Second Revision
August 8, 2000
UPDATE ON ETHICS 2000 PROJECT AND
SUMMARY OF RECOMMENDATIONS TO DATE
1
Margaret Colgate Love
The American Bar Association Commission on Evaluation of the Rules of Professional Conduct (the "Ethics 2000" Commission) was established in the spring of 1997 to undertake a comprehensive study and evaluation of the ABA Model Rules of Professional Conduct in light of developments in the law and in the legal profession since the Rules’ adoption in 1983. Experience had revealed substantive shortcomings in some rules and lack of clarity in others, and the need to reconcile text and commentary in a number of cases. Moreover, while 39 states and the District of Columbia had by then adopted some version of the Model Rules, 2 there were significant variations in particular rules from jurisdiction to jurisdiction. The desirability of a complete review of the rules to promote national uniformity and consistency was underscored by the extensive and innovative interpretive work of The American Law Institute’s Restatement of the Law Governing Lawyers (the "Restatement"), then nearing completion.
In the three years since its establishment, the Commission has met frequently, held public hearings, and circulated public discussion drafts of all of its proposed rule changes, as well as several proposed new rules. It has opened its meetings to the public, engaged in regular communication with its 250-member advisory council, reached out to special interest groups, and posted its discussion drafts and meeting minutes on the Internet. It has received hundreds of comments, which have resulted in numerous responsive modifications in its proposals. The Commission plans to circulate a complete set of proposed recommendations in the fall of 2000, and expects debate in the ABA House of Delegates to commence in the summer of 2001.
From the outset, the Commission has tried to take a relatively "minimalist" approach to its task, opting to retain the basic format and approach of the Model Rules, and generally to clarify and refine rather than make major changes in particular rules. Its presumptive operating principle has been to make no change unless substantively necessary – although it has found quite a bit that falls into this category. It has also made numerous editorial and stylistic changes in the interest of clarification, and amplified commentary to provide additional guidance in interpreting and applying the rules. It decided early on not to include aspirational "good practice" notes following each rule, concerned that these would be out of place in a disciplinary code. In approaching its work, the Commission has been mindful of the legal profession’s rapidly changing internal and external environment, particularly the expanded scope and complexity of client activities, heightened public scrutiny of lawyers’ involvement in those activities, the impact of technology and globalization, and new competitive pressures on law firms (including specialization, multidisciplinary practice and increased use of in-house counsel). These developments have in turn drawn into question traditional jurisdictional limits on the practice of law, ethical restrictions on lawyer mobility and on fee-sharing with nonlawyers, and traditional notions of confidentiality, conflicts of interest, and obligations to third parties. The Commission has considered it important to address these emerging trends, as well as situations in which state versions of particular rules vary widely, particularly Rule 1.6 on "Confidentiality," in light of the ABA’s historical role in developing consensus on ethical standards for the profession. It appreciates, and has often incorporated, the contributions of state experimentation in its effort to produce rules that will commend themselves to uniform adoption.
Summarized below are some of the more significant rule revisions the Commission has proposed to date, and some additional ones it is considering – with the caveat that its work will remain something of a moving target until it submits its report to the ABA House of Delegates. Any changes to the rules will not become effective until adopted by the House, and they will not be binding on lawyers unless and until they are adopted by the states. Some changes that the Commission has decided not to recommend are also of interest.
Scope and Preamble
The Commission proposes to modify the provisions of the Scope section that discuss the effect of a rule violation on a lawyer’s substantive legal duty (renumbered paragraph [20]), in recognition of the weight of judicial opinion in malpractice litigation that a violation of the rules may be admissible as evidence of a breach of the duty of care. The paragraph will now explain that violation of a rule should not "itself" give rise to a cause of action against the lawyer or "necessarily" warrant disqualification or any other non-disciplinary remedy. However, violation of a rule "may be evidence of a breach of the applicable standard of conduct."
Terminology
1. Terminology: The terminology section that was previously part of the Preamble/Scope section of the Rules has been elevated to rule status, as Rule 1.0 ("Terminology"). Several new definitions have been proposed ("informed consent," "tribunal," "writing" and "confirmed in writing"), and several definitions in the current terminology section have been revised.
a. " Informed Consent": The Commission proposes to make clear a lawyer’s obligations in connection with obtaining client consent (e.g., to conflicts of interest, to limitations on scope of representation, to business transactions with clients), by replacing the concept of "consent after consultation" with the somewhat more familiar – and also somewhat more demanding - concept of "informed consent." It also proposes to require that client consent be in writing in many cases, notably in connection with most conflict waivers. Ordinarily the writing need not be signed by the client. See subsection (e) below, and section 7, infra.
The definition makes clear the lawyer’s obligation to communicate "reasonably adequate" information about risks and alternatives, to enable the client to decide whether to consent to a conflict. New commentary explain how one determines the adequacy of communication necessary to obtain consent. In this regard, it may be relevant that the person from whom consent must be obtained is already aware of the relevant facts and their implications, though by not communicating with the client personally the lawyer assumes the risk that the client is inadequately informed and that the consent will therefore be invalid. Client "sophisticat[ion] in legal matters and in making the decisions of the type involved" is a relevant consideration in assessing whether the lawyer has complied with her obligations under the rule. Moreover, "generally a client or other person who is independently represented by other counsel in giving the consent should be presumed to have given informed consent." "Other counsel" includes in-house counsel for an organization.
b. " Firm": The proposed revised definition includes corporate legal departments, legal services organizations, and government agencies. The commentary (largely imported from Rule 1.10 on "Imputation of Conflicts") explains that a firm may also include lawyers sharing office space, depending on such facts as how the lawyers present themselves to the public, the terms of any formal agreement between them, and whether they have mutual access to information concerning the clients they serve.
c. " Fraud": The Commission proposes to make clear that the term fraud includes all conduct that is fraudulent under applicable substantive or procedural law. In addition, it proposes to delete the qualification in the present definition limiting fraud to conduct "having a purpose to deceive and not merely negligent misrepresentation or failure to apprise another of relevant information." New commentary explains that "although most conduct characterized as fraudulent involves an intent to deceive, there are circumstances in some jurisdictions where fraudulent conduct includes negligent misrepresentation or failure to inform." It also provides that "under the proposed new definition of fraud, it is not necessary that anyone have suffered damages or relied upon a misrepresentation or failure to inform." The effect of the proposed broader definition of fraud will be to expand the category of situations in which a lawyer is permitted (or obliged) to disclose client wrongdoing. See discussion of proposed amendments to Rules 1.2(d), 1.6, 3.3, and 4.1, in sections 2, 4, 19 and 20, infra.
The Reporter’s explanation accompanying the Commission’s proposed new definition of fraud explains that the expanded definition of "fraud" does not fit well in Rule 8.4(c), which subjects lawyers to discipline when they themselves engage in conduct that involves "dishonesty, fraud, deceit or misrepresentation." In this context, it would be inappropriate to discipline a lawyer for conduct that does not involve an intent to deceive. Rather than write a separate definition of fraud for lawyer conduct, the Commission will consider deleting the term fraud from 8.4(c), where it is now redundant in any event.
d. " Tribunal": The proposed new definition includes a court, an arbitrator in a binding arbitration proceeding, or "a legislative body, administrative agency, or other body acting in an adjudicative capacity." An entity acts in "an adjudicative capacity" if it "will render a binding legal judgment affecting a party’s interests in a particular matter." Ordinarily an administrative agency in a rule-making proceeding is not a "tribunal."
e. " Writing" and " Confirmed in Writing": The proposed new definition of "writing" includes both tangible and electronic records. When a person’s informed consent is required to be "confirmed in writing," it is in most situations sufficient if "the lawyer promptly transmits to the person [a writing] confirming an oral informed consent." In other words, the requirement of written consent may be satisfied by a confirmation letter from the lawyer to the client that need not be signed by the client. There is only one rule that requires the client’s signature on a consent, Rule 1.8(a) on business transactions with clients. See section 11, infra.
