Ethics Advisory Opinion No. 96-05

(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.
Footnotes
1.In re Interest on Lawyers’ Trust Accounts, 672 P.2d 406, 407 (Utah 1983). See also Utah Rules of Professional Conduct 1.15(b) [renumbered from 1.13(b) in 1995].
2.672 P.2d 406 (Utah 1983).
3.See, e.g ., Utah Ethics Advisory Op. No. 64 (1979).

EAOC 151 – 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 f

(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.
Footnotes
1.The question originally posed to the Committee described the more specific fact situation where the insurance company appoints one “independent” appraiser, the insured selects another “independent” appraiser and the two party-selected appraisers select an “umpire” to ascertain the value of loss suffered by the insured. this opinion does not turn on the existence of a three-person appraisal panel; it applies generally to situations where the attorney is called upon to perform appraisal services of the type described in the opinion.
2.The Rules of Professional Conduct would apply to the lawyer’s performance of legal services for the insurance company on the unrelated matters. the lawyer should consider whether the lawyer’s responsibilities as an “independent” appraiser under the insurance policy would materially limit the representation of the insurance company on the unrelated matters. See Utah Rules of Professional Conduct 1.7(b).
3.The lawyer might not qualify as an “independent” appraiser, as this term is used in the specific insurance policy that accompanied the original request to the Commitee, due to the lawyer’s client-lawyer relationship with the insurance company on the unrelated matters. This issue would be governed by substantive law and is beyond the scope of this opinion.
4.It is beyond the scope of this opinion to identify the particular Rules of Professional Conduct that may be at issue under these circumstances. However, as an example of how the Rules may be implicated, if the insured might reasonably believe that a client-lawyer relationship exists between the insurance company and the lawyer for the appraisal services, any of Rules 4.1, 4.2, 4.3 or 4.4 may govern the lawyer’s transactions with the insured.
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Ethics Advisory Opinion No. 146a

(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.
Analysis:
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
The exceptions found in the Model Code allowed for the lawyer to accept employment from close friends, relatives, former clients, and those whom the lawyer reasonably believes to be clients.6
The official commentary to Rule 7.3 does not suggest that the rule is any more expansive than its predecessor. In fact, Rule 7.3 in this regard may be more restrictive than its predecessor, as it does not allow direct solicitation of close friends. The context of Rule 7.3 deals with lawyer-client relationship and does not easily lend itself to interpreting “professional relationship” to mean any type of business relationship. The Committee has not found any state that has so interpreted or defined the term “professional relationship.”
Therefore, a lawyer may not solicit legal employment from insurance or investment customers developed through advertising and solicitation relating only to insurance and investment products.7
If a lawyer may not solicit legal business from non-legal-client insurance customers, may he then solicit insurance business from the clients of his law practice? Rule 1.8(a) addresses such business interests and provides, in relevant part, that “A lawyer shall not enter into a business transaction with a client . . . unless . . . (2) The client is given a reasonable opportunity to seek the advice of independent counsel in the transaction; and (3) The client consents in writing thereto.” Nothing in the Rules prohibits a lawyer from soliciting insurance business from clients who respond to his marketing efforts for his law practice, so long as he complies with Rule 1.8.
Michigan has held that, subject to the disclaimer and consent required in Rule 1.8, selling insurance products to existing clients is permitted.8However, the New York State Bar Association in a 1991 opinion held under its version of the Model Code that the opportunity for overreaching or conflict of interest by the lawyer is so great in this circumstance that no meaningful consent by the client can be given.9Nonetheless, we believe the less restrictive interpretation of the Model Rules by Michigan is the appropriate determination of this issue.
We emphasize again that, once a lawyer-client relationship is created, the lawyer is subject to the requirements of disclosure and consent under Rule 1.8(a) when attempting to sell insurance products to his law clients. A lawyer who sells insurance products to his clients must be sensitive to potential conflicts that can arise, for example, when the client cancels his insurance, or when a dispute arises between the insurer and the client/insured. The lawyer will assume a substantial burden of showing that his legal advice (or omission of advice) was free from any bias or conflict of interest created by the dual capacities in which the lawyer acted.10
Also, if both an insurance and law practice are operated from the same office, the lawyer must protect the legal client confidences. In circumstances where separated operations of the legal and non-legal businesses are not maintained, the Rules of Professional Conduct may apply to the ancillary business.11
Issue No. 2: May an attorney who is an employee of a financial planner perform legal services for the planner’s clients?
This question raises several concerns. As a threshold matter, the lawyer may not form a relationship with or otherwise assist in the unauthorized practice of law.12Rule 5.4(b) provides: “A lawyer shall not form a partnership with a nonlawyer if any of the activities of the partnership consist of the practice of law.” Similarly, Rule 5.5(b) specifies: “A lawyer shall not . . . [a]ssist any person in the performance of activity that constitutes the unauthorized practice of law.” To the extent the financial planner offers services that constitute the practice of law, the lawyer would be prohibited from participating with a nonlawyer in such a activities.13This opinion assumes that the financial planner’s services, taken alone, do not constitute the practice of law.
Beyond the unauthorized practice considerations, the primary concern involves the role of the lawyer as an employee of the financial planner. If the lawyer is to represent someone besides the financial planner, the lawyer must exercise independent professional judgment on behalf of that client.14However, as an employee of the financial planner, the lawyer also owes a duty to, and is under the supervision of, the employer. Clearly, the lawyer’s exercise of independent professional judgment on behalf of the private client must not be hampered by or subject to interference from the financial planner as the lawyer’s employer.15
Concerning the legal matters related to the services provided by a financial planner, the client of a lawyer who serves as in-house counsel to the financial planner would, of course, be the financial planner-not the planner’s client. An in-house counsel or other attorney who undertakes to provide legal services to a client of the attorney’s employer must render those services strictly outside of the employer’s services to be provided to that person. In determining whether to undertake any representation, the lawyer would also be bound by the provisions of Rule 1.716and Rule 1.917to determine whether a conflict exists between the lawyer’s employer and any potential or former client.
Furthermore, if the financial planner intends to pay for the legal services to be rendered to the planner’s client, Rule 1.8(f), Conflict of Interest, Prohibited Transactions, must also be carefully considered: “A lawyer shall not accept compensation for representing a client from one other than the client unless: . . . [t]here is no interference with the lawyer’s independence of professional judgment or with the client-lawyer relationship.” A lawyer paid from a source other than the client may render legal services to that client only if a separate lawyer-client relationship is established and if the client is informed and consents to the arrangement.
Whether a lawyer may ethically render legal services to a client of the lawyer’s employer ultimately depends on whether those legal services fall within the scope of the lawyer’s employer-assigned duties that are related to the planner’s services for the client. This is true irrespective of who actually pays for the legal services. Were the scope of the lawyer’s employment with the financial planner to include the performance of legal services to the planner’s client, the independent professional judgment of the lawyer would be impermissibly compromised. In such a situation, the lawyer’s professional judgment could be affected by his own pecuniary interests or those of his employer.18Generally, a “lawyer’s own interest should not be permitted to have an adverse effect on representation of a client.”19
In acting as an employee or agent, the lawyer’s principal client is the planner who gives the lawyer his work and supervises his conduct. The lawyer’s motivation to generate revenue for the planner through the preparation of wills, trusts and other documents on behalf of the planner would not necessarily be consistent with the best interests of the financial planner’s client. In order that the lawyer’s independent professional judgment will not be compromised either by the duties undertaken for the employer or by the method of compensation, the attorney’s services to the financial planner’s client must not be required by the attorney’s employment relationship with the financial planner.20The lawyer must also comply with Rule 1.7(b) of the Utah Rules of Professional Conduct and obtain the consent to representation of the financial planner and the potential client, after full disclosure of the possibilities of limitations upon the representation arising from the employment relationship.
Finally, the lawyer who seeks to represent a planner’s client would be required to establish a meaningful attorney-client relationship with that client before providing legal services. In estate planning, for example, the needs of the client may be unclear-the same client may be a grantor, beneficiary and a fiduciary.21
To explore the options and protect the rights of and explain the responsibilities of the client, the lawyer must have a meaningful relationship with the client. To do so, the attorney must establish an attorney-client relationship by meeting directly with and performing legal services directly for the client. This can only be done in the context of those legal services that are not required of the attorney by the attorney’s employment relationship with the financial planner.
Thus, a lawyer who enters into an employment relationship with a nonlawyer to provide estate-planning or similar services and represents or purports to represent the planner’s client within the scope of services to be provided by the planner cannot maintain the requisite professional independence to the planner’s client. Only where the lawyer has formed a lawyer-client relationship with the planner’s client to perform legal services not required of the lawyer by the lawyer’s employment responsibilities to the financial planner may the lawyer undertake to represent the client. The lawyer must, however, fully comply 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 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?
No disclosure is necessary where such referrals are made in-house. It would be prudent, however, for the insurance agent to advise the client being referred that he also works for the insurance company as an agent. Obviously, should any conflict arise under Rules 1.7, 1.8 or 1.9 relating to conflicts of interest, the lawyer would be bound by those rules.
Thus, a lawyer is permitted to accept referrals from any source and enter into an attorney-client relationship with the referred individual.
Footnotes
1.Opinion No. 146 was issued on July 29, 1994. Upon further consideration of the opinion, the Committee, sua sponte, determined that the treatment of the analysis and conclusion of Issue No. 2 (“May an attorney who is an employee of a financial planner perform legal services for the planner’s clients?”) was not a model of clarity and could be read as not internally consistent. After reconsidering the matter, the Committee has revised the conclusion and analysis of Issue No. 2 and designated the revised opinion as Opinion No. 146A. Accordingly, this revised opinion replaces and supersedes Opinion No. 146.
2.Ill. Bar Ass’n Comm. on Professional Ethics, Op. No. 90-32 (May 15, 1991), ABA/BNA Lawyers’ Manual on Professional Conduct 1001:3005.
3.”Taking the Rule and commentary as a whole, however, it appears the term ‘professional relationship’ is intended to connote the lawyer-client relationship, and not a mere business relationship. Thus, unless the lawyer had a prior or current lawyer-client relationship with the insurance customer, the lawyer may not offer legal services to the insurance customer in person or by phone.” Mich. Standing Comm. on Professional and Judicial Ethics, Op. No. RI-135 (May 28, 1992), ABA/BNA Lawyers’ Manual on Professional Conduct 1001:4763.
4.DR 2-104(A) provided that a “lawyer who has given in-person unsolicited advice to a lay person that he should obtain counsel or take legal action, shall not accept employment resulting from that advice . . . .”
5.ABA Informal Op., No. 83-1497 (March 1, 1983), ABA/BNA Lawyers’ Manual on Professional Conduct 801:344.
6.Model Code of Professional Responsibility DR 2-104(A)(1).
7.Accord, Ill. Bar Ass’n Comm. on Professional Ethics, Op. No. 90-32 (May 15, 1991), ABA/BNA Lawyers’ Manual on Professional Conduct 1001:3005.
8. Mich. Ethics Op. No. RI-135, supra, note 3.
9.N.Y. State Bar Ass’n, Ethics Op. No. 619 (March 14, 1991), ABA/BNA Lawyers’ Manual on Professional Conduct 1001:6101.
10.See ABA Informal Op. No. 82-1482, ABA/BNA Lawyers’ Manual on Professional Conduct 801:329.
11.See Utah Ethics Advisory Op. No. 30 (Oct. 14, 1976), Utah Ethics Advisory Op. No. 17 (Nov. 28, 1973), and Utah Ethics Advisory Op. No. 5 (Jan. 13, 1972). In addition, the American Bar Association has proposed Model Rule 5.7, “Responsibilities Regarding Law Related Services,” which sets forth circumstances under which a lawyer may be subject to the Rules of Professional Conduct with respect to the provision of law-related services. Proposed Model Rule 5.7 is consistent with Utah Op. Nos. 5, 17 and 30 and ABA Formal Op. No. 328 (June 1972).
12.Utah Rules of Professional Conduct 5.4(b) & 5.5(b).
13.See also ABA Informal Op. No. 82-1482, ABA/BNA Lawyer’s Manual on Professional Conduct 801:329. Further, if the “financial planner” is a corporation, it is precluded from providing services of its in-house attorney to the planner’s client. Utah Code Ann. § 78-51-40 (1992).
14.”In representing a client, a lawyer shall exercise independent professional judgment and render candid legal advice.” Utah Rules of Professional Conduct 2.1.
15.Utah Rules of Professional Conduct 1.7(b). See also Rule 1.7 cmt., Loyalty to a Client: “Loyalty to a client is also impaired when a lawyer cannot consider, recommend or carry out an appropriate course of action for the client because of the lawyer’s other responsibilities or interests.”
16.A lawyer shall not represent a client if the representation of that client may be materially limited by the lawyer’s responsibilities to another client or to a third person or by the lawyer’s own interest, unless: (1) The lawyer reasonably believes the representation will not adversely affect the relationship with the other client; and (2) Each client consents after consultation.
Rule 1.7, Conflict of Interest, General Rule.
17.Rule 1.9 deals with former clients.
18.See N.Y. State Bar Ass’n Ethics Op. No. 536 (June 30, 1981), ABA/BNA Lawyers’ Manual on Professional Conduct 801:6105.
19.Rule 1.7, cmt. The comment goes on to explain:
For example, a lawyer’s need for income should not lead the lawyer to undertake matters that cannot be handled competently and at a reasonable fee. See Rules 1.1 and 1.5. If the priority of a lawyer’s own conduct in a transaction is in serious question, it may be difficult or impossible for the lawyer to give a client detached advice. A lawyer may not allow related business interests to affect representation, for example, by referring clients to an enterprise in which the lawyer has an undisclosed interest.
See also N.Y. State Bar Ass’n, Ethics Op. No. 619, supra note 9; and N.Y. State Bar Ass’n, Ethics Op. No. 516 (Jan. 18, 1980).
20. “A lawyer shall not permit a person who . . . employs, or pays the lawyer to render legal services for another to direct of regulate the lawyer’s professional judgment in rendering such legal services.” Utah Rules of Professional Conduct 5.4(c).
21. Rule 1.7 cmt.

