(Approved July 3, 1996)
Issue: May a lawyer choose a law-related charitable institution other than the Utah Bar Foundation to be the recipient of trust-account interest that is generated in such nominal amounts that it is impractical to pay them to individual clients?
Opinion: Because the Utah Supreme Court’s approval of the Utah State Bar’s “interest on lawyers’ trust accounts” (IOLTA) program is specifically limited to the Bar’s original proposal to dedicate small-interest amounts to the Utah State Bar Foundation, a lawyer who remits interest to a different charitable institution would violate Rule 1.15 of the Utah Rules of Professional Conduct unless the Court specifically authorizes another recipient.
Discussion: It is well established that lawyers may not receive for their own purposes interest on clients’ funds that are held in trust for the clients.1Due to difficulties in accounting for and assigning interest payable to clients for small deposits and short deposit times, lawyers traditionally kept such funds in non-interest-bearing accounts.
The only institutions profiting by this arrangement were the financial institutions holding the funds. Accordingly, in 1983 the Utah State Bar petitioned the Utah Supreme Court to implement an IOLTA program to permit lawyers to accrue interest on clients’ trust funds that were otherwise impractical to account for and to remit those monies to the Utah Bar Foundation.
The Utah Supreme Court approved the program in In re Interest on Lawyers’ Trust Accounts.2Prior to this order of the Court, any interest earned on monies deposited in lawyers’ trust accounts had to be paid to the clients whose funds had generated the interest. There were no exceptions, even for small amounts that would require major accounting and allocation efforts.3
In the absence of such accounting, the funds had to be held in non-interest-bearing accounts, so that the lawyer would not be the beneficiary of any interest-both under the Code of Professional Responsibility (before 1988) and the Rules of Professional Conduct (after 1987).
The Supreme Court has provided a singular exception to this general rule by authorizing the Utah State Bar to implement a voluntary IOLTA program, under which clients’ funds that are nominal in amount and expected to be held for a short period of time can be channeled to an interest-bearing account, with interest payable to the Utah State Bar Foundation.
The Ethics Advisory Opinion Committee believes that the Supreme Court’s authorization is for a single exception to the general principle of Rule 1.15 and has not provided a blanket or generic exception to the rule. If an individual lawyer were to have the ability to choose a law-related charitable institution other than one designated by the Supreme Court, then that individual lawyer would be exercising a measure of control over the earned interest. Such an exercise of control would amount to the receipt of a personal benefit by the lawyer, which the ethical rules prohibit. Accordingly, the Committee concludes that, in order to avoid a violation of Rule 1.15, a lawyer would need to obtain specific Supreme Court approval of a proposal to remit trust-account interest to another charity. (more…)
(Approved October 28, 1994)
Issue: Do the Rules of Professional Conduct apply to the conduct of a lawyer who has been appointed by an insurance company as an “independent” appraiser of the property of an insured of the company, where the lawyer also provides legal services for the insurance company on unrelated matters?1
Opinion: The Rules of Professional Conduct apply to the provision of legal services and do not apply to the provision of non-legal services. If the lawyer makes a written disclosure to the insurance company and to the insured (1) that the lawyer represents the insurance company on unrelated matters; (2) that the lawyer’s retention by the insurance company as an “independent” appraiser is not a retention to perform legal services; and (3) that the retention does not create a client-lawyer relationship governed by the Rules of Professional Conduct and is not protected by the attorney-client privilege, the Rules of Professional Conduct do not apply to the engagement as an appraiser unless the lawyer also performs legal services. If the lawyer fails to make this disclosure, the Rules of Professional Conduct will apply to the extent the insurance company client or the insured are reasonably misled into believing that a lawyer-client relationship had been established between the insurance company and the lawyer for the provision of the appraisal services.
Analysis: The Preamble to the Rules of Professional Conduct provides that the Rules are intended to apply to the lawyer-client relationship. Whether this relationship exists is a matter of the substantive law external to the Rules of Professional Conduct. Ordinarily the Rules of Professional Conduct apply only after the client has requested the lawyer to render legal services and the lawyer has agreed to do so. The Preamble states in part:
Furthermore, for purposes of determining the lawyer’s authority and responsibility, principles of substantive law external to these Rules determine whether a client-lawyer relationship exists. Most of the duties flowing from the client-lawyer relationship attach only after the client has requested the lawyer to render legal services and the lawyer has agreed to do so.
The appraisal of the value of property is a discipline not normally associated with the practice of law. Therefore, if the lawyer makes a written disclosure to the insurance company and to the insured that: (1) the lawyer represents the insurance company as a lawyer on unrelated matters; (2) that the retention of the lawyer as an “independent” appraiser is not a request that the lawyer perform legal services; and (3) that the engagement does not create a client-lawyer relationship governed by the Rules of Professional Conduct or protected by the attorney-client privilege, the Rules of Professional Conduct do not apply to the engagement of the lawyer by the insurance company as an appraiser.2The relationship would be governed by the law of principal and agent, by the duties imposed by the substantive law upon property appraisers, and by the terms of the insurance policy.3
If the lawyer does not make clear to all parties who may be otherwise misled that the appraisal services are not legal services and that a client-lawyer relationship is not being established, the lawyer will be governed by the Rules of Professional Conduct in the provision of the appraisal services to the extent the insurance company client or the insured might reasonably believe that a client-lawyer relationship exists between the lawyer and the insurance company for the performance of the appraisal services.4Even with the written disclosure, the lawyer will be subject to the Rules of Professional Conduct for the engagement as an appraiser if the lawyer commences also to perform legal services in connection with the matter on behalf of the insurance company. (more…)
(Approved April 28, 1995)
This opinion addresses three related issues arising from a lawyer’s employment as a life insurance agent and by a financial planning company.
