the lawyer's responsibility is especially delicate. The lawyer is not permitted to reveal the client's wrongdoing, except where permitted by Rule 1.6. However, the The lawyer is required to avoid furthering the purpose assisting the client, for example, by drafting or delivering documents that the lawyer knows are fraudulent or by suggesting how it the wrongdoing might be concealed. A lawyer may not continue assisting a client in conduct that the lawyer originally supposes is supposed was legally proper but then discovers is criminal or fraudulent. Withdrawal The lawyer must, therefore, withdraw from the representation , therefore, may be required of the client in the matter. See Rule 1.16(a). In some cases, withdrawal alone might be insufficient. It may be necessary for the lawyer to give notice of the fact of withdrawal and to disaffirm any opinion, document, affirmation or the like. In extreme cases, substantive law may require a lawyer to disclose information relating to the representation to avoid being deemed to have assisted the client's crime or fraud. See Rule 4.1.

 

 

[8] [12] Where the client is a fiduciary, the lawyer may be charged with special obligations in dealings with a beneficiary.

 

[9] [13] Paragraph (d) applies whether or not the defrauded party is a party to the transaction. Hence, a lawyer should must not participate in a sham transaction ; for example, a transaction to effectuate criminal or fraudulent escape avoidance of tax liability. Paragraph (d) does not preclude undertaking a criminal defense incident to a general retainer for legal services to a lawful enterprise. The last clause of paragraph (d) recognizes that determining the validity or interpretation of a statute or regulation may require a course of action involving disobedience of the statute or regulation or of the interpretation placed upon it by governmental authorities.

 

 

[14] If a lawyer comes to know or reasonably should know that a client expects assistance not permitted by the Rules of Professional Conduct or other law or if the lawyer intends to act contrary to the client's instructions, the lawyer must consult with the client regarding the limitations on the lawyer's conduct. See Rule 1.4(a)(5).

 

 

Model Rule 1.2

Reporter's Explanation of Changes

TEXT:

1. Modify caption

 

The caption has been amended to more accurately describe the subjects addressed by the Rule.

 

2. Paragraph (a): Move "subject to paragraphs (c) and (d)" to beginning of paragraph (a)

 

The phrase "subject to paragraphs (c) and (d)" has been moved to clarify that all of the actions a lawyer may take pursuant to paragraph (a) are properly subject to the restrictions of paragraph (d) and some of them may be subject to the limitation in paragraph (c). In the current Rule, the limitations of paragraphs (c) and (d) only apply to the lawyer's obligation to abide by the client's decisions concerning the representation.

 

3. Paragraph (a): Modify to require consultation about means "as required by Rule1.4"

 

The Commission recommends the addition of a cross-reference to Rule 1.4, which requires a lawyer to "reasonably consult with the client about the means by which the client's objectives are to be accomplished." The Commission believes that the current formulation is flawed because it might be read to always require consultation before the lawyer takes action. These changes also reflect the Commission's decision that the lawyer's duty to communicate with the client should be addressed in Rule 1.4 rather than in Rule 1.2.

 

4. Paragraph (a): Add sentence acknowledging lawyer's implied authority to take action to carry out representation

 

The Commission believes that current paragraph (a) is flawed because the reference to the lawyer's duty to consult about means can be read to imply that the lawyer always must consult in order to acquire authority to act for the client. The Commission has added a sentence to clarify that "A lawyer may take such action on behalf of the client as is impliedly authorized to carry out the representation" and has added a new Comment [2] that addresses the resolution of disagreements with clients about the means to be used to accomplish the client's objectives. The new sentence in paragraph (a) parallels the reference in Rule 1.6(a) to the lawyer's implied authority to reveal information relating to the representation. The scope of the lawyer's implied authority is to be determined by reference to the law of agency. The Commission believes that this formulation strikes the right balance between respect for the lawyer's expertise and the preservation of the client's autonomy by allowing the lawyer to exercise professional discretion on behalf of the client, subject to consultation with the client as required by Rule 1.4(a)(2), but leaving open the possibility that a client might revoke such implied authority.

 

5. Paragraph (a): No general duty to abide by client instructions

 

Other than acknowledging the power of the client to revoke a lawyer's implied authority, the Commission has not attempted to specify the lawyer's duties when the lawyer and client disagree about the means to be used to accomplish the client's objectives. As explained in Comment [2], the Commission believes that disagreements between a lawyer and client about means must be worked out by the lawyer and client within a framework defined by the law of agency, the right of the client to discharge the lawyer and the right of the lawyer to withdraw from the representation if the lawyer has a fundamental disagreement with the client.

 

6. Paragraph (a): Replace "whether to accept an offer of settlement" with "whether to settle"

 

The reference in the current Rule to "accept an offer of settlement" is under-inclusive because it does not include making a settlement offer.

 

7. Paragraph (c): Permitting "reasonable" limitations on the "scope" of a lawyer's representation

 

The Commission recommends that paragraph (c) be modified to more clearly permit, but also more specifically regulate, agreements by which a lawyer limits the scope of the representation to be provided to a client. Although lawyers enter into such agreements in a variety of practice settings, this proposal in part is intended to provide a framework within which lawyers may expand access to legal services by providing limited but nonetheless valuable legal service to low or moderate-income persons who otherwise would be unable to obtain counsel.

 

a. Replace "objectives of the representation" with "scope of the representation"

The Commission has replaced the current reference to limiting the "objectives of the representation" with limiting the "scope of the representation." Only the client can limit the client's objectives. As indicated in Comment [6], the scope of a representation may be limited either by limiting the subject matter for which the lawyer will assume responsibility or the means the lawyer will employ.

b. Add requirement that limitation be "reasonable under the circumstances"

Unlike the current Rule, proposed paragraph (c) specifically precludes a limited representation that would not be "reasonable under the circumstances." Comment [7] discusses this limitation. In cases in which the limitation is reasonable, the client must give informed consent as defined in Rule 1.0(e). Because a useful limited representation may be provided over the telephone or in other situations in which obtaining a written consent would not be feasible, the proposal does not require that the client's informed consent be confirmed in writing. Comment [8], however, reminds lawyers who are charging a fee for a limited representation that a specification of the scope of the representation will normally be a necessary part of the lawyer's written communication with the client pursuant to Rule 1.5 (b).

c. Replace "consents after consultation" with "gives informed consent"

The Commission is recommending that throughout the Rules the phrase "consent after consultation" be replaced with "gives informed consent," as defined in Rule 1.0(e). No substantive change is intended.

8. Delete paragraph (e)

 

The Commission recommends that the substance of paragraph (e) be placed in a new paragraph (a)(5) in Rule 1.4. Comment [14] will serve as a cross-reference to Rule 1.4. The change is consistent with the Commission's recommendation that the lawyer's duty to communicate with the client be addressed in Rule 1.4 with appropriate cross-references in the Comment to Rule 1.2.

 

COMMENTARY:

 

Caption The current caption does not accurately describe Comments [1] - [3], which relate to the allocation of decision-making authority between lawyer and client.

 

[1] Current Comment [1] has been modified to reinforce the three main points in paragraph (a) and to provide appropriate cross-references to Rule 1.4(a)(1) and (a)(2). The second to the last sentence in current Comment [1] has been incorporated into Comment [2].

 

[2] Comment [2] is new and addresses the situation in which lawyer and client disagree about the means to be used to accomplish the client's objectives. The Comment explains why Rule 1.2 leaves such disagreements to be resolved by the lawyer and client with reference to the law of agency, the right of the client to discharge the lawyer and the right of the lawyer to withdraw in the event of a fundamental disagreement with the client.

 

[3] Comment [3] is new and recognizes the legitimacy of the lawyer's reliance on advance authorization from the client. It also specifies that an advance authorization can be revoked by the client and that such an authorization will not be considered effective if there has been a material change in circumstances.

 

Caption The caption has been modified to reflect the change to paragraph (c).

 

[6] Paralleling changes to paragraph (c), current Comment [4] has been modified to explain that a client's decision to seek limited objectives may be relevant to determining the reasonableness of a limitation on the scope of the representation under the circumstances. Cost has been added as a factor that might justify limitation.

 

[7] This new Comment explains the requirement in paragraph (c) that a limitation on the scope of a representation must be reasonable under the circumstances. It also explains the relationship between a limitation on the scope of a representation and the lawyer's duty of competence under Rule 1.1.

 

[8] This new Comment alerts the lawyer who is charging a fee for a limited representation that a specification of the scope of the representation will normally be a necessary part of the lawyer's written communication with the client pursuant to Rule 1.5(b).

 

[9] The Commission has modified current Comment [5] to serve as a general reminder that all agreements between lawyers and their clients must conform with the Rules of Professional Conduct. No change in substance is intended.

 

[10] The Commission has made minor editorial changes to current Comment [6]. No change in substance is intended.

 

[11] The Commission has added language to current Comment [7] to provide more guidance to lawyers about what they must do to avoid assisting a client to commit a crime or fraud. Also added is a cross-reference to Rule 4.1, which specifies a lawyer's duties in circumstances in which remaining silent will assist a client to commit a crime or fraud. No change in substance is intended.

 

[13] Current Comment [9] has been modified to eliminate the ambiguous reference to a "sham" transaction and to replace "should" with "must." This provides a more precise example of a situation in which a lawyer will violate Rule 1.2(d) even though the defrauded person is not a party to the transaction.

 

[14] New Comment [14] has been added to provide a cross-reference to Rule 1.4(a)(5), which is substantively identical to deleted paragraph 1.2(e).

 

RULE 1.3: DILIGENCE

 

A lawyer shall act with reasonable diligence and promptness in representing a client.

 

 

Commentary

 

[1] A lawyer should pursue a matter on behalf of a client despite opposition, obstruction or personal inconvenience to the lawyer, and may take whatever lawful and ethical measures are required to vindicate a client's cause or endeavor. A lawyer should must also act with commitment and dedication to the interests of the client and with zeal in advocacy upon the client's behalf. However, a A lawyer is not bound , however, to press for every advantage that might be realized for a client. A For example, a lawyer has may have authority to exercise professional discretion in determining the means by which a matter should be pursued. See Rule 1.2. A lawyer's work load should be controlled so that each matter can be handled adequately. The lawyer's duty to act with reasonable diligence does not require the use of offensive tactics or preclude the treating of all persons involved in the legal process with courtesy and respect.

 

 

[2] A lawyer's work load must be controlled so that each matter can be handled competently.

 

 

[2] [3] Perhaps no professional shortcoming is more widely resented than procrastination. A client's interests often can be adversely affected by the passage of time or the change of conditions; in extreme instances, as when a lawyer overlooks a statute of limitations, the client's legal position may be destroyed. Even when the client's interests are not affected in substance, however, unreasonable delay can cause a client needless anxiety and undermine confidence in the lawyer's trustworthiness. A lawyer's duty to act with reasonable promptness, however, does not preclude the lawyer from agreeing to a reasonable request for a postponement that will not prejudice the lawyer's client.

 

 

[3] [4] Unless the relationship is terminated as provided in Rule 1.16, a lawyer should carry through to conclusion all matters undertaken for a client. If a lawyer's employment is limited to a specific matter, the relationship terminates when the matter has been resolved. If a lawyer has served a client over a substantial period in a variety of matters, the client sometimes may assume that the lawyer will continue to serve on a continuing basis unless the lawyer gives notice of withdrawal. Doubt about whether a client-lawyer relationship still exists should be clarified by the lawyer, preferably in writing, so that the client will not mistakenly suppose the lawyer is looking after the client's affairs when the lawyer has ceased to do so. For example, if a lawyer has handled a judicial or administrative proceeding that produced a result adverse to the client but has not been specifically instructed concerning pursuit of an and the lawyer and the client have not agreed that the lawyer will handle the matter on appeal, the lawyer should advise must consult with the client of about the possibility of appeal before relinquishing responsibility for the matter. See Rule 1.4(a)(2). Whether the lawyer is obligated to prosecute the appeal for the client depends on the scope of the representation the lawyer has agreed to provide to the client. See Rule 1.2.

 

[5] To prevent neglect of client matters in the event of a sole practitioner's death or disability, the duty of diligence may require that each sole practitioner prepare a plan, in conformity with applicable rules, that designates another competent lawyer to review client files, notify each client of the lawyer's death or disability, and determine whether there is a need for immediate protective action. Cf. Rule 28 of the American Bar Association Model Rules for Lawyer Disciplinary Enforcement (providing for court appointment of a lawyer to inventory files and take other protective action in absence of a plan providing for another lawyer to protect the interests of the clients of a deceased or disabled lawyer).

 

 

Model Rule 1.3

Reporter's Explanation of Changes

TEXT:

The Commission is not recommending any change to the text of the Rule.

COMMENTARY:

 

 

[1] Several changes have been made to Comment [1] to clarify the lawyer's authority and duty to take certain actions on behalf of the client. No change in substance is intended.

 

[1] and [3] New material has been added to comments [1] and [3] to provide some support for the bar's civility initiatives. No change in substance is intended.

 

[2] This new Comment contains the substance of the last sentence in current Comment [1], with the reference to "should" being replaced with "must" because Rule 1.1 requires that a lawyer provide competent representation. No change in substance is intended.

 

[4] Current Comment [3] has been modified to sharpen its discussion of a lawyer's responsibilities with respect to taking an appeal from an adverse decision. No change in substance is intended.

[5] This new Comment has been added to alert sole practitioners to the need to have a plan in place to prevent client matters from being neglected in the event of the sole practitioner's death or disability. It also calls attention to the recommendation of the Senior Lawyers Division approved by the House of Delegates in 1997 that "urges state, local and territorial jurisdictions, that do not now have programs in place, to address the issue of the death or disability of lawyers and to develop and implement through court rule or other appropriate means effective procedures for the protection of clients' interests and property and the ethical closure or disposition of the practices." It is also consistent with Formal Ethics Opinion 92-369.

 

RULE 1.4: COMMUNICATION

 

(a) A lawyer shall keep a client reasonably informed about the status of a matter and promptly comply with reasonable requests for information. :

 

 

(1) promptly inform the client of any decision or circumstance with respect to which the client's informed consent, as defined in Rule 1.0(e), is required by these Rules;

(2) reasonably consult with the client about the means by which the client's objectives are to be accomplished;

(3) keep the client reasonably informed about the status of the matter;

(4) promptly comply with reasonable requests for information; and

(5) consult with the client about any relevant limitation on the lawyer's conduct when the lawyer knows that the client expects assistance not permitted by the Rules of Professional Conduct or other law.

(b) A lawyer shall explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation.

 

Commentary

 

[1] Reasonable communication between the lawyer and the client is necessary for the client effectively to participate in the representation.

 

 

Communicating with Client

 

[2] If these Rules require that a particular decision about the representation be made by the client, paragraph (a)(1) requires that the lawyer promptly consult with and secure the client's consent prior to taking action unless prior discussions with the client have resolved what action the client wants the lawyer to take. For example, a lawyer who receives from opposing counsel an offer of settlement in a civil controversy or a proffered plea bargain in a criminal case must promptly inform the client of its substance unless the client has previously indicated that the proposal will be acceptable or unacceptable or has authorized the lawyer to accept or to reject the offer. See Rule 1.2(a).

 

[3] Paragraph (a)(2) requires the lawyer to reasonably consult with the client about the means to be used to accomplish the client's objectives. In some situations - depending on both the importance of the action under consideration and the feasibility of consulting with the client - this duty will require consultation prior to taking action. In other circumstances, such as during a trial when an immediate decision must be made, the exigency of the situation may require the lawyer to act without prior consultation. In such cases the lawyer must nonetheless act reasonably to inform the client of actions the lawyer has taken on the client's behalf. Additionally, paragraph (a)(3) requires that the lawyer keep the client reasonably informed about the status of the matter, such as significant developments affecting the timing or the substance of the representation.

 

 

[4] A lawyer's regular communication with clients will minimize the occasions on which a client will need to request information concerning the representation. When a client makes a reasonable request for information, however, paragraph (a)(4) requires prompt compliance with the request, or if a prompt response is not feasible, that the lawyer, or a member of the lawyer's staff, acknowledge receipt of the request and advise the client when a response may be expected. Client telephone calls should be promptly returned or acknowledged.

 

 

Explaining Matters

 

[1] [5] The client should have sufficient information to participate intelligently in decisions concerning the objectives of the representation and the means by which they are to be pursued, to the extent the client is willing and able to do so. For example, a lawyer negotiating on behalf of a client should provide the client with facts relevant to the matter, inform the client of communications from another party and take other reasonable steps that permit the client to make a decision regarding a serious offer from another party. A lawyer who receives from opposing counsel an offer of settlement in a civil controversy or a proffered plea bargain in a criminal case should promptly inform the client of its substance unless prior discussions with the client have left it clear that the proposal will be unacceptable. See Rule 1.2(a). Even when a client delegates authority to the lawyer, the client should be kept advised of the status of the matter. [2] Adequacy of communication depends in part on the kind of advice or assistance that is involved. For example, in negotiations where when there is time to explain a proposal made in a negotiation, the lawyer should review all important provisions with the client before proceeding to an agreement. In litigation a lawyer should explain the general strategy and prospects of success and ordinarily should consult the client on tactics that might are likely to result in significant expense or to injure or coerce others. On the other hand, a lawyer ordinarily cannot will not be expected to describe trial or negotiation strategy in detail. The guiding principle is that the lawyer should fulfill reasonable client expectations for information consistent with the duty to act in the client's best interests, and the client's overall requirements as to the character of representation. In certain circumstances, such as when a lawyer asks a client to consent to a representation affected by a conflict of interest, the client must give informed consent, as defined in Rule 1.0(e).

 

 

[3] [6] Ordinarily, the information to be provided is that appropriate for a client who is a comprehending and responsible adult. However, fully informing the client according to this standard may be impracticable, for example, where the client is a child or suffers from mental disability. See Rule 1.14. When the client is an organization or group, it is often impossible or inappropriate to inform every one of its members about its legal affairs; ordinarily, the lawyer should address communications to the appropriate officials of the organization. See Rule 1.13. Where many routine matters are involved, a system of limited or occasional reporting may be arranged with the client. Practical exigency may also require a lawyer to act for a client without prior consultation.

 

 

Withholding Information

[4] [7] In some circumstances, a lawyer may be justified in delaying transmission of information when the client would be likely to react imprudently to an immediate communication. Thus, a lawyer might withhold a psychiatric diagnosis of a client when the examining psychiatrist indicates that disclosure would harm the client. A lawyer may not withhold information to serve the lawyer's own interest or convenience or the interests or convenience of another person. Rules or court orders governing litigation may provide that information supplied to a lawyer may not be disclosed to the client. Rule 3.4(c) directs compliance with such rules or orders.

 

 

Model Rule 1.4

Reporter's Explanation of Changes

TEXT:

1. Paragraph (a): Clarify lawyer's duty to communicate with client

 

Two aspects of the lawyer's duty to communicate with the client were previously contained in Rule 1.2. The Commission is recommending that all rules imposing a general duty to communicate with a client be located in Rule 1.4. To clarify the lawyer's important duties to communicate with a client, the Commission has modified paragraph (a) to specifically identify five different aspects of the duty to communicate.

 

2. Paragraph (a)(1): Add duty to communicate about decisions that require client consent

 

Paragraph (a)(1) is new and addresses the lawyer's duty to communicate with the client about decisions that require the client's consent. To the extent that current Rule 1.2(a) and paragraph (b) of this Rule implicitly require such communication, no change in substance is intended.

 

3. Paragraph (a)(2): Add duty to consult about means to accomplish client's objectives

 

Paragraph (a)(2) is taken from Model Rule 1.2(a), which now contains a textual cross-reference to this Rule. The word "reasonably" has been added to preclude a reading of the Rule that would always require consultation in advance of the lawyer taking any action on behalf of the client, even when such action is impliedly authorized under Rule 1.2(a). The Commission believes that lawyers have commonly understood current Rule 1.2(a) to require only reasonable consultation; therefore, no change in substance is intended.

 

4. Paragraph (a)(3): Relocate duty to keep client reasonably informed about status of matter

 

Paragraph (a)(3) is the same as the first half of current Rule 1.4(a). No change in substance is intended.

 

5. Paragraph (a)(4): Relocate duty to comply with reasonable requests for information

 

Paragraph (a)(4) is the same as the second half of current Rule 1.4(a). No change in substance is intended.

 

6. Paragraph (a)(5): Add duty to consult with the client about limitations on the lawyer's conduct

 

Paragraph (a)(5) contains the substance of current Rule 1.2(e). The Commission deleted Rule 1.2(e) and added paragraph (a)(5) to Rule 1.4 so that all rules imposing general duties to communicate with a client will be located in Rule 1.4. No change in substance is intended.

 

COMMENTARY:

 

[1] This new Comment describes in very general terms the reason for the various duties in Rule 1.4.

 

Caption A new caption, "Communicating with Client," has been added to distinguish the issue discussed in Comments [2] through [4] - when the lawyer must communicate with the client - from the subsequent discussion in Comments [5] and [6] about the adequacy of the information provided to the client.

 

[2] This new Comment refers to decisions where the client's consent is required by the Rules and explains the application of paragraph (a)(1) in such circumstances. The Comment also explains that prior communications with the client or a grant of authority by the client may make it unnecessary for the lawyer to communicate with the client prior to taking an action that requires client consent.

 

[3] This new Comment explains the paragraph (a)(2) duty to reasonably consult with the client about the means used to accomplish the client's objectives. The key issue is whether consultation is required before or after the lawyer takes action on behalf of the client. To call attention to the difference between the duty to reasonably consult about means and the duty in paragraph (a)(3) to keep the client reasonably informed about the status of the matter, the last sentence provides an example of the latter duty.

 

[4] This new Comment discusses the paragraph (a)(4) requirement that a lawyer promptly reply to reasonable requests for information. The Commission thought that emphasis should be given to promptly returning or at least acknowledging receipt of phone calls.

 

Caption The new caption "Explaining Matters" alerts lawyers that Comments [5] and [6] relate to the adequacy of the information provided to the client.

 

[5] This Comment includes points made in current Comments [1] and [2]. The deleted text relates to matters now discussed in Comment [2]. Language has been added to alert lawyers to keep the client advised about the cost implications of tactical decisions made by the lawyer. The final sentence alerts lawyers that in some cases they will be required to secure the client's informed consent, as defined in Rule 1.0(e).

 

[6] This Comment is the same as current Comment [3], except that the last sentence has been deleted because its point is made in proposed Comment [3].

 

[7] This Comment is the same as current Comment [4] except that the third sentence has been broadened to more comprehensively alert lawyers that decisions to withhold information are subject to the lawyer's duty of loyalty.

 

RULE 1.5: FEES

 

(a) A lawyer's fee lawyer shall be reasonable not make an agreement for, charge, or collect an unreasonable fee or an unreasonable amount for expenses. The factors to be considered in determining the reasonableness of a fee include the following:

 

(1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;

(2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;

(3) the fee customarily charged in the locality for similar legal services;

 

(4) the amount involved and the results obtained;

 

(5) the time limitations imposed by the client or by the circumstances;

 

(6) the nature and length of the professional relationship with the client;

 

(7) the experience, reputation, and ability of the lawyer or lawyers performing the services; and

(8) whether the fee is fixed or contingent.

(b) When the lawyer has not regularly represented the client, The scope of the representation and the basis or rate of the fee and expenses for which the client will be responsible shall be communicated to the client , preferably in writing, before or within a reasonable time after commencing the representation , except when the lawyer will charge a regularly represented client on the same basis or rate. Any changes in the basis or rate of the fee or expenses shall also be communicated in writing. This paragraph does not apply in any matter in which it is reasonably foreseeable that total cost to a client, including attorney fees, will be [$500] or less.

 

(c) A fee may be contingent on the outcome of the matter for which the service is rendered, except in a matter in which a contingent fee is prohibited by paragraph (d) or other law. A contingent fee agreement shall be in a writing signed by the client and shall state the method by which the fee is to be determined, including the percentage or percentages that shall accrue to the lawyer in the event of settlement, trial or appeal; litigation and other expenses to be deducted from the recovery; and whether such expenses are to be deducted before or after the contingent fee is calculated. The agreement must clearly notify the client of any expenses for which the client will be liable whether or not the client is the prevailing party. Upon conclusion of a contingent fee matter, the lawyer shall provide the client with a written statement stating the outcome of the matter and, if there is a recovery, showing the remittance to the client and the method of its determination.

 

(d) A lawyer shall not enter into an arrangement for, charge, or collect:

 

(1) any fee in a domestic relations matter, the payment or amount of which is contingent upon the securing of a divorce or upon the amount of alimony or support, or property settlement in lieu thereof; or

(2) a contingent fee for representing a defendant in a criminal case.

 

(e) A division of a fee between lawyers who are not in the same firm may be made only if:

 

(1) the division is in proportion to the services performed by each lawyer or , by written agreement with the client, each lawyer assumes joint responsibility for the representation;

(2) the client is advised of and does not object to the participation of all the lawyers involved agrees to the arrangement, including the share each lawyer will receive, and the agreement is confirmed in writing; and

(3) the total fee is reasonable.

 

 

Commentary

 

Reasonableness of Fee and Expenses

 

 

[1] Paragraph (a) requires that lawyers charge fees that are reasonable under the circumstances. The factors specified in (1) through (8) are not exclusive. Nor will each factor be relevant in each instance. Paragraph (a) also requires that expenses for which the client will be charged must be reasonable. A lawyer may seek reimbursement for the cost of services performed in-house, such as copying, or for other expenses incurred in-house, such as telephone charges, either by charging a reasonable amount to which the client has agreed in advance or by charging an amount that reasonably reflects the cost incurred by the lawyer.

 

Basis or Rate of Fee

 

 

[1] [2] When the lawyer has regularly represented a client, they ordinarily will have evolved an understanding concerning the basis or rate of the fee and the expenses for which the client will be responsible. In a new client-lawyer relationship, however, an a written understanding as to the fee fees and expenses should must be promptly established , unless the total cost to the client is unlikely to exceed [$500]. It is not necessary to recite all the factors that underlie the basis of the fee, but only those that are directly involved in its computation. It is sufficient, for example, to state that the basic rate is an hourly charge or a fixed amount or an estimated amount, or to identify the factors that may be taken into account in finally fixing the fee. When developments occur during the representation that render an earlier estimate substantially inaccurate, a revised estimate should be provided to the client. Generally, furnishing the client with a simple memorandum or copy of the lawyer's customary fee arrangements will suffice, provided that the writing states the general nature of the legal services to be provided, the basis, rate or total amount of the fee and whether and to what extent the client will be responsible for any costs, expenses or disbursements in the course of the representation. A written statement concerning the fee terms of the engagement reduces the possibility of misunderstanding. Furnishing the client with a simple memorandum or a copy of the lawyer's customary fee schedule is sufficient if the basis or rate of the fee is set forth. When the service provided is brief, providing a prompt written bill satisfies the requirements of this paragraph.

 

 

[3] Contingent fees, like any other fees, are subject to the reasonableness standard of paragraph (a) of this Rule. In determining whether a particular contingent fee is reasonable, or whether it is reasonable to charge any form of contingent fee, a lawyer must consider the factors that are relevant under the circumstances. Applicable law may impose limitations on contingent fees, such as a ceiling on the percentage allowable, or may require a lawyer to offer clients an alternative basis for the fee. Applicable law also may apply to situations other than a contingent fee, for example, government regulations regarding fees in certain tax matters.

 

 

Terms of Payment

 

 

[2] [4] A lawyer may require advance payment of a fee, but is obliged to return any unearned portion. See Rule 1.16(d). A lawyer may accept property in payment for services, such as an ownership interest in an enterprise, providing this does not involve acquisition of a proprietary interest in the cause of action or subject matter of the litigation contrary to Rule 1.8 (j) (i). However, a fee paid in property instead of money may be subject to special scrutiny because it involves questions concerning both the value of the services and the lawyer's special knowledge of the value of the property the requirements of Rule 1.8(a) because such fees often have the essential qualities of a business transaction with the client.

 

 

[3] [5] An agreement may not be made whose terms might induce the lawyer improperly to curtail services for the client or perform them in a way contrary to the client's interest. For example, a lawyer should not enter into an agreement whereby services are to be provided only up to a stated amount when it is foreseeable that more extensive services probably will be required, unless the situation is adequately explained to the client. Otherwise, the client might have to bargain for further assistance in the midst of a proceeding or transaction. However, it is proper to define the extent of services in light of the client's ability to pay. A lawyer should not exploit a fee arrangement based primarily on hourly charges by using wasteful procedures. When there is doubt whether a contingent fee is consistent with the client's best interest, the lawyer should offer the client alternative bases for the fee and explain their implications. Applicable law may impose limitations on contingent fees, such as a ceiling on the percentage.

 

 

Prohibited Contingent Fees

 

 

[6] Paragraph (d) prohibits a lawyer from charging a contingent fee in a domestic relations matter when payment is contingent upon the securing of a divorce or upon the amount of alimony or support or property settlement to be obtained. This provision does not preclude a contract for a contingent fee for legal representation in connection with the recovery of post-judgment balances due under support, alimony or other financial orders because such contracts do not implicate the same policy concerns.

 

 

Division of Fee

 

 

[4] [7] A division of fee is a single billing to a client covering the fee of two or more lawyers who are not in the same firm. A division of fee facilitates association of more than one lawyer in a matter in which neither alone could serve the client as well, and most often is used when the fee is contingent and the division is between a referring lawyer and a trial specialist. Paragraph (e) permits the lawyers to divide a fee on either on the basis of the proportion of services they render or by agreement between the participating lawyers if all assume each lawyer assumes responsibility for the representation as a whole . and In addition, the client is advised and does not object. It does not require disclosure to the client of must agree to the arrangement, including the share that each lawyer is to receive , and the agreement must be confirmed in writing. Contingent fee agreements must be in a writing signed by the client and must otherwise comply with paragraph (c) of this Rule. Joint responsibility for the representation entails the obligations stated in Rule 5.1 for purposes of the matter involved financial and ethical responsibility for the representation as if the lawyers were associated in a partnership. A lawyer should only refer a matter to a lawyer whom the referring lawyer reasonably believes is competent to handle the matter. See Rule 1.1.

 

 

[8] Paragraph (e) does not prohibit or regulate division of fees to be received in the future for work done when lawyers were previously associated in a law firm.

 

 

Disputes over Fees

 

 

[5] [9] If a procedure has been established for resolution of fee disputes, such as an arbitration or mediation procedure established by the bar, the lawyer must comply with the procedure when it is mandatory, and, even when it is voluntary, the lawyer should conscientiously consider submitting to it. Law may prescribe a procedure for determining a lawyer's fee, for example, in representation of an executor or administrator, a class or a person entitled to a reasonable fee as part of the measure of damages. The lawyer entitled to such a fee and a lawyer representing another party concerned with the fee should comply with the prescribed procedure.

 

 

Model Rule 1.5

Reporter's Explanation of Changes

TEXT:

1. Paragraph (a): Substitute Model Code standard

 

The current Rule requires that a lawyer's fee be reasonable, but it does not state a corollary prohibition of a fee that is larger than reasonable. The omission thus makes it harder than necessary to impose discipline for excessive fees. The Commission substituted the language of the Model Code prohibition for the current first sentence of (a). No change in substance is intended.

 

2. Paragraph (a): Add explicit prohibition on unreasonable expenses

 

Although ethics committee opinions have assumed that lawyers are prohibited from charging unreasonable expenses, as well as unreasonable fees, the current Rule does not say so explicitly. The Commission added language clarifying the lawyer's obligation, in order both to better educate lawyers as to their duties and to facilitate the imposition of discipline, where applicable. No change in substance is intended.

3. Paragraph (b): Require lawyers to communicate fees, scope and expenses in writing

 

Few issues between lawyer and client produce more misunderstandings and disputes than the fee due the lawyer. The current Rule says that the lawyer must communicate the basis or rate of the fee, preferably in writing. The Commission believes that the time has come to minimize misunderstandings by requiring the notice to be in writing, except where the lawyer will charge a regularly represented client on the same basis or rate or where the fee is de minimis.

 

4. Paragraph (b): Add scope of representation and expenses to written notice

 

As a practical matter, a statement about fees is rarely complete without a corresponding statement of what the lawyer is expected to do for the fee. Further, the Commission believes that issues about expenses are often at least as controversial as those about fees. Indeed, clients often do not distinguish between fees and expenses. Thus, proposed paragraph (b) includes statements about the scope of the representation and client responsibility for expenses as well as fees in the requirement of a written agreement. Changes in the basis or rate of the fee or expenses must also be communicated in writing but not changes in the scope of the representation, which may change frequently over the course of the representation.

5. Paragraph (b): Addition of de minimis exception to writing requirement

The Commission is recommending that there be a de minimis exception to the writing requirement. Also, providing such an exception makes clear that there is no requirement that the scope of the representation be communicated in writing when there will be no fee at all, as is the case not only in pro bono matters but also in matters where the lawyer is salaried, e.g., an in-house or government lawyer. The Commission recommends putting an amount in brackets in an acknowledgment that the size of the de minimis exception is a matter that is likely to vary among the states. The Commission is recommending a fairly low amount for the exception on the ground that it is middle and lower income clients who are most in need of the protection offered by this requirement.

