Things Old & New — Code Amendments

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By Stephen Gillers
[Originally published in NYPRR September 1999]


In one way, at least, the July 1999 amendments to the New York Code of Professional Responsibility did not much change it. The Code continues to be a composite of something old, something new, and something borrowed. (So far, nothing blue.)

The old are those provisions of the New York Code that were taken from the ABA Model Code. The ABA adopted the Model Code in 1969 but has since abandoned it, as have the great majority of American jurisdictions. The new are provisions unique (or nearly so) to New York. The borrowed is the language lifted with little or no change from the Model Rules of Professional Conduct, which the ABA adopted in 1983 and which about 45 American jurisdictions now enforce though with significant variations.

The Appellate Divisions adopted the new Code amendments more than 28 months after the New York State Bar Association recommended changes. In the mid-1980s, following debate, the State Bar declined to recommend some of the very provisions it has now endorsed. The Appellate Divisions, slow and passive in adopting legal ethics rules, deferred to the Bar then and have mostly deferred again. Clearly, there’s an issue about governance here. But let us save that debate for another day. Herewith is a short trip through the amended Code to identify key provisions (new and old) that New York lawyers must understand.

Defining Conduct Subject to Discipline

DR 1-102(A)(3) no longer refers to crimes of “moral turpitude,” a salutary change. (DRs or Disciplinary Rules have direct analogs in the court rules, NYCRR §1200 et seq., but I use the Code’s numbering system here.)

Discipline is now reserved for lawyers who commit illegal conduct “that adversely reflects on the lawyer’s honesty, trustworthiness, or fitness as a lawyer.” However, the Code still contains two open-ended provisions. DR 1-102(A)(5) forbids conduct “prejudicial to the administration of justice,” and (A)(7) forbids “any other conduct that adversely reflects on the lawyer’s fitness as a lawyer.”

Applies to law firms. Although not new, all New York lawyers should be aware that New York, alone among American jurisdictions, imposes the obligations of DR 1-102 on law firms as well as on lawyers. It hasn’t happened yet, but eventually a law firm is going to be disciplined for violating the Code. Don’t let it be yours. (Incidentally, “law firm” is defined to include just about any department, office or organization that renders legal services, including a general counsel’s office in a corporation or government agency.) More about law firm responsibility below.

‘Following Orders’ No Defense

DR 1-104 now contains those provisions of the ABA Model Rules that refuse to recognize a “following orders” defense when a subordinate lawyer is charged with unprofessional conduct, unless the supervisor’s instruction represented a “reasonable resolution of an arguable question of professional duty.” The same DR continues to impose detailed obligations on law firms and supervisory lawyers not only to undo misconduct of which they may become aware but, more important, to institute prophylactic measures calculated to detect and avoid misconduct in the first place. These provisions are unique to New York.

DR 1-105, a new rule, adopts the language of Model Rule 8.5, which uses a “bright line” test to determine which jurisdiction’s rules apply when a lawyer is admitted in, or practicing in, more than one. Ordinarily it is the jurisdiction in which the lawyer is admitted. If she is admitted in two places, it is the one in which she principally practices unless the “predominant effect” of the alleged misconduct occurs in another jurisdiction in which the lawyer is admitted. For misconduct before a tribunal in which the lawyer is admitted pro hac vice, the rules of that court apply. [See Mary Daly, “Crossing State Lines — Which Law Governs,” NYPRR Sept. 1999.]

I am skipping the provisions on advertisement and solicitation because they are incredibly Byzantine. However, it is worth noting that the court, properly in my view, has refused to allow lawyers to engage in in-person or telephonic solicitation of clients. There is an exception for close friends, relatives, and former and current clients. There is no stated exception for in-person solicitation by public interest lawyers (whose motive is not pecuniary), but the Supreme Court has recognized one. [In re Primus, 436 U.S. 412 (1978).]

Unique Exception on Client Confidences

New York continues to have a unique exception to the prohibition against revealing client confidences or secrets. The exception borrows language from the commentary to ABA Model Rule 1.6. Commendably, New York has chosen not to place this language in its ethical considerations but rather in a disciplinary rule. The explanation here may be historical. New York was the site of the famous O.P.M. case, where lawyers kept quiet (and were later sued) on finding that a client was engaged in fraud and using the lawyer’s work product, innocently prepared, to advance the fraud.

DR 4-101(C)(5) permits a lawyer to reveal client confidences and secrets “to the extent implicit in withdrawing a written or oral opinion or representation previously given by the lawyer and believed by the lawyer still to be relied upon by a third person where the lawyer has discovered that the opinion or representation was based on materially inaccurate information or is being used to further a crime or fraud.”

Resolving Conflicts of Interest

Canon 5, whose subject is conflicts of interest, has been significantly modernized. For starters, the scope of advocate-witness disqualification in DR 5-102 has been narrowed. Next, implementing state bar ethics opinions, lawyers may no longer accept waivers of all conflicts when their own interests are at odds with those of their client. Rather, an objective test now requires that “a disinterested lawyer would believe that the representation of the client will not be adversely affected DR 5-101.

Clients will now get more protection in the event of “a business transaction” with a lawyer in which the client and lawyer have “differing interests” and “the client expects the lawyer to exercise professional judgment” for the client’s protection. Borrowing from ABA Model Rule 1.8(a) but strengthening it, DR 5-104 now requires that the “transaction and terms on which the lawyer acquires the interest [be] fair and reasonable to the client and…fully disclosed and transmitted in writing to the client in a manner that can be reasonably understood by the client.” The client must consent “in writing, after full disclosure, to the terms of the transaction and the lawyer’s inherent conflict of interest.” And perhaps most important, the New York Rule (unlike the ABA Model Rule) requires that the lawyer advise “the client to seek the advice of independent counsel in the transaction.”

