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Directions in Professional Conduct: Those seeking evidence of sweeping
shifts in the newly amended Rules of Professional Conduct will not
likely find any, but developments over 20 years have given rise to
numerous changes in the details that bear careful attention. by Kenneth L. Jorgensen and William J. Wernz The amendments were sought in three MSBA petitions, filed in 2003 and 2004. The Court granted the petitions,
with a few significant changes, by order dated June 17, 2005. The full text of the Court’s order and a red-lined
version of the rules and amendments can be found, with other useful
materials, at www.courts.state.mn.us/lprb. This article will discuss the most noteworthy
rule changes. Background to the Petitions The MSBA
petitions were also based on several special-purpose considerations. First, the ABA
amended Model Rules 5.5 and 8.5 on the recommendation of its Multi-Jurisdictional
Practice (MJP) Commission.
The MJP Commission dealt with the problem of outdated unauthorized
practice of law regulations obstructing the increasingly multistate needs of clients. Second, the ABA
amended Model Rules 1.6 (Confidentiality) and 1.13 (Organization as
Client) on the recommendation of its Corporate Responsibility Commission. That commission was formed to respond to the
ethics issues raised by a wave of corporate scandals and by the regulations
affecting lawyers in the Sarbanes-Oxley Act and related sec rules. Third, the
Lawyers Board raised 1st Amendment concerns relating to Minnesota’s
prohibition, in Rule 7.4, against stating or implying that an attorney
is a “specialist,” unless he or she is certified as such. Fourth, in Lennartson v. Anoka-Hennepin Independent School District No. 11, 662 N.W.2d
125 (Minn. 2003), the Minnesota Supreme Court, having rejected longstanding
precedent, asked the bar to consider how lateral hire conflicts of
interests should be treated. Fifth,
in In re Panel File No. 99-42, 621 N.W.2d 240
(Minn. 2001), and In re Westby,
639 N.W.2d 358 (Minn. 2002), the Court held that Lawyers Board Opinions
were mere guidelines, without the force of law.
Because many of these opinions had been very useful in preventing
friction between lawyers and clients, it appeared best to incorporate
them in rule amendments. Drafting Proposed Rules For its efforts, the task force was honored with the
2003 MSBA President’s Award. The efforts of the task force in drafting the
first petition for rule amendment were followed by the MSBA Rules of Professional Conduct Committee’s work in drafting
the second and third petitions. Issues in Controversy Comments. The Minnesota Supreme Court has a longstanding
history of not adopting the Comments to its rules of practice and
procedure. Although the Comments
were included with the Court’s order adopting the Rules of Professional
Conduct in 1985, an attempt to amend the Comments in 1988 was rejected
when the Court indicated it had never formally adopted the Comments.1 Both the MSBA
and the Lawyers Board urged the Court to adopt the Comments because
they were not mere committee comments but integral to the ABA
Model Rules. An important component
of the E2K amendments
was the significant expansion of the Comments.2
Comments to the Rules of Professional Conduct differ
from traditional advisory committee comments in that they contain
substantive guidance on the application of the rules that is often
not readily apparent in the rules themselves.
One example involves the Comment to Rule 4.2 discussed below. Despite these arguments, the Court declined
to adopt the Comments, stating they were included “for convenience
and [did] not reflect court approval.” “Specialists.”
Competing proposals were
submitted by the MSBA
and the Board of Legal Certification over Rule 7.4(d), which regulates
communications about lawyer specialist certification.
The MSBA proposed that an uncertified lawyer
be prohibited from communicating that he or she was a “certified specialist”
unless the communication was accompanied by a disclaimer. In contrast, the Certification Board proposed
that an uncertified lawyer be prohibited from stating or implying
he or she was a “specialist” unless the statement was accompanied
by a disclaimer. The focus of the dispute centered on whether the prohibition
in the rule should be narrowly drawn due to constitutional concerns
and the unavailability of certification programs in many substantive
areas of the law, or whether a broader prohibition was necessary to
prevent uncertified lawyers from misleading legal consumers about
their certified status or lack thereof.
The Court resolved the dispute in favor of the broader rule.
