Ethics Advisory Opinion No. 02-01

Issued February 11, 2002
¶ 1 Issue:
Do the Utah Rules of Professional Conduct preclude a Utah lawyer from financing litigation costs through a loan from a third-party lending institution, if (a) the lawyer is obligated to repay the loan and (b) the client, by separate agreement with the lawyer, is obligated to reimburse the lawyer for such costs?

¶ 2 Conclusion: The Utah Rules of Professional Conduct do not preclude such litigation-financing arrangements, provided the lawyer discloses to the client the terms and conditions of the loan, the client consents, and the lawyer, but not the client, is obligor on the loan.
¶ 3 Background: A Utah State Bar lawyer seeks an advisory opinion regarding the ethical propriety under the Utah Rules of Professional Conduct of participating in a “recourse” loan program,1by which the lawyer would finance the costs of litigation for his client through a third-party lending institution offering loans to lawyers for litigation expenses.
The primary features of a typical program include:
The program allows a lawyer, often a personal-injury lawyer seeking to finance a contingent-fee case, to raise the money at low cost to be invested in litigation expenses. This is accomplished through a low-interest, recourse loan to the lawyer or law firm who uses the potential fees from the case as loan collateral.
Under the terms of the loan, the lending institution advances reimbursable litigation costs, as defined in the loan agreement, to the lawyer. The brochure of one such lending institution claims it advances 95% to 100% of the lawyer’s case costs.
The lawyer pays monthly interest charges on funds advanced under the loan, and remits the loan principal upon settlement or resolution of the case. By a separate agreement with the client, the lawyer ultimately recoups litigation expenses and interest charges from the client if the case is successful.
If the case is abandoned or lost, the lawyer is obligated to repay advanced costs and expenses and any outstanding interest to the lender. The lawyer may elect not to receive funding from the lending institution on a particular case if the potential for success is not deemed high enough. The client remains obligated to repay the lawyer for such advanced costs under a separate agreement between the lawyer and the client.
The lending institution recommends the lawyer add language to the client fee agreement that discloses the case-financing transaction. A sample client letter discloses, “If no recovery is obtained, you will be obligated only for disbursements and charges as described below.” Such disbursements include photocopying, messenger service, computerized research, videotape recordings, travel expenses, experts, investigators, etc. In disclosing the financing arrangement, the letter states, “You acknowledge and agree that we [the law firm] may borrow funds from time to time to pay certain of the costs referred to above and agree that, in addition to reimbursing us for the amount of such costs, you also will reimburse us for any interest charges and related expenses we incur in connection with such borrowings.”
¶ 4 Variations of such financing arrangements are possible, but the essential features for purposes of this opinion are that the lawyer is obligated to the lending institution to repay the loan principal, and the client is obligated to reimburse the lawyer for advanced litigation costs, plus any applicable interest.
¶ 5 Analysis: The letter requesting our opinion notes a concern with our Opinion 97-11,2 dealing with a “non-recourse” cost-financing program. In that opinion, we concluded, “An attorney’s grant of a security interest in a contingent fee from a particular case to secure a loan constitutes the sharing of fees with a non-lawyer in violation of Utah Rules of Professional Conduct 5.4(a).”3In other words, the lender’s fee was contingent upon the lawyer’s contingent fee. The Committee disagreed with the lender’s contention that such an arrangement did not involve fees, but merely a repayment of costs. The opinion added, “Once a security interest in the recovery of contingent fees from a particular case is granted, Rule 5.4 is implicated. Upon that grant, Lender has the right to attach upon default in payment of the loan.” That particularized interest would “compromise the lawyer’s judgment in a number of ways,” primarily by creating potential conflicts between the lawyer and the lender, thereby undermining the lawyer’s duty of independent professional judgment and the duty of client loyalty.4
¶ 6 The proposed financing arrangement explained above has none of the objectionable features described in Opinion 97-11. Here, the lending institution has no interest in the lawyer’s contingent-fee award because, under the separate loan agreement between the lawyer and the lender, the lawyer is obligated to repay the loan whatever the outcome of the case. Because this obligation is not contingent, the lawyer is not compromised, as was the lawyer under the arrangement described in Opinion 97-11. Similarly, in this case, the client, by separate agreement, remains obligated to the lawyer for payment of litigation costs. The lawyer is not compromised because the client’s obligation is not contingent upon the outcome of litigation. The arrangement described above simply makes it easier for clients and attorneys to finance litigation and is mutually beneficial to both.
¶ 7 Many other state counterparts to this Committee have considered the professional ethics issues arising under financing arrangements similar to those in this opinion. These advisory opinions have analyzed the proposed financing arrangement in light of their respective rules’ prohibitions against fee-splitting arrangements and the lawyer’s “independent judgment.” In Utah, these ethical standards are found in Rule 5.4(a).5The various state bar ethics opinions summarized in the Appendix to this opinion have invariably concluded that litigation-financing arrangements similar to those described above are permissible, provided the attorney remains obligated on the loan and there is full disclosure to the client. Our research has not disclosed a contrary opinion, and we generally concur with the reasoning and conclusions of these opinions.
APPENDIX
Florida
Formal Advisory Opinion No. 86-2, State Bar of Florida (April 15, 1986), asks whether “[l]awyers may charge a lawful rate of interest on liquidated fees and costs either as provided in advance by written agreement or upon reasonable notice.” The com mittee’s answer, in its entirety, states, “The Committee finds no basis for distinguishing between fees and costs advanced for the purpose of charging interest. Accordingly, the Committee concludes that the Code of Professional Responsibility does not prohibit in advance by written agreement or, in the absence of a written agreement, upon reasonable notice. It is the Committee’s view that 60 days would constitute reasonable notice.”
Georgia
Formal Advisory Opinion No. 92-1, State Bar of Georgia (January 14, 1992), describes a system for payment of certain costs and expenses in contingency-fee cases where the law firm sets up a draw account with a bank, secured by a note from individual firm lawyers. When a client makes a payment toward expenses incurred on the case, the law firm credits the client’s account, and if the case is settled or verdict paid, the firm pays off the client’s share of the money advanced on the loan. If no verdict or settlement is obtained, the lawyers are contractually obligated to repay the loan, although the client remains ultimately liable to the lawyer, not the bank, to reimburse such expenses. The opinion raises two issues: whether the bank loan to the lawyer compromises the attorney -client relationship and whether it is ethical to charge clients interest. As to the first issue, the opinion concludes there is no ethical impropriety provided the lawyers “make sure that the bank understands that its contractual arrangement can in no way affect or compromise the lawyer’s obligations to his or her individual clients.” The opinion similarly concludes on the second issue, “[I]t is permissible to charge interest on such advances only if (i) the client is notified in the contingent fee contract of the maximum rate of interest the lawyer will or may charge on such advances; and (ii) the written statement given to the client upon conclusion of the matter reflects the interest charged on expenses advanced in the matter.”
Illinois
Opinion No. 92-9, Illinois State Bar Ass’n (January 22, 1993), posits a different factual arrangement. The question was whether the lawyer may ethically help clients obtain financing. Under the proposed arrangement, the lawyer pays an initial fee of $500 for which he is given the right to submit loan applications from clients. If the loan is approved, the client becomes solely responsible on the loan, but the attorney receives the loan proceeds less a 10% fee. The opinion concluded that an “attorney may ethically assist clients in obtaining loans for payment of attorney fees, providing the attorney protects the client’s confidences and meets his fiduciary obligation of complete disclosure.”
Missouri
Informal Opinion No. 970066, Missouri Bar Ass’n (August 20, 2001), asks, “If an Attorney borrows money in order to fund the litigation expenses in a case, may an attorney pass the interest on the loan through to the client?” In a terse answer, the Opinion concludes the “Code of Professional Responsibility does not prohibit an attorney from charging a lawful rate of interest on liquidated fees and costs, either as provided in advance by written agreement or, in the absence of a written agreement, upon reasonable notice.”
New Jersey
120 N.J.L.J. 252, N. J. Advisory Comm. on Professional Ethics (July 30, 1987), discusses whether “it is appropriate for the firm to advance disbursements” in a contingency fee case. The financing arrangements are virtually identical to those described in the Utah inquiry. Consistent with its counterparts, the Committee found “nothing unethical or contrary to the letter of the rules of the Court, or Rules of Professional Conduct in the proposed provision.”
Ohio
Opinion 2001-3, The Supreme Court of Ohio, Board of Commissioners (June 7, 2001), addresses “the ethical propriety of a law firm borrowing money, using the funds to advance costs and expenses of litigation in a personal injury matter accepted on a contingent fee basis, and then passing the interest fees and costs of the loan to the client as expenses of litigation.” Again, the financing arrangements are virtually identical to those described in the Utah inquiry. The Ohio Board found: “[T]here is no rule prohibiting a lawyer from obtaining a loan from a third party institution for use in advancing the expenses of litigation provided the loan is not secured by the client’s settlement or judgment. However, the client should be informed.”
Texas
Tex. Comm. on Professional Ethics, Op. 465, V. 54 Tex. B.J. 76 (1991), discusses two issues: whether an attorney may “ethically own an interest in a lending institution which loans money to personal injury clients of the attorney,” and whether the attorney “may borrow money from a lending institution for case expenses . . . and ethically charge, or pass on, to the client, as part of the expense, the outofpocket [sic] interest or finance charges of the lending institution.” The Committee found “an attorney may properly own an interest in a lending institution which loans money to personal injury clients of the attorney,” and that “an attorney may properly borrow money from a lending institution for case expenses for a personal injury client, and charge, or pass on, to the client the actual out-of-pocket interest or finance charges of the lending institution.”
Tennessee
Advisory Ethics Opinion 98-A-659, Board of Professional Responsibility of the Supreme Court of Tennessee (July 9, 1989), draws a similar conclusion from similar facts described in the Utah inquiry. The Board concludes “a lawyer may advance or guarantee certain expenses” by means of “a lending company or recommending such services to clients.”
Footnotes
1.A “recourse loan” in this context is one for which the lawyer would be liable to a lending institution irrespective of the outcome of litigation being financed. See Black’s Law Dictionary (“recourse loan” under “loan” entries) (7th ed. 1999).
2.Utah Ethics Adv. Op. 97-11, 97 WL 770890 (Utah St. Bar).
3.Id. at 1.
4.Id. at 2.
5.“A lawyer or law firm shall not share legal fees with a nonlawyer” with noted exceptions, none of which is applicable here. Professional Independence of a Lawyer, Utah Rules of Professional Conduct 5.4(a) (2001).

Ethics Advisory Opinion No. 02-02

(Issued February 11, 2002)
¶1 Issue:
To what extent does the recent amendment to Utah Rules of Professional Conduct 7.3(c) affect a lawyer’s or law firm’s newsletters and “alerts” to clients and prospective clients, brochures provided at public seminars, promotional items provided at seminars and other events, and web-site information?

¶2 Facts: A law firm1prepares and mails, or e-mails, newsletters to clients and, in certain instances, to prospective clients with whom attorneys at the firm have no prior or current business, familial or close personal relationship. The newsletter and other firm information is also posted on the firm’s web-site. The law firm also sends notices or “alerts” on certain areas of the law to clients and prospective clients who may be interested in those areas. The law firm also on occasion, especially with sponsorship of activities such as seminars, sets up a booth or other location where various materials, such as general brochures about the law firms are made available to attendees of the function. Finally, the firm, either at seminars or other events, provides promotional items such as golf balls, flashlights, pens, and the like which have the firm’s logo on them.
¶3 Analysis: Rule 7.3(c) currently states:
Every written communication from a lawyer soliciting professional employment from a prospective client and with whom the lawyer has no family relationship, prior or current professional relationship, or close personal friendship, shall prominently include the words “Advertising Material” on the outside envelope, if any, and at the beginning of the communication. For the purposes of this subsection, “written communication does not include advertisement through public media, including but not limited to a telephone directory, legal directory, newspaper or other periodical, outdoor advertising, radio or television.2
¶4 In Opinion 99-043we determined that a “solicitation” in the context of Rule 7.3 means a communication initiated by the lawyer with respect to the lawyer’s availability to provide or to accept professional employment and necessarily includes an offer by the lawyer to provide or to accept professional employment.4
¶5 If the newsletter, alert or brochure encourages the recipient to engage the firm’s services or contact the firm for further information, extolls the firm’s expertise, or otherwise contains an offer to provide legal services, then the item constitutes a “solicitation” of professional employment. As such, unless it is sent to a current or prior client or to someone with whom a lawyer in the firm has a familial relationship or close personal friendship, Rule 7.3(a) requires that it contain the words “Advertising Material” prominently on the outside envelope, if any, and at the beginning of the communication.
¶6 The firm’s web-site, however, is not a written communication which is “sent” from the firm to anyone. A person’s visit to a web-site to obtain information can be viewed either as “advertisement through public media” or as analogous to telephoning the firm or visiting a lawyer’s office to request information; it does not require an “Advertising Material” legend.5An e-mail that is directed to a person’s individual e-mail address, on the other hand, falls in the same category as a regular mailing and must contain the appropriate “Advertising Material” legend at the beginning of the e-mail message.
¶7 Finally, items such as pens, flashlights, golf balls and the like displaying the firm’s logo do not constitute a written communication soliciting professional employment. The firm’s logo does not extoll the firm’s expertise, encourage the recipient to contact the firm, or otherwise request employment. As a result, such items do not need to contain the words “Advertising Material” on them.6
¶8 Conclusion: If the newsletters, alerts or brochures are designed by the firm in such a way that they constitute a solicitation of professional employment from a prospective client with whom no attorney at the firm has any family relationship, prior or current professional relationship, or close personal friendship, they must prominently include the words “Advertising Material” on the outside envelope, if any, and at the beginning of the communication. If the newsletters and alerts are not designed in such a way that they constitute a solicitation of professional employment, then they do not need to contain the words “Advertising Material” on them. Rule 7.3(c) does not require the firm’s web-site to have the words “Advertising Material” prominently displayed on it. The firm’s logo items also do not have to have the words “Advertising Material” displayed on them.
Footnotes
1.The request for an opinion was submitted by a law firm. Our analysis applies equally to individual lawyers.
2.Utah Rules of Professional Conduct 7.3(a) (2002). The current version of this rule was adopted by the Utah Supreme Court, effective April 1, 2001.
3.Utah Ethics Adv. Op. 99-04, 1999 WL 608212 (Utah St. Bar).
4.The 2001 amendments to Rule 7.3(a) do not affect our previous discussion of the definition of “solicit.” See also Calif. Rules of Professional Conduct, Rule 1400(B)(1) (“solicitation” is any communication “concerning the availability for professional employment of a member or law firm in which a significant motive is pecuniary gain”).
5.Utah Ethics Adv. Op. 97-10, 1997 WL 705482 (Utah St, Bar).
6.Although a case might be made that the “subject” or “re” line of an e-mail is similar to an envelope for a regular mailing, we do not decide here whether the words “Advertising Material” must be included in that line.

Ethics Advisory Opinion No. 02-03

(Issued February 27, 2002)
¶ 1 Issue:
What are the ethical obligations of an insurance defense lawyer with respect to insurance company guidelines and flat-fee arrangements?