Substituting Objective Test

DR 5-105, whose subject is client-client conflicts, has been amended to delete the opaque provision that permitted consent only when it was “obvious” that the lawyer could adequately represent each client. Now the objective test for consent is whether “a disinterested lawyer would believe that the lawyer can competently represent the interest of each” client. Further, consent must be preceded by full disclosure of the “implications of the simultaneous representation and the advantages and risks involved.” The quoted language is new not new, law firms must know that New York requires firms to “keep records of prior engagements… and…have a policy implementing a system by which proposed engagements are checked against current and previous engagements, so as to render effective assistance to lawyers within the firm.” “Failure to keep records or to have a policy which complies with this subdivision…shall be a violation by the firm,” whether or not an actual conflict arises. [DR 5-105(E).]

Borrowing from the Model Rules, New York has for the first time adopted language that describes when a lateral lawyer will impute a conflict to a new firm. That happens if, inter alia, “the lawyer had acquired information protected [as a secret or confidence] that is material to the matter.” DR 5-108(B)(2). This provision must be read in light of the New York Court of Appeals decision allowing screening. The same DR now recognizes that a law firm may become unconflicted when lawyers leave it. [See, Barbara Gillers, “Putting Screens Around Lateral Hire,” NYPRR Sept. 1999.]

The amended code adopts wholesale the language of ABA Model Rule 1.13 describing the obligations of “a lawyer for an organization” who discovers that the organization is being victimized by another agent or employee or is being used illegally to victimize third persons. The ABA’s unsatisfactory resolution of this dilemma is for the lawyer to complain up the chain of command and, if he or she gets no satisfaction, have the option to resign. [DR 5-109.]

New York continues to ban commencement of “sexual relations” with a domestic relations client “during the course of a lawyer’s representation of a client.” [DR 5-111(E)(3).] In other matters, sex with clients is okay so long as a lawyer does not employ “coercion, intimidation, or undue influence” and does not “require or demand sexual relations…incident to or as a condition of any professional representation.”

Contact Between Represented Clients

The anti-contact rule, as it is called, is amended in an important way This is the rule that forbids a lawyer, while representing a client, to “communicate or cause another to communicate on the subject of the representation with a party the lawyer knows to be represented by a lawyer in that matter,” absent the other lawyer’s consent or legal authorization. [DR 7-104(A).] The amendment, clarifying much uncertainty, allows a lawyer, unless prohibited by law, to “cause a client to communicate with a represented person, if that person is legally competent, and counsel the client with respect to those communications, provided the lawyer gives reasonable advance notice to the represented person’s counsel that such communications will be taking place.” [DR 7-104(B).] This means that two adverse parties can talk to each other while getting instruction from their respective lawyers. But because of the notice provision, it also means that the lawyer for either client can instruct his or her client not to participate in any discussion.

The prohibition on comment about pending court matters is amended by adopting the Model Rule provision allowing lawyers to make statements, otherwise forbidden, when the lawyer believes the statement “is required to protect a client from the substantial prejudicial effect of recent publicity not initiated by the lawyer or the lawyer’s client.” [DR 7-107(A).] Note that the adverse publicity to which the lawyer may respond need not have been instigated by the opponent.

Compensation to Lay Witnesses

One sleeper of an amendment now allows lawyers to compensate lay witnesses not only for the loss of time in attending and testifying but also for time spent “preparing to testify or otherwise assisting counsel.” While compensation for time spent preparing to testify is reasonable, the final phrase can be the source of much mischief. My own worry is that lawyers will use this authority to provide generous compensation to important witnesses whose assistance is little more than ministerial. True, it may all come out in cross-examination, and the compensation for the assistance must still be “reasonable,” but I fear this authority to pay witnesses creates too big a loophole. [DR 7-109(C).]

Finally, the Code continues the Model Rules language permitting law firms that hire former government lawyers, whose presence would otherwise create a disqualifying conflict at the firm, to screen those lawyers and accept matters that they by virtue of their government work, could not accept. [DR 9-101(B).]

New York’s Code has some laudable provisions but it is not, despite its imposition of duties on law firms and the exception to confidentiality in DR 4-101(C)(5), an example that legal ethics professionals would likely cite as among the best in the nation. Would that the courts were more actively involved in instigating modifications. Would that a broader segment of the bar participated in the process. The entire enterprise would benefit, and gain credibility, if non-lawyers (read “clients”) were invited to join it. Perhaps next time.

Stephen Gillers is Vice-Dean and Professor of Law, New York University School of Law.

DISCLAIMER: This article provides general coverage of its subject area and is presented to the reader for informational purposes only with the understanding that the laws governing legal ethics and professional responsibility are always changing. The information in this article is not a substitute for legal advice and may not be suitable in a particular situation. Consult your attorney for legal advice. New York Legal Ethics Reporter provides this article with the understanding that neither New York Legal Ethics Reporter LLC, nor Frankfurt Kurnit Klein & Selz, nor Hofstra University, nor their representatives, nor any of the authors are engaged herein in rendering legal advice. New York Legal Ethics Reporter LLC, Frankfurt Kurnit Klein & Selz, Hofstra University, their representatives, and the authors shall not be liable for any damages resulting from any error, inaccuracy, or omission.

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