CHICAGO--The ABA Aug. 6 approved with only scattered opposition all six proposals recommended by its Commission on Ethics 20/20 for modernizing the Model Rules of Professional Conduct and regulatory standards in light of sweeping changes in the practice of law.
The policy-setting House of Delegates, meeting here Aug. 6-7, approved by unanimous voice vote the commission's proposals on rule changes that address the outsourcing of legal services, protecting client confidences when using new technology, using new technology for marketing legal services, and easing the time-in-practice requirement for admission by motion.
The speedy approval followed nearly three years of deliberation, discussion, drafting, and revisions by the commission. The changes will not be binding on lawyers, however, unless and until they are adopted by individual states.
The only two proposals that generated any opposition were the recommendation to add a new exception in Model Rule 1.6, which addresses lawyer-client confidentiality, and the recommendation to adopt a Model Rule on Practice Pending Admission. Those measures too were ultimately approved by voice vote.
In other action at the bar group's annual meeting, the delegates tabled indefinitely any vote on a proposed resolution that would reaffirm the ABA's opposition to lawyers' sharing fees with nonlawyers or partnering with them.
By postponing the vote, the delegates left the door open for the Ethics 20/20 Commission to keep considering whether it should recommend rule changes to deal with choice of law problems that arise when jurisdictions have conflicting rules on these controversial issues.
In addition, the delegates took action on a variety of other matters bearing on law practice. They rejected proposed guidelines for lawyers' retention of testifying experts, but approved standards requiring ABA-accredited law schools to report accurate employment data for their graduates. See 28 Law. Man. Prof. Conduct 512.
Model Rule 1.6 prohibits lawyers from disclosing information relating to the representation of a client except in certain listed circumstances. A new exception urged by the Ethics 20/20 Commission and approved by the delegates permits disclosure reasonably necessary “to detect and resolve conflicts of interest arising from the lawyer's change of employment or from changes in the composition or ownership of a firm, but only if the revealed information would not compromise the attorney-client privilege or otherwise prejudice the client.”
In introducing this proposal to add a subsection (7) to Rule 1.6(b), Barbara Mendel Mayden, Nashville, Tenn., said it codifies long-accepted practice and is needed to direct traffic at the intersection of maintaining confidentiality and clearing conflicts.
Arguing against it, Lawrence J. Fox, Philadelphia, contended that to maintain trust in the legal profession lawyers should be required to obtain informed consent from affected clients before they may disclose information to identify conflicts when they want to change or combine firms. Although this process may take time, “the question is just one of convenience versus inconvenience,” he insisted.
Meeting Aug. 4-5 before the House of Delegates convened, the Ethics 20/20 Commission discussed feedback it has received on choice of law issues in sharing legal fees, lawyer-client agreements for choice of conflicts rules, and lawyers' virtual presence in jurisdictions outside their home state.
The commission plans to consider these subjects further when it meets Oct. 25-26 in Washington, D.C. It is still mulling possible recommendations on the subject of inbound foreign lawyers. Any additional proposals may be presented for consideration by the House of Delegates at the ABA Midyear Meeting in February 2013.
Without going quite that far, Salvador A. Mungia, Seattle, moved to amend the proposed exception to permit lawyers to share information for checking conflicts only after clients are informed about the scope of the disclosure. This is a no-brainer, he declared.
But Mungia's amendment was condemned by several speakers who insisted that the exception recommended by the Ethics 20/20 Commission would be wholly unworkable and pointless if clients had to be notified in advance about the disclosure.
Arthur D. Burger, Washington, D.C., protested that young lawyers who need or wish to move to a new firm would not be able to enter into discussions with another firm without alerting their employer. Roberta D. Liebenberg, Philadelphia, warned that requiring prior notification to clients would create a substantial career risk to lawyers without any real benefit to clients.
Lucian T. Pera, Memphis, Tenn., told the delegates that he was unaware of any authority supporting Mungia's amendment to require prior notification or any jurisdiction that has tried such an approach. The amendment would essentially turn back a long period of progress on the issue, he asserted.
The motion to add a prior notification requirement failed and, after one additional comment favoring the commission's proposed exception, many delegates who had asked to speak on the issue waived that opportunity. The house then swiftly accepted the recommendation to add the conflicts-checking exception to Rule 1.6(b) with only scattered nay votes.
