Bar Journal - Summer 2004
A 21st Century Update to the Rules of Professional Conduct
A Roundtable Discussion
Participants in Roundtable Discussion
Rolf Goodwin, co-chair, McLane, Graf, Raulerson & Middleton
Bryan K. Gould, Brown, Olson & Wilson, PC, Concord
Honey C. Hastings, solo practitioner, Amherst
Linda T. Landis, co-chair; senior counsel, Northeast Utilities
Mitchell M. Simon, professor, Franklin Pierce Law Center
Interviewer: Dan Wise, communications director, New Hampshire Bar Association
ROLF GOODWIN: The ABA began a process a few years ago called Ethics 2000. The goal of the Ethics 2000 Commission was to review the existing model rules of professional conduct and then update them. While that process was ongoing, the Ethics Committee was communicating with Associate Justice Linda Dalianis of the Supreme Court, who is also chair of the Supreme Court’s Advisory Committee on Rules. We agreed that it would be helpful to have the Ethics Committee conduct a review of the New Hampshire Rules of Professional Conduct that were adopted in 1984, and propose necessary revisions in light of what the ABA was doing.
Our review is simply a set of recommendations that we will be submitting to the Supreme Court Advisory Committee on Rules, which in turn makes it recommendations to the Supreme Court. We decided to review each and every rule, taking into consideration what the ABA has done but not feeling bound to adopt their language. There are number of rules that we on the Ethics Committee have known needed to be revised to take into account the realities of contemporary practice. There are some rules we thought simply needed to be made clearer. We are making use of the Internet to post our working drafts and invite comment from Bar members and the public that we will review and incorporate before sending our proposed revisions to the Advisory Committee on Rules.
BAR JOURNAL: How have changes in the legal profession affected the Rules of Professional Conduct? Are there some rules that need to be changed to reflect situations lawyers encounter now?
GOODWIN: One example of that is the issue of multijurisdictional practice. The question is whether New Hampshire should open its doors a little wider to accommodate attorneys not licensed here who are in the state, practicing law, but not in New Hampshire courts or with New Hampshire clients other than those that are connected to their employer. This has been going on for years. The ABA has proposed a Model Rule 5.5 in the hope that states would adopt it to better reflect the realities of practice. In the spring, the Supreme Court issued a proposal to create a limited license for in-house counsel with occasional contacts in New Hampshire and who do not practice in its courts. The court’s proposal would make changes to Rule 5.5 and Rule 8.5.
[On June 2, Goodwin made comments on behalf of the Ethics Committee at a public hearing held by the Supreme Court’s Advisory Committee on Rules. Goodwin said that the Ethics Committee questioned the need for NH to vary from the ABA’s model rule 5.5 and questioned whether the requirements for compliance under the court’s proposal for a limited license were too strict.
"The Ethics Committee has voted to recommend that the Court adopt the ABA Model Rule text as proposed, reasoning that the rule, which addresses in a limited way many of the most common multijurisdictional issues, represents a good first step in enhancing client service in a changing world," wrote Goodwin in a letter submitted to the Rules Committee. Acknowledging that the Ethics Committee had concerns about some aspects of the ABA’s language, Goodwin said that in this situation, " uniformity, at least initially, among the states would have some obvious benefits. ... We continue to believe that adoption of the ABA Model Rule 5.5 would best protect clients and the public in New Hampshire."]
DIFFERENT VIEWS ON REFERRAL FEES
BAR JOURNAL: I know that the Ethics Committee has wrestled with the question of whether the Rules should allow referral fees.
BRYAN GOULD: That is a question that has been thoroughly debated...
HONEY HASTINGS: ...by a diverse group of attorneys.
LINDA LANDIS: We have two versions of Rule 1.5 f that we are submitting because the Ethics Committee membership was thoroughly divided on how the rule should be structured. [The Ethics Committee also has issued alternative versions of Rule 1.5 b, concerning the need for fee agreements.]
HASTINGS: With regard to referral fees, the committee felt that this was the sort of close call that the court has to make. We are going to tell them that we discussed it and came up with the two options — maybe that will help their thinking. This appears to be an area more appropriate for the court to be making the call — it’s a major policy decision. We certainly can’t make it because we didn’t have a consensus.
LANDIS: And in this part of the process, with this first draft, we are also looking for the input of other practitioners. We hope we get input on all of these rules. We hope we are going to get a very robust dialogue going with the Bar membership. I am sure there are going to be a lot of opinions out there about the drafts we present. This is certainly one of the more provocative ones.
BAR JOURNAL: Can you explain what is different about the two versions of Rule 1.5 f?