Obligations to Clients
2. Scope of Representation: The Commission proposes to clarify the allocation of decision-making authority between lawyer and client under paragraph (a) of Rule 1.2 (now "Scope of Representation," tentatively retitled "Scope of Representation and Allocation of Authority Between Lawyer and Client"). The Commission believes that the current formulation is flawed in that it could be read to require consultation with the client before the lawyer takes any action, and also that it suggests too strongly that the lawyer does not have to abide by the client’s decisions with respect to the "means" as opposed to the "objectives" of the representation. As amended, the text will provide that a lawyer may take such action to carry out the representation as may be "impliedly authorized." The commentary points out that the client may revoke authority given in advance at any time, and cautions that the lawyer may not be able to rely on an advance authorization if there has been a material change in circumstances. Whether a lawyer must follow the client's instructions respecting means is determined by applicable law, which varies from jurisdiction to jurisdiction. Limitations on the scope of representation under paragraph (c) will be made subject to a reasonableness requirement, in addition to the current requirement of client consent.
Assisting Client Crime or Fraud: Paragraph (d) of Rule 1.2 prohibits a lawyer from "assisting" the client in conduct the lawyer knows is criminal or fraudulent. This provision raises important unsettled questions about the relationship between a lawyer’s obligation to third parties when she learns that her services have been or are being used to further client crime or fraud, and her obligation of confidentiality to her client under Rule 1.6. See also paragraph (b) of Rule 4.1 ("Truthfulness in Statements to Others"), section 20, infra. The Commission proposes to make clear in the text of Rule 1.2(d) what is now only implied in its commentary: viz., that a lawyer may be required to disclose information relating to the representation if necessary to avoid assisting a client’s crime or fraud, but only if disclosure is otherwise permitted by Rule 1.6. (Note that a lawyer’s obligation of candor to a tribunal under Rule 3.3 ("Candor Toward the Tribunal") is not qualified by the obligation of confidentiality in Rule 1.6. See section 19, infra.) Even though Rule 1.6 will, if amended as the Commission proposes, permit disclosure in a wider variety of circumstances involving client crime or fraud ( see section 5, infra), disclosure to third parties is conceived as a measure reserved for the extreme case where other remedial measures (including withdrawal) are insufficient to disassociate the lawyer from the client’s wrongful conduct. New commentary to Rule 1.2 makes clear that Rule 4.1(b) is a specific application of the general rule stated in paragraph (b), and that Rule 1.6 limits the lawyer’s duty to disclose under both rules.
3. Communication with Client - The text of Rule 1.4 ("Communication") will be revised to identify more clearly the various aspects of the lawyer's duty to keep the client "reasonably informed" about the status of a matter, and to consolidate all discussion of the duty to communicate in this Rule rather than having some parts stated in Rule 1.2. The comment will make clear that a lawyer who has blanket settlement authority does not have to advise the client of every offer.
4. Fees: The Commission proposes to amend paragraph (a) of Rule 1.5 ("Fees") to require that costs and disbursements, as well as fees, be "reasonable." The "degree of risk assumed by the lawyer" will be added to the list of factors to be considered in determining reasonableness of a fee, as a substitute for current paragraph (a)(8). The Commission rejected a proposal to add "the relative sophistication of the lawyer and the client" to the list. The Commission added a new comment explaining that the enumerated factors are applied as relevant in the circumstances. Language has been added to the commentary explaining that, under applicable law, a contingent fee may in some circumstances be deemed unreasonable, or subjected to a percentage or other limitation.
Under paragraph (b) as revised, the lawyer must communicate the basis or rate of the fee in writing before or shortly after commencing the representation, except where the lawyer will charge a regularly represented client the same fee. A new client must also now be informed in writing of the scope of representation, and of his responsibility for expenses. Changes in the basis or rate of the fee must also be communicated in writing. A provision requiring the lawyer to communicate changes in the scope of representation in writing was rejected by the Commission, on grounds that this would be impracticable and inefficient in many cases. The Commission also decided against a de minimus exception to the writing requirement, but agreed that the commentary should clarify that the writing can be very simple. A fee paid in property may be regarded as a "business transaction" that is subject to Rule 1.8(a). See section 11, infra.
The Commission proposes to delete language from existing commentary requiring a lawyer to offer a client an alternative to a contingent fee in certain circumstances. It is also proposing that contingent fees be permitted for post-divorce arrearages or property disputes, but not in any action involving divorce or child custody (including actions to change the terms of the original divorce or custody decree).
The Commission has also determined that fees for referrals should be permitted without requiring division of work or "joint responsibility" for the representation (see Rule 1.5(e)), but will include a cross reference to Rule 1.1 to emphasize that the referring lawyer has an obligation to refer the matter to a competent lawyer. The client must be informed of and consent to the participation of all lawyers involved, and must also be advised of the share of the fee each lawyer will receive.
5. Confidentiality: The Commission is proposing a substantial expansion of the grounds for discretionary disclosure under Rule 1.6 ("Confidentiality of Information"), though it will recommend no change in the broad concept of "information relating to the representation." Under existing Rule 1.6, a lawyer may reveal client information only if impliedly authorized to do so, to defend herself against criminal or disciplinary charges or in a fee controversy with the client, or "to prevent the client from committing a crime that is likely to result in imminent death or substantial bodily harm." The Commission’s proposed changes to paragraph (b) will revise and expand the grounds for permissive disclosure, in line with the Restatement and the recommendations of a number of scholars, substantially reverting to the original proposals of the Kutak Commission. As proposed to be amended, Rule 1.6 will permit disclosure "to the extent the lawyer reasonably believes necessary" to prevent "reasonably certain death or substantial bodily harm"; to prevent the client from committing a crime or fraud reasonably certain to result in substantial financial injury, if it involves the lawyer’s services; and to prevent, mitigate or rectify the consequences of a client’s financial fraud or crime in furtherance of which the lawyer’s services were used. (The term "fraud" is broadly defined in the new Rule 1.0 to include all conduct that is considered fraudulent under applicable law. See section 1, supra.) In addition to the existing "self-defense" exception to confidentiality, another new provision will explicitly permit the lawyer to disclose confidences to obtain legal advice about her compliance with the Rules. Note that new commentary to Rule 1.6 directs that "a disclosure adverse to the client’s interest should be no greater than the lawyer reasonably believes necessary to accomplish the purpose."
