Category Archives: ABA Model Rules

ABA Formal Ethics Opinion 492 addresses lawyer’s obligations to prospective clients after obtaining “significantly harmful” information

Hello everyone and welcome to this Ethics Alert, which will discuss the recent American Bar Association (ABA) Formal Ethics Opinion 492, which addresses the obligations of lawyers to prospective clients, including confidentiality, and conflicts of interest, including potential disqualifying conflicts after the lawyer obtains “significantly harmful” information.  The link to ABA Formal Opinion 492 is here:  https://www.americanbar.org/content/dam/aba/administrative/professional_responsibility/aba-formal-opinion-492.pdf

The ABA issued Formal Ethics Opinion 492 on June 9, 2020.  The opinion addresses a lawyer’s obligations to prospective client and discusses who is a “prospective client”, the obligation to protect confidential information, disqualifying conflicts because of the acquisition of “significantly harmful” information, and limiting information during an initial consultation and avoiding the imputation of conflicts to the firm.

“A prospective client is a person who consults a lawyer about the possibility of forming a client-lawyer relationship. Model Rule 1.18 governs whether the consultation limits the lawyer or the lawyer’s firm from accepting a new client whose interests are materially adverse to the prospective client in a matter that is the same or substantially related to the subject of the consultation, even when no client-lawyer relationship results from the consultation. Under Model Rule 1.18 a lawyer is prohibited from accepting a new matter if the lawyer received information from the prospective client that could be significantly harmful to the prior prospective client in the new matter.

“Model Rule 1.18(b) imposes a duty of confidentiality with respect to information learned during a consultation, even when no client-lawyer relationship ensues. It provides: Even when no client-lawyer relationship ensues, a lawyer who has learned information from a prospective client shall not use or reveal that information, except as Rule 1.9 would permit with respect to information of a former client.”

“Whether information learned by the lawyer could be significantly harmful is a fact-based inquiry depending on a variety of circumstances including the length of the consultation and the nature of the topics discussed. The inquiry does not require the prior prospective client to reveal confidential information. Further, even if the lawyer learned information that could be significantly harmful to the prior prospective client in the new matter, the lawyer’s firm can accept the new matter if the lawyer is screened from the new matter or the prospective client provides informed consent, as set forth in Model Rule 1.18(d)(1) and (2).”

The opinion concludes that a lawyer who receives information from a prospective client that could be “significantly harmful” and then represents a client in the same or a substantially related matter where that client’s interests are materially adverse to those of the prospective client would violate Model Rule 1.18(c) unless the conflict is waived by the prospective client.

Bottom line:  This opinion provides detailed information to assist lawyers in analyzing ethics issues that may arise related to prospective clients when the lawyer obtains “significantly harmful” information and provides guidance on how to identify and address those issues and comply with the lawyer’s ethical obligations.

Stay safe and be careful out there.

Disclaimer:  this e-mail is not an advertisement, does not contain any legal advice, and does not create an attorney/client relationship and the comments herein should not be relied upon by anyone who reads it.

Joseph A. Corsmeier, Esquire

Law Office of Joseph A. Corsmeier, P.A.

2999 Alt. 19, Suite A

Palm Harbor, Florida

Office (727) 799-1688

Fax     (727) 799-1670

jcorsmeier@jac-law.com

www.jac-law.com

 

Joseph Corsmeier

about.me/corsmeierethicsblogs

 

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ABA Formal Opinion 491 discusses a lawyer’s obligation to avoid counseling or assisting a client in a crime or fraud

Hello everyone and welcome to this Ethics Alert, which will discuss recent ABA  Formal Opinion 491 (issued 4/29/20), which discusses and provides guidance regarding a lawyer’s obligation to avoid counseling or assisting in crime or fraud in non-litigation settings.  The opinion is here:  https://www.americanbar.org/content/dam/aba/administrative/professional_responsibility/aba-formal-opinion-491.pdf

The opinion states:  “ABA Model Rule 1.2(d) prohibits a lawyer from advising or assisting a client in a transaction or other non-litigation matter the lawyer ‘knows’ is criminal or fraudulent. That knowledge may be inferred from the circumstances, including a lawyer’s willful blindness or conscious disregard of available facts.”

“Even if information learned in the course of a preliminary interview or during a representation is insufficient to establish ‘knowledge’ under Rule 1.2(d), other rules may require further inquiry to help the client avoid crime or fraud, to advance the client’s legitimate interests, and to avoid professional misconduct. These include the duties of competence, diligence, communication, and honesty under Rules 1.1, 1.3, 1.4, 1.13, 1.16, and 8.4.”