Consequently, communications by uncertified lawyers about their
services that state or imply they are “specialists” must be accompanied
by a disclaimer.3 The MSBA
and the criminal defense bar proposed adopting ABA
Rule 3.8(e).
The Lawyers Board and local prosecutors opposed the rule due
to constitutional concerns and questioned whether the rule was necessary
because of the absence of subpoena abuse in Minnesota.
The Court adopted the rule but eliminated the “no other feasible
alternative” requirement which had spawned much of the Justice Department
litigation. Conflicts Screening. Opinions also differed over attempts to change
Rule 1.10(b) to facilitate lateral movement between law firms by associates.
This issue arose in response to the Court’s Lennartson
decision in which the hiring law firm, despite its prompt efforts
to screen a new lateral associate, was disqualified because the associate
obtained significant confidential information when she represented
the opposing party during a single deposition while employed at her
former law firm.4 Competing proposals by the MSBA and the Lawyers Board that attempted
to enhance the opportunity for lateral associate movement without
jeopardizing client confidentiality were submitted to the Court in
supplemental petitions. Ultimately
the Court declined to accept either proposal and instead adopted existing
Minnesota Rule 1.10(b). Other Notable Amendments Confidentiality. Amendments
to Rule 1.6(b) have increased the number of circumstances in which
a lawyer may (but not must) disclose confidential client information
from six to ten. Several of these apparent changes are codifications
of existing practice and law, e.g.,
Rule 1.6(b)(3) allows disclosures “impliedly
authorized in order to carry out the representation” and Rule 1.6(b)(7)
allows disclosures necessary for a lawyer “to secure legal advice
about the lawyer’s compliance with these rules.”
Another ostensible exception to confidentiality in Rule 1.6(b)(2)
actually retains the “confidences and secrets” categories of prior
law, allowing disclosures that are not detrimental and do not waive
privilege. Rule 1.6 has also been amended to increase a lawyer’s
ability to prevent or rectify crimes and frauds.
In Minnesota, this change is incremental, because for nearly
20 years Minnesota Rule 1.6(b)(4) has allowed
lawyers to rectify fraud in which their services had been misused.
The ABA, in contrast,
consistently declined to permit such disclosures, until corporate
scandals and federal legislation changed the landscape. Organization as Client. Disclosure of misconduct is also central
to Rule 1.13, “Organization as Client.”
Rule 1.13(b) requires that a lawyer for an organization (whether
public corporation or government agency or small association) must report up the ladder — within the organization — insider wrongdoing
that is likely to substantially injure the corporation, unless the
lawyer reasonably believes such reporting will not serve the organization’s
best interests. A related question
— When may the lawyer
report corporate misconduct outside the organization? —
was answered more broadly by the ABA
than by Minnesota. Minnesota
applies the general confidentiality standard of Rule 1.6, but ABA Model Rule 1.13(c) permits disclosure
“whether or not Rule 1.6 permits such disclosure, but only if and
to the extent the lawyer reasonably believes necessary to prevent
substantial injury to the organization.”
Another amendment relating to disclosure of misconduct, found
in Rule 1.13(d), requires that a lawyer who withdraws or has been
discharged for reporting misconduct must inform the organization’s highest
authority. Litigation. Requirements for “candor to the tribunal”
have been enhanced by amendments to
Rule 3.3. Rule 3.3 generally
provides that lawyers must prevent
and disclose certain falsehoods to the tribunal.
Rule 3.3(a)(1) now requires lawyers
to correct their own material misstatements of law or fact.
Rule 3.3(a)(3) provides that a lawyer
must correct not only the client’s false statements, but also those
of a “witness called by the lawyer,” both on direct and cross-examination. The same rule requires that defense counsel
must offer evidence from a criminal defendant
that the lawyer reasonably believes (but does not actually know) is
false. These obligations exist
until “conclusion of the proceeding.” Rule
4.2. Comment [7] to Rule 4.2, governing communications
with persons affiliated with represented entities, was extensively
amended by the ABA. Although the Court has declined to adopt the
Comments en bloc, it has
nonetheless taken Rule 4.2 Comments to be decisive.
See e.g., State of Minnesota v. Miller,
600 N.W.2d 457, 467 (Minn. 1999) (“the Comments to MRPC 4.2 establish that this relationship [general manager]
falls within the protection of the Rule”).