Finally, the Commission has decided that disclosure should in no case be mandatory under Rule 1.6, even where disclosure is required by another rule or by a law or court order. Thus a final new section of paragraph (b) permits but does not require the lawyer to disclose information where she is otherwise obliged to do. As a result, Rule 1.6 does not add an ethical dimension (and the possibility of discipline) to whatever legal disclosure obligation the lawyer may otherwise have. New commentary will deal with a lawyer’s duty to raise non-frivolous challenges to disclosure requirements external to the Rules. Other rules that may require disclosure are discussed in section 2, supra, and sections 19 and 20, infra.
6. Conflict of Interest - Current Clients: The Commission has completely reorganized Rule 1.7 (to be retitled "Conflict of Interest: Current Client"), and substantially revised the commentary, in an effort to clarify the rule’s provisions on concurrent conflicts, but has made no significant substantive change in them. Paragraph (a) will now define what constitutes a conflict of interest, 3 and distinguish conflicts in which a lawyer may be "directly adverse" to a client, from those in which his representation of the client may be "materially limited." Paragraph (b) will provide that a lawyer may undertake a representation involving a conflict only with the "informed consent" of each affected client. The Commission will propose that client consent to a conflict be valid only if confirmed in writing (though the writing need not be signed by the client). (The terms "informed consent" and "written consent" are defined in Rule 1.0, discussed in section 1, supra.) The Commission was persuaded that the requirement of a writing has proved workable in California’s diverse bar, and that it protects both clients and lawyers. New commentary explains that "the writing is required in order to impress upon clients the seriousness of the decision the client is being asked to make and to resolve disputes or ambiguities that might later occur . . . ."
As noted, Rule 1.7(a) distinguishes two basic types of conflicts. As described in paragraph (a)(1), a "direct adversity" conflict is one in which the lawyer takes a position on behalf of one client against another client, in the same or an unrelated matter. Commentary will clarify that a "direct adversity" conflict may arise in a transactional setting as well as in litigation, and gives as an example the situation where a lawyer represents a buyer against a seller who is a client in another matter.
Even where there is no direct adverseness, a conflict may exist under paragraph (a)(2) if there is a "significant risk" that a lawyer’s ability to carry out an appropriate course of action for the client would be "materially limited as a result of the lawyer’s other responsibilities or interests." Material limitation conflicts always require an examination of the facts, and may derive from the lawyer’s responsibilities to another client or to a former client, or from the lawyer’s own interests or duties to a third person. Commentary will explain that simultaneous representation in unrelated matters of clients whose interests are only economically adverse does not constitute a "direct adversity" conflict, although it may constitute a "material limitation" conflict, depending upon the facts. Similarly, a "positional conflict," in which a lawyer takes inconsistent legal positions in different tribunals on behalf of different clients, may in some circumstances constitute a "material limitation" conflict.
The specific prohibition now contained in Rule 1.8(i) that bars a lawyer from representing a client when a close family member is on the other side of a matter will be deleted from that rule, and new commentary to Rule 1.7 will explain that such a representation will ordinarily constitute a conflict under Rule 1.7(a)(2). However, as a personal interest conflict, it will ordinarily not be imputed to other members of a firm under the Commission’s proposed changes to Rule 1.10. See section 6, infra. Thus, for example, a husband and wife may not appear on opposite sides of a case; however, a member of the husband’s firm may participate in a matter in which the wife is opposing counsel. Exceptions to this general rule could arise where one or both of the firms involved is very small, so that the financial interest of both spouses in the matter is substantial.
Paragraph (b) defines three circumstances under which a lawyer may not even ask for consent. In other words, where the conflict is deemed nonconsentable. Paragraph (b)(3) prohibits a lawyer or lawyers from the same firm from representing clients asserting claims against one another in the same litigation or other proceeding before a tribunal, even where both clients are willing to consent. Paragraph (b)(2) points out that consent will be ineffective to permit representations "prohibited by law." Finally, under paragraph (b)(1) a lawyer may not represent multiple clients even in a transactional setting, if the lawyer does not "reasonably believe" that she can "provide competent and diligent representation to each affected client." New commentary provides additional guidance on this point, as well as on joint representation generally ( see infra). For example, the commentary points out that, in determining whether multiple client representations are nonconsentable, "one factor to be considered is whether the representation will be provided by a single lawyer or by different lawyers in the same firm."
New commentary will also discuss how a lawyer should respond to "unforeseen developments" giving rise to a conflict in the course of a representation, such as changes in corporate and other organizational affiliation, or the addition or realignment of parties in litigation, and whether the lawyer may continue to represent any of the clients in the circumstances. A lawyer’s obligation to withdraw where a conflict arises after a representation has begun will be reviewed in several contexts, including joint representations. Where more than one client is involved, the question is whether a lawyer must terminate both representations, and whether client consent is sufficient to permit the lawyer to continue any participation in the matter.
The Commission has discussed at length the issue of prospective consent to conflicts. A new comment to Rule 1.7 will explain that a lawyer may ask a client to consent to conflicts that may arise in the future, but the efficacy of such advance consents will depend upon the extent to which the client reasonably understands the material risks involved. For this reason, a general open-ended consent will ordinarily not be effective. Where a client is independently represented in connection with giving prospective consent, such consent is more likely to be effective. Other new comments deal with such controversial and unsettled conflicts issues as corporate family conflicts, positional conflicts, and class action conflicts. Conflicts of interest that may arise between an organization and its constituents, including constituents who purport to speak or act for the organization, are more specifically addressed by Rule 1.13 ("Organization as Client"), in whose provisions the Commission has proposed no substantive change. See section 12, infra.
Rule 2.2 ("Intermediary") has been deleted entirely: the Commission was concerned that this rule has been the source of some confusion insofar as it suggests that a lawyer representing multiple clients as "intermediary" is not fully subject to Rule 1.7. The issues raised by joint representations are now discussed in a series of new comments to Rule 1.7. These new comments discuss the circumstances under which a lawyer may undertake a joint representation in the first place if it appears that the clients’ interests potentially conflict; the effect of joint representations on client-lawyer confidentiality and the attorney-client privilege; limits on the scope of representation and advocacy in this context; and the lawyer’s options if a conflict unexpectedly arises in the course of the representation and cannot be resolved (the lawyer "ordinarily . . . will be forced to withdraw from representing all of the clients if the joint representation fails"). A new rule on third party neutrals is also being proposed. ( See section 16 infra.)
7. Imputation of Conflicts: As under the current Rules, conflicts arising under Rules 1.7 and 1.9 are imputed to all lawyers associated in a "firm" under Rule 1.10 (now "Imputed Disqualification: General Rule," to be retitled "Imputation of Conflicts"). The commentary to Rule 1.0 ("Terminology") explains that a "firm" may include lawyers sharing office space without adequate measures to protect confidential information. ( See section 2, supra.) The scienter provisions of Rule 1.10 will be made more stringent so that one lawyer’s conflicts are imputed to his colleagues who know "or reasonably should know" of the conflict. (The scienter provisions of rules dealing with imputation of conflicts in specific situations, listed in the following paragraph, have been similarly revised.)
The Commission discussed at length whether, as a general matter, it should recommend unconsented screening to avoid imputation. At the time of this writing, the Commission has decided to permit unconsented screening only in a few specific situations: former government lawyers, judges and third party neutrals ( see Rules 1.11(b) and 1.12(a), discussed in sections 9 and 16, infra), lawyers who interview prospective clients ( see new Rule 1.18, discussed in section 10, infra), and lawyers who perform "short-term limited legal services" pursuant to new Rule 6.5 ( see section 17, infra). The Commission will revisit the screening issue, particularly in the case of lawyers moving between firms, before taking final action on its report to the House.