¶ 2 Opinion: An insurance defense lawyer’s agreement to abide by insurance company guidelines or to perform insurance defense work for a flat fee is not per se unethical. The ethical implications of insurance company guidelines must be evaluated on a case by case basis. An insurance defense lawyer must not permit compliance with guidelines and other directives of an insurer relating to the lawyer’s services to impair materially the lawyer’s independent professional judgment in representing an insured. If compliance with the guidelines will be inconsistent with the lawyer’s professional obligations, and if the insurer is unwilling to modify the guidelines, the lawyer must not undertake the representation. Flat-fee arrangements for insurance defense cases are unethical if they would induce the lawyer improperly to curtail services for the client or perform them in any way contrary to the client’s interests. Obligations of lawyers under the Utah Rules of Professional Conduct, including the duty zealously to represent the insured, cannot be diminished or modified by agreement.
Insurance Company Guidelines
¶ 3 Opinion Request Concerning Insurers’ Guidelines. The Ethics Advisory Opinion Committee has received a request for an ethics advisory opinion concerning insurance company guidelines for counsel who are employed to defend litigation brought by a third party against an insured. The requestors state that insurance companies doing business in Utah have incorporated in their defense-counsel retainer agreements certain billing protocols or guidelines governing attorneys’ procedures and payments that raise ethical issues.
¶ 4 Prior Opinions. Although issues pertaining to insurance company guidelines have been the subject of considerable discussion elsewhere,1 they have not been addressed directly by this Committee.2 When ethical concerns about insurance company guidelines have been raised in ethics opinions from other jurisdictions, the opinions are generally consistent with the summary set forth in ABA Opinion No. 01-421:
A lawyer must not permit compliance with “guidelines” and other directives of an insurer relating to the lawyer’s services to impair materially the lawyer’s independent professional judgment in representing an insured.
Although most of the ethics opinions on insurance company guidelines take a general approach, a few—while acknowledging that certain guidelines may be appropriate—have taken issue with particular guidelines. For purposes of illustration, portions of selected ethics opinions from other jurisdictions are set forth in Appendix A. We do not intend to imply agreement with the conclusions of these opinions. Rather, we wish to describe more fully the kinds of concerns that have been raised elsewhere, many of which are raised directly in the request before us.
¶ 5 Montana Supreme Court Decision. The Montana Supreme Court has issued an opinion that addresses these topics, but only after having determined that the insured is the sole client of the defense lawyer. Under that structure, the court noted that defense counsel (a) does not have a “blank check” to escalate litigation costs, (b) should consult with the insurer, (c) must charge reasonable fees, and (c) can be held accountable for its work. The Montana court then held that “defense counsel in Montana who submit to the requirement of prior approval [obtaining consent of the insurer prior to taking certain actions] violate their duties under the Rules of Professional Conduct to exercise their independent judgment and to give their undivided loyalty to insureds.”3
¶ 6 The Insurer-Defense Attorney Relationship. We do not decide whether, under Utah law, the insurer may or may not be a co-client of defense counsel. This is a legal question about which the Committee is not authorized to issue an opinion.4Courts in other jurisdictions have addressed the issue,5but the Utah Supreme Court has not determined whether a lawyer employed to represent an insured party in the defense of litigation also represents the insurer. We recognize not only that the Utah Supreme Court has not addressed this matter but that, even if it is assumed that the insurer is not a client, there are significant legal issues pertaining to the relationship between defense counsel and insurer.6The formation of an attorney-client relationship is a matter of substantive law external to the Utah Rules of Professional Conduct and in Utah, as in other states, depends upon the facts of the particular case including the intent and conduct of the parties.7As noted in the Scope comment to the Utah Rules of Professional Conduct:
[F]or purposes of determining the lawyer’s authority and responsibility, principles of substantive law external to these Rules determine whether a clientlawyer relationship exists. Most of the duties flowing from the clientlawyer relationship attach only after the client has requested that the lawyer render legal services and the lawyer has agreed to do so. But there are some duties, such as that of confidentiality under Rule 1.6, that may attach when the lawyer agrees to consider whether a clientlawyer relationship shall be established. Whether a clientlawyer relationship exists for any specific purpose can depend on the circumstances and may be a question of fact.
¶ 7 Our authority does not extend to the determination of legal question.8 Issuance of an opinion on the matters before us does not require that there be a determination of the legal question of whether a lawyer employed as defense counsel represents both insured and insurer. Accordingly, in this opinion, we address the lawyer’s ethical obligations in the event both the insurer and the insured are clients. We also address the lawyer’s ethical obligations in the event only the insured is a client. In the absence of controlling law to the contrary, who the lawyer represents may be determined at the outset by agreement of the insured, the insurer and the lawyer.
¶ 8 Insurance Company Guidelines. The requestors did not provide the Committee with copies of particular guidelines. Instead, they inquired generally about the ethical implications of guidelines, stating that certain tasks will only be paid at specified rates (e.g., written discovery will only be paid at paralegal rates) and that unless preapproval from an adjuster is obtained for certain tasks, defense counsel will not be paid (e.g., pleadings and motions, written discovery, retention of experts, legal research, travel, trial preparation, jury instructions, posttrial motions, appeals).9
¶ 9 The extensive scholarly literature on insurance company guidelines reveals a number of points that are relevant background for our consideration of ethical issues with respect to insurance company guidelines:
* Insurance company guidelines are not identical.
* Insurance companies may not use the same guidelines for every type of insurance defense.
* Considerations of freedom of contract, cost control in the interest of policyholders (including avoidance of unreasonable defense costs), and improving coordination and communications with defense counsel are important motivating factors for insurance companies in promulgating guidelines.
* Insurance company guidelines are similar in some respects to litigation management guidelines established by numerous corporate or governmental entities seeking to control litigation costs.
* There may be a degree of unobvious flexibility in insurance company guidelines, in that insurance companies may permit variance from written guidelines or may reconsider and reverse an initial decision against a particular action upon receiving a satisfactory justification from the defense attorney.
* Insurance company guidelines may include provisions that are unobjectionable from virtually any standpoint, such as:
(a) defining the financial relationship between the insurer and defense counsel (including hourly rates or other fees and permitted charges for expenses);
(b) coordinating the roles of defense counsel and employees of the insurer;
(c) establishing communications procedures between defense counsel and the insurer;
(d) stating the insurer’s objectives, both strategic and financial, with respect to litigation defense;
(e) outlining standard procedures the insurer prefers to follow in handling lawsuits;
(f) identifying which lawyers and nonlawyers will be responsible for the matter;
(g) requiring analysis of the case as a whole and of the need for particular services; and
(h) billing procedures, including frequency of billing and billing format, such as requirements that billings include sufficient information to permit an evaluation of the reasonableness of fees and costs.
On the other hand, many believe that insurance company guidelines may in practice result in an inadequate defense of the insured by requiring or inducing defense lawyers to curtail services for the insured improperly.
¶ 10 The Insurer-Insured Relationship. The insurer and the insured have significant rights and obligations pertaining to the defense of litigation brought against the insured by a third party. For example, in Ellis v. Gilbert,10the Utah Supreme Court stated:
The bare facts of life may as well be faced and reckoned with. If we look behind the facade it is to be seen that where there is insurance, the company actually takes over, employs counsel, investigates the case, interviews the witnesses, controls offers of settlement, and in fact, handles the entire matter.
In Peterson v. Western Casualty and Surety Co.,11while addressing the standard for showing diligence by insurer relying on alleged breach of cooperation clause by the insured, the Utah court noted that an insurance policy providing for interest on judgment “seems to be a recognition of the fact that the delay in payment of the judgment is chargeable to the insurance company, since it controls in the litigation.” In Berlant v. McAllister,12the Court described the insurerinsured relationship as follows:
To begin with we must know that the insurance carrier is obligated by its contract to pay all sums (up to the limits of the policy) which [the insured] may be, or shall become, liable to pay. This means that the carrier cannot be made to pay money until a judgment has been rendered against the insured []. However, this does not prevent the carrier from making a settlement of all claims against its insured before a judgment is rendered. The likelihood of losing the suit, the cost of defending it, and the possibility of settling for a sum less than the foreseeable costs and expenses are all matters which a carrier will consider in determining whether to settle a case or to defend it. The insurance contract provides that the insurer will, at its own expense, investigate, defend or settle any claims against the insured. It does not provide for any representation of its insured in an action against another party. Separate counsel always represents an insured plaintiff when he sues or an insured defendant when he counterclaims. The insurance attorney only represents the insured insofar as any claim is made against him for which the insurance company might be liable.
In Beck v. Farmers Insurance Exchange,13 the Court addressed obligations of the insurer as follows:
In a third-party situation [where the insurer contracts to defend the insured], the insurer controls the disposition of claims against its insured, who relinquishes any right to negotiate on his own behalf. . . . An insurer’s failure to act in good faith exposes its insured to a judgment and personal liability in excess of the policy limits. . . . In essence, the contract itself creates a fiduciary relationship because of the trust and reliance placed in the insurer by its insured. . . . The insured is wholly dependent upon the insurer to see that, in dealing with claims by third parties, the insured’s best interests are protected. In addition, when dealing with third parties, the insurer acts as agent for the insured with respect to the disputed claim. Wholly apart from the contractual obligations undertaken by the parties, the law imposes upon all agents a fiduciary obligation to their principals with respect to matters falling within the scope of their agency.
The Utah Rules of Professional Conduct do not in any way diminish or modify the rights or obligations of the insured or the insurer.
¶ 11 Ethical Obligations Cannot Be Modified by Agreement. A lawyer’s ethical duties under the Utah Rules of Professional Conduct cannot be diminished or modified by an agreement between the attorney and the attorney’s client or between the attorney and a third party. This principle applies equally to agreements concerning insurance company guidelines and fee agreements with insurance companies. For example, an attorney’s obligations to provide competent representation to a client,14to act with reasonable diligence and promptness in representing a client,15to exercise independent professional judgment and render candid advice,16and to supervise properly subordinate lawyers and nonlawyer assistants17cannot be limited by agreement. With respect to attorneys’ fee agreements, the comment to Rule 1.5 states: “An agreement may not be made whose terms might induce the lawyer improperly to curtail services for the client or perform them in any way contrary to the client’s interests.” Accordingly, notwithstanding any agreement pertaining to fees or pertaining to the manner in which litigation may be conducted, lawyers subject to the Utah Rules of Professional Conduct must at all times comply with them.
¶ 12 Consent For Third-Party Payment. Rule 1.8(f) provides:
A lawyer shall not accept compensation for representing a client from one other than the client unless:
(1) The client consents after consultation;
(2) There is no interference with the lawyer’s independence of professional judgment or with the clientlawyer relationship; and
(3) Information relating to representation of a client is protected by Rule 1.6.
Rule 1.8(f) applies by its terms to a lawyer employed to defend litigation brought by a third party against an insured, whether or not the insurer is a client. Accordingly, an insured must consent to an insurer’s paying a lawyer employed to defend litigation brought by a third party against an insured. For purposes of Rule 1.8(f), the insured manifests this consent by entering into the insurance contract and accepting the representation offered. No new or separate consent is necessary.
¶ 13 Information Under Rule 1.4(b). Under Rule 1.4(b), the insurance defense lawyer must “explain a matter to the extent reasonably necessary to enable the client to make informed decisions regarding the representation.” With respect to the insured as a client, the lawyer must inform the insured sufficiently to enable the insured to make informed decisions regarding the representation. The lawyer could accomplish this by sending the insured a letter at the outset of the representation informing the insured of relevant information. Although doing so would be a prudent practice, we do not hold that a lawyer must provide a written explanation. In ¶ 17 of this Opinion, we discuss the kinds of information that might be included in a letter to the insured at the outset of the representation.
¶ 14 Limitation of Scope Under Rule 1.2. Many perceived issues concerning insurance company guidelines can be resolved with proper attention to limitations on the scope of the representation under Rule 1.2. Under that rule, the scope of the attorney’s representation may be limited by agreement.18The comments to Rule 1.2 specifically refer to the retention of a lawyer by an insurance company to represent an insured:
The objectives or scope of services provided by a lawyer may be limited by agreement with the client or by the terms under which the lawyer’s services are made available to the client. For example, a retainer may be for a specifically defined purpose. Representation provided through a legal aid agency may be subject to limitations on the types of cases the agency handles. When a lawyer has been retained by an insurer to represent an insured, the representation may be limited to matters related to the insurance coverage. The terms upon which representation is undertaken may exclude specific objectives or means.19
Limitations on the objectives or scope of an attorney’s services should be determined jointly by the attorney and the client. The comment to Rule 1.2 states:
Both lawyer and client have authority and responsibility in the objectives and means of representation. The client has ultimate authority to determine the purposes to be served by legal representation, within the limits imposed by law and the lawyer’s professional obligations. Within those limits, a client also has a right to consult with the lawyer about the means to be used in pursuing those objectives. At the same time, a lawyer is not required to pursue objectives or employ means simply because a client may wish that the lawyer do so. A clear distinction between objectives and means sometimes cannot be drawn, and in many cases the client-lawyer relationship partakes of a joint undertaking. In questions of means, the lawyer should assume responsibility for technical and legal tactical issues but should defer to the client regarding such questions as the expense to be incurred and concern for third persons who might be adversely affected.20
¶ 15 If both insurer and insured are clients, both must agree to limitations on the objectives or scope of an attorney’s services. If only the insured is the client, the insured must agree. The lawyer could obtain the insured’s consent at the outset of the representation by sending the insured a letter informing the insured of the relevant limitations. For example, the claims asserted against the insured may include claims that exceed insurance policy limits, claims that are not covered by insurance, or interests of the insured (such as reputation) that the insurer has no obligation to protect. In these situations, special care should be taken to provide information necessary for the insured to understand and agree to any appropriate limitations and to implement means to provide additional representation the insured may desire.
¶ 16 Although doing so would be a prudent practice, we do not hold that a lawyer must provide a written explanation or obtain the client’s consent in writing. In the next paragraph, we discuss the kinds of information that might be included in a letter to the insured at the outset of the representation. The lawyer could inform the insured in the letter that the insured’s consent to the limitations on the objectives or scope of the lawyer’s services will be presumed unless the insured objects within a specified time period. The insured could manifest consent to the limitations by accepting the defense without objection.
¶ 17 Information That Could Be Provided at the Outset. Subject to any limitations on confidential information under Rule 1.6(a),21which may apply if the insurer is also a client, the insurance defense lawyer could provide the insured with information such as the following:
(1) the fact of the lawyer’s selection by the insurer to defend against the claim and appropriate information concerning the lawyer;
(2) the identity of the insurer;
(3) the identity of the lawyer’s client or clients (i.e., whether or not there are multiple insureds who will be clients and whether or not the insurance company will be the lawyer’s client);
(4) relevant policy information, including facts pertaining to the lawyer’s compensation by the insurer;
(5) to the extent they are not disputed by the parties, the insurer’s rights and obligations under the insurance policy with respect to defense and settlement of the litigation;
(6) to the extent they are not disputed by the parties, the insured’s rights and obligations under the insurance policy with respect to defense and settlement of the litigation;
(7) how the representation will be conducted, including any limitations on the objectives or scope of the representation22and the insurer’s normal practices in directing representations including by way of litigation or billing guidelines;
(8) how settlement proposals will be handled;
(9) that, unless the insured objects and subject to the requirements of the Utah Rules of Professional Conduct, the lawyer intends to proceed in accordance with the directions of the insurer;
(10) issues pertaining to confidential information and obtaining consents to convey confidential information between insured and insurer;23
(11) issues pertaining to avoidance and resolution of conflicts of interest;24
(12) risks to the insured, including the implications of the insurer’s rights, obligations, and procedures and any other relevant risks, such as an excess judgment or noncovered claims; and
(13) the insured’s right to hire a lawyer at the insured’s expense, including for purposes other than defense of the claim.25
While the foregoing items are provided as non-exhaustive illustrations, we do not hold that a defense lawyer must address every item in every case. Under Rule 1.4(b), the insurance defense lawyer must explain the matter to the extent reasonably necessary to enable the client to make informed decisions regarding the representation.
¶ 18 Professional Independence Under Rules 1.8(f) and 5.4(c). Rule 1.8(f)(2) requires that a lawyer accepting compensation for representing a client from one other than that client assure that “there is no interference with the lawyer’s independence of professional judgment or with the client-lawyer relationship.” This rule applies to a lawyer employed to defend litigation brought by a third party against an insured, whether or not the insurer is also a client.
¶ 19 Rule 5.4(c) provides: “A lawyer shall not permit a person who recommends, employs, or pays the lawyer to render legal services for another to direct or regulate the lawyer’s professional judgment in rendering such legal services.” Rule 5.4(c) applies to a lawyer employed to defend litigation brought by a third party against an insured, whether or not the insurer is a client. Rule 5.4(c) expressly prohibits a lawyer from permitting a person who employs or pays the lawyer to render legal services for another to direct or regulate the lawyer’s professional judgment in rendering the legal services. Rule 5.4(c) draws no distinction between advice and action and speaks directly to professional judgment in rendering legal services. This is not to say, however, that the scope of the lawyer’s representation may not properly be limited as provided in Rule 1.2. To the extent the scope of the lawyer’s representation properly is limited, the lawyer is not authorized to render services outside the scope of the representation. But agreements respecting insurance company guidelines or flat-fee arrangements with insurance companies cannot free the lawyer from the obligation to exercise independent professional judgment both in setting limits on the representation and in rendering services within the scope of the representation.
¶ 20 Summary of Analysis of Insurance Company Guidelines. With these principles in mind, we conclude that an insurance defense lawyer’s agreement to abide by insurance company guidelines is not per se unethical and that the ethical implications of insurance company guidelines must be evaluated on a case-by-case basis. An insurance defense lawyer must not permit compliance with guidelines and other directives of an insurer relating to the lawyer’s services to impair materially the lawyer’s independent professional judgment in representing an insured.26Obligations of attorneys under the Utah Rules of Professional Conduct cannot be diminished or modified by an agreement between the attorney and the attorney’s client or by an agreement between the attorney and an insurer. Before accepting a representation of an insured party that will be governed in part by insurance company guidelines, a defense lawyer must determine that compliance with the guidelines will not be inconsistent with the lawyer’s professional obligations. If compliance with the guidelines will be inconsistent with the lawyer’s professional obligations, and if the insurer is unwilling to modify the guidelines, the lawyer must not undertake the representation.
¶ 21 After accepting a representation of an insured party that is governed in part by insurance company guidelines, a defense lawyer must at all times comply with the Utah Rules of Professional Conduct, including Rules 1.1 (competent representation), 1.2 (limitation of scope of representation), 1.3 (diligence and promptness), 1.4 (communication requirements), 1.8(f) (consent), and 5.4(c) (no direction or regulation of the lawyer’s professional judgment). If the lawyer determines that the insurer’s interpretation or application of the guidelines in particular circumstances is in any way inconsistent with the lawyer’s professional obligations under the Utah Rules of Professional Conduct, and if the insurer will not withdraw its interpretation or application of the guidelines, the lawyer must still act in conformity with the Rules.27
¶ 22 In any case where an insurer’s refusal to authorize services that the lawyer, in her independent professional judgment, believes are necessary to comply with the Utah Rules of Professional Conduct, the lawyer should consider the following options:
(1) communicating with the insurer and the insured in an attempt to resolve the matter,28
(2) obtaining the agreement of the insured to pay for the services (perhaps with a reservation of rights to seek payment from the insurer at a later time);
(3) agreeing to provide the services without compensation (and perhaps reserving the right to seek compensation from the insurer at a later time); or
(4) withdrawing from the representation.
If withdrawal is necessary because of an irreconcilable conflict between the insured and the insurer, the lawyer should comply with all applicable provisions of Rules 1.7 and 1.16 and any applicable rules of court.
Flat-fee Arrangements
¶ 23 A Request on Flat-Fee Arrangements. The Committee has also received a separate request for an advisory opinion concerning ethical issues raised by flat-fee arrangements with insurance companies under which counsel is employed to defend a case or a group of cases for a flat fee. Because this request raises some of the same issues and analysis discussed in connection with insurance company guidelines for defense attorneys, we consolidate the two requests to issue a single opinion.
¶ 24 Applicable Rules and Prior Opinion 136. Rule 1.5 of the Utah Rules of Professional Conduct addresses ethical issues relating to attorneys’ fees. As we wrote in Opinion No. 136, “Fixedfee contracts . . . are not prohibited by Rule 1.5 of the Utah Rules of Professional Conduct” and, further, “The only specific types of fees expressly prohibited by Rule 1.5 are contingent fees in divorce and criminal defense cases.”29
¶ 25 In Opinion No. 136, we addressed the question of whether a client’s advance payment made as a “fixed fee” or “nonrefundable retainer” could be considered to be earned by the lawyer when received and, therefore, not required to be deposited in a trust account. We stated that fixedfee contracts or nonrefundable retainers are not expressly prohibited by Rule 1.5, and that the issue became whether such arrangements should be considered per se unreasonable under the Rule. We adopt a similar analysis here. Rule 1.5 does not expressly prohibit flat-fee arrangements. We conclude, therefore, that flat-fee arrangements, including flat-fee arrangements with liability insurance carriers, are not per se unethical. It does not follow, of course, that all flat-fee agreements are in compliance with the Utah Rules of Professional Conduct.
¶ 26 Improper Curtailment of Services. The comment to Rule 1.5 provides:
An agreement may not be made whose terms might induce the lawyer improperly to curtail services for the client or perform them in any way contrary to the client’s interest. For example, a lawyer should not enter into an agreement whereby services are to be provided only up to a stated amount when it is foreseeable that more extensive services probably will be required, unless the situation is adequately explained to the client.
Thus, Rule 1.5 prohibits flat-fee arrangements with insurers if the proposed arrangement would improperly curtail services to be provided to the client that would normally be within the scope of the representation. For example, a flat-fee agreement that is so low as to induce the lawyer to shirk his duties to the insured would be unethical. A lawyer may, of course, provide the necessary services for little or no additional fee, but the lack of further funding (from the insurer, for example) will not justify cutting corners on the lawyer’s ethical obligation to the client. Such situations should be fully explained to the insured. On the other hand, a flat-fee arrangement that is so high as to result in a clearly excessive fee would also violate Rule 1.5(a).
