Ethics Counsels Divulge Risk Management Tips

By Helen W. Gunnarsson

“Incoming!” could be the battle cry for lawyers who serve as their firm's internal ethics counsel, according to speakers at a July 31 presentation of the Association of Professional Responsibility Lawyers in Chicago.

Many issues stem from risks and conflicts that come into the firm from potential clients, from lateral hires and from lawyers moving to another state while staying with the firm, they explained.


As for exercising care in choosing whom to represent, panelist Eliza M. Rodrigues said in her firm the client intake process includes not only a report prepared by a conflicts analyst but also an analysis of the risks presented by the client. Rodrigues is associate general counsel and ethics counsel at Sedgwick LLP in San Francisco.

Rodrigues said her firm's risk management committee, which she chairs, seeks out as much information as possible about potential clients, including credit checks and Internet searches. Because the committee includes partners from a number of different practice areas, she said, “there's always someone with the right expertise.”

“Do you have someone to consider what potential conflicts might be created and what potential business you might be precluded from going after if you take on a client?” asked moderator J. Charles Mokriski, professional responsibility counsel at Proskauer Rose LLP in New York.

“Our firm's risk management committee has to know what our firm's practice areas are, what directions we want to go” and what risks the firm prefers to avoid altogether, Rodrigues said.

For example, she said, Sedgwick not only has a substantial insurance coverage practice but also represents manufacturers in asbestos and mass tort litigation, “so our policy would be we're not going to do coverage opinions in those areas.”

Lateral Challenges

Mokriski asked Rodrigues how her firm, which has “a number of offices around the country,” handles bar admission issues and practice pending admission when a lawyer moves to an office in another jurisdiction.

Those are “big challenges,” Rodrigues said, adding that they also arise when the firm hires laterally.

She said “I meet with every lateral attorney coming in the door and every attorney planning on moving to another office and explain to them what they can or cannot do and how they can or cannot promote themselves within that office.”

Whenever a lawyer moves to or is hired for an office before having taken that state's bar exam, she said, the firm must decide what type of work the lawyer may perform during the year before the lawyer takes the bar examination.

“We keep waiting for a national movement to happen. It's frustrating when different states have different rules,” Rodrigues said.

Mokriski pointed to the ABA's adoption of the Model Rule on Practice Pending Admission in August 2012. The rule would permit lawyers licensed in good standing and engaged in the active practice of law for at least three of the last five years to practice for up to a year in a jurisdiction in which they have opened an office or otherwise established “a systematic and continuous presence” if they have filed an application for admission to the state's bar. See 28 Law. Man. Prof. Conduct 509.

But only a tiny handful of states have adopted any version of the rule to date, Mokriski said. Others take the position “Hell no, we don't want to let people in until they dot their i's, cross their t's, and pass the bar and character and fitness” examinations, he stated.

Panelist Brian S. Faughnan told the audience that his jurisdiction, Tennessee, has a particularly “messed up” rule that requires an application for comity admission to be both filed and approved before beginning “law business” or work as a lawyer in the state. See Tennessee Supreme Court Rule 7, §5.01.

“Lots of people didn't know that rule was out there,” Faughnan said. “People aren't going to think about coming to Tennessee until they have a job offer, and then you have to wait 12 to 18 months for comity admission.” A proposed amendment to the rule is pending before the state supreme court, he said.

Faughnan practices in the Memphis office of Lewis, Thomason, King, Krieg & Waldrop P.C.

Read the Rule, Learn the Context

Other duties of law firm ethics counsel, Mokriski said, include serving as a hotline for individual firm lawyers with questions about ethics that come up in their day-to-day practices, and conducting firmwide ethics education.

“I like to send the text of a rule in response” to a lawyer's question, he said. “Lawyers think they know it, but they get it wrong.”

He said he includes the policies underlying the rule “so they will take it seriously and not as a silly rule to be gotten around,” and circulates advisories to firm members about new rules, ethics opinions and case law.

“One reason I try to explain fully the policy reasons behind a rule is so I can get the lawyer to agree with me and not just stop coming to me when he doesn't get the answer he wants,” he said.

Mokriski said that although he may use e-mail for those purposes, he saves evaluations of an issue for a conversation over the phone or in person.

Representing Firm, Not Its Lawyers

Mokriski asked Faughnan how he makes it clear that he represents the firm, rather than any individual lawyer, when a lawyer comes to him with a serious problem of his own creation.

“Usually I wish the person had come to me four days ago when it was an easily solvable problem,” Faughnan quipped. Still, he said, “It's a blessing that they've come in at all to consult me.” He said that as firm ethics counsel, “I have no ability to require them to do anything.”

Faughnan said he makes it clear that he's helping the lawyer “because the firm makes me available to do it, and I'm serving as the firm's lawyer.”