Issue No. 1: May a lawyer who is also a life insurance agent, in the course of selling life insurance products, suggest the need for estate planning and then perform legal services for the customer, if requested, where the customer initially did not contact the insurance agent for legal advice?
Opinion: (a) A lawyer who is employed for an insurance firm or who works as an insurance agent is restricted from soliciting legal services from insurance customers under Rule 7.3.
(b) A lawyer may sell insurance products to existing legal clients after fulfilling the disclosure and consent requirements of Rule 1.8(a).
Issue No. 2: May an attorney who is an employee of a financial planner perform legal services for the planner’s clients?
Opinion: A lawyer employed as an agent of a financial planner may perform legal services for the planner’s client only when (a) the legal services offered by the lawyer to the client fall outside the scope of the lawyer’s employment responsibilities to the financial planner with respect to that client, (b) the lawyer establishes an independent attorney-client relationship with that person and (c) the lawyer complies with Rules 1.7(b) and 1.8(f) of the Utah Rules of Professional Conduct.
Issue No. 3: May a lawyer, who is also an insurance agent, take referrals from other insurance agents to do legal work for those agents’ customers under the circumstance where every agent has his own territory and the lawyer/insurance agent would be only doing the legal work referred to him and representing those clients on a consent basis between the client and the attorney?
Opinion: A lawyer is permitted to accept referrals from any source and enter into an attorney-client relationship with the referred individual.
Issue No. 1. The Utah Rules of Professional Conduct do not restrict a lawyer from freely advertising for insurance business. A lawyer may also advertise for legal business and perform legal work resulting from such advertising. The lawyer may also accept unsolicited legal employment from customers developed solely from insurance or other business-related advertising.2However, in-person solicitation of legal work from persons who are not legal clients is restricted.
Rule 7.3(a) provides: “A lawyer may not solicit, in-person, professional employment from a prospective client with whom the lawyer has no family or prior professional relationship, when a significant motive for the lawyer’s doing so is the lawyer’s pecuniary gain.” If “professional relationship” means lawyer-client relationship, Rule 7.3 operates to ban direct solicitation by a lawyer of his insurance customers.
The Michigan Standing Committee on Professional and Judicial Ethics, in ruling on a similar question, held that “professional relationship” as used in Rule 7.3 meant a lawyer-client relationship and prohibited such solicitation.3
Neither the original version of Rule 7.3 nor the earlier Model Code provisions of DR 2-103 and DR 2-104 suggested any exception to in-person solicitation based on the existence of a prior non-legal business relationship.4In fact, the American Bar Association has held that under DR 2-103 a lawyer/physician could not solicit a patient for legal work.5 (more…)
(Approved April 28, 1994)
Issues: May a law firm accept a court appointment to represent an indigent defendant in a re-trial of a criminal case in which an investigator who had been involved in the State’s investigation of the defendant and testified against the defendant at the first trial is now a full-time employee of the law firm?1
May a law firm represent other defendants in matters in which the investigator personally and substantially participated while employed with the State but in which the investigator will not be called as a State witness?
Opinion: A law firm must avoid representing a defendant in a case in which its investigator may be called as a State witness. In addition, in matters in which the investigator will not be a State witness, the law firm must screen the investigator from participation in any matter in which the investigator had substantial, personal involvement for the State.
Analysis: These issues require consideration of two fundamental principles of the client-lawyer relationship. The first is the duty of loyalty to the client. The second is the obligation to preserve a client’s secrets and confidences. The first of these principles prohibits a law firm from representing the defendant in the re-trial. The second requires the implementation of a procedure to screen the investigator from participation in matters related to his work for the State.
A. Lawyer’s Duty of Loyalty to the Client.
Rule 1.7 of the Utah Rules of Professional Conduct protects clients from conflicts between the lawyer’s loyalty to the client and the lawyer’s loyalty to others or the lawyer’s own self-interest. Specifically, it prohibits a lawyer from representing a client where “the representation of that client may be materially limited by the lawyer’s responsibilities . . . to a third person or by the lawyer’s own interest.” A lawyer’s loyalty is impermissibly impaired when the lawyer’s conflicting loyalties prevent the lawyer from considering, recommending or implementing an appropriate course of action for the client or when the conflict forecloses alternatives that would otherwise be available to the client.2In particular, a conflict exists where the lawyer’s interest in a witness impairs or limits the lawyer’s ability effectively to challenge the credibility of the witness.3
Rule 1.7 precludes a law firm from representing the defendant so long as the possibility exists that an investigator employed by the law firm will testify. In such a situation, the lawyer’s representation of the client may be materially limited by risk of harm to the office or the investigator from the impeachment the office’s own employee. Such impeachment could potentially reduce or eliminate the investigator’s effectiveness as an employee of the law firm. In addition, a substantial possibility would exist that the State might try to use the investigator’s current employment with the law firm to enhance the investigator’s credibility in a manner that the law firm could not effectively rebut without injury or embarrassment to the office or its employee. The law firm’s conflicting loyalties to the defendant, its employee and to itself prevent it from representing the defendant under Rule 1.7.4 (more…)
(Approved March 10, 1994)
Issue: The Office of the Utah Attorney General has requested an advisory opinion concerning whether the rules of imputed disqualification apply to that office when it is fulfilling its duty of representing all state agencies, some of which may be adverse to each other on certain issues.