6. Paragraph (c): Clarify that contingent fee agreement must be signed by client

 

The Commission is proposing a number of revisions to the Rules that would require the lawyer to document certain communications or agreements in writing. The Commission believes that it should be clear in all instances what type of writing is required, particularly whether the writing needs to be signed by the client. Certain terms are defined in Rule 1.0, including "writing." Because there are only a few instances in which a client's signature is required, the Commission is recommending that those instances be clearly stated in the text of the Rule. Thus, while the Commission believes that paragraph (c) already requires that a contingent fee agreement be signed by the client, this requirement is now being made explicit. No change in substance is intended.

 

7. Paragraph (c): Additional notification regarding expenses in contingent fee agreements

 

Unlike the Model Code, the Model Rules permit lawyers to advance litigation expenses, with repayment contingent on the client prevailing. Nevertheless, lawyers are not required to make such repayment contingent. The Commission believes that clients may be misled without a clear statement, in the contingent fee agreement, that there are expenses for which the client will be liable whether or not the client is the prevailing party.

8. Paragraph (e): Division of fees

The Commission recommends retaining the current text of this Rule, with the sole exception that the client must agree, and the agreement must be confirmed in writing, to the participation of each lawyer, including the share of the fee that each lawyer will receive.

COMMENTARY:

[1] This Comment is entirely new. It introduces paragraph (a) by stating that lawyers must charge both fees and expenses that are reasonable under the circumstances. It explains that the factors set forth in paragraphs (a)(1) through (8) are not exclusive and that not all factors will be relevant in each instance. It further states the method by which lawyers may properly charge for services performed or incurred in-house, along the lines suggested in ABA Standing Committee on Ethics and Professional Responsibility Formal Opinion 93-379 (Billing for Professional Fees, Disbursements and Other Expenses).

[2] This Comment has been revised to refer to the new requirements set forth in paragraph (b), including a statement about the nature of the required writing. The last sentence clarifies that when the service provided is brief, prompt submission of a written bill is sufficient to meet the requirements of this Rule. The Commission is proposing to delete existing material in order to streamline the Comment in light of the material that has been added.

[3] This Comment is entirely new. It confirms that contingent fees, like other fees, are subject to the reasonableness standard of paragraph (a), including consideration of all of the factors that are relevant under the circumstances. It further refers to applicable law, which may impose limitations on contingent fees or require a lawyer to offer clients an alternative basis for the fee. (This is a revision of the last sentence in current Comment [3], revised to include an additional reference to ceilings on the percentage allowable under law.) It also refers to applicable law that may govern situations other than a contingent fee.

 

[4] This amendment to current Comment [2] eliminates the vague "special scrutiny" language and substitutes a cross-reference to the Rule 1.8(a) requirements for business transactions with a client when a fee is to be paid in property instead of money. Rule 1.8(a) treatment is not stated in absolute terms, but the possibility is strongly suggested. The recent ABA Business Law Section report on alternative billing practices agreed that Rule 1.8(a) treatment should be given to fees paid in stock or property.

 

[5] The Commission proposes to delete the next to the last sentence of current Comment [3] because the statement is merely advisory, given that the requirement of offering an alternative type of fee is not stated or implied in any textual provision. If the contingent fee is reasonable, then lawyers need not offer an alternative fee nor need they inform clients that other lawyers might offer an alternative.

 

[6] A number of ethics committee opinions have interpreted the current Model Rule to permit contingent fees in post-decree family law matters, i.e., collecting arrearages that have been reduced to judgment, because such fee arrangements do not implicate the same policy matters that are implicated when fees are contingent upon securing a divorce or on the amount of alimony, support or property order. The Commission proposes adding this new Comment to clarify that this is the intended interpretation of paragraph (d)(1).

[7] The changes reflect the changes made to paragraph (e). The Commission proposes revising the explanation of "joint responsibility" to entail legal responsibility, including financial and ethical responsibility, as if the lawyers were associated in a partnership. This is the interpretation that has been given to the term according to ABA Informal Opinion 85-1514, as well a number of state ethics opinions.

 

[8] This new Comment seeks to eliminate a misunderstanding that might arise about whether the requirements of paragraph (e)(1) must be satisfied when a lawyer leaving a law firm and the firm agree to share some part of a fee to be received in the future. Technically, the future division would be between lawyers who were no longer members of the same law firm. None of the usual reasons for requiring the client's agreement to the arrangement apply to such fee divisions, however, and this Comment is intended to make that clear.

 

[9] The proposed change highlights that lawyers must comply with fee arbitration or mediation procedures in jurisdictions where they are mandatory.

 

RULE 1.6: CONFIDENTIALITY OF INFORMATION

 

(a) A lawyer shall not reveal information relating to the representation of a client unless the client consents after consultation, except for disclosures that are gives informed consent, the disclosure is impliedly authorized in order to carry out the representation , and except as stated in or the disclosure is permitted by paragraph (b).

 

(b) A lawyer may reveal such information relating to the representation of a client to the extent the lawyer reasonably believes necessary:

 

(1) to prevent the client from committing a criminal act that the lawyer believes is likely to result in imminent reasonably certain death or substantial bodily harm; or

(2) to prevent the client from committing a crime or fraud that is reasonably certain to result in substantial injury to the financial interests or property of another and in furtherance of which the client has used or is using the lawyer's services;

(3) to prevent, mitigate or rectify substantial injury to the financial interests or property of another that is reasonably certain to result or has resulted from the client's commission of a crime or fraud in furtherance of which the client has used the lawyer's services;

(4) to secure legal advice about the lawyer's compliance with these Rules;

(2) (5) to establish a claim or defense on behalf of the lawyer in a controversy between the lawyer and the client, to establish a defense to a criminal charge or civil claim against the lawyer based upon conduct in which the client was involved, or to respond to allegations in any proceeding concerning the lawyer's representation of the client ; or

(6) to comply with other law or a court order.

 

Commentary

 

 

[1] The lawyer is part of a judicial system charged with upholding the law. One of the lawyer's functions is to advise clients so that they avoid any violation of the law in the proper exercise of their rights.

 

[2] The observance of the ethical obligation of a lawyer to hold inviolate confidential information of the client not only facilitates the full development of facts essential to proper representation of the client but also encourages people to seek early legal assistance.

 

[3] Almost without exception, clients come to lawyers in order to determine what their rights are and what is, in the maze of laws and regulations, deemed to be legal and correct. The common law recognizes that the client's confidences must be protected from disclosure. Based upon experience, lawyers know that almost all clients follow the advice given, and the law is upheld.

 

[1] This Rule governs the disclosure by a lawyer of information relating to the representation of a client during the lawyer's representation of the client. See Rule 1.18 for the lawyer's duties with respect to information provided to the lawyer by a prospective client, Rule 1.9(c)(2) for the lawyer's duty not to reveal information relating to the lawyer's prior representation of a former client and Rules 1.8(b) and 1.9(c)(1) for the lawyer's duties with respect to the use of such information to the disadvantage of clients and former clients.

 

 

[4] [2] A fundamental principle in the client-lawyer relationship is that , in the absence of the client's informed consent, the lawyer maintain confidentiality of must not reveal information relating to the representation. See Rule 1.0(e) for the definition of informed consent. This contributes to the trust that is the hallmark of the client-lawyer relationship. The client is thereby encouraged to seek legal assistance and to communicate fully and frankly with the lawyer even as to embarrassing or legally damaging subject matter. The lawyer needs this information to represent the client effectively and, if necessary, to advise the client to refrain from wrongful conduct. Almost without exception, clients come to lawyers in order to determine their rights and what is, in the complex of laws and regulations, deemed to be legal and correct. Based upon experience, lawyers know that almost all clients follow the advice given, and the law is upheld.

 

 

[5] [3] The principle of client-lawyer confidentiality is given effect in two by related bodies of law , : the attorney-client privilege , (which includes the work product doctrine ) in the law of evidence and the rule of confidentiality established in professional ethics. The attorney-client privilege applies and work-product doctrine apply in judicial and other proceedings in which a lawyer may be called as a witness or otherwise required to produce evidence concerning a client. The rule of client-lawyer confidentiality applies in situations other than those where evidence is sought from the lawyer through compulsion of law. The confidentiality rule , for example, applies not merely only to matters communicated in confidence by the client but also to all information relating to the representation, whatever its source. A lawyer may not disclose such information except as authorized or required by the Rules of Professional Conduct or other law. See also Scope.

 

 

[6] The requirement of maintaining confidentiality of information relating to representation applies to government lawyers who may disagree with the policy goals that their representation is designed to advance.

 

 

[4] Paragraph (a) prohibits a lawyer from revealing information relating to the representation of a client. This prohibition also applies to disclosures by a lawyer that do not in themselves reveal protected information but could reasonably lead to the discovery of such information by a third person. A lawyer's use of a hypothetical to discuss issues relating to the representation is permissible so long as there is no reasonable likelihood that the listener will be able to ascertain the identity of the client or the situation involved.

 

 

Authorized Disclosure

 

 

[7] [5] A Except to the extent that the client's instructions or special circumstances limit that authority, a lawyer is impliedly authorized to make disclosures about a client when appropriate in carrying out the representation , except to the extent that the client's instructions or special circumstances limit that authority. In litigation some situations, for example, a lawyer may disclose information by admitting be impliedly authorized to admit a fact that cannot properly be disputed or , in negotiation by making to make a disclosure that facilitates a satisfactory conclusion to a matter. [8] Lawyers in a firm may, in the course of the firm's practice, disclose to each other information relating to a client of the firm, unless the client has instructed that particular information be confined to specified lawyers.

 

 

Disclosure Adverse to Client

 

[9] [6] The Although the public interest is usually best served by a strict rule requiring lawyers to preserve the confidentiality of information relating to the representation of their clients, the confidentiality rule is subject to limited exceptions. In becoming privy to information about a client, a lawyer may foresee that the client intends serious harm to another person. However, to the extent a lawyer is required or permitted to disclose a client's purposes, the client will be inhibited from revealing facts which would enable the lawyer to counsel against a wrongful course of action. The public is better protected if full and open communication by the client is encouraged than if it is inhibited. Paragraph (b)(1) recognizes the overriding value of life and physical integrity and permits disclosure reasonably necessary to prevent reasonably certain death or substantial bodily harm. Such harm is reasonably certain to occur if it will be suffered imminently or if there is a present and substantial threat that a person will suffer such harm at a later date if the lawyer fails to take action necessary to eliminate the threat. Thus, a lawyer who knows that a client has accidentally discharged toxic waste into a town's water supply may reveal this information to the authorities if there is a present and substantial risk that a person who drinks the water will contract a life-threatening or debilitating disease and the lawyer's disclosure is necessary to eliminate the threat or reduce the number of victims.

 

[10] Several situations must be distinguished.

 

[11] First, the lawyer may not counsel or assist a client in conduct that is criminal or fraudulent. See Rule 1.2(d). Similarly, a lawyer has a duty under Rule 3.3(a)(4) not to use false evidence. This duty is essentially a special instance of the duty prescribed in Rule 1.2(d) to avoid assisting a client in criminal or fraudulent conduct.

 

 

[12] Second, the lawyer may have been innocently involved in past conduct by the client that was criminal or fraudulent. In such a situation the lawyer has not violated Rule 1.2(d), because to "counsel or assist" criminal or fraudulent conduct requires knowing that the conduct is of that character.

 

 

[13] Third, the lawyer may learn that a client intends prospective conduct that is criminal and likely to result in imminent death or substantial bodily harm. As stated in paragraph (b)(1), the lawyer has professional discretion to reveal information in order to prevent such consequences. The lawyer may make a disclosure in order to prevent homicide or serious bodily injury which the lawyer reasonably believes is intended by a client. It is very difficult for a lawyer to "know" when such a heinous purpose will actually be carried out, for the client may have a change of mind.

 

[14] The lawyer's exercise of discretion requires consideration of such factors as the nature of the lawyer's relationship with the client and with those who might be injured by the client, the lawyer's own involvement in the transaction and factors that may extenuate the conduct in question. Where practical, the lawyer should seek to persuade the client to take suitable action. In any case, a disclosure adverse to the client's interest should be no greater than the lawyer reasonably believes necessary to the purpose. A lawyer's decision not to take preventive action permitted by paragraph (b)(1) does not violate this Rule.

 

 

Withdrawal

 

[15] If the lawyer's services will be used by the client in materially furthering a course of criminal or fraudulent conduct, the lawyer must withdraw, as stated in Rule 1.16(a)(1).

 

[16] After withdrawal the lawyer is required to refrain from making disclosure of the client's confidences, except as otherwise provided in Rule 1.6. Neither this rule nor Rule 1.8(b) nor Rule 1.16(d) prevents the lawyer from giving notice of the fact of withdrawal, and the lawyer may also withdraw or disaffirm any opinion, document, affirmation, or the like.

 

 

[17] [7] Paragraph (b)(2) is a limited exception to the rule of confidentiality that permits the lawyer to reveal information to the extent necessary to enable affected persons or appropriate authorities to prevent the client from committing a crime or a fraud, as defined in Rule 1.0(d), that is reasonably certain to result in substantial injury to the financial or property interests of another and in furtherance of which the client has used or is using the lawyer's services. Such a serious abuse of the client-lawyer relationship by the client forfeits the protection of this Rule. The client can, of course, prevent such disclosure by refraining from the wrongful conduct. Although paragraph (b)(2) does not require the lawyer to reveal the client's misconduct, the lawyer may not counsel or assist the client in conduct the lawyer knows is criminal or fraudulent. See Rule 1.2(d). See also Rule 1.16 with respect to the lawyer's obligation or right to withdraw from the representation of the client in such circumstances. Where the client is an organization, the lawyer may be in doubt whether contemplated conduct will actually be carried out by the organization. Where necessary to guide conduct in connection with this Rule, the lawyer may make inquiry within the organization as indicated in Rule 1.13(b).

 

 

[8] Paragraph (b)(3) addresses the situation in which the lawyer does not learn of the client's crime or fraud until after it has been consummated. Although the client no longer has the option of preventing disclosure by refraining from the wrongful conduct, there will be situations in which the loss suffered by the affected person can be prevented, rectified or mitigated. In such situations, the lawyer may disclose information relating to the representation to the extent necessary to enable the affected persons to prevent or mitigate reasonably certain losses or to attempt to recoup their losses. Paragraph (b)(3) does not apply when a person who has committed a crime or fraud thereafter employs a lawyer for representation concerning that offense.

 

[9] A lawyer's confidentiality obligations do not preclude a lawyer from securing confidential legal advice about the lawyer's personal responsibility to comply with these Rules. In most situations, disclosing information to secure such advice will be impliedly authorized for the lawyer to carry out the representation. Even when the disclosure is not impliedly authorized, paragraph (b)(4) permits such disclosure because of the importance of a lawyer's compliance with the Rules of Professional Conduct.

 

 

Dispute Concerning a Lawyer's Conduct

 

 

[18] [10] Where a legal claim or disciplinary charge alleges complicity of the lawyer in a client's conduct or other misconduct of the lawyer involving representation of the client, the lawyer may respond to the extent the lawyer reasonably believes necessary to establish a defense. The same is true with respect to a claim involving the conduct or representation of a former client. Such a charge can arise in a civil, criminal, disciplinary or other proceeding and can be based on a wrong allegedly committed by the lawyer against the client or on a wrong alleged by a third person, for example, a person claiming to have been defrauded by the lawyer and client acting together. The lawyer's right to respond arises when an assertion of such complicity has been made. Paragraph (b) (2) (5) does not require the lawyer to await the commencement of an action or proceeding that charges such complicity, so that the defense may be established by responding directly to a third party who has made such an assertion. The right to defend also applies, of course, applies where a proceeding has been commenced. Where practicable and not prejudicial to the lawyer's ability to establish the defense, the lawyer should advise the client of the third party's assertion and request that the client respond appropriately. In any event, disclosure should be no greater than the lawyer reasonably believes is necessary to vindicate innocence, the disclosure should be made in a manner which limits access to the information to the tribunal or other persons having a need to know it, and appropriate protective orders or other arrangements should be sought by the lawyer to the fullest extent practicable.

 

 

[19] [11] If the lawyer is charged with wrongdoing in which the client's conduct is implicated, the rule of confidentiality should not prevent the lawyer from defending against the charge. Such a charge can arise in a civil, criminal or professional disciplinary proceeding, and can be based on a wrong allegedly committed by the lawyer against the client, or on a wrong alleged by a third person; for example, a person claiming to have been defrauded by the lawyer and client acting together. A lawyer entitled to a fee is permitted by paragraph (b) (2) (5) to prove the services rendered in an action to collect it. This aspect of the rule expresses the principle that the beneficiary of a fiduciary relationship may not exploit it to the detriment of the fiduciary. As stated above, the lawyer must make every effort practicable to avoid unnecessary disclosure of information relating to a representation, to limit disclosure to those having the need to know it, and to obtain protective orders or make other arrangements minimizing the risk of disclosure.

 

 

[12] Other law may require that a lawyer disclose information about a client. Whether such a law supersedes Rule 1.6 is a question of law beyond the scope of these Rules. When disclosure of information relating to the representation appears to be required by other law, the lawyer must discuss the matter with the client to the extent required by Rule 1.4. If, however, the other law supersedes this Rule and requires disclosure, paragraph (b)(6) permits the lawyer to make such disclosures as are necessary to comply with the law.

 

[13] Paragraph (b)(6) also permits compliance with a court order requiring a lawyer to disclose information relating to a client's representation. If a lawyer is called as a witness to give testimony concerning a client or is otherwise ordered to reveal information relating to the client's representation, however, the lawyer must, absent informed consent of the client to do otherwise, assert on behalf of the client all nonfrivolous claims that the information sought is protected against disclosure by the attorney-client privilege or other applicable law. In the event of an adverse ruling, the lawyer must consult with the client about the possibility of appeal. See Rule 1.4. Unless review is sought, however, paragraph (b)(6) permits the lawyer to comply with the court's order.

 

[14] Paragraph (b) permits disclosure only to the extent the lawyer reasonably believes the disclosure is necessary to accomplish one of the purposes specified. Where practicable, the lawyer should first seek to persuade the client to take suitable action to obviate the need for disclosure. In any case, a disclosure adverse to the client's interest should be no greater than the lawyer reasonably believes necessary to accomplish the purpose. If the disclosure will be made in connection with a judicial proceeding, the disclosure should be made in a manner that limits access to the information to the tribunal or other persons having a need to know it and appropriate protective orders or other arrangements should be sought by the lawyer to the fullest extent practicable.

 

 

[15] Paragraph (b) permits but does not require the disclosure of information relating to a client's representation to accomplish the purposes specified in paragraphs (b)(1) through (b)(6). In exercising the discretion conferred by this Rule, the lawyer may consider such factors as the nature of the lawyer's relationship with the client and with those who might be injured by the client, the lawyer's own involvement in the transaction and factors that may extenuate the conduct in question. A lawyer's decision not to disclose as permitted by paragraph (b) does not violate this Rule. Disclosure may be required, however, by other Rules. Some Rules require disclosure only if such disclosure would be permitted by paragraph (b). See Rules 1.2(d), 4.1(b), 8.1 and 8.3. Rule 3.3, on the other hand, requires disclosure in some circumstances regardless of whether such disclosure is permitted by this Rule. See Rule 3.3(c).

 

 

Disclosures Otherwise Required or Authorized

 

 

[20] The attorney-client privilege is differently defined in various jurisdictions. If a lawyer is called as a witness to give testimony concerning a client, absent waiver by the client, paragraph (a) requires the lawyer to invoke the privilege when it is applicable. The lawyer must comply with the final orders of a court or other tribunal of competent jurisdiction requiring the lawyer to give information about the client.

 

 

[21] The Rules of Professional Conduct in various circumstances permit or require a lawyer to disclose information relating to the representation. See Rules 2.2, 2.3, 3.3 and 4.1. In addition to these provisions, a lawyer may be obligated or permitted by other provisions of law to give information about a client. Whether another provision of law supercedes Rule 1.6 is a matter of interpretation beyond the scope of these Rules, but a presumption should exist against such a supersession.

 

 

Acting Competently to Preserve Confidentiality

 

[16] A lawyer must act competently to safeguard information relating to the representation of a client against inadvertent or unauthorized disclosure by the lawyer or other persons who are participating in the representation of the client or who are subject to the lawyer's supervision. See Rules 1.1, 5.1 and 5.3.

 

[17] When transmitting a communication that includes information relating to the representation of a client, the lawyer must take reasonable precautions to prevent the information from coming into the hands of unintended recipients. This duty, however, does not require that the lawyer use special security measures if the method of communication affords a reasonable expectation of privacy. Special circumstances, however, may warrant special precautions. Factors to be considered in determining the reasonableness of the lawyer's expectation of confidentiality include the sensitivity of the information and the extent to which the privacy of the communication is protected by law or by a confidentiality agreement. A client may require the lawyer to implement special security measures not required by this Rule or may give informed consent to the use of a means of communication that would otherwise be prohibited by this Rule.

 

 

Former Client

 

[22] [18] The duty of confidentiality continues after the client-lawyer relationship has terminated. See Rule 1.9(c)(2). See Rule 1.9(c)(1) for the prohibition against using such information to the disadvantage of the former client.

 

 

Model Rule 1.6

Reporter's Explanation of Changes

 

The Commission is proposing a substantial expansion of the grounds for permissive disclosure under Rule 1.6. While strongly reaffirming the legal profession's commitment to the core value of confidentiality, the Commission also recognizes the overriding importance of human life and the integrity of the lawyer's own role within the legal system. In this regard, the Commission agrees with the substantial criticism that has been directed at current Rule 1.6 and regards the Rule as out of step with public policy and the values of the legal profession as reflected in the rules currently in force in most jurisdictions.

 

As revised, Rule 1.6 will permit (though it will not require) disclosure to prevent death or substantial bodily harm and to prevent or rectify substantial injury resulting from a client's serious abuse of the lawyer's services. It will also explicitly permit a lawyer to disclose confidences to obtain legal advice about the lawyer's compliance with the Rules. Finally, it will permit disclosure where it is required by a law or court order. In light of these substantial changes to Rule 1.6, the Commission has both reorganized and substantially revised the Comments.

 

TEXT:

 

1. Paragraph (a): Replace "consents after consultation" with "informed consent"

The Commission is recommending that throughout the Rules the phrase "consent after consultation" be replaced with "gives informed consent," as defined in Rule 1.0(e). No change in substance is intended.

 

2. Paragraph (b)(1): Modify to permit disclosure to "prevent reasonably certain death or substantial bodily harm"

 

The Commission recommends that the exception currently recognized for client crimes threatening imminent death or substantial bodily harm be replaced with a broader exception for disclosures to prevent reasonably certain death or substantial bodily harm, with no requirement of client criminality. This change is in accord with Section 66 of the American Law Institute's Restatement of the Law Governing Lawyers. The Rule replaces "imminent" with "reasonably certain," to include a present and substantial threat that a person will suffer such injury at a later date, as in some instances involving toxic torts.

 

3. Paragraph (b)(2): Add paragraph permitting disclosure to prevent client crimes or frauds reasonably certain to cause substantial economic injury and in which client has used or is using lawyer's services

 

The Commission recommends that a lawyer be permitted to reveal information relating to the representation to the extent necessary to prevent the client from committing a crime or fraud reasonably certain to result in substantial economic loss, but only when the lawyer's services have been or are being used in furtherance of the crime or fraud. Use of the lawyer's services for such improper ends constitutes a serious abuse of the client-lawyer relationship. The client's entitlement to the protection of the Rule must be balanced against the prevention of the injury that would otherwise be suffered and the interest of the lawyer in being able to prevent the misuse of the lawyer's services. Moreover, with respect to future conduct, the client can easily prevent the harm of disclosure by refraining from the wrongful conduct. See also Comment [7].

 

Support for the Commission's proposal can be found in the eight jurisdictions that permit disclosure when clients threaten crimes or frauds likely to result in substantial injury to the financial or property interests of another and the 25 jurisdictions that permit a lawyer to reveal the intention of a client to commit any crime. The Commission's proposal is also in accord with Section 67 of the American Law Institute's Restatement of the Law Governing Lawyers.

 

4. Paragraph (b)(3): Add paragraph permitting disclosure to prevent, mitigate or rectify substantial economic loss resulting from client crime or fraud in which client has used lawyer's services

 

The rationale for this exception is the same as that for paragraph (b)(2), the only difference being that the client no longer can prevent disclosure by refraining from the crime or fraud. See also Comment [8]. The Commission believes that the interests of the affected persons in mitigating or recouping their substantial losses and the interest of the lawyer in undoing a wrong in which the lawyer's services were unwittingly used outweigh the interests of a client who has so abused the client-lawyer relationship. Support for the Commission's proposal can be found in the 13 jurisdictions that permit disclosure to rectify the consequences of a crime or fraud in the commission of which the client used the lawyer's services. The proposal is also in accord with Section 67 of the American Law Institute's Restatement of the Law Governing Lawyers.

 

5. Paragraph (b)(4): Add paragraph permitting disclosure to the extent necessary to secure legal advice regarding lawyer's compliance with Rules

 

Questions have been raised regarding the propriety of a lawyer revealing confidential information in order to secure legal advice regarding the lawyer's obligations under the Rules, including the lawyer's duty not to counsel or assist clients in crimes or frauds. In most instances, disclosing information to secure such advice is impliedly authorized. Nevertheless, in order to clarify that such disclosures are proper even when not impliedly authorized, the Commission recommends that such disclosures be explicitly permitted under this Rule. It is of overriding importance, both to lawyers and to society at large, that lawyers be permitted to secure advice regarding their legal obligations. Moreover, clients are adequately protected by the requirement that such disclosures be made only when protected by the attorney-client evidentiary privilege. See also Comment [9].

 

6. Paragraph (b)(6): Add paragraph permitting disclosure to comply with law or court order

 

The current Rule does not address whether lawyers are permitted or required to disclose information when such disclosure is required by other law or a court order. Current Comment [20], however, states that a lawyer must comply with the final orders of a court or other tribunal requiring the lawyer to give information about the client, and current Comment [21] refers to other law that may supersede Rule 1.6. The Commission recommends that the text of Rule 1.6 be amended to explicitly permit, but not require, disclosure to comply with law or court orders. No change in substance is intended. See also Comments [12] and [13].

 

COMMENTARY:

 

[1], [2] and [3] The points made in these Comments have been incorporated into Comment [2]. No change in substance is intended.

 

[1] This new Comment provides cross-references to the other Rules that protect clients, prospective clients and former clients against the disclosure or adverse use of information relating to the representation.

 

[2] This modification of current Comment [4] combines material in current Comments [1] through [4] into a single Comment setting forth the rationale for the confidentiality duty. No change in substance is intended.

 

[3] Current Comment [5] has been edited slightly to clarify that the work-product doctrine is separate from the attorney-client evidentiary privilege. No change in substance is intended.

 

[6] Given that Rule 1.6 contains no suggestion that there might be an exception for government lawyers who disagree with government policy, the Commission recommends the deletion of current Comment [6] as unnecessary.

 

[4] This new Comment reminds lawyers that the prohibition applies even when the disclosure does not itself reveal protected information but could lead to the discovery of such information, including the use of a hypothetical that poses an unreasonable risk that the listener will ascertain protected information. No change in substance is intended.

 

[5] This Comment combines and makes minor stylistic changes to current Comments [7] and [8]. No change in substance is intended.

 

[6] This new Comment replaces and modifies current Comments [9] and [13]. It states the rationale for the exception recognized in paragraph (b)(1) - disclosures to prevent reasonably certain death or substantial bodily harm. It also explains when such harm is reasonably certain, providing an illustration.

 

 

[10], [11], [12], [14], [15] and [16] The substance of these Comments has been included in various new Comments. The caption "Withdrawal" has also been deleted.

 

[7] Except for the last two sentences, which are identical to current Comment [17], Comment [7] is new and provides the rationale for paragraph (b)(2) - disclosure to prevent future crimes or frauds threatening substantial economic harm. It also provides a cross-reference to Rules 1.2 and 1.16, which govern the lawyer's conduct regardless of whether the lawyer chooses to exercise the lawyer's discretion to disclose.

 

[8] This new Comment provides the rationale for the exception recognized in paragraph (b)(3) - disclosure to prevent, mitigate or rectify substantial economic loss resulting from a client's past crimes or frauds in the furtherance of which the client has used the lawyer's services.

 

[9] This new Comment provides the rationale for the exception recognized in paragraph (b)(4) - securing confidential legal advice about the lawyer's personal responsibility to comply with the Rules.

 

Caption The caption has been deleted as no longer necessary.

 

[10] This Comment relating to paragraph (b)(5), disclosure permitted to defend against charges of lawyer misconduct, is derived from current Comment [18]. The new third sentence is taken from current Comment [19]. The deleted last sentence has been incorporated into Comment [14]. No change in substance is intended.

 

[11] This Comment contains the core of current Comment [19] that addresses disclosure necessary to collect a lawyer's fees. The deleted second sentence has been included in Comment [10] and the deleted last sentence has been incorporated into Comment [14]. No change in substance is intended.

 

[12] This new Comment addresses the lawyer's responsibilities when the lawyer is faced with other law that may require disclosure of information relating to a client's representation. This issue is cursorily discussed in current Comment [21]. Although recognizing that paragraph (b)(6) permits disclosure to comply with other law, this Comment emphasizes the lawyer's duty to consult with the client to the extent required by Rule 1.4. No change in substance is intended.

 

[13] This new Comment addresses the lawyer's responsibilities when the lawyer is faced with a court order requiring disclosure of information relating to a client's representation or is called to testify concerning a client. This issue is addressed in current Comment [20]. Although recognizing that paragraph (b)(6) permits disclosure to comply with a court order, this Comment requires the lawyer, absent the client's informed consent to the contrary, to invoke all nonfrivolous claims that the information is privileged and to consult with the client about the possibility of appealing an adverse ruling. No change in substance is intended.

 

[14] Combining points made in current Comments [14], [18] and [19], this new Comment explains the Rule 1.6(b) requirement that disclosure be limited to information the lawyer reasonably believes is needed to accomplish the purpose for which disclosure is permitted. It emphasizes remonstrating with the client to take appropriate action, disclosing no more than necessary and, where appropriate, seeking protective orders against further dissemination of the information. No change in substance is intended.

 

[15] This new Comment incorporates the substance of current Comment [14]. A new introductory sentence has been added, and the beginning of the second sentence has been revised for stylistic reasons. The last two sentences provide a cross-reference to other Model Rules that may require disclosure.

 

Caption This caption has been deleted because current Comments [20] and [21] have been deleted.

 

 

[20] and [21] Current Comments [20] and [21] have been deleted because these matters are now discussed in Comments [12] and [13].

 

Caption This new caption has been added to call attention to the two new Comments that discuss the requirement that lawyers act competently and diligently to preserve confidentiality.

 

[16] This new Comment cross-references Rules 1.1, 5.1 and 5.3, calling attention to the responsibility of the lawyer to act competently to safeguard information relating to the representation. A number of states have retained the formulation of ABA Model Code of Professional Responsibility DR 4-101(D), "A lawyer shall exercise reasonable care to prevent the lawyer's employees, associates and others whose services are utilized by the lawyer from disclosing or using confidences or secrets of a client, except that a lawyer may reveal the information allowed by DR 4-101(C) through an employee." Much of the recent discourse about confidentiality has focused on the lawyer's duty to act competently to prevent disclosure. The Commission believes this issue is important and ought to be flagged in the Comment. No change in substance, however, is intended.

 

[17] This new Comment addresses the lawyer's duty of care when transmitting confidential information. Although much of the current debate concerns the use of unencrypted e-mail, the Comment speaks more generally in terms of special security measures and reasonable expectations of privacy. It takes a case-by-case approach to the problem. The Commission believes this Comment is consistent with the prevailing resolution of this issue in recent ethics committee decisions.

 

 

[18] This comment is identical to current Comment [22], with the addition of cross-references to Rule 1.9(c)(1) and (2).

 

 

RULE 1.7: CONFLICT OF INTEREST: GENERAL RULE CURRENT CLIENTS

 

 

(a) A lawyer shall not represent a client if the representation of that client will be directly adverse to another client, unless:

(1) the lawyer reasonably believes the representation will not adversely affect the relationship with the other client; and

(2) each client consents after consultation.

(b) A lawyer shall not represent a client if the representation of that client may be materially limited by the lawyer's responsibilities to another client or to a third person, or by the lawyer's own interests, unless:

(1) the lawyer reasonably believes the representation will not be adversely affected; and

(2) the client consents after consultation. When representation of multiple clients in a single matter is undertaken, the consultation shall include explanation of the implications of the common representation and the advantages and risks involved.

 

(a) Except as provided in paragraph (b), a lawyer shall not represent a client if the representation involves a concurrent conflict of interest. A concurrent conflict of interest exists if:

 

(1) the representation of one client will be directly adverse to another client; or

(2) there is a significant risk that the representation of one or more clients will be materially limited by the lawyer's responsibilities to another client , a former client or a third person or by a personal interest of the lawyer.