The amended Comments should eliminate confusion over
the reference in the prior Comment to an employee “whose statement
may constitute an admission on the part of the organization.”
Local federal courts have interpreted “admission” to extend
the protection of Rule 4.2 to virtually all employees.5
The Director’s Office and the majority of other courts have
rejected this interpretation of “admission.”
The ABA and the Court resolved this controversy
by deleting “admission.” There
is no basis remaining in Rule 4.2 or its Comments for extending their
protection to a large number of employees. Comment [7] was also amended to provide that, instead
of protecting every employee with “managerial responsibility,” only
one “who supervises, directs or regularly consults with the organization’s
lawyer concerning the matter” and one who “has the authority to obligate
the organization with respect to the matter” are protected. For large organizations, these amendments will
allow many more employees to be contacted by adverse counsel. (Insofar as fewer employees are covered by Rule
4.2, more are covered by Rule 4.3, “Dealing With
Unrepresented Person.”) Comment
[7] also restates the position taken in Minnesota and most other states
that former employees are not covered by Rule 4.2. Rule
4.4. Following the
ABA Model Rule, Rule 4.4 now provides,
“A lawyer who receives a document relating to the representation of
the lawyer’s client and knows or reasonably should know that the document
was inadvertently sent shall promptly notify the sender.” Comment [2] clarifies that whether an inadvertently
received document can be used or must be returned is a matter of law
beyond the scope of the ethics rules.
Previously, the ABA
Commission on Ethics and Professional Responsibility, in Formal Op.
94-382 (1994), had taken the position that the receiving lawyer should
both notify and obey the sender’s instructions as to return or destruction
of the inadvertently sent document.6 Conflicts. The most important amendment to the conflicts
rules (Rules 1.7 — 1.12) requires that conflicts waivers be “confirmed
in writing.” Although the rules
(except 1.8(a)) do not require that conflict disclosures be in writing
or that the client(s) sign conflict waivers, obviously the best practice
will be not merely to confirm consents in writing, but to make disclosures
in writing and obtain a client’s signature or email assent. Rule 1.18, “Duties to Prospective Client,” is a new rule. It provides that a lawyer who has met with a
prospective client is disqualified from adverse representation on
a substantially related matter if the lawyer received significant
confidential information. Rule
1.18 also disqualifies the lawyer’s firm, unless there is informed
consent or the lawyer takes three steps:
avoiding learning unnecessary confidential information; being
screened from the adverse matter and fee; and giving prompt written
notice to the prospective client. The amended conflict rules also employ a new, defined
term for waivers, namely “informed consent.”
This term is defined by Rule 1. 0(f) to require
the lawyer to communicate “adequate information and explanation about
the material risks of and reasonably available alternatives to the
proposed course of conduct.” The vastly expanded Comments to the conflict rules will
be extremely important, even without Court adoption, because they
will influence disciplinary and civil standards.
For example, Comment 22 to Rule 1.7 suggests that prospective
waivers by sophisticated clients will likely be enforceable.
This Comment led the ABA
to withdraw Formal Opinion 93-372 and issue Formal Opinion 05-436,
which espouses enforceability of prospective waivers especially where
the client has independent counsel, as corporate clients often will. Other important comments to Rule 1.7 include Comment
34 (affiliates of corporate clients are presumed not to be identified with the client for conflicts purposes) and Comments
29—33, “Special Considerations in Common Representation.” Comment 7 states that a lawyer who represents
A may not, without informed consents, represent B in a transaction
with A, even though the subjects of the transaction and the representation
of A are wholly unrelated. Multijurisdictional Practice. Rule 5.5, governing the ethics dimension of
unauthorized practice, was substantially revised based upon the ABA MJP Commission recommendations designed
to facilitate temporary cross-border practice. Lawyer not licensed in Minnesota are still prohibited
from establishing an office or having a systematic continuous presence
in Minnesota for the practice of law.