¶ 27 Compliance with the Rules. Our conclusion that flat-fee arrangements with insurance carriers are not per se unethical does not free a lawyer from strict compliance with the applicable rules or standards of professional behavior. To provide some guidance to members of the Utah Bar, we will address some of the ethical considerations.
¶ 28 Rule 1.1 requires a lawyer to provide “competent representation to a client.” This includes the “thoroughness” and “preparation reasonably necessary for the representation.” A lawyer is also required to act with “reasonable diligence and promptness” under Rule 1.3. It is often stated that a lawyer is to represent her client “zealously.”30A lawyer should strictly adhere to these ethical standards, regardless of the nature of the fee arrangement or remuneration paid to the lawyer. Lawyers entering into flat-fee arrangements with insurance companies must use extra caution to assure that the representation they provide to the insured complies with these ethical obligations. Lawyers may not compromise these standards even if the financial arrangement to which they agreed with the insurance company results in a more-than-expected time commitment or worse-than-expected financial result for the lawyer. This also means, of course, that the lawyer should avoid entering into any flat-fee arrangement if there is reasonable cause to believe that future time and financial pressures may prevent the lawyer from providing competent, thorough, diligent and prompt representation to the insured.
¶ 29 Under Rule 1.2, the lawyer must abide by the client’s decisions concerning the objectives of the representation (subject to certain guidelines) and must consult with the client regarding the means by which the objectives of the litigation will be pursued. A lawyer should not enter into a flat-fee agreement with an insurer that would prevent meaningful participation by the insured in determining the objectives of the representation and the means of pursuing them. This may require, as a matter of prudence, consultation with the insured prior to entering into the flat-fee arrangement.
¶ 30 The comment to Rule 1.5 provides, “Where someone other than the client pays the lawyer’s fee or salary . . . , that arrangement does not modify the lawyer’s obligation to the client. . . . [S]uch arrangements should not interfere with the lawyer’s professional judgment.” Rule 1.8(f) expressly requires the lawyer to maintain her “independence of professional judgment” when someone other than the client pays the lawyer’s fee. These rules apply to a lawyer’s representation of an insured, just as they do in all other relevant cases. A lawyer who enters into any type of flat-fee arrangement with an insurer must use caution to assure that she exercises independent professional judgment on behalf of the insured. This is particularly important in situations where the scope of the case has unexpectedly increased beyond the attorney’s original expectations in agreeing to a fixed fee.
¶ 31 It has been suggested that flat-fee arrangements should be prohibited to protect the interests of lawyers in maintaining profitable fee arrangements with insurance companies. It is not this Committee’s role to regulate the competing economic interests of lawyers and insurance companies. Rather, it is our role to interpret the Utah Rules of Professional Conduct and to encourage ethical behavior for the protection of those who receive legal representation. Nothing in the Utah Rules of Professional Conduct prohibits flat-fee arrangements, and it would be improper for us to impose such a restriction where the Utah Supreme Court has chosen not to do so. Our discussion of some of the relevant concerns will provide guidance to lawyers and should promote competent representation for insureds who receive legal representation. As in any other case, the disciplinary procedures of the Utah State Bar and other legal proceedings are available to insureds who believe their lawyers have compromised their ethical duties because of a flat-fee arrangement with the insurer.31
¶ 32 In rendering this opinion, this Committee is aware of the arguments concerning economic and market factors vigorously promoted in the literature by both the insurance industry and the insurance defense bar. We are also mindful of our limited role, which is to interpret the Utah Rules of Professional Conduct and provide guidance to the members of Bar. Our role is not to regulate the market for legal services or to influence the economics of purchasing or providing legal services. Lawyers and insurance companies are free to negotiate fee arrangements that suit their respective economic interests so long as no lawyer on either side violates the Utah Rules of Professional Conduct. Insurance companies and lawyers may enter into fee arrangements that limit the amount of compensation the lawyer will be paid. We emphasize, however, that lawyers entering into such arrangements must use care to assure that their representation complies with all applicable ethical standards, even if the fee arrangement requires the lawyer to perform services for a reduced rate or even without compensation.
¶ 33 Conclusion: An insurance defense lawyer’s agreement to abide by insurance company guidelines or to perform insurance defense work for a flat fee is not per se unethical. The ethical implications of insurance company guidelines must be evaluated on a case by case basis. An insurance defense lawyer must not permit compliance with guidelines and other directives of an insurer relating to the lawyer’s services to impair materially the lawyer’s independent professional judgment in representing an insured. If compliance with the guidelines will be inconsistent with the lawyer’s professional obligations, and if the insurer is unwilling to modify the guidelines, the lawyer must not undertake the representation. Flat-fee arrangements for insurance defense cases are unethical if they would induce the lawyer to improperly curtail services for the client or perform them in any way contrary to the client’s interests. Obligations of lawyers under the Utah Rules of Professional Conduct, including the duty zealously to represent the insured, cannot be diminished or modified by agreement.
Footnotes
1.See ABA Comm. on Ethics and Professional Responsibility, Formal Op. 99-413; Ala. Ethics Op. RO-98-02; Colo. Bar Assoc. Ethics Comm. Formal Op. 107 (Sept. 18, 1999); Disciplinary Bd., Haw. Sup. Ct., Formal Op. 37 (Mar. 27, 1999); Ind. State Bar Assoc. Legal Ethics Op. 3 of 1998; Iowa Sup. Ct. Bd. of Professional Ethics & Conduct, Op. 99-01 (Sept. 8, 1999); Mass. Bar Op. 00-4; Miss. Bar, Op. 246 (1999); Neb. Advisory Comm., Advisory Op. 00-1; Ohio Op. 2000-3 (June 1, 2000); Penn. Bar Assoc. Comm. on Legal Ethics and Professional Responsibility, Formal Op. 2001-200 (June 28, 2001); R.I. Sup. Ct. Ethics Advisory Panel Op. 99-18 (Oct. 27, 1999); Tenn. Bd. of Professional Responsibility, Sup. Ct. of Tenn., Formal Ethics Op. 2000-F-145; Tex. Ethics Op. 533 (Sept. 2000); Vt. Bar Op. 98-07; Va. Leo 1723 (Nov. 23, 1998); Wash. State Bar Assoc. Formal Op. 195 (1999); Wis. State Bar Comm. on Professional Ethics, Formal Op. E-99-1 (Sept. 10, 1999);In re Rules of Professional Conduct and Insurer Imposed Billing Rules and Procedures, 2 P.3d 806 (Mont. 2000). We have been advised that proposed ethics opinions critical of insurance company billing guidelines were rejected by the Florida Bar Association’s Board of Governors at its December 2000 meeting (proposed opinions 99-2, 99-3 and 99-4) and the Supreme Court of Georgia (proposed opinion 99-R2) (unpublished order Sept. 17, 2001).
2.Utah Ethics Adv. Op. 98-11, 1998 WL 779176 (Utah St. Bar), addressed the ethics of a retainer agreement proposed by the Utah State Office of Recovery Services (ORS) for an attorney who would represent both ORS, as statutory lien claimant with prior rights on recoveries, and individual claimants in recovering medical claims. In that context, the Committee held that the State of Utah could propose a retainer agreement, but cautioned that it was not holding that attorneys representing the State may draft retainer agreements that violate the Utah Rules of Professional Conduct, noting that it would be unethical for the retainer agreement to (1) require the individual claimants to surrender the right to terminate the lawyer or (2) otherwise cause the attorney executing it to violate the Utah Rules of Professional Conduct. The Committee found that the attorney could not agree to conditions that would violate Rule 1.7(b).
3.In re Rules of Professional Conduct and Insurer Imposed Billing Rules and Procedures, 2 P.3d 806, 817 (Mont. 2000).
4.Utah Ethics Advisory Op. Comm. R. Procedure § I(b)(1) (2001) (“Committee opinions shall interpret the Rules of Professional Conduct adopted by the Utah Supreme Court but, except as necessary to the opinion, shall not interpret other law.”) and id. § I(b)(2) (“The following requests are outside the Committee’s authority: . . . (iii) Requests for legal, rather than ethics opinions.”).
5.See, e.g., Cincinnati Insurance Co. v. Willis, 717 N.E.2d 151, 161 (Ind. 1999); In re Rules of Professional Conduct and Insurer Imposed Billing Rules and Procedures, 2 P.3d 806 (Mont. 2000).
6.See, e.g., Paradigm Insurance Co. v. The Langerman Law Offices, 24 P.3d 593 (Ariz. 2001) (express agreement was not a prerequisite to the formation of an attorney-client relationship; when insurer has assigned attorney to represent an insured, lawyer had a duty to the insurer to benefit both the insurer and the insured when their interests coincided; lawyer had duty to a non-client and could be liable for negligent breach).
7.See generally Breuer-Harrison, Inc. v. Combe, 799 P.2d 716, 727 (Utah App. 1990) (a legal malpractice action):
In general, except where an attorney is appointed by a court, the attorney-client relationship is created by contract. . . . The contract may be express or implied from the conduct of the parties. . . . The relationship is proved by showing that a party seeks and receives the advice of an attorney in matters pertinent to the lawyer’s profession. . . . Such a showing is subjective in that a factor in evaluating the relationship is whether the client thought an attorney-client relationship existed. . . . However, a party’s belief that an attorney-client relationship exists, unless reasonably induced by representations or conduct of the attorney, is not sufficient to create a confidential attorney-client relationship. . . . In sum, “[i]t is the intent and conduct of the parties which is critical to the formation of the attorney-client relationship.”
(Citations omitted.)
8.See note 4, supra.
9.We do not, however, assume that the foregoing summary is a complete statement of insurance company guidelines.
10.429 P.2d 39, 42 (Utah 1967).
11.425 P.2d 769, 77172 (Utah 1967).
12.480 P.2d 126, 127 (Utah 1971).
13.701 P.2d 795, 799-800 (Utah 1985) (citations omitted).
14.Utah Rules of Professional Conduct 1.1 & cmt; Rule 1.2 cmt. Refer to Appendix B.
15.Id. 1.3. Refer to Appendix B.
16.Id. 2.1 (“In representing a client, a lawyer shall exercise independent professional judgment and render candid advice”).
17.Id. 5.1; 5.3. Refer to Appendix B.
18.Rule 1.2 provides, in pertinent part: “(a) A lawyer shall abide by a client’s decisions concerning the objectives of representation, subject to paragraphs (b), (c), (d), and shall consult with the client as to the means by which they are to be pursued. (b) A lawyer may limit the objectives of the representation if the client consents after consultation.”
19.Utah Rules of Professional Conduct 1.2 cmt. (2002).
20.The client has the ultimate authority to determine the expense to be incurred. In some situations, the client may determine that no expense will be incurred by designating certain actions that will not be taken.
21.Rule 1.6(a) provides: “A lawyer shall not reveal information relating to the representation of a client except as stated in paragraph (b), unless the client consents after consultation.”
22.For example, the defense lawyer could not represent both insured and insurer as to matters such as insurance coverage. In cases where the claim exceeds policy limits or includes non-covered claims, or where the insured desires services outside the scope of the representation to be paid for by the insurer, the defense lawyer should provide the insured with information concerning limits on the representation and available means of addressing such matters.
23.For example, the letter might include information necessary to inform the insured as to issues pertaining to submission of bills to the insurer or to outside auditing services. See Utah Ethics Advisory Op. 98-03, 1998 WL 199533 (Utah St. Bar).
24.For example, if both insured and insurer are clients, Rule 1.8(g) provides, in pertinent part: “A lawyer who represents two or more clients shall not participate in making an aggregate settlement of the claims of or against the clients . . . unless each client consents after consultation, including disclosure of the existence and nature of all the claims . . . involved and of the participation of each person in the settlement.” If both insured and insurer are clients, or if representation of a sole client insured may be materially limited by the lawyer’s responsibilities to the insurer, conflicts must be addressed as provided in Rule 1.7.
25.For example, unless the policy provides otherwise, the insurer will likely have no obligation to pay the defense lawyer to assert counterclaims or claims insureds may have against third parties, to protect interests of the insured other than defending against the amount of the claim (such as reputation or other interests), or to defend the insured against criminal charges.
26.In addition, a lawyer governed by the Utah Rules of Professional Conduct (such as a lawyer employed by an insurer) must not propose that a defense lawyer enter into an agreement if compliance with the agreement, including guidelines and other directives of an insurer relating to the lawyer’s services, would impair materially the defense lawyer’s independent professional judgment in representing an insured.
27.We believe that, in many cases, perceived conflicts may be resolved by consultation.
28.Under Rule 1.4(a), the insurance defense lawyer must keep the client or clients “reasonably informed about the status of a matter and promptly comply with reasonable requests for information.”
29. Utah Ethics Adv. Op. 136, 1993 WL 755253 (Utah St. Bar) (citing Rule 1.5(d)).
30.See, e.g., Utah Rules of Professional Conduct, Preamble.
31.See Fla. Bar Professional Ethics Comm., Op. 982 (1998) (a lawyer may accept a set fee per case from an insurance company to defend all of the insurer’s third party insurance defense work unless the lawyer concludes that her independent professional judgment will be affected by the arrangement); Conn. Bar, Professional Ethics Comm., Op. 9720 (1997) (flat-fee arrangement with insurer permissible; lawyer’s obligations to client remain); Ohio Ethics Op. 977 (1997) (flat-fee arrangement with insurer permissible if agreement is reasonable and adequate, not excessive or so inadequate that it compromises professional judgment; representation must be competent and zealous); Ore. Ethics Op. 199198 (1991) (flat-fee arrangement with insurer permissible provided lawyer fulfills ethical duties to insured); contra, American Insurance Assoc. v. Kentucky Bar Assoc., 917 S.W.2d 568 (Ky. 1996)
APPENDIX A & B
APPENDIX A
Hawaii:
[P]rovisions which prohibit activity which, in the lawyer’s professional judgment, are necessary in the representation of the client or provisions which provide a [disincentive] to perform those tasks are ethically unacceptable. As an example, unreasonable restrictions on preparation and discovery, and the limitation on compensable communication among attorneys in an office regarding a legal matter would, in all likelihood, affect an attorney’s independent judgment on behalf of the client.1
Indiana:
[I]f the negotiated financial terms result in a material disincentive to perform those tasks which, in the lawyer’s professional judgment, are reasonable and necessary to the defense of the insured, such provisions are ethically unacceptable. Especially troublesome are those provisions of the subject agreement which tend to curtail reasonable discussion between members of the defense team on a daytoday basis, and which seek to dictate the use of personnel within the lawyer’s office. Another example of a provision resulting in a material disincentive provides that if the senior litigator performs a particular service, e.g., argument of motions and other court appearances, conduct of depositions, or review of medical records or legal research, which could have been performed ‘suitably’ (in the carrier’s view) by an associate or paralegal, the service may be billed only at the hourly rate for the associate or paralegal. Similarly, the contract provides that once an associate attorney is assigned to a given matter, another associate may not be substituted without prior approval of the carrier. Such impairments of the responsible attorney’s exercise of professional judgment as to the assignment of the most effective member of the litigation team to a given task is ethically impermissible. Lastly, to require, or even permit, counsel to rely upon legal research by an unsupervised paralegal invites legal malpractice—a breach of counsel’s duty to the insured—and is intolerable. Such provisions, even though intended merely to achieve cost efficiency, infringe upon the independent judgment of counsel, and tend to induce violations of our ethical rules.2
Massachusetts:
For example, an insurer’s litigation guidelines may mandate that all deposition notices be drafted by paralegals, although the precise content of some deposition notices may require significant substantive and strategic legal input. If the lawyer has a reasonable basis to believe that the creation of a particular deposition notice presents too complicated a task for a paralegal to perform competently, then the lawyer’s ethical obligations, as described above, compel the lawyer not to delegate that task. In the event that the lawyer’s decision subsequently is challenged by the insurer who is paying his or her fees, then the Committee believes that the lawyer must consider whether the issue is significant enough to warrant withdrawing from the representation under Rule 1.16(a)(1).3
Ohio:
It is improper under DR 5107(B) [Avoiding Influence By Others Than The Client] for an insurance defense attorney to abide by an insurance company’s litigation management guidelines in the representation of an insured when the guidelines directly interfere with the professional judgment of the attorney. Attorneys must not yield professional control of their legal work to an insurer. Guidelines that restrict or require prior approval before performing computerized or other legal research are an interference with the professional judgment of an attorney. Legal research improves the competence of an attorney and increases the quality of legal services. Attorneys must be able to research legal issues when they deem necessary without interference by nonattorneys. Guidelines that dictate how work is to be allocated among defense team members by designating what tasks are to be performed by a paralegal, associate, or senior attorney are an interference with an attorney’s professional judgment. Under the facts and circumstances of a particular case, an attorney may deem it necessary or more expedient to perform a research task or other task, rather than designate the task to a paralegal. This is not a decision for others to make. The attorney is professionally responsible for the legal services. Attorneys must be able to exercise professional judgment and discretion. Guidelines that require approval before conducting discovery, taking a deposition, or consulting with an expert witness are an interference with an attorney’s professional judgment. These are professional decisions that competent attorneys make on a daily basis. Guidelines that require an insurer’s approval before filing a motion or other pleading are an interference with an attorney’s professional judgment. Motion by motion evaluation by an insurer of an attorney’s legal work is an inappropriate interference with professional judgment and is demeaning to the legal profession. If an insurer is unsatisfied with the overall legal services performed, the insurer has the opportunity in the future to retain different counsel.4
Rhode Island:
[Provisions] that require the insurer’s preapproval for specified legal services, extend beyond the financial and working relationship between the insurer and defense counsel, and infringe upon the attorneyclient relationship between the insured and the inquiring attorney. For example, the insurer’s prior approval is required before defense counsel engages in the following: conducting legal research in excess of three hours; filing counterclaims, crossclaims or thirdparty actions; visiting the accident scene; preparing substantive dispositive motions or briefs; customizing interrogatories or document requests; and scheduling depositions. The insurer’s prior approval is also required before defense counsel incurs expenses related to any of the following: retaining expert witnesses; scheduling independent medical examinations or peer reviews; instituting surveillance; and conducting additional investigations. To the extent that the insurer reserves unto itself the right to withhold approval for reasonable and necessary legal services to be provided to an insured, these provisions of the guidelines impermissibly interfere with the independent professional judgment of the inquiring attorney. By agreeing to abide by the preauthorization provisions, an attorney impermissibly abdicates the obligations imposed by Rule 2.1 and Rule 5.4(c). Therefore, the inquiring attorney may not agree to them. Furthermore, such provisions result in a material disincentive to provide legal services that are reasonable and necessary to the defense of the insured. See Indiana Bar Assoc. Op. 3 (1998). A material disincentive creates a conflict of interest pursuant to Rule 1.7.5
Washington:
A billing guideline that arbitrarily and unreasonably limits or restricts compensation for the time spent by counsel performing services which counsel considers necessary to adequate representation, such as periodic review of pleadings, conducting depositions, or in preparing or defending against a summary judgment motion, endeavors to direct or regulate the lawyer’s professional judgment in violation of RPC 5.4(c). A billing guideline that imposes ‘defacto’ or arbitrary rates for certain services performed by a lawyer, such as compensating a lawyer at prevailing paralegal rates when the firm does not employ paralegals, operates as a disincentive to performance of those services on violation of RPC 5.4(c).6
APPENDIX B
Relevant Portions of the Utah Rules of Professional Conduct
Rule 1.1—Competence
A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness, and preparation reasonably necessary for the representation.
The comment to Rule 1.1 provides, with respect to thoroughness and preparation:
Competent handling of a particular matter includes inquiry into and analysis of the factual and legal elements of the problem, and use of methods and procedures meeting the standards of competent practitioners. It also includes adequate preparation. The required attention and preparation are determined in part by what is at stake; major litigation and complex transactions ordinarily require more elaborate treatment than matters of lesser consequence.
The comment to Rule 1.2—Scope of Representation provides, with respect to agreements limiting the scope of representation:
The client has ultimate authority to determine the purposes to be served by legal representation, within the limits imposed by law and the lawyer’s professional obligations. . . An agreement concerning the scope of representation must accord with the Rules of Professional Conduct and other law. Thus, the client may not be asked to agree to representation so limited in scope as to violate Rule 1.1 or to surrender the right to terminate the lawyer’s services or the right to settle litigation that the lawyer might wish to continue.”
(Emphasis added.)
____________________________________________________________________________
Rule 1.3—Diligence
A lawyer shall act with reasonable diligence and promptness in representing a client.
The comment to Rule 1.3 notes, however, that: “A lawyer has professional discretion in determining the means by which a matter should be pursued. See Rule 1.2.”
____________________________________________________________________________
Rule 1.4—Communication
(a) A lawyer shall keep a client reasonably informed about the status of a matter and promptly comply with reasonable requests for information.
(b) A lawyer shall explain a matter to the extent reasonably necessary to enable the client to make informed decisions regarding the representation.
____________________________________________________________________________
Rule 1.8—Conflict of interest: prohibited transactions.
. . . .
(f) A lawyer shall not accept compensation for representing a client from one other than the client unless:
(1) The client consents after consultation;
(2) There is no interference with the lawyer’s independence of professional judgment or with the clientlawyer relationship; and
(3) Information relating to representation of a client is protected by Rule 1.6.
(g) A lawyer who represents two or more clients shall not participate in making an aggregate settlement of the claims of or against the clients or in a criminal case an aggregated agreement as to guilty or nolo contendere pleas, unless each client consents after consultation, including disclosure of the existence and nature of all the claims or pleas involved and of the participation of each person in the settlement.
____________________________________________________________________________
Rule 5.1—Responsibilities of a partner or supervisory lawyer
(a) A partner in a law firm shall make reasonable efforts to ensure that the firm has in effect measures giving reasonable assurance that all lawyers in the firm conform to the Rules of Professional Conduct.
(b) A lawyer having direct supervisory authority over another lawyer shall make reasonable efforts to ensure that the other lawyer conforms to the Rules of Professional Conduct.
(c) A lawyer shall be responsible for another lawyer’s violation of the Rules of Professional Conduct if:
(1) The lawyer orders or, with knowledge of the specific conduct, ratifies the conduct involved; or
(2) The lawyer is a partner in the law firm in which the other lawyer practices, or has direct supervisory authority over the other lawyer, and knows of the conduct at a time when its consequences can be avoided or mitigated but fails to take reasonable remedial action.
____________________________________________________________________________
Rule 5.3—Responsibilities regarding nonlawyer assistants
With respect to a nonlawyer employed or retained by or associated with a lawyer:
(a) A partner in a law firm shall make reasonable efforts to ensure that the firm has in effect measures giving reasonable assurance that the person’s conduct is compatible with the professional obligations of the lawyer;
(b) A lawyer having direct supervisory authority over the nonlawyer shall make reasonable efforts to ensure that the person’s conduct is compatible with the professional obligations of the lawyer.
(c) A lawyer shall be responsible for conduct of such a person that would be a violation of the Rules of Professional Conduct if engaged in by a lawyer if:
(1) The lawyer orders or, with knowledge of the specific conduct, ratifies the conduct involved; or
(2) The lawyer is a partner in the law firm in which the person is employed, or has direct supervisory authority over the person, and knows of the conduct at a time when its consequences can be avoided or mitigated but fails to take reasonable remedial action.
Appendix A Footnotes
1.Disciplinary Bd., Haw. Sup. Ct., Formal Op. 37 (Mar. 27, 1999).
2.Ind. State Bar Assoc. Legal Ethics Op. 3 of 1998.
3.Mass. Bar Op. 00-4.
4.Sup. Ct. of Ohio, Bd. of Commissioners on Grievances and Discipline, Op. 2000-3 (June 1, 2000).
5.R.I. Sup. Ct. Ethics Advisory Panel Op. 99-18 (Oct. 27, 1999).
6.Wash State Bar Assoc., Formal Op. 195 (1999).

