Ethics Advisory Opinion No. 01-01

Issued January 26, 2001
¶ 1 Issue:
Under the Utah Rules of Professional Conduct, may an attorney representing a client in a divorce case assert a statutory attorney’s lien under Utah Code Ann. § 78-54-41 against property awarded to the client in the divorce settlement?

¶ 2 Discussion: Rule 1.8(a). We first address a threshold question: Does the invocation of a statutory attorney’s lien require the attorney to meet the requirements of Rule 1.8(a) of the Utah Rules of Professional Conduct, which generally governs business transactions between lawyers and their clients?
¶ 3 Pursuant to Rule 1.8(a), a lawyer may not enter into a business transaction with a client or knowingly acquire an ownership, possessory, security or other pecuniary interest adverse to a client unless (1) the transaction and terms of the transaction are fair and reasonable to the client and are fully disclosed and transmitted in writing to the client, (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 to the transaction.
¶ 4 Rule 1.8(j) provides that “[a] lawyer shall not acquire a proprietary interest in the cause of action or subject matter of litigation the lawyer is conducting for a client, except that the lawyer may . . . acquire a lien granted by law to secure the lawyer’s fee or expenses . . . .”1
¶ 5 Utah statute provides for an attorney to be granted an attorney’s lien on the proceeds of a cause of action in which a lawyer represents a client:
The compensation of an attorney and counselor for services is governed by agreement, express or implied, which is not restrained by law. From the commencement of an action, or the service of an answer containing a counterclaim or at the time that the attorney and client enter into a written or oral employment agreement, the attorney who is so employed has a lien upon the client’s cause of action or counterclaim, which attaches to any settlement, verdict, report, decision, or judgment in the client’s favor and to the proceeds thereof in whosoever2hands they may come, and cannot be affected by any settlement between the parties before or after judgment. Any written employment agreement shall contain a statement that the attorney has a lien upon the client’s cause of action or counterclaim.3
¶ 6 The threshold question is, therefore, whether a lawyer may assert a lien under § 78-51-41 only if she satisfies the conditions of Rule 1.8(a), which govern a “business transaction” with a client and the knowing acquisition of an interest adverse to a client.
¶ 7 We conclude that Rule 1.8(a) is not applicable to the statutory lien situation. It is not reasonable to read this rule so narrowly that a statutory lien becomes a “business transaction” subject to Rule 1.8(a)’s conditions.4The statutory lien in question is a right of public record granted by the Legislature and is not the kind of adverse interest contemplated by Rule 1.8(a). Additionally, statutory attorney liens are specifically authorized by Rule 1.8(j)(1). Therefore, a lawyer does not violate Rule 1.8(a) by entering into a fee agreement with a client and subsequently enforcing that agreement by asserting a claim under § 78-51-41.5 (more…)

Ethics Advisory Opinion No. 01-02

(Issued February 21, 2001)
¶ 1 Issue
: Does a lawyer violate the Utah Rules of Professional Conduct if he agrees to discount his fees to a client until a referral fee initially charged to the client by a lawyer-referral service is reimbursed to the client?

¶ 2 Opinion: A lawyer who agrees to discount his fees to a referred client in order to permit the client to be reimbursed for the referral fee that the client originally paid to the referral service makes an indirect payment to the referral service and, therefore, violates the prohibition against payment of referral fees on a fee-per-case basis under Utah Rules of Professional Conduct 7.2(c).
¶ 3 Facts: A Utah lawyer referral service charges a referral fee to participating lawyers. It also charges a referral fee to its customers who are referred to lawyers. In order to make its business more appealing to the general public and businesses, the referral service also asks each participating lawyer to discount by 10% the lawyer’s usual fees to a referred client until the client is credited with an amount equal to the referral fee that the client paid to the referral service. Because not all participating lawyers agree to discount their legal fees, the referral service cannot guarantee to its customers that their referral fees will be reimbursed to them through the proposed payment arrangement.
¶ 4 Analysis: Under Utah Rules of Professional Conduct 7.2(c) (2000), “[a] lawyer shall not give anything of value to a person for recommending the lawyer’s services, except that a lawyer may pay the usual charges of a lawyer referral service or other legal service organization, but only as allowed by the provisions of Rule 1.5(e).” The relevant comment to Rule 7.2(c) further explains that the rule restricts the lawyer’s ability to pay referral fees by specifying that the “lawyer is allowed to pay for advertising permitted by this Rule, but otherwise is not permitted to pay another person for channeling professional work on a fee-per-case basis.”
¶ 5 Thus, a Utah lawyer may pay a fee to an organization that provides referrals so long as that fee is not calculated on a per-referral basis. In addition, if the referral organization consists entirely of lawyers, the payment of the referral fee must comply with the limitations imposed by Rule 1.5(e) on the division of fees between lawyers who are not in the same firm.1Based on the facts submitted to the Committee, we assume that the referral service comprises nonlawyers, rather than lawyers and, therefore, do not address the issue as to lawyer-generated referrals.
¶ 6 Under the proposed arrangement, the payment of a referral fee to the referral service is made initially by the client and later may be reimbursed by the participating lawyer by the lawyer’s discount in an amount equal to the referral fee initially paid by the client to the referral service. That arrangement is by nature a payment made on a fee-per-case basis because it cannot occur until the client hires the lawyer upon the referral provided by the referral service. The fact that the participating lawyer does not pay the referral fee directly to the referral service does not avoid the violation of the prohibition against the payment of referral fees on a fee-per-case basis. (more…)