“A lawyer’s reasonable evaluation after that inquiry based on information reasonably available at the time does not violate the rules. A lawyer’s reasonable evaluation after inquiry and based on information reasonably available at the time does not violate the rules. This opinion does not address the application of these rules in the representation of a client or prospective client who requests legal services in connection with litigation.”

The opinion concludes that: “where there is a high probability that a client seeks to use the lawyer’s services for criminal or fraudulent activity, the lawyer must inquire further to avoid advising or assisting such activity” and “(i)f the client or prospective client refuses to provide information necessary to assess the legality of the proposed transaction, the lawyer must ordinarily decline the representation or withdraw under Rule 1.16.”

Bottom line:  This ABA opinion states that, in order to comply with the lawyer’s obligations under ABA Rule 1.2(d) (which is substantial similar to Florida Bar Rule 4-1.2(d), if there is “a high probability that a client seeks to use the lawyer’s services for criminal or fraudulent activity”, the lawyer cannot engage in “willful blindness or conscious disregard of available facts” and the lawyer “must inquire further to avoid advising or assisting such activity.

Stay safe and healthy and be careful out there.

Disclaimer:  this e-mail is not an advertisement, does not contain any legal advice, and does not create an attorney/client relationship and the comments herein should not be relied upon by anyone who reads it.

Joseph A. Corsmeier, Esquire

Law Office of Joseph A. Corsmeier, P.A.

2999 Alt. 19, Suite A

Palm Harbor, Florida

Office (727) 799-1688

Fax     (727) 799-1670

jcorsmeier@jac-law.com

www.jac-law.com

 

Joseph Corsmeier

about.me/corsmeierethicsblogs

 

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ABA issues Formal Opinion 487 providing guidance regarding fee divisions in contingency cases when a lawyer is replaced

Hello everyone and welcome to this Ethics Alert, which will discuss the recent American Bar Association Formal Opinion 487, which provides guidance regarding the requirements of fee divisions in contingency fee matters when the initial lawyer is replaced by a successor lawyer.  ABA Formal Opinion 487 is here:  https://www.americanbar.org/content/dam/aba/images/news/2019/06/FormalOpinion487.pdf

ABA Formal Opinion 487 clarifies that a lawyer, who is a successor counsel in a contingency-fee matter, must notify the client, in writing, that a portion of any fees recovered may be paid to the original counsel. The opinion addresses a common misunderstanding about which model rules apply to successor relationships in contingency fee agreements, and the duties of successor counsel.

The initial lawyer in a contingency fee matter will often assert a lien on the proceeds when the lawyer is terminated or is required to withdraw; however, if the client employs successor counsel, the client may not understand there is a continuing obligation to pay the original lawyer for the value that lawyer contributed or was entitled to under the original contract.

The opinion states that lawyers may erroneously believe that ABA Model Rule 1.5(e) (or its state equivalent) (division of a fee between lawyers who are not in the same firm) governs this situation; however, Rule 1.5(e) only applies when there is division of fees between lawyers from different firms who are simultaneously representing a client or maintaining responsibility for the matter, not when there is successive representation. Rule 1.5(e) specifically requires that lawyers who are simultaneously representing a client and dividing a fee in a matter either divide the fee in proportion to the services delivered or assume joint responsibility for the representation.

When a lawyer no longer represents the client and there is a successor lawyer, there is no joint responsibility since the initial lawyer has no further responsibility after the withdrawal or termination and, according to the opinion, Model Rule 1.5(b) and (c) would apply to the successor lawyer in the fee relationship with the client.

Comment 2 to 1.5 states that, “an understanding as to fees …must be established”; however, the rule provides no specific time frame in which that understanding must occur. The opinion notes that under 1.5(a), client consent must be obtained before the fee is divided, which can occur up to the time of the conclusion of the matter and prior to disbursement of any money.

The opinion states that the duty to disclose the original lawyer’s potential claim and entitlement to some portion of the recovery does not constitute an “unreasonable burden” on successor counsel since, although a client may discharge a lawyer at any time for any reason, the client may be unaware of obligations to pay both the successor lawyer and the initial lawyer.  The opinion states that the successor counsel must address and clarify any confusion and inform the client, in writing, that the original attorney may have a claim against the contingency fee.

In many jurisdictions (including Florida), the initial lawyer may or would be entitled to, at a minimum,  the quantum meruit value of the lawyer’s services and the exact recovery and division of fees may not be known until the end of the case; however, the successor lawyer still has a duty to inform the client about a potential fee split.