(b) Notwithstanding the existence of a concurrent conflict of interest under paragraph (a), a lawyer may represent a client if:

 

(1) the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client;

(2) the representation is not prohibited by law;

(3) the representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation or other proceeding before a tribunal; and

(4) each affected client gives informed consent, confirmed in writing.

 

Commentary

 

Loyalty to a Client General Principles

 

[1] Loyalty is an and independent judgment are essential element elements in the lawyer's relationship to a client. Concurrent conflicts of interest can arise from the lawyer's responsibilities to another client, a former client or a third person or from the lawyer's own interests. For specific Rules regarding certain concurrent conflicts of interest, see Rule 1.8. For former client conflicts of interest, see Rule 1.9. For conflicts of interest involving prospective clients, see Rule 1.18. For definitions of "informed consent" and "confirmed in writing," see Rule 1.0(e) and (b).

 

 

[2] Resolution of a conflict of interest problem under this Rule requires the lawyer to: 1) clearly identify the client or clients; 2) determine whether a conflict of interest exists; 3) decide whether the representation may be undertaken despite the existence of a conflict, i.e., whether the conflict is consentable; and 4) if so, consult with the clients affected under paragraph (a) and obtain their informed consent, confirmed in writing. The clients affected under paragraph (a) include both of the clients referred to in paragraph (a)(1) and the one or more clients whose representation might be materially limited under paragraph (a)(2).

 

 

[3] An impermissible A conflict of interest may exist before representation is undertaken, in which event the representation should must be declined , unless the lawyer obtains the informed consent of each client under the conditions of paragraph (b). The To determine whether a conflict of interest exists, a lawyer should adopt reasonable procedures, appropriate for the size and type of firm and practice, to determine in both litigation and non-litigation matters the parties persons and issues involved and to determine whether there are actual or potential conflicts of interest. See also Comment to Rule 5.1. Ignorance caused by a failure to institute such procedures will not excuse a lawyer's violation of this Rule. As to whether a client-lawyer relationship exists or, having once been established, is continuing, see Comment to Rule 1.3 and Scope.

 

 

[2] [4] If such a conflict arises after representation has been undertaken, the lawyer should ordinarily must withdraw from the representation , unless the lawyer has obtained the informed consent of the client under the conditions of paragraph (b). See Rule 1.16. Where more than one client is involved and the lawyer withdraws because a conflict arises after representation, whether the lawyer may continue to represent any of the clients is determined both by the lawyer's ability to comply with duties owed to the former client and by the lawyer's ability to represent adequately the remaining client or clients, given the lawyer's duties to the former client. See Rule 1.9. See also Rule 2.2(c) Comments [5] and [29]. As to whether a client-lawyer relationship exists or, having once been established, is continuing, see Comment to Rule 1.3 and Scope.

 

 

[5] Unforeseeable developments, such as changes in corporate and other organizational affiliations or the addition or realignment of parties in litigation, might create conflicts in the midst of a representation, as when a company sued by the lawyer on behalf of one client is bought by another client represented by the lawyer in an unrelated matter. Depending on the circumstances, the lawyer may have the option to withdraw from one of the representations in order to avoid the conflict. The lawyer must seek court approval where necessary and take steps to minimize harm to the clients. See Rule 1.16. The lawyer must continue to protect the confidences of the client from whose representation the lawyer has withdrawn. See Rule 1.9(c).

 

 

Identifying Conflicts of Interest: Directly Adverse

 

 

[3] [6] As a general proposition, loyalty Loyalty to a current client prohibits undertaking representation directly adverse to that client without that client's informed consent. Paragraph (a) expresses that general rule. Thus, absent consent, a lawyer ordinarily may not act as an advocate in one matter against a person the lawyer represents in some other matter, even if it is when the matters are wholly unrelated. The client as to whom the representation is directly adverse is likely to feel betrayed, and the resulting damage to the client-lawyer relationship is likely to impair the lawyer's ability to represent the client effectively. In addition, the client on whose behalf the adverse representation is undertaken reasonably may fear that the lawyer will pursue that client's case less effectively out of deference to the other client, i.e., that the representation may be materially limited by the lawyer's interest in retaining the current client. Similarly, a directly adverse conflict may arise when a lawyer is required to cross-examine a client who appears as a witness in a lawsuit involving another client, as when the testimony will be damaging to the client who is represented in the lawsuit. On the other hand, simultaneous representation in unrelated matters of clients whose interests are only generally economically adverse, such as representation of competing economic enterprises in unrelated litigation, does not ordinarily constitute a conflict of interest and thus may not require consent of the respective clients. Paragraph (a) applies only when the representation of one client would be directly adverse to the other.

 

 

[7] Directly adverse conflicts can also arise in transactional matters. For example, if a lawyer is asked to represent the seller of a business in negotiations with a buyer represented by the lawyer, not in the same transaction but in another, unrelated matter, the lawyer could not undertake the representation without the informed consent of each client.

 

 

Identifying Conflicts of Interest: Material Limitation

 

 

[4] [8] Loyalty to a client is also impaired when Even where there is no direct adverseness, a conflict of interest exists if there is a significant risk that a lawyer cannot lawyer's ability to consider, recommend or carry out an appropriate course of action for the client because will be materially limited as a result of the lawyer's other responsibilities or interests. For example, a lawyer asked to represent several individuals seeking to form a joint venture is likely to be materially limited in the lawyer's ability to recommend or advocate all possible positions that each might take because of the lawyer's duty of loyalty to the others. The conflict in effect forecloses alternatives that would otherwise be available to the client. Paragraph (b) addresses such situations. A possible conflict The mere possibility of subsequent harm does not itself preclude the representation require disclosure and consent. The critical questions are the likelihood that a conflict difference in interests will eventuate and, if it does, whether it will materially interfere with the lawyer's independent professional judgment in considering alternatives or foreclose courses of action that reasonably should be pursued on behalf of the client. Consideration should be given to whether the client wishes to accommodate the other interest involved.

 

 

Lawyer's Interests Responsibilities to Former Clients and Other Third Persons

 

 

[9] In addition to conflicts with other current clients, a lawyer's duties of loyalty and independence may be materially limited by responsibilities to former clients under Rule 1.9 or by the lawyer's responsibilities to other persons, such as fiduciary duties arising from a lawyer's service as a trustee, executor or corporate director.

 

 

Personal Interest Conflicts

 

 

[6] [10] The lawyer's own interests should not be permitted to have an adverse effect on representation of a client. For example, a lawyer's need for income should not lead the lawyer to undertake matters that cannot be handled competently and at a reasonable fee. See Rules 1.1 and 1.5. If if the probity of a lawyer's own conduct in a transaction is in serious question, it may be difficult or impossible for the lawyer to give a client detached advice. A Similarly, when a lawyer has discussions concerning possible employment with an opponent of the lawyer's client, or with a law firm representing the opponent, such discussions could materially limit the lawyer's representation of the client. In addition, a lawyer may not allow related business interests to affect representation, for example, by referring clients to an enterprise in which the lawyer has an undisclosed financial interest. See Rule 1.8 for specific Rules pertaining to a number of personal interest conflicts, including business transactions with clients. See also Rule 1.10 (personal interest conflicts under Rule 1.7 ordinarily are not imputed to other lawyers in a law firm).

 

 

[11] When lawyers representing different clients in the same matter or in substantially related matters are closely related by blood or marriage, there may be a significant risk that client confidences will be revealed and that the lawyer's family relationship will interfere with both loyalty and independent professional judgment. As a result, each client is entitled to know of the existence and implications of the relationship between the lawyers before the lawyer agrees to undertake the representation. Thus, a lawyer related to another lawyer, e.g., as parent, child, sibling or spouse, ordinarily may not represent a client in a matter where that lawyer is representing another party, unless each client gives informed consent. The disqualification arising from a close family relationship is personal and ordinarily is not imputed to members of firms with whom the lawyers are associated. See Rule 1.10.

 

 

[12] A lawyer is prohibited from engaging in sexual relationships with a client unless the sexual relationship predates the formation of the client-lawyer relationship. See Rule 1.8(j).

 

Interest of Person Paying for a Lawyer's Service

 

 

[10] [13] A lawyer may be paid from a source other than the client, including a co-client, if the client is informed of that fact and consents and the arrangement does not compromise the lawyer's duty of loyalty or independent judgment to the client. See Rule 1.8(f). For example, when an insurer and its insured have conflicting interests in a matter arising from a liability insurance agreement, and the insurer is required to provide special counsel for the insured, the arrangement should assure the special counsel's professional independence. So also, when a corporation and its directors or employees are involved in a controversy in which they have conflicting interests, the corporation may provide funds for separate legal representation of the directors or employees, if the clients consent after consultation and the arrangement ensures the lawyer's professional independence. If acceptance of the payment from any other source presents a significant risk that the lawyer's representation of the client will be materially limited by the lawyer's own interest in accommodating the person paying the lawyer's fee or by the lawyer's responsibilities to a payer who is also a co-client, then the lawyer must comply with the requirements of paragraph (b) before accepting the representation, including determining whether the conflict is consentable and, if so, that the client has adequate information about the material risks of the representation.

 

 

Consultation and Consent Prohibited Representations

 

 

[5] [14] A client Ordinarily, clients may consent to representation notwithstanding a conflict. However, as indicated in paragraph (a)(1) with respect to representation directly adverse to a client, and paragraph (b) (1) with respect to material limitations on representation of a client, when a disinterested lawyer would conclude that the client should not agree to the representation under the circumstances, some conflicts are nonconsentable, meaning that the lawyer involved cannot properly ask for such agreement or provide representation on the basis of the client's consent. When the lawyer is representing more than one client is involved, the question of conflict consentability must be resolved as to each client. Moreover, there may be circumstances where it is impossible to make the disclosure necessary to obtain consent. For example, when the lawyer represents different clients in related matters and one of the clients refuses to consent to the disclosure necessary to permit the other client to make an informed decision, the lawyer cannot properly ask the latter to consent.

 

 

[15] Consentability is typically determined by considering whether the interests of the clients will be adequately protected if the clients are permitted to give their informed consent to representation burdened by a conflict of interest. Thus, under paragraph (b)(1), representation is prohibited if in the circumstances the lawyer cannot reasonably conclude that the lawyer will be able to provide competent and diligent representation. See Rule 1.1 (competence) and Rule 1.3 (diligence).

 

[16] Paragraph (b)(2) describes conflicts that are nonconsentable because the representation is prohibited by applicable law. For example, in some states substantive law provides that the same lawyer may not represent more than one defendant in a capital case, even with the consent of the clients, and under federal criminal statutes certain representations by a former government lawyer are prohibited, despite the informed consent of the former client. In addition, decisional law in some states limits the ability of a governmental client, such as a municipality, to consent to a conflict of interest.

 

[17] Paragraph (b)(3) describes conflicts that are nonconsentable because of the institutional interest in vigorous development of each client's position when the clients are aligned directly against each other in the same litigation or other proceeding before a tribunal. Whether clients are aligned directly against each other within the meaning of this paragraph requires examination of the context of the proceeding. Although this paragraph does not preclude a lawyer's multiple representation of adverse parties to a mediation (because mediation is not a proceeding before a "tribunal" under Rule 1.0(m)), such representation may be precluded by paragraph (b)(1).

 

 

Informed Consent

 

[18] Informed consent requires that each affected client be aware of the relevant circumstances and of the material and reasonably foreseeable ways that the conflict could have adverse effects on the interests of that client. See Rule 1.0(e) (informed consent). The information required depends on the nature of the conflict and the nature of the risks involved. When representation of multiple clients in a single matter is undertaken, the information must include the implications of the common representation, including possible effects on loyalty , confidentiality and the attorney-client privilege and the advantages and risks involved. See Comments [30] and [31] (effect of common representation on confidentiality).

 

[19] Under some circumstances it may be impossible to make the disclosure necessary to obtain consent. For example, when the lawyer represents different clients in related matters and one of the clients refuses to consent to the disclosure necessary to permit the other client to make an informed decision, the lawyer cannot properly ask the latter to consent. In some cases the alternative to common representation can be that each party may have to obtain separate representation with the possibility of incurring additional costs. These costs, along with the benefits of securing separate representation, are factors that may be considered by the affected client in determining whether common representation is in the client's interests.

 

 

Consent Confirmed in Writing

 

[20] Paragraph (b) requires the lawyer to obtain the informed consent of the client, confirmed in writing. Such a writing may consist of a document executed by the client or one that the lawyer promptly records and transmits to the client following an oral consent. See Rule 1.0(b). See also Rule 1.0(n) (writing includes electronic transmission). If it is not feasible to obtain or transmit the writing at the time the client gives informed consent, then the lawyer must obtain or transmit it within a reasonable time thereafter. See Rule 1.0(b). The requirement of a writing does not supplant the need in most cases for the lawyer to talk with the client, to explain the risks and advantages, if any, of representation burdened with a conflict of interest, as well as reasonably available alternatives, and to afford the client a reasonable opportunity to consider the risks and alternatives and to raise questions and concerns. Rather, the writing is required in order to impress upon clients the seriousness of the decision the client is being asked to make and to avoid disputes or ambiguities that might later occur in the absence of a writing.

 

 

Revoking Consent

 

[21] A client who has given consent to a conflict may revoke the consent and, like any other client, may terminate the lawyer's representation at any time. Whether revoking consent to the client's own representation precludes the lawyer from continuing to represent other clients depends on the circumstances, including the nature of the conflict, whether the client revoked consent because of a material change in circumstances, the reasonable expectations of the other client and whether material detriment to the other clients or the lawyer would result.

 

 

Consent to Future Conflict

 

[22] Whether a lawyer may properly request a client to waive conflicts that might arise in the future is subject to the test of paragraph (b). The effectiveness of such waivers is generally determined by the extent to which the client reasonably understands the material risks that the waiver entails. The more comprehensive the explanation of the types of future representations that might arise and the actual and reasonably foreseeable adverse consequences of those representations, the greater the likelihood that the client will have the requisite understanding. Thus, if the client agrees to consent to a particular type of conflict with which the client is already familiar, then the consent ordinarily will be effective with regard to that type of conflict. If the consent is general and open-ended, then the consent ordinarily will be ineffective, because it is not reasonably likely that the client will have understood the material risks involved. On the other hand, if the client is an experienced user of the legal services involved and is reasonably informed regarding the risk that a conflict may arise, such consent is more likely to be effective, particularly if, e.g., the client is independently represented by other counsel in giving consent and the consent is limited to future conflicts unrelated to the subject of the representation. In any case, advance consent cannot be effective if the circumstances that materialize in the future are such as would make the conflict nonconsentable under paragraph (b).

 

 

Conflicts in Litigation

 

[7] [23] Paragraph (a) (b)(3) prohibits representation of opposing parties in the same litigation , regardless of the clients' consent. Simultaneous On the other hand, simultaneous representation of parties whose interests in litigation may conflict, such as coplaintiffs or codefendants, is governed by paragraph (b) (a)(2). An impermissible A conflict may exist by reason of substantial discrepancy in the parties' testimony, incompatibility in positions in relation to an opposing party or the fact that there are substantially different possibilities of settlement of the claims or liabilities in question. Such conflicts can arise in criminal cases as well as civil. The potential for conflict of interest in representing multiple defendants in a criminal case is so grave that ordinarily a lawyer should decline to represent more than one codefendant. On the other hand, common representation of persons having similar interests in civil litigation is proper if the risk of adverse effect is minimal and the requirements of paragraph (b) are met. Compare Rule 2.2 involving intermediation between clients.

 

 

[8] Ordinarily, a lawyer may not act as advocate against a client the lawyer represents in some other matter, even if the other matter is wholly unrelated. However, there are circumstances in which a lawyer may act as advocate against a client. For example, a lawyer representing an enterprise with diverse operations may accept employment as an advocate against the enterprise in an unrelated matter if doing so will not adversely affect the lawyer's relationship with the enterprise or conduct of the suit and if both clients consent upon consultation. By the same token, government lawyers in some circumstances may represent government employees in proceedings in which a government agency is the opposing party. The propriety of concurrent representation can depend on the nature of the litigation. For example, a suit charging fraud entails conflict to a degree not involved in a suit for a declaratory judgment concerning statutory interpretation.

 

[9] A lawyer may represent parties having antagonistic positions on a legal question that has arisen in different cases, unless representation of either client would be adversely affected. Thus, it is ordinarily not improper to assert such positions in cases pending in different trial courts, but it may be improper to do so in cases pending at the same time in an appellate court.

 

[24] Ordinarily a lawyer may take inconsistent legal positions in different tribunals at different times on behalf of different clients. The mere fact that advocating a legal position on behalf of one client might create precedent adverse to the interests of a client represented by the lawyer in an unrelated matter does not create a conflict of interest. A conflict of interest exists, however, if there is a significant risk that a lawyer's action on behalf of one client will materially limit the lawyer's effectiveness in representing another client in a different case; for example, when a decision favoring one client will create a precedent likely to seriously weaken the position taken on behalf of the other client. Factors relevant in determining whether the clients need to be advised of the risk include: where the cases are pending, whether the issue is substantive or procedural, the temporal relationship between the matters, the significance of the issue to the immediate and long-term interests of the clients involved and the clients' reasonable expectations in retaining the lawyer. If there is significant risk of material limitation, then absent informed consent of the affected clients, the lawyer must refuse one of the representations or withdraw from one or both matters.

 

[25] When a lawyer represents or seeks to represent a class of plaintiffs or defendants in a class-action lawsuit, unnamed members of the class are ordinarily not considered to be clients of the lawyer for purposes of applying paragraph (a)(1) of this Rule. Thus, the lawyer does not typically need to get the consent of such a person before representing a client suing the person in an unrelated matter. Similarly, a lawyer seeking to represent an opponent in a class action does not typically need the consent of an unnamed member of the class whom the lawyer represents in an unrelated matter.

 

 

Other Conflict Situations Nonlitigation Conflicts

 

[11] [26] Conflicts of interest under paragraphs (a)(1) and (a)(2) arise in contexts other than litigation sometimes may be difficult to assess. For a discussion of directly adverse conflicts in transactional matters, see Comment [7]. Relevant factors in determining whether there is significant potential for adverse effect material limitation include the duration and intimacy of the lawyer's relationship with the client or clients involved, the functions being performed by the lawyer, the likelihood that actual conflict disagreements will arise and the likely prejudice to the client from the conflict if it does arise. The question is often one of proximity and degree. See Comment [8].

 

[13] [27] Conflict For example, conflict questions may also arise in estate planning and estate administration. A lawyer may be called upon to prepare wills for several family members, such as husband and wife, and, depending upon the circumstances, a conflict of interest may arise be present. In estate administration the identity of the client may be unclear under the law of a particular jurisdiction. Under one view, the client is the fiduciary; under another view the client is the estate or trust, including its beneficiaries. The In order to comply with conflict of interest rules, the lawyer should make clear the lawyer's relationship to the parties involved.

 

 

[12] [28] Whether a conflict is consentable depends on the circumstances. For example, a lawyer may not represent multiple parties to a negotiation whose interests are fundamentally antagonistic to each other, but common representation is permissible where the clients are generally aligned in interest even though there is some difference in interest among them. Thus, a lawyer may seek to establish or adjust a relationship between clients on an amicable and mutually advantageous basis; for example, in helping to organize a business in which two or more clients are entrepreneurs, working out the financial reorganization of an enterprise in which two or more clients have an interest or arranging a property distribution in settlement of an estate. The lawyer seeks to resolve potentially adverse interests by developing the parties' mutual interests. Otherwise, each party might have to obtain separate representation, with the possibility of incurring additional cost, complication or even litigation. Given these and other relevant factors, the clients may prefer that the lawyer act for all of them.

 

 

Special Considerations in Common Representation

 

[29] In considering whether to represent multiple clients in the same matter, a lawyer should be mindful that if the common representation fails because the potentially adverse interests cannot be reconciled, the result can be additional cost, embarrassment and recrimination. Ordinarily, the lawyer will be forced to withdraw from representing all of the clients if the common representation fails. In some situations, the risk of failure is so great that multiple representation is plainly impossible. For example, a lawyer cannot undertake common representation of clients where contentious litigation or negotiations between them are imminent or contemplated. Moreover, because the lawyer is required to be impartial between commonly represented clients, representation of multiple clients is improper when it is unlikely that impartiality can be maintained. Generally, if the relationship between the parties has already assumed antagonism, the possibility that the clients' interests can be adequately served by common representation is not very good. Other relevant factors are whether the lawyer subsequently will represent both parties on a continuing basis and whether the situation involves creating or terminating a relationship between the parties.

 

[30] A particularly important factor in determining the appropriateness of common representation is the effect on client-lawyer confidentiality and the attorney-client privilege. With regard to the attorney-client privilege, the prevailing rule is that, as between commonly represented clients, the privilege does not attach. Hence, it must be assumed that if litigation eventuates between the clients, the privilege will not protect any such communications, and the clients should be so advised.

 

[31] As to the duty of confidentiality, continued common representation will almost certainly be inadequate if one client asks the lawyer not to disclose to the other client information relevant to the common representation. This is so because the lawyer has an equal duty of loyalty to each client, and each client has the right to be informed of anything bearing on the representation that might affect that client's interests and the right to expect that the lawyer will use that information to that client's benefit. See Rule 1.4. The lawyer should, at the outset of the common representation and as part of the process of obtaining each client's informed consent, advise each client that information will be shared and that the lawyer will have to withdraw if one client decides that some matter material to the representation should be kept from the other. In limited circumstances, it may be appropriate for the lawyer to proceed with the representation when the clients have agreed, after being properly informed, that the lawyer will keep certain information confidential. For example, the lawyer may reasonably conclude that failure to disclose one client's trade secrets to another client will not adversely affect representation involving a joint venture between the clients and agree to keep that information confidential with the informed consent of both clients.

 

[32] When seeking to establish or adjust a relationship between clients, the lawyer should make clear that the lawyer's role is not that of partisanship normally expected in other circumstances and, thus, that the clients may be required to assume greater responsibility for decisions than when each client is separately represented. Any limitations on the scope of the representation made necessary as a result of the common representation should be fully explained to the clients at the outset of the representation. See Rule 1.2(c).

 

[33] Subject to the above limitations, each client in the common representation has the right to loyal and diligent representation and the protection of Rule 1.9 concerning the obligations to a former client. The client also has the right to discharge the lawyer as stated in Rule 1.16.

 

 

Organizational Clients

 

[34] A lawyer who represents a corporation or other organization does not, by virtue of that representation, necessarily represent any constituent or affiliated organization, such as a parent or subsidiary. See Rule 1.13(a). Thus, the lawyer for an organization is not barred from accepting representation adverse to an affiliate in an unrelated matter, unless the circumstances are such that the affiliate should also be considered a client of the lawyer, there is an understanding between the lawyer and the organizational client that the lawyer will avoid representation adverse to the client's affiliates, or the lawyer's obligations to either the organizational client or the new client are likely to limit materially the lawyer's representation of the other client.

 

 

[14] [35] A lawyer for a corporation or other organization who is also a member of its board of directors should determine whether the responsibilities of the two roles may conflict. The lawyer may be called on to advise the corporation in matters involving actions of the directors. Consideration should be given to the frequency with which such situations may arise, the potential intensity of the conflict, the effect of the lawyer's resignation from the board and the possibility of the corporation's obtaining legal advice from another lawyer in such situations. If there is material risk that the dual role will compromise the lawyer's independence of professional judgment, the lawyer should not serve as a director or should cease to act as the corporation's lawyer when conflicts of interest arise. The lawyer should advise the other members of the board that in some circumstances matters discussed at board meetings while the lawyer is present in the capacity of director might not be protected by the attorney-client privilege and that conflict of interest considerations might require the lawyer's recusal as a director or might require the lawyer and the lawyer's firm to decline representation of the corporation in a matter.

 

 

Conflict Charged by an Opposing Party

 

[15] Resolving questions of conflict of interest is primarily the responsibility of the lawyer undertaking the representation. In litigation, a court may raise the question when there is reason to infer that the lawyer has neglected the responsibility. In a criminal case, inquiry by the court is generally required when a lawyer represents multiple defendants. Where the conflict is such as clearly to call in question the fair or efficient administration of justice, opposing counsel may properly raise the question. Such an objection should be viewed with caution, however, for it can be misused as a technique of harassment. See Scope.

 

 

Model Rule 1.7

Reporter's Explanation of Changes

TEXT:

1. Change caption to "Conflict of Interest: Current Clients"

 

Rule 1.7 does not purport to define or regulate all types of conflicts but rather only those that arise with respect to current clients. The proposed change will more accurately reflect the limited scope of this Rule. No change in substance is intended.

 

 

2. Create single paragraph defining "conflict of interest"

 

The relationship between current paragraphs (a) (directly adverse conflicts) and (b) (material limitation conflicts) is not well understood. Lawyers frequently become confused attempting to determine what constitutes a "directly adverse" conflict when it may not matter because, even when not "directly adverse," the representation may still involve a conflict under paragraph (b)'s "material limitation" standard.

 

In addition, present paragraph (a) is conceptually confusing since, in most "directly adverse" conflicts, common representation is likely to affect both the relationship with the current client and the representation of the new client. For example, when the lawyer seeks to represent a new client suing an existing client represented by the lawyer in an unrelated matter, current paragraph (a) looks to the effect of the new representation on the existing client, while paragraph (b) applies to the effect of the existing relationship on the representation of the new client. Thus, most cases involving directly adverse conflicts need to be analyzed under both paragraphs (a) and (b). There appears to be no reason why both conflicts cannot be analyzed under a single paragraph that defines and prohibits the representation unless informed consent is properly obtained.

 

Under the proposed new structure, paragraph (a) sets forth the basic prohibition against representation involving currently conflicting interests, including the definition of a conflict of interest. Conflict of interest is defined to include both directly adverse conflicts and material limitation conflicts.

 

Unlike present paragraph (b), in which a conflict exists if the representation "may be" materially limited by the lawyer's interests or duties to others, proposed paragraph (a)(2) limits conflicts to situations in which there is "a significant risk" that the representation will be so limited. This proposed change is not substantive but rather reflects how current paragraph (b) is presently interpreted by courts and ethics committees.

 

Proposed paragraph (a)(2) specifically identifies "former clients" as nonclients to whom the lawyer may owe duties, as distinct from "other persons" to whom the lawyer may owe duties, such as those arising from the lawyer's role as fiduciary or corporate director. These changes are proposed to make it easier for lawyers to recognize these conflicts when they arise.

 

The introductory phrases in both paragraphs (a) and (b) are designed to clarify the relationship between the two paragraphs.

 

The purpose of these proposed changes is to clarify the text and to better educate lawyers regarding the complex subject of conflict of interest. No change in substance is intended.

 

 

3. Create single paragraph on consentability and informed consent

 

The proposed Rule makes clear that in certain situations a conflict may not be waived by the client. That is, the representation may not go forward even with the client's consent. Unlike the current Rule, the proposed Rule contains a single standard of consentability and informed consent, applicable both to directly adverse and material-limitation conflicts. This standard is set forth in a separate paragraph, both to reflect the separate steps required in analyzing conflicts (i.e., first identify potentially impermissible conflicts, then determine if the representation is permissible with the client's consent) and to highlight the fact that not all conflicts are consentable.

 

Under the current Rule, consentability turns on a determination that the conflict will "not adversely affect the representation." The difficulty with this standard is that in order to determine that a conflict exists in the first place, the lawyer must have already determined that the lawyer's duties or interests are likely to "materially limit" the representation. There is a difference between "material limitation" and "adverse affect on" the representation, but the difference is subtle. As a result, lawyers are understandably confused regarding the circumstances under which consent may be sought.

 

Paragraph (b) breaks down consentability into three components. The first and most common is modeled after the current Rule, in which the goal is to protect clients in situations where the representation is likely to be inadequate. The proposal is to replace the phrase "adverse effect on the representation" with an explicit statement of what that phrase was intended to mean, i.e., that it is unlikely that the lawyer will be able to provide "competent and diligent representation to each affected client." The terms "competent" and "diligent" are already defined and are generally well understood, thus providing a relatively clear standard that lawyers can apply in making the determination whether to go ahead and seek the client's consent. The term "reasonably" makes clear that, as under the current Rule, the consentability standard is an objective one.

 

Paragraphs (b)(2) and (b)(3) articulate situations in which courts and ethics committees have found certain conflicts to be nonconsentable, not only because they may be harmful to clients, but also because there are other interests, for example, the interests of courts, that need to be protected. Paragraph (b)(2) refers to representation "prohibited by law," that is, law other than the Rules of Professional Conduct. (For example, substantive law in some jurisdictions provides that the same lawyer may not represent more than one defendant in a capital case or both the buyer and seller in a real estate transaction.)

 

Paragraph (b)(3) describes conflicts that are nonconsentable because of the institutional interest in adequate development of each client's position when the clients are aligned directly against each other in the same litigation. Thus, these conflicts are nonconsentable even if the lawyer reasonably believed that the representation would be competent and diligent. It has been suggested that there may be similar institutional interests in separate representation in contexts outside litigation. Since it is not possible to describe such situations in language that preserves this paragraph's bright-line text, the Commission believes that these other situations can be adequately addressed under paragraphs (b)(1) and (b)(2).

 

Finally, paragraph (b)(4) substitutes "informed consent" of the client for "consent after consultation." It was felt that "consultation" did not adequately convey the requirement that the client receive full disclosure of the nature and implications of a lawyer's conflict of interest. The term "informed consent" was chosen because it already has a fairly well-accepted meaning in other contexts. That term, which is used throughout the Rules in place of "consent after consultation," is defined in Rule 1.0(e). In each Rule where the term is used, there will be a cross-reference in the Comment to the definition in Rule 1.0(e), as well as language in the Comment providing specialized guidance.

 

The purpose of these proposed changes is to clarify the text and better educate lawyers regarding the complex subject of conflict of interest. No change in substance is intended.

 

 

4. New requirement that informed consent be "confirmed in writing"

 

The Commission was urged to require some form of writing, for the benefit of both the lawyer and the client. Some states have done so, and experience indicates that the requirement is not overly burdensome or impractical.

 

Under the Commission's proposal, it is not necessary that the client's agreement be obtained in a writing signed by the client. Rather, the term "confirmed in writing" is defined by proposed Rule 1.0(b) to denote informed consent that is either given in writing by the person or a writing that a lawyer promptly transmits to the person confirming an oral informed consent. A writing is required in all instances, but the Comment allows for flexibility when there is not time to memorialize the consent before proceeding with the representation. See Comment [20].

COMMENTARY:

 

Conflict of interest doctrine is complicated, and the Commission believes that lawyers are in need of additional guidance. Therefore, the Commission is recommending substantial changes to the Comment to Rule 1.7. The changes are designed to clarify basic conflicts doctrine and to address a number of recurring situations. The proposed organization provides an introduction (Comments [1] through [5]), a general roadmap to conflicts analysis (Comments [6] through [22]) and finally an elaboration of conflicts involving litigation (Comments [23] through [25]), nonlitigation (Comments [26] through [28]), common representation (Comments [29] through [33]) and organizational clients (Comments [34] and [35]).

 

 

General Principles

 

Caption The caption has been changed to better reflect the subject of the following Comments.

 

[1] Comment [1] retains and modifies the first sentence of current Comment [1] but is otherwise new. It states the rationale for the basic prohibition of representation involving conflicts of interest - to avoid compromising loyalty and independent judgment. It then adds cross-references to Rules 1.8 and 1.9.

 

[2] This entirely new Comment outlines a four-step process for recognizing and resolving conflict-of-interest problems.

 

[3] This Comment incorporates much of the remainder of current Comment [1]. Changes in the first sentence reflect the dual requirements of paragraphs (a) and (b) that the lawyer recognize a conflict and decline representation unless the requirements of paragraph (b) have been met. The Comment adds a cross-reference to the Rule 5.1 Comment, which states the requirement that lawyers with managerial authority within a law firm make reasonable efforts to establish internal systems for determining conflicts of interest. The last sentence is identical to the last sentence in current Comment [2].

 

[4] This Comment incorporates much of current Comment [2]. Changes are designed to more clearly state the requirements of the Rule where a conflict arises after a representation has commenced and, in addition, to indicate the type of analysis required to determine whether a lawyer must withdraw from representing one of several clients represented concurrently by the lawyer or, in some cases, from representing all of them.

[5] This new Comment addresses the problem of conflicts that arise after a representation has commenced as a result of unforeseeable developments, such as a merger or acquisition by a corporate client. In the disqualification context, courts have often recognized that it is unreasonable to require the lawyer to withdraw from representing both clients and have permitted the lawyer to withdraw from one of the two representations in order to avoid the conflict (something that is ordinarily not permitted under the so-called "hot potato" doctrine). The Comment specifies that the lawyer may be permitted to withdraw from one of the representations in order to avoid the conflict. The Comment requires the lawyer to comply with Rule 1.16, including seeking court approval where necessary. The Comment further reminds lawyers that they continue to owe the now former client the duty to keep confidential any information gained during the course of the representation.

