Ethics Advisory Opinion 15-02

Utah State Bar

Ethics Advisory Opinion Committee

Opinion Number 15-02

Issued February 10, 2015

 

PROPRIETY OF EX PARTE CONTACT WITH INDIVIDUALS WITHIN AN ORGANIZATION

ISSUE

1.  May an attorney representing a party in pending or existing litigation contact servants, agents, and employees of an organization, which is the opposing party, to discuss issues directly related to the litigation, if the attorney is aware the organization is represented by counsel in the matter?  Is it ethical for an attorney to make contact directly with in-house or corporate counsel, even if the attorney is aware that the organization is represented by outside counsel in the matter?  Is it ethical for an attorney to send a copy of correspondence or email to an organization’s employee where the original is directed to opposing counsel?

 FACTS

2.  The query before the Committee relates to the issue of the propriety of an attorney making contact with a servant, agent, or employee of an organization which is potentially or is in fact involved in litigation, where the contacting attorney knows or has reason to know that the organization is represented by counsel.  The related question pertains to the same issue, except that the contact in question is with the organization’s in-house or corporate counsel.  Lastly, is it ethical for an attorney to send a copy of correspondence to an employee, the original of which is directed to opposing counsel for an organization?

 OPINION

3.  Communications, concerning the subject matter of anticipated, proposed or current litigation, are improper, if the individual being contacted is either (1) an employee of the target organization within the current “control group,” or (2) the individual’s acts, omissions or statements in the matter might be imputed to the opposing organization.  Contact with in-house counsel may be permissible, depending on the circumstances, as discussed below.

ANALYSIS

 4.  This opinion involves what has sometimes been referred to as the “no contact without consent” rule.  Utah Rules of Professional Conduct (URPC), Rule 4.2, Communication with Persons Represented by Counsel, states the general rule as follows:

(a) General Rule. In representing a client, a lawyer shall not communicate about the subject of the representation with a person the lawyer knows to be represented by another lawyer in the matter, unless the lawyer has the consent of the other lawyer.  Notwithstanding the foregoing, an attorney may, without such prior consent, communicate with another’s client if authorized to do so by any law, rule, or court order,[1] in which event the communication shall be strictly restricted to that allowed by the law, rule or court order, or as authorized by paragraphs (b), (c), (d) or (e) of this Rule.[2]

5.  As a general matter, subject to the exception that a lawyer may “communicate with another’s client if authorized to do so by any law, rule, or court order,” Rule 4.2 requires that a lawyer not communicate “about the subject of the representation with a person the lawyer knows to be represented by another lawyer in the matter, unless the lawyer has the consent of the other lawyer.”  Rule 4.2(a) (emphasis added).  The Rule “applies to communications with any person who is represented by counsel concerning the matter to which the communication relates,” and “applies even though the represented person initiates or consents to the communication. A lawyer must immediately terminate communication with a person if, after commencing communication, the lawyer learns that the person is one with whom communication is not permitted by this Rule.”  Comment (3) and (4) to Rule 4.2.  Rule 4.2 is broadly consistent with the general rules set forth in § 99, A Represented Nonclient – The General Anti-Contact Rule, The Restatement (Third) of the Law Governing Lawyers; See also The Law of Lawyering, Hazard, Hodes & Jarvis, §§ 4.01 and 41.02.
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Ethics Advisory Opinion No. 04-06

December 2, 2004
Issue:
Under what circumstances is it permissible for corporate counsel to assert that counsel concurrently represents present and former corporate employees whose testimony is relevant to a claim and ethically preclude opposing counsel’s access to those corporate employee witnesses?

Opinion: If corporate counsel has actually formed an attorney-client relationship with these employee-witnesses, and has fully complied with Utah Rules of Professional Conduct 1.7 (including obtaining informed consent from all multiple clients to joint representation and informing them of the possible need for withdrawal from representing any of them should an actual conflict arise), this is permissible and opposing counsel may not interview them. However, in the absence of such a fully formed and proper attorney-client relationship, it is improper for corporate counsel to block opposing counsel’s access to other current corporate constituents, by asserting an attorney-client relationship unless these individuals were control group members, their acts could be imputed to the organization or their statement would bind the corporation with respect to the matter under Utah Rules of Professional Conduct 4.2. Similarly, it is improper to block opposing counsel’s access to any former employee in the absence of a current fully formed and proper attorney-client relationship.
Facts: The tort action asserts one corporate employee and an outside individual were negligent, but names only the corporate entity (and the outside individual) as defendants. Counsel for plaintiff seeks to interview other employees who are fact witnesses and who are not alleged to be negligent. Corporate counsel informs plaintiff’s counsel that s/he is representing all corporate employees (current as well as former employees) and thus plaintiff’s counsel may not informally interview any of these individuals without violating Rule 4.2.
Analysis: Whether corporate counsel’s actions are proper must be determined by reference
to Rule 1.7 regarding conflicts of interest, Rule 4.2 as it governs counsel’s ability to interview “represented persons” in the corporate context, and Rule 3.4 as it permits corporate counsel to request that corporate employees not talk with opposing counsel.
Rule 4.2 1 provides in relevant part:
(a) General Rule. A lawyer who is representing a client in a matter shall not communicate about the subject of the representation with a person the lawyer knows to be represented by another lawyer in the matter, unless the lawyer has the consent of the other lawyer or is authorized to do so by [other law or judicial order].
Utah’s Rule 4.2 2 expressly addresses “Organizations as Represented Persons” and defines when an individual constituent of that organization, not separately represented, should be considered to be “represented” by corporate counsel. With respect to non-governmental organizations, Rule 4.2 states:
(c)(1)(B) When the represented “person” is an organization, an individual is “represented” by counsel for the organization if the individual is not separately represented . . . and . . . is known by the lawyer to be
(c)(1)(B)(i) a current member of the control group of the represented organization; or
(c)(1)(B)(ii) a representative of the organization whose acts or omissions in the matter may be imputed to the organization under applicable law; or
(c)(1)(B)(iii) a representative of the organization whose statements under applicable rules of evidence would have the effect of binding the organization with respect to proof of the matter. (more…)

