Ethics Advisory Opinion No. 00-01

(Approved March 9, 2000)
Issue:
What are the ethical obligations of a lawyer to protect client confidentiality in the use of Internet e-mail communications?

Opinion: A lawyer may, in ordinary circumstances, use unencrypted Internet e-mail to transmit client confidential information without violating the Utah Rules of Professional Conduct.
Analysis: Utah Rules of Professional Conduct 1.6 imposes a duty on the lawyer to protect confidential information against unauthorized use or disclosure.1 Opinions that have addressed this issue in the area of electronic communication have characterized the obligation of the lawyer to use a means of communication that has a “reasonable expectation” that the information will remain confidential.2
With respect to land-line telephone, fax machine and ordinary mail, a reasonable expectation of privacy has been deemed to exist, and a lawyer can use these means of communication to transmit confidential client information. It is recognized that a reasonable expectation of privacy does not mean certainty of privacy. Land-line telephone conversations can be intercepted, and the means to prevent interception are available through scrambling technology. Faxes can also be encrypted, and mail can be hand-delivered. This level of security, however, is not normally required, although circumstances can arise that require increased security in client communications by a lawyer.
State bar associations that have considered this issue have concluded, with few exceptions, that a reasonable expectation of privacy exists in the use of Internet e-mail and a lawyer may use this form of communication to transmit confidential client information.3
The American Bar Association has also concluded in a recent formal opinion that the use of Internet e-mail does not violate any Rule of Professional Conduct. In Formal Opinion No. 99-413, the ABA concluded that: “A lawyer sending confidential client information by unencrypted e-mail does not violate Model Rule 1.6(a) in choosing that mode to communicate. This is principally because there is a reasonable expectation of privacy in its use.”
Analyzing the characteristics of e-mail, ABA Opinion 99-413 concludes that e-mail is virtually indistinguishable from the process of sending a fax. The opinion states that there is a reasonable expectation of privacy, in part, because of the difficulty of intercepting direct e-mail, the current huge volume of e-mail traffic, and the fact that interception of e-mail is a criminal act.4
There is little evidence that unencrypted e-mails pose any greater risk of unauthorized disclosure than other forms of communication commonly used, such as telephone and facsimile.5The fact that Internet service provider (ISP) administrators or hackers are capable of intercepting e-mail (in violation of federal law) does not render the expectation of privacy unreasonable, any more than the risk of an illegal telephone tap removes the reasonable expectation of privacy in a land-line telephone call.6
Where the client information is particularly sensitive or the lawyer has reason to believe that the risk of interception of the communication is higher, he may want to use a means of communication with higher security. The lawyer should abide by any policy of the client regarding the use of e-mail (or any other means of communication) for its confidential information. A lawyer may wish to advise a client at the time he is retained that the lawyer intends to use unencrypted e-mail as one of the methods of communication with the client. (more…)

Ethics Advisory Opinion No. 00-02

(Approved March 9, 2000)
Issue:
May a Utah lawyer ethically state on her letterhead that she is “also admitted” in another state when she is on inactive status in that state?

Opinion: A lawyer on inactive status in a state may not ethically communicate by means of letterhead or otherwise that the lawyer is “admitted” in the state unless (i) the lawyer also affirmatively discloses the lawyer’s inactive status or (ii) the lawyer reasonably concludes that the communication would not be materially misleading under the circumstances as a whole, including the time and requirements involved in transferring from inactive to active status in the state in question. Further, the lawyer must (i) comply with any applicable requirements of the other state concerning inactive lawyers and (ii) guard against engaging in the unauthorized practice of law in the other state.
Analysis: A lawyer’s letterhead is a form of public communication1subject to the requirements of Rule 7.1, which provides in relevant part as follows:
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.2
In a series of cases beginning with Bates v. State Bar of Arizona,3the U.S. Supreme Court has made it clear that public communication concerning a lawyer’s services (including any form of advertising) is commercial speech, enjoys First Amendment protection, and can be regulated only to further substantial state interests, and then only in the least restrictive manner possible.4The cardinal rule concerning all public communication about a lawyer and her services is that the communication not be false or misleading.5In this regard, Rule 7.1 “captures the essence” of the Court’s opinions in Bates and its progeny, and “informs all of Part 7: lawyers have a First Amendment right to communicate truthfulinformation about their services, and potential clients have a right to hear such information, but society has a right to protect against communications that are false and misleading.”6
The three subsections of Rule 7.1 undertake to identify what constitutes permitted and prohibited speech and establish guidelines for the development of a common law of false and misleading communications with respect to legal services. The provision most applicable to the present analysis, Rule 7.1(a),7not only prohibits statements which contain material misrepresentations, but also requires “acaveat or explanation when a statement would otherwise be misleading.” Determining whether a particular communication is misleading requires an examination of the particular circumstances in question. There is no bright-line test for determining what is or is not misleading.8Rather, “[e]ach statement must be judged on its facts to determine whether it would have that effect and how much explanation is necessary.”9 (more…)

Ethics Advisory Opinion No. 00-03

(Approved March 9, 2000)
Issue: May a Utah lawyer who is also a real estate title officer ethically enter into a partnership with or form a small business corporation with a nonlawyer for the purpose of assisting clients in challenging their real estate taxes?

