ABA Podcasts "Ethics in 10" on representing entity clients

 Every now and then, the ABA Center for Professional Responsibility releases a podcast called "Ethics in 10" in which a moderator discusses a specific Model Rule for about 10 minutes.  These podcasts provide a short basic review of the content of the rules and a short reminder of common issues that arise in their interpretation.  

The most recent instalment is on Model Rule 1.13 on representation of entity clients.  The discussion is very basic, but it is is what it is.  You can listen to the presentation here.

Podcast on the attorney-client privilege as it applies to entity clients

Ipse Dixit has posted a podcast with Elise Bernlohr Maizel, Acting Assistant Professor of Lawyering at NYU Law School, in which she discusses her article "The Case for Downsizing the Corporate Attorney-Client Privilege." Maizel begins by describing the attorney-client privilege and work product doctrine. She explains why the attorney-client privilege doctrine has always been a poor fit for corporate clients. And she proposes a new model for the attorney-client privilege in the corporate context that is both more conceptually coherent and practically desirable. 

You can listen to the podcast by clicking on the play button below or by going here.

Supreme Court to address issues related to attorney-client privilege - UPDATED

January 9, 2023

If you are reading this blog, you probably know already that the US Supreme Court agreed to hear a case on whether a communication involving both legal and non-legal advice is protected by the attorney–client privilege if obtaining or providing legal advice was one of the significant purposes behind the communication.  The case is called In re Grand Jury, and the oral argument is today!

Here are a few links with commentary.  I will continue to update the list as more commentary is published after the oral argument.

SCOTUS Blog

Presnell on Privileges

UPDATE (1-13-2023):  Here are a few more links to stories that discuss the case:

Justices debate test for attorney-client privilege when lawyer’s advice has multiple purposes

ABA Law Journal:  "Law firm's more protective test for attorney-client privilege 'is a big ask,' Kagan says"

The National Law Review: "The Scope of Attorney-Client Privilege Over Dual-Purpose Communications"

The National Law Review:  "U.S. Supreme Court Is Asked to Adopt the ‘Significant Purpose’ Test to Permit the Withholding of Dual-Purpose Communications as Subject to the Attorney-Client Privilege"

US Supreme Court to decide case on attorney-client privilege -- UPDATED

December 10, 2022

The United States Supreme Court has agreed to hear a case that raises the issue of whether a communication involving both legal and non-legal advice is protected by attorney–client privilege where obtaining or providing legal advice was one of the significant purposes behind the communication.

The case is called In Re Grand Jury.  You can find a summary and links to relevant documents here.

The ABA has filed an amicus brief (available here) in which it urges the Court to consider client-lawyer communications privileged, even if the purpose of some of those communications is not to request or give legal advice.  The ABA Journal has a short article discussing the case and the brief here.

The blog Presnell on Privileges has a comment here.

UPDATE: Dec 18, 2022

Presnell on Privileges has more commentary on the case here.

Illinois State Bar Association issues three new ethics opinions

The Illinois State Bar Association’s Board of Governors approved three new Professional Conduct Advisory Opinions on May 15 during its regularly scheduled Board meeting.

The opinions address the duties of an in-house counsel when confronted with conduct that may be harmful to his or her employer; the prohibition on a lawyer threatening criminal charges to gain an advantage in a civil matter; and the propriety of a firm name of “X and Y” when one of the named lawyers has changed careers and no longer practices law.

Opinion 20-02

Opinion 20-02 relates to the duties of an in-house counsel when confronted with conduct that may be harmful to his or her employer. It discusses Illinois Rule of Professional Conduct 1.13 and the in-house counsel’s reporting obligations. It also covers the in-house counsel’s authority under Illinois Rule of Professional Conduct 1.13 and 1.6 to disclose confidential information outside of the entity in certain circumstances.

Opinion 20-03

Opinion 20-03 addresses prohibition of a lawyer threatening criminal charges to gain an advantage in a civil matter. The opinion concludes by indicating that in a demand letter, a lawyer may accurately set forth the law, including the possibility of civil and criminal liability, as well as including a copy of the applicable statute. However, a lawyer would be prohibited from stating that criminal liability could be avoided by complying with the demand.

Opinion 20-04

Opinion 20-04 addresses the propriety of a firm name when one of the named lawyers has changed careers and no longer practices law. The opinion also discusses the availability of the designation “of counsel” to a lawyer no longer practicing law with the firm, finding that such a designation would be inappropriate.


Thank you to Illinois Lawyer Now for this update, the summaries and the links.