EAOC 145 – 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 a

(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
Rule 1.7 is not the only basis for disqualification. In State v. Brown,5the Utah Supreme Court unambiguously described the conflict that arises when a lawyer’s interests limit the ability to cross-examine a witness:
In the situation confronting a city attorney acting as a defense counsel there inevitably will arise a struggle between, on the one hand, counsel’s obligation to represent his client to the best of his ability and, on the other hand, a public prosecutor’s natural inclination not to anger the very individuals whose assistance he relies upon in carrying out his prosecutorial responsibilities. Such a conflict of interest would operate to deprive a criminal defendant of the undivided loyalty of defense counsel to which he is entitled.6
In part, because of this conflict, the court adopted a per se rule prohibiting part-time prosecutors from accepting appointments to represent indigent defendants. Although the Brown decision did not turn on the application of the Rules of Professional Conduct and involved additional conflicts not at issue here, the decision provides clear direction in evaluating conflicts.7
In some situations, a client may, after consultation, consent to a Rule 1.7 conflict if the lawyer reasonably believes that the representation will not be adversely affected. However, “when a disinterested lawyer would conclude that the client should not agree to the representation under the circumstances, the lawyer involved cannot properly ask for such agreement or provide representation on the basis of the consent.”8Ordinarily, the lawyer is primarily responsible for determining when conflicting loyalties may materially limit the lawyer’s representation of the client.9However, in this case, the substantial conflict involving a criminal defendant and an adverse witness employed by the lawyer makes it unlikely that a reasonable, disinterested lawyer would conclude that the client should consent to the representation.10
B. Duty to Maintain Confidences.
Although the duty of loyalty bars representation of the defendant in the re-trial, this duty does not bar the law firm from representing other defendants in matters related to the investigator’s work for the State, so long as the investigator will not be a State witness. Such a representation is appropriate if the law firm properly implements a screening procedure that insures that any confidences obtained by the investigator as a State employee are not disclosed.
A fundamental aspect of the client-lawyer relationship is the lawyer’s duty to maintain the client’s confidences relating to the representation of the client.11 To further this goal, Rules of Professional Conduct 1.7 and 1.9 limit situations in which lawyers or their law firms may represent clients with interests adverse to the lawyer’s clients or former clients. Rules 1.10 and 1.11 also limit situations in which law firms may represent clients who are adverse to former clients of a recently hired lawyer or the new lawyer’s prior law firm. The primary goal of these rules is to insure that information obtained by the lawyer in representing the client is not later used against the client on behalf of another client.12
Although these rules on maintaining client confidences do not expressly apply to non-lawyers such as the investigator in this case, the importance of maintaining confidences has led courts and state ethics committees to apply similar restrictions on non-lawyers moving between law firms who represent adverse clients.13The application of these rules to non-lawyers is in part mandated by Rule 5.3, which requires that a lawyer insure that the lawyer’s non-lawyer staff complies with the rules as well as by the lawyer’s duty to avoid participating with others in violating a client’s confidences.14
Rule 1.11 contains the ethical restrictions on a law firm that hires a lawyer who has been employed by the government. Under this rule, a law firm may not represent a client in a matter in which the lawyer had a substantial and material participation in the government’s representation unless (a) the lawyer is screened from any participation in the matter, (b) the lawyer is given no portion of the fee and (c) the firm gives the appropriate government agency prompt notice to enable the agency to insure compliance with the rule’s screening requirements. Similar restrictions apply to firms whose members include lawyers who have had access to confidential governmental information.
Rule 1.11 applies in this case to the extent that the investigator had substantial, personal involvement in the representation of the State in matters where the law firm is adverse. This participation, however, would not preclude a law firm from representing the defendant if it notified the appropriate government agency and timely screened the investigator from all participation in the defense.15
Whether a law firm could construct an effective screening procedure is a fact-specific question, and this Opinion will not attempt an exhaustive discussion of what methods would be adequate. A few observations however may be helpful to the Bar, however.
Critical to construction of an effective screening procedure is timing. The screening procedure must be in place at the time the conflict arises, which in this case is when the investigator begins employment. In addition, the construction of a “Chinese wall” requires a careful attention to detail. For example, the Michigan Standing Committee on Professional and Judicial Ethics has described what should be included in any screening procedure:
The new employee must not actively work on the file . . . . In fact, the files should be physically segregated from the employee to avoid both intentional and inadvertent access to them by the employee. The employee should be instructed not to access these files or discuss the files or any related matters with other members of the firm. In addition, other employees of the firm should be instructed: (1) not to discuss these files or related matters in the employee’s presence; (2) not to allow the employee to review related documents or materials; and (3) not to receive any information from the employee regarding these files.16
If the law firm implements an appropriate screening program, its employment of the investigator should not create an ethical dilemma in cases where the investigator will not be called as a witness for the State.
Conclusion: To avoid violating the Rules of Professional Conduct, a law firm must not represent defendants in cases in which the 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.
Footnotes
1.The question was originally posed to the Committee in the context of a criminal defense firm funded by outside private and public entities. The analysis of this Opinion applies equally well to any law firm (or sole practitioner, for that matter).
2.Utah Rules of Professional Conduct 1.7 cmt.
3.Rule 3.7(b) permits a lawyer to act as an advocate in a matter where a member of the lawyer’s firm will be a witness, unless Rule 1.7 bars such a representation. Rule 1.7 would bar the representation where a substantial conflict exists between the witness’s testimony and the client’s position. Rule 3.7 cmt.
4.The conflict of interest here exists regardless of the stage of the proceeding. For example, the lawyer’s advice concerning a plea arrangement may be materially limited by the possibility of the investigator’s testimony. The conflict would, however, be eliminated if the prosecutors unequivocally stated their intent not to call the investigator as a witness.
5.853 P.2d 851 (Utah 1992).
6.Id . at 857-58. In State v. Holland, No. 910352, 1994 WL 9186 at *2 (Utah Jan. 13, 1994), the Utah Supreme Court held:
If an attorney’s loyalty is compromised because he believes that his client should be convicted or because he is influenced by a conflict in loyalties to other defendants, third parties, or the government, the law cannot tolerate the risk that the attorney will fail to subject the prosecution’s case to the kind of adversarial challenge necessary to ensure that the accused receives the effective assistance of counsel guaranteed by the Sixth Amendment.
7.See Brown, 853 P.2d at 856-57 (basing the decision on “vital interests of the criminal justice system”); id. at 857 n.4 (noting that the Rules of Professional Conduct did not govern the decision).
8.Rule 1.7 cmt.
9.Id.
10.The Utah Rules of Professional Conduct, Terminology, include the following definitions:
“Reasonable” or “reasonably,” when used in relation to conduct by a lawyer, denotes the conduct of a reasonably prudent and competent lawyer.
“Reasonable belief” or “reasonably believes,” when used in reference to a lawyer, denotes that the lawyer believes the matter in question and that the circumstances are such that the belief is reasonable.
11.Rule 1.6 cmt.
12.Rule 1.9 cmt.
13.See generally In re Complex Asbestos Litigation, 283 Cal. Rptr. 732 (Cal. App. 1991); Temkin v. Temkin, No. 057629, 1993 WL 392941 (Conn. Super. Ct. Sept. 28, 1993); Mich. Comm. on Professional and Judicial Ethics, Op. No. RI-115 (Jan. 31, 1992), ABA/BNA Lawyers Manual on Professional Conduct 1001:4760; N.J. Sup. Ct. Adv. Comm. on Professional Ethics, Op. No. 665 (Aug. 3, 1992), ABA/BNA Lawyers Manual on Professional Conduct 1001:5804.
14.Mich. Ethics Op. No. RI-115, supra note 13.
15.The Rules of Professional Conduct expressly authorize the use of screening procedures or “Chinese walls” to protect the former client’s confidences only where the attorney is moving from government employment to private employment. Rule 1.10, governing disqualification where the lawyer is moving between private firms, does not expressly authorize the use of screening procedures to insulate the tainted lawyer from other firm members who are representing a person adverse to the lawyer’s former client. See generally SLC Limited V v. Bradford Group West, Inc., 999 F.2d 464, 469 (10th Cir. 1993).
16.Mich. Ethics Op. No. RI-115, supra note 13.