As amended, the text of Rule 1.10 would exempt from imputation "personal interest conflicts" that do not present a "significant risk of materially limiting the representation of the client by the remaining lawyers in the firm." Thus, for example, the personal disqualification of a lawyer who has a financial interest in an opposing party, or who is personally related to or negotiating for employment with opposing counsel, would ordinarily not be imputed to other lawyers in the firm. New Comment [7] to Rule 1.10 states that the conflicts of nonlawyer firm personnel such as paralegals, and conflicts of a lawyer resulting from prior work as a nonlawyer (including as a law student), are not imputed to others in the firm, though such persons "ordinarily must be screened" from any personal participation in the matter. Similarly, under Rule 1.11 the conflicts of current government lawyers are not imputed to others in their agency, though "ordinarily it will be prudent" to screen them. See section 9, infra.
8. Conflict of Interest – Former Clients: No substantive change is being recommended in the text of Rule 1.9 (now "Conflict of Interest: Former Client", to be retitled "Duties to Former Clients"). New commentary explains that a lawyer who has represented clients jointly in a matter may not subsequently represent one client against the others in the same or a substantially related matter, without the consent of all affected clients. It also explains when matters will be deemed "substantially related" for purposes of the rule: "if they involve the same subject matter or if there is otherwise a risk that confidential information as would normally have been obtained in the prior representation would materially advance the client’s position in the current matter."
9. Conflict of Interest – Government Lawyers: The Commission has wrestled with the subject of the conflict of interest obligations of former and current government lawyers. It is currently in general agreement as to the substance of those obligations, but a final drafting solution has not been settled on. The Commission has decided that the substantive provisions of Rule 1.9 should apply where a current or former government lawyer would oppose a former client in a matter that is the same as or substantially related to one the lawyer participated in while in government. It has also affirmed the idea that additional ethical obligations should be imposed on a current or former government lawyer in situations where the lawyer is not adverse to a former client, "to prevent a lawyer from exploiting public office for the advantage of another client." The question unresolved at the time of this writing is whether all of these ethical obligations should be consolidated in an expanded Rule 1.11 (now "Successive Government and Private Employment," to be retitled "Special Conflicts of Interest for Former and Current Government Officers and Employees"). The drafting challenge has been to combine in a single rule the lawyer’s duties when opposing a former client, and the special obligations of a government employee not to abuse the power of public office.
Specific unresolved substantive issues affecting former government lawyers include the range of "matters" in which a former government lawyer will be barred from representing another client (either a private client or another public entity); the degree of participation required to trigger disqualification for former government lawyers; and, the extent of a former government lawyer’s confidentiality obligations under Rules 1.6 and 1.9(c). (The question of the identity of the government client is addressed in a comment to Rule 1.13. See section 12, infra.) The prohibition in existing Rule 1.11(b) against using "confidential government information" about a person acquired during government service against that person will be retained.
As to current government lawyers, the Commission has determined that they should be fully subject to Rule 1.9 where their obligations to former private clients are concerned, and that they should in addition be barred from any involvement in a matter where they formerly represented another client, regardless of the former client’s wishes, unless the government consents.
Rule 1.10 on imputation will remain inapplicable to former and current government lawyers. As under current Rule 1.11, lawyers associated with a former government lawyer may not undertake a representation from which that lawyer is personally disqualified unless she is screened. The black letter of Rule 1.11 will now provide that screening must be implemented in a timely manner, and new commentary will further discuss the requirements of an effective screening arrangement. The personal conflicts of current government lawyers are not imputed to other associated government officers or employees, "although ordinarily it will be prudent to screen such lawyers."
10. Prospective Clients: Under a new Rule 1.18, a lawyer will have the same duty of confidentiality to a person who discusses with her the possibility of forming a client-lawyer relationship, as she does to clients. In addition, a lawyer will not be permitted, without consent, to represent any clients against such a prospective client in the matter about which she was consulted (or one substantially related to it), if she received information from the prospective client that could be "significantly harmful" to him in the matter. Other lawyers in the firm will be permitted to undertake such a representation, however, as long as the personally disqualified lawyer "took reasonable steps to avoid exposure to more information than was necessary to determine whether to represent the prospective client" and is screened from any participation in the matter. Reference is made to the commentary to Rule 1.11, discussing the elements of an effective screen. (Note that this somewhat less rigorous treatment of the lawyer’s conflict of interest obligations to prospective clients is based substantially on § 27 of the Restatement.)
11. Transactions with Clients: The Commission proposes to rework and clarify some of the provisions of Rule 1.8 ("Conflict of Interest: Prohibited Transactions"), notably paragraph (a) regulating a lawyer’s business transactions with clients. As amended, this provision will require the lawyer to advise the client in writing of the desirability of seeking independent legal counsel on the transaction, and to obtain the client’s informed consent to the essential terms of the transaction and the lawyer’s role in it, including whether the lawyer is representing the client’s interests in the transaction. In contrast to the requirement of written consent elsewhere in the Rules, a writing under Rule 1.8(a) must be signed by the client. New commentary explains the risks associated with a lawyer’s dual role as legal adviser and participant in a transaction, pointing out that in some cases the conflict may be such that Rule 1.7 would preclude the lawyer from even seeking the client’s consent to the transaction.
The Commission initially proposed to amend the text of Rule 1.8(f) to require client consent not just to third party payment, as under the current rule, but also to third party "direction." The Commission subsequently decided against making this change, out of a concern that it might be understood to condone third party direction without regard to the possibility of interference with the lawyer’s independence of professional judgment on behalf of the client. The Commission decided to deal more extensively with the issue of third party direction in connection with the commentary to Rule 5.4 ("Professional Independence of a Lawyer"). See section 28, infra.
As previously noted in the discussion of Rule 1.7, see section 6 supra, the Commission proposes to delete paragraph (i) of this rule, which now specifically prohibits persons closely related by blood or marriage from appearing on opposite sides of a matter. These issues will be discussed in the commentary to Rule 1.7 as a particular form of "personal interest" conflict prohibited under paragraph (a)(2) of that rule. The Commission believes that there is no longer a need for a special rule to avoid imputation of conflicts arising from close family relationships, because personal interest conflicts will ordinarily no longer be imputed under Rule 1.10. See section 7 supra.
The Commission proposes to add a new paragraph (k) to Rule 1.8 to prohibit "sexual relations" between a lawyer and a client, unless a consensual sexual relationship existed at the time the client-lawyer relationship commenced. It rejected a proposal to exempt officers of an organizational client from the prohibition, and is considering whether to clarify in commentary the circumstances in which an individual may be so identified with an organization that the prohibition will come into play. Another new paragraph (l) will extend all of the prohibitions in Rule 1.8 to lawyers associated in a firm, except for the new prohibition on sexual relations with a client in paragraph (k). While sexual relations with a client will generally also give rise to a "personal interest" conflict under Rule 1.7, as such it will ordinarily not be imputed to associated lawyers under the proposed amendments to Rule 1.10(a). See section 7, supra.
New commentary to Rule 1.8 will deal with such controversial issues as a lawyer’s use of information relating to the representation to the client’s disadvantage, appointment of a lawyer as executor of the client’s estate, a lawyer’s subsidization of lawsuits or administrative proceedings brought on behalf of a client, aggregate settlements, and prospective limitation of malpractice liability.
