By Lazar Emanuel [Originally published in NYPRR December 2005]
[Author’s note: All the quotations in this article were taken from the Introduction to the COSAC report. Future issues of NYPRR will contain articles about the specific recommendations of the Committee. See, below for the report’s Executive Summary of changes in Model Rule 1.]
In a report issued on Sept. 30, 2005, the NYSBA Committee on Standards of Attorney Conduct (COSAC) has recommended that New York follow virtually all the other states in adopting the format of the Model Rules of the American Bar Association. At the same time, the Committee has reviewed the substance of the Model Rules and has compared each Rule to the corresponding provision of the New York Code of Professional Responsibility.
“An effort was made to adopt the Model Rule language for purposes of national uniformity absent some compelling reason to do otherwise.” Nevertheless, the Committee recommended changes in the language and substance of some of the Model Rules, especially in those cases in which “a New York rule has been adopted or amended relatively recently after considerable study” or “where COSAC believed that the New York rule was better written or offered clearer guidance.” The Committee also recommended the adoption of several new rules, including a rule that would permit reasonable restrictive covenants in law firm partnership agreements. The Committee suggested the title “New York Rules of Professional Conduct” for its revised set of rules.
The Committee pointed out that a majority of New York lawyers are already familiar with the format of the ABA Model Rules.
Since 1982, persons seeking admission to the New York Bar have had to pass the Multistate Professional Responsibility Examination, which is based solely on the ABA Model Rules. Over two-thirds of all NYSBA members were admitted to practice in 1982 or later, and thus were required to learn the Model Rules prior to admission. Today, law schools throughout the state and country emphasize the Model Rules in teaching ethics to their students. Retention of the Model Code format only complicates the teaching of ethics in New York law schools because of the need to choose between teaching two sets of sometimes inconsistent regulations or, worse, simply ignoring the New York Code altogether and focusing solely on the more accessible and understandable Model Rules.
The Committee found several other reasons to prefer the ABA Model Rules format:
1. The Model Rules use the familiar Restatement type format, with black-letter rules followed by commentary. “The structure makes it clear that there is only one set of Rules and that the Comments are subordinate to the text of the rule they follow.”
2. The organization of the Model Rules makes it easier for lawyers to find the provisions governing a particular ethical issue. In the existing New York Code, for example, rules relating to the relationship between lawyer and client are scattered throughout the Code, while in the Model Rules, these rules are all contained in the first section under the simple heading “Client-Lawyer Relationship.”
3. The Model Rules contain many provisions not covered in the New York Code, such as: (Rule 1.18) a lawyer ‘s duties to prospective clients; (Rule 1.6(b)(4) a lawyer ‘s right to reveal a client’s confidences when the lawyer needs legal advice about the lawyer ‘s compliance with the rules; and (Rule 1.2(a) the client’s right to decide whether or not to settle a matter. These rules “are discussed — if at all — only in non- binding ‘aspirational’ Ethical Considerations.”
4. The rest of the country has “embraced the Model Rules.”
Over the past 22 years, a nationwide body of law has developed under the Model Rules that New York lawyers cannot readily access because of the difference in format. In addition to case law and bar association ethics opinions from other states, most of the secondary literature about the professional responsibility of lawyers now focuses exclusively on the Model Rules. Adoption of the Model Rules format would facilitate ethical research by lawyers in New York, eliminating the need first to determine which Model Rule correlates to the DR or EC being researched and facilitating access to a large base of analysis and authority.
5. Adoption of the Model Rules by New York would enable lawyers in other states to review and rely on New York precedents. “At present, New York rulings, opinions and other authorities have little influence outside of the state. They are often discounted elsewhere because of New York’s continued reliance on the Model Code format. Conversion to the Model Rules format would allow New York statements on ethics issues to be national headlines, not mere footnotes.”
6. For the growing number of lawyers who travel outside of their state of admission to engage in the practice of law, adoption of the Model Rules format would facilitate multijurisdictional practice by eliminating confusion, inconsistencies and contradictions in the rules.
The COSAC report was the work of 28 participants, including Steven C. Krane as chair, Professor Roy D. Simon as vice-chair and chief reporter, and the Honorable Howard A. Levine as special counsel. The Committee was broken up into three subcommittees, each with its own chair (Marjorie E. Gross, David M. Schraver and M. David Tell) and its own Associate Reporter (Professors Roger C. Cramton, Steven Wechsler and Carol L. Ziegler). The subcommittee members included practitioners in the field of ethics, law professors and judges. Together, the subcommittees held 50 conference calls and spent 11 days in person plenary sessions, including full-day meetings in New York City, Albany and Rochester.