EAOC 142 – Whether the rules of imputed disqualification apply to the Office of the Utah Attorney General when it is fulfilling its duty of representing all state agencies, some of which may be adverse to each other on certain terms.

(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.
Footnotes
1.Utah Rules of Professional Conduct 1.7, 1.8, 1.9 and 1.10.
2.In the context of movement of lawyers between the government and the private sector, Rule 1.10 comments note that “the government’s recruitment of lawyers would be seriously impaired if Rule 1.10 were applied to the government.” The comments to Rule 1.11(c) suggest conflicts of a lawyer serving as a public officer or employee do not serve to disqualify “other lawyers in the agency with which the lawyer has become associated.” See also Rule 1.7 cmt. (“government lawyers in some circumstances may represent government employees in proceedings in which a government agency is the opposing party”). Nevertheless, we conclude that the comments are too unclear on this point to provide a basis for our opinion here.
3.Utah Const., Article VI, Section 16.
4.See, e.g., Opinions of Ethics Comm. of the Mass. Bar Ass’n, Op. 89-4 (1989), ABA/BNA Lawyers’ Manual on Professional Conduct 901:4604 (city solicitor allowed to advise city employee about litigation by city against private party who has previously been represented by another lawyer in city solicitor’s office if the lawyer with the conflict is sufficiently screened from involvement); Ethics Comm. of N. Car. State Bar Ass’n, Op. 55 (1989), ABA/BNA Lawyers’ Manual on Professional Conduct 901:6610 (lawyer who is a member of the attorney general’s staff and represents a state hospital may pursue appeals of Medicaid decisions even though opposition will be represented by another lawyer from attorney general’s office.)
5.See, e.g., People v. Brown, 624 P.2d 1206 (Cal. 1981) (attorney general not allowed to bring suit in its own name on issue where it had previously given legal advice on same issue to party it was seeking to sue on that issue).

EAOC 139 – May a law firm’s non-lawyer office administrator be compensated solely on the basis of a percentage of the gross income of the firm?

(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
In 1980, the ABA Model Code of Professional Responsibility was amended to be consistent with Informal Opinion 1440, adding to the text of DR 3-102(A)(3) the two words “compensation or” before the term “retirement plan,” thus specifically allowing nonlawyer employees to be included in a compensation or retirement plan “based in whole or in part on a profit-sharing arrangement.” However, even under this amendment, such compensation had to be based on the profits or fees from all cases.7
The old Utah Code of Professional Responsibility was not so amended. However, in 1988 the new Utah Rules of Professional Conduct were adopted, replacing the Code. The pertinent provision of the Rule 5.4, Professional Independence of a Lawyer states: “A lawyer or law firm shall not share legal fees with a nonlawyer, except that . . . [a] lawyer or law firm may include nonlawyer employees in a compensation plan or retirement plan, even though the plan is based in whole or in part on a profit-sharing arrangement.” (Emphasis added.)
Thus, an arrangement where nonlawyer employees are compensated on a percentage basis of profits is now proper under the Utah Rules of Professional Conduct.8Further, this Committee sees no material ethical distinction between profit sharing and revenue sharing. The ethical considerations are the same.
The paramount concern is in maintaining the independent judgment of the lawyer or law firm. Nonlawyers may, therefore, not become involved in the practice of setting fees, the administration or collection of fees, or the direction or control of the professional judgment of the lawyer.9All salaries are ultimately paid from receipt of fees, however, and little if any distinction can be made between compensation based upon gross receipts or net profit. So long as there is nothing in the nature of the arrangement that would tend to impair the independence of the law firm or lawyer, and provided no other rule of professional conduct is violated, compensation of nonlawyer employees may be based upon a percentage of gross or net income so long as it is not tied to specific fees from a particular case.
Footnotes
1.See, e.g., Ore. State Bar, Legal Ethics Comm., Op. 505 (1985), ABA/BNA Lawyers’ Manual on Professional Conduct 801:7115-16 (lawyer may not pay disbarred lawyer-employee on contingency basis or only when fees are collected from client); Md. State Bar Ass’n, Inc., Comm. on Ethics, Op. 84-103 (1984), ABA/BNA Lawyers’ Manual on Professional Conduct 801:4346-47.
2.Former Utah Code of Professional Responsibility DR 3-102(A)(3) (emphasis added).
3.Mass. Bar Assoc., Ethics Comm., Op. 84-2 (1984), ABA/BNA Lawyers’ Manual on Professional Conduct 801:4608; In re Shapiro, 90 A.D.2d 22, 455 N.Y.S.2d 604 (1982).
4.See former Utah Code of Professional Responsibility EC 3-8.
5.ABA Standing Comm. on Ethics & Professional Responsibility, Inf. Op. 1440 (1979) (citing ABA Model Code of Professional Responsibility DR 3-102(A)).
6.Id.
7.Note 1, supra.
8.Accord Va. State Bar, Standing Comm. on Legal Ethics, Op. 885 (1987), ABA/BNA Lawyers’ Manual on Professional Conduct 901:8716 (lawyer handling collections may compensate nonlawyer employees on a percentage of all profits from collection received); Va. State Bar, Standing Comm. on Legal Ethics, Op. 806 (1986), ABA/BNA Lawyers’ Manual on Professional Conduct 901:8707 (law firms may pay secretaries annual bonuses based on firm’s profits).
9.Utah Rules of Professional Conduct 5.4(d)(3).

Ethics Advisory Opinion No. 138

(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
Therefore, a sole practitioner may not use a firm name of the type “Doe & Associates” if he has no associated attorneys, even if the firm formerly had such associates or employs one or more “associated” nonlawyers such as paralegals or investigators.
Footnotes
1.Rules of Professional Conduct 7.5, cmt.
2.D.C. Bar Assoc., Legal Ethics Comm. Op. No. 189 (1988), ABA/BNA Lawyers’ Manual on Professional Conduct 901:2309.
3.Fla. Bar, Professional Ethics Comm. Op. 86-1 (1986), ABA/BNA Lawyers’ Manual on Professional Conduct 901:2501; Philadelphia [Pa.] Bar Assoc., Professional Guidance Comm., Op. 86-97 (1986), ABA/BNA Lawyers’ Manual on Professional Conduct 901:7506-07; Wash. State Bar Assoc., Rules of Professional Conduct Comm., Op. No. 178 (1984), ABA/BNA Lawyers’ Manual on Professional Conduct 801:8902-03.
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EAOC 136 – Can an advance payment made by a client ever be characterized as a “fixed fee” or “non refundable retainer,” which would be earned by the attorney when received and therefore not deposited into a trust account?