Lawyers not admitted similarly cannot advertise or otherwise
hold out to the public that they are admitted to practice in Minnesota. The most significant amendments define circumstances
under which lawyers not admitted in Minnesota can temporarily practice
in the state.7 These circumstances
include associating with a Minnesota lawyer or providing services
related to a pending or potential Minnesota proceeding if the non-Minnesota
lawyer (or a person the lawyer is assisting) is admitted pro hac vice or reasonably expects to be
admitted pro hac
vice. Authorized temporary practice also includes services
that arise out of or are reasonably related to the non-Minnesota lawyer’s
practice in his or her own state, provided the services do not require
pro hac vice admission in Minnesota. Examples include when officers of a multinational
corporation survey business sites and seek the services of their lawyer
to assess the merits of each. Another
example is where the services draw upon the lawyer’s expertise developed
by representing clients in matters involving a particular body of
federal, uniform, foreign or international law.
Two differences exist between Minnesota Rule 5.5 and
the ABA Model Rule. First, a reciprocity exemption in 5.5(a) exempts
Minnesota lawyers from being disciplined in Minnesota for their unauthorized
practice in another jurisdiction if the same conduct is permitted
in Minnesota under Rule 5.5 for lawyers not admitted in this state.8 A second difference is that unlike the Model Rule, Minnesota
Rule 5.5(d) does not authorize house counsel employed by a corporation
or organization to practice law on behalf of the organization without
first being admitted to practice in Minnesota.
The basis for this distinction was that lawyers who establish
a continuous presence in Minnesota should not be exempted from bar
admission requirements. In conjunction with this proposal, the Minnesota
Rules for Admission to the Bar were amended to facilitate the admission
of house counsel employed in Minnesota but admitted elsewhere. Rule 10, Rules for Admission to the Bar, now
provides for relaxed eligibility requirements for lawyers admitted
elsewhere to be admitted to the Minnesota bar as House Counsel. The House Counsel license authorizes the lawyer
to practice law in Minnesota solely on behalf of an organization as
long as the lawyer continues to be employed by the organization. Law Practice Issues. Until 2001, the formal opinions of the Lawyers
Board were considered to have authority nearly equivalent to that
of the Rules of Professional Conduct they interpreted. Violations of Lawyers Board opinions were treated
like rule violations and were frequently cited in private discipline
cases as well as the Court’s public discipline opinions. The Court’s decision in Panel File No. 99-42 not only changed but clarified the authority
of Lawyers Board opinions:
Opinion No. 13,
Return of Client Files. Opinion No. 13’s definitions of client files,
papers and property are now contained in Rule 1.16(e). In all
representations clients are entitled to receive all documents
and property delivered to the lawyer as well as documents and items
for which the client has paid the lawyer. In pending
litigation representations, clients are also entitled to litigation-related
documents that have been served or filed as well as costs and expense
items (e.g., depositions, expert opinions and
statements, business records, witness statements) regardless of whether
the client has paid for the lawyer’s services or reimbursed the lawyer. A different definition applies to nonlitigation
or transactional representations.
A client who has not paid for the lawyer’s services is not
entitled to unexecuted transactional documents such as estate plans,
title opinions, articles of incorporation, contracts, partnership agreements,
or any other unexecuted legal document that does not otherwise have
legal effect. Copy charges are also covered.
Although reasonable charges for reproducing files can be assessed
if the client has agreed in writing to such a charge, a lawyer may
not condition the return of client files, papers and property upon
payment of the copy costs or the lawyer’s outstanding fees.11 Opinion
No. 15, Advance Fee Payments and Availability or Nonrefundable Retainers. Advance fees and “availability”
or nonrefundable retainers are now covered by Rules 1.5(b) and Rule
1.15(c). All agreements for
advance payment of nonrefundable or availability retainers must be
reasonable in amount and communicated in a writing signed by the client. In addition, advance fee payments from clients
must be deposited into a trust account and withdrawn as earned unless
the lawyer and the client have entered into a written agreement to
the contrary. Other fee-related changes require contingent fee agreements
to disclose whether the client will be responsible for litigation
costs and expenses when the client is not the prevailing party12 and
all agreements to divide fees between lawyers from separate law firms
must be confirmed in writing with the client.13 Opinion
No. 9, Trust Account Books and Records. Lawyers
must certify annually on their attorney registration renewal that
they maintain trust account books and records in compliance with Rule
1.15. Historically, the books and records have been
identified and described in Opinion No. 9.