12. Organization as Client: The Commission decided against including a specific provision in Rule 1.13 ("Organization as Client") permitting the lawyer to disclose wrongdoing by organizational constituents in the interests of the organization, on the theory that the proposed amendments to Rule 1.6 will be adequate to allow such disclosures. The commentary dealing with the applicability of Rule 1.13 in the government context will be revised to incorporate a functional test for determining the identity of the government lawyer’s client.
13. Clients With Diminished Capacity: The Commission is proposing a number of amendments to Rule 1.14 (now "Client Under a Disability," to be retitled "Client With Diminished Capacity") further explicating a lawyer’s duties to a client whose capacity to make decisions concerning the representation is diminished by reason of minority or mental disability, or for some other reason. The term "diminished capacity" will be substituted for "disability" throughout the rule. Where the lawyer believes that a client with diminished capacity is at risk of physical, financial or other harm unless action is taken, the lawyer may take necessary protective action (including appointment of a guardian), and in such circumstances may be impliedly authorized under Rule 1.6 to reveal information relating to the representation to protect the client’s interests. New commentary discusses the lawyer’s relationship with the client’s family members, and provides guidance for the lawyer in taking protective measures short of seeking a guardian. The Commission decided against including a requirement that a lawyer advocate the least restrictive action on behalf of the client.
14. Withdrawal from Representation: The Commission proposes to clarify and make minor revisions in the grounds for permissive withdrawal in Rule 1.16 ("Declining or Terminating Representation"). The text will be restructured to make clear that a lawyer may withdraw for any reason if withdrawal can be accomplished "without material adverse effect on the interests of the client." Where there would be such an adverse effect, paragraph (b)(4) will permit withdrawal only where the lawyer has a "fundamental disagreement" with the client’s objectives or intended action, not simply where she considers them "imprudent." The Commission thus proposes to limit the lawyer’s ability to threaten withdrawal whenever she disagrees with the client over the course of the representation, since this detracts from the client’s ability to direct the representation.
The Commission initially proposed that a lawyer should be permitted to withdraw on grounds of "unreasonable financial burden" only if the financial burden was "unforeseeable" at the outset of the representation. Subsequently it decided not to include an explicit foreseeability requirement, on the ground that this would unduly restrict a lawyer’s ability to withdraw. There may be circumstances in which the lawyer should be permitted to withdraw even where the financial burden could have been foreseen, and this factor is relevant in any event in determining whether the financial burden on the lawyer should be considered "unreasonable." Finally, lawyers will be reminded of the requirement of obtaining court approval for withdrawal in certain circumstances. Additional issues affecting withdrawal where a conflict arises midway through a representation are addressed in new commentary to Rule 1.7, see section 6, supra; and withdrawal as a remedial measure in cases where the lawyer’s services have been or are being used in connection with client crime or fraud is addressed in the commentary to Rules 1.2(d), 3.3, and 4.1. See section 2, supra, and sections 19 and 20, infra.)
The commentary will point out that "[o]rdinarily, a representation in a matter is completed when the agreed-upon assistance has been been concluded," citing Rules 1.2(c), 1.3 comment [4], and 6.5.
15. Sale of Law Practice: The Commission proposes to revise paragraph (b) of Rule 1.17 ("Sale of Law Practice") to allow the sale of a law practice to more than one buyer, although the rule will still require that the entire practice be sold. It also proposes to make clear that existing agreements between the seller and clients as to fees and scope of representation must be honored by the purchaser, by deleting qualifying language in paragraph (d) permitting fees increases with the consent of the client. This language permitted the buyer of a practice to tell the seller’s clients that the buyer would not work on their cases unless they agreed to pay a higher fee than they had agreed to pay the seller. The Commission was persuaded that this result was problematical because the seller could not unilaterally abrogate the fee agreement as a matter of contract law. The proposed change in paragraph (d) is in accord with the rules in a number of jurisdictions, including California, New York, and Florida.
16. Third Party Neutrals: The Commission is proposing a new rule on lawyers serving as third party neutrals in ADR settings. This rule, temporarily designated Rule 2.x ("Lawyer Serving as Third Party Neutral"), will require lawyers serving as neutrals to make clear the nature of their role in the matter to the parties. The Commission decided after consultation with various ADR groups not to attempt further to define the obligations of lawyers serving as third party neutrals through lawyer ethics rules. For example, the Commission considered and rejected provisions that would have prohibited a neutral from giving legal advice to the parties, and one that would have prohibited a neutral from assisting the parties in drafting a settlement document.
The Commission will also propose amendments to Rule 1.12 (now "Former Judge or Arbitrator," to be retitled "Former Judge, Arbitrator, Mediator or Other Third Party Neutral") to extend the conflict of interest provisions of paragraph (a) to all third party neutrals. This means that former mediators, like former judges and arbitrators, may not represent a client in any matter in which they participated personally and substantially while a mediator, but others in their firm may to so if the former mediator is screened. The Commission initially proposed to extend a broader conflict of interest rule to all third party neutrals, and disallow screening for lawyers associated with them, but decided against this in light of comments received that this would tend to discourage mediation practice by lawyers in firms. The Commission was persuaded that third party neutrals typically do not share confidential information with other lawyers, and are usually precluded from doing so by applicable rules. Mediators as well as arbitrators and judges will now be barred by paragraph (b) from negotiating for employment with a party to the proceeding, or with a party’s lawyer.
17. Limited Legal Service Programs: A new Rule 6.5 ("Non-Profit and Court-Annexed Limited Legal Service Programs") will address the ethical obligations of lawyers providing "short-term limited legal services" to persons of limited means under the auspices of a non-profit or court-annexed legal services program (such as "legal advice hotlines, advice-only clinics, or pro se counseling programs"). In these programs a client-lawyer relationship is established, but the lawyer is subject to Rules 1.7 and 1.9(a) "only if the lawyer knows that the representation of the client involves a conflict of interest." The commentary points out that a lawyer representing a client in the circumstances addressed by the rule "ordinarily is not able to check systematically for conflicts of interest," and therefore may "rely on his personal recollection and information provided by the client in the ordinary course of the consultation." (The scienter requirement originally proposed was "knows or reasonably should know," but this was modified in light of the purpose of the rule.) The more relaxed treatment of conflicts of interest in the limited circumstances described in this rule was designed with an eye to the situation of part-time law firm volunteers fulfilling their pro bono obligations, but the Commission decided to make the benefits of the rule available to full-time legal service lawyers.
Paragraph (b) of the new rule provides that the personal disqualification of a lawyer engaged in a limited representation undertaken pursuant to the Rule will not be imputed to other lawyers associated with him, either in his firm or in the program itself. However, the lawyer himself will be disqualified from any matter that he knows is being handled by his firm. If the representation becomes more extensive, the ordinary conflict of interest rules apply, including Rule 1.10.