Ethics Advisory Opinion No. 02-04

Issued March 15, 2002
¶ 1 Issue:
May a lawyer, who is also a certified public accountant employed by an accounting firm, contemporaneously conduct from an office at the accounting firm public accounting services as an employee of the accounting firm and a law practice independent from the accounting firm without violating the Utah Rules of Professional Conduct?

¶ 2 Opinion: A lawyer who is a certified public accountant and employed by an accounting firm may not contemporaneously practice law and accounting from the offices of the accounting firm without violating Rule 5.4(b) of the Utah Rules of Professional Conduct. Accounting is a “law-related service,” and, when accounting services are provided by an active lawyer, the lawyer is subject to the Utah Rules of Professional Conduct while engaged in either profession. The lawyer is, therefore, prohibited by Rule 5.4(b) from forming a business association with a non-lawyer to provide the accounting services when the lawyer is contemporaneously engaged in the practice of law.
¶ 3 Factual Background: A lawyer (“Lawyer”) who is also a certified public accountant (“CPA”) is employed by an accounting firm owned by other CPAs (“Accounting Firm”). Lawyer is an employee of Accounting Firm, but does not have an ownership interest in the firm. Lawyer desires to conduct the professional practices of accounting and law from his office at Accounting Firm. Lawyer will pay Accounting Firm rent for the fair market value of office space, computer and furniture, receptionist and other Accounting Firm resources used by Lawyer in the legal practice, calculated on an hourly basis. Lawyer will develop his own clients, but may accept referrals from CPAs employed by Accounting Firm. Lawyer will directly and separately bill clients for legal services performed, and will not pay any referral fees to Accounting Firm. Lawyer will maintain confidentiality of law client files by maintaining these files separately from the accounting files of Accounting Firm.
¶ 4 Analysis: In the Committee’s prior opinions, we have found that, under certain circumstances, a lawyer engaged in a law-related occupation will be subject to the Utah Rules of Professional Conduct while engaged in either occupation.1These opinions are consistent with opinions issued by the American Bar Association prior to its adoption of ABA Model Rule 5.7 in 1994.2
¶ 5 Model Rule 5.7 addresses circumstances under which a lawyer who provides “law-related services” is subject to the ABA Rules of Professional Conduct. Under the rule, if the services are not provided in circumstances that (a) are distinct from the lawyer’s provision of legal services to clients, or (b) are provided by a separate entity, but the lawyer fails to take reasonable measures to assure that persons obtaining the law-related services know that the services of the separate entity are not legal services and that the protections of the attorney-client relationship do not exist.3
¶ 6 The Utah Supreme Court has not adopted Model Rule 5.7. While the Committee has noted that Model Rule 5.7 is consistent with its analysis in prior opinions,4 the Committee has not endorsed the rule, as the decision to adopt any new rule is exclusively within the purview of the Utah Supreme Court.5
¶ 7 In our Opinion No. 98-08, we did use the definition of law-related services found in Model Rule 5.7(b) to find that accounting services are law-related services:
We note that an accounting firm fits the Model Rule 5.7 definition of law-related services as those that (a) might reasonably be performed in conjunction with, and in substance are related to, the provision of legal services, and (b) are not prohibited as the unauthorized practice of law when provided by a non-lawyer.6
¶ 8 In Opinion No. 98-08, the Committee concluded that a law firm could own an accounting-practice subsidiary staffed by employees other than the law firm’s employees. However, the law firm’s lawyers would be subject to the Rules of Professional Conduct in connection with the subsidiary’s providing accounting services unless the law firm made reasonable attempts to inform the accounting clients that (a) they were not receiving legal services, and (b) they were not protected by the attorney-client relationship. Opinion No. 98-08 did not address the issue presented here of a lawyer who desires to practice law and public accounting contemporaneously from the offices of the accounting firm that employs the lawyer as an accountant.7
¶ 9 Consistent with our prior opinions, we hold that the Utah Rules of Professional Conduct do not preclude a lawyer who is also appropriately trained and licensed practice public accounting from contemporaneously engaging in the occupations of law and public accounting. Accounting services are law-related services; hence, the work of the lawyer in the accounting occupation will inevitably include the practice of law.8Thus, a lawyer will be considered to be engaging in the practice of law while engaged in an accounting practice and will, therefore, be subject to the Utah Rules of Professional Conduct in the performance of both occupations.9
¶ 10 Because the standards of practice in the accounting profession may conflict with the Rules of Professional Conduct, simultaneous compliance may impose substantial burdens on the lawyer who provides accounting services. For example, accounting rules or principles may call for certain disclosures regarding a client for accounting services, while the Rules of Professional Conduct preclude such disclosures without the client’s consent. The standards and rules governing the accounting profession regarding conflicts of interest may also be less demanding than Rules 1.7, 1.9 and 1.10 of the Rules of Professional Conduct. These burdens are, however, justified to protect a lawyer’s clients from unethical behavior by a lawyer in the provision of legal services under circumstances where it is difficult, if not impossible, to differentiate the legal services from the law-related services of public accounting.
¶ 11 With this analysis as background, we address whether Lawyer, who is also a CPA and an employee of Accounting Firm, may contemporaneously provide accounting services as an employee of Accounting Firm and conduct a separate law practice from the offices of Accounting Firm. We hold that this arrangement violates Rule 5.4(b) of the Utah Rules of Professional Conduct.
¶ 12 Rule 5.4(b) provides: “A lawyer shall not form a partnership with a non-lawyer if any of the activities of the partnership consist of the practice of law.” Under the facts set forth in this opinion, Lawyer is engaged in the practice of law while providing the law-related service of accounting. Accordingly, Rule 5.4(b) precludes Lawyer from forming a partnership with a non-lawyer to provide the public accounting services.10
¶ 13 In Utah Ethics Advisory Opinion 00-03, the Committee noted that the purpose of Rule 5.4 is “to protect the lawyer’s professional independence of judgment.”11 Recognizing that the wording of the rule addresses only a partnership, and that the request concerned the formation of a small business corporation between a lawyer and a non-lawyer, the Committee concluded that the small business corporation posed the same risk to the lawyer’s professional independence of judgment. We stated:
Here, 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.12
¶ 14 The employer-employee relationship between Lawyer and Accounting Firm creates no less danger to Lawyer’s professional independence of judgment. Indeed, it can be argued that Lawyer’s independence of professional judgment is at greater risk in the employee-employer relationship at issue than the equal ownership in a small business corporation addressed in Opinion 00-03.
¶ 15 In that opinion, the Committee concluded that a lawyer who was also a real estate title officer could not form a small business corporation (with equal ownership) with a non-lawyer to assist clients in challenging their real estate taxes without violating Rule 5.4(b). We stated, however, that the lawyer could form the small business corporation with a non-lawyer without violation of the Rules of Professional Conduct if the lawyer withdrew from the practice of law. In reaching this conclusion, the Committee cited with approval ABA Formal Opinions 297 and 239, which held that a lawyer could not enter into a partnership with an accountant to perform law-related services permissible for non-lawyers.13 Also, ABA Formal Opinion 305 clarified that a lawyer could enter a partnership with an accountant to perform services permissible to non-lawyers if the lawyer withdrew from the practice of law and refrained from holding himself out as a lawyer.14
¶ 16 Conclusion: A lawyer may contemporaneously engage in the practice of law and public accounting from the same office, but will be required to comply with the Rules of Professional Practice in the conduct of both occupations. If the lawyer is employed by an accounting firm, his contemporaneous practice of law and public accounting from the accounting firm’s office violates Rule 5.4(b). The lawyer may practice accounting as an employee of the accounting firm without violation of Rule 5.4(b) only if he withdraws from the practice of law and refrains from holding himself out as a lawyer.
Footnotes
1.Utah Ethics Advisory Op. 01-05, 2001 WL 829237 (Utah State Bar) (attorney functioning in law-related profession of real estate brokerage who holds himself out as an active or inactive lawyer, will be subject to the Utah Rules of Professional Conduct while engaged in the law-related profession); Utah Ethics Advisory Op. 30 (Utah State Bar, Oct. 14, 1976) (attorney who is president of a title company must comply with the ethics rules of a lawyer in both occupations); Utah Ethics Advisory Op. 17 (Utah State Bar, Nov. 28, 1973) (lawyer engaged in a real estate business is held to the ethical standards of a lawyer in both occupations); Utah Ethics Advisory Op. 5 (Utah State Bar, Jan. 13, 1972) (attorney selling life insurance is held to ethical standards of an attorney in both professions).
2.ABA Comm. on Ethics and Professional Responsibility, Formal Op. 328 (1972) (lawyer contemporaneously practicing law and accounting from the same office must conform to the Code of Professional Responsibility in conducting the activities of both occupations); ABA Comm. on Ethics and Professional Responsibility, Informal Op. 709 (1964) (same for lawyer conducting real estate brokerage business from his law office).
3.
(a) A lawyer shall be subject to the Rules of Professional Conduct with respect to the provision of law-related services, as defined in paragraph (b), if the law-related services are provided:
(1) by the lawyer in circumstances that are not distinct from the lawyer’s provision of legal services to clients; or
(2) by a separate entity controlled by the lawyer individually or with others if the lawyer fails to take reasonable measures to assure a person obtaining the law-related services knows that the services of the separate entity are not legal services and that the protections of the client-lawyer relationship do not exist.
(b) The term “law-related services” denotes services that might reasonably be performed in conjunction with and in substance are related to the provision of legal services, and that are not prohibited as unauthorized practice of law when provided by a nonlawyer.
ABA Model Rules of Professional Conduct 5.4 (2001).
4.Utah Ethics Advisory Op. 01-05, at ¶ 7 n.6, 2001 WL 829937 (Utah St. Bar) (Model Rule 5.7 is consistent with prior opinions of the Committee holding that a lawyer engaged in a law-related occupation is subject to the Rules of Professional Conduct in both occupations.); Utah Ethics Advisory Op. 98-08, at 2, 1998 WL 716635 (Utah St. Bar) (same).
5.Utah Ethics Advisory Op. 98-08, at 3 n.5, 1998 WL 716635 (Utah St. Bar).
6.Id. at 3.
7.The issue presented here was also not addressed in Utah Ethics Advisory Op. 146A, 1995 WL 283828 (Utah State Bar). In that opinion, we held that a lawyer employed by a financial planner as its in-house lawyer could under certain circumstances provide legal services to the financial planner’s clients independent of the financial planner. However, in Opinion 146A, the lawyer was not employed by the financial planner to provide anything other than legal services.
8.See ABA Comm. on Ethics and Professional Responsibility, Formal Op. 328 (1972).
9.Id.
10.Rule 5.4(b) has been criticized by some as being overly restrictive. We state no view on this because, as we have stated in a prior opinion, it is not within the authority of this Committee to amend Rule 5.4. Utah Ethics Advisory Op. 00-03, at n.20 & accompanying text, 2000 WL 347738 (Utah State Bar). Any amendment of Rule 5.4 must be submitted to and approved by the Utah Supreme Court.
11. Id. at 2.
12.Id.
13.ABA Comm. on Ethics and Professional Responsibility, Formal Op. 297 (1961); ABA Comm. on Ethics and Professional Responsibilities, Formal Op. 239 (1943).
14. ABA Comm. on Ethics and Professional Responsibilities, Formal Op. 305 (1962).