Opinion: In these circumstances, the conflict of interest rules apply only on an attorney-specific basis, and conflicts in the Office of the Utah Attorney General should not be imputed to all attorneys in that office. Nevertheless, the conflicts rules must be fully satisfied on an individual lawyer basis, and the Attorney General must ensure that attorneys with conflict problems are removed and screened from the particular representation at issue.
Analysis: Typically, if one attorney in a firm or office has a conflict of interest, that conflict is imputed to all attorneys in that office.1For two main reasons, we conclude that Rule 1.10 of the Rules of Professional Conduct does not apply as broadly to lawyers working in the Office of the Utah Attorney General.
The Rules of Professional Conduct apparently make no explicit provision for imputed disqualification in this context. The comments to Rule 1.10 define “firm” as “lawyers in a private firm, and lawyers employed in the legal department of a corporation or other organization, or in a legal services organization.” This definition does not seem expressly to include or exclude lawyers in a governmental office such as the Utah Attorney General.2Therefore, we turn to a more general analysis.
First, there are constitutional as well as practical policy reasons for not applying the imputed disqualification rule to the Office of the Utah Attorney General. The Utah State Constitution gives the Attorney General the duty of representing the State.3Application of the imputed disqualification rule to the Attorney General could frustrate, if not completely preclude, the fulfillment of this constitutional mandate. Because of the large number of attorneys employed by the Attorney General, there could be numerous occasions where imputed disqualification would occur, requiring the retention of private counsel to represent the State. Additional expense to the taxpayer in these situations could be enormous.
Second, other ethics advisory committees facing a similar situation issue have reached the same basic conclusion.4Although some other jurisdictions have reached different results in arguably similar, but not identical contexts,5we believe our conclusion here is most appropriate for the circumstances in which this request for an opinion was raised. Nevertheless, the Office of the Attorney General may encounter conflicts so pervasive or severe that the only prudent course of action is to hire outside counsel. Such circumstances should be judged on a case-by-case basis.
Furthermore, the fact that Rule 1.10 does not apply to the Office of the Attorney General in these circumstances does not relax the independent application of Rules 1.7, 1.8, 1.9, and 1.11 to each lawyer in that office. Any lawyer or supervising lawyer in that office who cannot individually satisfy the requirements of those rules should not engage in the representation in question. Moreover, despite being free from the imputed disqualification rule in these circumstances, the Office of the Attorney General must adopt procedures to ensure that individual lawyers with conflict problems are sufficiently removed and screened from those matters so as not to compromise client confidences or any other purposes related to the representation as promoted by the Utah Rules of Professional Conduct. (more…)
(Approved January 27, 1994)
Issue: May a law firm’s nonlawyer office administrator be compensated solely on the basis of a percentage of the gross income of the firm?
Opinion: Under Rule of Professional Conduct 5.4(a)(3), a lawyer or law firm may include nonlawyer employees in a compensation or retirement plan, which may be based upon a percentage of the net or gross income of the firm, so long as compensation is not tied to receipt of particular fees. The nonlawyer’s employment, however, must still comport with Rule 5.4(d), which prevents the nonlawyer from owning an interest in or controlling the activities of a law practice.
Analysis: The well-established general rule is that a lawyer or law firm may not compensate a lay assistant or employee a percentage (split) of a particular fee or on a contingency basis.1
Prior to 1988, the Code of Professional Responsibility, based on the American Bar Association Model Code of Professional Responsibility, was in effect in Utah. Under former Disciplinary Rule 3-102(A)(3), it was improper for a lawyer or law firm to share legal fees with a nonlawyer, “except that . . . a lawyer or law firm may include nonlawyer employees in a retirement plan, even though the plan is based in whole or in part on a profit sharing arrangement.”2
Under this provision, it was improper to tie a nonlawyer employee’s compensation, as distinguished from retirement, to the profits of the firm.3 The rationale for this proscription was to avoid encouraging a nonlawyer to engage in the practice of law and to assure professional control over the representation of clients.4
In 1979, the ABA issued an opinion that expanded upon the rule. The ABA Committee on Ethics and Professional Responsibility considered the circumstances where a lay office administrator was generally in charge of all nonprofessional business matters within the firm, but had no professional responsibilities, participated in no decisions involving professional judgment, and did not determine or accept legal fees or participate in decisions concerning collection of fees. The ABA concluded that it would not be violative of Disciplinary Rule 3-102 to compensate the administrator on the basis of a fixed, predetermined annual salary plus “a percentage of the profits which might be 1/4 to 1/3 of the administrator’s total compensation.”5Such a compensation structure, the opinion stated, “would provide an incentive and reward for unique talents and dedicated services in achieving greater efficiency and productivity in the operation of the law firm.”