The only other Ethics 20/20 Commission recommendation that provoked debate was the adoption of a Model Rule on Practice Pending Admission, which responds to concern that lawyers who need to relocate to another jurisdiction often face lengthy delays in gaining admission to the bar in the new locale. It too passed with just a few voices raised in opposition.
The new model rule enables a lawyer who has been engaged in active law practice for at least three of the previous five years to establish a law office or other systematic or continuous presence in a new jurisdiction for up to one year while pursuing admission there through a procedure such as admission by motion or taking the bar exam. The lawyer would have to submit an application right away, associate with local counsel, pay into the client protection fund, and meet numerous other specified requirements and restrictions.
The only person who spoke against the rule was Jequita H. Napoli, Norman, Okla., the delegate from the National Conference of Bar Examiners. Napoli characterized the rule as a “dramatic change” with complicated implications for admission, regulation, and discipline of lawyers. The rule doesn't encourage a speedier admissions process or broader uniformity in admissions, she contended.
But commission member Stephen Gillers, New York, reminded the delegates that in the current economic climate moving to another jurisdiction is not always a matter of choice. He emphasized that the rule requires the relocating lawyer to notify regulators up front, whereas practice pending admission may be occurring now without regulators knowing about it.
Explaining the National Organization of Bar Counsel's support for the rule, John T. Berry, Tallahassee, Fla., echoed Gillers on this point. The rule puts lawyer regulators in better shape than they are now because they will know who is practicing law in their state pending admission, he said.
Berry also pointed out that the ABA recently endorsed a special admissions procedure for lawyers who relocate due to a spouse's military service. (See 28 Law. Man. Prof. Conduct 97.) The Conference of Chief Justices has expressed support for that measure, he noted.
Miles V. Lynk, Tempe, Ariz., who chairs the ABA Standing Committee on Professional Discipline, told the delegates that his committee strongly supports the rule as the best possible template for states that are inclined to permit practice pending admission. The Ethics 20/20 Commission carefully considered the discipline committee's initial concerns and adopted nearly all of the committee's recommendations for improving the rule, Lynk said.
In other action on the subject of lawyer mobility, the delegates approved a resolution amending the ABA Model Rule for Admission by Motion to reduce the “time in practice” requirement.
The existing ABA model, adopted in 2002, specified that a lawyer licensed in one state may be admitted by motion to practice in another state if the lawyer graduated from an ABA-accredited law school, has actively practiced law for at least five of the preceding seven years, and meets the state's character and fitness standards, in addition to several other requirements. The Ethics 20/20 Commission's amendment reduces the time in practice requirement to three of the past five years.
The approved resolution also urges states to adopt the rule without adding further restrictions not present in the ABA model, with the goal of making the admission by motion process more uniform throughout the United States.
In presenting the measure, Stephen A. Saltzburg, Washington, D.C., noted that the 2002 version of the Model Rule on Admission by Motion has been embraced by 40 jurisdictions. Considering that lawyers now must often move to get employment, a shortened time in practice requirement is warranted, he told delegates.
Two others, Paula E. Boggs, Seattle, and Ethics 20/20 member Judith A. Miller, Chevy Chase, Md., also spoke in favor of the amendment. Boggs described the change as a modest step that will be particularly helpful to newly minted lawyers, who must move where they can find work. Miller characterized the reduced time-in-practice requirement as truly crucial to younger lawyers and women in practice.
In summarizing the Ethics 20/20 Commission's proposals regarding the impact of technology on lawyers' duty to safeguard confidential information, Cheryl I. Niro, Chicago, praised the measures as “lawyer-friendly” and said they provide helpful guidance and align the regulatory system with the way attorneys actually practice.
The amendments change the black-letter text of three Model Rules and augment the comments of those rules and two others. The most notable of these changes is new Model Rule 1.6(c), which states: “A lawyer shall make reasonable efforts to prevent the inadvertent or unauthorized disclosure of, or unauthorized access to, information relating to the representation of a client.”
New language in the comments to Rule 1.6 identifies factors that lawyers should take into account in determining whether their precautions are reasonable, including the cost of the safeguards and the sensitivity of the information.