Ethics Advisory Opinion No. 02-05

Issued March 18, 2002
¶ 1 Issue:
What are the ethical considerations for a governmental lawyer who participates in a lawful covert governmental operation, such as a law enforcement investigation of suspected illegal activity or an intelligence gathering activity, when the covert operation entails conduct employing dishonesty, fraud, misrepresentation or deceit?

¶ 2 Conclusion: A governmental lawyer who participates in a lawful covert governmental operation that entails conduct employing dishonesty, fraud, misrepresentation or deceit for the purpose of gathering relevant information does not, without more, violate the Rules of Professional Conduct.1
¶ 3 Background: A bar member who works for a federal agency that routinely performs undercover investigative work and covert actions directed against criminal and terrorist groups asks whether supervision of or participation in those activities violates Utah Rules of Professional Conduct 8.4(c), which states that: “It is professional misconduct for a lawyer to engage in conduct involving dishonesty, fraud, deceit or misrepresentation.” Similar issues are raised by federal and state prosecutors’ supervision of undercover criminal investigations.
¶ 4 Analysis: On its face, Rule 8.4(c) would seem to make it professional misconduct for a lawyer to engage in any kind of misrepresentation. However, the Official Comment to Rule 8.4 is read by some to restrict its range to a more limited scope of illegal conduct:
Many kinds of illegal conduct reflect adversely on fitness to practice law, such as offenses involving fraud and the offense of willful failure to file an income tax return. However, some kinds of offenses carry no such implication. Traditionally, the distinction was drawn in terms of offenses involving “moral turpitude.”. . . Although a lawyer is personally answerable to the entire criminal law, a lawyer should be professionally answerable only for offenses that indicate lack of those characteristics relevant to law practice. Offenses involving violence, dishonesty, or breach of trust, or serious interference with the administration of justice are in that category.
Relying on the Comment, commentators David Isbell and Lucantonio Salvi have concluded that Rule 8.4(c) is intended to “apply only to conduct of so grave a character as to call into question the lawyer’s fitness to practice law” and does not apply to deception by undercover investigators.2Furthermore, Congress, in its report on Abscam, indicated that “[i]n this era of increasingly powerful and sophisticated criminals, some use of the undercover technique is indispensable to the achievement of effective law enforcement.”3
¶ 5 Surprisingly, there is little authority bearing directly on the issue of whether Rule 8.4(c) applies to lawyer participation in lawful government covert operations. We are aware of no bar ethics opinions that have faced this question squarely.4A recent ABA opinion does hold that a lawyer’s recording of a conversation without the knowledge or consent of the other party does not necessarily violate the Model Rules.5It specifically reserves, however, the question presented here:
The Committee does not address in this opinion the application of the Model Rules to deceitful, but lawful conduct by lawyers, either directly or through supervision of the activities of agents and investigators, that often accompanies nonconsensual recording of conversations in investigations of criminal activity, discriminatory practices, and trademark infringement. We conclude that the mere act of secretly but lawfully recording a conversation inherently is not deceitful, and leave for another day the separate question of when investigative practices involving misrepresentations of identity and purpose nonetheless may be ethical.6
¶ 6 The ABA opinion does cite the Isbell and Salvi article as “discuss[ing the issue] thoughtfully.”7It also cites the discussion in Apple Corps. Ltd. v. International Collectors Society.8In that case, the plaintiffs suspected that the defendants were violating a consent order limiting the marketing or distribution of stamps bearing the image of The Beatles. In order to investigate, the suspected violations, counsel for the plaintiffs and others under their direction made phone calls posing as consumers.9When plaintiffs moved for contempt based on alleged violation of the consent order, defendants asked for sanctions against plaintiffs’ counsel, claiming, inter alia, a violation of New Jersey’s Rule 8.4(c).10 Relying largely on the Isbell and Salvi article, the court held that Rule “8.4(c) does not apply to misrepresentations solely as to identity of purpose and solely for evidence gathering purposes.”11 It reasoned:
Undercover agents in criminal cases and discrimination testers in civil cases, acting under the direction of lawyers, customarily dissemble as to their identities or purposes to gather evidence of wrongdoing. This conduct has not been condemned on ethical grounds by courts, ethics committees or grievance committees. This limited use of deception, to learn about ongoing acts of wrongdoing, is also accepted outside the area of criminal or civil rights law enforcement. The prevailing understanding in the legal profession is that a public or private lawyer’s use of an undercover investigator to detect ongoing violations of the law is not ethically proscribed, especially where it would be difficult to discover the violations by other means.12
¶ 7 The Oregon Supreme Court reached a different conclusion, however, in a recent opinion reviewing a disciplinary decision by the Oregon State Bar.13 The defendant in that case was accused of violating Oregon’s prohibition against dishonesty, fraud, deceit and misrepresentation (set forth in DR 1-102(A)(3)) by pretending to be a chiropractor in phone conversations for the purpose of gathering information about suspected fraud by a medical services review company. The accused (supported by the United States attorney, the Oregon Attorney General and others as amici curiae) argued that there should be an investigatory exception to the disciplinary rules for “‘misrepresentations . . . limited only to identity or purpose . . . made solely for the purposes of discovering information.’”14 Citing Apple Corps Ltd. and the Isbell and Salvi article, the court explained the rationale for an exception:
Those authorities assert that public policy favors an exception that, at the least, allows investigators and discrimination testers to misrepresent their identity and purpose when they are investigating persons who are suspected of engaging in unlawful conduct. The rationale for such an exception is that there may be no other way for investigators or discrimination testers to determine if a person who is suspected of unlawful conduct actually is engaged in unlawful conduct. Therefore, the argument goes, the public benefits more from allowing lawyers to use deception than allowing unlawful conduct to go unchecked.15
¶ 8 Relying on the plain language of its disciplinary rules, however, the Oregon court declined to find an exception. It concluded that it “should not create an exception to the rules by judicial decree” and that “any exception must await full debate that is contemplated by the process of adopting and amending the Code of Professional Responsibility.”16
¶ 9 “The Rules of Professional Conduct are rules of reason,” however, and “should be interpreted with reference to the purposes of legal representation and of the law itself.”17In light of the Official Comment to Rule 8.4(c) and longestablished practice at the time of its adoption, we do not believe that rule was intended to prohibit prosecutors or other governmental lawyers from participating in lawful undercover investigations.18Nor do we think a distinction should be drawn between prosecutors or other governmental lawyers who supervise the investigative activities of others and those who take part directly in such activities.19We hold that as long as a prosecutor’s or other governmental lawyer’s conduct employing dishonesty, fraud, deceit or misrepresentation is part of an otherwise lawful government operation, the prosecutor or other governmental lawyer does not violate Rule 8.4(c).
¶ 10 In our view, Rule 8.4(c) was intended to make subject to professional discipline only illegal conduct by a lawyer that brings into question the lawyer’s fitness to practice law. It was not intended to prevent state or federal prosecutors or other government lawyers from taking part in lawful, undercover investigations. We cannot, however, throw a cloak of approval over all lawyer conduct associated with an undercover investigation or “covert” operation. Further, a lawyer’s illegal conduct or conduct that infringes the constitutional rights of suspects or targets of an investigation might also bring into question the lawyer’s fitness to practice law in violation of Rule 8.4(c). The circumstances of such conduct would have to be considered on a case-by-case basis. Nor do we provide a license to ignore the Rules’ other prohibitions on misleading conduct.20We do hold, however, that a state or federal prosecutor’s or other governmental lawyer’s otherwise lawful participation in a lawful government operation does not violate Rule 8.4(c) based upon any dishonesty, fraud, deceit or misrepresentation required in the successful furtherance of that government operation.
Footnotes
1.We do not address in this opinion and specifically reserve the issue of whether the analysis and result of this opinion apply to a private lawyer’s investigative conduct that involves dishonesty, fraud, misrepresentation or deceit.
2.David B. Isbell and Lucantonio N. Salvi, Ethical Responsibility of Lawyers for Deception by Undercover Investigators and Discrimination Testers: An Analysis of the Provisions Prohibiting Misrepresentations Under the Model Rules of Professional Conduct, 8 Geo. J. Legal Ethics 791, 816 (1995).
3.See Select Committee to Study Undercover Activities of Components of the Department of Justice, 97th Cong., 2d Sess. 11 (1982), quoted in Shine, Note, Deception and Lawyers: Away From a Dogmatic Principle and Toward a Moral Understanding of Deception, 64 Notre Dame L. Rev. 722, 728-29 n. 26 (1989).
4.But see Ala. Bar Ass’n, Op. RO-89-31 (interpreting Model Code of Professional Responsibility DR 7-104(A)(1) and holding that it is permissible for a lawyer to direct an investigator to pose as a customer in order to determine whether the plaintiff lied about his injuries).
5.ABA Comm. on Ethics and Professional Responsibility, Formal Op. 01-422 (2001).
6.Id. See also Utah Ethics Advisory Op. 69-04, 1996 WL 391435 (Utah St. Bar) (similar result).
7.Id.
8.15 F. Supp. 2d 456, 475-76 (D.N.J. 1998)
9.Id. at 458-59, 461-62.
10.New Jersey’s Rule 8.4(c) is parallel to Utah’s Rule 8.4(c).
11.Id. at 475.
12.Id. (citations omitted); see also Richardson v. Howard, 712 F.2d 319, 321-22 (7th Cir. 1983) (authorizing use of “testers” in housing discrimination cases); Hamilton v. Miller, 477 F.2d 908, 909 n.1 (10th Cir. 1973) (same); Fred C. Zacharias and Bruce A. Green, The Uniqueness of Federal Prosecutors, 88 Geo. L.J. 107, 231-32 (2000) (“Except with respect to surreptitious tape recording of conversations with witnesses, the reported decisions have never questioned the use of deceit in criminal investigations.”).
13.In re Gatti, 8 P.3d 966 (Ore. 2000).
14. Id. at 974.
15.Id. at 975 (citations omitted).
16.Id. at 976. In response to the decision in In re Gatti, the Oregon legislature passed HB 3857, signed into law on June 28, 2001, which authorizes prosecutors and other government lawyers to “participate in covert activities that are conducted by public bodies . . . for the purpose of enforcing laws, or in covert activities that are conducted by the federal government for the purpose of enforcing laws, even though the participation may require the use of deceit or misrepresentation.”
17.Utah Rules of Professional Conduct, Scope.
18.See also Official Comment to Utah Rule 4.2 (making specific approving reference to government undercover investigations). “. . . Also permitted are undercover activities directed at ongoing criminal activity, even if it is related to past criminal activity for which the person is represented by counsel.”
19.Some investigators, including many FBI agents, may be active members of the Bar.
20.See, e.g., Utah Rules of Professional Conduct 4.1(b) (prohibiting knowing failure “to disclose a material fact to a third person when disclosure is necessary to avoid assisting a criminal or fraudulent act by a client”); Rule 4.3(b) (“In dealing on behalf of a client with a person who is not represented by counsel, a lawyer shall not state or imply.

Ethics Advisory Opinion No. 02-06

Issued June 12, 2002
¶ 1 Issue:
May an attorney represent a client in a criminal matter where the attorney will have to cross-examine as an adverse witness a former client whom the attorney previously represented in an unrelated matter?