Opinion: No. Even if the proposed activities can also be performed lawfully by nonlawyers, a lawyer may not ethically form a partnership or other business association with a nonlawyer if any of the activities of the partnership consist of the “practice of law.” Nor may a lawyer practice with or in the form of a business organization if a nonlawyer owns an interest in that organization. A lawyer may form a business relationship with a nonlawyer to engage in such activities only if the lawyer withdraws entirely from the active practice of law.
Facts: A lawyer who is currently licensed to practice law in Utah is also licensed as a real estate title officer. He owns a title company and practices law part time. He proposes to form a small business corporation with a nonlawyer to assist clients in challenging their real estate taxes in return for a percentage of any resulting decreases in taxes. Each shareholder would have equal ownership. The corporation would also offer similar services to Utah counties in return for a percentage of any resulting increases in tax revenues. The request suggests that most but not all challenges on behalf of taxpayers would be resolved without an appearance before the applicable tax board or commission. The request claims that nonlawyers may assist taxpayers in proceedings before such tax boards and commissions.1
Analysis: Rule 5.4 imposes limitations on a lawyer’s affiliation with nonlawyers in order “to protect the lawyer’s professional independence of judgment.”2Rule 5.4(b) prohibits a lawyer from “form[ing] a partnership with a nonlawyer if any of the activities of the partnership consist of the practice of law.”3Here, the request proposes equal ownership with a nonlawyer of a small business corporation. That form of affiliation presents, however, no less of a threat to the lawyer’s professional independence of judgment than does a partnership. We conclude, therefore, that Rule 5.4(b)’s ethical prohibition applies to the proposed arrangement.4
The issue presented to this Committee is, therefore, whether the representation of taxpayers in tax commission proceedings for the purpose of challenging real estate tax assessments is “the practice of law” within the meaning of Rule 5.4.
The Rules do not define the practice of law. In interpreting Utah Code Ann. § 78-51-25, which prohibits the practice of law by those not licensed as lawyers, the Utah Supreme Court has held that activities prohibited to nonlawyers include a wide variety of activities beyond “appearing in court.”5The Court has also stated:
The practice of law, although difficult to define precisely, is generally acknowledged to involve the rendering of services that require the knowledge and application of legal principles to serve the interests of another with his consent. It not only consists of performing services in the courts of justice throughout the various stages of a matter, but in a larger sense involves counseling, advising and assisting others in connection with their legal rights, duties, and liabilities.6 (more…)

Ethics Advisory Opinion No. 00-04

(Approved June 2, 2000)
Issue:
What are a lawyer’s ethical duties to a third person who claims an interest in proceeds of a personal injury settlement or award received by the lawyer?

Opinion: When a lawyer receives funds or property and knows a third person claims an interest in the funds or property, the lawyer must first determine whether the third person has a sufficient interest to trigger the duties stated in Rule 1.15(b). Only a matured legal or equitable claim-such as a valid assignment, a judgment lien, or a statutory lien-constitutes an interest within the meaning of Rule 1.15 so as to trigger duties to third persons under Rule 1.15. If no such interest exists, the lawyer may disburse the funds or property to the client. If such an interest exists, the lawyer must comply with the duties stated in Rule 1.15. Where the client does not have a good-faith basis to dispute the third person’s interest, the lawyer must promptly notify the third person, promptly disburse any funds or property to the third person to which that person is entitled, and render a full accounting when requested. If the client has a good-faith basis to dispute the third person’s interest, and instructs the lawyer not to disburse the funds or property to the third person, the lawyer must promptly notify the third person that the lawyer has received the funds or property and then must protect the funds or property until the dispute is resolved.
Background: Lawyers sometimes receive funds or property in which third per-sons, such as medical providers or other creditors of the lawyer’s client, claim an interest. The Office of Professional Conduct of the Utah State Bar has advised the Ethics Advisory Opinion Committee that it has received complaints from medical providers alleging that lawyers representing plaintiffs in personal injury matters have not distributed amounts from personal injury settlements or awards to reimburse them for medical services provided to the lawyer’s client. In cases of this nature, the medical provider and the patient may have agreed that the patient may defer payment for medical services until the time of a personal injury settlement or award, at which time the provider’s invoices will be paid. The medical provider may also rely on a statutory lien or an assignment. Medical providers without a statutory lien or an assignment may demand payment from funds held by the lawyer based on facts such as the client’s promise to pay the provider when a settlement or award is received or the lawyer’s use of the provider’s bill in proving damages. In other cases, non-medical service providers, sellers of goods, or judgment creditors may claim rights in funds or property in a lawyer’s possession. The Office of Professional Conduct has requested that the Committee issue a formal opinion regarding matters involving third-party claims to proceeds of a personal injury settlement or award received by a lawyer.
Analysis: Rule 1.15 of the Utah Rules of Professional Conduct specifically addresses a lawyer’s duties when safekeeping property for clients or third persons. It states, in pertinent part: (more…)