 

Identifying Conflicts of Interest: Directly Adverse

 

Caption The caption has been added to better reflect the following Comments.

 

[6] This Comment incorporates much of current Comment [3]. It addresses the conflicts defined in paragraph (a)(1), i.e., "directly adverse" conflicts. It provides the rationale for the Rule, addresses the question of whether the Rule applies when a lawyer will have to cross-examine a present client and explains how "directly adverse" conflicts also pose "material limitation" conflicts with respect to the lawyer's existing client.

[7] This new Comment explains how directly adverse conflicts may arise in some transactional matters.

 

Identifying Conflicts of Interest: Material Limitation

 

Caption The caption has been added to better reflect the following Comment.

 

[8] This Comment incorporates much of current Comment [4]. It addresses the conflicts defined in paragraph (a)(2), i.e., "material limitation" conflicts. The changes are designed to clarify the relationship between paragraphs (a)(1) and (a)(2) and to address the question of how likely the risk of harm must be before a conflict of interest is determined to exist.

 

 

Lawyer's Responsibilities to Former Clients and Other Third Persons

 

Caption The caption has been modified to better reflect the subject of the Comment.

 

[9] This new Comment explains the variety of ways conflicts arise other than from duties to existing or prospective clients, including a specification of some of the ways in which a lawyer's duties to third persons may interfere with the representation of present clients. It specifies that such third persons include former clients and provides a cross-reference to Rule 1.9. This Comment should help clarify that when there is a conflict between a prospective client and a former client, the representation may be undertaken only if the requirements of both Rules 1.7 and 1.9 are met.

 

 

Personal Interest Conflicts

 

Caption The caption has been added to better reflect the following Comments.

 

[10] This Comment addresses conflicts arising from a lawyer's self-interest and retains most of current Comment [6]. The sentence regarding fees has been deleted on the ground that conflicts between lawyers and prospective clients regarding fee arrangements are typically addressed not by "conflict of interest" rules but rather by Rule 1.5, which regulates fees directly. The third sentence is intended to incorporate ABA Formal Opinion 96-400, which addresses a lawyer negotiating for employment with opposing counsel, which might lead to a lawyer switching to the law firm opposing the lawyer's client in the middle of a representation. The last two sentences add cross-references to Rules 1.8 and 1.10.

[11] This new Comment addresses conflicts arising from a lawyer's family relationships, a topic that was previously addressed in Rule 1.8(i). (For a discussion of the reasons why the Commission is proposing to delete Rule 1.8(i) and address a lawyer's family relationships in the Rule 1.7 Comment, see the Reporter's Explanation on Rule 1.8.) This Comment explains how conflicts arise under Rule 1.7(b) when lawyers representing different clients are closely related. The cross-reference to Rule 1.10 reminds lawyers that these personal-interest conflicts ordinarily will not be imputed to members of the disqualified lawyer's firm.

 

[12] This new Comment provides a cross-reference to Rule 1.8(j), which prohibits lawyers from engaging in sexual relationships with clients in most circumstances.

 

 

Interest of Person Paying for a Lawyer's Service

 

[13] This Comment modifies current Comment [10] by eliminating the specific illustrations and explaining the relationship between Rules 1.7 and 1.8(f). The Commission is recommending a specific reference in Rule 1.8(f), Comment [12], to compliance with the requirements of Rule 1.7 when third-party payment involves a conflict of interest. The examples involving insurance defense and corporate constituents have been deleted on the grounds that these examples involve a number of complex questions that cannot adequately be addressed in this Comment.

 

 

Prohibited Representations

 

Caption The caption has been changed in order to highlight and then focus on the fact that there are some representations that are prohibited, even with the informed consent of the client.

 

[14] This Comment modifies current Comment [5] in order to more clearly articulate the fact that some conflicts are nonconsentable, meaning that the lawyer may not undertake the representation even with the client's informed consent.

 

[15] This new Comment addresses the standard by which consentability is determined under paragraph (b)(1), i.e., when the concern is for the client's own protection.

[16] This new Comment describes the standard by which consentability is determined under paragraph (b)(2), i.e., when the representation is prohibited by applicable law, and provides some examples.

 

[17] This new Comment describes the standard by which consentability is determined under paragraph (b)(3), i.e., when the clients are aligned directly against each other in the same litigation, and explains that the rationale is to protect institutional interests in vigorous development of each client's position.

 

 

Informed Consent

 

Caption The caption has been changed to reflect the substantive change in the text from "consent after consultation" to "informed consent."

 

[18] This new Comment explains what is required to meet the requirement that the lawyer obtain the client's informed consent and provides cross-references both to Rule 1.0(e) and to the more detailed paragraphs of this Comment on the implications of common representation.

 

[19] This new Comment addresses circumstances when it may be impossible to make the disclosures required to obtain consent.

 

Consent Confirmed in Writing

 

Caption The caption has been added to set off the new Comment.

 

[20] This new Comment addresses the new requirement under paragraph (b)(4) that the informed consent of the client be confirmed in writing. It states that it is not necessary in all instances that the writing be obtained or provided at the time the client gives informed consent. If it is not feasible to do so because of the exigencies of the circumstances, then the lawyer may confirm the consent in writing within a reasonable time thereafter.

 

Revoking Consent

 

Caption The caption has been added to set off the new Comment.

 

[21] This new Comment explains that, while a client may always revoke consent and terminate the lawyer's representation of the client, whether or not the revocation will preclude the lawyer from continuing to represent other clients will depend on the circumstances, including the nature of the conflict.

 

 

Consent to a Future Conflict

 

Caption The caption has been added to set off the new Comment.

 

[22] This new Comment addresses a question that has arisen frequently in practice, i.e., the effectiveness of consent to future conflicts. The Comment states that whether such consent is effective is determined by the test of paragraph (b), specifically whether the conflict is consentable and whether the client has given truly informed consent.

 

Conflicts in Litigation

 

[23] This Comment maintains current Comment [7] with only a few modifications reflecting textual changes.

 

 

[8] The Commission recommends deleting current Comment [8] because the material here is now addressed in Comment [6].

 

 

[9] The Commission recommends deleting current Comment [9] because the material here is now addressed in Comment [24].

 

[24] This new Comment replaces current Comment [9] on "positional conflicts." It focuses primarily, not on whether such conflicts are consentable, but rather on the more important and troubling question of whether the clients need to be consulted. The current Comment has been uniformly criticized for making too much of the distinction between trial and appellate courts. This Comment uses an analysis similar to that used for other conflicts, i.e., whether there is a significant risk that the lawyer's duties in one representation are likely to materially limit the lawyer's duties in the other representation. It must be kept in mind, however, that it may be difficult to detect some positional conflicts. Moreover, there is a need to avoid giving clients too much veto power over what types of representation a lawyer or law firm may handle.

 

[25] This new Comment addresses the application of paragraph (a)(1) to lawyers involved in class-action lawsuits.

 

 

Nonlitigation Conflicts

 

Caption The caption has been changed to reflect the emphasis in these Comments on nonlitigation conflicts.

 

[26] This Comment maintains current Comment [11] with a few modifications designed to clarify the application of conflict-of-interest doctrine to nonlitigation situations.

 

[27] This Comment maintains current Comment [13] with a few stylistic changes.

 

[28] This Comment maintains current Comment [12] with an expanded discussion of nonconsentability in the context of transactional representation. The expanded discussion is taken from the Comment to current Rule 2.2.

 

 

Special Considerations in Common Representation

 

These Comments are taken primarily from the Comment to current Rule 2.2, which the Commission is recommending be deleted on the grounds that the relationship between Rules 2.2 and 1.7 is confusing, the role of lawyer as "intermediary" has not been well understood and the Rule has not proved helpful in clarifying conflict-of-interest doctrine for lawyers. (See memorandum regarding proposed deletion of Rule 2.2.) The Commission believes that situations intended to be encompassed within Rule 2.2 can be adequately dealt with under Rule 1.7 and its Comment.

 

Caption The caption has been added to set off the new Comments.

 

[29] This new Comment combines Comments [4] and [7] to current Rule 2.2. "Intermediation" has been changed to "common representation." In addition, in keeping with the general standard of Rule 1.7(b)(1), the Comment states that common representation is improper, not only when impartiality "cannot" be maintained, but also when it is "unlikely" that the lawyer can do so. The Comment also makes clear that a lawyer may be required to withdraw from the representation entirely, depending upon the outcome of the analysis described in Comment [4].

 

[30] This Comment and Comment [31] are a modified version of Comment [6] to current Rule 2.2. The discussions of evidentiary privilege and the rule of confidentiality have been separated. This Comment addresses the privilege.

 

[31] This Comment is a modified version of the portion of Comment [6] to current Rule 2.2 that addresses the effect of the obligation of confidentiality on common representation. Unlike current Comment [6], this Comment gives more explicit guidance to lawyers, emphasizing that they should discuss confidentiality at the outset of the representation and that in most cases the common representation will be proper only if the clients have agreed that the lawyer will not maintain confidences between them.

 

[32] This Comment combines and substantially modifies Comments [8] and [9] to current Rule 2.2 and addresses the requirement of informed consent. It specifies that, when seeking to establish or adjust a relationship between clients, the lawyer must explain how such a role differs from the partisan role expected in other circumstances. It further requires the lawyer to explain the implications of the changed role on the client's responsibility for making decisions.

 

[33] This new Comment is a slightly modified version of Comment [10] to current Rule 2.2. The changes are stylistic.

 

 

Organizational Clients

 

Caption The caption has been added to set off the new Comments.

 

[34] This new Comment addresses the application of paragraph (a) to situations involving corporate or other organizational affiliates. The language is largely drawn from the conclusions of ABA Standing Committee on Ethics and Professional Responsibility Formal Opinion 95-390, although the Commission believes that there will be more situations in which the lawyer will be prohibited from undertaking representation than may have been reflected in that opinion.

 

[35] This Comment maintains current Comment [14] with modifications designed to reflect that, when problems arise with a lawyer-director, the lawyer may either resign as director or cease acting as the corporation's lawyer, and to advise the lawyer of the possible consequences of discussing matters at board meetings while the lawyer is present in the capacity of director.

 

 

[15] The Commission proposes to delete current Comment [15] and the associated caption because it addresses questions outside the disciplinary context.

 

 

RULE 1.8: CONFLICT OF INTEREST: PROHIBITED TRANSACTIONS CURRENT CLIENTS: SPECIFIC RULES

 

(a) A lawyer shall not enter into a business transaction with a client or knowingly acquire an ownership, possessory, security or other pecuniary interest adverse to a client unless:

 

(1) the transaction and terms on which the lawyer acquires the interest are fair and reasonable to the client and are fully disclosed and transmitted in writing to the client in a manner which that can be reasonably understood by the client;

(2) the client is advised in writing of the desirability of seeking and is given a reasonable opportunity to seek the advice of independent legal counsel in on the transaction; and

(3) the client consents gives informed consent, in a writing thereto signed by the client, to the essential terms of the transaction and the lawyer's role in the transaction, including whether the lawyer is representing the client in the transaction.

(b) A lawyer shall not use information relating to representation of a client to the disadvantage of the client unless the client consents after consultation gives informed consent, except as permitted or required by Rule 1.6 or Rule 3.3 these Rules.

 

(c) A lawyer shall not solicit any substantial gift from a client, including a testamentary gift, or prepare on behalf of a client an instrument giving the lawyer or a person related to the lawyer as parent, child, sibling, or spouse any substantial gift from a client, including a testamentary unless the lawyer or other recipient of the gift , except where the client is related to the donee client. For purposes of this paragraph, related persons include a spouse, child, grandchild, parent, grandparent or other relative or individual with whom the lawyer or the client maintains a close, familial relationship.

 

(d) Prior to the conclusion of representation of a client, a lawyer shall not make or negotiate an agreement giving the lawyer literary or media rights to a portrayal or account based in substantial part on information relating to the representation.

 

(e) A lawyer shall not provide financial assistance to a client in connection with pending or contemplated litigation, except that:

 

(1) a lawyer may advance court costs and expenses of litigation, the repayment of which may be contingent on the outcome of the matter; and

(2) a lawyer representing an indigent client may pay court costs and expenses of litigation on behalf of the client.

(f) A lawyer shall not accept compensation for representing a client from one other than the client unless:

 

(1) the client consents after consultation gives informed consent;

 

(2) there is no interference with the lawyer's independence of professional judgment or with the client-lawyer relationship; and

(3) information relating to representation of a client is protected as required by Rule 1.6.

(g) A lawyer who represents two or more clients shall not participate in making an aggregate settlement of the claims of or against the clients, or in a criminal case an aggregated agreement as to guilty or nolo contendere pleas, unless each client consents after consultation, including gives informed consent, in a writing signed by the client. The lawyer's disclosure of shall include the existence and nature of all the claims or pleas involved and of the participation of each person in the settlement.

 

(h) A lawyer shall not :

 

(1) make an agreement prospectively limiting the lawyer's liability to a client for malpractice unless permitted by law and the client is independently represented in making the agreement , ; or

(2) settle a claim or potential claim for such liability with an unrepresented client or former client without first advising unless that person is advised in writing that of the desirability of seeking and is given a reasonable opportunity to seek the advice of independent representation is appropriate legal counsel in connection therewith.

 

(i) A lawyer related to another lawyer as parent, child, sibling or spouse shall not represent a client in a representation directly adverse to a person whom the lawyer knows is represented by the other lawyer except upon consent by the client after consultation regarding the relationship.

 

 

(j) (i) A lawyer shall not acquire a proprietary interest in the cause of action or subject matter of litigation the lawyer is conducting for a client, except that the lawyer may:

 

(1) acquire a lien granted authorized by law to secure the lawyer's fee or expenses; and

(2) contract with a client for a reasonable contingent fee in a civil case.

 

 

(j) A lawyer shall not have sexual relations with a client unless a consensual sexual relationship existed between them when the client-lawyer relationship commenced.

 

 

(k) While lawyers are associated in a firm, a prohibition in the foregoing paragraphs (a) through (i) that applies to any one of them shall apply to all of them.

 

 

Commentary

 

 

Business Transactions Between Client and Lawyer

 

[1] As a general principle, all transactions between client and lawyer should be fair and reasonable to the client. In such transactions a review by independent counsel on behalf of the client is often advisable. Furthermore, a lawyer may not exploit information relating to the representation to the client's disadvantage. For example, a lawyer who has learned that the client is investing in specific real estate may not, without the client's consent, seek to acquire nearby property where doing so would adversely affect the client's plan for investment. Paragraph (a) A lawyer's legal skill and training, together with the relationship of trust and confidence between lawyer and client, create the possibility of overreaching when the lawyer participates in a business, property or financial transaction with a client, for example, a loan or sales transaction or a lawyer investment on behalf of a client. The requirements of paragraph (a) must be met even when the transaction is not closely related to the subject matter of the representation, as when a lawyer drafting a will for a client learns that the client needs money for unrelated expenses and offers to make a loan to the client. The Rule applies to lawyers engaged in the sale of goods or services related to the practice of law, for example, the sale of title insurance or investment services to existing clients of the lawyer's legal practice. See Rule 5.7. It also applies to lawyers purchasing property from estates they represent. It does not apply to ordinary fee arrangements between client and lawyer, which are governed by Rule 1.5, although its requirements must be met when the lawyer accepts an interest in the client's business or other nonmonetary property as payment of all or part of a fee. In addition, the Rule does not , however, apply to standard commercial transactions between the lawyer and the client for products or services that the client generally markets to others, for example, banking or brokerage services, medical services, products manufactured or distributed by the client, and utilities' services. In such transactions, the lawyer has no advantage in dealing with the client, and the restrictions in paragraph (a) are unnecessary and impracticable.

 

 

[2] Paragraph (a)(1) requires that the transaction itself be fair to the client and that its essential terms be communicated to the client, in writing, in a manner that can be reasonably understood. Paragraph (a)(2) requires that the client also be advised, in writing, of the desirability of seeking the advice of independent legal counsel. It also requires that the client be given a reasonable opportunity to obtain such advice. Paragraph (a)(3) requires that the lawyer obtain the client's informed consent, in a writing signed by the client, both to the essential terms of the transaction and to the lawyer's role. When necessary, the lawyer should discuss both the material risks of the proposed transaction, including any risk presented by the lawyer's involvement, and the existence of reasonably available alternatives and should explain why the advice of independent legal counsel is desirable. See Rule 1.0(e) (definition of informed consent).

 

 

[3] The risk to a client is greatest when the client expects the lawyer to represent the client in the transaction itself or when the lawyer's financial interest otherwise poses a significant risk that the lawyer's representation of the client will be materially limited by the lawyer's financial interest in the transaction. Here the lawyer's role requires that the lawyer must comply, not only with the requirements of paragraph (a), but also with the requirements of Rule 1.7. Under that Rule, the lawyer must disclose the risks associated with the lawyer's dual role as both legal adviser and participant in the transaction, such as the risk that the lawyer will structure the transaction or give legal advice in a way that favors the lawyer's interests at the expense of the client. Moreover, the lawyer must obtain the client's informed consent. In some cases, the lawyer's interest may be such that Rule 1.7 will preclude the lawyer from seeking the client's consent to the transaction.

 

 

[4] If the client is independently represented in the transaction, paragraph (a)(2) of this Rule is inapplicable, and the paragraph (a)(1) requirement for full disclosure is satisfied either by a written disclosure by the lawyer involved in the transaction or by the client's independent counsel. The fact that the client was independently represented in the transaction is relevant in determining whether the agreement was fair and reasonable to the client as paragraph (a)(1) further requires.

 

 

Use of Information Related to Representation

 

 

[5] Use of information relating to the representation to the disadvantage of the client violates the lawyer's duty of loyalty. Paragraph (b) applies when the information is used to benefit either the lawyer or a third person, such as another client or business associate of the lawyer. For example, if a lawyer learns that a client intends to purchase and develop several parcels of land, the lawyer may not use that information to purchase one of the parcels in competition with the client or to recommend that another client make such a purchase. The Rule does not prohibit uses that do not disadvantage the client. For example, a lawyer who learns a government agency's interpretation of trade legislation during the representation of one client may properly use that information to benefit other clients. Paragraph (b) prohibits disadvantageous use of client information unless the client gives informed consent, except as permitted or required by these Rules. See Rules 1.2(d), 1.6, 1.9(c), 3.3, 4.1(b), 8.1 and 8.3.

 

 

Gifts to Lawyers

 

 

[2] [6] A lawyer may accept a gift from a client, if the transaction meets general standards of fairness. For example, a simple gift such as a present given at a holiday or as a token of appreciation is permitted. If a client offers the lawyer a more substantial gift, paragraph (c) does not prohibit the lawyer from accepting it, although such a gift may be voidable by the client under the doctrine of undue influence, which treats client gifts as presumptively fraudulent. In any event, due to concerns about overreaching and imposition on clients, a lawyer may not suggest that a substantial gift be made to the lawyer or for the lawyer's benefit, except where the lawyer is related to the client as set forth in paragraph (c).

 

 

[7] If effectuation of a substantial gift requires preparing a legal instrument such as a will or conveyance, however, the client should have the detached advice that another lawyer can provide. Paragraph (c) recognizes an The sole exception to this Rule is where the client is a relative of the donee or the gift is not substantial.

 

 

[8] This Rule does not prohibit a lawyer from seeking to have the lawyer or a partner or associate of the lawyer named as executor of the client's estate or to another potentially lucrative fiduciary position. Nevertheless, such appointments will be subject to the general conflict of interest provision in Rule 1.7 when there is a significant risk that the lawyer's interest in obtaining the appointment will materially limit the lawyer's independent professional judgment in advising the client concerning the choice of an executor or other fiduciary. In obtaining the client's informed consent to the conflict, the lawyer should advise the client concerning the nature and extent of the lawyer's financial interest in the appointment, as well as the availability of alternative candidates for the position.

 

Literary Rights

 

 

[3] [9] An agreement by which a lawyer acquires literary or media rights concerning the conduct of the representation creates a conflict between the interests of the client and the personal interests of the lawyer. Measures suitable in the representation of the client may detract from the publication value of an account of the representation. Paragraph (d) does not prohibit a lawyer representing a client in a transaction concerning literary property from agreeing that the lawyer's fee shall consist of a share in ownership in the property, if the arrangement conforms to Rule 1.5 and paragraph (j) paragraphs (a) and (i).

 

 

Financial Assistance

 

 

[10] Lawyers may not subsidize lawsuits or administrative proceedings brought on behalf of their clients, including making or guaranteeing loans to their clients for living expenses, because to do so would encourage clients to pursue lawsuits that might not otherwise be brought and because such assistance gives lawyers too great a financial stake in the litigation. These dangers do not warrant a prohibition on a lawyer lending a client court costs and litigation expenses, including the expenses of medical examination and the costs of obtaining and presenting evidence, because these advances are virtually indistinguishable from contingent fees and help ensure access to the courts. Similarly, an exception allowing lawyers representing indigent clients to pay court costs and litigation expenses regardless of whether these funds will be repaid is warranted.

 

 

Person Paying for a Lawyer's Services

 

 

[4] Paragraph (f) requires disclosure of the fact that the lawyer's services are being paid for by a third party. Such an arrangement must also conform to the requirements of Rule 1.6 concerning confidentiality and Rule 1.7 concerning conflict of interest. Where the client is a class, consent may be obtained on behalf of the class by court-supervised procedure.

 

 

[11] Lawyers are frequently asked to represent a client under circumstances in which a third person will compensate the lawyer, in whole or in part. The third person might be a relative or friend, an indemnitor (such as a liability insurance company) or a co-client (such as a corporation sued along with one or more of its employees). Because third-party payers frequently have interests that differ from those of the client, including interests in minimizing the amount spent on the representation and in learning how the representation is progressing, lawyers are prohibited from accepting or continuing such representations unless the lawyer determines that there will be no interference with the lawyer's independent professional judgment and there is informed consent from the client. See also Rule 5.4(c) (prohibiting interference with a lawyer's professional judgment by one who recommends, employs or pays the lawyer to render legal services for another).

 

 

[12] Sometimes, it will be sufficient for the lawyer to obtain the client's informed consent regarding the fact of the payment and the identity of the third-party payer. If, however, the fee arrangement creates a conflict of interest for the lawyer, then the lawyer must comply with Rule. 1.7. The lawyer must also conform to the requirements of Rule 1.6 concerning confidentiality. Under Rule 1.7(a), a conflict of interest exists if there is significant risk that the lawyer's representation of the client will be materially limited by the lawyer's own interest in the fee arrangement or by the lawyer's responsibilities to the third-party payer (for example, when the third-party payer is a co-client). Under Rule 1.7(b), the lawyer may accept or continue the representation with the informed consent of each affected client, unless the conflict is nonconsentable under that paragraph. Under Rule 1.7(b), the informed consent must be confirmed in writing.

 

 

Aggregate Settlements

 

 

[13] Differences in willingness to make or accept an offer of settlement are among the risks of common representation of multiple clients by a single lawyer. Under Rule 1.7, this is one of the risks that should be discussed before undertaking the representation, as part of the process of obtaining the clients' informed consent. In addition, Rule 1.2(a) protects each client's right to have the final say in deciding whether to accept or reject an offer of settlement and in deciding whether to enter a guilty or nolo contendere plea in a criminal case. The rule stated in this paragraph is a corollary of both these Rules and provides that, before any settlement offer or plea bargain is made or accepted on behalf of multiple clients, the lawyer must inform each of them about all the material terms of the settlement, including what the other clients will receive or pay if the settlement or plea offer is accepted. See also Rule 1.0(e) (definition of informed consent). Lawyers representing a class of plaintiffs or defendants, or those proceeding derivatively, may not have a full client-lawyer relationship with each member of the class; nevertheless, such lawyers must comply with applicable rules regulating notification of class members and other procedural requirements designed to ensure adequate protection of the entire class.

 

 

Limiting Liability and Settling Malpractice Claims

 

 

[5] Paragraph (h) is not intended to apply to customary qualifications and limitations in legal opinions and memoranda.

 

 

[14] Agreements prospectively limiting a lawyer's liability for malpractice are prohibited unless the client is independently represented in making the agreement because they are likely to undermine competent and diligent representation. Also, many clients are unable to evaluate the desirability of making such an agreement before a dispute has arisen, particularly if they are then represented by the lawyer seeking the agreement. This paragraph does not, however, prohibit a lawyer from entering into an agreement with the client to arbitrate legal malpractice claims, provided such agreements are enforceable and the client is fully informed of the scope and effect of the agreement. Nor does this paragraph limit the ability of lawyers to practice in the form of a limited-liability entity, where permitted by law, provided that each lawyer remains personally liable to the client for his or her own conduct and the firm complies with any conditions required by law, such as provisions requiring client notification or maintenance of adequate liability insurance. Nor does it prohibit an agreement in accordance with Rule 1.2 that defines the scope of the representation, although a definition of scope that makes the obligations of representation illusory will amount to an attempt to limit liability.

 

 

[15] Agreements settling a claim or a potential claim for malpractice are not prohibited by this Rule. Nevertheless, in view of the danger that a lawyer will take unfair advantage of an unrepresented client or former client, the lawyer must first advise such a person in writing of the appropriateness of independent representation in connection with such a settlement. In addition, the lawyer must give the client or former client a reasonable opportunity to find and consult independent counsel.

 

 

Family Relationships Between Lawyers

 

[6] Paragraph (i) applies to related lawyers who are in different firms. Related lawyers in the same firm are governed by Rules 1.7, 1.9, and 1.10. The disqualification stated in paragraph (i) is personal and is not imputed to members of firms with whom the lawyers are associated.

 

 

Acquisition of Acquiring Proprietary Interest in Litigation

 

 

[7] [16] Paragraph (j) (i) states the traditional general rule that lawyers are prohibited from acquiring a proprietary interest in litigation. This Like paragraph (e), the general rule , which has its basis in common law champerty and maintenance , and is designed to avoid giving the lawyer too great an interest in the representation. In addition, when the lawyer acquires an ownership interest in the subject of the representation, it will be more difficult for a client to discharge the lawyer if the client so desires. The Rule is subject to specific exceptions developed in decisional law and continued in these Rules , such as the exception for reasonable contingent fees set forth in Rule 1.5 and the exception for certain advances of the costs of litigation set forth in paragraph (e). The exception for certain advances of the costs of litigation is set forth in paragraph (e). In addition, paragraph (i) sets forth exceptions for liens authorized by law to secure the lawyer's fees or expenses and contracts for reasonable contingent fees. The law of each jurisdiction determines which liens are authorized by law. These may include liens granted by statute, liens originating in common law and liens acquired by contract with the client. When a lawyer acquires by contract a security interest in property other than that recovered through the lawyer's efforts in the litigation, such an acquisition is a business or financial transaction with a client and is governed by the requirements of paragraph (a). Contracts for contingent fees in civil cases are governed by Rule 1.5.

 

 

Client-Lawyer Sexual Relationships

 

 

[17] The relationship between lawyer and client is a fiduciary one in which the lawyer occupies the highest position of trust and confidence. The relationship is almost always unequal; thus, a sexual relationship between lawyer and client can involve unfair exploitation of the lawyer's fiduciary role, in violation of the lawyer's basic ethical obligation not to use the trust of the client to the client's disadvantage. In addition, such a relationship presents a significant danger that, because of the lawyer's emotional involvement, the lawyer will be unable to represent the client without impairment of the exercise of independent professional judgment. Moreover, a blurred line between the professional and personal relationships may make it difficult to predict to what extent client confidences will be protected by the attorney-client evidentiary privilege, since client confidences are protected by privilege only when they are imparted in the context of the client-lawyer relationship. Because of the significant danger of harm to client interests and because the client's own emotional involvement renders it unlikely that the client could give adequate informed consent, this Rule prohibits the lawyer from having sexual relations with a client regardless of whether the relationship is consensual and regardless of the absence of prejudice to the client.

 

[18] Sexual relationships that predate the client-lawyer relationship are not prohibited. Issues relating to the exploitation of the fiduciary relationship and client dependency are diminished when the sexual relationship existed prior to the commencement of the client-lawyer relationship. However, before proceeding with the representation in these circumstances, the lawyer should consider whether the lawyer's ability to represent the client will be materially limited by the relationship. See Rule 1.7(a)(2).

 

[19] When the client is an organization, paragraph (j) of this Rule prohibits a lawyer for the organization (whether inside counsel or outside counsel) from having a sexual relationship with a constituent of the organization who supervises, directs or regularly consults with that lawyer concerning the organization's legal matters.

 

 

Imputation of Prohibitions

 

[20] Under paragraph (k), a prohibition on conduct by an individual lawyer in paragraphs (a) through (i) also applies to all lawyers associated in a firm with the personally prohibited lawyer. For example, one lawyer in a firm may not enter into a business transaction with a client of another member of the firm without complying with paragraph (a), even if the first lawyer is not personally involved in the representation of the client. The prohibition set forth in paragraph (j) is personal and is not applied to associated lawyers.

 

Model Rule 1.8

Reporter's Explanation of Changes

 

Caption

Change to "Conflict of Interest: Current Clients: Specific Rules"

 

The caption has been changed to parallel the change in Rule 1.7 and to more accurately reflect the scope of the Rule.

 

 

Rule 1.8(a): Business Transactions between Client and Lawyer

 

TEXT:

 

1. Paragraph (a)(1): Stylistic changes

 

The changes to this paragraph are grammatical and stylistic. No change in substance is intended.

 

2. Paragraph (a)(2): Client to be advised in writing of desirability of seeking counsel

 

The Commission recommends adding a requirement that the client be advised in writing of the desirability of seeking the advice of independent legal counsel, in addition to affording the client a reasonable opportunity to seek such counsel. A number of jurisdictions have adopted such a requirement. The Commission believes these additional requirements are necessary for the protection of clients; moreover, some are already imposed by common-law decisions providing for the voidability of such transactions by clients.

 

3. Paragraph (a)(3): Informed consent to essential terms of transaction and lawyer's role

 

The Commission recommends clarifying the nature of the consent to be given by the client under this paragraph. Lawyers have reported considerable confusion regarding its meaning. Several states have specified that the consent refers to the essential terms of the transaction. Case law in some jurisdictions goes further and requires disclosure regarding the risks of the transaction. The Commission recommends informed consent to both the terms of the transaction and the lawyer's role, including whether the lawyer is representing the client in the transaction.

 

4. Paragraph (a)(3): Informed consent in writing signed by client

 

The Commission is proposing a number of revisions to the Rules that would require the lawyer to document certain communications or agreements in writing. The Commission believes that it should be clear in all instances what type of writing is required, particularly whether the writing needs to be signed by the client. Certain terms are defined in Rule 1.0, including the term "writing." Because there are only a few instances in which a client's signature is required, the Commission is recommending that those instances be clearly stated in the text of the Rule. The Commission believes that, because of the risk of overreaching in business transactions between lawyers and clients, the client's informed consent to both the essential terms of the transaction and the lawyer's role should be obtained in a writing signed by the client.

 

COMMENTARY:

 

Caption "Business" was added to the caption to clarify its meaning.

 

[1] This Comment was revised to state the rationale for the Rule and to clarify which transactions are covered.

 

[2] This new Comment emphasizes that the lawyer must comply with the requirements of all three subparagraphs. It also elaborates on the nature of the disclosure the lawyer must make under paragraph (a)(3), including a cross-reference to Rule 1.0(e), which gives the general definition of informed consent.

 

[3] This new Comment clarifies the relationship between Rules 1.8(a) and 1.7, which has not been well understood by lawyers. Both Rules apply whenever the client reasonably expects that the lawyer is representing the client in the transaction itself or when the lawyer's financial interest in the transaction otherwise creates a significant risk to the lawyer's representation of the client in another matter. Thus, Rule 1.8(a) focuses on the risks of the transaction itself, whereas Rule 1.7 focuses on the risks of the representation.

 

[4] This new Comment clarifies how paragraph (a) applies when the client is represented by independent counsel in the transaction.

 

 

Rule 1.8(b): Use of Information Related to Representation

 

TEXT:

 

1. Replace "consent after consultation" with "gives informed consent"

 

The Commission is recommending that throughout the Rules the phrase "consent after consultation" be replaced with "gives informed consent," as defined in Rule 1.0(e). No change in substance is intended.

 

2. Replace "Rule 1.6 or Rule 3.3" with "these Rules"

 

The Commission recommends that the enumeration of applicable Rules should be in commentary rather than in text. No change in substance is intended.

 

COMMENTARY:

 

Caption The caption was added to set off new Comment [5].

 

[5] This new Comment states the rationale for the Rule and gives examples of both prohibited and permissible uses of information relating to the representation.

 

 

Rule 1.8(c): Gifts to Lawyers

 

TEXT:

 

1. Add prohibition on lawyer solicitation of substantial gifts

 

The Commission recommends adding a prohibition on a lawyer soliciting a substantial gift from a client, in order to avoid the danger of overreaching. The current Rule has been criticized for regulating gifts made by instrument but not those made in other ways.