GOULD: One variant allows "naked" referrals without any exception, and the other version is closer to the current rule in that it requires an allocation of the fee based on the responsibility of the lawyer for the representation.
MITCHELL SIMON: This rule raises an interesting and deeper debate about the nature of lawyers and clients, and to what degree lawyers are in a profession or a business. Members of the Ethics Committee were trying to decide whether lawyers need these incentives to make sure that clients get the best representation. Do we have to encourage lawyers to make appropriate referrals through referral fees or will lawyers, without money being a feature, make the appropriate referrals instead of retaining cases where they might not have sufficient expertise? By providing two versions, we reflect our own views and give the court the opportunity to consider the debate.
Bar Journal: Rule 1.18 provides new language regarding what constitutes the lawyer-client relationship, specifically what contacts between a law office and a potential client create a relationship. Is this rule change the result of people shopping for lawyers on the Internet?
Goodwin: Actually, the rule is designed to protect a lawyer from unwanted clients that try to attach themselves to the lawyer. Some of these clients do this to try to prevent you from ever representing someone else in a matter. The rule answers the question of at what stage when you receive information from someone who wants to be a client do you end up with confidentiality or privilege problems? It creates a new category of "prospective client."
Simon: The problem is this. If you interview someone and decide not to take the case, under current rules your firm probably can’t later take a case against that person on a related matter. The new rule doesn’t automatically disqualify your firm from taking the case. It allows you to screen the lawyer, and take the case as long as the information you obtained in your initial interview is not misused. This is in some ways a response to the Internet, to attorneys getting dribs and drabs of information on their web site from someone who can then disqualify the firm from a case. It also seeks to allow lawyers to talk with more individuals.
Screening is the process where someone is "walled off." It is not now permitted for lawyers except those leaving government service. The first draft of Ethics 2000 would allow private firms to screen; the ABA final draft and our proposal do not allow this. However, under Rule 1.18, you could still speak with someone as a prospective client and not necessarily have your firm be disqualified in a subsequent case. It is a limited approval of screening.
SALE OF LAW PRACTICE
Bar Journal: What are some of the areas of greatest change in your draft of the Rules?
Hastings: One rule I’d cite is a new Rule 1.17 allowing the sale of a law practice. We didn’t have any rule that allowed that before.
Simon: What this rule actually allows is for an attorney to agree to sell a practice if they agree to not practice in that geographic or practice area.
Hastings: an example of that might be that I might decide not to do litigation any more, and only do mediation. I have boxes and boxes of files of litigation cases that I could turn over to someone.
Goodwin: The limitation on sale of a law firm is usually geographic. This rule allows people to give up an entire practice area and only do, say, probate law.
ETHICS FOR LAWYERS AS MEDIATORS
Hastings: Another change is that we have in Rule 2.4 spelled out some of the ethics involved in a lawyer serving in the role of a third-party neutral. We have had several Ethics Committee opinions and articles on this topic. There has been a vigorous dialogue in the Ethics Committee on it. We didn’t all see the issues the same way. We ended up saying that there should be a rule spelling out the third-party neutral’s role and specifying how it fits into the ethical rules, including setting out rules regarding conflicts for mediators. The rule applying to conflicts for former judges is now extended to mediators. We urge everyone to look at these proposed changes.
Goodwin: There’s a rule on lawyers involved in ancillary businesses. Say you set up a consulting practice within a law firm. Under the current rules, there remains a lack of clarity as to whether you are required to make a disclosure in writing. Clients of your consulting business are not entitled to the same protections as they would be if you were representing them as a lawyer. Under our proposed Rule 5.7, you can operate a consulting practice as long as you take the proper steps to make sure that your clients are not going to be confused as to your role.
Simon: The series of opinions we had issued on the topic of ancillary businesses had been less than precise. We have worked to make it much clearer what the lawyer’s obligations are when establishing a relationship with a client who is not a legal client.
Bar Journal: Are there some changes that reflect the post-Enron era of corporate accountability?
Landis: The Committee is proposing revisions to Rule 1.13, "the Organization as Client." The Committee voted to adopt the ABA version that was drafted following the recommendations of a task force on corporate accountability. The proposed rule clarifies a lawyer’s role within the organization and also delineates appropriate actions that should be taken if the lawyer reasonably believes substantial injury to the organization may occur. The current rule requires a lawyer to go through a chain of actions before allowing that lawyer to make limited disclosures regarding conduct potentially harmful to the organization. The new version simplifies that process, although various factors to be taken into consideration by the attorney will be provided in the Comment. In the new version the lawyer is required to proceed as reasonably necessary in the best interest of the organization, which includes referral of the matter to higher authority in the organization. If the higher authority refused to address the issue, and the lawyer continues to believe substantial injury to the organization will result, then the lawyer may reveal whatever information is necessary to prevent that injury from occurring. The disclosure threshold thus somewhat supplements that of Rule 1.6 in that the attorney for a corporation is given latitude in making a reasonable determination of exactly what constitutes "substantial injury to the organization." This disclosure standard is more realistic than the former rule given the complicated nature of business transactions of today’s multi-faceted corporations and also responds to the public concerns regarding corporate accountability.