(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
The court in Bain v. Weiffenbach6was faced with a suit by a client to recover a portion of a $10,000 “nonrefundable” retainer paid to his attorney for representation in a criminal case. Relying heavily on Ethics Opinion 76-27 of the Florida State Bar, the court analyzed the entire fee on whether it was reasonable, accepting that nonrefundable retainers are not per se prohibited. The Florida Court of Appeals posed the question as follows:
If a substantial “nonrefundable retainer” which is in part a prepaid fee is paid to an attorney and, before the attorney performs any service under the contract, the client dies, or fires the attorney, or the services called for by the contract are no longer needed for some other reason, would the attorney be guilty of charging a clearly excessive fee under DR 2-106(A) if he refused to refund any of the “nonrefundable retainer”?
The court went on to analyze the question and conclude that such a fee was neither automatically prohibited nor automatically permitted.
Such a lawyer might, but would not necessarily be, guilty of charging an excessive fee . . . . We interpret the question as referring to a payment by a client to a lawyer of a sum of money designated as “nonrefundable retainer,” part of which is intended to compensate the lawyer for being available but not for specific services, and part of which is intended as a present payment for legal services to be performed in the future. If the lawyer performs no legal services, obtains no benefits for the client and has not lost other employment opportunities as a result of agreeing to represent the client, we believe he might well be guilty of charging an excessive fee if he refused to refund part of it. . . . On the other hand, a lawyer of towering reputation, just by agreeing to represent a client, may cause a threatened lawsuit to vanish and thereby obtain a substantial benefit for the client and be entitled to keep the entire amount paid to him, particularly if he had lost or declined other employment in order to represent that particular client. . . . We do not believe that, by designating a retainer as “nonrefundable,” a lawyer automatically insulates himself from a claim that the fee is excessive. Whether the fee is excessive is governed by DR 2-106 rather than use of the description “nonrefundable retainer.”7
A designation of a fee as “nonrefundable” can, of course, never supersede the requirements of Rule 1.5, which proscribe excessive or unreasonable fees, and Rule 1.14, which requires the return of unearned fees. Thus, the term “nonrefundable” really is a misnomer; such fees are more appropriately termed “fixed fees.”
Certainly, in some contexts fixed-fee contracts are definitely reasonable. In an article criticizing the Cooperman opinion,8Professor Stephen Gillers points out that in some instances (such as complex commercial or criminal litigation), a lawyer’s commitment to be available has value in and of itself. In addition, he notes that an attorney’s acceptance of a matter, even for a short while, may, on conflicts grounds, disqualify the attorney and his firm from accepting other matters. A fixed-fee agreement in these instances compensates the attorney in part for accepting that conflict.
Consequently, whether a fixed-fee agreement is clearly excessive depends on whether the total fee meets the standards set out in Rule 1.5 and not on whether any part of it is treated in the fee agreement as nonrefundable. The fee agreement should, however, clearly set forth (a) what portion of the retainer is considered to be nonrefundable, (b) that nonrefundability is conditioned on the absence of default by the lawyer, and (c) what circumstances may entitle the client to a disgorgement of all or part of the “nonrefundable” amount. Since the “nonrefundable” portion is considered earned upon payment, it may be deposited into the attorney’s general operating account rather than in his trust account.9However, the attorney may be required to return a portion of the fixed fee if the fee is clearly excessive under Rule 1.5 (a) as a result of changed circumstances, (b) failure to perform the requested services, (c) failure to convey any benefit to the client, and (d) the lawyer suffered no lost employment from the engagement.
Footnotes
1.Rules of Professional Conduct 1.5(d).
2.No. AD90-00429 (N.Y. App. Div., 2d Dept. Jan. 25, 1993).
3.Utah Rule 1.14(d) corresponds to DR 2-110(A)(3). Utah adopted the Rules of Professional Conduct in place of the Code of Professional Responsibility (and the disciplinary rules) in 1988.
4.483 N.Y.S.2d 711 (N.Y. App. Div., 1st Dept. 1985).
5.Bain v. Weiffenbach, 590 So. 2d 544 (Fla. App. 1991); In re Cook, 526 N.E.2d 703 (Ind. 1988); Jennings v. Backmeyer, 569 N.E.2d 689 (Ind. App. 1991); Smith v. Binder, 477 N.E.2d 606 (Mass. App. 1985); Brandes v. Zingmond, 573 N.Y.S.2d 579 (Sup. Ct. N.Y. 1991).
6.590 So. 2d 544 (Fla. App. 1991).
7.Id. at 545 (quoting Professional Ethics of the Florida Bar, Opinion 76-27). Reference to the old Disciplinary Rules, rather than the Rules of Professional Conduct does not detract from the applicability of this analysis.
8.”All Non-Refundable Fee Agreements Are Not Created Equal,” New York Law Journal, February 3, 1993.
9. Ethics Opinion No. 509, Oregon State Bar; Ethics Opinion No. 29, Hawaii State Bar; see Bain v. Weiffenbach, 590 So. 2d 544 (Fla. App. 1991).

Ethics Advisory Opinion No. 135

(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
ANALYSIS
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.
In light of the facts presented, Rule 1.7(b) would not prohibit the attorney with a contingent fee from assisting in the transaction. The facts do not suggest that the attorney’s interest in being paid from the insurance proceeds would “materially limit” his ability to advise the judgment-creditor in connection with the life insurance arrangement. In fact, the attorney and judgment creditor apparently share the same interest in being paid as much as possible.5Since the attorney’s interest does not materially limit the attorney’s representation, Rule 1.7 does not apply.
Since Rule 1.7 does not prohibit the attorney from representing the judgment-creditor, the next question is whether Rule 1.8 prohibits the attorney from entering into this type of transaction with a client. Rule 1.8(a) prohibits an attorney from entering any “business transaction” with a client unless the attorney fulfills each of the following conditions:
a. The transaction must be “fair and reasonable to the client.”
b. The attorney must fully disclose the transaction to the client in writing in a manner which can reasonably be understood by the client.
c. The client must be given a reasonable opportunity to obtain independent legal advice.
d. The client must consent in writing.6
Rule 1.8(a) governs here because the transaction involving the insurance policy is a business arrangement through which the judgment-creditor and the attorney agree to share the insurance proceeds and the cost of future premiums.7The facts presented do not provide the Committee with a basis for assessing whether this transaction is “fair and reasonable,” although the facts do not suggest a problem in this regard. At the time of the request to the Committee, the attorney had apparently not made the written disclosures nor obtained the written client consent required by the rule. The attorney must fulfill these conditions to satisfy the requirements of Rule 1.8(a).
4. May the attorney properly pay a portion of the life insurance premiums to obtain payment of his fees under a contingent fee arrangement?
The Rules of Professional Conduct do not prohibit the attorney’s payment of a portion of the premiums. Rule 1.8(j) does prohibit the acquisition of a proprietary interest in a cause of action or the subject of litigation. The intent of this rule is to prohibit champerty or maintenance. It is not intended to prohibit payments, such as these, that essentially are payments on a contract under which the attorney obtains a right to payment upon the death of the judgment-debtor.
Although the payments do not violate Rule 1.8(j), the attorney’s agreement with the judgment-creditor to make a portion of the payment must satisfy the requirements of Rule 1.8(a) which governs business transactions between attorneys and clients. The earlier discussion describes these requirements and will not be repeated here.
5. Should the agreement of the attorney and judgment-creditor be reduced to writing?
In essence, the transaction in issue is a business agreement between client and attorney by which the client seeks to recover a portion of his judgment and the attorney seeks to recover a portion of his contingent fee.8Rule 1.8(a), among other things, requires full written disclosure by the attorney and written consent by the client. To satisfy Rule 1.8(a) and to avoid or minimize the risk of future conflicts between the judgment-creditor and the attorney, these writings should include the following:
a. If it is their intent, the attorney and the judgment-creditor should expressly state that the attorney has a specified interest in the proceeds of the policy.9
b. The writing should state whether the judgment-creditor is required to pay the premiums after the expiration of the initial term or whether the judgment-creditor is permitted simply to let the policy lapse if he should so choose.
c. The writing should state whether the attorney is required to pay a portion of the premiums or forgo payment from the proceeds of the policy.
d. The writing should describe how the attorney and the judgment-creditor would pay the costs associated with enforcement of the policy in the event of a challenge by the insurer or the judgment-debtor’s heirs or creditors.
e. The writing should inform the judgment-creditor of the right to obtain independent legal or financial advice10concerning the use of the insurance policy to pay the judgement.
This list of possible items to be included in the disclosure and written consent is not exhaustive. The facts presented in the opinion request were not sufficiently detailed to permit the Committee to provide a complete list of items which should be disclosed. The attorney is responsible for insuring that the disclosure satisfies the requirements of Rule 1.8(a) in light of the attorney’s detailed understanding of the facts.
Footnotes
1.The request for this advisory opinion implicitly, but not expressly, indicates that the policy satisfies the judgment. This fact was not material to the Committee’s analysis of the ethical issues.
2.The request for this advisory opinion does not unambiguously describe the agreement between the attorney and the client for paying the premiums. For example, the request does not clearly state whether either the attorney or the judgment-creditor is obligated to pay the additional premiums or whether this is optional.
3.Also, as previously noted in other opinions, this Committee does not interpret questions of law. It is, therefore, assumed that the subject transaction is not in violation of any duly enacted state or federal legislation or lawfully promulgated regulation. See, e.g., Utah Ethics Op. No. 111, at 6 (July 29, 1993).
4.In the context of the Rules of Professional Conduct, the phrase “reasonably believes” means “that the lawyer believes the matter in question and that the circumstances are such that the belief is reasonable.” Rules of Professional Conduct, Terminology.
5.It should, however, be noted that a situation could arise where the interests of a client and an attorney under a contingent-fee contract may diverge. For example, a client may have an interest in discounting the amount paid by the judgment-debtor in order to obtain an immediate payment for some special purpose; whereas, the attorney may have an interest in deferring payment in hope of recovering a larger amount in the future. In such a case, the attorney would have to satisfy the requirements of Rule 1.7 before advising the client in connection with a transaction affecting the payment of the judgment.
6.Rule 1.8(a) also applies when the attorney knowingly acquires an ownership or other pecuniary interest adverse to the client. The attorney’s interest in the proceeds of the insurance policy does not appear to be adverse to the client’s since the interests do not conflict but are rather separate interests in different portions of the insurance proceeds. However, because the proposed transaction is a “business transaction” with a client and the attorney here must fulfill the applicable Rule 1.8(a) conditions in any event, the Committee need not address this issue.
7.In finding that this arrangement is a “business transaction,” the Committee expresses no opinion on whether other arrangements for the payment of accrued attorney fees are “business transactions” within Rule 1.8(a).
8. The post-judgment agreement between the attorney and the judgment-creditor is not a contingent-fee arrangement under Rule 1.5(c). Except for collection of the judgment, the attorney has completed his representation, and the agreement does not require the attorney to provide legal services in the future. However, even if the new agreement were treated as a contingent-fee contract, the result here may not be changed, because Rule 1.5(c) requires a writing quite similar to that required by Rule 1.8(a).
9.Although not required by the Rules of Professional Conduct, designating the attorney as a beneficiary may avoid the possibility of future misunderstandings between the attorney and the judgment creditor as to the payment to of the insurance proceeds to the attorney.
10.In this case, as in others, the attorney should assist the client in becoming fully informed of the economic benefits and risks of the client’s actions. See generally Rule of Professional Conduct 2.1 & Comment: “[B]usiness matters can involve problems within the competence of the accounting profession or of financial specialists. Where consultation with a professional in another field is itself something a competent lawyer would recommend, the lawyer should make such a recommendation.” See also Rule of Professional Conduct, Comment to Rule 1.5, Terms of Payment: “[A] fee paid in property instead of money may be subject to special scrutiny because it involves questions concerning both the value of the services and the lawyer’s special knowledge of the value of the property.”