The ABA opinion noted that the source of payment for nonlawyer employees will be legal fees, recognized that nonlawyers may be included in retirement programs even though such plans are based in whole or in part on a profit sharing arrangement, recognized the development of professional business management within law firms, and noted the prevalence of fixed-salary-plus-incentive compensation programs in the business community as a whole:
In our view, the foregoing proposal does not constitute dividing legal fees with a nonlawyer under DR 3-102, because the compensation relates to the net profits and business performance of the firm and not to receipt of particular fees.6 (more…)
(Approved January 27, 1994)
Issue: May a currently practicing sole practitioner who formerly had associates or junior partners continue to use the firm name that includes the sole practitioner’s name followed by “& Associates”?
Opinion: A lawyer may not use “& Associates” as part of a firm name where no attorney associates are currently employed by that firm.
Analysis: Rule 7.5(a) of the Utah Rules of Professional Conduct provides, “A lawyer shall not use a firm name, letterhead, or other professional designation that violates Rule 7.1.” Rule 7.1 provides:
A lawyer shall not make a false or misleading communication about the lawyer or the lawyer’s services. A communication is false or misleading if it:
(a) Contains a material misrepresentation of fact or law, or omits a fact necessary to make the statement considered as a whole not materially misleading;
(b) Is likely to create an unjustified expectation about results the lawyer can achieve, or states or implies that the lawyer can achieve results by means that violate the Rules of Professional Conduct or other law; or
(c) Compares the lawyer’s services with other lawyers’ services, unless the comparison can be factually substantiated.
Also, Rule 7.5(a) provides that a lawyer in private practice may use a trade name that does not imply a connection with a government agency or with a public or charitable legal services organization and is not otherwise in violation of Rule 7.1. In addition, Rule 7.5(d) provides: “Lawyers may state or imply that they practice in a partnership or other organization only when that is the fact.”
A private firm may use a trade name such as the “ABC Legal Clinic.” A firm name that includes the name of a deceased partner is also considered a trade name and is permitted.1In some circumstances, “Doe & Associates” could also be considered a permissible trade name. However, there are limitations. It is, for example, misleading and improper to use the name of a living lawyer who is not presently or was not previously associated with the firm or a predecessor of the firm.
The official comment to Rule 7.5 also points out that lawyers sharing office facilities who are not actual partners may not denominate themselves as “Doe & Jones,” falsely suggesting a partnership in the practice of law. Likewise, a sole practitioner who uses the name “Doe & Associates” implies that attorneys other than Doe are in practice in the firm. This would be misleading to the public as a “material misrepresentation of fact” under Rule 7.1(a) and, therefore, would be in violation of Rule 7.5.
Could the term “associates” in a firm name refer to support staff employed by the sole practitioner? No. Under Rule 7.5, the term “associates” in a firm name is limited to lawyer employees and not nonprofessional staff that the firm may employ.
Other jurisdictions that have considered this issue have uniformly disapproved its use. The District of Columbia Bar Association allows use of a firm name “John Doe and Associates” only if the firm normally employs two or more associates.2Similarly, Florida, Philadelphia and Washington (state) have barred the use of the term “Associates” in a firm name in the case of a sole practitioner’s practice.3 (more…)
(Approved July 29, 1993)
Issue:Can an advance payment made by a client ever be characterized as a “fixed fee” or “nonrefundable retainer”, which would be earned by the attorney when received and therefore not deposited into a trust account?
Opinion: Fixed-fee contracts (nonrefundable retainers) are not prohibited by Rule 1.5 of the Rules of Professional Conduct. Under appropriate conditions, a nonrefundable retainer may be considered earned when paid and, therefore, may be deposited into the attorney’s operating account rather than his trust account. However, a nonrefundable retainer is, like any other type of fee, subject to the standard of Rule 1.5 that an attorney “shall not enter into an agreement for, charge or collect an illegal or clearly excessive fee.” As a result, although considered earned on payment, a nonrefundable retainer may be subject to disgorgement if it is clearly excessive under Rule 1.5. Furthermore, a fixed fee should be clearly set out in a written fee agreement that clearly informs the client of what circumstances would entitle him to a disgorgement of all or part of the “nonrefundable” retainer.
Analysis: Rules of Professional Conduct 1.5 provides: “a lawyer shall not enter into an agreement for, charge or collect an illegal or clearly excessive fee.” A fee is “clearly excessive” if a lawyer of ordinary prudence, after reviewing all of the facts, would be left with a definite and firm conviction that the fee is not reasonable. Rule 1.5 sets out several factors for determining whether the fee is reasonable. The only specific types of fees expressly prohibited by Rule 1.5 are contingent fees in divorce and criminal defense cases.1
Since a nonrefundable retainer is not specifically prohibited under Rule 1.5(d), the question is whether nonrefundable retainers should be considered per se unreasonable fees under the rule. The only apparent authority for a per se prohibition is In re: Cooperman,2a recent New York case. The Second Judicial Department of the Appellate Division of the New York Supreme Court held that nonrefundable retainers create a chilling effect on a client’s right to discharge his attorney at any time with or without cause. The court also based its decision on its opinion that the term “nonrefundable” was “imbued with an absoluteness which conflicts with DR 2-110(A)(3),3which provides that a lawyer who withdraws from employment shall refund promptly any part of a fee paid in advance that has not been earned.”