The opinion also observes that, in many instances, the fees paid to both attorneys will not affect the client’s recovery, since a client cannot be required to pay more than one contingency fee when switching attorneys; however, if the client’s original counsel was terminated for cause, the initial lawyer may not have any claim to fees on the recovery.

Finally, according to the opinion, if the successor lawyer is required to negotiate fees with the initial lawyer on the client’s behalf, the successor lawyer must advise the client and obtain a waiver to avoid issues with Rule 1.7 conflict of interest regarding the disbursement of the funds.  Also, if a dispute arises regarding the disbursement of the funds, the successor lawyer has the obligation under Rule 1.15(e) to retain the funds in the trust account pending resolution of the dispute (and, in many jurisdictions, including Florida, the lawyer may be required to place the disputed funds in the court registry if the dispute cannot be resolved).

Bottom line:  This ABA opinion provides clear guidance on the Model Bar rule requirements when there is division of fees after the initial lawyer withdraws or is terminated and the client hires a successor counsel in contingency matters; however, lawyers must be aware that ABA opinions provide guidance regarding the ABA Model Rules only and each lawyer must research his or her own jurisdiction’s Bar Rules before taking any action.

Be careful out there.

Disclaimer:  this e-mail is not an advertisement, does not contain any legal advice, and does not create an attorney/client relationship and the comments herein should not be relied upon by anyone who reads it.

Joseph A. Corsmeier, Esquire

Law Office of Joseph A. Corsmeier, P.A.

29605 U.S. Highway 19 N. Suite 150

Clearwater, Florida 33761

Office (727) 799-1688

Fax     (727) 799-1670

jcorsmeier@jac-law.com

www.jac-law.com

Joseph Corsmeier

about.me/corsmeierethicsblogs

 

 

 

 

 

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ABA Formal Opinion 484 provides guidance when a client may need third party legal fee financing

Hello everyone and welcome to this Ethics Alert which will discuss ABA Formal Opinion 484, which addresses third party financing of the lawyer’s fees and concludes that a lawyer may refer a client to a fee financing companies even if the lawyer owns a financial interest in the lender or broker if the lawyer complies with ethical obligations, including fairness and full disclosure.  ABA Formal Opinion 484 is here: https://www.americanbar.org/content/dam/aba/administrative/professional_responsibility/aba_formal_opinion_484.pdf

American Bar Association Formal Opinion 484, which was released on November 27, 2018, concludes that lawyers may refer clients to fee financing companies even if the lawyer owns a financial interest in the lender or broker with certain caveats and requirements.

The opinion outlines the various ways that fee financing services are being used, including a client’s direct application for a loan from a financing company to cover the lawyer’s fees, which the client then pays back to the lender with interest rates between 5 and 15 percent. In another situation, the lawyer pays an initial fee to a finance company in order to submit loan applications from clients and, if the client receives the loan, the lawyer receives the funds minus a 10 percent financing fee.  In a similar arrangement, the lawyer assists a client to set up what is amounts to a retainer or voucher for the fees through a lender minus a service charge.

In other situations, the funds loaned to the client may go directly to the client and the lawyer is notified, sometimes through an online portal a service, for which the lawyer pays. There are also “same as cash” programs, where the lawyer helps the client apply for the loan and, if a loan is made, the financial relationship remains between the lender and the client.  Finally, a lawyer may work with a financial brokerage company that helps find legal fee financing options.

In the above arrangements, the attorney making the referral does not have an ownership or financial interest in the lender or broker and must explain the arrangement so the client can make an informed decision.  The opinion states that these arrangements are permissible only if other Model Rules of Professional Conduct are met, including: Model Rule 1.2(c) (Scope of Representation and Allocation of Authority Between Client and Lawyer); Model Rule 1.4(b) (Communications); Model Rule 1.5(a) and (b) (Fees); Model Rule 1.6 (Confidentiality of Information); Model Rule 1.7(a)(2) (Conflict of Interest: Current Clients); and Model Rule 1.9(a) (Duties to Former Clients).