 

2. Change in definition of relationships that fall within the exception for lawyers related to client or donee

 

The Commission has retained the exception for related lawyers. It is recommending changes to clarify that the same degree of relatedness applies in determining whether the donee is related to both the lawyer and the client and to adopt the more expansive and flexible definition of the ABA Model Code of Judicial Conduct (defining "member of the judge's family").

 

COMMENTARY:

 

Caption The caption has been added to set off the following Comments.

 

[6] Current Comment [2] has been revised to reflect the Commission's decision to prohibit lawyer solicitation of nontestamentary gifts, except when such gifts are insubstantial. It also reminds lawyers that, while the Rule does not prohibit lawyers from accepting substantial gifts not solicited by the lawyer, such gifts may be voidable by the client under the doctrine of undue influence.

 

[7] This Comment is also based on current Comment [2]. The changes are stylistic. No change in substance is intended.

 

[8] This new Comment clarifies a present ambiguity by addressing the question of whether appointment of the lawyer or the lawyer's firm as executor constitutes a "substantial gift" within the meaning of this Rule. The Commission believes that such appointments are not "gifts" but that they may create a conflict of interest between the client and the lawyer that would be governed by Rule 1.7.

 

 

Rule 1.8(d): Literary Rights

 

TEXT:

 

No change recommended.

 

COMMENTARY:

 

[9] The sole revision to current Comment [3] adds an additional cross-reference to Rule 1.8(a).

 

 

Rule 1.8(e): Financial Assistance

 

TEXT:

 

No change recommended.

 

COMMENTARY:

 

Caption The caption has been added to set off the new Comment.

 

[10] This new Comment states the rationale for the Rule, explains that it covers both making and guaranteeing loans and indicates more specifically the kind of expenses that lawyers are permitted to advance. No change in substance is intended.

 

 

Rule 1.8(f): Person Paying for Lawyer's Services

 

TEXT:

 

 

Change "consents after consultation" to "gives informed consent"

 

The Commission is recommending that throughout the Rules the phrase "consent after consultation" be replaced with "gives informed consent," as defined in Rule 1.0(e). No change in substance is intended.

 

COMMENTARY:

 

[11] This new Comment replaces current Comment [4]. It presents a more detailed explanation of the rationale for and requirements of the Rule. It also clarifies that a client who pays for the representation of a co-client is governed by this Rule. Finally, it adds a cross-reference to Rule 5.4(c).

 

[12] This new Comment explains the relationship between this Rule and Rule 1.7.

 

 

Rule 1.8(g): Aggregate Settlements

 

TEXT:

 

1. Replace "consents after consultation" with "gives informed consent"

 

The Commission is recommending that throughout the Rules the phrase "consent after consultation" be replaced with "gives informed consent," as defined in Rule 1.0(e). No change in substance is intended.

 

2. Client consent required to be "in a writing signed by the client"

 

The Commission is proposing a number of revisions to the Rules that would require the lawyer to document certain communications or agreements in writing. The Commission believes that it should be clear in all instances what type of writing is required, particularly, whether the writing needs to be signed by the client. Certain terms are defined in Rule 1.0, including the term "writing." Because there are only a few instances in which a client's signature is required, the Commission is recommending that those instances be clearly stated in the text of the Rule. The Commission believes that because aggregate settlements entail settlement offers posing potentially serious conflicts of interest between the clients, each client's informed consent should be obtained in a writing signed by the client.

 

COMMENTARY:

 

Caption The caption has been added to set off the new Comment.

 

[13] This new Comment states the rationale for the Rule, which is an application of Rules 1.7 and 1.2. In addition, it reminds lawyers involved in class actions that, while this Rule does not apply, lawyers must comply with procedural requirements regarding notification of the class.

 

 

Rule 1.8(h): Limiting Liability and Settling Malpractice Claims

 

TEXT:

 

1. Break Rule into two paragraphs

 

The purpose of this change is to clarify the two separate obligations under this Rule. No change in substance is intended.

 

2. Paragraph (h)(1): Delete "unless permitted by law"

 

The Commission is unaware of any statute or case law that addresses the question of whether such agreements should be permitted. Given that the phrase "unless permitted by law" appears to play no significant role in addressing these conflicts, the Commission is recommending that such agreements be permitted when the client is independently represented. The Commission believes that there may be good reasons to permit a lawyer to limit liability prospectively and that the client is adequately protected when represented by independent counsel.

 

3. Paragraph (h)(2): Add "potential claim"

 

The purpose of this change is to clarify that the Rule applies even when the client has not actually asserted a claim, for example, when the lawyer asks the client to sign a release as part of settling a dispute over legal fees.

 

4. Paragraph (h)(2): Reword advice to obtain independent counsel

 

The purpose of this change is to conform the language to that used in Rule 1.8(a). No change in substance is intended.

 

COMMENTARY:

 

Caption The caption has been changed to better reflect the two separate obligations in the Rule.

 

[14] This new Comment states the rationale for paragraph (h)(1). It also addresses three questions that frequently arise concerning the application of the Rule - whether the Rule prohibits agreements requiring arbitration of a legal malpractice claim, whether the Rule applies to lawyers practicing in limited-liability entities and whether the Rule prohibits agreements limiting the scope of the representation.

 

[15] This new Comment states the rationale for paragraph (h)(2).

 

 

Deletion of Current Rule 1.8(i): Family Relationships between Lawyers

 

TEXT:

 

At the time this Rule was first enacted, there was concern that lawyer-spouses would be unable to find employment in different firms in the same city because of the fear that one spouse's conflicts would result in the disqualification of the other spouse's law firm. Thus, the primary purpose for treating such conflicts under Rule 1.8 rather than Rule 1.7 was to avoid the imputation of the conflict under Rule 1.10. The Rule, however, is both under and over-inclusive. It is underinclusive because it does not address personal-interest conflicts arising from close family or family-like relationships other than those enumerated in the Rule, such as couples who live together in a relationship approximating marriage. Moreover, it is limited to directly adverse conflicts and does not include material limitation conflicts, for example when lawyer-spouses represent coplaintiffs or codefendants with significantly different positions in the litigation. The Rule is overinclusive because it permits the representation with the consent of the client, regardless of whether the conflict would otherwise be deemed nonconsentable under Rule 1.7. Moreover, while imputation is unnecessary in most cases, in some instances it may be indicated. Under the changes proposed for Rule 1.10, personal interest conflicts are not imputed unless they present a significant risk of materially limiting the representation of the client by the remaining lawyers in the firm. As a result of these changes, the Commission is recommending deletion of this Rule and the addition of a Comment to Rule 1.7 addressing conflicts of interest arising from a lawyer's family relationships. See Rule 1.7, Comment [11].

 

COMMENTARY:

 

 

[6] The Commission is proposing deleting this Comment and the associated caption along with the text.

 

 

Rule 1.8(i): Acquiring Proprietary Interest in Litigation

 

TEXT:

 

 

Substitute "authorized by law" for "granted by law"

 

The purpose of this change is to clarify that the exemption applies to all liens authorized by substantive law, including those liens that are contractual in nature.

 

COMMENTARY:

 

Caption The caption has been changed to better reflect the meaning of the Rule.

 

[16] This expanded Comment further explains the rationale for the Rule and adds a cross-reference to Rule 1.8(a), which will apply when a lawyer acquires by contract a security interest in property other than that recovered through the lawyer's effort in the litigation.

 

 

Rule 1.8(j): Client-Lawyer Sexual Relationships

 

TEXT:

 

 

Adopt new per se Rule prohibiting most client-lawyer sexual relationships

 

The Commission recommends following the lead of a number of jurisdictions that have adopted Rules explicitly regulating client-lawyer sexual conduct. Although recognizing that most egregious behavior of lawyers can be addressed through other Rules, the Commission believes that such Rules may not be sufficient. Given the number of complaints of lawyer sexual misconduct that have been filed, the Commission believes that having a specific Rule has the advantage not only of alerting lawyers more effectively to the dangers of sexual relationships with clients but also of alerting clients that the lawyer may have violated ethical obligations in engaging in such conduct.

 

The Commission further recommends a total, rather than a partial, ban on client-lawyer relationships, except for those pre-dating the formation of the client-lawyer relationship. Partial bans, i.e., those that prohibit relationships only when they involve coercion or cause the lawyer to act incompetently, do not effectively address the problem of conflicts of interest, particularly the difficulty of obtaining an adequately informed consent from the client. Moreover, they do little to prevent problems from arising in the first place.

 

COMMENTARY:

 

Caption The caption has been added to set off the new Comments.

 

[17] This new Comment states the rationale for the Rule.

 

[18] This new Comment states the rationale for the Rule's exception for pre-existing relationships, noting that even though the Rule does not apply, such relationships may give rise to conflicts of interest under Rule 1.7.

 

[19] This new Comment was added to explain how the Rule is applied in the case of an organizational client.

 

 

Paragraph (k): Imputation of Prohibitions

 

TEXT:

 

1. Treat imputation under Rule 1.8 rather than 1.10

 

The Commission is recommending that imputation of the prohibitions in Rule 1.8 be addressed by Rule 1.8 rather than by Rule 1.10. Under paragraph (k), an associated lawyer may not necessarily proceed with the informed consent of the client (as the lawyer could under Rule 1.10); moreover, there is no exception here (as there is in Rule 1.10) for personal-interest conflicts of the individually disqualified lawyer.

 

2. Impute all prohibitions except paragraph (j)

 

Under current Rule 1.10, only the prohibition of paragraph (c) (gifts to lawyers) is imputed to other lawyers in a firm. The Commission recommends that the prohibition of all paragraphs except (j) be so imputed.

 

COMMENTARY:

 

Caption The caption has been added to set off the new Comment.

 

[20] This new Comment explains the rationale for paragraph (k).

 

 

RULE 1.9: CONFLICT OF INTEREST: DUTIES TO FORMER CLIENT CLIENTS

 

(a) A lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which that person's interests are materially adverse to the interests of the former client unless the former client consents after consultation gives informed consent, confirmed in writing.

 

(b) A lawyer shall not knowingly represent a person in the same or a substantially related matter in which a firm with which the lawyer formerly was associated had previously represented a client

 

 

(1) whose interests are materially adverse to that person; and

(2) about whom the lawyer had acquired information protected by Rules 1.6 and 1.9(c) that is material to the matter;

unless the former client consents after consultation gives informed consent, confirmed in writing.

 

(c) A lawyer who has formerly represented a client in a matter or whose present or former firm has formerly represented a client in a matter shall not thereafter:

 

(1) use information relating to the representation to the disadvantage of the former client except as Rule 1.6 or Rule 3.3 these Rules would permit or require with respect to a client, or when the information has become generally known; or

(2) reveal information relating to the representation except as Rule 1.6 or Rule 3.3 these Rules would permit or require with respect to a client.

Commentary

 

[1] After termination of a client-lawyer relationship, a lawyer has certain continuing duties with respect to confidentiality and conflicts of interest and thus may not represent another client except in conformity with this Rule. The principles in Rule 1.7 determine whether the interests of the present and former client are adverse. Thus Under this Rule, for example, a lawyer could not properly seek to rescind on behalf of a new client a contract drafted on behalf of the former client. So also a lawyer who has prosecuted an accused person could not properly represent the accused in a subsequent civil action against the government concerning the same transaction. Nor could a lawyer who has represented multiple clients in a matter represent one of the clients against the others in the same or a substantially related matter after a dispute arose among the clients in that matter, unless all affected clients give informed consent. See Comment [9]. Current and former government lawyers must comply with this Rule to the extent required by Rule 1.11.

 

[2] The scope of a "matter" for purposes of this Rule may depend depends on the facts of a particular situation or transaction. The lawyer's involvement in a matter can also be a question of degree. When a lawyer has been directly involved in a specific transaction, subsequent representation of other clients with materially adverse interests in that transaction clearly is prohibited. On the other hand, a lawyer who recurrently handled a type of problem for a former client is not precluded from later representing another client in a wholly factually distinct problem of that type even though the subsequent representation involves a position adverse to the prior client. Similar considerations can apply to the reassignment of military lawyers between defense and prosecution functions within the same military jurisdictions. The underlying question is whether the lawyer was so involved in the matter that the subsequent representation can be justly regarded as a changing of sides in the matter in question.

 

 

[3] Matters are "substantially related" for purposes of this Rule if they involve the same transaction or legal dispute or if there otherwise is a substantial risk that confidential factual information as would normally have been obtained in the prior representation would materially advance the client's position in the subsequent matter. For example, a lawyer who has represented a businessperson and learned extensive private financial information about that person may not then represent that person's spouse in seeking a divorce. Similarly, a lawyer who has previously represented a client in securing environmental permits to build a shopping center would be precluded from representing neighbors seeking to oppose rezoning of the property on the basis of environmental considerations; however, the lawyer would not be precluded, on the grounds of substantial relationship, from defending a tenant of the completed shopping center in resisting eviction for nonpayment of rent. Information that has been disclosed to the public or to other parties adverse to the former client ordinarily will not be disqualifying; nor will government information that the lawyer is impliedly authorized to use or disclose or that is otherwise known to persons outside the government agency involved. Information acquired in a prior representation may have been rendered obsolete by the passage of time, a circumstance that may be relevant in determining whether two representations are substantially related. In the case of an organizational client, general knowledge of the client’s policies and practices ordinarily will not preclude a subsequent representation; on the other hand, knowledge of specific facts gained in a prior representation that are relevant to the matter in question ordinarily will preclude such a representation. A former client is not required to reveal the confidential information learned by the lawyer in order to establish a substantial risk that the lawyer has confidential information to use in the subsequent matter. A conclusion about the possession of such information may be based on the nature of the services the lawyer provided the former client and information that would in ordinary practice be learned by a lawyer providing such services.

 

Lawyers Moving Between Firms

 

 

[3] [4] When lawyers have been associated within a firm but then end their association, the question of whether a lawyer should undertake representation is more complicated. There are several competing considerations. First, the client previously represented by the former firm must be reasonably assured that the principle of loyalty to the client is not compromised. Second, the rule should not be so broadly cast as to preclude other persons from having reasonable choice of legal counsel. Third, the rule should not unreasonably hamper lawyers from forming new associations and taking on new clients after having left a previous association. In this connection, it should be recognized that today many lawyers practice in firms, that many lawyers to some degree limit their practice to one field or another, and that many move from one association to another several times in their careers. If the concept of imputation were applied with unqualified rigor, the result would be radical curtailment of the opportunity of lawyers to move from one practice setting to another and of the opportunity of clients to change counsel.

 

 

[4] Reconciliation of these competing principles in the past has been attempted under two rubrics. One approach has been to seek per se rules of disqualification. For example, it has been held that a partner in a law firm is conclusively presumed to have access to all confidences concerning all clients of the firm. Under this analysis, if a lawyer has been a partner in one law firm and then becomes a partner in another law firm, there may be a presumption that all confidences known by the partner in the first firm are known to all partners in the second firm. This presumption might properly be applied in some circumstances, especially where the client has been extensively represented, but may be unrealistic where the client was represented only for limited purposes. Furthermore, such a rigid rule exaggerates the difference between a partner and an associate in modern law firms.

 

[5] The other rubric formerly used for dealing with disqualification is the appearance of impropriety proscribed in Canon 9 of the ABA Model Code of Professional Responsibility. This rubric has a two-fold problem. First, the appearance of impropriety can be taken to include any new client-lawyer relationship that might make a former client feel anxious. If that meaning were adopted, disqualification would become little more than a question of subjective judgment by the former client. Second, since "impropriety" is undefined, the term "appearance of impropriety" is question-begging. It therefore has to be recognized that the problem of disqualification cannot be properly resolved either by simple analogy to a lawyer practicing alone or by the very general concept of appearance of impropriety.

 

 

Confidentiality

 

 

[8] [5] Paragraph (b) operates to disqualify the lawyer only when the lawyer involved has actual knowledge of information protected by Rules 1.6 and 1.9 (b) (c). Thus, if a lawyer while with one firm acquired no knowledge or information relating to a particular client of the firm, and that lawyer later joined another firm, neither the lawyer individually nor the second firm is disqualified from representing another client in the same or a related matter even though the interests of the two clients conflict. See Rule 1.10(b) for the restrictions on a firm once a lawyer has terminated association with the firm.

 

[6] Preserving confidentiality is a question of access to information. Access to information, in turn, is essentially a question of fact in Application of paragraph (b) depends on a situation's particular circumstances facts, aided by inferences, deductions or working presumptions that reasonably may be made about the way in which lawyers work together. A lawyer may have general access to files of all clients of a law firm and may regularly participate in discussions of their affairs; it should be inferred that such a lawyer in fact is privy to all information about all the firm's clients. In contrast, another lawyer may have access to the files of only a limited number of clients and participate in discussions of the affairs of no other clients; in the absence of information to the contrary, it should be inferred that such a lawyer in fact is privy to information about the clients actually served but not those of other clients. In such an inquiry, the burden of proof should rest upon the firm whose disqualification is sought.

 

 

[7] Application of paragraph (b) depends on a situation's particular facts. In such an inquiry, the burden of proof should rest upon the firm whose disqualification is sought.

 

 

[9] [7] Independent of the question of disqualification of a firm, a lawyer changing professional association has a continuing duty to preserve confidentiality of information about a client formerly represented. See Rules 1.6 and 1.9 (c).

 

 

Adverse Positions

 

[10] The second aspect of loyalty to a client is the lawyer's obligation to decline subsequent representations involving positions adverse to a former client arising in substantially related matters. This obligation requires abstention from adverse representation by the individual lawyer involved, but does not properly entail abstention of other lawyers through imputed disqualification. Hence, this aspect of the problem is governed by Rule 1.9(a). Thus, if a lawyer left one firm for another, the new affiliation would not preclude the firms involved from continuing to represent clients with adverse interests in the same or related matters, so long as the conditions of paragraphs (b) and (c) concerning confidentiality have been met.

 

 

[11] [8] Information Paragraph (c) provides that information acquired by the lawyer in the course of representing a client may not subsequently be used or revealed by the lawyer to the disadvantage of the client. However, the fact that a lawyer has once served a client does not preclude the lawyer from using generally known information about that client when later representing another client.

 

 

[12] [9] Disqualification from subsequent representation is The provisions of this Rule are for the protection of former clients and can be waived by them. A waiver is effective only if there is disclosure of the circumstances, including the lawyer's intended role in behalf of the new client if the client gives informed consent, which consent must be confirmed in writing under paragraphs (a) and (b). See Rule 1.0(e). [13] With regard to an opposing party's raising a question of conflict of interest the effectiveness of an advance waiver, see Comment [22] to Rule 1.7. With regard to disqualification of a firm with which a lawyer is or was formerly associated, see Rule 1.10.

 

 

Model Rule 1.9

Reporter's Explanation of Changes

TEXT:

1. New caption

Because paragraph (c) addresses confidentiality, the current caption is underinclusive.

 

2. Paragraphs (a) and (b): Substitute "informed consent, confirmed in writing" for "consents after consultation"

 

In paragraphs (a) and (b), the phrase "consents after consultation" has been changed to "gives informed consent to the representation, confirmed in writing." This change is consistent with a similar change in Rule 1.7 and reflects a judgment of the Commission that both lawyers and their former clients benefit when the lawyer is required to secure the former client's informed consent, confirmed in writing, to a representation that is materially adverse to the former client in the same or a substantially related matter. See Rule 1.0(e) for the definition of "informed consent" and Rule 1.0(b) for the definition of "confirmed in writing."

 

3. Paragraph (c): Replace "Rule 1.6 or Rule 3.3" with "these Rules"

 

This change was made because there are Rules other than Rule 3.3 that may require disclosure (at least when disclosure is permitted by Rule 1.6) - see Rules 1.2(d), 4.1(b), 8.1 and 8.3.

 

COMMENTARY:

 

[1] Comment [1] has been amended to make clear that this Rule applies when common clients have had a falling out and one or more of them has dismissed the lawyer. The Comment has also been amended to make the important point that Rule 1.11 now determines when Rule 1.9 is applicable to present and former government lawyers. No change in substance is intended as to how Rule 1.9 applies to lawyers who do not or have not worked for the government.

 

[2] These changes are designed to further refine and cabin the concept of substantial relationship, particularly as it affects the potential disqualification of former lawyers for an organization, including the government.

 

[3] This new Comment explains when matters are "substantially related." That term has been the subject of considerable caselaw, and this definition and suggestions about applying it are an effort to be helpful to lawyers in complying with the Rule and courts in construing it. No change in substance is intended.

 

 

[4] and [5] These Comments have been deleted as no longer helpful to the analysis of questions arising under this Rule. No change in substance is intended.

 

[5] This Comment has been modified to correct the erroneous reference to paragraph (b) in the first sentence.

 

[6] This Comment combines current Comments [6] and [7] in an effort to increase the clarity of each. No change in substance is intended.

 

[7] Because this sentence addresses confidentiality rather than disqualification, the reference to Rule 1.9 has been narrowed to a reference to Rule 1.9(c). No change in substance is intended.

 

[10] This Comment has been deleted as no longer helpful to the analysis of questions arising under this Rule. No change in substance is intended.

 

[8] A minor wording change was made for clarification. No change in substance is intended.

 

[9] This Comment combines current Comments [12] and [13] and adds a cross-reference to the Comment in Rule 1.7 that addresses advance waivers of conflicts of interest.

 

 

RULE 1.10: IMPUTED DISQUALIFICATION IMPUTATION OF CONFLICTS OF INTEREST: GENERAL RULE

 

(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 , 1.8(c), or 1.9 or 2.2 , unless the prohibition is based on a personal interest of the prohibited lawyer and does not present a significant risk of materially limiting the representation of the client by the remaining lawyers in the firm.

 

(b) When a lawyer has terminated an association with a firm, the firm is not prohibited from thereafter representing a person with interests materially adverse to those of a client represented by the formerly associated lawyer and not currently represented by the firm, unless:

 

(1) the matter is the same or substantially related to that in which the formerly associated lawyer represented the client; and

(2) any lawyer remaining in the firm has information protected by Rules 1.6 and 1.9(c) that is material to the matter.

 

(c) When a lawyer becomes associated with a firm, no lawyer associated in the firm shall knowingly represent a person in a matter in which that lawyer is disqualified under Rule 1.9 unless:

 

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

(2) written notice is promptly given to any affected former client to enable it to ascertain compliance with the provisions of this Rule.

(c) (d) A disqualification prescribed by this rule may be waived by the affected client under the conditions stated in Rule 1.7.

 

 

(e) The disqualification of lawyers associated in a firm with former or current government lawyers is governed by Rule 1.11.

 

Commentary

 

Definition of "Firm"

 

[1] For purposes of the Rules of Professional Conduct, the term "firm" includes denotes lawyers in a private firm, and law partnership, professional corporation, sole proprietorship or other association authorized to practice law; or lawyers employed in a legal services organization or the legal department of a corporation or other organization , or in a legal services organization. See Rule 1.0(c). Whether two or more lawyers constitute a firm within this definition can depend on the specific facts. For example, two practitioners who share office space and occasionally consult or assist each other ordinarily would not be regarded as constituting a firm. However, if they present themselves to the public in a way suggesting that they are a firm or conduct themselves as a firm, they should be regarded as a firm for purposes of the Rules. The terms of any formal agreement between associated lawyers are relevant in determining whether they are a firm, as is the fact that they have mutual access to information concerning the clients they serve. Furthermore, it is relevant in doubtful cases to consider the underlying purpose of the Rule that is involved. A group of lawyers could be regarded as a firm for purposes of the rule that the same lawyer should not represent opposing parties in litigation, while it might not be so regarded for purposes of the rule that information acquired by one lawyer is attributed to another. See Rule 1.0, Comments [2] - [4].

 

[2] With respect to the law department of an organization, there is ordinarily no question that the members of the department constitute a firm within the meaning of the Rules of Professional Conduct. However, there can be uncertainty as to the identity of the client. For example, it may not be clear whether the law department of a corporation represents a subsidiary or an affiliated corporation, as well as the corporation by which the members of the department are directly employed. A similar question can arise concerning an unincorporated association and its local affiliates.

 

[3] Similar questions can also arise with respect to lawyers in legal aid. Lawyers employed in the same unit of a legal service organization constitute a firm, but not necessarily those employed in separate units. As in the case of independent practitioners, whether the lawyers should be treated as associated with each other can depend on the particular rule that is involved, and on the specific facts of the situation.

 

 

[5] Different provisions are thus made for movement of a lawyer from one private firm to another and for movement of a lawyer between a private firm and the government. The government is entitled to protection of its client confidences and, therefore, to the protections provided in Rules 1.6, 1.9 and 1.11. However, if the more extensive disqualification in Rule 1.10 were applied to former government lawyers, the potential effect on the government would be unduly burdensome. The government deals with all private citizens and organizations and, thus, has a much wider circle of adverse legal interests than does any private law firm. In these circumstances, the government's recruitment of lawyers would be seriously impaired if Rule 1.10 were applied to the government. On balance, therefore, the government is better served in the long run by the protections stated in Rule 1.11.

 

Principles of Imputed Disqualification

 

[6] [2] The rule of imputed disqualification stated in paragraph (a) gives effect to the principle of loyalty to the client as it applies to lawyers who practice in a law firm. Such situations can be considered from the premise that a firm of lawyers is essentially one lawyer for purposes of the rules governing loyalty to the client, or from the premise that each lawyer is vicariously bound by the obligation of loyalty owed by each lawyer with whom the lawyer is associated. Paragraph (a) operates only among the lawyers currently associated in a firm. When a lawyer moves from one firm to another, the situation is governed by Rules 1.9(b) and 1.10(b).

 

 

[3] The rule in paragraph (a) does not prohibit representation where neither questions of client loyalty nor protection of confidential information are presented. Where one lawyer in a firm could not effectively represent a given client because of strong political beliefs, for example, but that lawyer will do no work on the case and the personal beliefs of the lawyer will not materially limit the representation by others in the firm, the firm should not be disqualified. On the other hand, if an opposing party in a case were owned by a lawyer in the law firm, and others in the firm would be materially limited in pursuing the matter because of loyalty to that lawyer, the personal disqualification of the lawyer would be imputed to all others in the firm.

 

 

[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 while 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.

 

 

[7] [5] Rule 1.10(b) operates to permit a law firm, under certain circumstances, to represent a person with interests directly adverse to those of a client represented by a lawyer who formerly was associated with the firm. The Rule applies regardless of when the formerly associated lawyer represented the client. However, the law firm may not represent a person with interests adverse to those of a present client of the firm, which would violate Rule 1.7. Moreover, the firm may not represent the person where the matter is the same or substantially related to that in which the formerly associated lawyer represented the client and any other lawyer currently in the firm has material information protected by Rules 1.6 and 1.9(c).

 

 

[6] Where the conditions of paragraph (c) are met, imputation is removed, and consent to the new representation is not required. Lawyers should be aware, however, that courts may impose more stringent obligations in ruling upon motions to disqualify a lawyer from pending litigation.

 

[7] Requirements for screening procedures are stated in Rule 1.0(k). Paragraph (c)(2) does not prohibit the screened lawyer from receiving a salary or partnership share established by prior independent agreement, but that lawyer may not receive compensation directly related to the matter in which the lawyer is disqualified.

 

[8] Notice, including a description of the screened lawyer's prior representation and of the screening procedures employed, generally should be given as soon as practicable after the need for screening becomes apparent.

 

[9] Rule 1.10(d) removes imputation with the informed consent of the affected client or former client under the conditions stated in Rule 1.7. The conditions stated in Rule 1.7 require the lawyer to determine that the representation is not prohibited by Rule 1.7(b) and that each affected client or former client has given informed consent to the representation, confirmed in writing. In some cases, the risk may be so severe that the conflict may not be cured by client consent. For a discussion of the effectiveness of client waivers of conflicts that might arise in the future, see Rule 1.7, Comment [22]. For a definition of informed consent, see Rule 1.0(e).

 

 

[4] [10] Where a lawyer has joined a private firm after having represented the government, the situation imputation is governed by Rule 1.11 (a) and (b) and (c) ; , not this Rule. Under Rule 1.11(d), where a lawyer represents the government after having served private clients , the situation is governed by Rule 1.11(c)(1). The individual lawyer involved is bound by the Rules generally, including Rules 1.6, 1.7 and 1.9 in private practice, nongovernmental employment or in another government agency, former-client conflicts are not imputed to government lawyers associated with the individually disqualified lawyer.

 

[11] Where a lawyer is prohibited from engaging in certain transactions under Rule 1.8, paragraph (k) of that Rule, and not this Rule, determines whether that prohibition also applies to other lawyers associated in a firm with the personally prohibited lawyer.

 

 

Model Rule 1.10

Reporter's Explanation of Changes

TEXT:

1. Paragraph (a): Eliminate imputation of conflicts under Rules 1.8(c) and 2.2

 

The reference to Rule 2.2 has been deleted because the Commission is recommending elimination of that Rule. The reference to Rule 1.8(c) has been deleted because the Commission is recommending that imputation of the prohibitions in Rule 1.8 be addressed by Rule 1.8 rather than by Rule 1.10. Under Rule 1.8(k) the prohibitions set forth in paragraphs 1.8(a) through (i), but not (j), are imputed to other lawyers with whom the personally disqualified lawyer is associated.

 

2. Paragraph (a): Eliminate imputation of "personal interest" conflicts

 

The proposed reference to "personal interest" conflicts at the end of Rule 1.10(a) would eliminate imputation in the case of conflicts between a lawyer's own personal interest (not interests of current clients, third parties or former clients) and the interest of the client, at least where the usual concerns justifying imputation are not present. The exception applies only where the prohibited lawyer does not personally represent the client in the matter and no other circumstances suggest the conflict of the prohibited lawyer is likely to influence the others' work. This is a substantive change in the Rule as written, but the Commission believes that the proposed Rule provides clients with all the protection they need, given that the exception applies only when there is no significant risk that the personal-interest conflict will affect others in the lawyer's firm.

 

3. Paragraph (c): Screening of lateral hires

 

A number of jurisdictions now provide that former-client conflicts of lawyers who have moved laterally are not imputed to the new law firm if the personally disqualified lawyer has been timely screened from participation in the matter and the former client is notified of the screen. The Commission is recommending that current Rule 1.10 be amended to permit nonconsensual screening of lawyers who have joined a law firm.

 

The Commission is persuaded that nonconsensual screening in these cases adequately balances the interests of the former client in confidentiality of information, the interests of current clients in hiring the counsel of their choice (including a law firm that may have represented the client in similar matters for many years) and the interests of lawyers in mobility, particularly when they are moving involuntarily because their former law firms have downsized, dissolved or drifted into bankruptcy. There are presently seven jurisdictions that permit screening of laterals by Rule. The testimony the Commission has heard indicates that there have not been any significant numbers of complaints regarding lawyers' conduct under these Rules.

 

4. Paragraph (c)(1): Timely screening

 

This paragraph tracks similar language in current Rule 1.11(a) and in Rule 1.12(c), except that it adds the requirement that the screen be "timely" implemented. A similar requirement is being proposed for those Rules as well and also for Rule 1.18. The term "screened" is defined in Rule 1.0(k) and in Comments [8] - [10] of that Rule.

 

5. Paragraph (c)(2): Written notice

 

This paragraph tracks similar language in current Rule 1.11(a) and 1.12(c).

 

6. Paragraph (e): Relationship of this Rule to Rule 1.11

 

This paragraph clarifies that Rule 1.11 is intended to be the exclusive Rule governing the imputation of conflicts of interests of current or former government lawyers.

 

COMMENTARY:

 

 

Definition of "Firm"

 

The Commission is recommending adoption of a definition of "firm" in Rule 1.0(c). That definition will apply not only for purposes of imputing conflicts under this Rule, but also for addressing the supervisory obligations of lawyers under Rules 5.1 - 5.3. The definition in Rule 1.0(c) and the Comments to that Rule were based on the current Comment to Rule 1.10. As a result, the Commission is recommending deleting that material in this Comment.

[1] This Comment modifies the first two sentences in the current Comment to reflect what is now in Rule 1.0(c). Cross-references to that Rule and its Comment have been added. The remainder of the Comment is deleted because the material has been moved to the Comment to Rule 1.0.

 

[2] and [3] The material in these Comments has been moved to the Comment to Rule 1.0.

 

[5] Current Comment [5] has been deleted because the conflicts arising from moving between government and a private firm are discussed in Rule 1.11.

[3] This entirely new Comment deals with the elimination of imputation of a lawyer's "personal-interest" conflicts to others in the firm because there is no risk to loyal and effective representation of the client. The Comment also provides illustrations of when this exception to imputation might and might not apply.

 

[4] This entirely new Comment explains how this Rule applies to persons who are nonlawyers, e.g., secretaries, or who obtained their disqualifying information while a nonlawyer, e.g., while a law student. Such persons are disqualified personally, but the conflict is not imputed so long as they are screened from participation in the matter so as to protect the confidential information. This Comment represents a substantive change from the current text of Rule 1.10, but it represents the overwhelming state of the current case law and is intended to give guidance to lawyers about important practical questions.

[6] This entirely new Comment addresses paragraph (c). The second sentence clarifies that courts may impose more stringent standards on lawyers in determining whether to disqualify a lawyer from representing a client in pending litigation.