Simon: The package of post-Enron changes contained in the ABA’s Model Rules of Professional Conduct and in our revision of NH’s Rules of Professional Conduct are designed to make lawyers more attentive to third-party interests. It’s a significant change in the model of lawyering, allowing you as an attorney to look beyond just your client’s interests. The existing rules allow disclosure of confidences to prevent crimes. The proposed rules change it so that an attorney, no matter what the client’s conduct, can disclose confidential information to prevent "reasonably certain death or substantial bodily harm or to prevent or rectify client frauds. These changes temper the total client-centeredness that has been our traditional model of lawyering.
Bar Journal: Hasn’t New Hampshire always allowed attorneys more leeway in making disclosures?
Simon: New Hampshire’s current rule is more pro-disclosure than the ABA model rule and the rule adopted in many states, but now the ABA has leapfrogged us with an even more pro-disclosure approach. The New Hampshire rule we are proposing is not mandatory, it does require disclosure of the client’s potentially criminal and damaging conduct, but it allows the attorney to violate attorney-client confidence to make the disclosure.
I ask my students if someone confesses to you that they killed someone and there is someone who is going to be executed for that crime, can you disclose that fact. Under the old rule 1.6 you couldn’t disclose. You had to keep si lent. Under the new proposed rule, you can make that disclosure, and you can do something to stop an innocent person from being executed. That change makes a lot of sense to me.
Gould: Another significant though small change in language is the standard for a reasonable fee in Rule 1.5 a. The current rule prevents lawyers from charging a clearly excessive fee, and the ABA’s Ethics 2000 project changed that to an "unreasonable" fee. Again, there was a fair amount of debate in our committee on whether to go along with that, and what the implications were of such a change. In fee shifting statutes, for example, when an attorney attempts to recover fees from the other side, the question is "Did the lawyer charge a ‘reasonable’ fee?" If the judge finds it was "unreasonable," will that constitute a per se ethical violation? We went through several drafts on that.
Goodwin: There was a good discussion as to whether a fee agreement has to be in writing. The ABA and we came out saying you might be foolish to do not put your fee agreement with a client in writing, but imagined there might be exceptions. [The committee’s current draft proposes two variations, one requiring fee agreements in writing for fees above a certain amount.]
UNBUNDLED LEGAL SERVICES
Gould: From a litigator’s standpoint, not much has changed in the rules governing conflicts of interest (Rules 1.7 and 1.9). All we did was to make them more readable. Then there was the issue of allowing unbundled legal services in Rule 6.5.
Goodwin: Rule 6.5 is very much a live topic. The tension there is between providing a full set of protections for clients that the rules are meant to provide, versus provide greater accessibility to the legal system at the cost of lessening those protections. We are still talking about it. It is fair to say that our discussion is that the ABA has loosened things up a lot, and is allowing more unbundling. In larger cities, that’s a little easier. Based on the assumption that in Los Angeles or in Chicago, you are not likely to tip over the same matter a little later or your firm is unlikely to trip over this matter. In New Hampshire, that is not a valid presumption.
Hastings: We issued an opinion a few years back that I read as permitting unbundling, but raising some concerns. But I would have noticed if it said you can’t do that. Because of the Supreme Court’s Pro Se Task Force report that recommends that court rules and ethics code be looked at to make sure that lawyers understand that they can provide unbundled legal services, we are in fact taking another look at it. It may be that we have to write the rule to make it clearer to people that they can do it; it may also take some court rule changes so that a lawyer can actually go in to court without taking the entire responsibility for the case.
Bar Journal: Even if you have permissive language in the ethics rules, you need to have the judges allowing it as well.
Hastings: It seems like the judges are now of the point of view that they would rather have the client have some access to a lawyer rather than the current situation where you have so many people with no contact at all with lawyers.
PRO BONO OBLIGATION
Simon: We also did make some changes in the pro bono rules.
Goodwin: This is another area of perennial tension between the people who want a numeric quota of hours or dollars; the ABA version has a 50-hours-per year quota of legal services to poor people. Our proposed Rule 6.1 makes it clear that providing direct legal services to the poor is what we are talking about, not just providing assistance to charitable or non profit entities. This is a hot topic. Our current NH rule says you ought to do something like this but it does not have a quota. It specifies legal service to the poor as fulfilling the requirement and added pro bono for other nonprofit service as a somewhat less preferred alternative.