Ethics Advisory Opinion No. 132

(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.
Analysis:
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
Further, Utah Rules of Professional Conduct 7.3(a), which limits certain in-person solicitation contacts, specifically does not apply to the solicitation of “professional employment from a prospective client with whom the lawyer has [had a] . . . prior professional relationship . . . .” The American Bar Association has issued informal opinions, under the Model Rules of Professional Conduct, indicating that a partner or associate resigning from a firm may send personal letters to clients for whose matter the attorney was directly responsible, informing them of the change to another firm.9
The ethical and legal considerations involved in the timing, form and content of such contact by the departing attorney or law firm are not addressed in this opinion. Also, whether there may be factual circumstances that would be actionable under such legal theories as tortious interference with contract is beyond the scope of this opinion.10
II. Division of Fees
Fees generated by the departing attorney while employed by the law firm are accounts receivable owned by the law firm. The departing attorney owes no duty to the law firm with respect to legal fees generated from legal services he performs after leaving the law firm, unless the attorney and the law firm have agreed otherwise, and the fee division is in accordance with Rule 1.5(e), which governs fee-sharing between lawyers not in the same firm.
Because the division of fees would likely not be in proportion to the services performed by each lawyer, Rule 1.5(e) would require each lawyer to assume joint responsibility for the representation by a written agreement with the client. In addition, no matter what arrangements the lawyers make among themselves, the total fee charged to the client must be reasonable under Rule 1.5(a), and the client must be advised of and not object to the participation of all lawyers involved under Rule 1.5(e)(2).
Even if these fee-splitting requirements are complied with, the arrangement may violate public policy if the client is effectively denied choice of counsel in the event the withdrawing lawyer cannot afford to continue to represent the client under the fee-allocation arrangement, and may violate Rule 5.6, which prohibits attorneys from entering into agreements restricting the rights of a lawyer to practice law.11
Footnotes
1.The comment to Rule 1.14 states: “A client has the right to discharge a lawyer at any time, with or without cause, subject to liability for payment for the lawyer’s services.”
2.E.g., Corti v. Fleisher, 93 Ill. App. 3d 517, 417 N.E.2d 764, 768 (1981); Dwyer v. Jung, 133 N.J. Super. 343, 336 A.2d 498, 501 (1975); see also ABA/BNA Manual on Professional Conduct 91:705-06; id . 41:710-12.
3. Charles W. Wolfram, Modern Legal Ethics 888 (West 1986).
4.”A lawyer should hold property of others with the care required of a professional fiduciary.” Rule 1.13(a) cmt.; Formal Op. No. 1991-60, Oregon State Bar (a firm must preserve wills and other client property until directed by client to send them elsewhere).
5.Rule 1.14(d): “Upon termination of representation, a lawyer shall take steps to the extent reasonably practicable to protect a client’s interests, such as . . . surrendering papers and property to which the client is entitled . . . .”; see Formal Op. No. 1991-70, Oregon State Bar (departing attorney may take files for whom he has done work if the clients so request); ABA/BNA Manual on Professional Conduct 91:705.
6.See Utah State Bar Ethics Op. No. 91 (May 17, 1989) (an attorney may ethically invoke a retaining lien when the attorney has been wrongfully discharged by the client or withdraws for good cause).
7.Rule 1.14(d) provides: “The lawyer may retain papers relating to the client to the extent permitted by law.” There may be portions of the client’s file that are not necessary for preserving the client’s interests and to which the client is not entitled. It is beyond the scope of this opinion to delineate the limits of Rule 1.14(d). The authorities are not consistent on this issue. See Corrigan v. Armstrong, 824 S.W.2d 92 (Mo. App. 1992); Kansas Bar Assoc. Op. 92-05 (July 30, 1992); Connecticut Bar Assoc. Op. 92-21 (July 22, 1992); California State Bar Op. 1992-127, Oregon State Bar Op. 1991-125 (July 1991); Vermont Bar Assoc. Op. 91-3.
8.Oregon Bar Assoc. Formal Op. 1991-70, at n.1, (July 1991).
9.ABA Informal Op. No. 1457 (1980) and ABA Informal Op. 1466 (1981).
10.At least one court has found that the actions of a departing attorney who sent form dismissal agreements urging his previous clients to terminate their arrangements with the former law firm were an “intentional interference with performance of contract by a third person.” Adler, Barish, Daniels, Levin and Creskoff v. Epstein, 482 Pa. 416, 393 A.2d 1175 (1978). But see id., dissenting opinion, which concludes that the direct solicitation by the departing lawyer had Constitutional protection and was not illegal or unethical. See also ABA/BNA Manual of Professional Conduct 91:706-710; Charles C. Marvel, Annotation, Rights of Attorneys Leaving Firm with Respect to Firm Clients, 1 A.L.R.4th 1164 (1980).
11.See Corti, 417 N.E.2d at 768 (rejecting an agreement under which a law firm performed all legal services on certain matters but was required to turn over all fees received on these matters to a former member of the firm); Champion v. Superior Court (Boccardo), 247 Cal. Rptr. 624 (1988) (California law partnership agreement, under which firm was entitled to receive from withdrawing partner almost all fees he would earn from work performed for partnership’s clients, violates “unconscionable fee” provision of DR 2-107 and public policy); see generally ABA/BNA Manual of Professional Conduct 91:710-12.