[7] This entirely new Comment addresses the requirements of paragraph (c)(2) and includes a cross-reference to the definition of "screened" in Rule 1.0(k).

 

[8] This entirely new Comment addresses the requirements of paragraph (c)(3).

[9] This entirely new Comment deals directly with the availability of and conditions for consent, a subject heretofore largely ignored in this Rule. The Comment notes that consent may be conditioned on screening the disqualified lawyer, but, other than that reference, no provision for general screening under Rule 1.10 without the consent of the opposing party is proposed.

 

[10] The minor proposed amendments to current Comment [4] are designed to make clear that in the case of current and former government lawyers, imputation is governed by Rule 1.11. Under the current Rules, the application of Rule 1.10 to such lawyers is unclear.

[11] Historically lawyers have relied on paragraph (a) of Rule 1.10 for a complete list of the conflict Rule numbers and paragraph references that trigger imputed disqualification. All references to Rule 1.8 have been removed from Rule 1.10(a) because none of the Rule 1.8 paragraphs fit logically or grammatically in Rule 1.10(a). The Commission added this new Comment for the assistance of lawyers who look to Rule 1.10 to determine if the prohibitions of Rule 1.8 apply to other lawyers in the firm.

 

 

RULE 1.11: SUCCESSIVE SPECIAL CONFLICTS OF INTEREST FOR FORMER AND CURRENT GOVERNMENT OFFICERS

AND PRIVATE EMPLOYMENT EMPLOYEES

 

(a) Except as law may otherwise expressly permit, a lawyer who has formerly served as a public officer or employee of the government:

 

(1) is subject to Rules 1.9(a) and (b), except that "matter" is defined as in paragraph (e) of this Rule;

(2) is subject to Rule 1.9(c); and

(3) shall not otherwise represent a private client in connection with a matter in which the lawyer participated personally and substantially as a public officer or employee, unless the appropriate government agency consents after consultation gives its informed consent, confirmed in writing, to the representation.

 

(b) No When a lawyer is disqualified from representation under paragraph (a), no lawyer in a firm with which that lawyer is associated may knowingly undertake or continue representation in such a matter unless:

 

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

(2) written notice is promptly given to the appropriate government agency to enable it to ascertain compliance with the provisions of this rule.

 

(b) (c) Except as law may otherwise expressly permit, a lawyer having information that the lawyer knows is confidential government information about a person acquired when the lawyer was a public officer or employee, may not represent a private client whose interests are adverse to that person in a matter in which the information could be used to the material disadvantage of that person. As used in this Rule, the term "confidential government information" means information that has been obtained under governmental authority and which, at the time this Rule is applied, the government is prohibited by law from disclosing to the public or has a legal privilege not to disclose and which is not otherwise available to the public. A firm with which that lawyer is associated may undertake or continue representation in the matter only if the disqualified lawyer is timely screened from any participation in the matter and is apportioned no part of the fee therefrom.

 

 

(c) (d) Except as law may otherwise expressly permit, a lawyer currently serving as a public officer or employee :

 

(1) is subject to Rules 1.7 and 1.9; and

 

(2) shall not:

(1) (i) participate in a matter in which the lawyer participated personally and substantially while in private practice or nongovernmental employment, unless under applicable law no one is, or by lawful delegation may be, authorized to act in the lawyer's stead in the matter the appropriate government agency gives its informed consent, confirmed in writing; or

(2) (ii) negotiate for private employment with any person who is involved as a party or as lawyer for a party in a matter in which the lawyer is participating personally and substantially, except that a lawyer serving as a law clerk to a judge, other adjudicative officer or arbitrator may negotiate for private employment as permitted by Rule 1.12(b) and subject to the conditions stated in Rule 1.12(b).

 

(d) (e) As used in this Rule, the term "matter" includes:

 

(1) any judicial or other proceeding, application, request for a ruling or other determination, contract, claim, controversy, investigation, charge, accusation, arrest or other particular matter involving a specific party or parties, and

(2) any other matter covered by the conflict of interest rules of the appropriate government agency.

 

(e) As used in this Rule, the term "confidential government information" means information which has been obtained under governmental authority and which, at the time this rule is applied, the government is prohibited by law from disclosing to the public or has a legal privilege not to disclose, and which is not otherwise available to the public.

 

Commentary

 

 

[1] This Rule prevents a lawyer from exploiting public office for the advantage of a private client. It is a counterpart of Rule 1.10(b), which applies to lawyers moving from one firm to another.

 

 

[2] [1] A lawyer representing a government agency, whether employed or specially retained by the government, who has served or is currently serving as a public officer or employee is personally subject to the Rules of Professional Conduct, including the prohibition against representing adverse interests concurrent conflicts of interest stated in Rule 1.7 and the protections afforded former clients in Rule 1.9. In addition, such a lawyer is may be subject to Rule 1.11 and to statutes and government regulations regarding conflict of interest. Such statutes and regulations may circumscribe the extent to which the government agency may give consent under this Rule. See Rule 1.0(e) for the definition of informed consent.

 

[2] Paragraphs (a)(1), (a)(2) and (d)(1) restate the obligations of an individual lawyer who has served or is currently serving as an officer or employee of the government toward a former government or private client under Rule 1.9. Rule 1.10, however, is not applicable to the conflicts of interest addressed by this Rule. Rather, paragraph (b) sets forth a special imputation rule for former government lawyers that provides for screening and notice. Because of the special problems raised by imputation within a government agency, paragraph (d) does not impute the conflicts of a lawyer currently serving as an officer or employee of the government to other associated government officers or employees, although ordinarily it will be prudent to screen such lawyers.

 

 

[3] Paragraphs (a)(3) and (d)(2) impose additional obligations on a lawyer who has served or is currently serving as an officer or employee of the government. They apply in situations where a lawyer is not adverse to a former client and are designed to prevent a lawyer from exploiting public office for the advantage of another client. For example, a lawyer who has pursued a claim on behalf of the government may not pursue the same claim on behalf of a later private client after the lawyer has left government service, except when authorized to do so by the government agency under paragraph (a). Similarly, a lawyer who has pursued a claim on behalf of a private client may not pursue the claim on behalf of the government, except when authorized to do so by paragraph (d). As with paragraphs (a)(1), (a)(2) and (d)(1), Rule 1.10 is not applicable to the conflicts of interest addressed by these paragraphs.

 

 

[3] [4] Where This Rule represents a balancing of interests. On the one hand, where the successive clients are a public government agency and a private another client, public or private, the risk exists that power or discretion vested in that agency public authority might be used for the special benefit of a private the other client. A lawyer should not be in a position where benefit to a private the other client might affect performance of the lawyer's professional functions on behalf of the government public authority. Also, unfair advantage could accrue to the private other client by reason of access to confidential government information about the client's adversary obtainable only through the lawyer's government service. However On the other hand, the rules governing lawyers presently or formerly employed by a government agency should not be so restrictive as to inhibit transfer of employment to and from the government. The government has a legitimate need to attract qualified lawyers as well as to maintain high ethical standards. The provisions for screening and waiver in paragraph (b) are necessary to prevent the disqualification rule from imposing too severe a deterrent against entering public service. The limitation of disqualification in paragraphs (a)(1), (a)(3) and (d)(2) to matters involving a specific party or parties, rather than extending disqualification to all substantive issues on which the lawyer worked, serves a similar function.

 

 

[4] [5] When the client is an agency of a lawyer has been employed by one government agency and then moves to a second government agency, it may be appropriate to treat that second agency should be treated as a private another client for purposes of this Rule if the lawyer thereafter represents an agency of another government, as when a lawyer represents is employed by a city and subsequently is employed by a federal agency. However, because the conflict of interest is governed by paragraph (d), the latter agency is not required to screen the lawyer as paragraph (b) requires a law firm to do. The question of whether two government agencies should be regarded as the same or different clients for conflict of interest purposes is beyond the scope of these Rules. See Rule 1.13 Comment [6].

 

 

[5] [6] Paragraphs (a)(1) and (b) and (c) contemplate a screening arrangement. See Rule 1.0(k) (requirements for screening procedures). These paragraphs do not prohibit a lawyer from receiving a salary or partnership share established by prior independent agreement . They prohibit , but that lawyer may not receive compensation directly relating the lawyer's compensation to the fee in the matter in which the lawyer is disqualified.

 

 

[7] Notice, including a description of the screened lawyer's prior representation and of the screening procedures employed, generally should be given as soon as practicable after the need for screening becomes apparent. When disclosure is likely to significantly injure the client, a reasonable delay may be justified.

 

 

[6] Paragraph (a)(2) does not require that a lawyer give notice to the government agency at a time when premature disclosure would injure the client; a requirement for premature disclosure might preclude engagement of the lawyer. Such notice is, however, required to be given as soon as practicable in order that the government agency will have a reasonable opportunity to ascertain that the lawyer is complying with Rule 1.11 and to take appropriate action if it believes the lawyer is not complying.

 

 

[7] [8] Paragraph (b) (c) operates only when the lawyer in question has knowledge of the information, which means actual knowledge; it does not operate with respect to information that merely could be imputed to the lawyer.

 

 

[8] [9] Paragraphs (a) and (c) (d) do not prohibit a lawyer from jointly representing a private party and a government agency when doing so is permitted by Rule 1.7 and is not otherwise prohibited by law.

 

[9] Paragraph (c) does not disqualify other lawyers in the agency with which the lawyer in question has become associated.

 

 

Model Rule 1.11

Reporter's Explanation of Changes

TEXT:

 

1. Change caption to read "Special Conflicts of Interest for Former and Current Government Officers and Employees"

 

The change in caption reflects the fact that the Rule has traditionally been applied not only to lawyers moving from government service to private practice (and vice versa) but also to lawyers moving from one government agency to another.

 

2. Paragraph (a): Clarify that individual lawyer who formerly served as public officer or government employee is subject to Rule 1.9

 

There has been disagreement whether individual lawyers who have served as government officials or employees are subject to Rule 1.9 regarding their obligations to former clients or whether their obligations under Rule 1.11(a) are exclusive. The question is an important one, both for the individual lawyer and for the lawyer's firm. The Commission decided that representation adverse to a former government client is better determined under Rule 1.9 than under Rule 1.11(a) because Rule 1.9 includes not only the very matter in which a former government lawyer participated but also matters that are substantially related. In order not to unduly restrict the mobility of former government lawyers, however, the Commission decided to limit the disqualification under Rules 1.9(a) and (b) to matters as defined in paragraph (e) of this Rule, i.e., excluding legislation, rule-making and other policy determinations.

 

As a result of the cross-reference to Rule 1.9 in new paragraphs (a)(1) and (a)(2), the prohibition under new paragraph (a)(3) would apply to any representations not covered by paragraphs (a)(1) and (a)(2), primarily representations that are not adverse to a former government client (but nevertheless involve the danger of misuse of government office) or representations that are adverse to a government agency on a matter in which the lawyer participated personally and substantially but not as a lawyer representing a client.

 

3. Paragraph (a): Delete "private"

 

The text of current Rule 1.11(a) suggests that the disqualification under that paragraph applies only when the lawyer moves from government service to private practice. Current Comment [4], however, states that "[w]hen the client is an agency of one government, that agency should be treated as a private client for purposes of this Rule." To avoid any possible confusion, the Commission determined that the text should be changed to conform to the Comment.

 

4. Paragraph (a)(2): Change from "consent after consultation" to "gives its informed consent to the representation"

 

The Commission is recommending that throughout the Rules the phrase "consent after consultation" be replaced with "gives informed consent," as defined in Rule 1.0(e). No change in substance is intended.

 

5. Paragraphs (a) and (d): Consent to be "confirmed in writing"

 

The Commission recommends requiring that the consent here be confirmed in writing, as with other conflict-of-interest Rules. "Confirmed in writing" is defined in Rule 1.0(b).

 

6. Paragraph (b): Clarify that conflicts under paragraph (a) - including conflicts arising under Rule 1.9 - are not imputed to other associated lawyers when individual lawyer is properly screened

 

There is no change in the basic rule of imputation for situations governed under former Rule 1.11(a). The change is intended for situations that previously might have been governed by Rule 1.9 rather than 1.11(a). Although ordinarily conflicts under Rule 1.9 are imputed to associated lawyers under Rule 1.10, this paragraph states clearly that when the conflict arises from the individually disqualified lawyer's service as a public officer or employee of the government, the conflict is not imputed if the lawyer is screened and the appropriate government agency is notified of the representation. The Commission believes that this result is necessary in order to continue to encourage lawyers to work in the public sector without fear that their service will unduly burden their future careers in the private sector. (Conflicts are not imputed under either the current or the proposed Rule when the move is from one government agency to another.)

 

7. Paragraph (b): Add scienter requirement

 

This change conforms this Rule to Rule 1.10, in which associated lawyers are not subject to discipline unless they "know" of the disqualification of their colleague.

 

8. Paragraphs (b)(1) and (c): Add "timely"

 

The Commission is recommending a definition of "screened" that includes a requirement that the lawyer be "timely" isolated from participation in the matter. Nevertheless, the Commission believes that the timeliness requirement is so important that it should appear in the text as well. This change is being recommended for all of the Rules that address screening. See Rules 1.10, 1.12 and 1.18.

 

9. Paragraph (c): Include definition of "confidential government information" from current paragraph (e)

 

The material in what is now paragraph (c) is currently in paragraph (b). The Commission is recommending that current paragraph (e) be deleted and the definition of "confidential government information" be moved to paragraph (c), where the defined term is now used. This change is for purposes of clarification only, and no change in substance is intended.

 

10. Paragraph (d): Clarify relationship between this Rule and Rules 1.9 and 1.10

 

As with paragraph (a), this paragraph is intended to clarify that individual lawyers may not undertake representation adverse to former clients when to do so would violate Rule 1.9, even when the representation was not in the same matter but rather was in a substantially related matter in which it is likely that the lawyer received confidential client information. Unlike paragraph (b), however, these conflicts are not imputed to lawyers associated in a government agency, even when formal screening mechanisms are not instituted. The lack of imputation presently applies to disqualifications under current Rule 1.11(c) but not necessarily to disqualifications of a current government lawyer under Rule 1.9, in which Rule 1.10 otherwise would apply. Screening is not required for public agencies because it may not be practical in some situations. Nevertheless, Comment [2] states the expectation that such lawyers will in fact be screened where it is practical to do so.

 

11. Paragraph (d)(1): Add reference to Rule 1.7

 

The Commission determined that it made sense to address in Rule 1.11, not only the imputation of former-client conflicts, but also the imputation of current conflicts of interest under Rule 1.7. As with former-client conflicts, the Commission decided that these conflicts should not be imputed to lawyers associated in a government agency, even when formal screening mechanisms are not instituted. Screening is not required in the disciplinary context because it may not be practical in some situations. Nevertheless, as with Rule 1.9 conflicts, Comment [2] states the expectation that such lawyers will in fact be screened where it is practical to do so.

 

12. Paragraph (d)(2): Substitute "informed consent" of the client for exception where "under applicable law no one is, or by lawful delegation may be, authorized to act in the lawyer's stead in the matter"

 

The interests of the former client are protected under Rule 1.9, and, under that Rule, the former client may effectively consent to a subsequent adverse representation. The interests of the government agency itself are protected under paragraph (d)(2). These interests are similar to those protected under paragraph (a)(3), where the former government agency may effectively consent to the subsequent representation. If a government agency can effectively consent under paragraph (a)(3), the Commission sees no reason why it cannot similarly consent to representation otherwise prohibited by paragraph (d)(2). This would include (but not be limited to) situations where "under applicable law no one is, or by lawful delegation may be, authorized to act in the lawyer's stead in the matter."

 

13. Delete current paragraph (e)

 

As set forth above, the Commission proposes to delete current paragraph (e) and move its material unchanged to paragraph (c).

 

COMMENTARY:

 

 

[1] The Commission recommends deleting current Comment [1] and expanding upon the rationale for the Rule in Comment [4].

 

[1] The reference to Rule 1.9 has been deleted because the relationship between Rules 1.9 and 1.11 is now addressed in Comment [2]. The remainder of the changes are stylistic, and no change in substance is intended.

 

[2] This entirely new Comment explains the relationship between Rules 1.9, 1.10 and 1.11 as stated in the text of paragraphs (a)(1), (a)(2) and (d)(1).

 

[3] This new Comment provides the rationale for the obligations of the individual lawyer under paragraphs (a)(3) and (d)(2), which are the obligations of former and present government lawyers aside from those imposed by Rule 1.9. Unlike Rule 1.9, these obligations are designed to protect against abuse of public office generally, not necessarily obligations owed to former clients of the lawyer.

[4] This Comment modifies slightly the provisions of current Comment [3]. First, it avoids using the term "private," given the applicability of the Rule to successive representation between distinct government agencies. It also makes minor stylistic changes and adds a sentence at the end to explain the rationale for limiting the disqualification in paragraphs (a)(3) and (d)(2) to a narrower range of "matter" than is typically covered by conflict-of-interest rules. (See paragraph (e).)

 

[5] The changes reflect the change in text to delete the reference to "private" clients. The last sentence explains how imputation works when the successive clients are both government agencies.

 

[6] This Comment provides a cross-reference to the screening requirements in Rule 1.0(k) and further elaborates on the prohibition on fee apportionment in language identical to that used in the Comment to the other screening Rules. See Rules 1.10, 1.12 and 1.18.

 

[7] This entirely new Comment elaborates on the notice requirement, in language identical to that in the Comment to the other screening Rules. See Rules 1.10, 1.12 and 1.18.

 

 

[6] This Comment has been deleted because its content is covered in Comment [7].

 

 

[9] The current Comment has been deleted. Its content now appears in Comment [2].

RULE 1.12: FORMER JUDGE OR , ARBITRATOR , MEDIATOR OR OTHER THIRD-PARTY NEUTRAL

 

(a) Except as stated in paragraph (d), a lawyer shall not represent anyone in connection with a matter in which the lawyer participated personally and substantially as a judge or other adjudicative officer , arbitrator or law clerk to such a person or as an arbitrator, mediator or other third-party neutral, unless all parties to the proceeding give informed consent after consultation , confirmed in writing.

 

(b) A lawyer shall not negotiate for employment with any person who is involved as a party or as lawyer for a party in a matter in which the lawyer is participating personally and substantially as a judge or other adjudicative officer or as an arbitrator , mediator or other third-party neutral. A lawyer serving as a law clerk to a judge , or other adjudicative officer or arbitrator may negotiate for employment with a party or lawyer involved in a matter in which the clerk is participating personally and substantially, but only after the lawyer has notified the judge , or other adjudicative officer or arbitrator.

 

(c) If a lawyer is disqualified by paragraph (a), no lawyer in a firm with which that lawyer is associated may knowingly undertake or continue representation in the matter unless:

 

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

(2) written notice is promptly given to the parties and any appropriate tribunal to enable it them to ascertain compliance with the provisions of this rule.

(d) An arbitrator selected as a partisan of a party in a multimember arbitration panel is not prohibited from subsequently representing that party.

 

 

Commentary

 

[1] This Rule generally parallels Rule 1.11. The term "personally and substantially" signifies that a judge who was a member of a multimember court, and thereafter left judicial office to practice law, is not prohibited from representing a client in a matter pending in the court, but in which the former judge did not participate. So also the fact that a former judge exercised administrative responsibility in a court does not prevent the former judge from acting as a lawyer in a matter where the judge had previously exercised remote or incidental administrative responsibility that did not affect the merits. Compare the Comment to Rule 1.11. The term "adjudicative officer" includes such officials as judges pro tempore, referees, special masters, hearing officers and other parajudicial officers, and also lawyers who serve as part-time judges. Compliance Canons A(2), B(2) and C of the Model Code of Judicial Conduct provide that a part-time judge, judge pro tempore or retired judge recalled to active service, may not "act as a lawyer in any proceeding in which he served as a judge or in any other proceeding related thereto." Although phrased differently from this Rule, those Rules correspond in meaning.

 

 

[2] Like former judges, lawyers who have served as arbitrators, mediators or other third-party neutrals may be asked to represent a client in a matter in which the lawyer participated personally and substantially. This Rule forbids such representation unless all of the parties to the proceedings give their informed consent, confirmed in writing. See Rule 1.0(e) and (b). Other law or codes of ethics governing third-party neutrals may impose more stringent standards of personal or imputed disqualification. See Rule 2.4.

 

[3] Although lawyers who serve as third-party neutrals do not have information concerning the parties that is protected under Rule 1.6, they typically owe the parties an obligation of confidentiality under law or codes of ethics governing third-party neutrals. Thus, paragraph (c) provides that conflicts of the personally disqualified lawyer will be imputed to other lawyers in a law firm unless the conditions of this paragraph are met.

 

[4] Requirements for screening procedures are stated in Rule 1.0(k). Paragraph (c)(1) does not prohibit the screened lawyer from receiving a salary or partnership share established by prior independent agreement, but that lawyer may not receive compensation directly related to the matter in which the lawyer is disqualified.

 

[5] Notice, including a description of the screened lawyer's prior representation and of the screening procedures employed, generally should be given as soon as practicable after the need for screening becomes apparent. When disclosure is likely to significantly injure the client, a reasonable delay may be justified.

 

 

Model Rule 1.12

Reporter's Explanation of Changes

TEXT:

1. Caption: Change to "Former Judge, Arbitrator, Mediator or Other Third-Party Neutral"

 

In the caption and thereafter throughout the Rule, terminology is modified to encompass a more expansive category of neutrals that participate in court-based and private dispute resolution.

 

2. Paragraph (a): Add other third-party neutrals

 

This paragraph has been modified to add mediators and other third-party neutrals. The term "arbitrator" was moved because arbitrators, like mediators and other third-party neutrals, typically do not have law clerks.

 

3. Paragraph (a): Change from "consent after consultation" to "give informed consent"

 

The Commission is recommending that throughout the Rules the phrase "consent after consultation" be replaced with "give informed consent," as defined in Rule 1.0(e). No change in substance is intended.

 

4. Paragraph (a): Consent "confirmed in writing"

 

The Commission recommends requiring that the consent here be confirmed in writing, as with other conflict-of-interest Rules. "Confirmed in writing" is defined in Rule 1.0(b).

 

5. Paragraph (b): Add references to other third-party neutrals

 

As with paragraph (a), the Commission has added references to mediators and other third-party neutrals and deleted "arbitrator" from the sentence addressing law clerks.

 

6. Paragraph (c): Nonconsensual screening of other third-party neutrals

 

Under the current Rule, the individual disqualification of a former judge or arbitrator under this Rule is not imputed to associated lawyers in a law firm if the conditions in (c)(1) and (2) are satisfied. The Commission determined that mediators and other third-party neutrals should be treated in the same manner because 1) there is typically less confidential information obtained in these proceedings than when the lawyer represents clients in a client-lawyer relationship and 2) although the third-party neutral usually owes a duty of confidentiality to the parties, it is not the same duty of confidentiality owed under Rule 1.6. The Commission also heard testimony that third-party neutrals do not share information with other lawyers in the firm in the same way that lawyers representing clients do. Finally, the Commission was concerned that failure to permit screening might inhibit the extent to which lawyers serve as third-party neutrals, particularly in voluntary, court-based alternative dispute resolution programs.

 

7. Paragraph (c)(1): Add "timely"

 

The Commission is recommending a definition of "screened" that includes a requirement that the lawyer be "timely" isolated from participation in the matter. Nevertheless, the Commission believes that the timeliness requirement is so important that it should appear in the text as well. This change is being recommended for all of the Rules that provide for screening. See Rules 1.10, 1.11 and 1.18.

 

 

COMMENTARY:

 

[2] This Comment has been added to explain the textual addition to paragraph (a) of the Rule, i.e., its applicability to arbitrators, mediators and other third-party neutrals.

 

[3] This entirely new Comment explains the rationale for imputing the conflicts of a personally disqualified lawyer unless the requirements of paragraph (c) are met.

 

[4] This entirely new Comment addresses the requirements of paragraph (c)(1) and has a cross-reference to the definition of "screened" in Rule 1.0(k).

 

[5] This entirely new Comment addresses the requirements of paragraph (c)(2).

 

RULE 1.13: ORGANIZATION AS CLIENT

(a) A lawyer employed or retained by an organization represents the organization acting through its duly authorized constituents.

 

(b) If a lawyer for an organization knows that an officer, employee or other person associated with the organization is engaged in action, intends to act or refuses to act in a matter related to the representation that is a violation of a legal obligation to the organization, or a violation of law which reasonably might be imputed to the organization, and is likely to result in substantial injury to the organization, the lawyer shall proceed as is reasonably necessary in the best interest of the organization. In determining how to proceed, the lawyer shall give due consideration to the seriousness of the violation and its consequences, the scope and nature of the lawyer's representation, the responsibility in the organization and the apparent motivation of the person involved, the policies of the organization concerning such matters and any other relevant considerations. Any measures taken shall be designed to minimize disruption of the organization and the risk of revealing information relating to the representation to persons outside the organization. Such measures may include among others:

(1) asking for reconsideration of the matter;

(2) advising that a separate legal opinion on the matter be sought for presentation to appropriate authority in the organization; and

(3) referring the matter to higher authority in the organization, including, if warranted by the seriousness of the matter, referral to the highest authority that can act in on behalf of the organization as determined by applicable law.

(c) If, despite the lawyer's efforts in accordance with paragraph (b), the highest authority that can act on behalf of the organization insists upon action, or a refusal to act, that is clearly a violation of law and is likely to result in substantial injury to the organization, the lawyer may resign in accordance with Rule 1.16.

 

(d) In dealing with an organization's directors, officers, employees, members, shareholders or other constituents, a lawyer shall explain the identity of the client when it is apparent the lawyer knows or reasonably should know that the organization's interests are adverse to those of the constituents with whom the lawyer is dealing.

 

(e) A lawyer representing an organization may also represent any of its directors, officers, employees, members, shareholders or other constituents, subject to the provisions of Rule 1.7. If the organization's consent to the dual representation is required by Rule 1.7, the consent shall be given by an appropriate official of the organization other than the individual who is to be represented, or by the shareholders.

 

 

Commentary

 

The Entity as the Client

 

[1] An organizational client is a legal entity, but it cannot act except through its officers, directors, employees, shareholders and other constituents. Officers, directors, employees and shareholders are the constituents of the corporate organizational client. The duties defined in this Comment apply equally to unincorporated associations. "Other constituents" as used in this Comment means the positions equivalent to officers, directors, employees and shareholders held by persons acting for organizational clients that are not corporations.

 

[2] When one of the constituents of an organizational client communicates with the organization's lawyer in that person's organizational capacity, the communication is protected by Rule 1.6. Thus, by way of example, if an organizational client requests its lawyer to investigate allegations of wrongdoing, interviews made in the course of that investigation between the lawyer and the client's employees or other constituents are covered by Rule 1.6. This does not mean, however, that constituents of an organizational client are the clients of the lawyer. The lawyer may not disclose to such constituents information relating to the representation except for disclosures explicitly or impliedly authorized by the organizational client in order to carry out the representation or as otherwise permitted by Rule 1.6.

 

[3] When constituents of the organization make decisions for it, the decisions ordinarily must be accepted by the lawyer even if their utility or prudence is doubtful. Decisions concerning policy and operations, including ones entailing serious risk, are not as such in the lawyer's province. However, different considerations arise when the lawyer knows that the organization may be substantially injured by action of a constituent that is in violation of law. In such a circumstance, it may be reasonably necessary for the lawyer to ask the constituent to reconsider the matter. If that fails, or if the matter is of sufficient seriousness and importance to the organization, it may be reasonably necessary for the lawyer to take steps to have the matter reviewed by a higher authority in the organization. Clear justification should exist for seeking review over the head of the constituent normally responsible for it. The stated policy of the organization may define circumstances and prescribe channels for such review, and a lawyer should encourage the formulation of such a policy. Even in the absence of organization policy, however, the lawyer may have an obligation to refer a matter to higher authority, depending on the seriousness of the matter and whether the constituent in question has apparent motives to act at variance with the organization's interest. Review by the chief executive officer or by the board of directors may be required when the matter is of importance commensurate with their authority. At some point it may be useful or essential to obtain an independent legal opinion.

 

[4] In an extreme case, it may be reasonably necessary for the lawyer to refer the matter to the The organization's highest authority . Ordinarily, that is to whom a matter may be referred ordinarily will be the board of directors or similar governing body. However, applicable law may prescribe that under certain conditions the highest authority reposes elsewhere, for example, in the independent directors of a corporation.

 

 

Relation to Other Rules

 

[5] The authority and responsibility provided in paragraph (b) this Rule are concurrent with the authority and responsibility provided in other Rules. In particular, this Rule does not limit or expand the lawyer's responsibility under Rule 1.6, 1.8, 1.16, 3.3 or 4.1. If the lawyer's services are being used by an organization to further a crime or fraud by the organization, Rule 1.2(d) can be applicable.

 

 

Government Agency

 

[6] The duty defined in this Rule applies to governmental organizations. However, when the client is a governmental organization, a different balance may be appropriate between maintaining confidentiality and assuring that the wrongful official act is prevented or rectified, for public business is involved. In addition, duties of lawyers employed by the government or lawyers in military service may be defined by statutes and regulation. Therefore, defining Defining precisely the identity of the client and prescribing the resulting obligations of such lawyers may be more difficult in the government context and is a matter beyond the scope of these Rules. See Scope [18]. Although in some circumstances the client may be a specific agency, it is generally may also be a branch of government, such as the executive branch, or the government as a whole. For example, if the action or failure to act involves the head of a bureau, either the department of which the bureau is a part or the relevant branch of government as a whole may be the client for purpose purposes of this Rule. Moreover, in a matter involving the conduct of government officials, a government lawyer may have authority under applicable law to question such conduct more extensively than that of a lawyer for a private organization in similar circumstances. Thus, when the client is a governmental organization, a different balance may be appropriate between maintaining confidentiality and assuring that the wrongful act is prevented or rectified, for public business is involved. In addition, duties of lawyers employed by the government or lawyers in military service may be defined by statutes and regulation. This Rule does not limit that authority. See note on Scope.

 

 

Clarifying the Lawyer's Role

 

[7] There are times when the organization's interest may be or become adverse to those of one or more of its constituents. In such circumstances the lawyer should advise any constituent, whose interest the lawyer finds adverse to that of the organization of the conflict or potential conflict of interest, that the lawyer cannot represent such constituent, and that such person may wish to obtain independent representation. Care must be taken to assure that the individual understands that, when there is such adversity of interest, the lawyer for the organization cannot provide legal representation for that constituent individual, and that discussions between the lawyer for the organization and the individual may not be privileged.

 

[8] Whether such a warning should be given by the lawyer for the organization to any constituent individual may turn on the facts of each case.

 

 

Dual Representation

 

[9] Paragraph (e) recognizes that a lawyer for an organization may also represent a principal officer or major shareholder.

 

 

Derivative Actions

 

[10] Under generally prevailing law, the shareholders or members of a corporation may bring suit to compel the directors to perform their legal obligations in the supervision of the organization. Members of unincorporated associations have essentially the same right. Such an action may be brought nominally by the organization, but usually is, in fact, a legal controversy over management of the organization.

 

[11] The question can arise whether counsel for the organization may defend such an action. The proposition that the organization is the lawyer's client does not alone resolve the issue. Most derivative actions are a normal incident of an organization's affairs, to be defended by the organization's lawyer like any other suit. However, if the claim involves serious charges of wrongdoing by those in control of the organization, a conflict may arise between the lawyer's duty to the organization and the lawyer's relationship with the board. In those circumstances, Rule 1.7 governs who should represent the directors and the organization.

 

 

Model Rule 1.13

Reporter's Explanation of Changes

TEXT:

1. Paragraph (b): Add "for" and substitute "on" for "in"

These changes are stylistic and grammatical. No change in substance is intended.

2. Paragraph (d): Change "when it is apparent" to "the lawyer knows or reasonably should know"

 

This change clarifies the scienter requirement in this paragraph, using defined terminology and a construction that appears elsewhere in the Rules. See, e.g., Rule 4.3.

 

COMMENTARY:

 

[4] These changes are stylistic. No change in substance is intended.

[5] This change is stylistic. No change in substance is intended.

[6] This modification of Comment [6] is designed to more accurately reflect prevailing law regarding the identity of a government client. Although ultimately the identity of the client is a question of law beyond these Rules, the Commission believes that the limited guidance provided in this revised Comment is helpful.

 

RULE 1.14: CLIENT UNDER A DISABILITY WITH DIMINISHED CAPACITY

 

(a) When a client's ability capacity to make adequately considered decisions in connection with the a representation is impaired diminished, whether because of minority, mental disability impairment or for some other reason, the lawyer shall, as far as reasonably possible, maintain a normal client-lawyer relationship with the client.

 

(b) A lawyer may seek the appointment of a guardian or take other protective action with respect to a client only when When the lawyer reasonably believes that the client has diminished capacity, is at risk of substantial physical, financial or other harm unless action is taken and cannot adequately act in the client's own interest , the lawyer may take reasonably necessary protective action, including consulting with individuals or entities that have the ability to take action to protect the client and, in appropriate cases, seeking the appointment of a guardian ad litem, conservator or guardian.