Ethics Advisory Opinion No. 01-03

Issued March 21, 2001
¶ 1 Issue:
What are the ethical considerations where a lawyer seeks to disqualify a judge from a case by associating a lawyer from the judge’s prior private law firm and intentionally creating a circumstance in which the judge may conclude that he must recuse himself from the case?

¶ 2 Conclusion: Depending on the facts and circumstances, it may be unethical conduct for either lawyer to manipulate the judicial system by agreeing to associate new counsel for the primary purpose of provoking a judge’s recusal.

¶ 3 Background
: The following practice has been brought to the Committee’s attention: A lawyer (the “initial counsel”) is dissatisfied with the particular judge assigned to his client’s case or is disappointed with one of the judge’s preliminary rulings. The lawyer then associates a new lawyer (the “new colleague”) on the case-a lawyer purposefully chosen from the judge’s prior private law firm. Concerned that his impartiality in the case might be questioned because of the relationship with his prior law firm, the judge then recuses himself from the pending matter under Canon 3E of the Utah Code of Judicial Conduct1and the lawyer’s client is assigned a new judge.
¶ 4 We have been asked to consider whether it is unethical conduct for either the initial counsel or the new colleague to remove or attempt to remove a judge from a case by intentionally creating a circumstance in which the judge will feel compelled to recuse himself under Canon 3E of the Code of Judicial Conduct.2
¶ 5 Analysis: There are no provisions of the Utah Rules of Professional Conduct that directly address relationships between a lawyer and a judge that could lead to the judge’s disqualification. For example, the rules that define conflicts of interest-primarily Rules 1.7, 1.8, and 1.9-concern a lawyer’s interests that may conflict with loyalty to a client. They do not govern relations between a lawyer and a judge that could lead to the judge’s disqualification. Without more than the mere association of a lawyer from the judge’s prior law firm, we can find no per se ethical violation for the initial lawyer to solicit, or for the prospective new colleague to accept, an offer to associate on a case that will result in a judge’s recusal.
¶ 6 The issue of the intentional manipulation of the judicial system by interfering with the court’s assignment of a judge to hear a case is, however, more troubling. Such manipulation would constitute unethical conduct when the new colleague, who has a current or past relationship with the judge, is retained for the primary purpose of provoking a judge’s recusal after the judge has issued preliminary orders or rulings or has had other substantial involvement in the litigation. A significant indicator of this improper intent would arise when the initial lawyer associates with a new colleague chosen from the court’s prior private law firm, and the association has no basis in the new colleague’s expertise, experience or area of practice, or the new colleague makes no significant contribution to the representation. (more…)

Ethics Advisory Opinion No. 01-04

Issued May 10, 2001
¶ 1 Issue
: Is it ethical for lawyers to charge clients an annual fee for estate planning and asset-protection legal services based on a percentage of the value of the assets involved?

