By Roy Simon [Originally published in NYPRR August 1999]
Almost lost in the hoopla over the new amendments to the disciplinary rules are the new amendments to the Ethical Considerations (ECs), effective June 30, 1999. The ECs are not formally adopted by the courts, but they are adopted by the New York State Bar Association, and courts look to the ECs for interpretive guidance. The major changes to the ECs are in Canons 2 (advertising), 5 (conflicts of interest), and 7 (advocacy).
Changes to ECs in Canon 2
EC 2-10: Now that DR 2-101 has been amended to delete the antiquated prohibition against “puffery,” EC 2-10 has also been amended to make clear that “puffery and claims that cannot be measured or verified” are nevertheless still prohibited if they are “false, deceptive or misleading.” A more interesting change to EC 2-10 is the increasingly interstate nature of law practice and the regional and national reach of the media: “A lawyer who advertises in a state other than New York should comply with the advertising rules or regulations applicable to lawyers in that state.”
(The unanswered question is whether web pages constitute “advertising.” If so, then every web page is supposed to comply with the advertising rules of every jurisdiction. That cannot be the right interpretation because it would make web pages nearly impracticable. A better view is that web pages fall outside the definition of “advertising.”)
(Note: In addition, to these changes, the State Bar recently added ECs 2-37 and 2-38, which discuss so-called “pay-to-play” practices which reportedly compel lawyers to contribute to political campaigns to become eligible for lucrative government legal contracts.)
EC 2-14: The blank space at EC 2-14 (which was repealed years ago) is filled with new language aimed at tasteless advertising. This language says that communications like the following, whether public or to a prospective client, “are likely to be false, deceptive or misleading”:
(1) a communication that promises the outcome of any legal matter; (2) a communication that states or implies that the lawyer has the ability to influence improperly a court, court officer, governmental agency or government official; (3) a letter or other written communication made to appear as a legal document; (4) the publication of names, addresses and telephone numbers under DR 2-101(K) [requiring all ads to include the advertising attorney’s name, office address and phone number] in a manner that is too small or too fast for an average viewer to receive the information in a meaningful fashion; (5) the use of dollar signs, the terms “most cash” or “maximum dollars,” or like terms that suggest the outcome of the legal matter; (6) the use of an actor to portray the lawyer or another representative of the lawyer’s firm; or (7) any other use of an actor or use of a dramatization without meaningful disclosure thereof.
Changes to ECs in Canon 5
EC 5-4: Reflecting the wholesale amendment of DR 5-104, new language in EC 5-4 reminds lawyers that in lawyer-client transactions, “a review by independent counsel on behalf of the client is often advisable,” and “a lawyer may not exploit information relating to the representation to the client’s disadvantage.” For example, if a client is investing in a parcel of real estate, a lawyer may not acquire nearby property without the client’s consent if the lawyer’s acquisition “would adversely affect the client’s plan for investment.” On the other hand, a lawyer may “enter into standard commercial transactions with a client for products and services that the client generally markets to others” because “the lawyer has no advantage in dealing with the client and restrictions are unnecessary and impracticable.”
EC 5-15: To clarify the reach of amended DR 5-105, several new sentences have been imported from the Comment to ABA Model Rule 1.7. First: “Simultaneous representation in unrelated matters of clients whose interests are only generally diverse, such as competing economic enterprises, does not by itself require consent of the respective clients.” Second: “[A] lawyer may generally represent parties having antagonistic positions on a legal question that has arisen in different cases, unless representation of either client would be conflicting legal positions “in cases pending in different trial courts.”
EC 5-16: Again drawing on the Comment to ABA Model Rule 1.7, important new language has been added regarding what a lawyer must do to obtain valid client consent to conflicts of interest. The new language provides that before a lawyer may represent multiple clients, the lawyer should explain fully to each client the implications of the common representation and “otherwise provide to each client information reasonably sufficient, giving due regard to the sophistication of the client, to permit the client to appreciate the significance of the potential conflict. Another new clause encourages lawyers to obtain waivers in writing. To clarify when a lawyer may neither seek nor accept a client’s consent to a conflict, the Krane Committee has added the following new language at the end of EC 5-16:
If a disinterested lawyer would conclude that any of the affected clients should not agree to the representation under the circumstances, the lawyer involved should not ask for such agreement or provide representation on the basis of the client’s consent. In addition, there may be circumstances in which it is impossible to make the disclosure necessary to obtain consent, such as when the lawyer represents different clients in related matters and one of the clients refuses to consent to the disclosure necessary to permit the other client to make an informed decision. In all cases in which the fact, validity or propriety of client consent is called into question, the lawyer must bear the burden of establishing that consent was properly obtained and relied upon by the lawyer.
EC 5-18: Unfurling a red flag for lawyers who want to be directors of their corporate clients, the following language from the Comment to ABA Model Rule 1.7 has been added to EC 5-18:
A lawyer for a corporation or other organization who is asked to become a member of its board of directors should determine whether the responsibilities of the two roles may conflict. The lawyer may be called on to advise the corporation in matters involving actions of the directors. Consideration should be given to the frequency with which such situations may arise, the potential intensity of the conflict, the effect of the lawyer’s resignation from the board and the possibility of the corporation’s obtaining legal advice from another lawyer in such situations. If there is a material risk that the dual role will compromise the lawyer’s independent professional judgment on behalf of the corporation, the lawyer should not serve as a director.
Changes to ECs in Canon 7
EC 7-18 elaborates on the new subparagraph in DR 7-104 regarding a lawyer’s role in client-to-client communications. The new language of EC 7-18 provides as follows:
[A] lawyer may properly advise a client to communicate directly with a represented person, if that person is legally competent, without obtaining consent from the represented person’s counsel, and may advise a client with respect to those communications (including by drafting papers for the client to present to the represented person), provided the lawyer gives reasonable advance notice to the represented person’s counsel that such communications will be taking place.
The new language goes on to define “reasonable advance notice” as “notice provided sufficiently in advance of the direct client-to-client communications, and of sufficient content, so that the represented person’s lawyer has an opportunity to advise his or her own client with respect to the client-to-client communications before they take place.” The new language then cautions that a lawyer who advises a client regarding communications with a represented person “should also advise the client against engaging in abusive, harassing or unfair conduct.” Finally, recognizing that lawyers themselves are often personally involved in litigation and transactions, EC 7-18 says: “A lawyer who is a party or who is otherwise personally involved in a legal matter or transaction, whether appearing pro se or represented by counsel, may communicate with a represented person on the subject matter of the representation pursuant to the provisions of DR 7-104(A) and (B).”
No Changes in Some ECs
There are no changes to the ECs in Canons 1, 3, 8 & 9. (Eventually, the State Bar should write a the new and complex choice of law provision, DR 1-105.) In Canon 6, a minor change to EC 6-6 (which governs a lawyer’s efforts to prospectively limit claims for malpractice or to settle such claims after they are brought) adds that “a member of a limited liability Company or a partner in a limited liability partnership engaged in the practice of law” may limit malpractice liability to the extent permitted by law. (The previous version of ECs 6-6 referred to a professional legal corporation (P.C.), not to LLPs.)
Roy Simon is Professor of Law at Hofstra Law and Director of Hofstra’s Institute for the Study of Legal Ethics.
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