New opinion on when an attorney can speak directly to in house counsel when the entity for which in house counsel works is represented by another lawyer

According to Model Rule 4.2, and its state equivalents, with a few exceptions, an attorney can’t communicate directly with someone the lawyer knows to be represented by counsel.  But how do these rules apply to in-house counsel?  Can a lawyer communicate with in-house counsel when the lawyer knows the entity for which in-house counsel works is represented by another lawyer?

Last month, the Virginia Supreme Court addressed these and other questions in its Legal Ethics Opinion 1890 (available here).  The Law for Lawyers Today has a comment here.

Virginia ethics opinion on communicating with a person who is represented by counsel

On January 9, 2020, the Supreme Court of Virginia approved a new formal ethics opinion to clarify the scope of Rule 4.2, which regulates the ability of lawyers to communicate directly with people who are represented by counsel.   You can read the full opinion here, but here are some of the highlights.

-- The rule applies only if the communication is about the subject of the representation in the same matter.

-- The rule applies only if the lawyer knows that the person is represented by counsel.

-- Represented persons may communicate directly with each other regarding the subject of the representation, but the lawyer may not use the client to circumvent Rule 4.2.

-- A lawyer may not use an investigator or third party to communicate directly with a represented person.

-- Ex parte communications are permitted with employees of a represented organization unless the employee is in the “control group” or is the “alter ego” of the represented organization.

-- The rule does not apply to communications with former employees of a represented organization.

-- The fact that an organization has in house or general counsel does not prohibit another lawyer from communicating directly with constituents of the organization, and the fact that an organization has outside counsel in a particular matter does not prohibit another lawyer from communicating directly with in-house counsel for the organization.

-- Plaintiff’s counsel generally may communicate directly with an insurance company’s employee/adjuster after the insurance company has assigned the case to defense counsel.

Challenges facing inhouse counsel

In the most recent Thinking Like a Lawyer podcast, hosts Joe Patrice and Elie Mystal, two popular contributors to Above the Law discuss a number of issues that face inhouse counsel, including a recent comprehensive survey of corporate legal departments which reveals confusion over privacy requirements and complaints over outside counsel costs.   (Note that the discussion begins with a completely different issue but eventually gets to the issues related to inhouse counsel at the 9:40 minutes mark.).  You can listen to it by clicking on the "play button" (triangle) below, or by going here.

Interesting new study on professionalism

Ethical Systems.org is reporting on a new paper on Professionalism and Moral Behavior which tests the hypothesis that individuals in traditional occupations that strongly identify as professionals (e.g., law, medicine) have a greater likelihood of engaging in unethical behavior. This is an important inquiry in light of ethical failures in companies where lawyers and accountants often act as “gatekeepers” on ethics and compliance issues vis a vis corporate practices.  Examples of incidents in these types of companies abound, with automakers and financial companies featuring prominently on the list.  Go here for more information and links.

On a related matter, here is a comment on the ethical culture that allows conduct as the one recently discovered Volkswagen perpetrated to deceive consumers and authorities.

More comments on the role of lawyers in the GM debacle and the connection with the need for less secrecy in litigation

News and comments regarding General Motors keep piling up and none of it is good for the automaker. You can go to my Torts blog fore more information and links, but the important aspect of the debate here relates to the role of the lawyers involved and the on-going debate about the need to control secrecy in litigation.  Here are a few links.

June 14: Richard Zitrin (UC Hastings):  Secret settlements fueled GM's latest ethical inferno

June 16: Richard Painter (Minnesota):  Down the ladder due diligence is just as important as up the ladder reporting

June 18: NY Times: GM CEO faces criticism in House hearings (includes short video)

June 19:  Painter and Zitrin:  GM's general counsel and CEO should resign or be fired

June 24:  John Steele (Legal Ethics Forum): Update on the proposed sunshine in litigation act 

The role of lawyers in the GM debacle

The debacle surrounding GM's car recalls, lawsuits and corporate culture has generated a great debate on issues related to torts, safety, litigation, the use of bankruptcy protection, alternative compensation funds and the role of lawyers.  Sadly, much of the debate shows we (whatever you interpret "we" to mean - society, lawyers, judges, regulatory agencies) have not learned important lessons from the past.   You really should take a few minutes and go to the following sites to read up on the issues (and make sure you read the comments too):

The Legal Ethics Forum reports (with links) that GM has fired lawyers as a result of an investigation.

Link to the report prepared by a lawfirm for GM.