An amendment in the comments to Model Rule 1.1 (competence) reminds lawyers to keep up with “the benefits and risks associated with relevant technology.”
Other changes update Model Rule 4.4 (respect for rights of third persons) and its commentary. To encompass the kinds of information that are prone to being transmitted inadvertently in a digital age, the amendments replace the word “document” with the phrase “document or electronically stored information,” and the amended comment defines the phrase “inadvertently sent.”
New language in the comment to Rule 4.4 makes clear that a lawyer's receipt of a document containing metadata triggers the notification duties of the rule, but only when the receiving lawyer has reason to know that the metadata was included unintentionally. The amendments do not resolve the larger question of whether a lawyer may look at metadata, Niro pointed out in describing the proposals.
Ellen J. Flannery, Washington, D.C., offered a friendly amendment to Comment  to Rule 4.4, which states that a lawyer may opt to “return” an inadvertently sent document unread. Flannery's amendment specifies that in the case of electronically stored information, a lawyer may choose to “delete” the information. This change recognizes that lawyers cannot “return” electronic information in the same way that they are able to return paper documents, Flannery explained.
With this friendly amendment, the delegates accepted the package of changes on confidentiality and technology without further discussion or debate.
The delegates also embraced a group of proposals geared to the interplay between technology and acquiring new clients. As former ABA president H. Thomas Wells Jr., Birmingham, Ala., explained, the amendments essentially make four changes:
• First, Model Rule 1.18 (duties to prospective clients) is reworded because the first contact with a would-be client can occur in many ways other than a face-to-face meeting.
The amended rule provides that a person who “consults” a lawyer about the possibility of forming a client-lawyer relationship with respect to a matter is a prospective client. The comments provide guidance about when communications amount to a consultation and as such create a prospective lawyer-client relationship.
• Second, amendments in the comment to Model Rule 7.2 (advertising) clarify when the prohibition against paying for a recommendation is triggered in an era of new methods such as “pay per click” advertising.
The amended comment defines “recommendation” to mean endorsing or vouching for a lawyer's professional qualities. This definition, along with additional language, will enable lawyers to use new tools for marketing their services while ensuring that the public is not misled and that the restrictions on sharing fees with nonlawyers are observed, Wells said.
• Third, new language in the comment to Model Rule 7.3, which is now retitled “Solicitation of Clients,” defines the term “solicitation” to mean “a targeted communication initiated by the lawyer that is directed to a specific person and that offers to provide, or can reasonably be understood as offering to provide, legal services.”
The revised comment distinguishes this targeted contact from communications directed to the general public, such as an internet banner advertisement or a website, and those that respond to a request for information or are automatically generated in an internet search.
• Finally, technical amendments remove references to “prospective clients” from the comments to two rules that do not address the subject of forming attorney-client relationships with prospective clients.
“These rules are intended to be of assistance to lawyers in a day of new communication,” Wells told the House.
Although others had signed up to speak on these amendments, all waived the opportunity, and the delegates passed the resolution without further ado.
In introducing the Ethics 20/20 Commission's proposals on outsourcing, Neal R. Sonnett, Miami, noted that lawyers increasingly need to go outside their own firm to ensure that legal services for their clients are performed efficiently and competently.
The commission found, Sonnett explained, that existing black-letter rules adequately deal with the principles that govern outsourcing of legal services, so it did not add to the ethics rules themselves. Instead, the commission developed comments to the rules to explain how they apply to outsourcing. The new comments avoid the word “outsourcing” in case it becomes outdated or unpopular, and use the more familiar term “retention,” he told the House.
Highlighting some key additions, Sonnett pointed out that:
• The revised comment to Model Rule 1.1 (competence) requires lawyers to make reasonable efforts to ensure that work is performed competently and contributes to the overall representation of the client.
• An amended comment to Model Rule 5.3 (which is retitled “Responsibilities Regarding Nonlawyer Assistance”) obligates lawyers to make reasonable efforts to ensure that outsourced nonlawyer services are provided in a manner that is compatible with the lawyer's obligations, including confidentiality. The focus here is on reasonable steps and reasonable efforts, Sonnett said.