¶ 2 Opinion: In general, an attorney may represent a client in a criminal case where the attorney will have to cross-examine a former client whose interests are adverse to the defendant as long as the representations of the present and former clients are not substantially factually related and the attorney does not disclose or use any confidential information gained in the course of the former client’s representation to his disadvantage, as provided by Rule 1.9.
¶ 3 Analysis: The examination of a former client as an adverse witness on behalf of another client presents a potential conflict of interest for the attorney that must be examined under the provisions of Utah Rules of Professional Conduct: Rule 1.9, which governs successive conflicts of interest; Rule 1.7(b), which deals with concurrent conflicts of interest; Rule 1.6(a), which governs the duty of confidentiality; and Rules 1.1 and 1.3, which set forth the duties of competency and diligence, respectively. The Committee concludes that the cross-examination of the former client by the attorney does not per se create a disqualifying conflict of interest. However, the specific facts and circumstances of the case may involve a violation of the foregoing rules, and it is the lawyer’s responsibility to analyze the situation to determine whether there will be compliance with the applicable rules.1
¶ 4 Under Rules of Professional Conduct 1.9(a), an attorney may not represent a person “in the same or a substantially factually related matter in which that person’s interests are materially adverse to the interest of the former client unless the former client consents after consultation.” Unlike the ABA Model Code of Professional Responsibility, which requires that the matters be simply “substantially related,” Rule 1.9 requires that the matters be “substantially factually related,” thus focusing on the factual nexus between the prior and current representations, rather than a similarity of legal issues.2If the attorney determines that the facts underlying the representation of the former client-witness are substantially related to the indictment of the defendant, then the attorney needs to assess whether the interests of the former client and the defendant are materially adverse.3Should the attorney conclude that the two representations are substantially factually related and that the interest of the former and present clients are materially adverse, the attorney would be faced with an impermissible conflict of interest that could be cured only by obtaining the former client-witness’s consent to the representation of the defendant.
¶ 5 In cross-examining the former client, the attorney must also comply with the ethical obligation not to disclose any confidential information related to the representation of the former client. The cross-examination may create a tension between (a) the attorney’s duty of loyalty to the client, which encompasses the duty to represent the client diligently and therefore to cross-examine the adverse witness vigorously, and (b) the attorney’s duties to the former client-witness. The attorney will need to resolve any such tension within the boundaries of Rule 1.9(b).
¶ 6 Rule 1.9(b) prevents an attorney from using any information relating to the representation to the disadvantage of the attorney’s former client, except as otherwise permitted by Rule1.6, which governs confidentiality. Thus, the attorney must refrain from the use or disclosure of any information that is not expressly permitted by Rule 1.6 or generally known to the public. If the attorney has not learned any information during the representation of the former client-witness that could be used in the criminal proceeding to discredit the witness’s credibility or otherwise pursue the defendant’s interests, no actual conflict exists, and no conflict is likely to arise.4However, if the attorney has gained information that could be used to the disadvantage of the former client-witness, then the attorney should try to obtain the former client’s consent prior to the disclosure. In the absence of such consent, the attorney must seek to withdraw from representing the defendant.
¶ 7 Even if the attorney concludes that an actual or potential conflict of interest that would be prohibited by Rule 1.9 does not exist under the particular circumstances, the attorney must comply with the provisions of Rules 1.7(b) and 1.4(b). Under Rule 1.7(b), an attorney is prohibited from representing a client if the representation may be materially limited by the attorney’s responsibilities to a third person (here, the former client), unless the lawyer reasonably believes that the representation will not be adversely affected and the current client consents to the representation.5
¶ 8 Also, pursuant to Rule 1.4(b), the attorney should explain the matter to the client to the extent reasonably necessary to enable the client to make an informed decision regarding the representation. The attorney, therefore, must evaluate whether the obligations to the former client-witness pose a material limitation to the representation of the defendant. If a material limitation exists or is likely to arise, the attorney should disclose the limitation to the client and, if the attorney reasonably believes that she can proceed because the representation will not be adversely affected, she should obtain her client’s consent to the representation.6
¶ 9 An attorney, therefore, is not automatically precluded by the Utah Rules of Professional Conduct from cross-examining a former client in the course of representing another client, provided that (a) there is not a substantial factual nexus between the present and former representations and (b) the attorney is able to provide the client a competent and diligent representation and to cross-examine the former client-witness vigorously. If the attorney believes that the representation of the client may be limited by the attorney’s obligations to the former client-witness, then the attorney must disclose the potential limitations and obtain the client’s consent to the potential conflict. In the absence of consent in this situation, the attorney must seek to withdraw from the case. Also, if it is reasonably foreseeable that a conflict of interest may arise due to the possible use of confidential information related to his representation of the former client-witness, then the attorney must obtain the former client’s consent to such disclosure or seek to withdraw. Finally, in a criminal case, it is good practice for the attorney to inform the court of any such conflict or potential conflict in order to facilitate a timely resolution of the issue.7
Footnotes
1.This opinion does not address the situation in which the adverse witness is a current client, rather than a former client, of the attorney.
2. Houghton v. Dept. of Health, 962 P.2d 58 (Utah 1998) (denying motion to disqualify attorney where there was no common factual nexus between prior representation of State and current representation of Medicaid recipients against State); see also SLC Ltd. v. Bradford Group West, Inc., 999 F.2d 464 (10th Cir. 1993) (disqualification of attorney upheld because of close factual nexus between prior representation of debtor’s general partner in loan workouts and subsequent representation of secured creditor in debtor’s bankruptcy proceeding); State v. Larsen, 828 P.2d 487 (Utah Ct. App. 1992) (a substantial factual relation is required to create a conflict of interest under Utah Rule 1.9(a)).
3.See Wheat v. United States, 486 U.S. 153 (1988) (attorney disqualified when he represented co-conspirators in criminal case and government intended to call one of co-conspirators as a witness); United States v. Amini, 149 F.R.D. 647 (D. Utah 1993) (government’s motion to disqualify rejected when attorney had previously represented defendant’s wife-codefendant in related proceedings but when interests of former client and defendant were not directly adverse and both client and former client waived any potential conflicts); United States v. Valdez, 149 F.R.D. 223 (D. Utah 1993) (defense attorney was not disqualified from representing criminal defendant when attorney had previously represented a government witness in an unrelated case and was not privy to any confidential information of former client-witness that could be used in criminal case); Ill. Adv. Op. 86-12, 1987 WL 383870 (Ill. State Bar Ass’n) (attorney may represent clients in criminal cases investigated by police officer when attorney had previously represented police officer in disciplinary proceeding but where there is no factual relationship between the two matters).
4.United States v. Valdez, 149 F.R.D. 223 (D. Utah 1993); Houghton v. Dept. of Health, 962 P.2d 58 (Utah 1998); United States v. TA, 938 F. Supp. 762 (D. Utah 1996) (no actual conflict of interest exists under Rule 1.9(a) when attorney does not have relevant confidential information); Pa. Ethics Op. 92-96, 1992 WL 810292 (Pa. Bar Ass’n) (defense lawyer may cross-examine former client who is adverse witness if past and present cases are entirely separate and lawyer does not use confidential information acquired during representation of former client); Conn. Ethics Op. 00-2, 2000 WL 1364223 (Conn. Bar Ass’n) (attorney may represent plaintiff in personal injury action when attorney had previously represented defendant in unrelated criminal matter provided that attorney did not gain information from previous representation that could be used to former client’s disadvantage or that he obtained former client’s consent).
5.To satisfy the consent condition of Utah Rule 1.7(b), each client must consent after consultation. In the case before us there is only one affected client—the criminal defendant. The attorney’s former client is not a “client” from whom consent is required to comply with Rule 1.7(b). However, the former client’s consent may be necessary if the attorney intends to use any information to the disadvantage of the former client. Utah Rules of Professional Conduct 1.9(b), 1.6(a).
6.In Utah Ethics Op. 145, 1994 WL 579851 (Utah St. Bar), we concluded that a law firm could not represent a defendant in the retrial of a criminal case in which the investigator who had been involved in the State’s investigation against the defendant is now a full-time employee of the firm. In that case, the lawyer’s representation of the client would create an impermissible conflict of interest under Rule 1.7 because the representation would be materially limited by the risk of harm to the law firm or the investigator that would result from the impeachment of the law firm’s own employee.
7.See generally United States v. Valdez, 149 F.R.D. 223, 228 (D. Utah 1993), where Magistrate Judge Ronald Boyce urged prosecutors to bring such issues before the court at an early stage of the proceedings.

Ethics Advisory Opinion No. 02-07

Issued: September 13, 2002
¶ 1 Issue:
Under Rule 5.4 of the Utah Rules of Professional Responsibility, may a Utah lawyer (a) hire a paralegal, not otherwise associated with the lawyer or the lawyer’s firm, as an independent contractor, or (b) compensate an employee paralegal or other firm employee based on a percentage of the lawyer’s fees.
¶ 2 Conclusion: Utah lawyers may hire outside paralegals on an independen-contractor basis, provided the paralegal does not control the lawyer’s professional judgment. In addition, if the amounts paid for services are not tied to specific cases, Utah lawyers or law firms may share fees with nonlawyer employees in a compensation plan.
¶ 3 Background: A Utah lawyer contemplates hiring outside paralegals and compensating them on a per task basis. The lawyer seeks our opinion on whether such an arrangement complies with the Utah Rules of Professional Responsibility. While the lawyer’s inquiry is limited to hiring outside paralegals, it raises related issues about whether compensation for paralegals and other professionals, either as independent contractors or employees, can be tied to fees the lawyer generates. We take the occasion to resolve both the lawyer’s inquiry and to reiterate and clarify our prior opinions on these issues.
¶ 4 Analysis: The plain language of Rule 5.4,1as well as official comments to the Rule, and our opinions interpreting it, stress its underlying rationale: “protect[ion of] the lawyer’s professional independence of judgment” and overriding loyalty to the client against potential conflicts.2The proposed contractual arrangement here is between the lawyer and an outside, independent paralegal. This arrangement does not violate either the letter or spirit of Rule 5.4, assuming the paralegal compensation is totally independent from the lawyer’s relationship with, and compensation from, the client. The same rationale would apply to other third parties the lawyer hires, such as expert witnesses, copy centers, computer specialists, etc.
¶ 5 Under Rule 5.4(a), the lawyer in such a relationship would not be sharing legal fees with the non-lawyer paralegal or other third-party professional. Our rationale for this conclusion is the same as that in Opinion 02-01, in which we concluded that a lawyer would not be sharing legal fees with a non-lawyer financing company that underwrote litigation under a “recourse” loan to the lawyer.3The non-lawyer paralegal, as with the financing company in Opinion No. 02-01, has an independent contractual relationship with the lawyer and is paid for work done, no matter the outcome of any legal matter.
¶ 6 Succinctly stated, the contemplated lawyer-paralegal relationship is permissible under the Utah Rules of Professional Conduct because the lawyer’s professional judgment is not compromised.
¶ 7 The same concept applies to employee-paralegals. Rule 5.4(a) forbids the sharing of legal fees, except in three instances, one of which is the inclusion of a “nonlawyer employee” in a “compensation plan” under Rule 5.4(a)(3). The Rule does not presume to define the boundaries of an acceptable compensation plan. We have previously held, however, that compensation of nonlawyer employees may be based upon a percentage of gross or net income provided: (a) compensation is not tied to specific fees from a particular case; (b) there is nothing in the nature of the arrangement that would tend to impair the independence of the law firm or lawyer; and (c) no other rule of professional conduct is violated.4
¶ 8 Conversely, Rule 5.4 precludes a compensation plan tied to a sharing of lawyer fees for independent paralegals. Given the rule’s underlying rationale of preserving lawyer independence, the apparent difference between the permissible sharing of fees for employee-paralegals and the impermissible sharing of fees with an independent contractor stems from the nature of the lawyer/paralegal relationship. The employee-paralegal, being an employee of the lawyer, is not in a position to exert undue influence on the lawyer. The independent paralegal would be in a less subordinate role. The rule’s distinction between permissible and impermissible compensation arrangements for employee-paralegals and independent paralegals is thus consistent with its underlying purpose.
Footnotes
1.The text of the relevant portions of Rule 5.4 reads:
(a) A lawyer or law firm shall not share legal fees with a nonlawyer, except that: . . . .
(3) A lawyer or law firm may include nonlawyer employees in a compensation or retirement plan, even though the plan is based in whole or in part on a profit-sharing arrangement.
(b) A lawyer shall not form a partnership with a nonlawyer if any of the activities of the partnership consist of the practice of law.
(c) A lawyer shall not permit a person who recommends, employs, or pays the lawyer to render legal services for another to direct or regulate the lawyer’s professional judgment in rendering such legal services.
(d) A lawyer shall not practice with or in the form of a professional corporation or association authorized to practice law for a profit, if: . . . .
(3) A nonlawyer has the right to direct or control the professional judgment of a lawyer. . . .
2.See, e.g., Utah Rules of Professional Conduct 5.4, cmt; Utah Ethics Advisory Op. 02-04, 2002 WL 448569 (Utah St. Bar) (Rule 5.4(b) prohibits lawyer from forming a business association with non-lawyer accounting firm where the lawyer is contemporaneously engaged in the practice of law); Utah Ethics Advisory Op. 02-01, 2002 WL 231939 (Utah St. Bar) (Rule 5.4 does not preclude litigation financing arrangements, provided lawyer’s professional independence is not compromised); Utah Ethics Advisory Op. 00-03, 2000 WL 347378 (Utah St. Bar) (lawyer may form business relationship with a non-lawyer to engage in law-related activities only if the lawyer withdraws entirely from the active practice of law).
3.Utah Ethics Advisory Op. 02-01, 2002 WL 231939 (Utah St. Bar).
4.Utah Ethics Advisory Op. 139, 1994 WL 579849 (Utah St. Bar).

Ethics Advisory Opinion No. 02-08

Issued September 18, 2002
¶ 1 Issue
: An attorney filed a complaint with the Judicial Conduct Commission against a judge. The complaint was eventually dismissed for insufficient evidence with no finding of misconduct. May the attorney accept new cases as counsel and appear before that judge without advising the clients of the complaint and without giving them the option of the attorney filing a motion for recusal?

¶ 2 Conclusion: The attorney must inform the client if the attorney thinks the judge may harbor some ill feelings toward the attorney. However, if the attorney has a reasonable good-faith belief that the judge does not harbor any ill feeling toward the lawyer, then the lawyer need not advise the client of the complaint the lawyer filed against the judge.
¶ 3 Background: An attorney was the victim of a criminal act. During the pretrial process, the attorney-victim thought that the judge did not afford him his constitutional and statutory rights. He subsequently filed a personal complaint with the Utah Judicial Conduct Commission. The attorneyvictim then advised new clients that were placed on this judge’s docket of the unresolved personal complaint against the judge and offered to file a Rule 29 motion to recuse. In the cases that were not placed on different dockets, the judge recused himself. After processing the complaint, the Judicial Conduct Commission informed the attorney that there was insufficient evidence to warrant further proceedings. The attorney now seeks guidance on whether he may accept new cases as counsel and appear before this particular judge without advising the clients of the prior dismissed complaint and without offering to file a motion to recuse.
¶ 4 Analysis: Rule 1.4(b) provides “A lawyer shall explain a matter to the extent reasonably necessary to enable the client to make informed decisions regarding the representation.” The commentary to Rule 1.4 further provides that “[t]he guiding principle is that the lawyer should fulfill reasonable client expectations for information . . . consistent with the duty to act in the client’s best interest and the client’s overall requirements as to the character of representation.” No doubt a client would like to be informed about potential ill will or even hostility between a judge and counsel and its possible effects on the client’s representation. The commentary aptly provides “A lawyer may not withhold information to serve the lawyer’s own interest or convenience.”
¶ 5 If an actual conflict of interest exists, rather than just a potential for a conflict, Rule 1.7(b) applies: “A lawyer shall not represent a client if the representation of that client may be materially limited . . . 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.” A “lawyer’s own interest” could include the lawyer’s taking on new clients despite the potential ill feelings against him by a district court judge. The commentary to Rule 1.7 indicates a hypothetical or potential conflict does not itself preclude representation. Accordingly, if there is no actual conflict, client consent is not required.
¶ 6 The critical issues, then, are (1) the likelihood that a conflict will eventuate and, if it does, (2) whether it will materially interfere with the lawyer’s professional judgment in considering alternatives or foreclose courses of actions that reasonably should be pursued.
¶ 7 A judge is also required to avoid conflicts. Canon 1 of the Code of Judicial Conduct sets the general standard that “[a] judge should participate in establishing, maintaining, and enforcing, and shall personally observe, high standards of conduct so that the integrity and independence of the judiciary will be preserved.”1If a judge were to allow a dispute with an attorney on a personal level to interfere with his professional judgment, this would constitute unjudicial conduct that would prejudice public esteem of the office. Further, the judge could be subject to be “reprimanded, censured, suspended, removed from office, or involuntarily retired for . . . conduct prejudicial to the administration of justice which brings a judicial office into disrepute.”2
¶ 8 At the beginning of representation, the potential conflict, if any, may never develop into an actual conflict. For instance, if a particular case is not even assigned to this judge’s docket, any possible conflict will be avoided and the issue need not be addressed. Also, if the case is initially assigned to the judge, the judge might sua sponte recuse himself pursuant to Canon 3 of the Code of Judicial Conduct, which states, “A judge shall enter a disqualification in a proceeding in which the judge’s impartiality might reasonably be questioned, including but not limited to instances where . . . the judge has a personal bias or prejudice concerning a party or a party’s lawyer.”3
¶ 9 If the lawyer takes a case that is assigned to the judge who does not recuse himself, the lawyer must then decide if there is a reasonable, good-faith basis to believe that the judge does not harbor ill feelings or resentment toward the lawyer. The lawyer may reasonably believe the judge harbors no ill will, for example, if sufficient time has elapsed to dissipate initial ill will; if the judge has affirmatively indicated that he bears no resentment; or if the attorney has represented a client before the judge with no sign of prejudicial effect. Under such circumstances, the attorney need not inform the client of the prior incident.
¶ 10 If the lawyer believes the judge might continue to resent the lawyer’s filing the complaint, the lawyer must reveal this potential conflict to the client. If the lawyer, in good faith, believes the judge does not have any ill feelings toward the lawyer, then he need not advise the client of the complaint that was filed against the judge. However, the prudent attorney will also consider that, if the client is not informed of the prior complaint, he may later find himself the subject of an ineffective-assistance-of-counsel appeal or a bar complaint, and the lawyer should be prepared to explain his reasonable good-faith conclusion that the judge did not harbor ill feelings towards him for his having filed the complaint against the judge.
Footnotes
1.Utah Code of Judicial Admin., ch. 12, Code of Judicial Conduct, Canon 1 (2002).
2.Utah Code Ann. § 78-8-103(1)(e) (1996).
3.Utah Code of Judicial Admin., ch. 12, Code of Judicial Conduct, Canon 3.E(1)(a) (2002).

Ethics Advisory Opinion No. 02-09

Issued September 24, 2002
¶ 1 Issue:
Is it ethical for an attorney to enter into a contingency-fee agreement, under which all fees, expenses and costs of litigation are unconditionally assumed by the attorney?