The decision in Cooperman conflicts with several other court and bar association opinions, including the opinion of the First Judicial Department of the same New York court in Jacobson v. Sassower.4In Jacobson, the court held that whether a nonrefundable retainer has a chilling effect on a client’s right freely to discharge his attorney depends on a “full exploration of all the facts and circumstances of the particular case, including the intent of the parties and whether the fee demanded is out of proportion to the value of the attorney’s services.” Other courts have also reviewed such fees in terms of whether the total fee was reasonable and not whether any portion of it is nonrefundable.5 (more…)
(Approved September 23, 1993)
Issue: In a contingent-fee case, what are the ethical considerations for a judgment-creditor’s attorney where the judgment-debtor agrees to name the judgment-creditor as the beneficiary of an insurance policy on the life of the judgment-debtor in order to satisfy the judgment?
Opinion: With proper written disclosure by the attorney of the terms, conditions and obligations of the participants, there is no ethical proscription of this type of arrangement.
Factual Background. The plaintiff retained the attorney on a contingent-fee basis. The plaintiff’s attorney obtained a judgment which, with interest, is worth approximately $40,000. The defendant, who is also represented by counsel, cannot pay the amount of the judgment.
The parties, through their counsel, have negotiated a method through which the judgment creditor could recover $25,000 of the judgment through a term life insurance policy on the life of the judgment-debtor. The judgment-debtor has agreed to purchase, in satisfaction of the judgment, a six-year term life insurance policy for $3,000.1The judgment-creditor will own the policy and be its beneficiary.
Upon expiration of the term of the policy, the judgment-creditor may extend the term by paying additional premiums. In addition, the judgment-creditor’s attorney may pay a portion of those premiums based on the attorney’s interest in the proceeds of the policy.2
1. May the attorney assist in a transaction where a judgment-debtor satisfies a judgment by purchasing, on his own life, a term life insurance policy naming the judgment-creditor as owner and beneficiary?
2. May the attorney assist in such a transaction if the judgment-creditor may pay the premiums upon the expiration of the initial term?
3. Does the contingent-fee arrangement create a conflict of interest that bars the attorney from assisting the judgment-creditor in the transaction.
Whether the attorney may properly assist the judgment-creditor in this transaction depends on two considerations. The first is whether the Utah Rules of Professional Conduct prohibit assistance in a transaction where the proceeds of a life insurance policy on the judgment-debtor funds payment of a judgment and where the policy premiums, at least in part, are paid by the judgment-creditor. If the Rules do not prohibit such assistance, the second consideration is whether the Rules prohibit the attorney’s assistance when the attorney has an interest in the life insurance proceeds because of a contingent-fee contract with the judgment-creditor. Each of these considerations is discussed below.
Rule 1.2(c) of the Rules of Professional Conduct prohibits an attorney from counseling or assisting a client in any conduct that the attorney knows is criminal or fraudulent. Because the facts do not suggest anything fraudulent or criminal in this transaction, Rule 1.2(c) would not prohibit the attorney from advising his client on this matter.3
The question, however, remains whether the rules prohibit the attorney from advising a judgment-creditor in connection with such a transaction when the attorney has a contingent-fee arrangement with the judgment-creditor. The resolution of this issue turns on whether the contingent-fee arrangement creates a conflict of interest between the judgment-creditor and the attorney.
Rule 1.7 identifies situations in which conflicts of interest prevent an attorney from accepting or continuing to represent a client. Rule 7.1(b) precludes an attorney from representing a client if the lawyer’s own interest materially limits his representation of the client, unless (1) “the lawyer reasonably believes the representation will not be adversely affected”;4 and (2) the client consents after consultation. The purpose of this rule is to insure that the lawyer’s own interests do not adversely affect the advice given to the client and that the client is informed of any potential risk. (more…)
(Approved August 26, 1993)
Issues: May an attorney who is leaving a law firm take, either to another law firm or to solo practice, the files and clients generated while the attorney was an employee or member of the law firm?
What duties does the departing attorney owe the law firm with respect to fees paid to the attorney by these clients for services performed subsequent to the attorney’s departure from the firm?
Opinion: When an attorney who is an employee or member of a law firm leaves the firm, he may take with him a client and the relevant legal files generated while at the firm, but only with the prior authorization of the client.
The departing lawyer has no duty to the departed law firm with respect to fees for services rendered after the withdrawal from the firm, unless the departing lawyer and his law firm have agreed otherwise. Any such fee arrangement must comply with Rules of Professional Conduct 1.5 and 5.6 and should not effectively deny the client a choice of counsel.
Factual Background: Attorney voluntarily leaves Law Firm where Attorney is a shareholder. On departure Attorney takes client files relating to the trust and probate matters Attorney has worked on while employed by Law Firm. Attorney’s name, but not that of Law Firm, appears in several prominent places on the wills, trusts and related documents contained in these files. The clients paid the fees generated by the preparation of these documents directly to Law Firm and not to Attorney. In many cases, the principal financial reward in a trust and probate practice is not in preparing the wills and trusts, but when the wills are probated or the trusts mature, which may occur long after execution of the original documents.