The COSAC report will now be considered by the NYSBA House of Delegates and by the Courts. The NYSBA delegates will consider the report in January and then in a series of six successive meetings. If approved by the NYSBA, the proposals would then be sent to the Courts. The Committee issued the following recommendation to the NYSBA:
Our recommendation is that the NYSBA approve the change in format from the New York Lawyers’ Code of Professional Responsibility to the New York Rules of Professional Conduct, and that it ask the Courts of the State of New York, particularly the four departments of the Appellate Division of the Supreme Court, to adopt the Rules and Comments. We note that, historically, the Appellate Division has only adopted the Disciplinary Rules as part of the New York Code. The Ethical Considerations have traditionally been adopted by the NYSBA House of Delegates. It is possible that the Appellate Division, should it decide to adopt the Model Rules format, may only adopt the Rules, and not the Comments. In that case, we anticipate that COSAC, and then the NYSBA House of Delegates, would review the Comments after the Rules have been approved and make necessary conforming changes.
Executive Summary: Major Differences Between COSAC Proposals & Current N.Y. Lawyer’s Code of Professional Responsibility
[Editor’s Note: Printed below are only that portion of the COSAC Executive Summary relating to COSAC’s proposed Rule 1, dealing with the relationship between lawyer and client. NYPRR Jan. 2006 issue will carry the other proposed Rules.]
The proposed New York Rules of Professional Conduct differ in many ways from the current New York Lawyer’s Code of Professional Responsibility. This segment of COSAC’s report briefly highlights the most significant differences. (Where the language of the proposed rules is substantially similar to the language of the existing New York Code of Professional Responsibility, this segment of the Report is silent. Thus, silence indicates that a proposed rule generally tracks the language of the equivalent Code provision.)
Note: All citations to Disciplinary Rules (DRs) and Ethical Considerations (ECs) refer to the current New York Lawyer’s Code of Professional Responsibility, which is frequently referred to herein as the “New York Code” or simply “the Code.” Citations to Rules (e.g., “Rule 1.6”) and to “Comments” refer to the New York Rules of Professional Conduct proposed by COSAC.
Preamble and Scope. The proposed Preamble and Scope differ significantly from the Preamble and Preliminary Statement in the existing New York Code.
Rule 1.0: Terminology. COSAC proposes thirteen new defined terms in the Terminology section. In addition, a detailed Comment explains most of the defined terms. The increase in defined terms should increase the clarity and consistency of the Code. (All of the terms in the Terminology section appear in more than one proposed rule. Terms that appear in only one rule are defined in that rule.)
Rule 1.1: Competence. In the current New York Code, Canon 6 provides that a lawyer “Should Represent a Client Competently,” and EC 6-1 provides that a lawyer “should act with competence,” but DR 6-101 does not affirmatively mandate competent representation and makes no effort to define competence. Proposed Rule 1.1 fills that gap.
Rule 1.2: Scope of Representation and Allocation of Authority Between Lawyer and Client. Currently, EC 7-7 provides guidance regarding allocation of decision-making authority, but no Disciplinary Rule does so. Rule 1.2(a) elevates the core ideas in EC 7-7 to a Disciplinary Rule and provides that a lawyer must abide by a client’s decisions on specified matters.
Rule 1.4: Communication. EC 7-8 provides limited guidance regarding a lawyer’s duty to communicate with a client. Rule 1.4(a) provides broader guidance by specifying various topics on which a lawyer must consult with a client.
Rule 1.5: Fees and Division of Fees. Rule 1.5(a), like DR 2-106(A), prohibits “excessive or illegal” legal fees, but Rule 1.5(a) extends this prohibition to “expenses” as well. Rule 1.5(a) then generally lists the same factors as DR 2- 106(B) for determining whether a fee is excessive, but adds a new factor (the client’s “opportunity and ability to compare and negotiate legal fees”) and relegates DR 2-106(B)’s threshold test for an excessive fee (“a lawyer of ordinary prudence would be left with a definite and firm conviction that the fee is in excess of a reasonable fee”) into one of the ten factors to consider in deciding whether a fee is excessive. Rule 1.5(b) generally requires a lawyer to communicate the scope of the representation and the basis or rate of the fees and expenses “before or within a reasonable time after commencing the representation, except with [sic] the lawyer will charge a regularly represented client on the same basis or rate.” The rule also requires a lawyer to communicate any later changes in the basis or rate. These requirements are consistent with the requirements of New York’s written letter of engagement rule, 22 NYCRR Part 1215, but Rule 1.5(b) applies even if fees are expected to be less than $3,000 (though Rule 1.5(b), unlike Part 1215, does not require the communication about fees and expenses to be in writing). Rule 1.5(e) permits lawyers in different firms to divide fees on essentially the same terms as DR 2-107(A), but requires the lawyers to disclose the share each lawyer will receive.