¶ 2 Opinion: Within broad limitations, the Utah Rules of Professional Conduct permit an attorney and a client to determine the terms of the lawyer’s compensation, and there is no per se restriction prohibiting the attorney from assuming all litigation costs and expenses under a contingency-fee agreement. Such fee agreements, however, must comply with all other applicable provisions of the Utah Rules of Professional Conduct concerning fees.
¶ 3 Analysis: We have received a request for an opinion as to the propriety of a lawyer’s entering into a contingent-fee agreement with a commercial client on collection matters that contains the following paragraph:
All fees, expenses and costs, such as filing fees, court disbursements, photocopy costs, telephone expenses, travel, postage, storage, office supplies, and miscellaneous expenses associated with the collection shall be the sole responsibility of the attorney and will not be billed or reimbursed by client.
The issue requires a determination of whether a fee arrangement of this kind is consistent with Rules1.5, 1.7, and 1.8(e) of the Utah Rules of Professional Conduct (“The Rules”).1
¶ 4 Lawyers are generally free to determine the terms of their representation with their clients, consistent with the Rules. The Ethics Advisory Opinion Committee has recently addressed this issue in Opinion No.02-03, reaching a conclusion that a flat-fee agreement between a defense lawyer and an insurance company is not per se unethical and cautioning:
A lawyer who enters into any type of flat-fee arrangement with an insurer must use caution to assure that she exercises independent professional judgment on behalf of the insured. This is particularly important in situations where the scope of the case has unexpectedly increased beyond the attorney’s original expectations in agreeing to a fixed fee.2
¶ 6 Our Opinion No.136 also addressed the issue of whether a client’s advance payment, made as a fixed fee or non-refundable retainer, was unethical. The opinion concluded that fixed-fee contracts or non-refundable retainers are not expressly prohibited by Rule1.5. 3
¶ 7 Rule1.5(c) addresses certain requirements related to contingent-fee arrangements, including the requirement that the fee agreement must be in writing, and it must state the method by which the fee is to be determined and how expenses are to be handled.4While Rule1.5(c) anticipates that expenses will be deducted either before or after the contingent fee is calculated, nothing in the rule prohibits the attorney from agreeing to assume those costs and expenses within her contingent fee, or, if no judgment or settlement is obtained, to assume responsibility for those costs and expenses.
¶ 8 As was extensively addressed in Opinion 02-03, a lawyer must ensure that her agreement relating to fees will not require her improperly to curtail services provided to the client that would normally be within the scope of the representation.
¶ 9 Rule 1.7(b) requires a lawyer to decline representation if the representation of the client may be limited, among other things, by the lawyer’s own interest. As we pointed out in Opinion No. 02-03, the economics of any agreement between the lawyer and her client is not the Committee’s business. In the context of our discussion of fee arrangements between lawyers and insurers, we noted:
Lawyers and insurance companies are free to negotiate fee arrangements that suit their respective economic interests so long as no lawyer on either side violates the Utah Rules of Professional Conduct. . . . We emphasize, however, that lawyers entering into such arrangements must use care to assure that their representation complies with all applicable ethical standards, even if the fee arrangement requires the lawyer to perform services for reduced rate or even without compensation.5
¶ 10 We conclude that there is no material difference between the proposed arrangement and a “standard” contingency fee-arrangement under which the attorney essentially “advances” her own services with the potential that she will not be “reimbursed” for her costs of operation (office, overhead, staff, library, etc.). We can see no distinction between a lawyer’s providing all the ancillary services that make up her normal operations in connection with a contingent-fee agreement and the lawyer’s undertaking to pay the costs and expenses directly connected to the representation as part of the bargained-for quid pro quo of the contingent-fee agreement.
¶ 11 An argument has been advanced that the lawyer who undertakes to pay all costs associated with the pursuit of the case is providing financial assistance to the client in connection with pending or contemplated litigation, which is prohibited under Rule1.8(e). This argument fails because it is subject to the exception under Rule1.8(e)(1). The exception states: “[E]xcept [a] lawyer may advance court casts and expenses of litigation the repayment of which may be contingent on the outcome of the matter.” In the proposed arrangement the lawyer is simply advancing court costs and expenses of litigation. If the lawyer is unsuccessful with a case, she is not compensated for costs and expenses; if successful, she is compensated for the costs and expenses as an implicit part of the percentage-fee retained from the recovery. That is, the lawyer’s right to recover costs can be made as contingent as her right to a fee.”6
¶ 12 Additionally, some have argued that the proposed arrangement may create a prohibited “proprietary interest” under Rule1.8(j). Even if it does, we conclude that it falls under the contingent-fee exclusion of Rule1.8(j)(2).7
¶ 13 Finally, we observe that there have been decisions in other jurisdictions that find the arrangement we address here to be an ethical violation.8Those decisions can generally be distinguished as having been decided under more stringent versions of a rule similar to Utah’s Rule1.8(e). In any event, we decline to adopt such a result, as we can identify no substantial public policy that is served by prohibiting this kind of arm’s-length agreement between attorney and client,9so long as it otherwise complies with the our Rules of Professional Conduct concerning fees.10
Footnotes
1.Our opinion here is not limited to contingent fees in commercial collection situations, but has general applicability to contingent-fee arrangements.
2.Utah Ethics Advisory Op. 02-03, at ¶ 30, 2002 WL 340262 (Utah St. Bar).
3.Utah Ethics Advisory Op. 136, 1993 WL 755253 (Utah St. Bar).
4. “A contingent fee agreement shall be in writing and shall state the method by which the fee is to be determined, including the percentage or percentages that shall accrue to the lawyer in the event of settlement, trial or appeal, litigation and other expenses to be deducted from the recovery, and whether such expenses are to be deducted before or after the contingent fee is calculated.” Rule1.5(c).
5.Opinion No.02-03, at ¶ 32 (emphasis added).
6.We also note that we obtain no guidance from the official comment to Rule1.8, as it does not address Rule1.8(e). However, the ABA’s Annotated Model Rules of Professional Conduct (4th ed. 1999), citing Charles W. Wolfram, Model Legal Ethics § 9.2.3 (1986), states: “Rule 1.8 does not require that the client guarantee repayment of the advances; repayment may be made contingent on the outcome of the matter.”
7.“[T]he lawyer may [c]ontract with a client for a reasonable contingent fee in a civil case.”
8.See, e.g., Arizona Comm. on the Rules of Professional Conduct, Op. 95-01, decided under a version of1.8(e) that reads: “A lawyer shall not provide financial assistance to a client in connection with pending or contemplated litigation, except that: (1) a lawyer may advance court costs and expenses of litigation, provided the client remains ultimately liable for such costs and expenses . . . .”
9.Indeed, there are the same beneficial public-policy attributes of the proposed arrangement as are often articulated for “standard” contingent-fee arrangements—namely, that it provides access to the judicial system for aggrieved persons for whom access would otherwise not be economic or practicable.
10.For example: “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,” Rule1.5(a).

Ethics Advisory Opinion No. 02-10

Issued December 18, 2002
¶ 1 Issue:
May a lawyer review pleadings prepared by a non-lawyer mediator for simple, uncontested divorces and advise the mediator on how to modify the pleadings for filing in court?

¶ 2 Conclusion: (1) As lawyer for the mediator, a lawyer may advise the mediator on the issues likely to arise in the course of the mediation, but may not advise the mediator how to prepare the divorce agreement and court pleadings for particular parties who are clients of the mediator. This would constitute assisting in the unauthorized practice of law and would violate Utah Rules of Professional Conduct 5.5. (2) An attorney may provide representation to a party engaged in a divorce mediation that is limited to advising the party and assisting with pleadings, but may not so limit the representation without first fully informing the party of the proposed limitation and obtaining the party’s informed consent.
¶ 3 Background: A divorce mediator has requested that a lawyer perform a limited service: review pleadings prepared by the mediator and amend them as needed. Prior to the attorney’s involvement, the mediator would meet with the divorcing parties and assist them in reaching a settlement of all issues in their divorce. Then, the mediator would draft the parties’ agreement, which would be filed with the court or incorporated into the judgment of the court. Finally, the mediator would draft the various additional court documents (e.g., complaint, findings of fact and conclusions of law, judgment) needed for the parties’ divorce. The mediator would inform the divorcing parties that the pleadings were not prepared by an attorney, but had been reviewed by an attorney for “sufficiency.” The divorcing parties would pay the attorney a small fee for this service.
¶ 4 Analysis: The request raises the following issues:
* Whether the lawyer is representing the mediator or the divorcing parties.
* Whether this plan involves the lawyer’s assisting in the unauthorized practice of law in violation of Utah Rules of Professional Conduct 5.5.
* Whether this plan constitutes an appropriate limitation on the lawyer’s representation for the client under Utah Rules of Professional Conduct 1.2 and 1.1.
A. Whether the lawyer is representing the mediator or the divorcing parties.
¶ 5 The original request appears to presume that the lawyer is advising the mediator. However, the advice sought from the Committee focuses on the agreement and pleadings for a divorce between two particular parties. Here, we consider the ethical constraints on both possible relationships.
B. Whether the lawyer, in advising the mediator, is assisting in the authorized practice of law.
¶ 6 Rule 5.5 provides that a lawyer shall not “assist any person in . . . the unauthorized practice of law.” However, the Comments to Rule 5.5 state that the rule “does not prohibit lawyers from providing professional advice and instruction to nonlawyers whose employment requires knowledge of law.” Accordingly, it should be permissible for a lawyer to form an attorney-client relationship and provide a mediator with professional advice that the mediator needs for this occupation. In order to understand the limits of what is appropriate legal advice to give a mediator, we first examine what constitutes the practice of mediation under Utah law and current codes of conduct for mediators.
¶ 7 Utah statute provides for the certification of “alternative dispute resolution providers,”1including persons providing services as mediators.2 “Alternative dispute resolution” is defined as “the provision of an alternative system for settling conflicts between two or more parties, which operates both independent of or as an adjunct to the judicial-litigation system, through the intervention of a qualified neutral person or persons who are trained to intercede in and coordinate the interaction of the disputants in a settlement process.”3 A “dispute resolution provider” is “a person, other than a judge acting in his official capacity, who holds himself out to the public as a qualified neutral person trained to function in the conflict-solving process using the techniques and procedures of negotiation, conciliation, mediation.”4
¶ 8 Utah statute also provides for the Judicial Council to establish alternative dispute resolution programs to be administered by the Administrative Office of the Courts.5The Judicial Council is authorized to establish rules concerning ADR procedures, including establishing the qualifications of ADR providers for each form of ADR.6This statute further provides that an ADR provider “conducting procedures under the rules of the Judicial Council and the provisions of this act” shall be immune from all liability except for wrongful disclosure of confidential information.7These court-annexed ADR programs may also include mediation, defined as “a private forum in which one or more impartial persons facilitate communication between parties to a civil action to promote a mutually acceptable resolution or settlement.”8
¶ 9 These laws establishing and defining mediation focus on the mediator’s possessing and utilizing certain communication skills in order to help parties resolve a dispute, rather than having legal knowledge or the ability to prepare court pleadings.
¶ 10 This focus is consistent with the model Standards of Conduct for Mediators adopted in 1994 by the American Bar Association Section on Dispute Resolution, the Society of Professionals in Dispute Resolution (SPIDR), and the American Arbitration Association. These standards provide that “[m]ediation is based on the principle of self-determination by the parties” and includes the comment: “A mediator cannot personally ensure that each party has made a fully informed choice to reach a particular agreement, but it is a good practice for the mediator to make the parties aware of the importance of consulting other professionals, where appropriate, to help them make informed decisions.”9Thus, standards for mediators recognize that legal advice may be necessary for some parties to make informed decisions. The standards further recognize that it is not the mediator’s role to provide that legal advice:
The primary purpose of a mediator is to facilitate the parties’ voluntary agreement. This role differs substantially from other professional-client relationships. Mixing the role of a mediator and the role of a professional advising a client is problematic, and mediators must strive to distinguish between the roles. A mediator should, therefore, refrain from providing professional advice. Where appropriate, a mediator should recommend that parties seek outside professional advice.10
¶ 11 Accordingly, in “providing professional advice and instruction to nonlawyers whose employment requires knowledge of law,”11it would be appropriate for a lawyer to advise a mediator about the issues that typically arise in a divorce—custody, visitation, child support, alimony, and property division. In this way, the mediator can assist the parties to discuss all of the relevant issues. Similarly, the lawyer might properly explain various options for parties to consider in resolving their dispute and might suggest which options are likely to be adopted by a court of law. In this way the mediator can assist the parties to consider relevant and feasible options.
¶ 12 Moreover, a lawyer may publish a “How to” manual regarding divorce, including draft forms to use.12Thus, the attorney could give such a manual and draft forms to the mediator for distribution to clients who could complete and file these forms pro se. Similarly, the lawyer could approve the draft forms the mediator has prepared for distribution to divorcing parties to use pro se. Finally, a lawyer could advise the mediator as a consultant about the mediator’s legal obligations in difficult cases. For example, if a party told the mediator of suspected child abuse by the other parent, the mediator could seek and obtain advice from an attorney about the mediator’s obligation to report suspected child abuse.
¶ 13 However, in a mediated divorce setting, a lawyer’s more typical role would be to provide legal advice to one of the parties in order to insure that the party is making informed decisions. Typically, this advice is provided in the context of full representation of the client who is participating in the mediation. However, the lawyer’s services to that client can be more limited. (See part C below, regarding “unbundled services.”) Note that a lawyer is permitted to represent only one of the parties to the divorce in order to avoid impermissible, and non-consentable conflict, as we explained in Opinion 116.13
¶ 14 The Comment to Rule 5.5 states: “[A] lawyer may counsel nonlawyers who wish to proceed pro se.” Accordingly, the lawyer might properly advise a divorcing party about her rights in a divorce case and about the pleadings she will need to file and the procedures she will need to pursue.
¶ 15 However, complications arise when the lawyer is providing that advice to the mediator (rather than directly to a party) and the mediator is assisting that party to complete the necessary pleadings.
¶ 16 The Utah Supreme Court considered the propriety of non-lawyers assisting parties to prepare court pleadings most recently in the case of Utah State Bar v. Petersen,14where a paralegal “prepared wills, divorce papers, and pleadings . . . on behalf of clients for a fee” without this work being supervised by an attorney.15The Supreme Court affirmed the judgment that Petersen had engaged in the unauthorized practice of law,16defining the “practice of law” as “the rendering of services that require the knowledge and application of legal principles to serve the interests of another with his consent . . . performing services in the courts of justices . . . counseling, advising, and assisting others in connection with their legal rights, duties, and liabilities.”17
¶ 17 In a similar case, the Florida Supreme Court held that a paralegal would run afoul of the unauthorized practice of law by assisting divorcing parties to draft their pleadings in a divorce case; but the paralegal would be permitted to sell printed divorce forms to the parties.18
¶ 18 In a recent bankruptcy case a nonlawyer “bankruptcy petition preparer” (BPP) went beyond “the typing services a BPP may legitimately perform” by having pleadings she prepared reviewed by a lawyer and by having the lawyer available to “chat” with petitioners regarding their “general” questions.19The Idaho Bankruptcy Court found that this arrangement constituted a deceptive and unfair practice where the reviewing lawyer did not actually represent the bankruptcy petitioners and this BPP advertised the availability of a lawyer for review and general information as a benefit to her clients.20The Bankruptcy Court further found that this BPP engaged in the unauthorized practice of law by providing “legal advice to prospective debtors by giving them a pamphlet or other publication.” since “the very act of directing a prospective debtor to review a particular section or a legal book in and of itself constitutes legal advice.”21
¶ 19 In light of Utah case law and persuasive authority from other jurisdictions, we conclude that an attorney may not advise a nonlawyer mediator about the preparation of pleadings or agreements in particular cases without violating the rule that prohibits the lawyer from assisting the unauthorized practice of law, Rule 5.5.
¶ 20 While we have no authority to define “unauthorized practice of law” under state statute, we are able to state that an attorney would assist the unauthorized practice of law and thus violate Rule 5.5 by advising a non-lawyer how to conform legal pleadings to proper form without having an attorney-client, advice-giving relationship with the party in interest. Accordingly, the proposed plan of having the mediator draft the court pleadings and the agreement and having the attorney review these documents “for sufficiency” would be a violation of the Utah Rules of Professional Conduct.
C. What are the limitations on the lawyer’s representation of a party engaged in a divorce mediation?
¶ 21 If the lawyer has been retained by the mediator to provide advice as discussed in Part B, then she may not, in most cases, concurrently represent either of the divorcing parties.22If, on the other hand, the lawyer has not been retained by the mediator, she may represent one or the other of the parties (but, under Opinion 116, not both), and mediators often do recommend that divorcing parties obtain legal advice from lawyers. However, the parties may seek to limit their expenses by engaging a lawyer for only limited representation. We now take up the issue of how an attorney may properly limit the scope of her representation in this situation.
¶ 22 Rule 1.2(b) provides that “a lawyer may limit the objectives of the representation if the client consents after consultation.” However, the Comments to Rule 1.2 indicate that “the client may not be asked to agree to representation so limited in scope as to violate Rule 1.1 [competence].”
¶ 23 This Committee has had occasion to address the propriety of limiting the scope of legal representation under the prior Code of Professional Responsibility as well as under the current Rules of Professional Conduct, and we take this opportunity to review those determinations:
* Opinion 47: An attorney may “provide limited legal advice, consultation, and assistance to inmates regarding the preparation of the initial pleadings in civil matters” provided the inmates are fully informed of the limited services.23
* Opinion 53: An attorney may interview, advise, and provide a manual and forms for clients seeking to file pro se divorces.24
* Opinion 74: An attorney may advise a party proceeding pro se and assist him to prepare pleadings. (“However, extensive undisclosed participation . . . that permits the litigant falsely to appear as being without substantial professional assistance is improper” as conduct involving misrepresentation.)25
* Opinion 95-01: Publishing a “How to” manual does not constitute the practice of law where there is no “personal advice given on a specific problem.”26
* Opinion 96-12: An attorney may charge for legal advice given to callers using a “1-900” number, but cannot disclaim the creation of an attorney-client relationship.27
* Opinion 97-09: A lawyer providing certain estate-planning legal services in conjunction with a non-lawyer estate-planner “must perform an independent role as legal advisor to the client, assuring that the estate plan and associated documents are legally appropriate to accomplishing the client’s objectives.”28
* Opinion 98-14: A lawyer representing a client in a divorce is not automatically counsel for that client in a protective-order proceeding because the client may elect to proceed pro se in this separate action.29
* Opinion 01-03: An insurance defense lawyer with a flat-fee arrangement may not improperly curtail services to the client, which include “competent representation . . . to exercise independent professional judgment and render candid advice.”30
Certain principles from these precedents emerge as fundamental when a lawyer attempts to limit the scope of representation.
¶ 24 First, the lawyer may “limit the objectives of the representation [only] if the client consents after consultation.”31Such consultation should comport with Rule 2.1, which requires an exercise of “independent professional judgment” and “candid advice,” as well as with Rule 1.4 which requires the lawyer to “explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation.”
¶ 25 Accordingly, an attorney may limit the legal services provided to a divorcing client only after fully advising the client as the to range of services possible (e.g., from full representation to advice followed by the client proceeding pro se)32 and after advising the client as to the pros and cons of proceeding in any particular manner.33
¶ 26 There are nevertheless certain limitations that cannot be imposed. The lawyer cannot disclaim the attorney-client relationship,34nor limit the obligation to be “competent,” which includes “thoroughness” and “preparation reasonably necessary” for the representation.35
¶ 27 In a similar case, we analyzed the proposal of a professional estate planner who sought to involve a lawyer on a limited basis to assist in drafting estate plans for his clients.36The issue we addressed in that opinion was whether the lawyer could thus “provide competent representation under Rules 1.1 and 1.2(b).” We concluded that too circumscribed a role is not permissible. We opined that the estate planning lawyer cannot “provide competent representation . . . if he declines to counsel the client as to the appropriate means of executing the estate-planning documents or as to the appropriate means of transferring assets into the estate-planning vehicles to accomplish the client’s objectives.” In the estate planning situation, we determined that “a lawyer has an obligation not only to advise a client of legal rights and responsibilities, but also to advise the client regarding the advisability of the action contemplated.” We stated: “A lawyer is under a duty to inform clients of the relevant facts, law and issues necessary for the client to make intelligent decisions regarding the objectives of the representation.”37
¶ 28 We are unable to find a principle that justifies a different decision here. An estate- planning lawyer cannot be a mere scrivener, but “must perform an independent role as legal advisor to the client.”38Likewise, a divorce attorney cannot be a mere drafter, preparing court pleadings, proposed orders and judgments and avoiding the exercise of any “independent professional judgment” and communication of any “candid advice”39to the client.
¶ 29 Indeed, the Rules of Professional Conduct identify various functions the lawyer assumes as “representative of clients,” including advisor, advocate, intermediary, and evaluator,40but the Rules do not identify the role of “drafter” or “scrivener.” As an advisor, “a lawyer provides a client with an informed understanding of the client’s legal rights and obligations and explains their practical implication.”41While an attorney may limit the scope of representation to advising the client or to advising and assisting in drafting pleadings, there is no authority for eliminating the advice-giving role in an attorney-client relationship.
¶ 30 Commentators have addressed the challenges faced in such “unbundled” legal services.42Various courts have addressed the propriety of attorneys assisting only with “ghostwritten” pleadings, as is proposed here. In some cases, courts have considered ghostwritten pleadings to be a fraud on the court.43Some courts have explicitly required a pro se litigant to indicate whether she had legal assistance in preparing her pleadings;44other courts have required an attorney to appear in person and represent clients in future hearings if they attempt to appear only through ghostwritten pleadings.45A few states have addressed the limited service of ghostwritten pleadings through court rule. Colorado provides that an attorney may “undertake to provide limited representation . . . to a pro se party” by including his name on the party’s pleadings and warranting that the attorney’s assistance relies upon the pro se party’s representation of the facts.46
¶ 31 Various state bars have addressed the limitation on legal services where the lawyer provides only legal analysis and drafting services.47We can find no judicial or ethics opinion that approves drafting services alone; the drafting services are always an adjunct to analysis and advice provided by the lawyer. Finally, best practices in “unbundled” legal services are addressed in various books and articles,48and we can find none that suggest drafting services alone are adequate or appropriate.
¶ 32 Indeed, all pleadings in Utah divorce cases must be signed by the attorney or the pro se party, “certifying that to the best of the person’s knowledge, information, and belief, formed after an inquiry reasonable under the circumstances, . . . the claims, defenses and other legal contentions therein are warranted by existing law [and] . . . the allegations and other factual contentions have evidentiary support.”49It is difficult to understand how a lawyer could appropriately assist an individual to file pro se divorce pleadings without advising the party when his claims appear to lack any legal support and without advising the party regarding the evidentiary support the party will need to support certain contentions.
¶ 33 In the absence of any court rules that address the propriety of ghostwritten pleadings, this Committee concludes that, at a minimum, a lawyer may not limit her services to conforming a party’s pleadings to proper form without providing analysis and advice to the party seeking such advice.
D. Conclusion
¶ 34 It is permissible for a lawyer to advise a divorce mediator on the issues likely to arise in the course of a mediation, but the lawyer may not advise the mediator how to prepare divorce agreements and court pleadings for particular parties who are clients of the mediator. It is also permissible for a lawyer to review the contents of the divorce agreement for one of the parties and advise that party about the options and the advisability of the draft agreement. A lawyer might appropriately limit her services to such a review. A second attorney might advise the other party in this same way. Thereafter, either of these two attorneys might review the pleadings prepared by these parties as to sufficiency. And these parties might then proceed to file pro se.
¶ 35 However, the most crucial element of legal services here is informing a party about the relevant legal standards so that the party’s decisions are informed. Accordingly, it is inappropriate for an attorney to limit her services to assisting a divorcing party to prepare divorce pleadings while failing or refusing to advise the divorcing party about the relevant law.
Footnotes
1.Utah Code Ann. §§ 58-39a-1 et seq. (2002), “Alternative Dispute Resolution Provider Act.” An ADR Providers Certification Board, comprising two judges, one lawyer and four members of the general public with a demonstrated interest in ADR, is to grant certification to persons who “complete a program of education or training, or both, in ADR or have demonstrated sufficient experience in ADR.” Id. §§ 58-39a-3 and -5
2.Id. § 58-39a-2.
3.Id. § 58-39a-2(1)(a).
4.Id. § 58-39a-2(4).
5.Utah Code Ann. §§ 78-31b-1 et seq. (2002), “The Alternative Dispute Resolution Act.”
6.Id. § 78-31b-5(3)(h). This statute explicitly provides that ADR providers may, but need not, be certified under the ADR Provider Certification Act.
7.Id. § 78-31b-4(4).
8.Id. § 78-31b-2(8).
9.Standards of Conduct for Mediators, Standard I and cmt.
10.Id., Standard V cmt.
11.Utah Rules of Professional Conduct 5.5, cmt.
12.Utah Ethics Advisory Op. 95-01, 1995 WL 49472 (Utah St. Bar). Publication of such forms is not the practice of law where no personal advice is given. (The Committee’s opinions are also available at www.utahbar.org/options/index.html).
13.Utah Ethics Advisory Op. 116, 1992 WL 685249 (Utah St. Bar).
14.Utah State Bar v. Petersen, 937 P.2d 1263 (Utah 1997)
15.Id. at 1263.
16.Petersen was found to have violated Utah Code Ann. § 78-51-25.
17.Petersen, 937 P.2d at 1268.
18.Florida Bar v. Brumbaugh, 335 So. 2d 1186 (Fla. 1978).
19. In re: Doser, 281 B.R. 292, 294 (Bkrtcy. D. Idaho 2002).
20.Id. at 304-06.
21.Id. at 306-09.
22.Such a concurrent representation would likely create a conflict of interest under Rules of Professional Conduct 1.7. Whether this conflict could be waived by the consent of the mediator and the divorcing party would depend on the facts and circumstances.
23.Utah Ethics Advisory Op. 47 (Utah St. Bar, July 1978).
24.Utah Ethics Advisory Op. 53 (Utah St. Bar, April 1979).
25.Utah Ethics Advisory Op. 74 (Utah St. Bar, Feb. 1981).
26.Utah Ethics Advisory Op. 95-01, 1995 WL 49472 (Utah St. Bar).
27.Utah Ethics Advisory Op. 96-12, 1997 WL 45137 (Utah St. Bar).
28.Utah Ethics Advisory Op. 97-09, 1997 WL 433814 (Utah St. Bar).
29.Utah Ethics Advisory Op. 98-14, 1998 WL 863905 (Utah St. Bar).
30.Utah Ethics Advisory Op. 01-03, 2001 WL 314288 (Utah St. Bar).
31.Utah Rules of Professional Conduct 1.2 (c) (emphasis added). See also Utah Ethics Advisory Op. 47.
32.See Utah Ethics Advisory Op. 98-14.
33.See Utah Ethics Advisory Op. 47.
34.Utah Ethics Advisory Op. 96-12.
35.Utah Ethics Advisory Op. 02-03.
36.Utah Ethics Advisory Op. 97-09.
37.Id.
38.Id.
39.Utah Rules of Professional Conduct 2.1.
40.Preamble, Utah Rules of Professional Conduct.
41.Id.
42.See Forrest S. Mosten, Unbundling Legal Services: A Guide to Delivering Legal Services a la Carte, (ABA Law Practice Management Section, 2000) (hereinafter, “Mosten”).
43.Johnson v. Freemont 868 F. Supp. 1226 (D. Colo. 1984). Our Opinion 74 considers an attorney providing “extensive undisclosed” assistance to be unethical as assisting in a misrepresentation.
44.Wesley v. Dan Stein Buick, 987 F. Supp. 884 (D. Kans. 1997).
45.See Kimberly Pochnau, Unbundling Civil Legal Services, A Critical Reader (ABA 1998).
46.Colo. R. Civ. P 11(b).
47.Alaska Bar Association Ethics Opinion No. 93-1 (permissible to interview client and draft pleadings without appearing in court); ABA Informal Ethics Opinion 1414 (1978) (permissible to advise and prepare pleadings; but extensive undisclosed participation would constitute misrepresentation); Arizona Opinion 91-03 (attorney may advise on domestic relations matters and prepare pleadings); Colorado Bar Association Ethics Committee Formal Opinion No. 101 (1998) (attorney may limit representation provided she makes sufficient inquiry into and analysis of factual and legal elements to provide competent representation); New York Opinion 613 (1990) (attorney may advise and prepare pleadings for a pro se litigant without entering an appearance).
48.See, e.g., Mosten, supra note 42; Mary Helen McNeal, Redefining Attorney-Client Roles: Unbundling and Moderate-Income Elderly Clients, 32 Wake Forest L. Rev. 295 (1997)
49.Utah R. Civ. P. 11.

