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Bar News - October 21, 2005 Lawyers as Clients: The Expanding Call for Professional Responsibility Lawyers By: Peter G. Beeson and Mitchell M. Simon
Across the border in Massachusetts, in a firm of 150 lawyers, the same question is presented to the firm’s part-time, in-house general counsel. Her position has been created to provide the firm with expert advice on increasingly complex ethical issues; to represent the firm in client disputes; to resolve conflict issues that arise during the case intake process; and to improve internal risk management through policy development and training. In both states, the message is the same: the practice of law is changing, and with these changes, attorneys are reaching out with increased frequency to professional responsibility lawyers who are concentrating on the ethical and liability issues unique to our profession. Law of Lawyering Expands For those of us who practice in this field, this trend has evolved quite naturally as the legal complexities, risks and competition in the practice of law have increased. Only five years ago, for example, the American Law Institute published the first Restatement of the Law Governing Lawyers. Contained in two volumes, the publication is testimony to the increased scope and complexity of decisional law, statutes and professional conduct rules governing our profession. Geoffrey Hazard, Director Emeritus of the American Law Institute and a professional responsibility lawyer of national stature, noted the unique nature of this Restatement in the Foreword he authored: “The subject matter represents something of a departure in the Institute’s agenda, focusing as it does on a specific vocation. (I do not think the Institute would contemplate a Restatement of the Law Governing Physicians, or Accountants, for example.)” The practice of law itself is in a state of upheaval. At the Bar’s recent Fall Leadership Conference, Bar President Richard Uchida invited Charles Robinson, a legal profession “futurist,” to entertain an apprehensive audience with stories of legal services outsourced to India; increased competition from “do-it-yourself” trust and will packages available on the Internet; and the projected demise of the traditional litigation practice due to the trend toward increased, pro se representation and our clients’ strong preference for private ADR to resolve disputes quickly and economically. A Growing Need As lawyers, we routinely advise our corporate clients to develop internal compliance programs that will ensure adherence to the laws and regulations that govern their daily business operations. The lack of a comprehensive program increases the likelihood of violations and can lead to significantly greater penalties for regulatory infractions. The practice of law is no different . . . but the regulatory process is far more complex. We have fiduciary and professional duties to our clients; expanding duties of care to third parties; and potentially conflicting duties to the court system or to those who may be injured by our clients’ misconduct. Remedies or sanctions for violation of these obligations can include professional discipline, disqualification from representation, disgorgement of fees, monetary damage awards and, in cases of knowing misconduct, criminal convictions. Our Supreme Court has imposed a mandatory annual requirement for two hours of ethics training as one means of achieving greater compliance with the obligations of our profession. Most firms in the state have also designated partners to monitor negligence claims when they arise, and to oversee the firm’s malpractice insurance needs. Over the past decade, however, larger law firms around the country have moved well beyond these basic steps—in recognition of a growing need for specialized assistance on the laws and rules of lawyering during a period of increased competition and harsher scrutiny of lawyers—particularly in connection with the misconduct of their corporate clients. This need is being met both by in-house lawyers and outside counsel. A recent survey reported in the National Law Journal disclosed that 69 percent of the nation’s top 200 law firms (in terms of revenue) have now designated in-house ceneral counsel in the mold of their corporate clients. Almost all of these in-house counselors have been drawn from within the partnerships. Most still split their time between legal work for the firm’s lawyers and work for their outside clients. Some firms report that they have supplemented the resources of the designated general counsel—who devote between 750 hours and 2000 hours annually to their “General Counsel” tasks—with additional attorneys assigned to cover professional liability, ethics or loss prevention matters. This trend toward the development of in-house “compliance specialists” was also documented in a survey carried out by Elizabeth Chambliss and David Wilkins of the Harvard Law School’s “Program on the Legal Profession” published in 2002. The survey encompassed 32 firms ranging in size from five firms with 75-150 lawyers at one end of the spectrum, to four firms with 1,000-plus lawyers at the other. The survey found