Ethics Advisory Opinion No. 00-05

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

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

Ethics Advisory Opinion No. 00-06

(Approved September 29, 2000)
¶ 1 Issue:
What are the ethical obligations of an attorney who, unaware his client will lie, hears the client commit perjury or otherwise materially mislead a tribunal?

¶ 2 Opinion: Counsel who knows that a client has materially misled the court may not remain silent and continue to represent the client; to do so would be “assisting” the client in committing a fraud on the court. Rather, counsel is obligated to remonstrate with the client and attempt to persuade the client to rectify the misleading or untruthful statements to the court. If this is unsuccessful, counsel must seek to withdraw. If withdrawal is denied, counsel must disclose the fraud to the court.

¶ 3 Facts
: This issue came to the Committee in the narrow setting of a criminal sentencing hearing in which the court asks the lawyer’s client, who is not under oath, about the client’s prior criminal history. The defendant misleads the court and gives false material information that counsel knows to be untruthful. Counsel is now confronted with ethical considerations.
Analysis:
A. Counsel may not remain silent and continue to represent the client; to do so would be “assisting” the client in committing a fraud on the court.
¶ 4 Rule 3.3(a)(2) provides that “[a] lawyer shall not knowingly . . . fail to disclose a material fact to a tribunal when disclosure is necessary to avoid assisting a criminal or fraudulent act by the client.”1The issue on the facts presented here is whether a lawyer, by remaining silent in response to unanticipated false client testimony not presented by the lawyer, is “assisting” the client in committing a fraud on the court.
¶ 5 Ethical dilemmas arising under Rule 3.3 present difficult issues requiring balancing of competing duties. A lawyer’s duty of candor to the court must be balanced against the duty of loyalty to and zealousness on behalf of a client and the duty to maintain confidential client information.2
¶ 6 After the adoption of the Model Rules of Professional Conduct by the American Bar Association, the ABA’s Committee on Professional Ethics reconsidered its prior opinions regarding a lawyer’s duties in response to false testimony by a client. In ABA Formal Opinion 87-353, the ABA Committee stated that Model Rules 3.3(a) and 3.3(b) were a “major policy change with regard to a lawyer’s duty . . . when his client testifies falsely. It is now mandatory under [Model Rule 3.3] for a lawyer who knows the client has committed perjury, to disclose this knowledge to the tribunal if the lawyer cannot persuade the client to rectify the perjury.”3That opinion considered the same facts presented here: “judge asks the defendant whether he has a criminal record and he falsely answers that he has none.”4The opinion states that “where the client has lied to the court about the client’s criminal record, the conclusion of Opinion 287 [decided in 1953 under the 1908 Canons of Professional Ethics] that the lawyer is prohibited from disclosing the client’s false statement to the court is contrary to the requirement of Model Rule 3.3. This rule imposes a duty on the lawyer, when the lawyer cannot persuade the client to rectify the perjury, to disclose the client’s false statement to the tribunal . . . .”5 (more…)

Ethics Advisory Opinion No. 00-07

(Approved June 2, 2000)
Issue:
Do the Utah Rules of Professional Conduct prohibit a lawyer licensed to practice in Utah from participating in an association of lawyers that would use joint letterhead, with a disclaimer that the association “is an affiliation of independent attorneys-not a partnership?”