¶ 2 Opinion: Charging clients an annual fee for estate planning and asset protection legal services based on a percentage of the value of the assets involved is likely to be ethical only in extraordinary circumstances.
¶ 3 Facts: A law firm desires to bill clients for legal services1for estate planning and asset protection on an annual basis using a percentage, not to exceed 1%, of “assets owned” by clients or client entities. The percentage fee would cover “initial design and implementation of client’s estate and asset protection plan and firm’s commitment to ongoing annual services including several hours of annual office and telephonic conferences, annual gifting programs, additional document preparation, and review of documents related to the purchase or sale of the client’s principal residence.”
¶ 4 Applicable Rules of Professional Conduct: Rule 1.5(a) of the Utah Rules of Professional Conduct provides, in pertinent part:
A lawyer shall not enter into an agreement for, charge or collect an illegal or clearly excessive fee. A fee is clearly excessive when, after a review of the facts, a lawyer of ordinary prudence would be left with a definite and firm conviction that the fee is in excess of a reasonable fee. Factors to be considered as guides in determining the reasonableness of a fee include the following:
(1) The time and labor required, the novelty and difficulty of the questions involved and the skill requisite to perform the legal service properly;
(2) The likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;
(3) The fee customarily charged in the locality for similar legal services;
(4) The amount involved and the results obtained;
(5) The time limitations imposed by the client or by the circumstances;
(6) The nature and length of the professional relationship with the client;
(7) The experience, reputation and ability of the lawyer or lawyers performing the services; and
(8) Whether the fee is fixed or contingent.
(b) When the lawyer has not regularly represented the client, and it is reasonably foreseeable that total attorneys fees to the client will exceed $750.00, the basis or rate of the fee shall be communicated to the client, in writing, before or within a reasonable time after commencing the representation.
Also, Rule 1.4(b) of the Utah Rules of Professional Conduct provides: “A lawyer shall explain a matter to the extent reasonably necessary to enable the client to make informed decisions regarding the representation.”
¶ 5 Analysis: The fundamental requirement of the Utah Rules of Professional Conduct with respect to attorneys fees is that they must be reasonable.2The ethical propriety of hourly, contingency, retainer, fixed-fee and other arrangements for payment for legal services must be determined with reference to the provisions of Rule 1.5.3A percentage fee is no exception.4Accordingly, whether the annual percentage fee proposed is ethically proper must be determined with reference to the provisions of Rule 1.5. (more…)

Ethics Advisory Opinion No. 01-05

Issued July 13, 2001
¶1. Issue:
What are the ethical implications for a real estate broker who includes in his promotional material that he is also a lawyer?

¶2. Opinion: A lawyer functioning in a law-related profession, such as real estate brokerage, who holds out as either an active or inactive lawyer will be subject to the Utah Rules of Professional Conduct while engaged in that law-related profession.
¶3. Background: An individual who is currently licensed to practice law in State A and is an inactive member of the Utah State Bar intends to engage in providing real estate agent or real estate brokerage services in Utah. He has asked the Committee about the ethical consequences of stating in advertising for his Utah real estate services that he is a licensed and active lawyer in State A and an inactive Utah lawyer.
¶4. Analysis: The lawyer, acting in his role as a real estate broker,1is not marketing legal services that he will deliver as a lawyer, but is alerting prospective real estate clients that he is a lawyer-trained real estate broker and can deliver real estate professional services. The purpose of a factually correct claim in advertising his real estate services that he is a lawyer may be to gain the confidence of clients or gain an advantage over non-lawyer real estate agents or brokers on the indirectly promoted assumption that a lawyer-trained real estate broker would be able to exercise better professional judgment than a non-lawyer-trained broker with respect to issues that could come up in the marketing, sale or acquisition of real estate.
¶5. When a lawyer markets himself as able to perform non-legal professional services for a client and lists his qualifications or experience as a lawyer in a communication for “law-related professional services,” the use of such legal credentials is a “communication” within the meaning of the Rule 7.1, if a recipient of such materials could reasonably believe that the lawyer is offering legal services or professional advice that involves his legal experience, judgment or considerations.2An inactive member of the Bar may list a J.D. degree as a “credential,” but may not hold himself out as a lawyer.3The display of such credentials without more would not invoke the Rules of Professional Conduct even though the inactive member is engaged in a law-related profession.
¶6. The real estate broker profession is law-related,4and it may not be possible to know whether the lawyer’s work for the client is performed as part of a practice of law or part of the lawyer’s other occupation: “If the second occupation (such as a real estate brokerage business) is so law-related that the work of the lawyer in such an occupation will involve, inseparably, the practice of law, the lawyer is considered to be engaged in the practice of law while conducting that occupation. Accordingly, he is held to the standards of the bar while conducting that second occupation from his law offices.”5
¶7. As to the actively practicing lawyer, we have previously concluded that a lawyer who engages in a real estate, life insurance or title business is held to the ethical standards of a lawyer in both profession.6We have also more recently determined that a lawyer who holds himself out as a lawyer in any context may not ethically form a partnership with a non-lawyer if any of the activities of the partnership constitute the practice of law.7Applying this standard to an inactive lawyer who holds himself out in advertising in a law-related profession as lawyer-trained, we affirm that he would be held to the ethical standards of the legal profession while acting in the law-related profession. Further, because the lawyer is not currently qualified to practice law in the State of Utah, he may be engaged in the unauthorized practice of law when engaged in the real estate profession if he advertises that he is a lawyer, albeit, inactive. However, it is not within the purview of this Committee to determine what constitutes the unauthorized practice of law. (more…)

Ethics Advisory Opinion No. 01-07

Issued August 29, 2001
¶ 1. Issue:
Is it a violation of the ethical rules for an attorney or law firm to use trade names such as “Legal Center for the Wrongfully Accused” or “Legal Center for Victims of Domestic Violence” in selected court pleadings?