that while the “professional development of compliance specialists” in law firms was “just beginning,” one or more partners nevertheless had been designated at every firm with “special responsibility for ethics and/or regulatory compliance.” Generally speaking, their titles (General Counsel, firm counsel, ethics partner, professional responsibility advisor, conflicts partner, risk/loss management partner, ethics committee chair and ombudsman) as well as their roles and jurisdictions have evolved significantly as the firms have adapted, often reluctantly, to in-house compliance oversight. The Trend in New Hampshire Several explanations exist for the profession’s increasing use of specialized professional responsibility lawyers, ethics advisors, general counsel (in the largest firms), and proactive risk management and training programs. In New Hampshire, and in all other model rule jurisdictions, our professional responsibility rules are now undergoing comprehensive revisions based on the ABA’s Ethics 2000 initiative. Existing rules (such as Rule 1.13 relating to corporate representation) are being revised dramatically. New rules are also being created to define duties to “prospective clients”, licensing requirements for corporate, in-house counsel, and the ethical parameters for providing “unbundled legal services” in litigation. These comprehensive rule changes, standing alone, will place educational burdens on law firms and lawyers that can not be met simply through annual ethics training. Other New Hampshire developments have also expanded the profession’s need for this specialized legal assistance. The increased number of regional law firms in the state—all with regional and national clients—creates the need for close analysis of the cross-border practice and unauthorized practice of law rules that are seldom implicated by the work of smaller, local firms. Increased competition for traditional legal services is also causing lawyers to consider other sources of revenue, such as referral fee arrangements with non-lawyers; joint enterprises with title companies; development of ancillary real estate brokerage or insurance sales operations; lobbying and investment advisor services; and various business ventures with clients. Experienced professional responsibility lawyers are essential to help the attorney or law firm through the applicable ethical rules; identify areas of risk of future litigation; analyze malpractice insurance coverage issues; and—perhaps most importantly—provide an opinion regarding compliance with the applicable rules that would be available if the new enterprise is challenged in the future. In New Hampshire as in most other states, the Bar’s Ethics Committee is a source of assistance with these issues. The NHBA Ethics Committee has rendered opinions on non-traditional business ventures and other ethical questions. Its opinions are thorough and provide valuable generic guidance for the Bar. For some lawyers, however, the Ethics Committee does not, and really cannot, meet their needs. Those who need a prompt opinion may find that the rigorous drafting process, which typically takes several months, is a problem. In addition, the Committee process, focused as it is on guidance to Bar members generally, provides for little on-going interaction between the Committee and the attorney. There may be no opportunity—as would exist with private counsel—to fine tune the original proposal to avoid ethical pitfalls and develop a workable, and defensible, venture. Beyond these New Hampshire-based circumstances, other explanations for the profession’s increased reliance on specialized professional responsibility lawyers have been identified by law firm consultants, in-house General Counsel and insurance company risk managers in writings on the topic:
Lawyering for Lawyers in New Hampshire In New Hampshire, a number of practitioners have developed significant experience in the representation of lawyers in the defense of malpractice claims, in professional discipline matters, and before the Character and Fitness Committee. Members of the Bar’s Ethics Committee have also gained a broad understanding of our rules (and the ongoing revision process). Our law firm, Devine, Millimet, has started the Attorney Conduct and Liability Practice Group to provide a broad array of professional responsibility services for lawyers and law firms—including training, malpractice litigation, defense of disciplinary proceedings, risk management advice, ethics opinions and expert testimony. If New Hampshire follows the national trend, the state’s law firms will, as they grow in size and geographic reach, establish or increase “in-house” resources for the basic “compliance” function. As always, the state’s lawyers will continue to look beyond the firm for representation in litigation, second opinions on complex ethical issues, and help on unique risk management or liability matters. Peter G. Beeson is a shareholder at Devine, Millimet & Branch, Professional Association in Manchester, New Hampshire. Mitchell M. Simon, a professor at Franklin Pierce Law Center, is Of Counsel at Devine, Millimet & Branch.
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