"Shades of Enron: the Legal Ethics Implications of the General Motors Scandal"

New York Times article:  "G.M. Lawyers Hid Fatal Flaw, From Critics and One Another"

Richard Zitrin explains the connection between secrecy in litigation and the current issues

The PopTort on GM corporate culture

New York Times reports on internal investigation of GM legal department

Here is an interesting article in today's New York Times that reports on an on-going internal investigation on the role of GM's lawyers in the recent recalls and investigations that resulted in GM's agreement to pay a $35 million dollar fine.

For more on the GM mess go here and scroll down.

What to do if attorney discovers child pornography in a computer that belongs to a member of a corporate client

Prof. Monroe Freedman has posted this interesting question at the Legal Ethics Forum:  A lawyer who represents both civil and criminal clients is at the offices of a corporate client he is representing in a civil matter.  While he is there, the lawyer gets permission from a VP of the company to use the VP’s computer  (which belongs to the corporate client) to check the lawyer’s email.  In using the computer, the lawyer inadvertently discovers that it contains pornographic pictures of sexual abuse of children.  The VP is not the lawyer’s client, and the VP has no reason to believe that he is.  The pornography is unrelated to the client’s business.  What should the lawyer do?  Go here for the discussion.

Claiming the client made you do it will not save your license

The Legal Profession blog is reporting on a case that reiterates an important lesson for all lawyers.  Lawyers can't blame their clients for misconduct.  Lawyers have a duty to exercise independent professional judgment which, in some cases, may require the lawyer to quit, get rid of a client, talk the client out of a proposed course of action or taking other preventive or remedial measures.

In this new case, the disciplinary authorities believed the attorney when he testified that he was "used" or "led down the wrong path" by his employer, which the lawyer characterized as an unscrupulous real estate development company.  The lawyer testified that, among other things, the client forged his name on checks. The lawyer testified to his remorse, his efforts to make his victims whole, and the fact that he did not misappropriate any funds for his personal use and realized no monetary gain from the subject transactions.

That was all fine, but the attorney was still suspended for two years by the New York Appellate Division for the Second Judicial Department. The court noted that the lawyer knew that his conduct was improper but took no action to blow the whistle or to step down from his position as in-house counsel with the company. Rather, he knowingly allowed his services to be used by another to perpetrate a fraud.

Washington DC to decide whether there is a civil liability duty to non clients

Under what circumstances should an attorney have a duty in tort toward the affiliates of an entity client? 

The question is now before the District of Columbia Court of Appeals.  The case involves a claim by Boston-Maine Airways Corp. against a law firm that represented its sibling companies and a shared owner.  After a District of Columbia Superior Court judge granted the law firm's motion for summary judgment, finding that Boston-Maine failed to prove that Sheppard owed them any care, it appealed arguing that the firm's representation of its sibling companies meant the firm couldn't take actions that would harm members of the corporate family. For a more detailed summary of the case and the issues go here.

My guess is that the court will follow the analysis suggested in the comment to Model Rule 1.7 on conflicts of interest.  Even though the issue is different, the analysis is helpful.  According to the Rule's approach, lawyers who represent entities do not, by virtue of that representation, necessarily represent any constituent or affiliated organization, such as a parent or subsidiary of the entity.  For this reason, an attorney for an entity is not barred from accepting a client whose interests are adverse to an affiliate of the entity client in an unrelated matter, unless the circumstances are such that the affiliate should also be considered a client of the lawyer, or there is an understanding between the lawyer & the entity client that the lawyer will avoid accepting new clients in those circumstances, or if the lawyer’s obligations to either the entity client or to the new client are likely to materially limit the representation of the other client.

New ISBA opinions

In its January meeting, the Illinois State Bar Association's Board of Governors approved three ethics opinions addressing probate fees, conflicts of interest in representing partnerships, and Unauthorized practice of law.

Opinion No. 13-01: Fees and Expenses; Court Obligations

It is not ethically permissible for a lawyer for a representative of a decedent's estate to enter into a fee agreement, or to collect a fee, for an amount in excess of the amount of fees allowed by a probate court as reasonable.

Opinion No. 13-02: Arbitration and Mediation; Conflict of Interest; and Multiple Representation

A lawyer ordinarily represents a partnership as an entity for conflicts of interest purposes. Where a lawyer has represented a partnership and all individual partners in various matters in a common representation, and one partner subsequently files an arbitration matter against another partner, whether the lawyer may represent the defending partner with informed consent will depend on the circumstances. Similarly, whether the lawyer can continue to represent the partnership or any of the partners in other matters with informed consent will depend on the circumstances.

Opinion No. 13-03: Arbitration and Mediation; and Unauthorized Practice of Law

A nonlawyer’s representation of parties to a FINRA arbitration generally constitutes the unauthorized practice of law.