Ethics Advisory Opinion No. 131

(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
Other jurisdictions have found that listing non-lawyer employees on legal stationary is in itself a misleading practice and a per se violation of Rule 7.1.4
The primary conceptual objection to inclusion of a non-lawyer on law firm letterhead is based on the notion that, since the purpose of letterheads is to inform the public of the names of persons available in the office to provide legal services, by including the name of a non-lawyer-e.g., a CPA-on a letterhead, a client or prospective client could be led to the conclusion that one of the lawyers in the firm is a CPA or that the CPA is a lawyer.
In one specific case in support of this reasoning, it was opined that a CPA may not carry on his own practice from the offices of the law firm while so employed due to the possibility that the CPA could become a “feeder” to the law practice.5 This Michigan opinion involved a non-lawyer CPA who was apparently not a full-time employee of the law firm, and the question does become more complex where such a situation exists.6
However, the issue of whether the non-lawyer employee will become a “feeder” to the law firm is relatively unrelated to the propriety of placing the non-lawyer’s name on the letterhead. See Rule 5.4, Professional Independence of Lawyers. The former question will not be resolved simply by forbidding linkage in signage and letterhead. The latter question is perceived to be basically one of full and candid disclosure, as is required by Rule 7.1.
In a recent opinion, concluding that it would not be improper to include the name of a non-lawyer accountant (not a CPA) with a proviso that he is an enrolled agent with the IRS, and not a lawyer, the Nassau County [N.Y.] Bar Association Committee on Professional Ethics reasoned that such a practice is permissible if conducted in such a way as not to be deceptive, provided that such employees are clearly described and identified as non-lawyers, and that the information provided is such that it might be of assistance to the public in the process of selecting counsel.7
The Committee believes that the better reasoned opinions are those to the effect that a non-lawyer may be included in a law firm’s letterhead, but only if the listing: (1) clearly indicates the individual’s function and non-lawyer status, (2) is presented in such a way as to avoid any possibility of a “material misrepresentation of fact or law,” and (3) does not “omit a fact necessary to make the statement considered as a whole not materially misleading,” as required by Rule 7.1(a).
Conclusion: The principle involved is that of full, fair and honest disclosure. The inclusion of a non-lawyer employee on a lawyer’s or firm’s letterhead is not a per se violation of Rule of Professional Conduct 7.1 or 7.5, so long as such an inclusion clearly states that the individual is not a lawyer, provides sufficient information either in the letterhead or body of the letter to insure that the inclusion is not false or misleading, and fully complies with the letter and spirit of Rules 7.1(a) and 7.1(b).
Footnotes
1. This opinion addresses and is confined solely to situations involving full-time employees or those employees having no outside employment or private practice.
2. Official comment to Rule 7.2, Rules of Professional Conduct.
3. Cards, Letterheads, & Firm Names, Non-Lawyer on Letterhead, ABA/BNA Lawyers Manual on Professional Conduct, at 9, 10 (July 19, 1989), citing ABA Informal Opinion No. 89-1527 (Feb. 22, 1989) (listing of law firm’s non-lawyer executive director allowed if it shows non-lawyer status and is not false or misleading; listing other non-lawyer support personnel, such as administrators, office managers, administrative assistants and paralegals, is similarly permissible); Connecticut Ethics Opinion No. 85-17 (Nov. 20, 1985) (listing helps eliminate client confusion about the status of employees who speak or correspond with them); Florida Ethics Opinion No. 86-4 (Aug. 1, 1986) (may list names and titles of paralegals and legal assistants); Hawaii Ethics Opinion No. 78-8-19 (July 3, 1984) (may list paralegal or legal assistant provided information is not false, fraudulent, misleading or deceptive); Illinois Ethics Opinion No. 87-1 (Sept. 8, 1987) (non-legal personnel may be listed if clearly identified as such); Mississippi Ethics Opinion No. 93 (June 7, 1984) (may include name of paralegal or other non-legal employee provided non-legal status is clearly indicated); Virginia Ethics Opinion No. 970 (Sept. 30, 1987) (may list name and title of firm’s chief investigator so long as listing includes affirmative statement that investigator is not licensed to practice law); Wisconsin Ethics Opinion No. E-85-6 (Oct. 1985) (may list legal assistant’s name if the employment is relevant to the lawyer’s ability to provide legal services).
4. Id., citing Arizona Ethics Advisory Opinion 82-3 (Feb. 26, 1982) (may not include name and title of legal assistant, and legal assistant may not be provided with separate letterhead with assistant’s name and firm’s name; there is a possibility for public confusion and potential for non-lawyer employee to engage in unauthorized practice of law); Idaho Ethics Opinion 109 (Nov. 30, 1981) (listing non-lawyers would create misleading impression of partnership between lawyers and non-lawyers); Michigan Ethics Opinion CI-942 (June 7, 1983) (a law firm employing accountant may not place accountant’s name on its letterhead or door signs; purpose of letterhead is to inform public of names of persons available in office to provide legal services); Allegheny County [Pa.] Ethics Opinion 1 (Oct. 1981) (may not list legal assistants and paralegals as these titles do not necessarily identify graduates of properly accredited courses of study).
5. Michigan Bar Assoc. Ethics Opinion CI-942 (June 7, 1983).
6. As indicated in the statement of the issue in this Opinion No. 131, the Committee has confined its consideration to situations involving full-time employees or those having no outside private practice or other employment.
7. Nassau County [N.Y.] Bar Assoc. Committee on Professional Ethics, Op. 91-32 (1991); see also Nassau County [N.Y.] Ethics Opinion 87-14 (1987), provisionally approving the practice of including a paralegal’s name on the letterhead.

EAOC 129 – With respect to Utah’s Rule 4.4, which proscribes certain lawyer communications and actions with respect to third persons, what is the effect of the US Supreme Court’s void-for-vagueness finding concerning Nevada’s Rule 3.6?

(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.
Although one might argue that a void-for-vagueness analysis similar to that developed by the Gentile opinion could be applied to Rule 4.4, the conclusion of such an analysis-and the interplay with a specific set of facts-is beyond the ability or authority of this Committee to decide. There is no clear, indisputable application of Gentile to Rule 4.4.
Accordingly, the Ethics Advisory Opinion Committee declines to consider a Gentile analysis of Rule 4.4 and advises that, in the absence of a decision by a court of competent jurisdiction that would overturn or limit the application of Rule 4.4, Utah attorneys are bound by the terms and conditions set forth in that rule.4
Footnotes
1. 501 U.S. ___, 111 S. Ct. 2720, 115 L. Ed. 2d 888 (1991).
2. The Committee on Ethics and Discipline deals directly with complaints of unethical conduct brought against individual attorneys. See “Procedures of Discipline of the Utah State Bar,” Rules IV and IX, X and XI. The Ethics Advisory Opinion Committee, as the title suggests, will “prepare proposed written opinions concerning the ethical propriety of anticipated professional or personal conduct.” Rules of Procedure for the Ethics Advisory Opinion Committee 1.
3. Rule 3.6(a) states, for example:
A lawyer shall not make or cause another to make an extrajudicial statement that a reasonable person would expect to be disseminated by means of public communication if the lawyer knows or reasonably should know that it will have a substantial likelihood of materially influencing an adjudicative proceeding.
4. As with any statute or administrative regulation or ruling, an affected party who chooses to take action inconsistent with the current state of the law does so with the risks attendant to ultimately failing to establish its illegality.