¶ 2. Opinion: It is not a violation of the ethical rules for an attorney or law firm to use trade names such as “Legal Center for the Wrongfully Accused” or “Legal Center for Victims of Domestic Violence” so long as the organization represents clients who claim to be in the indicated categories and provided the name is uniformly used for all such representation. Selective use of such trade names for some clients in the indicated categories but not others would violate Utah Rule of Professional Conduct 7.1(a).
¶ 3. Facts: A law firm desires to use the name “Legal Center for the Wrongfully Accused” in selected pleadings “in appropriate circumstances.” The law firm does not intend to use the trade name in advertising or in every pleading filed with a court. Use of the name will be limited to domestic violence cases, and will be used only in circumstances where the law firm deems it appropriate. The law firm proposes to use this trade name in response to the use by a public or charitable legal services organization designated “Legal Center for the Victims of Domestic Violence.”
¶ 4. Applicable Rules of Professional Conduct: Rule 7.5(a) of the Utah Rules of Professional Conduct states:
A lawyer shall not use a firm name, letterhead or other professional designation that violates Rule 7.1. A trade name may be used by a lawyer in private practice if it 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.
¶ 5. Rule 7.1 states:
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.
¶ 6. Analysis: Rule 7.5(a) expressly authorizes a lawyer’s use of trade names provided certain conditions are met. Use of trade names can assist the public in the selection of an attorney. The Committee is of the opinion that a law firm’s use of the trade name “Legal Center for the Wrongfully Accused” would satisfy the requirements of Rule 7.5(a) provided the law firm actually represents clients accused of unlawful conduct and provided the firm uses the name uniformly in all cases in which the firm’s client is accused of unlawful conduct. The law firm may not use the trade name in some “unlawful conduct” cases but not others. The same analysis applies to the trade name “Legal Center for Victims of Domestic Violence.” (more…)

Ethics Advisory Opinion No. 01-06A Update

Issued June 12, 2002
¶1. Issue:
May a private practitioner who serves as a part-time county attorney represent private clients in connection with protective-order hearings?

¶2. Opinion: The private representation of an individual by a part-time county attorney at a protective-order hearing is not a per se violation of the Utah Rules of Professional Conduct. However, the county attorney must fully inform the client that, if the client later becomes a criminal defendant in that county, the county attorney will not be able to continue the representation; he will not be able to defend the client in any criminal proceedings; and he will have to withdraw as counsel in the civil case. The county attorney must also determine, on a case-by-case basis, the likelihood that this potential conflict of interest between his prosecutorial duties and the interest of his private client will actually arise. If the likelihood that this will occur is relatively high, the attorney must obtain both the county’s and the private client’s informed consent to the representation.
¶3. Facts: An attorney has been declining to represent private clients at protective-order hearings in the county where the attorney serves as a part-time prosecutor as a result of objections made against such a representation by a lawyer practicing in that jurisdiction. The objecting lawyer has alleged an impermissible conflict of interest with the county attorney’s prosecutorial duties that would arise in the event that the subject of the protective order were to violate the order and consequently become the subject of a criminal investigation. One of the county attorney’s clients has been served with a protective order and required to appear at a hearing in an adjacent county. The county attorney intends to represent that client, since the hearing will be held in a jurisdiction where the county attorney does not have prosecutorial duties. The county attorney would also like to be able to undertake the representation of defendants to protective orders in the county where he serves as a part-time prosecutor, with the understanding that, if any of those clients were to violate their protective orders, he would withdraw from prosecuting the criminal case and refer it to another prosecutor.
¶4. Analysis: The facts submitted to the Committee raise the issue of the ethical obligations of a part-time county attorney in regard to conflicts of interest that may arise from the county attorney’s simultaneous private civil practice. The applicable standard is found in Utah Rules of Professional Conduct 1.7(b):
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 be adversely affected; and (2) Each client consents after consultation.
¶5. An impermissible conflict of interest would arise in the event that an attorney were to represent a criminal defendant in the jurisdiction in which he serves as a part-time county prosecutor, since the interests of the county prosecutor’s client (i.e., the public) are adverse to the interests of the criminal defendant.1Utah law clearly states the prohibition against such a representation: “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.”2In State v. Brown,3the Utah Supreme Court articulated the public concerns supporting a per se rule against the private representation of a criminal defendant by an attorney with concurrent prosecutorial duties. Among those concerns are: the client’s hesitation to confide in counsel known to be a prosecutor; the prosecutor’s reluctance to attack the constitutionality of the laws that he is sworn to uphold; reluctance to vigorously cross-examine those officials on whom he relies in his prosecutorial role; and, more generally, the potential erosion of the public’s confidence in the criminal justice system.4 (more…)