Obligations to Persons Other Than Clients
18. Meritorious Claims and Contentions: The Commission proposes to amend the text of Rule 3.1 ("Meritorious Claims and Contentions") to provide that the lawyer’s assessment of the frivolousness of a claim will be judged from the perspective of a reasonable lawyer. Thus a lawyer violates the rule only if he does not "reasonably believe" that there is a basis "in law and fact" for bringing or defending a claim or asserting or controverting an issue. The Commission also proposes to make clear that a lawyer’s conduct will be judged by a single objective standard, replacing the term "good faith" with the term "non-frivolous" throughout the rule and commentary. In explaining the change, the Reporter observed that "[a]lthough the ‘good faith’ formulation has been widely adopted by the states and is employed in § 170 of the Restatement . . . the Commission thinks that it is desirable to employ an objective standard in evaluating whether a lawyer is abusing the adjudicative process." Consistent with this objective standard, the commentary will no longer define "frivolous" in terms of the client’s desire to take an action "primarily for the purpose of harassing or maliciously injuring a person."
New commentary requires a lawyer to take remedial action where she comes subsequently to "reasonably believe" that a claim or contention she has advanced is frivolous. Additional new commentary states that the rule does not "preclude" a criminal defense lawyer from requiring the government to establish every element of its case, but such a lawyer "must not file frivolous motions."
19. Candor to the Tribunal: The Commission proposes to clarify and amplify a lawyer’s obligation of candor to a tribunal under Rule 3.3 ("Candor Toward the Tribunal"). (The term "tribunal" is defined in new Rule 1.0 to include a court, an arbitrator in a binding arbitration proceeding, and a legislative or administrative body acting in an adjudicative capacity. See section 1, supra.) First, the Commission proposes to delete the requirement of materiality that now qualifies a lawyer’s obligation in 3.3(a)(1) not to make a false or misleading statement of fact or law to a tribunal. This change will bring the duty not to make false statements into conformity with the duty not to offer false evidence to be set forth in 3.3(a)(3). The Commission also proposes to add a new sentence to (a)(1) addressing the lawyer’s duty to correct a false statement of "material" fact or law previously made to the tribunal. The requirement of materiality in connection with the duty to correct in (a)(1) will parallel the duty in paragraph (a)(3) to take reasonable remedial measures if the lawyer comes to know that she has previously offered material false evidence.
Respecting the truthfulness of evidence offered by the lawyer’s client or a witness called by the lawyer, the text of (a)(3) will more clearly distinguish the situation where the lawyer "knows" the evidence is false or misleading from the situation where he only "reasonably believes" this to be the case. In the former situation, the lawyer may not offer the evidence. In addition, where the lawyer subsequently learns that "material" evidence offered by a client or a witness is false or misleading, she must take remedial steps, "including, if necessary, disclosure to the tribunal." As under the current rule, the duty to take remedial measures applies "even if compliance requires disclosure of information otherwise protected by Rule 1.6." See paragraph (c), formerly paragraph (b). The Commission discussed and rejected a suggestion that the lawyer’s obligation not to offer false evidence, and to correct evidence that she subsequently learns is false, depends upon whether the evidence was deliberately falsified. Thus the lawyer’s duty does not depend upon whether the client or other witness knows or otherwise appreciates that the evidence is false. New commentary will explain that a lawyer does not violate the Rule if the lawyer knowingly elicits false testimony for the purpose of subsequently establishing its falsity.
Where the lawyer does not "know" but only "reasonably believes" the evidence to be false, he may refuse to offer it but is not required to do so. The lawyer would be under no disclosure obligation if his doubts arose after the evidence had been offered. The commentary provides that doubts about the veracity of testimony or other evidence should be resolved in favor of the client, though the lawyer "cannot ignore an obvious falsehood."
The lawyer’s discretion to refuse to offer evidence he reasonably believes is false does not extend to the testimony of a criminal defendant. Consistent with the special protections historically accorded criminal defendants, the text of paragraph (a)(3) will now specifically provide that a lawyer representing a criminal accused may not refuse to allow his client to testify even if the lawyer reasonably believes the testimony will be false. The present rule addresses the duties of an advocate for a criminal accused only in commentary. The lawyer representing a criminal defendant is generally subject to the duty in the first two sentences of paragraph (a)(3) not to offer testimony that the lawyer knows is false, and to take remedial measures where the lawyer subsequently comes to know that testimony the lawyer previously offered is false. (As pointed out in existing commentary, however, in some jurisdictions the courts have interpreted constitutional protections accorded criminal defendants to require that defense counsel allow the accused to testify if he wishes to do so, even if counsel knows the testimony will be false. The obligation of the advocate under the Rules is subordinate to such a constitutional requirement.)
The Commission proposes to delete paragraph (a)(2) of the present rule, and to address the lawyer’s duty to disclose crime or fraud in connection with an adjudicative proceeding more generally in a new paragraph (b). (The lawyer’s general duty to disclose when necessary to avoid assisting client crime or fraud is addressed in Rules 1.2(d) and 4.1(b). See section 2, supra, and section 20, infra.) The new paragraph (b) provides that a lawyer who knows that any person, including the lawyer’s client, intends to engage, is engaging or has engaged in criminal or fraudulent conduct related to the proceeding, shall take reasonable remedial measures, including, if necessary, disclosure to the tribunal. A new comment identifies the type of conduct sought to be reached under the rule: "bribing, intimidating or otherwise unlawfully communicating with a witness, juror, court official, or other participant in the proceeding, unlawfully destroying or concealing documents or other evidence or failing to disclose information to the tribunal when required by law to do so."
New commentary describes remedial measures short of disclosure, including remonstrating with the client, consulting with the client about the lawyer’s duty of candor to the tribunal, and withdrawal from the representation. It also makes clear that the lawyer’s obligation of candor applies "in an ancillary proceeding conducted pursuant to the tribunal’s adjudicative authority, such as a deposition." Respecting the duration of the obligation, the commentary explains that a proceeding has concluded within the meaning of Rule 3.3 when a final judgment has been affirmed on appeal or the time for review has passed.
20. Truthfulness in Statements to Others: The Commission proposes no change in the text of Rule 4.1 ("Truthfulness in Statements to Others"), but will clarify the duty imposed by paragraph (b) (a lawyer may not knowingly "fail to disclose a material fact when disclosure is necessary to avoid assisting a criminal or fraudulent act by a client, unless disclosure would be prohibited by Rule 1.6"). This duty is a specific application of the general duty set forth in Rule 1.2(d), see section 2 supra, and is most frequently invoked where a client’s wrong-doing involves a lie or misrepresentation to a third party. The Commission will provide additional guidance on the relationship between the lawyer’s duty to third parties under Rules 1.2(d) and 4.1(b), and the lawyer’s duty of confidentiality to the client under Rule 1.6. Even though Rule 1.6 would, if amended as the Commission is proposing, permit disclosure in a wider variety of circumstances involving client crime or fraud ( see section 5, supra), disclosure is still conceived as a measure reserved for the extreme case where other remedial measures (such as withdrawal) are insufficient to disassociate the lawyer from the client’s wrongful conduct. (Note that a lawyer’s obligation of candor to a tribunal under Rule 3.3 ("Candor Toward the Tribunal") is not qualified by the obligation of confidentiality in Rule 1.6. See section 19, supra.).
The Commission proposes to clarify in commentary that the term "misrepresentation" in paragraph (a) of the rule includes "partially true but misleading statements or omissions that are tantamount to an affirmative false statement."
