Ethics 20/20 Commission Airs Proposals On Conflicts-Checking, Choice of Rules Pacts

The ABA Commission on Ethics 20/20 Sept. 8 tentatively recommended changing the Model Rules of Professional Conduct to let lawyers discuss confidential information for conflicts-checking purposes when they prepare to change firms.

The commission also preliminarily suggested adding a comment to the ethics rule on concurrent conflicts of interest to make clear that lawyers and their clients may agree in advance about which jurisdiction's conflicts rules will apply in the representation.

These two proposals reflect decisions made at the commission's most recent meeting, which took place in August at the ABA annual meeting. See 27 Law. Man. Prof. Conduct 529.

On the same day, the commission released its initial recommendations for updating Model Rule 5.5 on multijurisdictional practice and the ABA Model Rule on Admission by Motion. See 27 Law. Man. Prof. Conduct 576.

The commission is seeking public comment on these proposals by Nov. 30.

ABA Ethics 20/20 Commission Circulates Draft Comment on Agreements for Choice of Conflict Rules

The ABA Commission on Ethics 20/20 has asked for feedback on whether this possible exception to Model Rule 1.7 would be a good idea:

“[23] A matter may require a lawyer to perform work in multiple jurisdictions whose conflict rules differ. To ensure that a lawyer and client have the ability to reduce uncertainty and to predict which conflict rules will apply to a matter, the lawyer and client may agree that their relationship concerning the matter will be governed by the conflict rules of a specific United States or foreign jurisdiction, which may be other than the jurisdiction whose rules would apply under Rule 8.5(b) absent such agreement. Any such agreement, however, is subject to the following conditions: The client gives informed consent to the agreement, confirmed in writing; the lawyer advises the client in writing of the desirability of seeking independent counsel regarding the agreement; the client has a reasonable opportunity to consult with independent counsel regarding the agreement; the selected jurisdiction must be one in which the predominant effect of, or substantial work relating to, the matter is reasonably expected to occur; and the agreement may not result in the application of a conflict rule to which informed client consent is not permitted under the rules of the jurisdiction whose rules would otherwise govern the matter. See Rules 1.7(b) and 8.5(b). Client consent under this paragraph is more likely to be effective if the client is an experienced user of legal services.”

Confidentiality Exception to Spot Conflicts.

In its report accompanying the proposed exception to Model Rule 1.6 on confidentiality, the commission explained that as one consequence of increased lawyer mobility, lawyers considering a new association are being asked by their potential new employer to name their clients and describe these matters so that possible conflicts of interest can be spotted and resolved.

Although ABA Formal Ethics Op. 09-455, 25 Law. Man. Prof. Conduct 621 (2009), approved limited disclosure for this purpose, the commission found it advisable to add an express exception in Rule 1.6 to provide a “firmer doctrinal basis” and more guidance about the limitations on such disclosures.

The report accompanying the proposal indicates that in formulating the proposed exception the commission drew on Opinion 09-455 as well as Comment [5A] to Colorado's Rule 1.6, Boston Ethics Op. 2004-1 (2005), District of Columbia Ethics Op. 312 (2002), New York State Ethics Op. 720 (1999), and New York City Ethics Op. 2003-03 (2003).

Under the draft exception to Model Rule 1.6, a lawyer would be permitted to reveal information to the extent the lawyer reasonably believes necessary

to determine if a conflict of interest would arise from the lawyer's association with a firm, but only when there is a reasonable possibility of such an association and the revealed information would not adversely affect the lawyer's client. Information revealed under this paragraph may not be used or revealed by the lawyers receiving the information for any purpose except the identification and resolution of potential conflicts of interest.

The commission also recommended a new Comment [14] to Rule 1.6. The proposed comment emphasizes that disclosure must be no greater than reasonably necessary to permit the lawyer and the firm to identify conflicts of interest, and must not be harmful to the lawyer's clients or ex-clients.

'Perfectly Appropriate.'

Conflicts expert William Freivogel, Chicago, characterized the recommended change as “perfectly appropriate.”

“It fixes an issue most lawyers seem to think you can ignore,” he told BNA. The proposal is unlikely to be controversial, he predicted.

