Wisconsin Lawyer: Ethics: Determining Responsibility of Local Counsel:

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    Ethics: Determining Responsibility of Local Counsel

    Determining a lawyer’s responsibilities as local counsel depends very much on how the lawyer is being compensated for services. It is important to have a clear and specific engagement letter that describes the nature and scope of services to be provided as local counsel and the fee arrangement, including how time and billing matters will be handled.

    Dean R. Dietrich

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    Wisconsin LawyerWisconsin Lawyer
    Vol. 84, No. 4, April 2011

    Question

    I serve as local counsel for an out-of-state law firm in a lawsuit and only provide procedural assistance in the lawsuit. Am I responsible for the performance of the out-of-state law firm?

    Answer

    Serving as local counsel occurs much more frequently today because of the nature of multijurisdictional practices and the proliferation of lawsuits throughout the country. A determination of what your responsibilities are as local counsel depends very much on how you are being compensated for your services.

    If you are sharing fees with the out-of-state law firm, you are considered to have joint responsibility for the representation of the client and have “the same ethical responsibility for the representation as if the lawyers were partners in the same firm.”1 The parameters of “joint responsibility” were addressed in detail in Wisconsin Formal Ethics Opinion EF-10-02, which was issued by the Committee on Professional Ethics on Oct. 27, 2010.2

    Dean DietrichDean R. Dietrich, Marquette 1977, of Ruder Ware, Wausau, is chair of the State Bar Professional Ethics Committee.

    If the client is separately paying you for your services, the analysis is different. SCR 20:1.5(e)(1) provides that a division of fees between lawyers may be “based on the services performed by each lawyer” if “the client is advised of and does not object to the participation of all the lawyers involved and is informed if the fee will increase as a result of their involvement.” Under this provision, each law firm assumes responsibility for a particular part of the representation, and separate billing takes place for the representation provided by each law firm. Under these circumstances, the lawyer who is working with the out-of-state law firm, but is getting paid on the basis of a separate billing, would be responsible only for the nature and scope of representation that the lawyer is hired to perform.

    It is important in these circumstances for the lawyer who is serving as local counsel to have a very clear and specific engagement letter that describes the nature and scope of services being provided by the lawyer in his or her local-counsel capacity. It is important to describe which services and responsibilities the lawyer will assume and which duties and responsibilities the lawyer will not assume when serving as local counsel. SCR 20:1.2(c) clearly provides that a lawyer may limit the scope of her representation if such limitation is clearly communicated to the client and is reasonable under the circumstances and if the client gives informed consent to the limited scope of representation. It is important to remember that informed consent requires the lawyer to communicate adequate information about the consequences of and a decision by the client to agree to a limited-scope representation and to describe the alternatives to the limited-scope representation that are available to the client. SCR 20:1.0(f) defines informed consent as “the agreement by a person to a proposed course of conduct after the lawyer has communicated adequate information and explanation about the material risks of and reasonably available alternatives to the proposed course of conduct.”

    Consistent with this definition, the lawyer must discuss all the information necessary for the client to understand the impact of the limited representation and provide the client with alternatives to the proposed limited representation so that the client can make an informed decision about the representation.

    Serving as local counsel for a client (and in conjunction with an out-of-state law firm) is an alternative available to a lawyer to assist in providing appropriate representation for a client. The lawyer must be very careful to clearly define and outline for the client the nature and scope of the representation and the responsibilities being assumed by the lawyer as part of the representation. If that is not done, the local counsel may have the same degree of liability for malpractice as the out-of-state counsel. Lawyers also must be careful that they do not assume additional responsibility for the representation simply because the out-of-state counsel is not acting appropriately. To avoid potential liability, the local counsel may have an obligation to notify the client of the out-of-state counsel’s failure to provide proper representation.

    Endnotes

    1 See SCR 20:1.5(e).

    2 EF-10-02: Ethical Responsibility of Lawyers When Referral Fees Are Received, State Bar of Wisconsin, Committee on Professional Ethics, 83 Wis. Law. 30 (Dec. 2010), available at www.wisbar.org/wislawmag.

    The [local counsel] must be very careful to clearly define and outline for the client the nature and scope of the representation and the responsibilities being assumed by the lawyer as part of the representation. If that is not done, the local counsel may have the same degree of liability for malpractice as the out-of-state counsel.




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