New opinion on the right of in-house counsel to sue former employer for retaliatory termination of employment

The question of whether in-house counsel have a right to sue a former employer/client for wrongful termination is one that continues to generate opinions around the country.  In class, for example, we discuss the (in)famous Balla v Gambro decision in which the court denies lawyers the right to sue for wrongful termination when they are fired for acting according to professional conduct obligations.

Other jurisdictions have taken different approaches, and just a few days ago, the D.C. Bar Legal Ethics Committee issued a new opinion in which it concludes that in-house lawyers suing their employers or clients for discrimination or a retaliatory firing can't disclose any confidences or secrets, unless they're defending against a counterclaim or affirmative defense.  The Blog of the Legal Times has more information here.

WSJ on firms buying lunch for clients using clients' own money

In class I am often asked if a lawyer violates the rule that says lawyers can't provide financial assistance to clients if the lawyer takes a client to lunch and pays the bill.  Well, it turns out that the question may be a non-issue since firms may be charging the clients for those lunches after all...  In a short article today, the Wall Street Journal law blog discusses the issue (here).  It starts:  "Here’s a tip for law firms who want to keep clients happy: Don’t buy them fancy lunches with their own money. . . . [Clients are] fighting over line items such as photocopies and food, and pushing back hard on charges for pricey legal research databases such as Westlaw and LexisNexis. Their position: many of these costs are law firm overhead, and so shouldn’t be passed on to the client in the first place."

Can an entity file a pro se claim? Should the entity suffer the consequences because a complaint is filed by a non-lawyer?

The Illinois Supreme Court recently heard oral arguments in an interesting case that raises some interesting questions as to what constitutes the practice (and unauthorized practice) of law and as to what is the proper consequence in a case where a party is represented by someone who is not authorized to practice law.

The facts of the case are relatively simple.  The City of Chicago Department of Administrative Hearings entered four default judgments against a corporation, for certain ordinance violations.  Upon hearing about this, the president of that corporation filed four motions to set aside the default judgments, alleging that the City did not properly notify the corporation of the hearings regarding the violations. After a hearing to discuss the matter, an administrative law officer denied relief and instructed the president of the corporation that he had a right to appeal.  The officer told him that he could go to a certain office and file the necessary paperwork.  The president immediately went to the office, completed a form and filed it.  The form was a pro se complaint for review by a trial court under the Administrative Review Law.  Approximately six months after the complaints were filed, an attorney filed an appearance on behalf of the corporation at which point the City moved to dismiss the complaint on the basis that the corporation’s president who had filed the complaint in the first place was not a licensed attorney and, thus, was unauthorized to file complaints on behalf of a corporation. The trial court granted the City's motion and denied the corporation's motion to amend the complaint to include the signature of its attorney.

On appeal, the City is requesting the Supreme Court to recognize that an entity can never file a pro se claim and to impose an absolute rule that a complaint filed by a non attorney other than in a pro se case must be considered void ab initio.

The corporation is arguing that a better policy is to consider the circumstances and to decide cases on a case by case basis.  In this case, either because the filling out of a form at the direction of the administrative law office was not the practice of law to begin with or because, if it was, there was no harm to the corporation, the corporation should not lose its rights to appeal.  According to this view, the main thing is to consider the reasons why we have a rule against the unauthorized practice of law to begin with.

It seems to me this second view is more sound, and, if nothing else, more fair.  I understand we need to protect the public from inadequate representation by people who are not qualified to practice law, but that is not what happened in this case. 

The case is called Downtown Disposal Services v City of Chicago and the lower court opinion is available at 943 NE2d 185 (Ill App 2011).  You can watch the oral argument here.  If you prefer just the audio, you can listen to it here.

Prospective waivers

A few days ago, I discussed the use of prospective waivers with my students.  Now, here is a link to an article criticizing their use.  Here is an excerpt that summarizes its position:

What started as a trickle has now become a flood, as major law firms have embraced the practice of inserting into every retainer letter, often buried on page 5 in paragraph 16, a wholesale prospective waiver that would permit the law firm to take on any representation against the new client so long as the matters are not substantially related. No limitation as to matters that are not waivable under Rule 1.7(b)(1). No limitation as to time. No limitation as to matters not litigated. No limitation as to the subject matter of the adverse representation. No limitation as to the identity of the adverse party or parties who would be represented adverse to the client that is granting the prospective waiver. Can such a waiver come close to being given with informed consent? Of course not.

You can read the full article here.  The article is by Larry Fox, a former member of the ABA Standing Committee on Professional Responsibility.  For some comments on the article go to the Legal Ethics Forum, here.

Thanks to the LEF for the link to the article.