IMPACT OF THE NEW OHIO RULES OF PROFESSIONAL CONDUCT ON SOLO/SMALL FIRMS

Transcription

1 IMPACT OF THE NEW OHIO RULES OF PROFESSIONAL CONDUCT ON SOLO/SMALL FIRMS Panel Discussion by Charles J. Kettlewell, J.D. Christensen, Christensen, Donchatz, Kettlewell & Owens, LLP Alvin E. Mathews. J.D. Bricker & Eckler, LLP Gretchen Koehler Mote, J.D. Ohio Bar Liability Insurance Company DISCLAIMER This outline includes loss prevention techniques designed to minimize the likelihood of incurring a claim for legal malpractice. The material presented does not establish, report, or create the standard of care for attorneys. The material is not a complete analysis of the topic and should not be construed as providing legal advice. Readers should conduct their own appropriate legal research.

2 I. INTRODUCTION This presentation will discuss the impact of the new Ohio Rules of Professional Conduct on the solo/small firm lawyer. These are emerging issues since the rules became effective February 1, The rules should be consulted for specific information. A. Scope of Rules Rules of reason Imperative rules shall or shall not that define proper conduct for purposes of professional discipline Permissive rules may areas where lawyer has discretion to exercise professional judgment IMPACT: You must comply with requirements of imperative rules. Best practices indicate adoption of may rules. B. Terminology Rule 1.0 defines 14 terms not defined on Code of Professional Responsibility New definition of firm or law firm Comment [2] notes whether two or more lawyers constitute a firm can depend on specific facts IMPACT: Determine who constitutes your firm. Comply with applicable rules. See Rule 1.5(e) on fees. Rule 1.0 defines confirmed in writing, informed consent, and writing. IMPACT: Know these definitions for application in the rules. II. NEW FOCUS ON CLIENT/LAWYER RELATIONSHIP A. Competence and diligence Rule 1.1 no longer confines lawyer to associating with competent counsel. See Comment [4]. Rule 1.2 allows a lawyer to limit the scope of new or existing representation if limitation is reasonable and communicated to client, preferably in writing. Rule 1.3 replaces zeal with diligence.

3 IMPACT: May allow opportunities for additional practice areas, within limitations of rules. B. Communication with clients Rule 1.4 lists minimum required communication. All are shall requirements. Rule 1.5 requires that nature and scope of representation and basis or rate of fees and expenses shall be communicated to client, preferably in writing. Rule 1.5(c)(1) requires that all contingent fees shall be in writing. Rule 1.5(c)(2) requires a closing statement shall be signed by the client and the lawyer. IMPACT: Put it in writing! C. Client confidentiality Rule 1.6 expands the duty to maintain client confidences and secrets to information relating to the representation. Modifies when a lawyer may reveal information, adding Rule 1.6(b)(1) and 1.6(b)(4). IMPACT: Greater discretion for lawyers to reveal confidential client information in certain circumstances. Consider securing legal advice about compliance with these rules. III. CONFLICTS OF INTEREST A. Current Clients Rule 1.7 requires that each affected client give informed consent, confirmed in writing. No other change in substance of Ohio rules is intended. Comments to the rule give guidance to identifying conflicts. Comparison to former Code lists nonconsentable conflicts. Rule 1.8(f) is a new requirement to provide Statement of Insured Client s Rights if lawyer is compensated by insurer. IMPACT: Carefully read rules to determine if conflict exists and whether it is consentable. If so, obtain consent in writing. If representing insured clients, provide required Statement.

4 B. Former Clients Rule 1.9 adopts substantial relationship test of Kala v. Aluminum Smelting & Refining Co., Inc. (1998), 81 Ohio St. 3d 1. Rule 1.10 imputes all conflicts, except personal conflicts, and clarifies the imputation generally ends when disqualified lawyer leaves the firm. Rule 1.11 governs the situation of lawyer joining firm after having represented government. IMPACT: Carefully consider Rule 1.10 comments on definition of firm. Note requirements for written notice and disqualification waiver, in writing, per Rule 1.7. C. Special Circumstances Rule 1.13 is new and specifies that lawyer representing an organization owes duty to organization. Rule 1.13(e) requires written consent of organization if lawyer will have dual representation of organization and any of its directors, officers, employees, members, etc. Rule 1.14 is new and addresses a client with diminished capacity, specifically providing for appointment of a guardian ad litem. IMPACT: Refer to Rules for guidance in these situations. D. Prospective Clients Rule 1.18 defines a prospective client and lawyers duty to protect confidences. Rule 1.18(d) provides representation is permissible when lawyer has received disqualifying information, if both affected client and prospective client have given informed consent, confirmed in writing. IMPACT: Requires careful conflicts evaluation for prospective clients and compliance with informed consent in writing.