While we ended up reworking it, we ended up in pretty much the same place this time after much discussion. It is closer to the ABA language, but drops out the specific hours requirement in the ABA’s model rule.
The primary issue for some of us is not that we are saying people ought not to be providing legal services for the poor, but that the ethical rules are minimal standards —and if you are not meeting them, you could be disbarred. With the pro bono rule, we would have this great exception where we are making a statement that a fully ethical lawyer ought to do this. It’s a fair question whether it is aspirational.
Hastings: Is it aspirational or not, that is the essence of the issue, isn’t it? If all of the rules are requirements except this one, is it an aspiration? Didn’t the old rule have more of the distinction between what you have to do and what you aspire to?
Simon: What our proposed rule says is that you have a professional responsibility to do pro bono work, and you should meet it in a certain way. If the rule is still purely aspirational, then I am not sure the rule will alter behavior. The com mittee seemed not to be mandating pro bono, but by adopting the ABA version of the rule, to have decided to push lawyers to do pro bono work.
Goodwin: The concern some of us have with a specific quota is that it would be very difficult to enforce. Also, not every practitioner is in the same situation every year. A new practitioner may be able to do 50 hours of pro bono this year, or maybe 300 hours in this year, but not as many in the next. You ought to be able to do it as it is appropriate, but according to these rules, you ought to be doing it.
Simon: The Comment to the ABA rule says this rule is not intended to be enforced through the disciplinary process.
Bar Journal: Can you think of examples of rules you have drafted that reflect the unique character of practice or the culture of the Bar in New Hampshire?
Goodwin: Any rule with an "a" on the end is going to be unique to New Hampshire, such as Rule 1.11a regarding conflicts for town officials, since there are so many lawyers who have volunteer positions in government. There is an ongoing tension between towns needing the expertise of lawyers on their appointed boards versus the potential conflicts of interest that can develop.
THE REVISION PROCESS
Bar Journal: How have you gone about this process? Have you obtained guidance from the Professional Conduct Committee, or the court, or relied solely on the caselaw? Have you been able to benefit from talking to people who implement the rules?
Goodwin: Janet DeVito, deputy counsel of the Attorney Discipline System (formerly known as the Professional Conduct Committee) attends the Ethics Committee meetings and has provided input.
Landis: We looked at the ABA model rules, and members of the committee have been looking at how other states have written rules on various issues. This gives us some discussion points, and additional opportunities to improve our rules, and make them more relevant to today’s practice.
Simon: One example of that was a rule on decision-making for clients. [Ethics Committee member] John Norton found a version of Rule 1.2 from another state that allowed lawyers to make certain kinds of judgments based on professional courtesy without having to go back to check with the client. It’s a professionalism issue. Our version reads that "it is not inconsistent with a lawyer’s’ duty to seek the lawful objectives of a client through reasonably available means for the lawyer to accede to reasonable requests of opposing counsel that do not prejudice the rights of the client, to avoid the use of offensive or dilatory tactics, or treat an opposing counsel or opposing party with civility."
Gould: It is an interesting way to frame it —"It is not inconsistent with a lawyer’s duty..." to be civil.
Goodwin: We hope that the Bar Association membership will take advantage of the fact that this is an open procedure. We are conducting this revision in a way that we have never been able to do before. The draft is being posted on the web site as sections are voted on, and we are asking people to make comments, and those will be looked at before we ship the final product to the Advisory Committee on Rules.
It is a very thoughtful committee. One thing we all find is that you come to an Ethics Committee meeting thinking something is clear, and once the discussion starts, you learn a whole new way of thinking about it. In turn, we are hoping the membership can join into that and raise our level of consciousness.
WHAT'S YOUR REACTION TO THESE REVISIONS?
Send your comments, referenced by specific Rule, to firstname.lastname@example.org
New Hampshire Bar Association Ethics Committee 2003-2004
James F. Allmendinger
Charles P. Bauer
Peter G. Beeson
William L. Chapman
Janet F. DeVito
David A. Garfunkel
Clyde R.W. Garrigan
Rolf E. Goodwin, co-chair
Bryan K. Gould
Honey C. Hastings
Russell F. Hilliard
Peter F. Imse
Linda T. Landis, co-chair
Jeffrey Alan Meyers
John C. Norton
John E. Peltonen
Patricia B. Quigley
Mitchell M. Simon
Maureen D. Smith
Richard Y. Uchida
Robert William Upton
Lawrence A. Vogelman