May 28 --The “informed consent” that an attorney must get from a client before accepting compensation from a third party does not need to be in writing, the Utah Supreme Court decided May 23 .
The court relied on principles of statutory construction to conclude that there is no writing requirement in Utah Rule of Professional Conduct 1.8(f) on payment of fees by someone other than the client.
Speaking through Justice Christine M. Durham, the court said neither the rule itself nor its structure indicates that oral consent is insufficient.
The Utah Legal Group (ULG), a marketing company that recruits paying clients for lawyers, contacted Thomas Broude after he was arrested for trespass and aggravated assault.
Recently added Comment [1a] to Utah Rule of Professional Conduct 8.4 states:
“[1a] A violation of paragraph (a) based solely on the lawyer's violation of another Rule of Professional Conduct shall not be charged as a separate violation. However, this rule defines professional misconduct as a violation of the Rules of Professional Conduct as the term professional misconduct is used in the Supreme Court Rules of Professional Practice, including the Standards for Imposing Lawyer Sanctions. In this respect, if a lawyer violates any of the Rules of Professional Conduct, the appropriate discipline may be imposed pursuant to Rule 14-605.”
A ULG representative then spoke with Broude's mother, Judy Carey, who signed a contract to pay ULG $6,000 to hire a lawyer and monitor her son's case. Carey said she believed ULG was a law firm. The company, she alleged, published ads stating that it would “kick ass” and “get things accomplished that no other firm could.” Carey said ULG promised to help Broude avoid jail.
ULG retained attorney Jere B. Reneer to represent Broude for a flat fee of $2,500. Reneer was not aware of the amount Carey paid ULG, and he never signed a separate fee agreement with Broude or Carey.
Reneer negotiated a plea that reduced Broude's assault charge to a misdemeanor. Broude was sentenced to 365 days in jail, with all but 120 days suspended.
Carey was not satisfied. Citing ULG's alleged promise that her son would avoid jail, she filed a bar complaint and sought a refund from Reneer, whom she misidentified as an employee of the Utah Legal Group.
A screening panel found that Reneer did not obtain “informed consent” to receive compensation from a third party for representing Broude, and thus breached Rule 1.8(f), as well as 8.4(a) which prohibits violation of any rule of professional conduct.
A disciplinary committee sustained those charges and recommended a private admonishment in light of the fact that Reneer's conduct caused little or no injury.
Durham said that nothing in Rule 1.8(f) indicates a client's verbal agreement to third-party payment of fees won't ever suffice. “The structure of rule 1.8 confirms that a writing is not required,” she said.
Durham pointed out that Rule 1.8(f) is grouped with other conflict rules that do “explicitly require a client's written consent to waive the conflict.” See Rules 1.8(a) (business transactions with clients) and 1.8(g) (aggregate settlement of multiple clients' claims). “Thus” she reasoned, “the omission of a written consent requirement in rule 1.8(f) must be seen as purposeful, allowing for a client's oral manifestation of consent.”
In a footnote the court cautioned that written consent will be required in “situations where third-party payments also constitute a conflict of interest under Rule 1.7,” which contains its own explicit written consent requirement. That allegation was not made here, the court said.
Bar counsel said the Rule 1.8(f) charge could be sustained because Reneer produced no evidence of informed oral consent in any form.
The court said that put the burden of proof on the wrong party. “The screening panel received no evidence--much less substantial evidence--of the absence of Mr. Broude's oral informed consent,” it said. “[Reneer] did not bear the burden of proving compliance with the rules of professional conduct. … In the absence of testimony or other evidence on this issue, the screening panel may not presume noncompliance.”
The court also dismissed the Rule 8.4(a) charge. A comment adopted after the present case commenced specified that Rule 8.4(a) “may not stand as an independent ground for discipline,” Durham explained. (See box.)
The court had rejected applying Rule 8.4(a) in this way prior to the adoption of the new comment. See Brussow v. Utah State Bar, 286 P.3d 1246, 28 Law. Man. Prof. Conduct 568 (Utah 2012) (stating that “the rule amounts to no more than a 'piling on,' in that an attorney will never be sanctioned for only one rule violation”), and Utah State Bar v. Jardine, 289 P.3d 516, 28 Law. Man. Prof. Conduct 655 (Utah 2012).
Other courts have reached a similar conclusion. See Iowa Supreme Court Attorney Disciplinary Bd. v. Templeton, 784 N.W.2d 761, 26 Law. Man. Prof. Conduct 437 (Iowa 2010).
Reneer, of Provo, Utah, appeared pro se. The Office of Professional Conduct was represented by Deputy Senior Counsel Todd Wahlquist, Salt Lake City.
Copyright 2014, the American Bar Association and The Bureau of National Affairs, Inc. All Rights Reserved.
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