He said he explains that he will record his consultation time on the firm's in-house counsel account and instructs the lawyer not to bill the client for any of it.

Then, he said, he approaches the problem from a practical standpoint of preventing losses and tries to help the lawyer review and decide which option is best. “I hold hands so that the process works and they see that it has value,” Faughnan said.


The panelists agreed that lawyers serving as their firms' ethics counsel should have the title to buttress their authority “and also so people will know who to go to,” Rodrigues added.

Mokriski said a year into his duties he suggested to his firm's management that he should be given the title “Professional Responsibility Counsel.” Proskauer not only agreed but “apparently got some credit from our insurance carrier for it,” he said.

Rodrigues said at her firm the formal title “helps people to come sooner rather than later” for advice and assistance.

Serving as firm ethics counsel, Mokriski said, requires the lawyer to know the rules, the underlying jurisprudence and case law developments, and also have “an eye for the unintuitive. Some rules seem a little strange.”

As an example, he said “I get a lot of pushback” regarding Rule of Professional Conduct 1.7(a)(2), which prohibits a lawyer from accepting a new representation if a significant risk exists that an ongoing representation will be materially limited by the lawyer's responsibilities to another client, a former client or a third person, or by a personal interest of the lawyer—unless the potential new client as well as the other affected clients consent.

Mokriski said he's found explaining the risks of noncompliance with that rule very helpful toward gaining his colleagues' cooperation.

He said he frequently talks about Estate of Re v. Kornstein Veisz & Wexler, 958 F. Supp. 907 (S.D.N.Y. 1997), in which the court cited a prior formulation of the rule, New York's DR 5-101(A), as a rationale for denying summary judgment to a law firm accused by a former client of malpractice and breach of fiduciary duty because of a prior conflicting business relationship that it didn't disclose to the client.

Although there may have been good reasons for the law firm to have acted as it did in the underlying matter, he said, the court's ruling “made it prudent for them to settle.”

“The hardest part in counseling my clients was to explain that the rule was just the beginning of the discussion,” panelist Gabriel Miller said. Miller has held general counsel positions for several companies and law firms and is currently CEO and general counsel of Advocates United, a national consumer law firm.


Miller identified threatening to report a violation of the professional conduct rules so as to exert pressure to settle as a prime issue concerning the “rule that everyone thinks they understand.”

What if, for example, a lawyer tells opposing counsel “I'm worried that if we go through the discovery process I may have a duty to report,” he said. “How many people would consider that a threat?”

“Damn near never does anyone have a duty to report,” Faughnan said, because the information is protected under most jurisdictions' versions of Rule 1.6 and the lawyer cannot disclose it without the client's consent.

“There's no punishment if you fail to encourage or ask your client to consent,” he said. “Except,” Mokriski cautioned, “in Illinois,” where the supreme court embraced a robust reporting obligation in In re Himmel, 533 N.E.2d 790 (Ill. 1988).

Mokriski added that some opinions have suggested that merely calling a lawyer's attention to a possible rule violation may be considered a threat, “particularly if you don't then go ahead and report the person.”


Mokriski asked Rodrigues “who is more difficult” in getting an engagement letter prepared and signed in a new representation—the clients or the firm lawyers?

Rodrigues said Sedgwick requires an engagement letter as part of its new business intake procedure unless an exemption is issued.

Some partners, she said, have demurred on the ground that clients either do not want to sign an engagement letter or object to signing a new one for each new matter. “There's pushback, because lawyers want to start doing work and billing,” she said.

To address those issues, Rodrigues said she finds herself increasingly negotiating engagement terms directly with a member of the client's office of general counsel and has found it “very helpful” for her firm lawyers to tell clients that someone from the firm's general counsel office will be contacting them.

“We can talk at the same level” and work out whether terms such as an indemnification clause are needed in the engagement agreement, Rodrigues said.

She said firm lawyers are more “difficult” with respect to engagement letters than firm clients, who she's found “are willing to communicate and negotiate with you.”

Sticks for Scofflaws

From the audience, David Atkins, of Pullman & Comley LLC in Bridgeport, Conn., asked “Do you have a stick for scofflaws who don't send out an engagement letter?”

Yes, Rodrigues responded. “We allow time entry but not bills to be sent out” until an engagement letter is on file.

Mokriski said at least one jurisdiction—California, in Section 6148 of its Business and Professions Code—requires lawyers to have written fee agreements under most circumstances, providing additional support for firm ethics counsel coaxing compliance from balky colleagues.

Faughnan emphasized that law firm ethics counsel “must recognize that your function is to be a problem solver, not a problem creator.”

He recommended “Don't just tell lawyers they can't do what they want to do.” Find a way for them to do it, he urged.

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

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