21. Trial Publicity: The Commission initially proposed to amend comment [5] to Rule 3.6 ("Trial Publicity") to delete from the list of statements deemed "more likely than not to have a material prejudicial effect" on a proceeding, the fact that a defendant has been charged with a crime, unless it is accompanied by a statement explaining that the defendant is presumed innocent until proven guilty. After receiving a number of critical comments, the Commission reconsidered this proposal and is currently inclined to leave the comment unchanged.
22. Communications with Represented Persons: The Commission has spent a great deal of time and energy considering possible amendments to Rule 4.2 ("Communication with Person Represented by Counsel"), to meet concerns raised by the U.S. Department of Justice. 4 The draft that has now been released for public comment makes one amendment to the black letter of the rule, confirming that otherwise prohibited communications may be authorized by court order. New commentary will provide that such an order may be sought either to clarify the application and scope of the rule; or, in exceptional circumstances, to authorize communication that would otherwise be prohibited by the rule.
Existing commentary will be revised to explain that communications "authorized by law" may include those made by a lawyer "on behalf of a client who is exercising a constitutional or other legal right to communicate with a government official," and those made in the course of "investigative activities of lawyers representing governmental entities, directly or indirectly through investigative agents, prior to the commencement of criminal or civil enforcement proceedings." In this latter regard, the revised commentary attempts to clarify the relationship between Rule 4.2 and constitutional limits on government lawyers’ investigative activities: "The fact that a communication does not violate a state or federal constitutional right is insufficient to establish that the communication is authorized by law." A cross reference to Rule 8.4(a) will be added. See section 26, infra.
The commentary will make clear that the "no-contact rule" applies even when the represented person "initiates or consents to" the communication, and that a lawyer must immediately terminate communications if she learns that the person is one with whom communication is not permitted. Perhaps most significant, it modifies the test in existing commentary for determining the applicability of the rule in the organizational context: communication will now be prohibited with "a constituent" of the organization who supervises, directs, or regularly consults with the organization’s lawyer concerning the matter or has authority to obligate the organization with respect to the matter, or whose act or omission in the matter may be imputed to the organization for purposes of civil or criminal liability." (The Commission considered a proposal to include a specific prohibition on communications with members of a governing board, and decided instead to change the term "agent or employee" in the discussion draft to "constituent.") The Commission also deleted the problematic reference to any other person "whose statement may constitute an admission on the part of the organization," on the theory that lawyers cannot know in advance whether the information they elicit will be binding on the organization.
A new sentence has been added to the commentary to confirm that consent of the organization’s lawyer is not required for contacts with former constituents, reflecting existing interpretation of the rule and the Commission’s judgment that there is not sufficient unity of interest between an organization and its former constituents to justify treating them as representatives of the organization. The commentary warns that a lawyer communicating with former constituents should not solicit or assist in the breach of any duty of confidentiality owed to the organization. Finally, the commentary on the rule’s scienter requirement has been corrected to eliminate the suggestion that a lawyer’s actual knowledge can be established by proof that the lawyer had "substantial reason to believe" that a person was represented, which is inconsistent with the relevant definition in Rule 1.0.
23. Dealing with Unrepresented Persons: The Commission proposes to restore to Rule 4.3 ("Dealing with Unrepresented Person") a provision from the Model Code prohibiting a lawyer from giving legal advice to an unrepresented person whose interests "are or have a reasonable possibility of being in conflict" with those of her client, other than the advice to seek counsel. New commentary will provide guidance on what constitutes impermissible advice- giving, and allude to the particular problems that may arise when a lawyer for an organization deals with an unrepresented constituent.
24. Inadvertent disclosures: A new provision in Rule 4.4 ("Respect for Rights of Third Persons") deals with the currently controversial issue of the "errant FAX." It provides that a lawyer who receives a document, and has reason to believe that it was inadvertently sent, must promptly notify the sender. Beyond this, however, the rule does not attempt to sort out a lawyer’s possible obligations under other law in connection with examining and using confidential documents that come into her possession through the inadvertence or wrongful act of another.
25. Special Responsibilities of a Prosecutor: The Commission is not proposing any substantive changes to the text of Rule 3.8 ("Special Responsibilities of a Prosecutor"). After initially proposing to modify the requirement in section (e) that prosecutors must exercise reasonable care to prevent non-supervised personnel from making impermissible extrajudicial statements, it decided to leave this requirement in place. It is recommending amendments to commentary to clarify that a prosecutor’s disclosure obligations under paragraph (d) go beyond those imposed by constitutional law, and extend to evidence that "tends materially to impeach a government witness." It is also recommending deletion of a controversial reference in comment [1] suggesting that a prosecutor’s disclosure obligations in the grand jury are governed by Rule 3.3(d). In this regard, it initially proposed adoption of a new comment linking a prosecutor’s grand jury disclosure obligations to the requirement in Rule 3.8(a) that charges be supported by probable cause, but deleted this comment after the Department of Justice argued that it was inconsistent with historical independence of the grand jury. The Commission declined to delete a controversial limitation on the issuance of subpoenas to defense counsel.
26. Misconduct/Discrimination: The Commission is considering deletion of the term "fraud" from paragraph (c) of Rule 8.4 ("Misconduct"), in light of the fact that the definition of fraud in Rule 1.0 ("Terminology") has been expanded so that it now includes negligent misrepresentation as well as intentional misrepresentation. See paragraph 1, supra. The Reporter’s explanation states that this definition makes sense for purposes of Rules 1.2(d) and 4.1, where substantive law governing the conduct of clients sometimes characterizes negligent or reckless conduct as "fraud," but does not make sense in the context of lawyer conduct, particularly conduct by a lawyer not engaged in the representation of a client. Rather than define "fraud" differently for clients and lawyers, the term "fraud" would simply be deleted from Rule 8.4(c) (the only place it appears with respect to conduct of the lawyer herself). There would be no loss in meaning, since paragraph (c) already encompasses conduct that involves dishonesty, deceit or misrepresentation.
A new comment will make clear that lawyers are subject to discipline under paragraph (a) when they engage or attempt to engage in conduct prohibited by these rules, when they knowingly assist or induce another lawyer to do so, or when they "request or instruct an agent to do so on the lawyer’s behalf." This does not mean, however, that a lawyer may not advise a client "concerning action that the client is lawfully entitled to take." The Commission declined to accept a recommendation from the Department of Justice to add a specific exception for law enforcement. It also decided against adding a provision to the black letter of Rule 8.4 prohibiting discrimination, concluding that the discussion of this issue Comment [2] (renumbered [3]), was adequate to deal with the issue.
The Practice of Law
27. Law Firm Management and Discipline: The Commission will recommend that the text of Rule 5.1(a) ("Responsibilities of a Partner or Supervisory Lawyer") and Rule 5.3(a) ("Responsibilities Regarding Nonlawyer Assistants") be amended to make clear that the responsibilities imposed by these provisions to ensure that other lawyers and nonlawyer assistants comply with the Rules, apply not just to "partners" in a law firm, but to all lawyers with "managerial authority" in a firm (defined in Rule 1.0 to include corporate legal departments, legal services organizations, and law offices within government agencies, see section 2, supra). In addition, it has accepted a recommendation from the ABA Standing Committee on Professional Discipline to extend these duties to law firms as well as individual lawyers, and will propose conforming amendments to the text. The commentary to Rule 5.1 will elaborate the duty of each responsible lawyer to make reasonable efforts to establish internal policies and procedures designed to provide reasonable assurance that all lawyers in a firm will conform to the Rules, including procedures designed to detect and resolve conflicts of interest, to account for client funds, to see that all lawyers comply with their pro bono obligations, and to ensure proper supervision of inexperienced lawyers, as well as nonlawyers employed by a firm. Similar additions will be made to the commentary to Rule 5.3.