In a footnote, the opinion refers to Florida Bar Ethics Opinion 16-2 and states that this opinion “reason(ed) that legal fee financing is not impermissible fee sharing because it is a form of credit plan and Florida ethics rules permit lawyers to accept payments through credit plans, which include credit cards.”  That opinion specifically addressed the fees of a criminal defense lawyer.  Florida Bar Ethics Op. 16-2 is here:  https://www.floridabar.org/etopinions/etopinion-16-2/

The opinion only addresses situations where a lawyer is being paid from funds that a client borrowed and does not address a nonrecourse cash advance to a litigant in exchange for a percentage of the judgement or settlement.  According to the opinion, if a lawyer recommends a fee financing or brokerage company in which the lawyer has an ownership or financial stake, the lawyer must disclose the relationship, ensure fair and reasonable terms, advise the client to seek independent legal advice on the transaction, and obtain the client’s  written informed consent.

The ABA formal opinion further states that if a lawyer charges a higher fee to account for any transactional costs or subscription fees the lawyer must pay the lender, that fee must be reasonable and disclosed to the client. Additionally, the opinion cautioned that lawyers should not “recommend the finance company or broker to the client even though fee financing is not in the client’s interests because the client’s arrangement of financing best assures payment or timely payment of the lawyer’s fee.”

“Finally, although not among the fee financing scenarios of which the Committee has been made aware, it is conceivable that a lawyer might acquire an ownership or other financial interest in a finance company or brokerage, or wish to form such a business. If a lawyer did so and referred a client to that entity, the lawyer would be entering into a business transaction with the client or would be acquiring a security or pecuniary interest adverse to the client, or both. In those situations, the lawyer would need to comply with Model Rule 1.8(a) (which is substantially the same as Florida Bar Rule 4-1.8(a).”

Bottom line:  This ABA opinion sets forth the lawyer’s obligations related to third party financing of the lawyer’s fees and concludes that a lawyer may refer a client to a fee financing company even if the lawyer owns a financial interest in the lender or broker if the lawyer complies with all ethical obligations.

Disclaimer:  this e-mail is not an advertisement, does not contain any legal advice, and does not create an attorney/client relationship and the comments herein should not be relied upon by anyone who reads it.

Joseph A. Corsmeier, Esquire

Law Office of Joseph A. Corsmeier, P.A.

29605 U.S. Highway 19 N. Suite 150

Clearwater, Florida 33761

Office (727) 799-1688

Fax     (727) 799-1670

jcorsmeier@jac-law.com

www.jac-law.com

Joseph Corsmeier

about.me/corsmeierethicsblogs

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Filed under ABA Formal Opinion 484 third party financing of attorneys fees, ABA formal opinions, ABA Model Rules, Attorney Ethics, Florida Bar Ethics Opinion 16-2- legal fee and other third party financing, Florida Lawyer Ethics and Professionalism, joe corsmeier, Joseph Corsmeier, Lawyer ethics, Lawyer Ethics and Professionalism

ABA issues Formal Ethics Opinion 483 providing ethics guidance to lawyers before and after a cyber breach or hack

Hello everyone and welcome to this Ethics Alert which will discuss recent (October 17, 2018) American Bar Association Formal Opinion 483 which provides guidance to lawyers before and when there has been a cyber breach or hack.  The opinion is here:  https://www.americanbar.org/content/dam/aba/administrative/professional_responsibility/aba_formal_op_483.pdf

Just like to rest of our digital world, lawyers are susceptible to cyber hacking/breaches when using digital devices and programs or otherwise using the internet.  The ABA Opinion confirms the duty that lawyers have to attempt to prevent such hacks and breaches and also the lawyer’s obligation to notify clients of a data hack/breach.

The opinion provides the reasonable steps that lawyers can take to meet their obligations under the ABA model rules and emphasizes the importance for lawyers to plan for an electronic breach or cyberattack and discusses how model rules may apply when an incident is either detected or suspected. According to the opinion, the following Model Rules of Professional Conduct would potentially apply:

Rule 1.1 (competence), requiring lawyers to develop sufficient competence in technology to meet their obligations under the rules after a breach; Rule 1.15 (safekeeping property), requiring lawyers to protect trust accounts, documents and property the lawyer is holding for clients or third parties; Rule 1.4 (communication), requiring lawyers to take reasonable steps to communicate with clients after an incident; Rule 1.6 (confidentiality), regarding issues of confidentiality in the client-lawyer relationship; Rule 5.1 (lawyer oversight), which sets forth the responsibilities of a managing partner or supervisory lawyer and; Rule 5.3 (nonlawyer oversight), which sets forth the responsibilities of supervisors who are nonlawyers.

The opinion states that “(w)hen a breach of protected client information is either suspected or detected, Rule 1.1 requires that the lawyer act reasonably and promptly to stop the breach and mitigate damage resulting from the breach…(h)ow a lawyer does so in any particular circumstance is beyond the scope of this opinion.”