5 IV. SAFEKEEPING PROPERTY, TERMINATING REPRESENTATION, SALE OF PRACTICE A. Safekeeping Property Rule 1.15 addresses handling of property of third persons as well as funds and requires specified financial records be maintained for a period of 7 years. Comment [1] states that the records required by the rule may be maintained electronically. IMPACT: Implement systems to comply with new requirements. B. Declining or Terminating Representation Rule 1.16 replaces DR Defines client papers and property and requires withdrawing lawyer to promptly return to client. IMPACT: Return client files when withdrawing. C. Sale of Practice Rule 1.17 restates DR 2-111, changing confidences and secrets to information relating to the representation. IMPACT: No major impact. V. RULES GOVERNING LAWYER AS COUNSELOR, ADVOCATE AND TRANSACTIONS WITH PERSONS OTHER THAN CLIENTS A. Rules on Lawyer as Counselor Rule 2.1 requires independent professional advice and candid advice. IMPACT: No comparable DR, but scope addressed in EC 7-8. No major impact from adoption of this rule. Rule 2.3 provides for evaluation for use by third person. IMPACT: No comparable DR. Rule addresses title opinion and other situations. Requires careful identification of who is my client. Rule 2.4 on arbitrator, mediator or third party neutral is new.

6 IMPACT: Lawyer serving in this role should inform unrepresented parties of differences of role as neutral and representing client. Be aware of rule and discuss with clients as appropriate. B. Rules on Lawyer as Advocate Rules 3.1 through 3.6 echo former DR s and EC s. IMPACT: No substantial change. Rule 3.7 replaces DR 5-101(B) and and enacts (b) allowing a lawyer to act as an advocate in a trial in which another lawyer in the firm is likely to be called as a witness unless precluded by Rule 1.7 or 1.9. IMPACT: Changes ability of lawyers associated in a firm with a testifying lawyer to allow continued representation of client, unless precluded. Rule 3.8 addresses responsibilities of prosecutor and largely corresponds to DR 7-103(A) and (B) and EC IMPACT: This in included recognizing that some solo/small firm attorneys also be part-time prosecutors. Rule 3.9 has no DR counterpart, but requires when representing a client before a legislative body or administrative agency the representative capacity be disclosed and conform with Rules 3.3 and 3.4. IMPACT: Applies only when lawyer represents client in official hearing or meeting of government agency or legislative body to which lawyer or client is presenting evidence or argument. C. Transactions with persons other than clients Rule 4.1 Truthfulness in statements to others Rule 4.2 Communication with person represented by counsel Rule 4.3 Dealing with unrepresented persons IMPACT: Rules largely enact provisions of former DR s and EC s with Model Rule format with no substantial change Rule 4.4 Respect for rights of third persons. Includes 4.4(b) a new section that lawyer who inadvertently receives a document should notify the sender. IMPACT: Requires return of intentionally sent documents.

7 VII. SUPERVISORY RULES AND MJP A. Supervisory rules are new and have no counterpart in the Code. Rule 5.1 requires that lawyers with managerial authority within a firm or governmental agency should make reasonable efforts to establish internal policies and procedures to provide reasonable assurance all lawyers will conform to the Rules. Rule 5.2 provides that a lawyer is bound by the rules notwithstanding that the lawyer acted at the direction of another. Rule 5.3 requires that a lawyer must give the assistants they employ appropriate instruction and supervision. IMPACT: Rule 5.1 at Comment [3] notes that in a small firm of experienced lawyers, informal supervision and periodic review of compliance with the firm s policies may be appropriate. Firm s must have the internal policies and procedures in place. Rule 5.1 at Comment [5] notes that whether a lawyer has supervisory authority in a particular circumstance is a question of fact. Clarification of this authority is necessary. Rule 5.3 at Comment [1] notes that the assistants employed by lawyers can include secretaries, investigators, law student interns, and paraprofessionals. It further notes that whether the lawyer employees these persons or they are independent contractors, the lawyer must give appropriate instruction and supervision. Lawyers must have appropriate procedures for complying with this. B. Rule 5.4 Professional Independence of a Lawyer is not intended to change any of the provisions of the Code. It prohibits dividing fees with nonlawyers, forming a partnership or practicing in a professional corporation with nonlawyers and prohibits direction or regulation of a lawyer s professional judgment by any person who recommends, employs or pays the lawyer to render legal services to another. IMPACT: No change from Code is intended.