EAOC 127 – 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 payme

(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.
Analysis:
I. Solicitation
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
Using these assumptions, the lawyer’s conduct would violate Rule 7.3(a) if a significant motive for the solicitation of such persons was the lawyer’s pecuniary gain.
In representing an informal unincorporated group, a lawyer represents each of the members of the group unless the agreement with the clients provides otherwise.5 In soliciting members to a citizens’ group, a lawyer would be soliciting employment from a prospective client if the lawyer intended to represent the group.
Whether a significant motive for a lawyer’s solicitation of members to a group in this context is the lawyer’s own pecuniary gain mandates a factual analysis of the lawyer’s motives. Clearly, if a lawyer’s sole motive is to procure professional employment and to establish a fund for payment of the lawyer’s legal fees, Rule 7.3(a) would be violated. On the other hand, if a lawyer’s principal motive in soliciting membership in a citizens’ group in this context is to organize an effective and efficient means to advance the legal rights of a commonly interested group, then an incidental but nonsignificant motive to procure professional employment in the process would not rise to a violation of Rule 7.3(a).
If a significant motive for a lawyer’s solicitation of members to a group to advance legal rights is the lawyer’s pecuniary gain, the lawyer’s solicitation would be constitutionally protected if the citizens’ group is a bona fide association to advance common legal rights and is not a sham association formed by the lawyer for the purpose of solicitation of professional employment or an association so controlled or dominated by the lawyer that it is the lawyer’s alter ego. In NAACP v. Button,6 the United States Supreme Court held that the State of Virginia, under its power to regulate the legal profession, could not prohibit the NAACP or its staff attorneys conducting meetings to apprise citizens of their rights to desegregated schools and to solicit clients who would act as parties in suits to be financed by the NAACP. The solicitation activities of the NAACP and its staff attorneys were modes of political expression and association protected by the First and Fourteenth Amendments of the United States Constitution.7 In Brotherhood of Railroad Trainmen v. Virginia,8 United Mine Workers v. Illinois Bar Association,9 and United Transportation Union v. State Bar of Michigan,10 the Supreme Court held that the principle of NAACP v. Button extended beyond political expression and association and included bona fide associational activities to economically and effectively advance economic claims.11 In 1978, the Supreme Court decided In re Primus12 and Ohralik v. Ohio State Bar13 to delineate further the constitutional limits of state regulation of lawyer solicitation.
In Primus the lawyer had been invited to speak to a group of welfare mothers who had been sterilized as a condition to continued receipt of welfare benefits. The lawyer described to the group their legal rights and later wrote a letter to one of the attendees advising her that the American Civil Liberties Union (ACLU) had agreed to provide representation to the sterilized mothers without fee. While the lawyer was a cooperating lawyer with the local branch of the ACLU, she received no compensation for her work on behalf of the ACLU. The South Carolina Bar Association punished the lawyer for soliciting a client on behalf of the ACLU. Finding that the lawyer’s actions were “undertaken to express personal political beliefs and to advance the civil-liberties objectives of the ACLU, rather than derive financial gain,”14 the Supreme Court found that her conduct was protected by the First Amendment rights of expression and association. The Supreme Court could find no meritorious distinction between the conduct in Primus on behalf of the ACLU and the conduct in NAACP v. Burton on behalf of the NAACP.
In Ohralik, the lawyer had learned that two persons with whom he was casually acquainted had been injured in an automobile accident. He then contacted both (one was contacted while still in traction in the hospital) and he obtained their agreement to engage him on a contingency fee. The court distinguished the case from Primus and NAACP v. Button, stating “Appellant does not contend, and on the facts of this case could not contend, that his approaches to the two young women involved political expression or exercise of associational freedom . . . .”15 The Court distinguished the case from United Transportation Union v. State Bar of Michigan, United Mine Workers v. Illinois State Bar, and Brotherhood of Railroad Trainmen v. Virginia, stating: “Nor can he compare his solicitation to the mutual assistance in asserting legal rights [at issue in these cases] . . . .”16 The Supreme Court held that a state may constitutionally discipline a lawyer “for soliciting clients in person, for pecuniary gain, under circumstances likely to impose dangers that the State has a right to prevent.”17 The Supreme Court went on to state that a state may adopt a prophylactic rule categorically banning all such in-person solicitations and may constitutionally punish violations even in the absence of explicit proof or findings of harm or injury.18
Primus and Ohralik are cases on opposite extremes. The conduct in Primus concerned a strong ideological interest and no pecuniary interest while the conduct in Ohralik concerned a strong pecuniary interest and no ideological interest.19 Whether a lawyer’s conduct may be proscribed by solicitation rules when the solicitation is in furtherance of protected associational activities but a significant motive for the solicitation is pecuniary gain was not decided in Primus or Ohralik.
The Supreme Court did offer some guidance. In Primus, the Supreme Court recognized that, while the purpose or motive of the speaker is normally not central to First Amendment protections, it does bear on the distinction between conduct that is “an associational aspect of ‘expression’ and other activity subject to plenary regulation by government.”20 The court noted in Primus that the speech was part of associational activity intended to advance “beliefs and ideas,” while the lawyer in Ohralik was not engaged in associational activities for the advancement of beliefs or ideas, but his purpose was the advancement of his own commercial interests.21 The Court then observed: “The line, based in part on the motive of the speaker and the character of the expressive activity, will not always be easy to draw, . . . but that is no reason to avoid the undertaking.”22
After Primus and Ohralik, in dual-motive cases, the courts have focused on the legitimacy of the alleged associational activities and upon whether the lawyer’s activities present the same dangers the ban on solicitation sought to prevent.23 The motive of the lawyer and the character of the expression are central to assessing the legitimacy of the associational activity and the dangers of the conduct.
The Supreme Court recognized in Primus that solicitation on behalf of an association that is “a mere sham to cover what is actually nothing more than an attempt by a group of attorneys to evade a valid state rule against solicitation for pecuniary gain” will not receive constitutional protection.24 Furthermore, associations or not-for-profit corporations so controlled and dominated by attorneys that they become the attorney’s alter ego would not insulate an attorney from the solicitation rules.25
If, however, the associational interests advanced by the solicitation activities of the lawyer are legitimate, the courts have held the solicitation activities to be constitutionally protected even in cases where there was a significant motive for pecuniary gain.26 It appears from these authorities that a state may not proscribe in-person solicitation if the solicitation involves bona fide political expression or an exercise of associational freedom, or is undertaken on behalf of a legitimate association united to assert legal rights as effectively and economically as practicable.27 This is true even if a significant motive for the solicitation is the lawyer’s pecuniary gain.
II. Conflict of Interest
Two potential conflicts of interest are present when a lawyer agrees to represent an informal group of which the lawyer is a member in the common assertion of legal rights: (1) the lawyer’s own interests with regard to the subject matter may materially limit the lawyer’s ability to represent other members of the group; and (2) the interests of some group members may be in conflict with those of other group members.
If a lawyer’s own interests and the interests of each member of the group regarding the subject matter are entirely congruent and cannot reasonably be expected to diverge, an actual or potential conflict of interest is not present. Rule 1.7(b) requires as a threshold that the representation of the client “may be materially limited” by the lawyer’s own interests or the lawyer’s responsibilities to other clients.
If a conflict of interest is present or the potential for a conflict of interest is reasonably probable, Rule 1.7(b) prohibits the representation unless: (1) the lawyer reasonably believes the representation will not be adversely affected by the lawyer’s own interest or the lawyer’s responsibilities to other clients; and (2) each client consents after consultation. The lawyer’s belief that the representation will not be adversely affected is tested by the objective standard of a disinterested lawyer. When “a disinterested lawyer would conclude that the client should not agree to the representation under the circumstances, the lawyer involved cannot properly ask for such agreement or provide representation on the basis of the client’s consent.”28
The consultation required for an effective consent to the actual or potential conflict of interest requires a full disclosure of the actual or the potential conflict and a discussion of its implications to the clients. In the context of multiple representations of parties in the same matter, Rule 1.7(b) requires that the consultation include an explanation to each client of the implications of the common representation and the advantages and risks involved. The comment to Rule 1.7 identifies the following conflicts that may arise in cases of representations of multiple parties in the same matter: (1) conflict by reason of discrepancy in the parties’ testimony; (2) incompatibility in positions and relation to an opposing party; or (3) on the facts there are substantially different possibilities of settlement of the claims or liabilities in question.29
In the factual context of this opinion, it may well be that the lawyer’s representation would be materially limited by the lawyer’s own interests or by the lawyer’s responsibilities to other members of the group. If the facts lead to this conclusion, the representations would require an informed consent to the representation by all clients represented in accordance with Rules 1.7(b)(1) and 1.7(b)(2). An informed consent to the representation requires that the lawyer disclose to the clients the possible limitations upon the lawyer’s representation of the clients.30
Footnotes
1. Rule 7.3(a) defines “in-person solicitation” to include in-person and telephonic communications directed to a specific recipient.
2. After the United States Supreme Court’s decision in Shapero v. Kentucky Bar Association, 486 U.S. 466, (1988), Utah’s Rule 7.3 was amended to permit targeted mailings to specific recipients concerning specific causes of action, subject to a few limitations stated in Rule 7.3(b). A lawyer may ethically solicit persons to join a citizens’ group under these circumstances by direct targeted mail subject to the limitations of Rule 7.3(b).
3. If the group is a non-profit corporation and a lawyer solicits donations for the prosecution of the litigation as an officer of the corporation, Rule 7.3(a) may not be applicable. In such circumstances, the solicitation may not be directed to a prospective client, as the lawyer may represent the corporation, not the donors.
4. Rule 7.3(a) permits in-person solicitation of family members and the current and prior clients of the lawyer.
5. ABA/BNA Lawyers’ Manual on Professional Conduct 91:2007 (1988). But see ABA Model Rule of Professional Conduct 1.13. Utah did not adopt Model Rule 1.13, which chose the “entity theory” of representation rather than the “group theory,” even in the case of unincorporated associations. Model Rule 1.13, Comment. Due to the informality of the group, in the absence of an agreement providing otherwise, the members of the group would likely believe the lawyer represented each of them.
6. 371 U.S. 415 (1963).
7. 371 U.S. at 428-29.
8. 377 U.S. 1 (1964) (union had a constitutional right to advise injured members to obtain legal advice and to recommend specific lawyers to represent them).
9. 389 U.S. 217 (1967) (union had constitutional right to hire attorneys on a salary basis to assist members of the union in filing and prosecution of workers’ compensation claims).
10. 401 U.S. 576 (1971) (union may recommend legal counsel to members who agree not to charge fees in excess of 25% of recovery).
11. Id. at 580. “The Michigan Supreme Court failed to follow our decisions in Trainmen, United Mine Workers and NAACP v. Button . . . upholding the First Amendment principle that groups can unite to assert their legal rights as effectively and economically as practicable.”
12. 436 U.S. 412 (1978).
13. 436 U.S. 447 (1978).
14. Primus, 436 U.S. at 422.
15. Ohralik, 436 U.S. at 458.
16. Id.
17. Id. at 449.
18. Id. at 466-67. See Shapero v. Kentucky Bar Assoc., 486 U.S. 466, 475 (1988).
19. In re Teichner, 75 Ill. 2d 88, 387 N.E.2d 265 (1979).
20. 436 U.S. at 438 n.32 (citation omitted).
21. Id.
22. Id. (citation omitted).
23. In re Appert, 315 N.W.2d 204 (Minn. 1981); Woll v. Attorney General, 409 Mich. 500, 297 N.W.2d 578 (1980); In re Teichner, 75 Ill. 2d 88, 387 N.E.2d 265 (1979); Woll v. Attorney General, 116 Mich. App. 791, 323 N.W.2d 560 (1982).
24. 436 U.S. at 428 n. 20.
25. Great Western Cities, Inc. v. Binstein, 476 F. Supp. 827, 835 (N.D. Ill. 1979) (citation omitted), aff’d, 614 F.2d 775 (7th Cir. 1979). In Great Western Cities an attorney and others formed an association of lot owners claiming to have been defrauded by a development company in the sale of lots. The development company sought to enjoin the association’s solicitation of additional lot owners as members of the association. The Court held that so long as the association was not a sham and an alter ego of the attorneys representing the association, its solicitation activities were constitutionally protected and could not be restrained as an unlawful solicitation under rules regulating the activities of bar members.
26. Woll v. Attorney General, 409 Mich. 500, 297 N.W.2d 578 (1980); In re Teichner, 75 Ill.2d 88, 387 N.E.2d 265 (1979). In Teichner, the Supreme Court of Illinois found that an attorney called to the site of a distant accident by a pastor and community leader as part of his community relief program, responded to the call with primarily a pecuniary motive. But the Supreme Court of Illinois still concluded that the attorney’s constitutionally protected right to engage in associational activities of a bona fide relief project immunized him from discipline for soliciting clients as part of the project.
27. ABA, Annotated Model Rules of Professional Conduct 323 (1984).
28. Rules of Professional Conduct 1.7, cmt., “Consultation and Consent.”
29. Id., cmt., “Conflicts in Litigation.”
30. In this context, Rule 1.7(b) may require disclosure of the fact that the lawyer’s interests as a member of the group in the prosecution of litigation may differ from the interests of other group members because the lawyer is being paid by the group for professional services.