 

 

(c) Information relating to the representation of a client with diminished capacity is protected by Rule 1.6. When taking protective action pursuant to paragraph (b), the lawyer is impliedly authorized under Rule 1.6(a) to reveal information about the client, but only to the extent reasonably necessary to protect the client's interests.

 

 

Commentary

 

[1] The normal client-lawyer relationship is based on the assumption that the client, when properly advised and assisted, is capable of making decisions about important matters. When the client is a minor or suffers from a diminished mental capacity disorder or disability, however, maintaining the ordinary client-lawyer relationship may not be possible in all respects. In particular, an a severely incapacitated person may have no power to make legally binding decisions. Nevertheless, a client lacking legal competence with diminished capacity often has the ability to understand, deliberate upon, and reach conclusions about matters affecting the client's own well-being. Furthermore, to an increasing extent the law recognizes intermediate degrees of competence. For example, children as young as five or six years of age, and certainly those of ten or twelve, are regarded as having opinions that are entitled to weight in legal proceedings concerning their custody. So also, it is recognized that some persons of advanced age can be quite capable of handling routine financial matters while needing special legal protection concerning major transactions.

 

[2] The fact that a client suffers a disability does not diminish the lawyer's obligation to treat the client with attention and respect. If the person has no guardian or legal representative, the lawyer often must act as de facto guardian. Even if the person does have has a legal representative, the lawyer should as far as possible accord the represented person the status of client, particularly in maintaining communication.

 

 

[3] The client may wish to have family members or other persons participate in discussions with the lawyer. When necessary to assist in the representation, the presence of such persons generally does not affect the applicability of the attorney-client evidentiary privilege. Nevertheless, the lawyer must keep the client's interests foremost and, except for protective action authorized under paragraph (b), must to look to the client, and not family members, to make decisions on the client's behalf.

 

 

[3] [4] If a legal representative has already been appointed for the client, the lawyer should ordinarily look to the representative for decisions on behalf of the client. If a legal representative has not been appointed, the lawyer should see to such an appointment where it would serve the client's best interests. Thus, if a disabled client has substantial property that should be sold for the client's benefit, effective completion of the transaction ordinarily requires appointment of a legal representative. In many circumstances, however, appointment of a legal representative may be expensive or traumatic for the client. Evaluation of these considerations is a matter of professional judgment on the lawyer's part. In matters involving a minor, whether the lawyer should look to the parents as natural guardians may depend on the type of proceeding or matter in which the lawyer is representing the minor. [4] If the lawyer represents the guardian as distinct from the ward, and is aware that the guardian is acting adversely to the ward's interest, the lawyer may have an obligation to prevent or rectify the guardian's misconduct. See Rule 1.2(d).

 

 

Taking Protective Action

 

 

[5] If a lawyer reasonably believes that a client is at risk of substantial physical, financial or other harm unless action is taken, and that a normal client-lawyer relationship cannot be maintained as provided in paragraph (a) because the client lacks sufficient capacity to communicate or to make adequately considered decisions in connection with the representation, then paragraph (b) permits the lawyer to take protective measures deemed necessary. Such measures could include: consulting with family members, using a reconsideration period to permit clarification or improvement of circumstances, using voluntary surrogate decisionmaking tools such as durable powers of attorney or consulting with support groups, professional services, adult-protective agencies or other individuals or entities that have the ability to protect the client. In taking any protective action, the lawyer should be guided by such factors as the wishes and values of the client to the extent known, the client's best interests and the goals of intruding into the client's decisionmaking autonomy to the least extent feasible, maximizing client capacities and respecting the client's family and social connections.

 

[6] In determining the extent of the client's diminished capacity, the lawyer should consider and balance such factors as: the client's ability to articulate reasoning leading to a decision, variability of state of mind and ability to appreciate consequences of a decision; the substantive fairness of a decision; and the consistency of a decision with the known long-term commitments and values of the client. In appropriate circumstances, the lawyer may seek guidance from an appropriate diagnostician.

 

[7] If a legal representative has not been appointed, the lawyer should consider whether appointment of a guardian ad litem, conservator or guardian is necessary to protect the client's interests. Thus, if a client with diminished capacity has substantial property that should be sold for the client's benefit, effective completion of the transaction may require appointment of a legal representative. In addition, rules of procedure in litigation sometimes provide that minors or persons with diminished capacity must be represented by a guardian or next friend if they do not have a general guardian. In many circumstances, however, appointment of a legal representative may be more expensive or traumatic for the client than circumstances in fact require. Evaluation of such circumstances is a matter entrusted to the professional judgment of the lawyer. In considering alternatives, however, the lawyer should be aware of any law that requires the lawyer to advocate the least restrictive action on behalf of the client.

 

 

Disclosure of the Client's Condition

 

 

[5] [8] Rules of procedure in litigation generally provide that minors or persons suffering mental disability shall be represented by a guardian or next friend if they do not have a general guardian. However, disclosure Disclosure of the client's disability can diminished capacity could adversely affect the client's interests. For example, raising the question of disability diminished capacity could, in some circumstances, lead to proceedings for involuntary commitment. Information relating to the representation is protected by Rule 1.6. Therefore, unless authorized to do so, the lawyer may not disclose such information. When taking protective action pursuant to paragraph (b), the lawyer is impliedly authorized to make the necessary disclosures, even when the client directs the lawyer to the contrary. Nevertheless, given the risks of disclosure, paragraph (c) limits what the lawyer may disclose in consulting with other individuals or entities or seeking the appointment of a legal representative. At the very least, the lawyer should determine whether it is likely that the person or entity consulted with will act adversely to the client's interests before discussing matters related to the client. The lawyer's position in such cases is an unavoidably difficult one. The lawyer may seek guidance from an appropriate diagnostician.

 

 

Emergency Legal Assistance

 

 

[6] [9] In an emergency where the health, safety or a financial interest of a person under a disability with seriously diminished capacity is threatened with imminent and irreparable harm, a lawyer may take legal action on behalf of such a person even though the person is unable to establish a client-lawyer relationship or to make or express considered judgments about the matter, when the disabled person or another acting in good faith on that person's behalf has consulted with the lawyer. Even in such an emergency, however, the lawyer should not act unless the lawyer reasonably believes that the person has no other lawyer, agent or other representative available. The lawyer should take legal action on behalf of the disabled person only to the extent reasonably necessary to maintain the status quo or otherwise avoid imminent and irreparable harm. A lawyer who undertakes to represent a person in such an exigent situation has the same duties under these Rules as the lawyer would with respect to a client.

 

 

[7] [10] A lawyer who acts on behalf of a disabled person with seriously diminished capacity in an emergency should keep the confidences of the disabled person as if dealing with a client, disclosing them only to the extent necessary to accomplish the intended protective action. The lawyer should disclose to any tribunal involved and to any other counsel involved the nature of his or her relationship with the disabled person. The lawyer should take steps to regularize the relationship or implement other protective solutions as soon as possible. Normally, a lawyer would not seek compensation for such emergency actions taken on behalf of a disabled person.

 

 

Model Rule 1.14

Reporter's Explanation of Changes

TEXT:

1. Caption: Change to "Client with Diminished Capacity"

 

In the caption and thereafter throughout the Rule, terminology referencing a client's capacity is changed to focus on and more accurately express the continuum of a client's capacity.

 

2. Paragraph (a): Terminology change

 

The change in terminology in this paragraph is grammatical and reflective of the change of focus of the Rule to the continuum of a client's capacity.

 

3. Paragraph (b): Add protective measures lawyer may take short of request for guardian and requiring risk of substantial harm unless action is taken

 

The Commission recommends adding guidance for lawyers regarding "protective action" the lawyer may take short of seeking a guardian, which is generally deemed appropriate only in extreme circumstances. The revision permits the lawyer to "take reasonably necessary protective action, including consulting with individuals or entities that have the ability to take action to protect the client, and, in appropriate cases, seeking the appointment of a guardian ad litem, conservator or guardian." The Commission believes the recommended change offers the lawyer flexibility when a client faces substantial risk of harm or when emergency legal assistance is required as described in Comments [9] and [10].

 

4. Paragraph (c): Add limitation on "protective action"

 

The Commission recommends addition of a new paragraph (c) to specify the means by which "protective action" should be limited to avoid client harm. The proposal explicitly recognizes the relationship of Rule 1.14(b) to Rule 1.6. Specifically, it states that Rule 1.6 allows disclosure of information under Rule 1.14(b) only as "reasonably necessary to protect the client's interests."

 

COMMENTARY:

 

[1] This Comment has been revised with collateral language changes to reflect the Rule's focus on degrees of a client's capacity.

 

[2] This Comment has been revised to delete the sentence, "If the person has no guardian or legal representative, the lawyer often must act as de facto guardian." The Commission views as unclear, not only what it means to act as a "de facto guardian," but also when it is appropriate for a lawyer to take such action and what limits exist on the lawyer's ability to act for an incapacitated client. The other revision to the Comment is a grammatical and stylistic change.

 

[3] This new Comment includes additional discussion of the potential risk in the common practice of having family members or other persons participate in the lawyer's representation of a client with diminished capacity. The change is recommended to encourage lawyers to seek such involvement since this practice may be of assistance to the representation. The Comment also points out potential risk to the extent that family members may be guided, consciously or unconsciously, by their own interests instead of the interests of the client.

 

[4] This revision of current Comment [3] includes additional discussion indicating that parents as natural guardians may have the same rights as legal guardians to make decisions regarding their children, depending on the nature of the matter or proceeding. (Whether and when parents have rights to make decisions on their children's behalf is a matter of substantive law that is not addressed here.)

 

The discussion in current Comment [3] on the issue of whether the lawyer should seek appointment of a guardian has been moved, with modification, to new Comment [7]. Finally, current Comment [4] is now the last sentence of proposed Comment [4] in order to provide a single Comment on the lawyer's role when the client of diminished capacity already has a legal representative.

 

Caption "Taking Protective Action" has been added to highlight and focus on action the lawyer may take during representation of a client with diminished capacity.

 

[5] This new Comment sets forth the rationale for paragraph (b) and gives additional detail on the circumstances that might trigger the lawyer's permission to consult with family members, adult-protective agencies or other individuals or entities that have the authority to protect the client.

 

[6] This new Comment provides guidance on determining the extent of a client's diminished capacity.

 

[7] This new Comment addresses the issue of whether a lawyer should seek appointment of a guardian. Discussion of this issue in current Comment [3], with modification, is relocated here. The modification clarifies that, while it "may" be necessary to have a legal representative appointed to complete a transaction, it is not "ordinarily" required to the extent that a client with some degree of capacity may be able to execute a power of attorney. In addition, the discussion in current Comment [5] regarding rules of procedure requiring a guardian or next friend has been moved to this Comment. A new final sentence serves as a useful reference to other law that may impose a requirement that the lawyer take the least restrictive action under the circumstances.

 

[8] This is a revision of current Comment [5]. The first sentence has been moved to Comment [7]. The majority of the language is essentially new and refers to the limitations in paragraph (c) on the disclosure of information relating to the representation and clarifies the relationship between Rules 1.14 and 1.6. The last sentence of the current Comment has been deleted because the issue of whether a lawyer may seek guidance from a diagnostician is addressed in Comment [6].

 

 

[9] and [10] The changes reflect the Rule's new focus on degrees of a client's capacity.

 

 

RULE 1.15: SAFEKEEPING PROPERTY

 

(a) A lawyer shall hold property of clients or third persons that is in a lawyer's possession in connection with a representation separate from the lawyer's own property. Funds shall be kept in a separate account maintained in the state where the lawyer's office is situated, or elsewhere with the consent of the client or third person. Other property shall be identified as such and appropriately safeguarded. Complete records of such account funds and other property shall be kept by the lawyer and shall be preserved for a period of [five years] after termination of the representation.

 

 

(b) A lawyer may deposit the lawyer's own funds in a client trust account for the sole purpose of paying bank service charges on that account, but only in an amount necessary for that purpose.

 

 

(c) A lawyer shall deposit into a client trust account legal fees and expenses that have been paid in advance, to be withdrawn by the lawyer only as fees are earned or expenses incurred.

 

 

(b) (d) Upon receiving funds or other property in which a client or third person has an interest, a lawyer shall promptly notify the client or third person. Except as stated in this rule or otherwise permitted by law or by agreement with the client, a lawyer shall promptly deliver to the client or third person any funds or other property that the client or third person is entitled to receive and, upon request by the client or third person, shall promptly render a full accounting regarding such property.

 

 

(c) (e) When in the course of representation a lawyer is in possession of property in which both two or more persons (one of whom may be the lawyer and another person ) claim interests, the property shall be kept separate by the lawyer until there is an accounting and severance of their interests. If a dispute arises concerning their respective interests, the portion in dispute shall be kept separate by the lawyer until the dispute is resolved. The lawyer shall promptly distribute all portions of the property as to which the interests are not in dispute.

 

 

Commentary

 

[1] A lawyer should hold property of others with the care required of a professional fiduciary. Securities should be kept in a safe deposit box, except when some other form of safekeeping is warranted by special circumstances. All property that is the property of clients or third persons should , including prospective clients, must be kept separate from the lawyer's business and personal property and, if monies, in one or more trust accounts. Separate trust accounts may be warranted when administering estate monies or acting in similar fiduciary capacities. A lawyer should maintain on a current basis books and records in accordance with generally accepted accounting practice and comply with any recordkeeping rules established by law or court order. See, e.g., ABA Model Financial Recordkeeping Rule.

 

 

[2] While normally it is impermissible to commingle the lawyer's own funds with client funds, paragraph (b) provides that it is permissible when necessary to pay bank service charges on that account. Accurate records must be kept regarding which part of the funds are the lawyer's.

 

 

[2] [3] Lawyers often receive funds from third parties from which the lawyer's fee will be paid. If there is risk that the client may divert the funds without paying the fee, the The lawyer is not required to remit the portion from which the fee is to be paid to the client funds that the lawyer reasonably believes represent fees owed. However, a lawyer may not hold funds to coerce a client into accepting the lawyer's contention. The disputed portion of the funds should must be kept in a trust account and the lawyer should suggest means for prompt resolution of the dispute, such as arbitration. The undisputed portion of the funds shall be promptly distributed.

 

 

[3] [4] Third Paragraph (e) also recognizes that third parties , such as a client's creditors, may have just lawful claims against specific funds or other property in a lawyer's custody , such as a client's creditor who has a lien on funds recovered in a personal injury action. A lawyer may have a duty under applicable law to protect such third-party claims against wrongful interference by the client , and accordingly may . In such cases, when the third-party claim is not frivolous under applicable law, the lawyer must refuse to surrender the property to the client until the claims are resolved. However, a A lawyer should not unilaterally assume to arbitrate a dispute between the client and the third party , but, when there are substantial grounds for dispute as to the person entitled to the funds, the lawyer may file an action to have a court resolve the dispute.

 

 

[4] [5] The obligations of a lawyer under this Rule are independent of those arising from activity other than rendering legal services. For example, a lawyer who serves only as an escrow agent is governed by the applicable law relating to fiduciaries even though the lawyer does not render legal services in the transaction and is not governed by this Rule.

 

 

[5] [6] A "clients' security lawyers' fund " for client protection provides a means through the collective efforts of the bar to reimburse persons who have lost money or property as a result of dishonest conduct of a lawyer. Where such a fund has been established, a lawyer must participate where it is mandatory, and, even when it is voluntary, the lawyer should participate.

 

 

Model Rule 1.15

Reporter's Explanation of Changes

TEXT:

1. Paragraph (b): Deposits to minimize bank charges

 

The Commission heard testimony that in some jurisdictions lawyers are unable to avoid bank charges unless they are permitted to deposit money in a client trust account to cover such charges. The addition of this new paragraph is designed to address that problem.

 

2. Paragraph (c): Advance payment of fees and expenses

This new paragraph provides needed practical guidance to lawyers on how to handle advance deposits of fees and expenses. The Commission is responding to reports that the single largest class of claims made to client protection funds is for the taking of unearned fees.

 

3. Paragraph (e): Expand to cover all instances of disputed funds

 

Current Rule 1.15(c) is presently written to cover disputes between the lawyer and "another person," usually the client. The change proposed recognizes that at least three kinds of disputes are in fact possible: client-lawyer, client-creditor and lawyer-client's creditor. The proposed change thus uses more general language, tightens the first two sentences into one and reiterates the lawyer's duty to pay over undisputed sums. The final additional sentence clarifies the lawyer's duty to promptly distribute all portions of the property that are not subject to dispute.

 

COMMENTARY:

 

[1] Consistent with the Commission's action with respect to Rule 1.18, a phrase has been added to make clear that prospective clients are included among the third parties to whom the lawyer owes a duty to protect property pursuant to this Rule.

 

While the black letter of this Rule is written in mandatory terms, the Comments are often permissive. Sometimes that may be appropriate, as where a safe deposit box is suggested unless something else is warranted by the circumstances. When the issue is close, permissive language has been retained. However, Rule 1.15(a) clearly requires that client property, including money, be kept separate from the lawyer's own, and the Comment has been changed to make that clear. A sentence has been added to provide guidance to lawyers regarding the proper maintenance of trust accounts.

 

[2] This new Comment addresses new paragraph (b).

 

[3] This Comment deals with handling client funds that may be set aside for payment of fees. The current language refers only to funds received from third parties, whereas the usual payer will be the client. Further, the lawyer should not have to show that the client is in fact likely to leave town if, pursuant to agreement, the lawyer is entitled to have the security of funds paid over before the fee is actually earned.

 

In addition, as in Comment [1], the clear Rule 1.15(a) and (e) requirements that disputed client funds be kept in a separate account is made mandatory rather than permissive.

 

[4] This Comment deals with a practical problem in which a client's creditor tries to get at funds in the hands of the lawyer. There is no doubt that, as a matter of substantive law, in some cases the lawyer would be required to make the creditor whole if the lawyer remitted property to the client to which the creditor was found entitled. In those, but only those, cases, paragraph (e) mandates a lawyer's refusal to remit the funds to the client until the dispute is resolved, while this Comment reinforces and tries to explain this sometimes controversial point. The Comment further explains that the lawyer's duty to protect client creditors only exists when the creditor has a claim against specific funds being held by the lawyer and that the lawyer's duty to protect the third party exists only when there is a nonfrivolous claim under applicable law. When there are substantial grounds for dispute as to the person entitled to the funds, the lawyer may file an action to have a court resolve the dispute.

 

[5] These changes clarify that when a lawyer holds funds in a capacity other than as a lawyer representing a client, this Rule does not apply.

 

[6] The change to "lawyers' fund for client protection" reflects the current nomenclature for these funds. The new language in the second sentence indicates a lawyer has an obligation to contribute to these funds in jurisdictions where they are mandatory.

 

 

RULE 1.16: DECLINING OR TERMINATING REPRESENTATION

 

(a) Except as stated in paragraph (c), a lawyer shall not represent a client or, where representation has commenced, shall withdraw from the representation of a client if:

 

(1) the representation will result in violation of the rules of professional conduct or other law;

(2) the lawyer's physical or mental condition materially impairs the lawyer's ability to represent the client; or

(3) the lawyer is discharged.

(b) Except as stated in paragraph (c), a lawyer may withdraw from representing a client if :

 

(1) withdrawal can be accomplished without material adverse effect on the interests of the client , or if: ;

(1) (2) the client persists in a course of action involving the lawyer's services that the lawyer reasonably believes is criminal or fraudulent;

(2) (3) the client has used the lawyer's services to perpetrate a crime or fraud;

(3) (4) a the client insists upon pursuing an objective taking action that the lawyer considers repugnant or imprudent with which the lawyer has a fundamental disagreement;

(4) (5) the client fails substantially to fulfill an obligation to the lawyer regarding the lawyer's services and has been given reasonable warning that the lawyer will withdraw unless the obligation is fulfilled;

(5) (6) the representation will result in an unreasonable financial burden on the lawyer or has been rendered unreasonably difficult by the client; or

(6) (7) other good cause for withdrawal exists.

(c) A lawyer must comply with applicable law requiring notice to or permission of a tribunal when terminating a representation. When ordered to do so by a tribunal, a lawyer shall continue representation notwithstanding good cause for terminating the representation.

 

(d) Upon termination of representation, a lawyer shall take steps to the extent reasonably practicable to protect a client's interests, such as giving reasonable notice to the client, allowing time for employment of other counsel, surrendering papers and property to which the client is entitled and refunding any advance payment of fee or expense that has not been earned or incurred. The lawyer may retain papers relating to the client to the extent permitted by other law.

 

 

Commentary

 

[1] A lawyer should not accept representation in a matter unless it can be performed competently, promptly, without improper conflict of interest and to completion. Ordinarily, a representation in a matter is completed when the agreed-upon assistance has been concluded. See Rules 1.2(c) and 6.5. See also Rule 1.3, Comment [4].

 

 

Mandatory Withdrawal

 

[2] A lawyer ordinarily must decline or withdraw from representation if the client demands that the lawyer engage in conduct that is illegal or violates the Rules of Professional Conduct or other law. The lawyer is not obliged to decline or withdraw simply because the client suggests such a course of conduct; a client may make such a suggestion in the hope that a lawyer will not be constrained by a professional obligation.

 

[3] When a lawyer has been appointed to represent a client, withdrawal ordinarily requires approval of the appointing authority. See also Rule 6.2. Similarly, court approval or notice to the court is often required by applicable law before a lawyer withdraws from pending litigation. Difficulty may be encountered if withdrawal is based on the client's demand that the lawyer engage in unprofessional conduct. The court may wish request an explanation for the withdrawal, while the lawyer may be bound to keep confidential the facts that would constitute such an explanation. The lawyer's statement that professional considerations require termination of the representation ordinarily should be accepted as sufficient. Lawyers should be mindful of their obligations to both clients and the court under Rules 1.6 and 3.3.

 

 

Discharge

 

[4] A client has a right to discharge a lawyer at any time, with or without cause, subject to liability for payment for the lawyer's services. Where future dispute about the withdrawal may be anticipated, it may be advisable to prepare a written statement reciting the circumstances.

 

[5] Whether a client can discharge appointed counsel may depend on applicable law. A client seeking to do so should be given a full explanation of the consequences. These consequences may include a decision by the appointing authority that appointment of successor counsel is unjustified, thus requiring self-representation by the client.

 

[6] If the client is mentally incompetent has severely diminished capacity, the client may lack the legal capacity to discharge the lawyer, and in any event the discharge may be seriously adverse to the client's interests. The lawyer should make special effort to help the client consider the consequences and , in an extreme case, may initiate proceedings for a conservatorship or similar protection of the client. See take reasonably necessary protective action as provided in Rule 1.14.

 

 

Optional Withdrawal

 

[7] A lawyer may withdraw from representation in some circumstances. The lawyer has the option to withdraw if it can be accomplished without material adverse effect on the client's interests. Withdrawal is also justified if the client persists in a course of action that the lawyer reasonably believes is criminal or fraudulent, for a lawyer is not required to be associated with such conduct even if the lawyer does not further it. Withdrawal is also permitted if the lawyer's services were misused in the past even if that would materially prejudice the client. The lawyer may also withdraw where the client insists on a taking action that the lawyer considers repugnant or imprudent objective with which the lawyer has a fundamental disagreement.

 

[8] A lawyer may withdraw if the client refuses to abide by the terms of an agreement relating to the representation, such as an agreement concerning fees or court costs or an agreement limiting the objectives of the representation.

 

 

Assisting the Client upon Withdrawal

 

[9] Even if the lawyer has been unfairly discharged by the client, a lawyer must take all reasonable steps to mitigate the consequences to the client. The lawyer may retain papers as security for a fee only to the extent permitted by law. Whether or not a lawyer for an organization may under certain unusual circumstances have a legal obligation to the organization after withdrawing or being discharged by the organization's highest authority is beyond the scope of these Rules. See Rule 1.15.

 

 

Model Rule 1.16

Reporter's Explanation of Changes

TEXT:

1. Paragraph (b): Clarify significance of permission to withdraw "without material adverse effect on the interests of the client"

 

No change in substance is intended. This proposal is intended to clarify that the lawyer may withdraw for any reason if "withdrawal can be accomplished without material adverse effect on the interests of the client," or, even if there will be such material adverse effect, if the lawyer has good cause, as set forth in paragraphs (b)(2) through (6).

 

2. Paragraph (b)(4): Alter requirement for permissive withdrawal when client and lawyer disagree over course of representation

 

a. Substitute "taking action" for "pursuing an objective"

The Commission recommends that a lawyer be permitted to withdraw from representation whenever a client is insisting that the lawyer take action that the lawyer finds repugnant or, in some instances, when the lawyer has a fundamental disagreement with the action proposed by the client, regardless of whether the action concerns the client's objectives or the means of achieving those objectives.

b. Substitute "with which the lawyer has a fundamental disagreement" for "imprudent"

Allowing a lawyer to withdraw merely because the lawyer believes that the client's objectives or intended action is "imprudent" permits the lawyer to threaten to withdraw in order to prevail in almost any dispute with a client, thus detracting from the client's ability to direct the course of the representation. Nevertheless, the Commission believes that a lawyer ought to be permitted to withdraw when the disagreement over objectives or means is so fundamental that the lawyer's autonomy is seriously threatened.

c. Change first word from "a" to "the"

This is a stylistic change to conform with the other subparagraphs of (b).

3. Paragraph (c): Remind lawyers of court requirements of notice or permission to withdraw from pending litigation

 

Some courts require only that the lawyer notify the court of withdrawal, for example, where a substitution of counsel is being made with the consent of the client. The Commission recommends following the practice of several states that have added the proposed first sentence in order to remind lawyers of their obligations under court rules.

 

4. Paragraph (d): Add reference to return of unearned fees and unexpended advanced expenses

 

This change corresponds to the change in Rule 1.15, which requires lawyers to segregate advanced fees and expenses in a client trust account.

 

COMMENTARY:

 

[1] The additional material addresses the question of when a representation is completed and cross-references other Rules, including those in which the services are limited in scope or intended to be short-term in nature. No change in substance is intended.

 

[3] Three changes are proposed. None of them is substantive. The first proposal is to add a sentence regarding the possibility that a court may require either approval or notice before a lawyer withdraws from pending litigation. The second is to substitute "request" for "wish" for reasons of style. The third is to add a cross-reference to Rules 1.6 and 3.3 regarding any colloquy with a court requesting an explanation for the lawyer's request to withdraw.

 

[6] These changes are proposed in light of the changes made in Rule 1.14.

 

[7] The proposed change tracks the proposed change to paragraph (b)(4).

 

[9] The Commission recommends adding a cross-reference to Rule 1.15 on client property. It also recommends that the last sentence be deleted because its meaning is unclear.

 

RULE 1.17: SALE OF LAW PRACTICE

 

A lawyer or a law firm may sell or purchase a law practice, including good will, if the following conditions are satisfied:

 

(a) The seller ceases to engage in the private practice of law [in the geographic area] [in the jurisdiction] (a jurisdiction may elect either version) in which the practice has been conducted;

 

(b) The entire practice is sold as an entirety to another lawyer one or more lawyers or law firm firms;

 

(c) Actual written notice is given to each of the seller's clients regarding:

 

(1) the proposed sale;

(2) the terms of any proposed change in the fee arrangement authorized by paragraph (d);

(3) (2) the client's right to retain other counsel or to take possession of the file; and

(4) (3) the fact that the client's consent to the sale will be presumed if the client does not take any action or does not otherwise object within ninety (90) days of receipt of the notice.

If a client cannot be given notice, the representation of that client may be transferred to the purchaser only upon entry of an order so authorizing by a court having jurisdiction. The seller may disclose to the court in camera information relating to the representation only to the extent necessary to obtain an order authorizing the transfer of a file.

 

(d) The fees charged clients shall not be increased by reason of the sale. The purchaser may, however, refuse to undertake the representation unless the client consents to pay the purchaser fees at a rate not exceeding the fees charged by the purchaser for rendering substantially similar services prior to the initiation of the purchase negotiations.

 

 

Commentary

 

[1] The practice of law is a profession, not merely a business. Clients are not commodities that can be purchased and sold at will. Pursuant to this Rule, when a lawyer or an entire firm ceases to practice and another lawyer other lawyers or firm takes firms take over the representation, the selling lawyer or firm may obtain compensation for the reasonable value of the practice as may withdrawing partners of law firms. See Rules 5.4 and 5.6.

 

 

Termination of Practice by the Seller

 

[2] The requirement that all of the private practice be sold is satisfied if the seller in good faith makes the entire practice available for sale to the purchaser purchasers. The fact that a number of the seller's clients decide not to be represented by the purchaser purchasers but take their matters elsewhere, therefore, does not result in a violation. Neither does a return Return to private practice as a result of an unanticipated change in circumstances does not necessarily result in a violation. For example, a lawyer who has sold the practice to accept an appointment to judicial office does not violate the requirement that the sale be attendant to cessation of practice if the lawyer later resumes private practice upon being defeated in a contested or a retention election for the office.

 

[3] The requirement that the seller cease to engage in the private practice of law does not prohibit employment as a lawyer on the staff of a public agency or a legal services entity that provides legal services to the poor, or as in-house counsel to a business.

 

[4] The Rule permits a sale attendant upon retirement from the private practice of law within the jurisdiction. Its provisions, therefore, accommodate the lawyer who sells the practice upon the occasion of moving to another state. Some states are so large that a move from one locale therein to another is tantamount to leaving the jurisdiction in which the lawyer has engaged in the practice of law. To also accommodate lawyers so situated, states may permit the sale of the practice when the lawyer leaves the geographic area rather than the jurisdiction. The alternative desired should be indicated by selecting one of the two provided for in Rule 1.17(a).

 

 

Single Purchaser Sale of Entire Practice

 

[5] The Rule requires a single purchaser that the seller’s entire practice be sold. The prohibition against piecemeal sale of a less than the entire practice protects those clients whose matters are less lucrative and who might find it difficult to secure other counsel if a sale could be limited to substantial fee-generating matters. The purchaser is purchasers are required to undertake all client matters in the practice, subject to client consent. If This requirement is satisfied, however, the even if a purchaser is unable to undertake all a particular client matters matter because of a conflict of interest in a specific matter respecting which the purchaser is not permitted by Rule 1.7 or another rule to represent the client, the requirement that there be a single purchaser is nevertheless satisfied.

 

 

Client Confidences, Consent and Notice

 

[6] Negotiations between seller and prospective purchaser prior to disclosure of information relating to a specific representation of an identifiable client no more violate the confidentiality provisions of Model Rule 1.6 than do preliminary discussions concerning the possible association of another lawyer or mergers between firms, with respect to which client consent is not required. Providing the purchaser access to client-specific information relating to the representation and to the file, however, requires client consent. The Rule provides that before such information can be disclosed by the seller to the purchaser the client must be given actual written notice of the contemplated sale, including the identity of the purchaser and any proposed change in the terms of future representation, and must be told that the decision to consent or make other arrangements must be made within 90 days. If nothing is heard from the client within that time, consent to the sale is presumed.

 

[7] A lawyer or law firm ceasing to practice cannot be required to remain in practice because some clients cannot be given actual notice of the proposed purchase. Since these clients cannot themselves consent to the purchase or direct any other disposition of their files, the Rule requires an order from a court having jurisdiction authorizing their transfer or other disposition. The Court can be expected to determine whether reasonable efforts to locate the client have been exhausted, and whether the absent client's legitimate interests will be served by authorizing the transfer of the file so that the purchaser may continue the representation. Preservation of client confidences requires that the petition for a court order be considered in camera. (A procedure by which such an order can be obtained needs to be established in jurisdictions in which it presently does not exist.)

 

[8] All the elements of client autonomy, including the client's absolute right to discharge a lawyer and transfer the representation to another, survive the sale of the practice.

 

 

Fee Arrangements Between Client and Purchaser

 

[9] The sale may not be financed by increases in fees charged the clients of the practice. Existing agreements between the seller and the client as to fees and the scope of the work must be honored by the purchaser , unless the client consents after consultation. The purchaser may, however, advise the client that the purchaser will not undertake the representation unless the client consents to pay the higher fees the purchaser usually charges. To prevent client financing of the sale, the higher fee the purchaser may charge must not exceed the fees charged by the purchaser for substantially similar service rendered prior to the initiation of the purchase negotiations.

 

 

[10] The purchaser may not intentionally fragment the practice which is the subject of the sale by charging significantly different fees in substantially similar matters. Doing so would make it possible for the purchaser to avoid the obligation to take over the entire practice by charging arbitrarily higher fees for less lucrative matters, thereby increasing the likelihood that those clients would not consent to the new representation.

 

Other Applicable Ethical Standards

 

 

[11] [10] Lawyers participating in the sale of a law practice are subject to the ethical standards applicable to involving another lawyer in the representation of a client. These include, for example, the seller's obligation to exercise competence in identifying a purchaser qualified to assume the practice and the purchaser's obligation to undertake the representation competently (see Rule 1.1); the obligation to avoid disqualifying conflicts, and to secure client the client’s informed consent after consultation for those conflicts that can be agreed to (see Rule 1.7 regarding conflicts and Rule 1.0(e) for the definition of informed consent); and the obligation to protect information relating to the representation (see Rules 1.6 and 1.9).