• New language in the comment to Model Rule 5.5, which addresses unauthorized practice and multijurisdictional practice, makes it clear that lawyers cannot engage in outsourcing in a manner that constitutes or facilitates the unauthorized practice of law.
The Ethics 20/20-endorsed changes are intended to help lawyers determine their obligations under the rules so that they can outsource in an ethical manner, Sonnett said.
The House approved the commission's outsourcing proposals unanimously.
The House not only was receptive to the Ethics 20/20 Commission's proposals, but also beat back an effort by some delegates to derail its further consideration of possible choice of law rules on lawyers' fee-sharing with nonlawyers.
When the commission decided in April to ditch the idea of recommending any changes to the bar group's policy against nonlawyer owners or investors in law firms, it announced that it would continue to examine the best way to provide practical guidance about choice of law problems that lawyers are facing on this issue.
A few jurisdictions, including the District of Columbia and a growing number of countries, permit some degree of nonlawyer ownership of law firms. See 28 Law. Man. Prof. Conduct 250. The commission issued draft proposals on these subjects in December 2011, floating possible rule changes that could make it feasible for lawyers in states that do not allow nonlawyer owners to be partners and share fees with lawyers in jurisdictions that do allow nonlawyer ownership. See 27 Law. Man. Prof. Conduct 750.
By the time the commission dropped any further consideration of even partial nonlawyer ownership of law firms, its discussion draft on “alternative law practice structures” had provoked a firestorm of protest.
The Illinois State Bar Association, joined by the ABA Senior Lawyers Division, urged the House to reaffirm its policy, adopted in July 2000, that the sharing of legal fees with nonlawyers and the ownership or control of the practice of law by nonlawyers are inconsistent with the core values of the profession, and that the law governing lawyers that prohibits sharing fees and partnering with nonlawyers should not be revised.
By the time debate on this measure got underway in the House, 92 lawyers had signed up to speak on the issue.
In introducing the measure, ISBA President John E. Thies, Urbana, Ill., told delegates they should reaffirm existing ABA policy to brake ever-increasing involvement by nonlawyers in the practice of law. He emphasized that the Ethics 20/20 Commission has not formally withdrawn its preliminary proposal that would allow lawyers to share fees with firms that have nonlawyer owners. “We need to send a strong statement … that this association is not going to water down our ethical standards,” Thies declared.
David B. Wolfe, Livingston, N.J., expressed support for the measure on behalf of the Young Lawyers Division, saying that approval of the resolution would not cut off the debate but rather would guide the commission's work so that it can get to a safe destination. “It is never premature for this House to affirm or to reaffirm one of our core beliefs and principles,” he told the delegates.
Lawrence Fox too urged delegates to reaffirm the existing ABA policy against sharing fees with nonlawyers. He said the vote would be another comment--a strong one--opposing what he characterized as the commission's “stealth proposal” on choice of law rules for sharing fees. We should be exporting our standards against nonlawyer ownership of law practices, not importing the lowest common denominator, he argued.
But former ABA president Wells said the delegates would send a “chilling message” to the commission by approving the resolution at this point. Defeating the resolution, he said, would preserve existing ABA policy without signaling that the commission should not even consider the issue.
Suggesting a sort of cease-fire, Maury B. Poscover, St. Louis, moved to postpone the proposed resolution indefinitely. A vote to postpone would merely let the ABA's “star-studded commission” complete its work in an orderly manner, he said.
The House passed Poscover's postponement motion. Although the voice vote was too close to call, a standing vote indicated that a majority of delegates favored putting this issue aside for now.
By Joan C. Rogers
The Ethics 20/20 Commission's proposals accepted by the delegates are posted on its website at http://www.americanbar.org/groups/professional_responsibility/aba_commission_on_ethics_20_20.html.
All of the resolutions and reports considered at the delegates' meeting can be accessed on the ABA website at http://www.abanow.org/issue/page/1/?annual-meeting-2012&view=hod.
The ABA/BNA Lawyers’ Manual on Professional Conduct is a joint publication of the American Bar Association Center for Professional Responsibility and Bloomberg BNA.
Copyright 2012, the American Bar Association and The Bureau of National Affairs, Inc. All Rights Reserved.