I. Client Representation and Files
It is the client, and not the departing or remaining lawyers, who determines who will be its counsel and who may keep the files. If the client wishes to terminate the law firm as its legal counsel on such files and retain the departing attorney, the client is free to do so. Rule 1.14(a)(3) mandates the law firm’s withdrawal from representation if discharged by the client.1
Because it is the client who has the authority to choose counsel, an agreement between a departing lawyer and the former firm as to the future representation of a client, absent the client’s agreement, is void and unenforceable.2Wolfram, in his book Modern Legal Ethics, has perhaps best articulated this concept, stating: “Attempting to resolve the issue by referring to clients as ‘files’ and debating which client each lawyer ‘owns,’ or to which lawyer a client ‘belongs,’ obscures and distorts the client-lawyer relationship. The compelling fact is that the client-lawyer relationship is personal; clients should accordingly have a first choice of counsel.”3
Under the facts of this inquiry, the law firm has a duty to preserve the clients’ wills and trusts until directed by the clients to deliver the files to the departing attorney.4Upon direction by the client, the law firm has a duty to surrender the papers to which the client is entitled to the departing lawyer,5unless the law firm is owed fees on such files, and applicable law accords the law firm a retaining lien.6The papers to which the client is entitled would clearly include the original wills and trusts, other documents executed by the client and such other portions of the client’s file necessary to interpret or understand such documents.7During the period of time before receiving the client’s direction as to who will handle a file after a lawyer’s departure, neither a law firm nor the departing lawyer should deny the other access to information about the matter that is necessary to protect the client’s interests.8 (more…)
(Approved May 20, 1993)
Issue: May a Utah lawyer include on his letterhead the name of a non-lawyer employee with an indication that he is a certified public accountant (CPA)?
Opinion: An employee non-lawyer, such as a CPA, may be listed on the letterhead of a solo practitioner, partnership or firm so long as the designation is not false or misleading and contains a clear indication of the non-lawyer’s status.1
Discussion: The Rules of Professional Conduct do not specifically address this issue. Rule 7.5 regarding firm names and letterheads states in pertinent part: “A lawyer shall not use the firm name, letterhead or other professional designation that violates Rule 7.1.”
Rule 7.1 addresses the issue of communications concerning a lawyer’s services and states as follows:
A lawyer shall not make a false or misleading communication about the lawyer or the lawyer services. A communication is false or misleading if it:
(a) contains a material misrepresentation of fact or law, or omits a fact necessary to make the statement considered as a whole not materially misleading;
(b) is likely to create an unjustified expectation about results the lawyer can achieve, or states or implies that the lawyer can achieve results by means that violate the Rules of Professional Conduct or other law; or
(c) compares the lawyer’s services with other lawyer’s services, unless the comparison can be factually substantiated.
The comment to Rule 7.1 states in part, “Whatever means are used to make known a lawyer’s services, statements about them should be truthful.” This is the sine qua non regarding communications, whatever the medium, between lawyers and their clients or the public in general.
With regard to a related question, this Committee previously issued Opinion No. 108 on the subject of whether a Utah lawyer who is also a certified public accountant may include the CPA designation on his professional law office letterhead. The Committee in that instance concluded that such a practice would be permissible, stating as follows:
Although formerly there were proscriptions of this practice, these constraints have largely been rendered invalid by the development of permissible attorney advertising under the First Amendment analysis of Bates v. State Bar of Arizona [433 U.S. 350 (1977)] and other cases [citing Shapero v. Kentucky Bar Ass’n, 486 U.S. 466 (1988)] and by adoption of the current Rules of Professional Conduct for Lawyers.
Opinion No. 108 compared the current rules with superseded disciplinary Rule 2-101(e), which forbade such a practice and stressed that “the foundational guideline is: `a lawyer shall not make a false or misleading communication about the lawyer or the lawyer’s services’,” citing Rule 7.1.
The primary distinction between the subject of Opinion No. 108 and this opinion is that the request in No. 108 was with respect to “public dissemination of information concerning . . . the kind of services a lawyer will undertake.”2 In this case, the request does not indicate that the lawyer has any expertise whatsoever in accounting, but only wishes to include the name and designation as a CPA of another individual on his letterhead.
As observed in the ABA/BNA Lawyers Manual in Profession Conduct No. 80, “[Q]uestions about the propriety of listing non-lawyer employees on letterheads have often been resolved by allowing the listing so long as it is not false or misleading, and clearly reflects the non-lawyer’s status with the firm.”3 (more…)
(Approved March 11, 1993)
Issues: The U.S. Supreme Court found that, in Nevada, a portion of Rule 3.6 of the Rules of Professional Conduct concerning trial publicity is void for vagueness. Does this result have any effect on the viability of Utah’s Rule of Professional Conduct 4.4, which proscribes certain lawyer communications and actions with respect to third persons?
Conclusion: No judicial decision applicable to Utah has addressed Rule 4.4 under a U. S. Constitutional analysis analogous to the U. S. Supreme Court’s decision in Gentile v. State Bar of Nevada.1 Accordingly, Utah attorneys remain bound by the ethical requirements of Rule 4.4. This Committee takes no position on the merits of a future challenge to Rule 4.4 that might be mounted on constitutional grounds or any other legal theory.
Discussion: This opinion arises out of a case that involved the actions of a plaintiff’s lawyer who disseminated copies of a civil complaint to a newspaper in the city where defendant was employed by a professional sports team. The distribution of the complaint was apparently made contemporaneously with its filing in a Utah court and prior to its service on defendant’s counsel.