 

 

[12] [11] If approval of the substitution of the purchasing lawyer for the selling lawyer is required by the rules of any tribunal in which a matter is pending, such approval must be obtained before the matter can be included in the sale (see Rule 1.16).

 

 

Applicability of the Rule

 

 

[13] [12] This Rule applies to the sale of a law practice by representatives of a deceased, disabled or disappeared lawyer. Thus, the seller may be represented by a non-lawyer representative not subject to these Rules. Since, however, no lawyer may participate in a sale of a law practice which does not conform to the requirements of this Rule, the representatives of the seller as well as the purchasing lawyer can be expected to see to it that they are met.

 

 

[14] [13] Admission to or retirement from a law partnership or professional association, retirement plans and similar arrangements, and a sale of tangible assets of a law practice, do not constitute a sale or purchase governed by this Rule.

 

 

[15] [14] This Rule does not apply to the transfers of legal representation between lawyers when such transfers are unrelated to the sale of a practice.

 

RULE 1.18: DUTIES TO PROSPECTIVE CLIENT

 

(a) A person who discusses with a lawyer the possibility of forming a client-lawyer relationship with respect to a matter is a prospective client.

 

(b) Even when no client-lawyer relationship ensues, a lawyer who has had discussions with a prospective client shall not use or reveal information learned in the consultation, except as Rule 1.9 would permit with respect to information of a former client.

 

(c) A lawyer subject to paragraph (b) shall not represent a client with interests materially adverse to those of a prospective client in the same or a substantially related matter if the lawyer received information from the prospective client that could be significantly harmful to that person in the matter, except as provided in paragraph (d). If a lawyer is disqualified from representation under this paragraph, no lawyer in a firm with which that lawyer is associated may knowingly undertake or continue representation in such a matter, except as provided in paragraph (d).

 

(d) Representation is permissible if both the affected client and the prospective client have given informed consent, confirmed in writing, or:

 

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

(2) written notice is promptly given to the prospective client.

 

 

Commentary

 

[1] Prospective clients, like clients, may disclose information to a lawyer, place documents or other property in the lawyer's custody, or rely on the lawyer's advice. A lawyer's discussions with a prospective client usually are limited in time and depth and leave both the prospective client and the lawyer free (and sometimes required) to proceed no further. Hence, prospective clients should receive some but not all of the protection afforded clients.

 

[2] Not all persons who communicate information to a lawyer are entitled to protection under this Rule. A person who communicates information unilaterally to a lawyer, without any reasonable expectation that the lawyer is willing to discuss the possibility of forming a client-lawyer relationship, is not a "prospective client" within the meaning of paragraph (a).

 

[3] It is often necessary for a prospective client to reveal information to the lawyer during an initial consultation prior to the decision about formation of a client-lawyer relationship. The lawyer often must learn such information to determine whether there is a conflict of interest with an existing client and whether the matter is one that the lawyer is willing to undertake. Paragraph (b) prohibits the lawyer from using or revealing that information, except as permitted by Rule 1.9, even if the client or lawyer decides not to proceed with the representation. The duty exists regardless of how brief the initial conference may be.

 

[4] In order to avoid acquiring disqualifying information from a prospective client, a lawyer considering whether or not to undertake a new matter should limit the initial interview to only such information as reasonably appears necessary for that purpose. Where the information indicates that a conflict of interest or other reason for non-representation exists, the lawyer should so inform the prospective client or decline the representation. If the prospective client wishes to retain the lawyer, and if consent is possible under Rule 1.7, then consent from all affected present or former clients must be obtained before accepting the representation.

 

 

[5] A lawyer may condition conversations with a prospective client on the person's informed consent that no information disclosed during the consultation will prohibit the lawyer from representing a different client in the matter. See Rule 1.0(e) for the definition of informed consent. If the agreement expressly so provides, the prospective client may also consent to the lawyer's subsequent use of information received from the prospective client.

[6] Even in the absence of an agreement, under paragraph (c), the lawyer is not prohibited from representing a client with interests adverse to those of the prospective client in the same or a substantially related matter unless the lawyer has received from the prospective client information that could be significantly harmful if used in the matter.

[7] Under paragraph (c), the prohibition in this Rule is imputed to other lawyers as provided in Rule 1.10, but, under paragraph (d), imputation may be avoided if the lawyer obtains the informed consent, confirmed in writing, of both the prospective and affected clients. In the alternative, imputation may be avoided if all disqualified lawyers are timely screened and written notice is promptly given to the prospective client. See Rule 1.0(k) (requirements for screening procedures). Paragraph (d)(1) does not prohibit the screened lawyer from receiving a salary or partnership share established by prior independent agreement, but that lawyer may not receive compensation directly related to the matter in which the lawyer is disqualified.

[8] Notice, including a description of the screened lawyer's prior representation and of the screening procedures employed, generally should be given as soon as practicable after the need for screening becomes apparent. When disclosure is likely to significantly injure the client, a reasonable delay may be justified.

[9] For the duty of competence of a lawyer who gives assistance on the merits of a matter to a prospective client, see Rule 1.1. For a lawyer's duties when a prospective client entrusts valuables or papers to the lawyer's care, see Rule 1.15.

 

 

Model Rule 1.18

Reporter's Explanation of Changes

 

Rule 1.18 is a proposed new Rule in response to the Commission's concern that important events occur in the period during which a lawyer and prospective client are considering whether to form a client-lawyer relationship. For the most part, the current Model Rules do not address that pre-retention period.

 

TEXT:

 

1. Paragraph (a): Define prospective client

 

Paragraph (a) defines the limited circumstances to which this Rule applies by defining who qualifies as a "prospective client."

 

2. Paragraph (b): Duty of confidentiality owed prospective client

 

Paragraph (b) identifies the duty to treat all communications with a prospective client as confidential. This obligation is a well-settled matter under the law of attorney-client privilege, and the fact that Model Rule 1.9 does not now technically cover these communications is an omission that this proposal corrects.

 

3. Paragraph (c): Prohibit later representation adverse to prospective client

 

Paragraph (c) extends the application of Rule 1.9 to prohibit representation adverse to the prospective client in the same or a substantially related matter. Unlike Rule 1.9, however, this Rule does so only if the lawyer received information from the prospective client that could be "significantly harmful" to that person in the later representation.

 

The prospective client situation justifies that different treatment because, prior to the representation decision, there is an inevitable period in which it is in the interest of the prospective client to share enough information with the lawyer to determine whether there is a conflict of interest or simple incompatibility. The lawyer may learn very early in the consultation, for example, that the party adverse to the prospective client is a client of the lawyer's firm. If the discussion stops before "significantly harmful" information is shared, it seems that the law firm's regular client should not be denied counsel of its choice if a substantially related matter arises.

 

Paragraph (c) also extends the prohibition of this Rule to associated lawyers, except as provided in paragraph (d).

 

4. Paragraph (d): Representation permitted with client consent

 

Paragraph (d) makes clear that the prohibition imposed by this Rule can be waived with the informed consent, confirmed in writing, of both the former prospective client and the client on whose behalf the lawyer later plans to take action adverse to the former prospective client. The expression of this requirement is parallel to that in Rules 1.7 and 1.9.

 

5. Paragraph (d): Screening lawyer who conferred with prospective client

 

In the event that "significantly harmful" information is revealed, paragraph (d) provides that the lawyer who received the information may be screened from any involvement in the subsequent matter but others in the law firm may represent the adverse party.

 

COMMENTARY:

 

[1] This Comment highlights three ways in which lawyers may assume obligations to prospective clients: disclosure of information, taking possession of documents or property and giving legal advice. It also explains the inevitably tentative quality of the initial consultation and suggests the reason for giving prospective clients somewhat less than the protection offered former clients by Rule 1.9.

 

[2] This Comment explains that lawyers are not disqualified when a person unilaterally communicates information to the lawyer without any reasonable expectation that the lawyer will agree to discuss the possibility of forming a client-lawyer relationship.

 

[3] This Comment explains the lawyer's obligation to preserve confidences of the prospective client, no matter what right the lawyer or law firm may have to undertake later adverse representation.

 

[4] This Comment first explains that a lawyer should obtain only the information required to determine whether to undertake the representation. If a conflict of interest is found to exist, the lawyer should decline the representation or obtain the required consent from all affected clients.

 

[5] This Comment identifies consent in advance of the consultation as one way to avoid later concerns about adverse use of the information obtained. Such an option was expressly approved in ABA Standing Committee on Ethics and Professional Responsibility Formal Opinion 90-358.

 

[6] This Comment reiterates the right of a lawyer to undertake representation adverse to a prospective client from whom no "significantly harmful" information was obtained.

 

[7] This Comment describes how the imputation otherwise required by paragraph (c) may be avoided by either obtaining the informed consent of the prospective and affected clients or by screening under the conditions stated in paragraph (d)(1).

 

[8] This Comment addresses the requirements of paragraph (d)(2).

 

[9] This Comment is a cross-reference to existing Rules that deal with two of the three issues identified in Comment [1]. Any advice a lawyer gives must be competent under Rule 1.1, and Rule 1.15 requires a lawyer to care for property of "third persons," which would include prospective clients.

 

RULE 2.1: ADVISOR

 

In representing a client, a lawyer shall exercise independent professional judgment and render candid advice. In rendering advice, a lawyer may refer not only to law but to other considerations such as moral, economic, social and political factors, that may be relevant to the client's situation.

 

 

Commentary

 

Scope of Advice

 

[1] A client is entitled to straightforward advice expressing the lawyer's honest assessment. Legal advice often involves unpleasant facts and alternatives that a client may be disinclined to confront. In presenting advice, a lawyer endeavors to sustain the client's morale and may put advice in as acceptable a form as honesty permits. However, a lawyer should not be deterred from giving candid advice by the prospect that the advice will be unpalatable to the client.

 

[2] Advice couched in narrow legal terms may be of little value to a client, especially where practical considerations, such as cost or effects on other people, are predominant. Purely technical legal advice, therefore, can sometimes be inadequate. It is proper for a lawyer to refer to relevant moral and ethical considerations in giving advice. Although a lawyer is not a moral advisor as such, moral and ethical considerations impinge upon most legal questions and may decisively influence how the law will be applied.

 

[3] A client may expressly or impliedly ask the lawyer for purely technical advice. When such a request is made by a client experienced in legal matters, the lawyer may accept it at face value. When such a request is made by a client inexperienced in legal matters, however, the lawyer's responsibility as advisor may include indicating that more may be involved than strictly legal considerations.

 

[4] Matters that go beyond strictly legal questions may also be in the domain of another profession. Family matters can involve problems within the professional competence of psychiatry, clinical psychology or social work; business matters can involve problems within the competence of the accounting profession or of financial specialists. Where consultation with a professional in another field is itself something a competent lawyer would recommend, the lawyer should make such a recommendation. At the same time, a lawyer's advice at its best often consists of recommending a course of action in the face of conflicting recommendations of experts.

 

 

Offering Advice

 

[5] In general, a lawyer is not expected to give advice until asked by the client. However, when a lawyer knows that a client proposes a course of action that is likely to result in substantial adverse legal consequences to the client, the lawyer's duty to the client under Rule 1.4 may require that the lawyer act offer advice if the client's course of action is related to the representation. Similarly, when a matter is likely to involve litigation, it may be necessary under Rule 1.4 to inform the client of forms of dispute resolution that might constitute reasonable alternatives to litigation. A lawyer ordinarily has no duty to initiate investigation of a client's affairs or to give advice that the client has indicated is unwanted, but a lawyer may initiate advice to a client when doing so appears to be in the client's interest.

 

 

Model Rule 2.1

Reporter's Explanation of Changes

TEXT:

No change is proposed to the text of this Rule.

COMMENTARY:

 

[5] The Commission has proposed an addition to this paragraph to remind lawyers that informing a client of various forms of dispute resolution may be required under Rule 1.4, i.e., when a different form of dispute resolution would constitute a reasonable alternative to litigation. This addition is proposed in recognition of the increasingly important role being played by alternative dispute resolution in litigation. The remaining changes are for clarification and style.

 

RULE 2.2: INTERMEDIARY

 

(a) A lawyer may act as intermediary between clients if:

 

(1) the lawyer consults with each client concerning the implications of the common representation, including the advantages and risks involved, and the effect on the attorney-client privileges, and obtains each client's consent to the common representation;

(2) the lawyer reasonably believes that the matter can be resolved on terms compatible with the clients' best interests, that each client will be able to make adequately informed decisions in the matter and that there is little risk of material prejudice to the interests of any of the clients if the contemplated resolution is unsuccessful; and

(3) the lawyer reasonably believes that the common representation can be undertaken impartially and without improper effect on other responsibilities the lawyer has to any of the clients.

(b) While acting as intermediary, the lawyer shall consult with each client concerning the decisions to be made and the considerations relevant in making them, so that each client can make adequately informed decisions.

 

(c) A lawyer shall withdraw as intermediary if any of the clients so requests, or if any of the conditions stated in paragraph (a) is no longer satisfied. Upon withdrawal, the lawyer shall not continue to represent any of the clients in the matter that was the subject of the intermediation.

 

 

Comment

 

[1] A lawyer acts as intermediary under this Rule when the lawyer represents two or more parties with potentially conflicting interests. A key factor in defining the relationship is whether the parties share responsibility for the lawyer's fee, but the common representation may be inferred from other circumstances. Because confusion can arise as to the lawyer's role where each party is not separately represented, it is important that the lawyer make clear the relationship.

 

[2] The Rule does not apply to a lawyer acting as arbitrator or mediator between or among parties who are not clients of the lawyer, even where the lawyer has been appointed with the concurrence of the parties. In performing such a role the lawyer may be subject to applicable codes of ethics, such as the Code of Ethics for Arbitration in Commercial Disputes prepared by a joint Committee of the American Bar Association and the American Arbitration Association.

 

[3] A lawyer acts as intermediary in seeking to establish or adjust a relationship between clients on an amicable and mutually advantageous basis; for example, in helping to organize a business in which two or more clients are entrepreneurs, working out the financial reorganization of an enterprise in which two or more clients have an interest, arranging a property distribution in settlement of an estate or mediating a dispute between clients. The lawyer seeks to resolve potentially conflicting interests by developing the parties' mutual interests. The alternative can be that each party may have to obtain separate representation, with the possibility in some situations of incurring additional cost, complication or even litigation. Given these and other relevant factors, all the clients may prefer that the lawyer act as intermediary.

 

[4] In considering whether to act as intermediary between clients, a lawyer should be mindful that if the intermediation fails the result can be additional cost, embarrassment and recrimination. In some situations the risk of failure is so great that intermediation is plainly impossible. For example, a lawyer cannot undertake common representation of clients between whom contentious litigation is imminent or who contemplate contentious negotiations. More generally, if the relationship between the parties has already assumed definite antagonism, the possibility that the clients' interests can be adjusted by intermediation ordinarily is not very good.

 

[5] The appropriateness of intermediation can depend on its form. Forms of intermediation range from informal arbitration, where each client's case is presented by the respective client and the lawyer decides the outcome, to mediation, to common representation where the clients' interests are substantially though not entirely compatible. One form may be appropriate in circumstances where another would not. Other relevant factors are whether the lawyer subsequently will represent both parties on a continuing basis and whether the situation involves creating a relationship between the parties or terminating one.

 

 

Confidentiality and Privilege

 

[6] A particularly important factor in determining the appropriateness of intermediation is the effect on client-lawyer confidentiality and the attorney-client privilege. In a common representation, the lawyer is still required both to keep each client adequately informed and to maintain confidentiality of information relating to the representation. See Rules 1.4 and 1.6. Complying with both requirements while acting as intermediary requires a delicate balance. If the balance cannot be maintained, the common representation is improper. With regard to the attorney-client privilege, the prevailing rule is that as between commonly represented clients the privilege does not attach. Hence, it must be assumed that if litigation eventuates between the clients, the privilege will not protect any such communications, and the clients should be so advised.

 

[7] Since the lawyer is required to be impartial between commonly represented clients, intermediation is improper when that impartiality cannot be maintained. For example, a lawyer who has represented one of the clients for a long period and in a variety of matters might have difficulty being impartial between that client and one to whom the lawyer has only recently been introduced.

 

 

Consultation

 

[8] In acting as intermediary between clients, the lawyer is required to consult with the clients on the implications of doing so, and proceed only upon consent based on such a consultation. The consultation should make clear that the lawyer's role is not that of partisanship normally expected in other circumstances.

 

[9] Paragraph (b) is an application of the principle expressed in Rule 1.4. Where the lawyer is intermediary, the clients ordinarily must assume greater responsibility for decisions than when each client is independently represented.

 

 

Withdrawal

 

[10] Common representation does not diminish the rights of each client in the client-lawyer relationship. Each has the right to loyal and diligent representation, the right to discharge the lawyer as stated in Rule 1.16, and the protection of Rule 1.9 concerning obligations to a former client.

 

 

Model Rule 2.2

Reporter's Explanation of Changes

TEXT:

 

The Commission recommends deleting Rule 2.2 and moving any discussion of common representation to the Rule 1.7 Comment. The Commission is convinced that neither the concept of "intermediation" (as distinct from either "representation" or "mediation') nor the relationship between Rules 2.2 and 1.7 has been well understood. Prior to the adoption of the Model Rules, there was more resistance to the idea of lawyers helping multiple clients to resolve their differences through common representation; thus, the original idea behind Rule 2.2 was to permit common representation when the circumstances were such that the potential benefits for the clients outweighed the potential risks. Rule 2.2, however, contains some limitations not present in Rule 1.7; for example, a flat prohibition on a lawyer continuing to represent one client and not the other if intermediation fails, even if neither client objects. As a result, lawyers not wishing to be bound by such limitations may choose to consider the representation as falling under Rule 1.7 rather than Rule 2.2, and there is nothing in the Rules themselves that clearly dictates a contrary result.

 

Rather than amending Rule 2.2, the Commission believes that the ideas expressed therein are better dealt with in the Comment to Rule 1.7. There is much in Rule 2.2 and its Comment that applies to all examples of common representation and ought to appear in Rule 1.7. Moreover, there is less resistance to common representation today than there was in 1983; thus, there is no longer any particular need to establish the propriety of common representation through a separate Rule.

 

COMMENTARY:

 

[1] This Comment has been deleted. The Commission believes the term "common representation" is preferable to "intermediation."

 

[2] This Comment has been deleted as no longer necessary since the term "intermediation" has been eliminated.

 

[3] This Comment has been deleted. Some of the material may be found in the Comment to Rule 1.7.

 

[4] This Comment has been deleted. Some of the material may be found in the Comment to Rule 1.7.

 

[5] This Comment has been deleted as no longer necessary after the elimination of the term "intermediation."

 

[6] This Comment has been deleted. Some of the material may be found in the Comment to Rule 1.7.

 

[7] This Comment has been deleted. Some of the material may be found in the Comment to Rule 1.7.

 

[8] This Comment has been deleted. Some of the material may be found in the Comment to Rule 1.7.

 

[9] This Comment has been deleted. Some of the material may be found in the Comment to Rule 1.7.

 

[10] This Comment has been deleted. Some of the material may be found in the Comment to Rule 1.7.

 

 

RULE 2.3: EVALUATION FOR USE BY THIRD PERSONS

 

(a) A lawyer may undertake provide an evaluation of a matter affecting a client for the use of someone other than the client if : (1) the lawyer reasonably believes that making the evaluation is compatible with other aspects of the lawyer's relationship with the client ; and .

 

 

(2) (b) When the lawyer knows or reasonably should know that the evaluation is likely to affect the client's interests materially and adversely, the lawyer shall not provide the evaluation unless the client consents after consultation gives informed consent.

 

 

(b) (c) Except as disclosure is required authorized in connection with a report of an evaluation, information relating to the evaluation is otherwise protected by Rule 1.6.

 

 

Commentary

 

 

Definition

 

[1] An evaluation may be performed at the client's direction but or when impliedly authorized in order to carry out the representation. See Rule 1.2. Such an evaluation may be for the primary purpose of establishing information for the benefit of third parties; for example, an opinion concerning the title of property rendered at the behest of a vendor for the information of a prospective purchaser, or at the behest of a borrower for the information of a prospective lender. In some situations, the evaluation may be required by a government agency; for example, an opinion concerning the legality of the securities registered for sale under the securities laws. In other instances, the evaluation may be required by a third person, such as a purchaser of a business.

 

 

[2] Lawyers for the government may be called upon to give a formal opinion on the legality of contemplated government agency action. In making such an evaluation, the government lawyer acts at the behest of the government as the client but for the purpose of establishing the limits of the agency's authorized activity. Such an opinion is to be distinguished from confidential legal advice given agency officials. The critical question is whether the opinion is to be made public.

 

 

[3] [2] A legal evaluation should be distinguished from an investigation of a person with whom the lawyer does not have a client-lawyer relationship. For example, a lawyer retained by a purchaser to analyze a vendor's title to property does not have a client-lawyer relationship with the vendor. So also, an investigation into a person's affairs by a government lawyer, or by special counsel by a government lawyer, or by special counsel employed by the government, is not an evaluation as that term is used in this Rule. The question is whether the lawyer is retained by the person whose affairs are being examined. When the lawyer is retained by that person, the general rules concerning loyalty to client and preservation of confidences apply, which is not the case if the lawyer is retained by someone else. For this reason, it is essential to identify the person by whom the lawyer is retained. This should be made clear not only to the person under examination, but also to others to whom the results are to be made available.

 

 

Duty Duties Owed to Third Person and Client

 

 

[4] [3] When the evaluation is intended for the information or use of a third person, a legal duty to that person may or may not arise. That legal question is beyond the scope of this Rule. However, since such an evaluation involves a departure from the normal client-lawyer relationship, careful analysis of the situation is required. The lawyer must be satisfied as a matter of professional judgment that making the evaluation is compatible with other functions undertaken in behalf of the client. For example, if the lawyer is acting as advocate in defending the client against charges of fraud, it would normally be incompatible with that responsibility for the lawyer to perform an evaluation for others concerning the same or a related transaction. Assuming no such impediment is apparent, however, the lawyer should advise the client of the implications of the evaluation, particularly the lawyer's responsibilities to third persons and the duty to disseminate the findings.

 

 

Access to and Disclosure of Information

 

 

[5] [4] The quality of an evaluation depends on the freedom and extent of the investigation upon which it is based. Ordinarily a lawyer should have whatever latitude of investigation seems necessary as a matter of professional judgment. Under some circumstances, however, the terms of the evaluation may be limited. For example, certain issues or sources may be categorically excluded, or the scope of search may be limited by time constraints or the noncooperation of persons having relevant information. Any such limitations that are material to the evaluation should be described in the report. If after a lawyer has commenced an evaluation, the client refuses to comply with the terms upon which it was understood the evaluation was to have been made, the lawyer's obligations are determined by law, having reference to the terms of the client's agreement and the surrounding circumstances. In no circumstances is the lawyer permitted to knowingly make a false statement of material fact or law in providing an evaluation under this Rule. See Rule 4.1.

 

 

Obtaining Client's Informed Consent

 

 

[5] Information relating to an evaluation is protected by Rule 1.6. In many situations, providing an evaluation to a third party poses no significant risk to the client; thus, the lawyer may be impliedly authorized to disclose information to carry out the representation. See Rule 1.6(a). Where, however, it is reasonably likely that providing the evaluation will affect the client's interests materially and adversely, the lawyer must first obtain the client's consent after the client has been adequately informed concerning the important possible effects on the client's interests. See Rules 1.6(a) and 1.0(e).

 

Financial Auditors' Requests for Information

 

[6] When a question concerning the legal situation of a client arises at the instance of the client's financial auditor and the question is referred to the lawyer, the lawyer's response may be made in accordance with procedures recognized in the legal profession. Such a procedure is set forth in the American Bar Association Statement of Policy Regarding Lawyers' Responses to Auditors' Requests for Information, adopted in 1975.

 

 

Model Rule 2.3

Reporter's Explanation of Changes

TEXT:

1. Restructure text to clarify circumstances in which lawyer may provide evaluation for use of third persons

The Commission recommends restructuring the Rule to clarify its application in two situations. The first is one where the evaluation poses no significant risk to the client. Here, the lawyer may be impliedly authorized to provide the evaluation, and paragraph (a) requires only that the lawyer determine that providing the evaluation is compatible with other aspects of the client-lawyer relationship. The second situation is one where there is a significant risk of material and adverse effect on the client's interests. Here, paragraph (b) provides that the lawyer may not proceed without obtaining the client's informed consent. Paragraph (c) reminds lawyers that the disclosure of information pursuant to providing an evaluation is governed by Rule 1.6, under which disclosures may be impliedly or expressly authorized.

2. Paragraph (a): Substitute "provides" for "undertakes"

This change reflects the Commission's view that it is not the undertaking that is potentially problematic but rather the actual provision of an evaluation for use by third persons.

3. Paragraph (b): Substitute "informed consent" for "consent after consultation"

The Commission is recommending that throughout the Rules the phrase "consent after consultation" be replaced with "gives informed consent," as defined in Rule 1.0(e). No change in substance is intended.

4. Paragraph (b): Material adverse effect

This paragraph clarifies that informed consent is not required in all cases but rather only those in which there is a significant risk of material adverse effect on the client's interests.

5. Paragraph (c): Substitute "authorized" for "required"

This change reflects the Commission's view that disclosures in connection with an evaluation under this Rule are not "required" but rather "authorized" and that the authorization must conform to the requirements of Rule 1.6.

COMMENTARY:

[1] The addition to this Comment is designed to explain the relationship between this Rule and Rule 1.2, in which the lawyer's authority to provide an evaluation may be expressly or impliedly authorized.

[2] The Commission recommends deleting this Comment on the ground that neither its meaning nor its function is clear.

Caption The caption has been changed to reflect the context of the Comment, which addresses duties to both third persons and to clients.

[4] The Commission recommends the addition of a cross-reference to Rule 4.1 in response to expressions of concern that lawyers should not render an opinion based on stated facts when the lawyer knows the facts to be otherwise.

Caption This new caption introduces the new material in Comment [5].

[5] This new Comment discusses and explains the requirement to obtain the informed consent of the client if there is a significant risk of material and adverse effect on the client's interests. "Informed consent" is defined in Rule 1.0(e).

 

RULE 2.4: LAWYER SERVING AS THIRD-PARTY NEUTRAL

(a) A lawyer serves as a third-party neutral when the lawyer assists two or more persons who are not clients of the lawyer to reach a resolution of a dispute or other matter that has arisen between them. Service as a third-party neutral may include service as an arbitrator, a mediator or in such other capacity as will enable the lawyer to assist the parties to resolve the matter.

(b) A lawyer serving as a third-party neutral shall inform unrepresented parties that the lawyer is not representing them. When the lawyer knows or reasonably should know that a party does not understand the lawyer's role in the matter, the lawyer shall explain the difference between the lawyer's role as a third-party neutral and a lawyer's role as one who represents a client.

Commentary

[1] Alternative dispute resolution has become a substantial part of the civil justice system. Aside from representing clients in dispute-resolution processes, lawyers often serve as third-party neutrals. A third-party neutral is a person, such as a mediator, arbitrator, conciliator or evaluator, who assists the parties, represented or unrepresented, in the resolution of a dispute or in the arrangement of a transaction. Whether a third-party neutral serves primarily as a facilitator, evaluator or decisionmaker depends on the particular process that is either selected by the parties or mandated by a court.

[2] The role of a third-party neutral is not unique to lawyers, although, in some court-connected contexts, only lawyers are allowed to serve in this role or to handle certain types of cases. In performing this role, the lawyer may be subject to court rules or other law that apply either to third-party neutrals generally or to lawyers serving as third-party neutrals. Lawyer-neutrals may also be subject to various codes of ethics, such as the Code of Ethics for Arbitration in Commercial Disputes prepared by a joint committee of the American Bar Association and the American Arbitration Association or the Model Standards of Conduct for Mediators jointly prepared by the American Bar Association, the American Arbitration Association and the Society of Professionals in Dispute Resolution.

[3] Unlike nonlawyers who serve as third-party neutrals, lawyers serving in this role may experience unique problems as a result of differences between the role of a third-party neutral and a lawyer's service as a client representative. The potential for confusion is significant when the parties are unrepresented in the process. Thus, paragraph (b) requires a lawyer-neutral to inform unrepresented parties that the lawyer is not representing them. For some parties, particularly parties who frequently use dispute-resolution processes, this information will be sufficient. For others, particularly those who are using the process for the first time, more information will be required. Where appropriate, the lawyer should inform unrepresented parties of the important differences between the lawyer's role as third-party neutral and a lawyer's role as a client representative, including the inapplicability of the attorney-client evidentiary privilege. The extent of disclosure required under this paragraph will depend on the particular parties involved and the subject matter of the proceeding, as well as the particular features of the dispute-resolution process selected.

[4] A lawyer who serves as a third-party neutral subsequently may be asked to serve as a lawyer representing a client in the same matter. The conflicts of interest that arise for both the individual lawyer and the lawyer's law firm are addressed in Rule 1.12.

[5] Lawyers who represent clients in alternative dispute-resolution processes are governed by the Rules of Professional Conduct. When the dispute-resolution process takes place before a tribunal, as in binding arbitration (see Rule 1.0(m)), the lawyer's duty of candor is governed by Rule 3.3. Otherwise, the lawyer's duty of candor toward both the third-party neutral and other parties is governed by Rule 4.1.

 

Model Rule 2.4

Reporter's Explanation of Changes

TEXT:

The role of third-party neutral is not unique to lawyers, but the Commission recognizes that lawyers are increasingly serving in these roles. Unlike nonlawyers who serve as neutrals, lawyers may experience unique ethical problems, for example, those arising from possible confusion about the nature of the lawyer's role. The Commission notes that there have been a number of attempts by various organizations to promulgate codes of ethics for neutrals (e.g., aspirational codes for arbitrators or mediators or court enacted rules governing court-sponsored mediators), but such codes do not typically address the special problems of lawyers. The Commission's proposed approach is designed to promote dispute resolution parties' understanding of the lawyer-neutral's role.

1. Paragraph (a): Define "third-party neutral"

Paragraph (a) defines the term "third-party neutral" and emphasizes assistance at the request of the parties who participate in the resolution of disputes and other matters.

2. Paragraph (b): Inform parties of nature of lawyer's role

Paragraph (b) requires the lawyer serving as a third-party neutral to inform unrepresented parties in all cases that the lawyer does not represent them. The potential for confusion is sufficiently great to mandate this requirement in all cases involving unrepresented parties. Consistent with the standard of Rule 4.3, paragraph (b) requires the lawyer to explain the differences in a lawyer's role as a third-party neutral and the role of a lawyer representing a party in situations where the lawyer knows or reasonably should know that the unrepresented party does not understand the lawyer's role as a third-party neutral.

COMMENTARY:

[1] This introductory Comment describes dispute-resolution processes and notes that the specific role of the third-party neutral may depend on whether the process is court-annexed or private.

[2] This Comment cross-references other law and ethics codes applicable to lawyers serving as third-party neutrals. The Commission believes the referenced material will be helpful to lawyers unfamiliar with existing standards in this area.

[3] This Comment explains the rationale for the requirement of paragraph (b) that lawyers inform unrepresented parties that the lawyer is not representing them and, in some cases, explain the differences between the lawyer's role as neutral and the role of a lawyer representing a party.

[4] This Comment cross-references Rule 1.12, which addresses the conflicts of interest that arise when a lawyer-neutral or that lawyer's firm is asked to represent a client in a matter that is the same as a matter in which the lawyer served as a third-party neutral.

[5] This Comment distinguishes between the lawyer's duty of candor in an arbitration and in other dispute resolution proceedings. Because a binding arbitration is a "tribunal" as defined in Rule 1.0(m), the lawyer's duty of candor in such a proceeding is governed by Rule 3.3. In other dispute-resolution proceedings, the lawyer's duty of candor toward the third-party neutral and the other parties is governed by Rule 4.1.

[5] When a lawyer’s conduct involves significant contacts with more than one jurisdiction, it may not be clear whether the predominant effect of the lawyer’s conduct will occur in a jurisdiction other than the one in which the conduct occurred. So long as the lawyer’s conduct conforms to the rules of a jurisdiction in which the lawyer reasonably believes the predominant effect will occur, the lawyer is not subject to discipline under this Rule.

[5] [6] If two admitting jurisdictions were to proceed against a lawyer for the same conduct, they should, applying this rule, identify the same governing ethics rules. They should take all appropriate steps to see that they do apply the same rule to the same conduct, and in all events should avoid proceeding against a lawyer on the basis of two inconsistent rules.

[6] [7] The choice of law provision is not intended to apply to applies to lawyers engaged in transnational practice , unless international law, treaties or other agreements between competent regulatory authorities in the affected jurisdictions provide otherwise. Choice of law in this context should be the subject of agreements between jurisdictions or of appropriate international law.

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