Boston College law professor Paul R. Tremblay brought the issue to the forefront several years ago in Migrating Lawyers and the Ethics of Conflicts Checking, 19 Geo. J. Legal Ethics 489 (2006).

Tremblay's article contended that existing authority supports surprisingly little information sharing, but that carefully defined disclosures ought to be permitted when they will not cause hardship or embarrassment to the migrating lawyer's clients.

Private Choice of Conflicts Rules.

Earlier this year the commission sought comments on how to improve the ABA rule that determines which jurisdiction's ethics standards should apply in a given situation. See 27 Law. Man. Prof. Conduct 83.

Rather than proposing amendments to Model Rule 8.5, however, the commission decided instead to recommend a new comment to Model Rule 1.7, which addresses concurrent conflicts of interest.

The draft Comment [23] would permit lawyers to agree with their clients in advance to be bound by the conflicts rules of a particular jurisdiction. (See box.)

The report accompanying the recommendation explains that the draft comment contains several important limitations on lawyer-client pacts concerning choice of conflicts rules:

• The client must give informed consent and must have an opportunity to consult with counsel.

• The selected jurisdiction must be one where the predominant effect of the matter will occur, or where substantial work relating to the matter will take place.

• The representation cannot involve a “nonconsentable” conflict under the rules of the jurisdiction that would otherwise apply under Rule 8.5.

The proposed comment also states that client consent is more likely to be effective if the client is an experienced user of legal services.

The proposal is intended to provide more predictability to lawyers and their clients, according to the report.

The report states that the commission will ask the ABA's ethics committee to draft a formal opinion providing guidance on how to resolve conflicts-related inconsistencies in the absence of any lawyer-client agreement about which jurisdiction's rules apply.

The commission concluded that a formal opinion on this topic would be a better approach than amending Rule 8.5, the report explains, because “the resolution of conflicts-related inconsistencies requires a fact-based inquiry that is not amenable to Model Rules treatment.”

'Tinkers Around the Edges.'

In an interview with BNA about the draft comment to Model Rule 1.7, Anthony E. Davis of Hinshaw & Culbertson, New York, expressed disappointment about the limited scope of the commission's recommendations on the subject of which rules apply.

The proposed comment “tinkers around the edges of a much broader series of problems” without really adding anything, Davis said. He characterized the draft comment as having limited value because, he said, lawyers and clients can make these agreements anyway.

An agreement with the client about which rules apply doesn't remove uncertainty, he added, because every conflict involves a third party, and a lawyer-client agreement will not be binding on that other party. Moreover, Davis noted, a client might change its mind after entering into the agreement.

A different, more comprehensive proposal is needed, in Davis's view. He's on record as saying that the legal profession's choice-of-law rules simply don't work. See 26 Law. Man. Prof. Conduct 447.

Davis appeared before the Ethics 20/20 Commission in April on behalf of a group of general counsel from law firms that represent large commercial clients. A new regulatory scheme is needed that will prevent these organizations and their outside counsel in the United States from being saddled with conflicting, burdensome ethics rules on conflicts of interest, lawyer mobility, and limitation of liability, he told the commission. See 27 Law. Man. Prof. Conduct 261.

Other lawyers too have contended that the realities of global law practice make it essential to reform choice-of-law rules for applying disciplinary standards. See 27 Law. Man. Prof. Conduct 376.

Final Proposals Set for May.

In a cover letter accompanying the commission's latest releases, Co-Chairs Jamie S. Gorelick and Michael Traynor stated that the commission will announce its remaining proposals by the end of September.

Over the coming months, they said, the commission will seek public reaction to revised drafts of proposals for which it has already solicited comment.

The commission will submit its finalized proposals to the House of Delegates in May 2012, for consideration at the ABA annual meeting, Gorelick and Traynor said.

By Joan C. Rogers

The Ethics 20/20 Commission's latest proposals can be viewed on its website at .

The ABA/BNA Lawyers’ Manual on Professional Conduct is a joint publication of the American Bar Association Center for Professional Responsibility and BNA.

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