Opinion: A lawyer does not violate the Utah Rules of Professional Conduct if he participates in an association or affiliation of individual lawyers and law firms, provided that he adheres to the applicable rules regarding conflicts of interest and disclosure of confidential information. However, it would be misleading, and therefore a violation of the Rules, for the lawyer to participate in such an association or affiliation if its members were to practice under a common firm name and were to use joint letterhead. The inclusion of a partnership disclaimer would not cure the misleading nature of the letterhead concerning the relationship among the attorneys.
Facts: A Utah lawyer desires to associate himself with lawyers who are licensed to practice law in various foreign countries. Under the proposed arrangement, the members of the association would not be partners, but would be independent practitioners. It is not clear from the facts whether the lawyers participating in the association would merely refer clients to each other or whether they would also have some kind of a financial arrangement. The lawyers would use joint letterhead, which would identify the association as follows:
A, B, C & D
International Lawyers
[Address]
Offices: Representative
A, Admitted: State,Country United Kingdom
B, Admitted: Country European Union
C, Admitted: Country Russia
D, Admitted: State, Country Asia
A,B,C & D is an affiliation of independent attorneys—not a partnership.
Analysis: A lawyer’s communications regarding the lawyer’s services, including the designation of the lawyer’s firm and the lawyer’s letterhead, must comply with the requirements of Rules 7.1, 7.4 and 7.5 of the Rules.
Rule 7.1 states that “A lawyer shall not make a false or misleading communication about the lawyer or the lawyer’s services.”1Rule 7.5 governs firm names and letterheads, and subsection (d) is applicable to the analysis in this case: “Lawyers may state or imply that they practice in a partnership or other organization only when that is the fact.”2The obligation of the lawyer not to mislead third parties is further delineated by Rule 7.4, which outlines the limits of the lawyer’s communication of his fields of practice and states that, while allowed to indicate that his practice is limited to specific areas of practice, a lawyer cannot communicate that he is a specialist, unless otherwise permitted by the rule.3
The practice of law has evolved from the traditional model of a partnership with a single law office to various, more fluid forms of relationships among lawyers, which range from structures similar in nature to a partnership to arrangements that merely contemplate mutual referrals. It has now become common practice for lawyers to associate or become affiliated with other lawyers or law firms in different states or countries by way of some form of strategic alliance or participation in national or international networks. While these creative forms of association may provide a legitimate service to clients in a shrinking world, nonetheless they remain circumscribed by the Rules. (more…)

Ethics Advisory Opinion No. 00-06

Opinion No. 00-06
(Approved September 29, 2000)

1 Issue:

What are the ethical obligations of an attorney who, unaware his client will lie, hears the client commit perjury or otherwise materially mislead a tribunal?

2 Opinion: Counsel who knows that a client has materially misled the court may not remain silent and continue to represent the client; to do so would be “assisting” the client in committing a fraud on the court. Rather, counsel is obligated to remonstrate with the client and attempt to persuade the client to rectify the misleading or untruthful statements to the court. If this is unsuccessful, counsel must seek to withdraw. If withdrawal is denied, counsel must disclose the fraud to the court.

3 Facts
: This issue came to the Committee in the narrow setting of a criminal sentencing hearing in which the court asks the lawyer’s client, who is not under oath, about the client’s prior criminal history. The defendant misleads the court and gives false material information that counsel knows to be untruthful. Counsel is now confronted with ethical considerations.

Analysis:
A. Counsel may not remain silent and continue to represent the client; to do so would be “assisting” the client in committing a fraud on the court.

4 Rule 3.3(a)(2) provides that “[a] lawyer shall not knowingly . . . fail to disclose a material fact to a tribunal when disclosure is necessary to avoid assisting a criminal or fraudulent act by the client.”1The issue on the facts presented here is whether a lawyer, by remaining silent in response to unanticipated false client testimony not presented by the lawyer, is “assisting” the client in committing a fraud on the court.

5 Ethical dilemmas arising under Rule 3.3 present difficult issues requiring balancing of competing duties. A lawyer’s duty of candor to the court must be balanced against the duty of loyalty to and zealousness on behalf of a client and the duty to maintain confidential client information.2

6 After the adoption of the Model Rules of Professional Conduct by the American Bar Association, the ABA’s Committee on Professional Ethics reconsidered its prior opinions regarding a lawyer’s duties in response to false testimony by a client. In ABA Formal Opinion 87-353, the ABA Committee stated that Model Rules 3.3(a) and 3.3(b) were a “major policy change with regard to a lawyer’s duty . . . when his client testifies falsely. It is now mandatory under [Model Rule 3.3] for a lawyer who knows the client has committed perjury, to disclose this knowledge to the tribunal if the lawyer cannot persuade the client to rectify the perjury.”3That opinion considered the same facts presented here: “judge asks the defendant whether he has a criminal record and he falsely answers that he has none.”4The opinion states that “where the client has lied to the court about the client’s criminal record, the conclusion of Opinion 287 [decided in 1953 under the 1908 Canons of Professional Ethics] that the lawyer is prohibited from disclosing the client’s false statement to the court is contrary to the requirement of Model Rule 3.3. This rule imposes a duty on the lawyer, when the lawyer cannot persuade the client to rectify the perjury, to disclose the client’s false statement to the tribunal . . . .”5
(more…)