Ethics Advisory Opinion No. 03-04

Issued October 14, 2003
¶1 Issue
: May a lawyer threaten to present criminal charges against an opposing party or witness during negotiations in a private civil matter?

¶2 Opinion: In the course of representing a client in a civil matter, it is not per se unethical for a lawyer to threaten that the client may pursue criminal charges against an adverse party where the civil and criminal matters are related. However, such a threat will be a violation of the Utah Rules of Professional Conduct if it constitutes “extortion,” if the lawyer does not have a reasonable belief that such charges are warranted by the law and the facts, or if it involves “abusive treatment” of a witness.
¶3 Background: This query arose when counsel, during a mediation, stated that the opposing party’s witness was in violation of Utah law and that the County Attorney’s office “would be interested” to learn of the alleged violation.
¶4 The Former Rule. Prior Disciplinary Rule 7-105 of the Model Code of Professional Responsibility barred a lawyer from using criminal charges to gain leverage in a civil action: “A lawyer shall not present, participate in presenting, or threaten to present criminal charges solely to obtain an advantage in a civil matter.”1 The stated intent of DR 7-105 was to prevent lawyers from using the criminal justice system for oppressive purposes, and the rule set the boundaries of acceptable lawyer conduct clearly.
¶5 The drafters of the American Bar Association Model Rules of Professional Conduct (“Model Rules”), however, deliberately left out the provisions of DR 7-105. The rationale behind this omission was the drafters’ belief that “extortionate, fraudulent, or otherwise abusive threats were covered by other, more general prohibitions in the Model Rules and thus that there was no need to outlaw such threats specifically.”2 The prior rule was thought to be overbroad because it prohibited legitimate pressure tactics and negotiation strategies.3 The current Utah Rules of Professional Conduct also include no analog to DR 7-105, but instead prohibit a lawyer from using “means that have no substantial purpose other than to embarrass, delay or burden a third person”4 and from engaging “in conduct involving dishonesty, fraud, deceit or misrepresentation [or] . . . in conduct that is prejudicial to the administration of justice.”5
¶6 ABA Opinion 92-363: The American Bar Association addressed the permissibility of threats in 1992 in Formal Opinion 92-363 (“Opinion 363”). Opinion 363 concluded that a lawyer may use the possibility of presenting criminal charges against the opposing party in a private civil matter to gain relief for the client, as long as the criminal and civil matters are related, the lawyer has a reasonable belief that threat is warranted by the law and the facts, and the lawyer does not suggest she possesses improper influence over the criminal process or try to exert such influence.6 Correspondingly, a lawyer may agree to refrain from presenting criminal charges as part of a settlement so long as the agreement does not violate applicable law.7
¶7 The same factors apply to threats against an opposing party’s witness. Opinion 363 notes that “abusive treatment” of witnesses may implicate Model Rule 4.4. Abusive treatment exists if the lawyer’s purpose in suggesting charges may be brought is merely to embarrass, delay or burden a third person. If, however, the lawyer has a well-founded belief that criminal charges related to the civil action may be justified, and the lawyer does not suggest the presence of improper influence over the criminal process, the conduct is not abusive. (more…)

Ethics Advisory Opinion No. 00-05

(Approved December 1, 2000)
¶ 1 Issue:
Where a defendant is being represented by a lawyer appointed by defendant’s insurance carrier prior to the entry of any judgment against the defendant, would it be ethical for plaintiff’s lawyer to convey a settlement offer proposing that plaintiff take an assignment of any bad-faith claim that the defendant might have against the insurance carrier in exchange for plaintiff’s agreement not to execute against defendant for amounts exceeding the insurance policy limits?