Rule 1.6: Confidentiality of Information. Rule 1.6(a) abandons DR 4-101’s confusing dichotomy between “confidences” and “secrets” in favor of the unified term confidential information.” Rule 1.6(a) then defines “confidential information” to include “information gained during and relating to the representation of a client” but ordinarily excluding “legal knowledge or legal research” and “generally known” information, thus more closely matching the bar’s custom and understanding than DR 4-101(A). The rule also permits a lawyer to reveal confidential information when “impliedly authorized,” which accords with existing practice even though not in the text of DR 4-101(C). Rule 1.6(b) contains two new exceptions to confidentiality: “(1) to prevent reasonably certain death or substantial bodily harm”; and “(4) to secure legal advice about compliance with these Rules or other law by the lawyer, another lawyer associated with the lawyer’s firm or the law firm.” It also narrows the existing self-defense exception so that it applies to an accusation of wrongful conduct if the accusation is (a) “concerning the lawyer ‘s representation of the client” and (b) “made in a proceeding that has been brought or that the lawyer reasonably believes will be brought.”
Rule 1.7: Conflict of Interest: Current Clients. Rule 1.7(a) clears up the ambiguities in DR 5-105 by specifying that a “concurrent conflict” exists when either (1) the representation of one client will be “directly adverse” to another client, or “(2) there is a “significant risk” that the representation will be “materially limited,” or that the lawyer ‘s independent professional judgment will be adversely affected. Rule 1.7(b) permits a representation despite a concurrent conflict if, among other things, the lawyer “reasonably believes” that the lawyer can provide “competent and diligent” representation to each affected client and each client gives “informed consent, confirmed in writing.”
Rule 1.8: Current Clients: Special Conflict of Interest Rules. Rule 1.8 consists of ten separate conflicts rules, plus one rule that imputes most of these conflicts (all but sex with clients) to other lawyers in the same firm. Rule 1.8(a), governing business transactions between lawyer and client, retains much of DR 5-104(A) but deletes the introductory limitation that DR 5-104(A) applies only if the lawyer and client “have differing interests therein and if the client expects the lawyer to exercise professional judgment therein for the protection of the client.” Instead, the Rule 1.8(a)(2) expands the requirement that the lawyer advise the client to seek independent counsel in the transaction, and give the client a reasonable opportunity to seek independent counsel, unless the client is already represented by independent counsel (in which case the lawyer “shall advise the client that it is desirable for the client to continue to be independently represented”). Rule 1.8(a)(3) reinforces this requirement by mandating that the lawyer obtain the client’s informed written consent not only to the terms of the transaction (as in DR 5-104) but also to “the lawyer ‘s role in the transaction, including whether the lawyer is representing the client in the transaction.” Rule 1.8(c) generally prohibits a lawyer from soliciting “any substantial gift” from a client (including a testamentary gift) unless certain conditions are met. The rule thus covers ground now addressed only in EC 5-5. Rule 1.8(e) permits a lawyer to advance court costs and expenses of litigation “the repayment of which may be contingent on the outcome of the matter,” in contrast to DR 5-103(B)(1), and permits a lawyer to pay court costs and litigation expenses outright when representing an indigent “or” pro bono client (in contrast to the requirement in DR 5-103(B)(2) that the client be both indigent and pro bono). Rule 1.8(h)(1), unlike DR 6-102(A), permits a lawyer to make an agreement prospectively limiting the lawyer ‘s liability to a client for malpractice if “the client is independently represented in making the agreement.” Rule 1.8(k) imputes the conflicts in Rule 1.8 to other lawyers in the same firm, except the rule on sex with clients (meaning that if one lawyer in a firm has a prohibited sexual relationship with a client, the other lawyers in the firm have not automatically violated Rule 1.8).
Rule 1.10: Imputation of Conflicts of Interest: General Rule. Rule 1.10(a), unlike DR 5-105(D), does not impute conflicts based on a lawyer’s own financial, business, property, or other personal interests unless a reasonable lawyer would perceive “no significant risk” that representation by other lawyers in the firm “will be materially limited or the independent judgment of the participating lawyers in the firm will be adversely affected.” Rule 1.10(c), unlike DR 5-105(D), permits a law firm to use screening to avoid disqualification due to a laterally hired lawyer, but only in the narrow circumstance where there is “no substantial risk” that the former client’s confidential information will be used to her disadvantage because (1) the confidential information in question is not “material and significant” in the current matter and (2) the firm acts “promptly and reasonably” to set up an effective screen to “prevent the flow of information about the matter” between the personally disqualified lateral and the other lawyers in the firm. Rule 1.10(f) continues the conflict-checking obligation imposed by DR 5-105(E) when a firm accepts a new engagement, but expands the conflict-checking obligation to two other situations likely to create conflicts that could not have been caught by the original conflicts check (hiring a new attorney for the firm, or adding a new party in a pending matter).