“As a matter of preparation and best practices, however, lawyers should consider proactively developing an incident response plan with specific plans and procedures for responding to a data breach. The decision whether to adopt a plan, the content of any plan and actions taken to train and prepare for implementation of the plan should be made before a lawyer is swept up in an actual breach.”

Bottom line:  This ABA opinion addresses and discusses a lawyer’s obligations in attempting to prevent a cyber hack or breach and also provides guidance regarding the lawyer’s obligations if a breach/hack occurs.  All lawyers should be addressing serious issue this now and should consult their state/jurisdiction’s ethics rules to insure compliance.

Be careful out there.

Disclaimer:  this Ethics Alert is not an advertisement, does not contain any legal advice, and does not create an attorney/client relationship and the comments herein should not be relied upon by anyone who reads it.

Joseph A. Corsmeier, Esquire

Law Office of Joseph A. Corsmeier, P.A.

29605 U.S. Highway 19, N., Suite 150

Clearwater, Florida 33761

Office (727) 799-1688

Fax     (727) 799-1670

jcorsmeier@jac-law.com

www.jac-law.com

 

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Filed under ABA Formal Ethics Opinion 483 guidance to lawyers before and after a cyber breach or hack, ABA formal opinions, ABA Model Rules, Attorney Ethics, joe corsmeier, Joseph Corsmeier, Lawyer competence technology, Lawyer ethics, Lawyer Ethics and Professionalism, Lawyer ethics opinions, Lawyer technology competence, Lawyer technology competence after hack or breach

California Supreme Court adopts new Bar ethics rules which (mostly) follow the ABA Model Rules of Professional Conduct

Hello everyone and welcome to this Ethics Alert, which will discuss the California Supreme Court’s recent Order implementing new Bar ethics rules which are substantially patterned after the ABA Model Rules of Professional Conduct.  The California Supreme Court Order approving 69 new rules (42 of which were modified by the Court) along with the Court’s comments is here: http://www.calbar.ca.gov/Portals/0/documents/Supreme%20Court%20Order%202018-05-09.pdf.

On May 10, 2018, the California Supreme Court issued an order adopting a new set of California Rules of Professional Conduct patterned after the American Bar Association’s Model Rules of Professional Conduct, which were first published by the ABA in 1983.  California will now join the other 49 states which have adopted ethics rules patterned after the ABA Model Rules.  California lawyers are also governed by the California Business Code. The new California Bar rules will take effect on November 1, 2018.

The new California Bar rules are not identical to the ABA Model Rules; however, and the new rules do not adopt Model Rule 1.14, which sets forth the obligations of lawyers who are representing clients with diminished capacity.  The new Bar rules implement streamlined advertising rules which substantially track the rules proposed by the Association of Professional Responsibility Lawyers (APRL).

A table comparing the new California Bar rules with the ABA model rules which was prepared by the California Bar is here: http://www.calbar.ca.gov/Portals/0/documents/ethics/2D_RRC/2017_CrossReferenceChart%20RulesByNumbering-v.2-031717.pdf

According to media reports, there is also back story related to the substantial efforts to align the California Bar rules with the ABA model rules (as well as the rest of the country).  An article published by the ABA/BNA Lawyers’ Manual on Professional Conduct in April 2017 outlines the history of “California’s multiyear initiative to update its standards governing lawyer conduct” to align with the ABA Model Rules templates.  That article is here:  https://www.bna.com/fate-california-rule-n57982086261/

Bottom line:  After a long effort by California lawyers, the state has now joined the 49 other states (including Florida in 1990), which have adopted versions of the ABA Model Rules of Professional Responsibility.

Be careful out there.

Disclaimer:  this e-mail is not an advertisement, does not contain any legal advice, and does not create an attorney/client relationship and the comments herein should not be relied upon by anyone who reads it.

Joseph A. Corsmeier, Esquire

Law Office of Joseph A. Corsmeier, P.A.

29605 U.S. Highway 19 N. Suite 150

Clearwater, Florida 33761

Office (727) 799-1688

Fax     (727) 799-1670

jcorsmeier@jac-law.com

www.jac-law.com

Joseph Corsmeier

about.me/corsmeierethicsblogs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Filed under ABA Model Rules, Attorney Ethics, California adopts Model ABA Bar Rules, California Bar Rules 2018, joe corsmeier, Joseph Corsmeier, Lawyer ethics, Lawyer Ethics and Professionalism, Lawyer Professionalism