By Steven C. Krane [Originally published in NYPRR August 1999]
[The following discussion of the new amendments to the Code of Professional Responsibility was prepared by Mr. Krane for his law firm, Proskauer Rose LLP.]
Throughout the Code, changes were made to take into account the fact that lawyers are now permitted by law to practice in the form of limited liability companies and partnerships. Among the provisions affected are the definition of “law firm” (Definition 2) and the rules governing firm names [DR 2-102(B)] and prospective limitations on liability [EC 6-6].
The definition of “tribunal” (Definition 6) was changed to include arbitrators. The purpose of this amendment is to make clear to lawyers that the ethical rules that govern lawyer conduct before judicial tribunals apply equally when lawyers appear before arbitral tribunals.
Canon 1 — Responsibility of Supervisory and Subordinate Lawyers
DR 1-104(E), 1-104(F): A new DR 1-104(E) states: “A lawyer is bound by these Disciplinary Rules notwithstanding that the lawyer acted at the direction of another person.” This change, which complements the 1996 amendments to the Disciplinary Rules regarding law firm discipline, makes clear to lawyers that they cannot escape disciplinary liability by arguing that they were “only following orders.” However, a new DR 1-104(F) counterbalances that rule by providing a safe harbor for subordinate lawyers who act in accordance with a supervisory lawyer’s reasonable resolution of an arguable question of professional duty.
DR 1-105: Adds a new jurisdiction and choice-of-law rule, patterned on ABA Model Rule 8.5. First, the new rule provides that lawyers admitted in New York are subject to discipline in New York regardless of where their wrongful conduct actually takes place. The rule also provides that lawyers in litigated matters will generally be required to comply with the standards of conduct of the forum in which the litigation is pending. This rule is intended to cover problems that arise when the rules of the forum in which the lawyer is admitted generally or pro hac vice, conflict with New York disciplinary rules. In non-litigated matters, a lawyer admitted in New York will be required to comply only with New York disciplinary rules (regardless of where the work is being performed); the conduct of a lawyer admitted in more than one jurisdiction would be governed by the rules of the jurisdiction in which the lawyer principally practices. Lastly, the rule provides that if “particular conduct clearly has its predominant effect in another jurisdiction in which the lawyer is licensed to practice, the rules of that jurisdiction shall be applied to that conduct.”
Canon 2 — Publicity & Advertising; Solicitation; Specialization
DR 2-101(A): The rules governing the content of lawyer advertising have been streamlined. In keeping with recent Supreme Court precedents regarding content-based restrictions on commercial speech, revised DR 2-101(A) prohibits only communications containing statements or claims that are “false, deceptive or misleading.” The long-standing rule [existing DR 2-101(B)] prohibiting such things as “self-laudation,” “puffery” and “claims regarding the quality of the lawyer’s legal services” has been repealed.
DR 2-103(A): The rules governing solicitation and the methods by which lawyers communicate with prospective clients, have also been changed. While the per se ban on in-person solicitation has been retained, written solicitations (such as targeted direct mail advertising) are permitted unless certain manifestly improper tactics are used. Among other things, no written communication may be made to a prospective client if “[t]he lawyer knows or reasonably should know that the age or the physical, emotional or mental state of the recipient make it unlikely that the recipient will be able to exercise reasonable judgment in retaining an attorney” [DR 2-103(A)(4).] This rule could be applied, for example, to classic “ambulance chasing” as well as to lawyers who descend upon victims of mass disasters.
DR 2-103(D): The rules regarding lawyer referral services have been amended [DR 2-103(D)(3)] to permit private legal referral services to operate under statutes to be enacted or regulations to be promulgated by the courts. Previously, only bar association referral services were permitted. It is anticipated that this amendment will foster expansion of the manner in which legal services are made available to people of moderate means, among others, and will subject private legal referral services to governmental supervision.
The rules governing pre-paid legal service plans [DR 2-103(D)(4)] have been amended to eliminate the prohibition against closed-panel plans, thus enabling lawyers to develop new means of offering their services to individuals in need of those services, while providing procedural and substantive protection for a plan member who believes that the attorney furnished, selected or approved by the organization should not ethically undertake the representation.
DR 2-105: To conform with Supreme Court precedents, the rules governing advertising of practice “specialization” have been changed. The prior rule permitted only those lawyers who had been certified as specialists by appropriate governmental authorities to advertise that they “specialized” in a particular field of law. Because no such governmental authority existed in New York, the prior rule was a nullity. The new rule [DR 2-105(C)] allows advertising of specialization by lawyers certified by private organizations that have been approved by the ABA, provided a disclaimer states that the organization is not affiliated with any governmental authority and that certification is not required to enable a lawyer to practice in New York.
Canon 3 — Compensation of Non-Lawyer Employees
DR 3-102(A)(3): A change in this DR, and a corresponding change to EC 3-8, allows non-lawyer employees of a lawyer or law firm to participate in a profit-sharing plan with respect to their salaries and bonuses and otherwise to be of the lawyer or law firm. Under the prior rule, non-lawyer employees could participate in profit-sharing only as part of a retirement plan.
Canon 5 — Conflicts of Interests
DR 5-101(A), 5-105(C): Throughout the rules governing conflicts of interest, the amendments modify and harmonize the standard for determining whether a lawyer may continue or undertake a representation with respect to which a conflict exists. Amendments to DR 5-101(A) and DR 5-105(C) state that a lawyer may not accept a client’s waiver and proceed with a representation in the face of a conflict “unless a disinterested lawyer would believe that the representation of the client will not be adversely affected thereby” This objective standard replaces the old vague and unworkable “obviousness” test.