Ethics Advisory Opinion No. 126

(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.
TABLE 1
Opinion No.
Issued
Holding
6
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
10
July 7, 1972
Municipal attorneys in sparsely populated areas of Utah may represent criminal defendants in other municipalities.
25
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.
41
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.
48
July 28, 1978
A Salt Lake County municipal attorney may not represent criminal defendants in other jurisdictions.
73
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.
Prosecutorial Duties. Rule 1.7(a) applies most directly when an attorney attempts to represent two clients whose interests are directly adverse to each other. For example, it is clear under Rule 1.7(a)(1) that a city attorney could not represent a criminal client where there would be a direct conflict between the accused and the city attorney’s public duties. The city prosecutor obviously could not represent a client he or she is obligated to prosecute. As Justice Durham has pointed out in State v. Brown,4 the city prosecutor may be disinclined to cross-examine vigorously a police officer on whom the attorney, as a prosecutor, may rely in another matter or may be reluctant to attack the constitutionality of laws the attorney is sworn to uphold as city attorney. In addition, the defendant may be hesitant to confide fully in counsel known to be a prosecutor in the city where the defendant resides, which may compromise the quality of the representation.5 The city prosecutor may not, therefore, represent a criminal client charged with violation of that city’s ordinances.
Even when the city attorney undertakes to represent a defendant in circumstances with no such direct conflict, there is nonetheless the potential for “adversely affecting” the attorney’s relationship with one of the clients. It may be difficult to determine the various influences that could undermine the attorney’s defense of the criminal client.
State v. Brown provides a general framework for analyzing the variations that are likely to arise, and it is useful to review the setting for that case. A Tremonton city attorney who had prosecutorial duties for the city was court-appointed to represent a criminal defendant in Box Elder County. Tremonton is in Box Elder County. The Utah Supreme Court found the city attorney’s representation of that client to be contrary to the public interest, notwithstanding the consent of the parties and the non-identical jurisdictions (city v. county).6 Thus, by the court’s opinion, a court-appointed city attorney with prosecutorial duties may not represent a criminal client charged within the city or an overlapping jurisdiction.7
It is more difficult to analyze the potential conflict when a city prosecutor represents a criminal client charged in a jurisdiction physically remote from the city that he or she represents. Yet, even in this situation, it is impossible to determine what unconscious influences may affect the representation. As the U.S. Court of Appeals for the Fourth Circuit has noted: “Each such [prosecuting] attorney may have assigned to him a particular row to hoe, but the overall objective is the cultivation of the entire field. That objective can be achieved only if each [prosecuting attorney] tends his row and does not obstruct his fellows.”8 The Committee believes that this metaphor and the Utah Supreme Court’s decision in State v. Brown aptly apply to remote jurisdictions, and it concludes that a city attorney with prosecutorial duties may not represent criminal defendants in any jurisdiction within Utah,9 including federal court.10
Nonprosecutorial duties. The attorney in State v. Brown was the city prosecutor. Does the outcome of the ethical analysis change if the city attorney has only civil responsibilities for the city? Yes and no, depending on the nature of the relationship between the attorney and the city.
Statutorily Appointed City Attorneys. There is a certain perception of unity with the city’s interests that attaches to a city attorney who has been appointed pursuant to statute.11 Therefore, for many of the same reasons that Justice Durham discussed in State v. Brown, adverse representations in the same city have too great a potential for compromise of zealous representation of one or the other party-even when the city attorney limits his city representation to civil matters.
The citizens of a Utah municipality ought not to have to ask the question, “How can the estimable city attorney stand firm and foursquare for the civil interests of my city and, at the same time, defend an individual on charges of criminal activity that may be a threat to the public safety in or near my city?” The Committee believes that this is a relationship that a lawyer could not reasonably believe would not “adversely affect the relationship” with one of the clients. Accordingly, a city attorney with no prosecutorial duties may not represent criminal defendants in the same city. He may represent criminal defendants in other jurisdictions but, as with any conflict to which Rule 1.7(a) applies, only under the conditions that: (1) the attorney reasonably believes that the representation of each client will not be adversely affected,12 and (2) each client consents after consultation.13
Attorneys Retained by Contract. An attorney who is not appointed as the official city attorney, but is retained on a contract basis, does not necessarily carry the presumption of unity of identity with the city’s interests. The Committee is, therefore, unable to articulate a per se rule prohibiting an attorney who is hired on a contract basis, and who has no prosecutorial duties, from representing a criminal defendant client, even in the same city. This is not to say that such an attorney is free to represent criminal defendants in all circumstances. To the contrary, both elements of Rule 1.7(a) must be satisfied before any representation of a criminal defendant is undertaken by an attorney who also represents a city on some basis.14
The public policy concerns with the attorney’s inherent conflict between diligent representation of his criminal defense client and the diligent representation of the city, along with the public policy concerns that clients be encouraged to discuss their cases freely with counsel, do not seem to be apparent in those instances where the criminal representation takes place in a jurisdiction other than the city that the attorney represents. In such instances, there is less likelihood that the attorney will be facing police officers and other criminal justice system participants with whom he normally works. Further, he will not be attacking ordinances he is sworn to uphold as a city attorney. The fact that the attorney, or one in his firm, is a city attorney would not necessarily chill the criminal defense client from freely discussing his case with his counsel.
Partners and Associates. The principles set forth above apply generally to the city attorney’s law-firm partners, associates or office-sharers.15 In particular, the city attorney’s partners, associates or those with whom the city attorney practices in situations that could be construed as a “firm” cannot represent criminal defendants in any situation where the city attorney would be so prohibited.
Conclusion. 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.
All of the situations in which the city attorney might represent a criminal defendant are, of course, subject to the underlying provisions of Rule 1.7(a), including the required consent under subparagraph (2).
To the extent that the conclusions reached in this Opinion are inconsistent with previous Opinion Nos. 6, 10, 25, 41, 48 and 73, those opinions are deemed modified or overruled.
Footnotes
1. Utah Code Ann. § 17-18-1(9)(a) (1991) directly disposes of this issue for county attorneys: “A county attorney may not: (a) in any manner consult, advise, counsel, or defend within this state any person charged with any crime, misdemeanor, or breach of any penal statute or ordinance.”
2. Rule 1.7(c) seems to address a similar relationship, when there are “interests of adverse parties in separate matters,” with the same proscriptions and conditions as found in Rule 1.7(a). This provision is not found in the Model Rules of Professional Conduct, and there is no explicit reference to paragraph (c) in the official comments to Rule 1.7. Because this Opinion reaches its conclusion by applying Rule 1.7(a) to the issue at hand, it is unnecessary to decide what, if any, situations are contemplated by Rule 1.7(c) that wouldn’t already be included under Rule 1.7(a).
3. A lawyer shall not represent a client if the representation of that client will be directly adverse to another client, unless:
(1) The lawyer reasonably believes the representation will not adversely affect the relationship with the other client; and
(2) Each client consent after consultation.
Utah Rules of Professional Conduct 1.7(a).
4. 853 P.2d 851, 857 (Utah 1992).
5. Id. at 858.
6. See also People v. Rhodes, 524 P.2d 363, 366 (Cal. 1974) (“Neighboring and overlapping law enforcement agencies have close working relationships, and resentment engendered by a city attorney within the membership of such agencies would have an adverse effect on the relationship of the city attorney with members of his local police department.”)
7. In the judgment of the Committee, the Utah Supreme Court’s analysis did not in any way depend on the fact that the attorney had been court-appointed to serve as defense counsel. On the contrary, if there is a conflict when a judicial officer orders the representation, a fortiori , the same conflict would exist if the dual representation is not court-ordered.
8. Goodson v. Peyton, 351 F.2d 905, 908 (4th Cir. 1965).
9. Utah Code Ann. § 17-18-1(9)(a) (1991) similarly proscribes such representation “within this state” by county attorneys. Note 1, supra.
10. See ABA Standard 4-3.5(g), Defense Function; ABA Standard 3-1.3(b), Prosecution Function.
11. Utah Code Ann. §§ 10-3-901 & -902 (1992).
12. There may be particular circumstances where the representation of a criminal client would be sufficiently adverse to the attorney’s city client as to make it impossible to satisfy subparagraph (1) of Rule 1.7(a). This would be a matter for the affected attorney to evaluate on the particular facts. The Committee cannot foresee all possible circumstances where the lawyer could not reasonably decide there were not adverse effects, and it declines to provide definitive safe harbors or out-of-bounds rulings on Rule 1.7(a) that are fact-dependent.
13. This Opinion offers no guidance on who may give such consent on behalf of the city client or the appropriate procedure by which to obtain such consent.
14. The Committee reiterates its reluctance to describe all situations in which representation would or would not be appropriate. As a general guideline, however, the Committee believes that the closer the interests of the attorney and the city are perceived to be, the more difficult it will be for the attorney to make the determination that neither client’s interests will be adversely affected.
15. “While lawyers are associated in a firm, none of them shall knowingly represent a client when any one of them practicing alone would be prohibited from doing so by Rules 1.7, 1.8(c) or 2.2.” Rules of Professional Responsibility 1.10(a). See also Comment to Rule 1.10, addressing the definition of a “firm.”
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Ethics Advisory Opinion No. 125

(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.
Footnotes
1. Rules of Professional Conduct 1.10.
2. Id. Rule 1.7; see also Utah State Bar Ethics Advisory Op. No. 126, ABA/BNA Lawyers’ Manual on Professional Conduct 1001:8502 (1994).
3. See Utah State Bar Ethics Advisory Op. No. 34 (1976).
4. Indiana State Bar Assoc. Ethics Op. U4, ABA/BNA Lawyers’ Manual on Professional Conduct 901:3305 (1990); Maine Op. 41, ABA/BNA Lawyers’ Manual on Professional Conduct 801:9207 (Aug. 23, 1983).
5. Virginia State Bar Op. 943, ABA/BNA Lawyers’ Manual on Professional Conduct 901:8722 (June 24, 1987).
6. Pennsylvania Bar Assoc. Op. 88-55, ABA/BNA Lawyers’ Manual on Professional Conduct 901:7312 (1988). See also Arthur Garwin, Suite Harmony, A.B.A. J., March 1992, at 88.