¶ 2 Opinion: It is ethical for plaintiff’s lawyer to communicate this offer of settlement to the defendant so long as the communication complies with Utah Rules of Professional Conduct 4.1 and 4.2. If the offer of settlement creates a conflict of interest for the defendant’s insurance carrier-appointed lawyer, then the defendant’s lawyer must fully comply with Rule 1.7. Counsel’s presentation of plaintiff’s settlement offer to advance plaintiff’s interests is not unethical, even though it may place defendant’s counsel in a conflict of interest.
¶ 3 Facts: In a lawsuit brought against Defendant by Plaintiff, Defendant is being represented by a lawyer appointed by Defendant’s insurance carrier. There is the potential for a judgment against Defendant for an amount greater than the limits of the insurance policy. Prior to the entry of judgment (or even prior to the filing of a complaint), Plaintiff, through her lawyer, wishes to make a settlement offer to Defendant under which Plaintiff would accept an assignment of any bad-faith claims1Defendant might have against his insurance carrier in exchange for Plaintiff’s agreement not to execute on any judgment against Defendant to the extent that a judgment would exceed the limits of the applicable insurance policy.
¶ 4 The request to the Committee questions whether Plaintiff’s counsel’s conveying such an offer of settlement has ethical ramifications if it creates a relationship between Plaintiff’s lawyer and an adverse party that results in a conflict of interest for Defendant’s counsel. The Committee has been asked to consider the request under two assumptions: that the offer is conveyed (a) by a letter addressed to Defendant, in care of Defendant’s counsel, and (b) by a letter addressed to Defendant, in care of the insurance adjuster for Defendant’s insurance carrier.2
¶ 5 Discussion: The Committee has previously issued an opinion that provides guidance on this issue. In Opinion No. 98-05,3the Committee was asked if it was unethical for a defense lawyer to offer a “full satisfaction” settlement, conditioned upon a plaintiff’s waiving a claim for attorneys’ fees against defendant. The request suggested that these offers of settlement were unethical because they created a conflict of interest for plaintiff’s counsel under Utah Rules of Professional Conduct 1.7(b), as plaintiff’s counsel’s interest in her fees might cloud her judgment as to the merits of the settlement. Opinion 98-05 states that defendant’s counsel does not act unethically in making an offer of settlement that may create a conflict of interest for plaintiff’s counsel. Defendant’s counsel in that case has a duty to represent the interests of his client zealously within the limits of law. It is the duty of plaintiff’s counsel to convey the settlement proposal to her client, to resolve any conflicts of interest arising under Rule 1.7(b), and to respond to the settlement proposal as dictated by her client. (more…)

Ethics Advisory Opinion No. 96-03

(Approved April 26, 1996)
Issue:
What are the ethical obligations of an attorney who has negotiated an agreement with medical providers on behalf of a personal-injury client whose debts are subsequently discharged in bankruptcy?

Opinion: Absent dishonesty, fraud, deceit or misrepresentation, the attorney has no ethical obligation to honor personally the client’s agreements to pay medical providers out of a settlement or judgment. Disputes resulting from the failure of an attorney to make payment for services rendered by the medical providers should be treated as questions of substantive law, including state and bankruptcy law, and should be examined under traditional contract, agency, and bankruptcy doctrines rather than as questions of the ethical propriety of the attorney’s actions.1
Analysis: In a personal injury action, attorneys on behalf of their clients often negotiate agreements with medical providers for the care the client receives or has received in conjunction with the injury. Such agreements contractually obligate the client, but not the attorney, to pay medical providers for those services out of, or at the time of, any settlement or judgment. Prior to the settlement or judgment, the client may file a bankruptcy and may be discharged of certain of these medical-cost obligations.
The factual background of the present issue is not substantially different from that addressed by Utah Ethics Advisory Opinion No. 98.2In that opinion it was determined that imputation of an ethical obligation for an attorney’s failure to pay a third party for services could create the possibility that the Bar could initiate disciplinary actions against a lawyer for the mere failure to pay creditors. Such a possibility was determined to be beyond the scope of the Bar’s role in maintaining ethical standards among its members. This conclusion seems particularly valid when, as postulated in the present factual variation, the debts themselves may be legally discharged through a bankruptcy proceeding and when such a discharge may have been avoided through proper documentation by the medical provider.
Notwithstanding the foregoing, however, Rule of Professional Conduct 4.1 provides:
In the course of representing a client, a lawyer shall not knowingly: (a) make a false statement of material fact or law to a third person; or (b) fail to disclose a material fact to a third person when disclosure is necessary to avoid assisting a criminal or fraudulent act by a client, unless disclosure is prohibited by Rule 1.6.
Rule 4.3(b) provides:
In dealing on behalf of a client with a person who is not represented by counsel, a lawyer shall not state or imply that the lawyer is disinterested. When the lawyer knows or reasonably should know that the unrepresented person misunderstands the lawyer’s role in the matter, the lawyer shall make reasonable efforts to correct the misunderstanding.
Based on the foregoing rules, an attorney’s dishonesty, fraud, deceit or misrepresentation in conjunction with obtaining the medical services could subject the attorney to disciplinary action. For example, an attorney who (1) knows that his client intends subsequently to discharge medical debts in a bankruptcy proceeding, or intends to have his client seek a discharge of such debts in bankruptcy, (2) uses a form of documentation that the attorney knows will not withstand a bankruptcy, and (3) affirmatively states that the medical provider will be paid at settlement or judgment, will have committed an ethical violation. (more…)