February 2000

 

By Edward J. Cleary

Suggested links:

Website of Minnesota's Lawyers Professional Responsibility Board

Back in 1997, the ABA announced that a commission was being formed "to undertake the first comprehensive review in nearly 20 years of the rules governing the professional conduct of lawyers."1 Previous canons, codes, and rules had been promulgated by the ABA in 1908, 1969, and 1983. The members of the commission appointed in 1997 included experts on ethical issues from around the nation.

The threshold issue for the commission was to determine the scope of the undertaking. The commissioners decided that the recommendations would take the form of proposed changes "to the existing platform provided by the Model Rules of Professional Conduct,"2 rather than recommendations leading to a thorough revision of the regulatory scheme for the legal profession. Previous efforts to mold a set of rules to govern professional conduct had different parameters. In the 1960s, the Model Code of Professional Responsibility was created with a three-tier approach to regulation: canons, disciplinary rules, and ethical considerations. The focus was primarily on the practice as it pertained to litigation. By the 1980s, with the Model Rules of Professional Conduct, the activities of transactional attorneys were also addressed, as were other developments in the law, including advertising.

Now, two years into the Ethics 2000 Commission’s work, we are beginning to see some of the recommended changes and the direction they take the profession. The text of the proposed changes, which are discussed below, is given in the sidebar accompanying this article.

Loyalty to the client has always been a key basic tenet of the practice of law. Addressing conflicts of interest responsibly has continually been crucial to maintaining both the perception and the reality of such loyalty. The current rule distinguishes between "direct adversity" conflicts and "material limitation" conflicts.

The commission decided that the current approach was confusing and inefficient, since many attorneys have had difficulty in deciding what constitutes direct adversity and because they have also failed to recognize that most cases that involve direct adversity, impact both "the relationship with the current client and the representation of the new client." Consequently, any potential conflict needs to be evaluated under both sections of the current rule.

In response, the commission drafted a single paragraph defining conflict of interest, adding a second paragraph to explain when client consent is effective in removing the conflict (for instance, client consent is not enough when the representation is prohibited by law or when the lawyer attempts to represent both clients on opposite sides in the same litigation). The second paragraph also includes a new requirement of written informed consent from each client, allowing the lawyer to continue (or begin) representation in the face of a conflict of interest (when consent is sufficient), ostensibly to protect both the lawyer and the client. The latter requirement incorporates the California model, where the lawyer must obtain the client’s written agreement to representation following written disclosure by the lawyer of the conflict of interest.3

Although current Rule 1.5 provides that fees must be reasonable, proposed new language would make this requirement more explicit, stating unequivocally that unreasonable fees are prohibited. Other changes proposed by the commission include a written engagement agreement for all clients "not regularly represented" by the lawyer. In contrast to a written retainer agreement, this document would spell out the scope of representation as well as fees and disbursements. The previous rule suggested it was "preferable" to have a written fee agreement but did not require disclosure of disbursements nor a summary of the scope of representation (previously outlined in 1.2, MRPC); all would now be mandated.

In evaluating the reasonableness of a fee, the proposed new rule would add a factor regarding "the degree of risk assumed by the lawyer." In addition, the new rule would require lawyers from different firms who wish to divide a fee to get "informed consent in writing" from the client as to the participation of all the lawyers involved. Notably, the commission decided against requiring client notification of the specific terms of the fee division, even though this has been required since 1985 in Minnesota under 1.5(e)(2), MRPC.

The new language in this rule addresses a lawyer’s responsibility for funds in the event of a dispute between "two or more persons (one of whom may be the lawyer)" over ownership of property. Perhaps the change in this rule that may cause the most concern among practitioners is the language that mandates that the "property shall be kept separate by the lawyer until any dispute about the interests is resolved." From a practical standpoint, this could force an attorney to hold onto funds indefinitely in her trust account without a lien, letter of protection, or other threshold showing of validity of a claim against such funds. While the motivation appears to be to make clear that "lawyers may not legally give in to client pressure to ignore the creditor’s possible rights," it seems likely that this provision may create more problems than it solves.

The commission recommended the creation of a new rule, 1.18, which would extend the lawyer’s duty of confidentiality to prospective clients while addressing conflicts of interests involving those same clients. The commission proposed the new rule out of a belief that "important events occur in the period during which a lawyer and prospective client are considering whether to form a lawyer-client relationship."

Among the recommendations in addition to the duty of confidentiality to a prospective client (not currently spelled out in 1.6 or 1.9, MRPC), is a prohibition against later representation adverse to the prospective client.

This amended rule would keep the current language of the rule and add two other provisions, one of which would prohibit lawyers from seeking privileged information when communicating with third persons and the other instructing lawyers who receive documents inadvertently to notify the sender.

This latter provision is notable for the fact that although it makes clear the lawyer’s obligation to notify a sender under these circumstances, it extends the obligation no further. Earlier ABA opinions defined the lawyer’s obligation more broadly. A 1992 opinion recommended that a lawyer should refrain from examining materials acquired inadvertently, notify the sending lawyer, and abide by any instructions that the lawyer gave him regarding the documents.4 A 1994 opinion gave the receiving lawyer the additional option of reviewing the documents to the extent necessary to determine how to proceed and, if she disagreed with her adversary’s lawyer’s instructions, the lawyer was instructed to refrain from using the materials until "a definitive resolution of the proper disposition of the materials" was obtained from a court.5 In this instance, the commission goes one step beyond the 1994 opinion in limiting the receiving lawyer’s obligation. Lawyers should be aware of this recommendation as it regards inadvertent disclosure of documents and they should take all necessary steps to improve office procedures to prevent inadvertent disclosure from occurring.

A thorough review of the rules that govern the legal profession has occurred only once in the past 30 years since the passage of the Model Code of Professional Responsibility in 1969. Although the review of the rules currently being undertaken by the ABA’s Ethics 2000 Commission is comprehensive, the review is being undertaken within the framework of the Model Rules of Professional Conduct drafted 16 years ago. By the time the commission’s work is finished, a review of all of the current rules and some suggested new provisions will have occurred. The updated work plan of the commission suggests a very ambitious schedule for calendar year 2000, with the aim of circulating an overall preliminary report in October of 2000.

Locally, the MSBA’s Rules of Professional Conduct Committee and its Ethics 2000 subcommittee have been busy monitoring all of the proposed changes and regularly commenting on behalf of the state bar. The flow of information emanating from the ABA’s Ethics 2000 Commission has been, and continues to be, prodigious. Although review of that material is being handled by members of the committee, all lawyers in Minnesota should be aware of possible changes in the regulation of the profession in the future. Several years from now, when specific changes are being proposed to the Minnesota Rules of Professional Conduct based on the ABA’s recommendations, the legal community of Minnesota should be conversant with the recommendations and should be prepared to respond.

1. Steven C. Krane, "Ethics 2000: What Might Have Been," The Professional Lawyer, Spring 1999, p. 2.

2. Ibid.

3. See also, Kevin McMunigal, "Defining Conflict of Interest: Substantial and Unjustifiable Risks," The Professional Lawyer, Spring 1999, p. 26.

4. ABA Formal Opinion 92-368: "Inadvertent Disclosure of Confidential Materials," November 10, 1992.

5. ABA Formal Opinion 94-382: "Unsolicited Receipt of Privileged or Confidential Materials," July 5, 1994.

Edward J. Cleary is director of the Office of Lawyers Professional Respnsibility. He has practiced both privately and as a public defender for 20 years and is past president of the Ramsey County Bar Assocation. His book, Beyond the Buring Cross, won a national award in 1996.