The Commission considered and rejected a proposal to delete paragraph (b) of Rule 5.2 ("Responsibilities of a Subordinate Lawyer"), which shields a subordinate lawyer from discipline if she acts in accordance with a supervisory lawyer’s "reasonable resolution of an arguable question of professional duty." The Commission was concerned that deleting this provision might mislead junior lawyers into thinking that they were safe in "following orders" of a senior lawyer. It decided not to recommend any changes to Rule 5.6 ("Restrictions on Right to Practice").
28. Multidisciplinary Practice: The Commission deferred action on Rules 5.4 ("Professional Independence of a Lawyer") and 5.7 ("Responsibilities Regarding Law-Related Services") pending action by the ABA House of Delegates on the recommendations of the Commission on Multidisciplinary Practice. In July 2000 the House voted to reject the MDP Commission’s proposal that lawyers be permitted to share fees and join with nonlawyer professionals in a multidisciplinary practice. The Commission will be considering at its next meeting whether to recommend any changes in these rules. As noted above in connection with the discussion of Rule 1.8(f), see section 11 supra, it will expand the commentary on the issue of third party direction that may interfere with the lawyer’s professional independence.
29. Information About Legal Services: The Commission is recommending only minor amendments to the rules governing the provision of information about a lawyer’s services, including targeted solicitations and Internet advertising. It proposes to reduce Rule 7.1 ("Communications Concerning A Lawyer’s Services") to a simple prohibition against false or misleading communications, and to provide additional guidance in commentary about what constitutes a misleading statement. It rejected proposals to relax the restrictions in Rule 7.3 ("Direct Contact With Prospective Clients") on in-person or live telephonic or electronic contact, but declined to adopt a proposal to establish a 30-day ban on direct-mail communication with accident victims.
30. Unauthorized Practice and Choice of Law: The Commission has approved significant changes to Rule 5.5 ("Unauthorized Practice of Law") and Rule 8.5 ("Disciplinary Authority: Choice of Law") that recognizes the fact that modern practice crosses jurisdictional boundaries in a variety of ways. Proposed amendments to Rule 5.5 will identify four "safe harbors" for a lawyer practicing outside his licensing jurisdiction: 1) where he is preparing for a proceeding in which he expects to be admitted pro hac vice; 2) where he is acting on behalf of a client of which he is an employee, or on behalf of the client’s other employees; 3) where he is handling a matter that is "reasonably related" to his practice on behalf of a client in a jurisdiction where the lawyer is licensed; and 4) where he is "associated in a particular matter" with a lawyer admitted in the jurisdiction. New commentary notes that the rule does not address whether other conduct constitutes the unauthorized practice of law. This incremental approach seems an appropriate response to the growing sentiment against blanket "unauthorized practice" restrictions on lawyers, while acknowledging the concerns of those who may have a more parochial view.
Under proposed amendments to Rule 8.5, a lawyer who "renders or offers to render any legal services" in a jurisdiction where he is not admitted will be subject to the disciplinary authority and rules (including choice of law rules) of that jurisdiction, as well as the jurisdiction where he is licensed. The Reporter’s explanation notes that there are a number of ways in which discipline might be implemented by a nonadmitting jurisdiction, including "making a disciplinary record, sending it to states in which the lawyer is admitted and having those states impose reciprocal discipline." In addition, the Commission is proposing a new approach to choice of law where conduct does not take place in connection with a matter before a tribunal, offering an alternative between the rules of the jurisdiction where the conduct occurred or the jurisdiction where the conduct had its predominant effect.
31. Mandatory Pro Bono Service: The Commission discussed at length the question whether to amend Rule 6.1 ("Voluntary Pro Bono Publico Service") to make mandatory a lawyer’s obligation to perform 50 hours of pro bono service. After seeking public comment on the issue, it decided against modifying the current voluntary rule. Proponents of mandatory pro bono service had focused on the difficulty many citizens have in finding a way to pay for the legal services they need, and justify mandatory pro bono service in terms of the proper functioning of the legal system. Those who favored keeping the pro bono requirement voluntary were also concerned about the provision of legal services to persons of limited means, but feared that imposing pro bono work on unwilling practitioners would foster an atmosphere of opposition and resentment that is inconsistent with the ABA’s goal of increasing pro bono participation. They also argued that a lawyer’s pro bono efforts are demeaned by a mandatory rule, and pointed to enforcement problems.
The Commission rejected a compromise option that would leave the pro bono obligation voluntary but impose a mandatory reporting requirement. It did decide to add commentary, to this rule and to Rule 5.1, emphasizing the responsibility of lawyers with managerial responsibilities and law firms to ensure that lawyers meet their pro bono obligations. See section 27, supra. It also voted to state in its report that it believes that pro bono service is an important ethical obligation of lawyers; that the current system of providing needed pro bono service is not working; that a mandatory pro bono requirement will not cure this problem; and, that the ABA should redouble its efforts to increase pro bono participation in every part of the profession.
************
The Commission is grateful for the strong interest shown in its work by so many members of the profession, and for the many insightful comments it has received to date on its proposals. It is especially grateful to those who have regularly attended its meetings and public hearings, and participated so helpfully and patiently in its sometimes protracted discussions. As the Commission nears completion of its work, and public interest in its recommendations intensifies, it is mindful of the debt it owes all those who made their views known early on. Their contributions have had a significant impact on the Commission’s work.
From the beginning, the Commission has hoped to use the unprecedented openness of its process to build a substantial body of support for its proposals by the time they are ready for presentation to the House of Delegates. Judging from the lively engagement of so many members of the profession, and the generally enthusiastic response to the Commission’s work to date, this strategy appears to be succeeding. The Commission looks forward to delivering recommendations that will command consensus within the legal profession and respect within the larger community.
1 This paper reflects developments in the Ethics 2000 project through August 8, 2000. The original version of this "Update" memorandum was published in the Winter, 2000 issue of The Professional Lawyer, and a revised version was dated June 15, 2000. This second revision reflects decisions made by the Commission at its July 2000 meeting, in light of comments that had then been received on all rules except Rules 1.0 ("Teminology") and 3.3 ("Candor Toward the Tribunal"). The Commission is currently scheduled to have a final meeting on September 15-17 in Philadelphia, at which time additional comments received by September 1, will be considered.
2 Since 1997, three additional states have adopted some version of the Model Rules.
3 As amended, Rule 1.7(a) will provide:
A conflict of interest exists if
- the representation of one client will be directly adverse to another client; or, 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 or to a former client or by the lawyer’s own interests or duties to a third person.
4 The Commission held a number of meetings with representatives of the Justice Department in an effort to develop mutually acceptable revisions of Rule 4.2. These negotiations came close to resolving outstanding issues in the spring of 1999, and a recommendation for amending the rule was submitted by the Commission and the Standing Committee on Ethics and Professional Responsibility to the ABA House of Delegates in August of that year. However, the recommendation was withdrawn at the Annual Meeting after the Justice Department declined to support the proposal.