8 C. Unauthoized Practice, Restrictions on Right to Practice and law- Related Services Rules Rule 5.5addresses unauthorized practice and multjurisdictional practice. No change in Ohio law or ethics law is intended by the adoption of this rule. IMPACT: No change is intended from adoption. Rule 5.6 prohibits restrictive agreements, except with retirement benefits. This rule is analogous to DR IMPACT: No change from Code. Rule 5.7 applies to the provision of law-related services or ancillary businesses. There is no similar Code provision, but the rule is consistent with Advisory Opinion 94-7 of the Board of Commissioners on Grievances and Discipline. Law-related services include providing title insurance, financial planning, accounting, trust services, real estate counseling, legislative lobbying, economic analysis, social work psychological counseling, tax preparation, patent, medical or environmental consulting. IMPACT: A lawyer owns an interest in an entity or who controls such an entity, cannot require customers of the business to agree to legal representation as a condition of the law-related services. The converse also applies. The prohibitions and disclosures now apply to all lawyers in the lawyer s firm who know about the lawyer s interest in such business and to all lawyers who work in a firm that controls or owns an interest in a business that provides a law-related service. VIII. PUBLIC SERVICE RULES A. Voluntary Pro Bono Rule is deferred. IMPACT: The Ohio Supreme Court deferred consideration of Model Rule 6.1 in light of recommendations in final report of Supreme Court Task Force on Pro Se and Indigent Representation and recommendation from Ohio Legal Assistance Foundation.

9 Rule 6.2 Accepting Appointments is similar to EC IMPACT: Similar to existing Code provisions. Rules 6.3 and 6.4 are not adopted. Rule 6.5 on Nonprofit and Court-Annexed Limited Legal Services Programs does not have a specifically comparable Code provision, but codifies former DR exception to general conflicts of Rule 1.7 to encourage participation in shortterm legal service projects. IMPACT: A lawyer who participates in such limited legal services must communicate with the client, preferably in writing, regarding the limited scope of the representation. IX. ADVERTISING, SPECIALIZATION, FIRM NAMES AND LETTERHEAD A. All communications about a lawyer s services, including advertising in Rule 7.2, are governed by Rule 7.1. Rule 7.1 requires statements to be truthful and retains the prohibition on unverifiable claims, but does not keep the prohibitions on client testimonials or self-laudatory claims. IMPACT: If verifiable and true, you can now include client testimonials. However, see comments for further restrictions. Rule 7.2, subject to Rules 7.1 and 7.3, allows a lawyer to advertise through written, recorded or electronic communication. IMPACT: Specific reference in the rule to types of fees are not included but are addressed in Comment [4]. However, most of Rules are included. Rule 7.3 includes provisions of DR 2-104(A), DR 2-101(F), with modifications. The Rule is broadened to permit use of recorded telephone messages and Internet and changes the conspicuously displayed requirement. IMPACT: Use of recorded communication and internet allowed, subject to rules. Understanding Your Rights is retained.

10 B. Specialization Rule 7.4 compares to DR except that it permits a lawyer to state the lawyer is a specialist, practices a speciality, or specializes in particular fields, subject to Rule 7.1. IMPACT: Lawyers may indicate if they only practice in certain areas. Lawyers certified as specialists by an organization approved by the Supreme Court Commission on Certification of Attorneys as Specialists may so state. C. Firm Names and Letterhead Rule 7.5 is comparable to DR 2-102, with exception of DR 2-102(E) which prohibits truthful statements about a lawyer s actual businesses and professions. IMPACT: With the elimination of the prohibition in DR 2-102(E) lawyers are not precluded from truthful statements about professional status, other business pursuits or degrees. These may now be included on letterhead. X. DISCIPLINARY MATTERS AND REPORTING REQUIREMENTS A. Disciplinary Matters Rule 8.1 on Bar Admission and Disciplinary matters is similar to DR The applicability to bar applicants is removed and addressed in Rule 1 of the Supreme Court Rules for the Government of the Bar. IMPACT: Lawyers serving on Admissions to the Bar Committee should note this change. Rule 8.2 Judicial Officials does not depart substantially from DR IMPACT: Rule not substantially changed. Rule 8.3 Reporting Professional Misconduct differs from DR by requiring a lawyer to report misconduct only when the lawyer possesses unprivileged knowledge that raises a question as to any lawyer s honesty, trustworthiness, or fitness in other respects and by requiring a lawyer to self-report.

11 IMPACT: Lawyer are now required to self-report. See Advisory Opinion for additional guidance on selfreporting. Rule 8.4 Misconduct is substantively comparable to DR and 9-101(C), except that it removes moral turpitude and replaces it with 8.4(b) making it professional misconduct if the lawyer commits an illegal act that reflects adversely on the lawyer s honesty and trustworthiness. IMPACT: Rule essentially the same. Rule 8.5 Disciplinary Authority; Choice of Law has no code counterpart. IMPACT: Codifies longstanding law that conduct of lwyer admitted in Ohio is subject to disciplinary authority of Ohio and resolves potential conflicts if lawyer subject to more than one set of rules of professional conduct. XI. EFFECTIVE DATE AND APPLICATION A. Ohio Rules of Professional Conduct became effective February 1, 2007, replacing and superseding the Ohio Code of Professional Responsibility, to govern conduct of lawyers occurring on or after that effective date. B. The Ohio Code of Professional Responsibility shall continue to apply to govern conduct occurring prior to February 1, 2007 and shall apply to all disciplinary investigations and prosecutions relating to conduct that occurred prior to February 1, IMPACT: Application of Rules or Code will be determined by date of the conduct governed.