The amendments modify the lawyer-as-witness rule by requiring disqualification only if the issue on which the lawyer will be a witness is a significant one in the litigation, and by limiting the prohibition on acting as an advocate before a tribunal to circumstances in which the lawyer-witness will be arguing issues of fact, as contrasted with procedural or substantive legal issues.
DR 5-104(A): Reflects new procedural safeguards for clients entering into business transactions with lawyers: (1) the transaction and terms must be fair and reasonable and fully disclosed and transmitted in writing to the client in a reasonably understandable manner; (2) the lawyer must advise the client to seek the advice of independent counsel in the transaction; and (3) the client must consent in writing, after full disclosure, to the terms of the transaction and to the lawyer’s inherent conflict of interest.
DR 5-104(B) has been modified to prohibit lawyers from negotiating media rights agreements with clients or third parties with respect to ongoing representations until the matter has been concluded. Courts and ethics committees have criticized the “practice of attorneys arranging to benefit from the publication of their clients’ stories.” Under the modified rule, for example, a lawyer representing a client in a highly publicized case is not permitted to obtain the client’s publication rights or agree to sell the lawyer’s own publication rights until the case has concluded.
DR 5-108(B), (C): These new DRs address disqualification issues that arise when lawyers change law firms. Under DR 5-108(B), a lawyer who leaves a firm is disqualified from knowingly participating in matters adverse to parties who were clients of the former firm only if the lawyer personally acquired material confidential information about the adverse party while at the former firm. Correspondingly, new DR 5-108(C) lifts the burden of imputed disqualification for former client representations when the “tainted” lawyer is no longer with the firm; however, a law firm will still be disqualified if the firm (e.g., in its central files), or any other lawyer still in the firm, possesses client confidences or secrets that are material to the new matter, unless the affected client consents after full disclosure.
DR 5-109(B), (C): Patterned on ABA Model Rule 1.13, these new DRs provide guidance to lawyers who learn of wrongdoing within an organizational client. If the misconduct is likely to result in substantial injury to the organization, the lawyer is required to take whatever action may be reasonably necessary in the best interest of the organization, such as suggesting that a separate legal opinion be sought for presentation to an appropriate authority in the organization, and “[r]eferring the matter to higher authority in the organization, including, if warranted by the seriousness of the matter, referral to the highest authority that can act in behalf of the organization as determined by applicable law.” If these efforts fail, and the organization insists upon a course of action (or inaction) that is clearly a violation of law and is likely to result in a substantial injury to the organization, the lawyer is permitted to resign from the representation. Disclosure outside the organization is not permitted.
DR 5-111: Prohibits lawyers from requiring or demanding sexual relations with a client or third party incident to or as a condition of any professional representation or employing coercion, intimidation, or undue influence in entering into sexual relations with a client. The rule does not apply to sexual relations between lawyers and their spouses or to ongoing consensual sexual relationships that predate the initiation of the lawyer-client relationship. Maintained in effect (but relocated into DR 5-111) is the pre-existing rule prohibiting lawyers in domestic relations matters from commencing sexual relations with clients.
Guidance to lawyers on common and recurring conflict of interest issues is provided in amendments to EC 5-15 (representation of business competitors; representation of parties having antagonistic positions on a legal question that has arisen in different cases); EC 5-16 (circumstances in which consent of the affected clients may not be sufficient or available to cure a conflict of interest); EC 5-17 (representations adverse to affiliates of organizational clients); and EC 5-18 (guidance to lawyers serving or asked to serve as directors of organizational clients).
Canon 7 — Communications with Adverse Parties; Trial Publicity
DR 7-104(A)(1): Prohibits lawyers from communicating, or causing another to communicate, with a represented person on the subject of the representation without the consent of that person’s lawyer. This rule had been interpreted as prohibiting lawyers from counseling clients in connection with direct communications with a represented party unless the lawyer for the other party consents, on the theory that the lawyer would be “caus[ing] another to communicate” in violation of DR 7-104(A)(1). In light of this, a new DR 7-104(B) has been adopted to permit lawyers to counsel clients in connection with direct discussions with other represented persons, provided the represented person is legally competent and the represented person’s counsel is given reasonable advance notice that the client-to-client communications will be taking place.
DR 7-107(A) (Trial Publicity): This Rule prohibits lawyers from making any extrajudicial statements “that a reasonable person would expect to be disseminated by means of public communication if the lawyer knows or reasonably should know that it will have a substantial likelihood of materially prejudicing an adjudicative proceeding.” Incorporating the substance of a recent amendment to Model Rule 3.6, adopted by the ABA in light of Supreme Court precedent, the rule has now been amended to permit a lawyer to make “a statement that a reasonable lawyer would believe is required to protect a client from the substantial prejudicial effect of recent publicity not initiated by the lawyer or the lawyer’s client.” The statement must be “limited to such information as is necessary to mitigate the recent adverse publicity.”
The amendments are the product of the first comprehensive examination of the Code of Professional Responsibility in over a decade. While the amendments do not purport to cure every problem or fill every gap in the Code, their adoption presents the Bar with a set of rules that clearly establish mandatory and aspirational standards for attorney conduct, and provide ethical guidance for all lawyers in all types of practice throughout the State.
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