Rule 1.11: Special Conflicts of Interest for Former and Current Government Officers and Employees. Rule 1.11(a) generally tracks DR 9-101(B) but makes clear that a former government lawyer must not disclose the former client’s confidential information or use that information against the former client. Rule 1.11(b), like DR 9-101(B)(1), permits screening to cure a former government lawyer ‘s conflict, but Rule 1.11(b) refines the elements of an effective screen, removes the requirement that the disqualified lawyer “is appropriated no part of the fee” from the matter, and adds an obligation to notify the appropriate government agency about the screening. Rule 1.11(c) formulates a special rule for imputing conflicts of interest within a government office where a lawyer in the office is personally disqualified. The rule permits other lawyers in the office to handle a representation despite the presence of a personally disqualified lawyer if the other lawyers (1) reasonably believe they can provide competent and diligent representation and (2) the government office promptly and effectively screens off the disqualified lawyer. The current New York Code has no comparable Disciplinary Rule. Rule 1.12. Former Judge, Arbitrator, Mediator or Other Third-Party Neutral. Rule 1.12 (a) expresses the same concept as DR 9-101(A) regarding former judges but replaces the phrase “acted on the merits” with “participated personally and substantially” (echoing the phrase used in Rule 1.11 and DR 9-101(B)) and expands the rule to cover former impartial arbitrators, mediators, and other neutrals. Rule 1.12(b) contains a special provision allowing a law clerk to negotiate for employment with parties involved in matters in which the clerk is participating personally and substantially, but only after notifying the judge. The current New York Code has a flat ban with no comparable “notice” provision. Rule 1.12(c) permits a government office to continue representation despite the presence of a personally disqualified lawyer provided the office implements certain screening measures. Rule 1.12(d) makes clear that an arbitrator selected by a party in multimember arbitration panel is not prohibited from later representing the party in the matter.
Rule 1.13: Organization as Client. Rule 1.13(b) begins by tracking the first sentence of DR 5-109(B), but the rest of DR 5 109(B) is replaced by a single sentence providing: “Unless the lawyer reasonably believes that it is not necessary in the best interest of the organization to do so, the lawyer shall refer the matter to higher authority in the organization, including, if warranted by the circumstances, to the highest authority that can act on behalf of the organization …” Rule 1.13(d) permits a lawyer representing an organization also to represent other constituents subject to Rule 1.7 (the general conflict of interest rule), provided consent is given by an official other than the individual to be represented.
Rule 1.14: Client with Diminished Capacity. Rule 1.14 addresses the complex issues that arise when a lawyer represents a minor, a mentally impaired client, or a client with otherwise diminished capacity. In the current New York Code, those issues are addressed only by ECs 7-11 and 7-12, which often provide inadequate guidance.
Rule 1.16: Declining or Terminating Representation. Rule 1.16(a) is substantially identical to DR 2-110(B) (which governs mandatory withdrawal), except that the problem[s] of litigation positions “merely” for purposes of harassment are dealt with in Rule 3.1 rather than in the withdrawal rule. Rule 1.16(b) largely tracks DR 2-110(C) (which governs permissive withdrawal), but eliminates some grounds for permissive withdrawal that overlap grounds for mandatory withdrawal, allows a lawyer to withdraw if the client insists on taking action that the lawyer considers “repugnant” or with which the lawyer has a “fundamental disagreement,” requires a lawyer to give “reasonable warning” to a client before withdrawing for nonpayment of fees, makes clear that an unreasonable financial burden on the lawyer is grounds for withdrawal only if it was “not reasonably foreseeable when the relationship began,” and allow[s] withdrawal when “permitted under Rule 1.13(c) [equivalent to DR 5-109(B)] or other law.” Rule 1.16(d) is similar to DR 2-110(A)(2)-(3).
Rule 1.17: Sale of Law Practice. Rule 1.17 is substantially identical to DR 2-111, except Rule 1.17(e) provides that the fee charged a client by a lawyer who buys a law practice “shall not be increased by reason of the sale.” DR 2-111(E) contains the same language, but qualifies it by adding “unless permitted by a retainer agreement with the client or otherwise specifically agreed to by the client.” Rule 1.17(e) deletes that qualifying “unless” clause.
Rule 1.18: Duties to Prospective Client. Rule 1.18(a) and (b) make clear that when a lawyer and a prospective client discuss the possibility of forming an attorney-client relationship, the lawyer owes a duty of confidentiality to the person. Rule 1.18(c) disqualifies a lawyer from opposing a prospective client in a substantially related matter if the lawyer “received information from the prospective client that could be significantly harmful to that person,” and disqualifies other lawyers in the firm unless the firm complies with the consent or screening provisions in Rule 1.18(d). The current New York Code has no Disciplinary Rule equivalent to Rule 1.18.
Lazar Emanuel is the Publisher of NYPRR
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