Complaints were lodged with the Utah State Bar by defendant’s lawyer and by defendant’s employer and were referred to the Committee on Ethics and Discipline.2 The Defendant’s lawyer’s complaint was founded on an alleged violation of Rule 4.4 of the Utah Rules of Professional Conduct, which reads:
Respect for Rights of Third Persons
In representing a client, a lawyer shall not use means that have no substantial purpose other than to embarrass, delay, or burden a third person, or use methods of obtaining evidence that violate the legal rights of such a person.
The Ethics and Discipline Committee summarily dismissed the complaint on motions filed by the respondent attorney and the Office of Bar Counsel. There was no ruling on the merits of the complaints, and there was no recommendation to the Utah Board of Bar Commissioners for further action.
Subsequently, this Committee was asked to address the current status of Rule 4.4. The request was founded on the conjecture that the Gentile case’s analysis of Rule 3.6, dealing with pre-trial publicity,3 may have a direct application to Rule 4.4.
A brief summary of Gentile is helpful in resolving this issue. In 1989, an attorney representing a defendant in a criminal case in Nevada conducted a press conference in response to the issuance of an indictment charging his client with certain crimes. At the press conference he made a prepared statement and answered questions. He was found by the Nevada Bar (as affirmed by the Nevada Supreme Court) to have violated Nevada Rules of Professional Conduct 3.6, which is identical to Utah’s rule. On review, the U. S. Supreme Court found Rule 3.6 to be void for vagueness and that the attorney had not engaged in unethical conduct.
To the extent that Utah’s Rule 3.6 is identical to the Nevada rule that the Supreme Court analyzed, one could conclude that Utah lawyers are subject to the same interpretation of acceptable behavior under Rule 3.6 as found by the Supreme Court in Gentile. However, there is no direct connection between Rules 3.6 and 4.4 that would justify the inference that Rule 4.4 has constitutional deficiencies or any other facial legal shortcoming. Therefore, it is beyond the scope of this Committee to extrapolate the Gentile result to Rule 4.4. (more…)
(Approved April 28, 1994)
Issues: May a lawyer make in-person solicitations of persons to join the lawyer in forming a citizens’ group that will be the nominal plaintiff in litigation, if the members of the citizens’ group will be requested to contribute funds for the payment of legal fees and the lawyer intends to serve as legal counsel for the citizens’ group in the litigation?
Does the lawyer, who has a personal interest in the outcome of the litigation, have an actual or potential conflict of interest in representing the citizens’ group.
Opinion: If a significant motive for the lawyer’s solicitation of members to the citizens’ group is the lawyer’s own pecuniary gain, the lawyer’s conduct would violate Rule 7.3(a) of the Utah Rules of Professional Conduct. However, if the citizens’ group is a bona fide association of persons commonly interested in the assertion of legal rights and is not a sham association formed by the lawyer to avoid the solicitation rules or an association so controlled or dominated by the lawyer that it was the alter ego of the lawyer, the lawyer’s solicitation of members to the group would be an associational activity protected by the First and Fourteenth Amendments of the United States Constitution and could not be proscribed by Rule 7.3(a).
The lawyer’s personal interest in the outcome of the litigation may materially limit the ability to adequately represent the group and its members. Additionally, the lawyer’s representation of multiple parties in the same matter may give rise to a conflict of interest. If such potentials for conflict of interest are present, the lawyer may only undertake the representation if permitted by Rule 1.7(b) of the Utah Rules of Professional Conduct after obtaining the informed consent to the representation from each member of the group.
Factual Background: An attorney was opposed to certain commercial development in the community where the attorney resided. When the planning commission approved the development, the attorney appeared pro se to appeal personally the decision to the appropriate administrative authority.
The attorney’s administrative appeal was denied. The attorney announced the intent to form a citizens’ group and to become the nominal plaintiff in an action to set aside the administrative determinations and to enjoin the development. The attorney made in-person solicitations of persons opposed to the development to join the citizens’ group and to contribute funds to pay for legal fees. The attorney informed the persons solicited to join the group that the attorney intended to act as the group’s lawyer and to be compensated for the legal services.
Whether a lawyer may ethically engage in in-person solicitation of persons to join a citizens’ group under these circumstances requires a two-step analysis: (1) whether the conduct violates Rule 7.3(a) of the Utah Rules of Professional Conduct; and (2) whether the solicitation is protected by the First and Fourteenth Amendments of the United States Constitution.
Rule 7.3(a) prohibits in-person1 solicitation of professional employment from a perspective client with whom the lawyer has no family or prior professional relationship, when a significant motive for the lawyer’s doing so is the lawyer’s own pecuniary gain.2 It is assumed for the purposes of this analysis that: (1) the citizens’ group is an informal unincorporated group;3 and (2) the persons solicited to the group included persons with whom the lawyer had no family or prior professional relationship.4 (more…)
(Approved January 27, 1994)
Issue: Under what circumstances may a city attorney represent criminal defendants?
Opinion: A city attorney with prosecutorial functions may not represent a criminal defense client in any jurisdiction. A city attorney with no prosecutorial functions, who has been appointed as city attorney pursuant to statute, may not represent a criminal defense client in that city, but may represent a criminal defense client in other jurisdictions, provided that Rule 1.7(a) of the Utah Rules of Professional Conduct is satisfied. An attorney with no prosecutorial functions, who is retained by a city on a contract or retainer basis, may represent a criminal defense client in any jurisdiction, provided that Rule 1.7(a) is satisfied. An attorney who is a partner or associate of a city attorney may not represent a criminal defense client in any situation where the city attorney is so prohibited.