Rule 1.15(i) now authorizes the Lawyers
Board to annually publish the required trust account books and records. It is anticipated the Lawyers Board will publish
Opinion No. 9. Opinion
No. 12, Trust Account Signatories. The
requirement that all trust account checks or other disbursements be
signed or authorized by at least one lawyer associated with the law
firm is now incorporated in Rule 1.15(j). Opinion
No. 5, Fee Arbitration Awards.
Although participation in the fee arbitration programs sponsored by
the local bar associations is voluntary, it has long been professional
misconduct for a lawyer to refuse to honor a fee arbitration award
after agreeing to arbitrate the dispute.
This standard of conduct now appears in Rule 8.4(i).14 Minnesota Variations from the Model Rules In some cases, Minnesota drafting appeared superior to
the ABA’s. For example, Model Rule 1.8(c) provides an exception
to the general prohibition on drafting an estate plan for the benefit
of the drafting lawyer or his or her family, namely allowing drafting
for the benefit of both family members and others “with whom the lawyer
or the client maintains a close, familial relationship.”
The problem with this exception is that the drafting lawyer/beneficiary
will claim such a nebulous relationship even with those who are being
exploited, and proof of the absence of such a relationship will be
very difficult. Other rules
that use Minnesota drafting include MRPC
1.8(k) (sex with client), 1.17 (sale of a law practice), 3.5 (ex parte communications
with judge or juror), and 8.3(c) (exemption from required disclosure
of attorney misconduct learned during participation in lawyer assistance
program). Conclusion Periodic reevaluation of professional standards is important
for self-regulating professions. The
integrity of any ethics standard demands consideration of societal
changes. The comprehensive
changes to the Rules are intended to fulfill these purposes by promoting
greater uniformity of legal ethics rules among jurisdictions and responding
to problems relating to recent corporate scandals, while at the same
time preserving Minnesota’s variations from the Model Rules that over
time have proven beneficial to the bar and the public.
c Notes 2 For example,
new Rule 1.7 relating to conflict of interest has 35 paragraphs as
compared to 14 paragraphs in the previous version. 3 The disclaimer
must state that the lawyer is not certified by an organization approved
by the Minnesota Board of Legal Certification and must appear in the
same sentence that communicates the certification.
4 Lennartson v. Anoka-Hennepin Independent School Dist, 662 N.W.2d 125 (Minn. 2003). 5 Paulson
v. Plainfield Trucking, Inc.,
210 F.R.D. 654 (D. Minn. 2002); Midwest Motor Sports, Inc. v.
Arctic Cat Sales, Inc., 347 F. 3d 693, 2003 U.S. App. LEXIS 21188 (8th Cir. 10/20/03). By Local
Rule 83.6(d)(2), the U.S. District Court
in Minnesota adopts the Minnesota Rules of Professional Conduct, “except
as otherwise provided by specific rules of this Court.” 6 For a fuller
treatment of this issue, see Kenneth L. Jorgensen, “Ethics Advisory Opinions,” Bench & Bar
of Minnesota 60:7(August 2003)
p. 12 ff 7 See Rule 5.5(c). 8 Although this
provision would exempt a lawyer who engages in unauthorized practice
elsewhere from Minnesota discipline, he or she might still be subject
to discipline or other sanctions in the other jurisdiction for unauthorized
practice. 9 In re Panel
File No. 99-42, 621
N.W.2d 240, 242 (Minn. 2001).
10 See Rule 1.16(d) which obligates lawyers to surrender
papers and property to which the client is entitled to receive upon
termination of representation. 11 See Rules 1.16(f) and (g). 12 Rule 1.5(c). 13 Rule 1.5(e). 14 See also
In re Pearson, 352 N.W.2d 415
(Minn. 1984). WILLIAM J. WERNZ
is a partner with Dorsey & Whitney in Minneapolis.
He chaired the MSBA Task Force on the Rules of Professional
Conduct. KENNETH L. JORGENSEN
is director of the Office
of Lawyers Professional Responsibility, where he has served the cause
of lawyers’ self-regulation for over 20 years. |