Ethics Advisory Opinion No. 02-06

Issued June 12, 2002
¶ 1 Issue:
May an attorney represent a client in a criminal matter where the attorney will have to cross-examine as an adverse witness a former client whom the attorney previously represented in an unrelated matter?

¶ 2 Opinion: In general, an attorney may represent a client in a criminal case where the attorney will have to cross-examine a former client whose interests are adverse to the defendant as long as the representations of the present and former clients are not substantially factually related and the attorney does not disclose or use any confidential information gained in the course of the former client’s representation to his disadvantage, as provided by Rule 1.9.
¶ 3 Analysis: The examination of a former client as an adverse witness on behalf of another client presents a potential conflict of interest for the attorney that must be examined under the provisions of Utah Rules of Professional Conduct: Rule 1.9, which governs successive conflicts of interest; Rule 1.7(b), which deals with concurrent conflicts of interest; Rule 1.6(a), which governs the duty of confidentiality; and Rules 1.1 and 1.3, which set forth the duties of competency and diligence, respectively. The Committee concludes that the cross-examination of the former client by the attorney does not per se create a disqualifying conflict of interest. However, the specific facts and circumstances of the case may involve a violation of the foregoing rules, and it is the lawyer’s responsibility to analyze the situation to determine whether there will be compliance with the applicable rules.1
¶ 4 Under Rules of Professional Conduct 1.9(a), an attorney may not represent a person “in the same or a substantially factually related matter in which that person’s interests are materially adverse to the interest of the former client unless the former client consents after consultation.” Unlike the ABA Model Code of Professional Responsibility, which requires that the matters be simply “substantially related,” Rule 1.9 requires that the matters be “substantially factually related,” thus focusing on the factual nexus between the prior and current representations, rather than a similarity of legal issues.2If the attorney determines that the facts underlying the representation of the former client-witness are substantially related to the indictment of the defendant, then the attorney needs to assess whether the interests of the former client and the defendant are materially adverse.3Should the attorney conclude that the two representations are substantially factually related and that the interest of the former and present clients are materially adverse, the attorney would be faced with an impermissible conflict of interest that could be cured only by obtaining the former client-witness’s consent to the representation of the defendant.
¶ 5 In cross-examining the former client, the attorney must also comply with the ethical obligation not to disclose any confidential information related to the representation of the former client. The cross-examination may create a tension between (a) the attorney’s duty of loyalty to the client, which encompasses the duty to represent the client diligently and therefore to cross-examine the adverse witness vigorously, and (b) the attorney’s duties to the former client-witness. The attorney will need to resolve any such tension within the boundaries of Rule 1.9(b).
¶ 6 Rule 1.9(b) prevents an attorney from using any information relating to the representation to the disadvantage of the attorney’s former client, except as otherwise permitted by Rule1.6, which governs confidentiality. Thus, the attorney must refrain from the use or disclosure of any information that is not expressly permitted by Rule 1.6 or generally known to the public. If the attorney has not learned any information during the representation of the former client-witness that could be used in the criminal proceeding to discredit the witness’s credibility or otherwise pursue the defendant’s interests, no actual conflict exists, and no conflict is likely to arise.4However, if the attorney has gained information that could be used to the disadvantage of the former client-witness, then the attorney should try to obtain the former client’s consent prior to the disclosure. In the absence of such consent, the attorney must seek to withdraw from representing the defendant.
¶ 7 Even if the attorney concludes that an actual or potential conflict of interest that would be prohibited by Rule 1.9 does not exist under the particular circumstances, the attorney must comply with the provisions of Rules 1.7(b) and 1.4(b). Under Rule 1.7(b), an attorney is prohibited from representing a client if the representation may be materially limited by the attorney’s responsibilities to a third person (here, the former client), unless the lawyer reasonably believes that the representation will not be adversely affected and the current client consents to the representation.5
¶ 8 Also, pursuant to Rule 1.4(b), the attorney should explain the matter to the client to the extent reasonably necessary to enable the client to make an informed decision regarding the representation. The attorney, therefore, must evaluate whether the obligations to the former client-witness pose a material limitation to the representation of the defendant. If a material limitation exists or is likely to arise, the attorney should disclose the limitation to the client and, if the attorney reasonably believes that she can proceed because the representation will not be adversely affected, she should obtain her client’s consent to the representation.6
¶ 9 An attorney, therefore, is not automatically precluded by the Utah Rules of Professional Conduct from cross-examining a former client in the course of representing another client, provided that (a) there is not a substantial factual nexus between the present and former representations and (b) the attorney is able to provide the client a competent and diligent representation and to cross-examine the former client-witness vigorously. If the attorney believes that the representation of the client may be limited by the attorney’s obligations to the former client-witness, then the attorney must disclose the potential limitations and obtain the client’s consent to the potential conflict. In the absence of consent in this situation, the attorney must seek to withdraw from the case. Also, if it is reasonably foreseeable that a conflict of interest may arise due to the possible use of confidential information related to his representation of the former client-witness, then the attorney must obtain the former client’s consent to such disclosure or seek to withdraw. Finally, in a criminal case, it is good practice for the attorney to inform the court of any such conflict or potential conflict in order to facilitate a timely resolution of the issue.7
Footnotes
1.This opinion does not address the situation in which the adverse witness is a current client, rather than a former client, of the attorney.
2. Houghton v. Dept. of Health, 962 P.2d 58 (Utah 1998) (denying motion to disqualify attorney where there was no common factual nexus between prior representation of State and current representation of Medicaid recipients against State); see also SLC Ltd. v. Bradford Group West, Inc., 999 F.2d 464 (10th Cir. 1993) (disqualification of attorney upheld because of close factual nexus between prior representation of debtor’s general partner in loan workouts and subsequent representation of secured creditor in debtor’s bankruptcy proceeding); State v. Larsen, 828 P.2d 487 (Utah Ct. App. 1992) (a substantial factual relation is required to create a conflict of interest under Utah Rule 1.9(a)).
3.See Wheat v. United States, 486 U.S. 153 (1988) (attorney disqualified when he represented co-conspirators in criminal case and government intended to call one of co-conspirators as a witness); United States v. Amini, 149 F.R.D. 647 (D. Utah 1993) (government’s motion to disqualify rejected when attorney had previously represented defendant’s wife-codefendant in related proceedings but when interests of former client and defendant were not directly adverse and both client and former client waived any potential conflicts); United States v. Valdez, 149 F.R.D. 223 (D. Utah 1993) (defense attorney was not disqualified from representing criminal defendant when attorney had previously represented a government witness in an unrelated case and was not privy to any confidential information of former client-witness that could be used in criminal case); Ill. Adv. Op. 86-12, 1987 WL 383870 (Ill. State Bar Ass’n) (attorney may represent clients in criminal cases investigated by police officer when attorney had previously represented police officer in disciplinary proceeding but where there is no factual relationship between the two matters).
4.United States v. Valdez, 149 F.R.D. 223 (D. Utah 1993); Houghton v. Dept. of Health, 962 P.2d 58 (Utah 1998); United States v. TA, 938 F. Supp. 762 (D. Utah 1996) (no actual conflict of interest exists under Rule 1.9(a) when attorney does not have relevant confidential information); Pa. Ethics Op. 92-96, 1992 WL 810292 (Pa. Bar Ass’n) (defense lawyer may cross-examine former client who is adverse witness if past and present cases are entirely separate and lawyer does not use confidential information acquired during representation of former client); Conn. Ethics Op. 00-2, 2000 WL 1364223 (Conn. Bar Ass’n) (attorney may represent plaintiff in personal injury action when attorney had previously represented defendant in unrelated criminal matter provided that attorney did not gain information from previous representation that could be used to former client’s disadvantage or that he obtained former client’s consent).
5.To satisfy the consent condition of Utah Rule 1.7(b), each client must consent after consultation. In the case before us there is only one affected client—the criminal defendant. The attorney’s former client is not a “client” from whom consent is required to comply with Rule 1.7(b). However, the former client’s consent may be necessary if the attorney intends to use any information to the disadvantage of the former client. Utah Rules of Professional Conduct 1.9(b), 1.6(a).
6.In Utah Ethics Op. 145, 1994 WL 579851 (Utah St. Bar), we concluded that a law firm could not represent a defendant in the retrial of a criminal case in which the investigator who had been involved in the State’s investigation against the defendant is now a full-time employee of the firm. In that case, the lawyer’s representation of the client would create an impermissible conflict of interest under Rule 1.7 because the representation would be materially limited by the risk of harm to the law firm or the investigator that would result from the impeachment of the law firm’s own employee.
7.See generally United States v. Valdez, 149 F.R.D. 223, 228 (D. Utah 1993), where Magistrate Judge Ronald Boyce urged prosecutors to bring such issues before the court at an early stage of the proceedings.