Analysis: Several previous Utah ethics opinions have tackled the question of when it is appropriate for a city attorney to represent criminal defendants.1 These opinions have been attempts by the Utah State Bar, under the previous Code of Professional Responsibility, to balance the inherent conflict between a city attorney’s representation of a criminal defendant and the needs of the smaller cities in less populated areas.
This Committee has been specifically asked to reconcile the perceived contradiction between Opinion Nos. 6 and 73. In the context of that review, the Committee has determined to review all previous opinions dealing with this issue, as listed above, and to issue an opinion consolidating and revising the holdings of these previous opinions as appropriate.
January 13, 1972
A city attorney whose position includes prosecutions may not defend those charged with misdemeanors and criminal offenses in other jurisdictions unless he is assigned to do so by the court
July 7, 1972
Municipal attorneys in sparsely populated areas of Utah may represent criminal defendants in other municipalities.
May 11, 1976
It is improper for members of a law firm to represent criminal defendants in municipal court where the law firm acts as a special city attorney.
December 22, 1977
A part-time city attorney may not represent defendants charged with violations of city ordinances, but he may represent private clients against non-city clients.
July 28, 1978
A Salt Lake County municipal attorney may not represent criminal defendants in other jurisdictions.
February 11, 1980
A municipal prosecutor may not represent criminal defendants in the same circuit court district, even if the defense is conducted in a different division of that court.
Analytic Foundation. The representation of a criminal defendant by an attorney who also represents a city creates a conflict of interest of the type identified in Utah Rules of Professional Conduct 1.7(a): “representation of [a] client [that is] directly adverse to another client.” A criminal defendant’s interests are, almost by definition, adverse to the interests of the sovereign and the political subdivisions to which the sovereign has delegated law-enforcement authority-e.g., cities, towns and counties. Accordingly, Rule 1.7(a) provides the applicable standard in the analysis of city-attorney-as-defense-counsel conflict issues.2
In general, Rule 1.7 conflicts may be overcome if two conditions are met: (1) the attorney reasonably believes that the representation of each client will not be adversely affected, and (2) each client consents.3 This opinion will focus on the first of these requirements, finding that, in some situations, an attorney could not “reasonably believe” that the dual representation would not be “adversely affected.” In such cases, it is irrelevant whether the clients’ consent could be obtained; the representation is not permitted. (more…)
(Approved October 28, 1994)
Issue: May an elected county attorney share and rent office space to another attorney who may represent interests adverse to the county?
Opinion: The Utah Rules of Professional Conduct do not prohibit one attorney from renting office space to another, provided that the arrangement does not create a conflict of interest prohibited by the Rules, does not jeopardize confidential client information, does not mislead clients about the relationship between the attorneys, and is otherwise consistent with the Rules.
Analysis: A county attorney maintains a private office in a different city from the main county offices. The office is used for county business and for a small private law practice of the county attorney. The attorney shares the office with another attorney, in exchange for rent and building maintenance. The two attorneys have separate signs and letterhead, separate client files (not accessible to the other attorney), and separate billing practices. The two attorneys do, however, share a secretary, common space, and telephone services. The renting attorney does not perform criminal defense work, but does represent a city within the county and other clients who may have interests in conflict with the interests of the county.
Under the Utah Rules of Professional Conduct, if a lawyer is prohibited from undertaking representation because of a current conflict of interest, other lawyers associated in a firm with that lawyer are also prohibited from undertaking the representation.1 The county attorney is prohibited from representing private clients with interests adverse to the county.2 Thus, if the lawyers were “associated in a firm” by virtue of the rental agreement, the disqualification of the county attorney would be imputed to the renting attorney.
The Comment to Rule 1.10 indicates that lawyers who share office space ordinarily are not regarded as constituting a firm simply as a result of the sharing arrangement. The inquiry is fact-specific, however, and if the details of the sharing arrangement indicate that the two lawyers are acting as a firm, they will be regarded as a firm for purposes of the conflicts rules.3 For example, if the lawyers in any way present themselves to the public as a firm, they will be regarded as a firm under the conflict rules.
The comment to Rule 1.10 also indicates that lawyers sharing office space may be regarded as a firm if they have mutual access to confidential information. The lawyers in this situation describe themselves as maintaining separate files, with separate access to those files. However, they share common secretarial and telephone services, and the county attorney uses the office for county business. Several state bar associations have concluded that shared secretarial services present an unacceptable risk to confidential information when attorneys represent clients with adverse interests.4 Other jurisdictions either strongly advise against shared secretarial services5 or require the attorneys involved to institute procedures to ensure that the secretary will not divulge clients’ secrets.6
At a minimum, therefore, there is agreement among all bar opinions considering the question that the rental arrangement described by the two attorneys must include mechanisms to insure that the shared secretary does not divulge confidential information, or the attorneys will be regarded as a firm for purposes of the disqualification rules. Although it is not a per se violation of the Rules of Professional Conduct, the Committee finds it difficult to see how it would be possible for shared secretarial arrangements not to put confidential information at risk. We, therefore, strongly caution attorneys who represent clients with conflicting interests not to share a secretary with respect to the representations. (more…)