November 2018 | Ethics in View

“Ya gotta have a plan”

by Dennis A. Rendleman, Ethics Counsel, ABA Center for Professional Responsibility

The Standing Committee on Ethics and Professional Responsibility has recently issued two Formal Ethics Opinions:

No. 482:

The Rules of Professional Conduct apply to lawyers affected by disasters. Model Rule 1.4 (communication) requires lawyers to take reasonable steps to communicate with clients after a disaster. Model Rule 1.1 (competence) requires lawyers to develop sufficient competence in technology to meet their obligations under the Rules after a disaster. Model Rule 1.15 (safekeeping property) requires lawyers to protect trust accounts, documents and property the lawyer is holding for clients or third parties. Model Rule 5.5 (multijurisdictional practice) limits practice by lawyers displaced by a disaster. Model Rules 7.1 through 7.3 limit lawyers’ advertising directed to and solicitation of disaster victims. By proper advance preparation and planning and taking advantage of available technology during recovery efforts, lawyers can reduce their risk of violating the Rules of Professional Conduct after a disaster.

No. 483:

Model Rule 1.4 requires lawyers to keep clients “reasonably informed” about the status of a matter and to explain matters “to the extent reasonably necessary to permit a client to make an informed decision regarding the representation.” Model Rules 1.1, 1.6, 5.1 and 5.3, as amended in 2012, address the risks that accompany the benefits of the use of technology by lawyers. When a data breach occurs involving, or having a substantial likelihood of involving, material client information, lawyers have a duty to notify clients of the breach and to take other reasonable steps consistent with their obligations under these Model Rules.

One aspect that binds these two opinions together is that they both recommend lawyers have a “plan.” Fundamentally, a lawyer can satisfy the ethical obligations discussed in both opinions by preparing for disasters or data breaches by establishing an internal practice plan for the protection of clients and continuation of the obligations of the law practice.

Presently, many states have rules that provide a mechanism to the appointment of a trustee or receiver should a lawyer die, disappear or become disabled without having a succession plan in place. Some states ask lawyers to voluntarily disclose whether they have a designated a “successor” lawyer on their annual registration renewals.

As to the latter, Florida provides a good example. Florida Rule 1-3.8 Right to Inventory both allows a circuit court to appoint an “inventory attorney” to protect client interests when a lawyer has died, disappeared or become disabled; or otherwise become involuntarily unavailable. The rule also requires that Florida licensees designate another Florida lawyer to be the “inventory attorney” for the practice.  However, the designated “inventory attorney” is not required to perform that function when called upon.

More broadly, Colorado and Illinois have adopted Proactive Management-Based Regulation (PMBR). The Colorado Self-Audit Checklist includes questions about backing-up calendar and client files electronically. Under the Illinois rules, not only does Rule 776 authorize appointment of a receiver but under Amended Rule 756(e), lawyers who do not maintain malpractice insurance are required to complete a self-assessment every two years. 

Substantively, these evolving approaches to protecting clients in the lawyer regulatory system will likely be satisfied by developing a business management plan. This concept is simply another iteration of what has been called a succession plan. 

The PMBR Colorado Self-Audit Checklist is a good start. In addition, the details contained in Formal Opinions 482 and 483 add important supplements to that checklist. Formal Opinion 482 notes that lawyers should maintain a list of current clients and their contact information in multiple formats that will be easily accessible in the event of disasters. That information also fulfills the obligation noted in both Formal Opinions 482 and 483 to notify clients in case of disasters or cyberattacks, but these are examples of the general Rule 1.4 requirement to keep clients informed. A lawyer’s business management plan that includes a regular schedule of client communication on both a calendar and event basis address what is one of the most common disciplinary complaints – failing to communicate effectively with clients

A second area that arises under both opinions is security of client files. Earlier Formal Opinion 08-451 determined that a lawyer was responsible for monitoring and supervising the use of cloud computing. This same obligation exists, as noted in Opinion 483, to a data breach or cyber-intrusion of those files or, as noted in Opinion 482, possible intrusion into a client’s property protected under Rule 1.15.

But in a broader sense, one can anticipate a logical merger of the PMBR and business/succession planning as states move toward a proactive rather than a reactive approach to client protection.  The overlap between the two will benefit lawyers by consolidating the time and burden required and put the lawyer’s practice in a more efficient – and profitable – mode. Indeed, in a practical sense, that is what has already evolved at larger law firms through the loss-prevention planning provided by the professional liability insurers. The insurance industry has found it efficacious to evaluate the business/professional practices of their insured law firms covering many of the same topics encompassed by PMBR and business/succession planning.

The New York State Bar Association has a “Planning Ahead Guide,” which advises “how to establish an advance exit plan to protect your clients’ interests in the event of your disability, retirement or death.”

A parallel resource available from ABA is The Lawyer’s Guide to Succession Planning: A Project Management Approach for Successful Law Firm Transitions and Exits by John W Olmstead.

In “Gypsy,” the great Jule Stein/Stephen Sondheim/Arthur Laurents musical, Mazeppa and the other strippers sing to Gypsy: “Kid, you gotta have a gimmick, if you wanna get ahead.” For successful practicing lawyers that translates to “You gotta have a plan, if you wanna practice law!”