Vol. 70, No. 8, August
1997
Ethics Opinions
Opinions and advice of the Professional Ethics Committee, its members
and assistants, are issued pursuant to State Bar Bylaws, Article IV, Section
5. Opinions and advice are limited to the facts presented, are advisory
only and are not binding on the courts, the Board of Attorneys Professional
Responsibility or members of the State Bar of Wisconsin. For more information
or to request an opinion be sent to you, review Wisconsin Lawyer's
ethics opinion information.
E-96-1 (corrected): Posting of bail by attorneys
Editor's note: The wrong opinion number was used in the last sentence
when E-96-1 was published in the April 1996 Wisconsin Lawyer. It is corrected
here.
Question: Is it a
violation of the Rules of Professional Conduct for an attorney to post bail
in the form of a check or cash for someone who has been arrested?
Opinion
If the funds or assets posted for the bail, bond or surety are not the
attorney's own property, there is no ethical violation or violation of section
757.34 of the Wisconsin Statutes for the attorney to do so. An attorney
in Wisconsin is prohibited by statute from posting his or her own funds
or assets as bail, bond or surety for another person in any civil or criminal
case. Wis. Stat. 757.34. * The Wisconsin Supreme
Court has held that there are no exceptions to this prohibition, and it
applies to all attorneys whether or not an attorney-client relationship
is involved. Gilbank v. Stephenson, 30 Wis. 155 (1872); see also
Withers v. Tucker, 28 Wis. 2d 82 (1965). The committee is constrained
to conclude that an attorney who violates the statute engages in misconduct
under SCR 20:8.4(f). Note, however, that
an attorney who holds client funds in his or her trust account is not ethically
prohibited from issuing trust checks for a client's bail, bond or surety.
An attorney who provides his or her own funds for a client's bail or
surety also may be in violation of SCR 20:1.8(e).
In the opinion of the committee, a bail, bond or surety is not a court cost
nor an expense of litigation under the exceptions in 1.8(e). The committee
reaffirms the conclusion reached in E-75-0.
* Statute requires downloading Adobe
Acrobat Reader.
E-97-1: Limitation of representation
in residential real estate transactions
Facts
It is common for title companies to offer closing services to residential
real estate customers, and to advise sellers that the title company will
obtain a deed and transfer return from a lawyer to assist the seller and
the buyer in completing the necessary transaction. The title company supplies
a lawyer with the specific information necessary to complete the deed and
transfer return. The lawyer prepares the documents based solely upon information
received from the title company and delivers the documents to the title
company before the closing. The lawyer does not have direct contact with
the seller or buyer and does not do a conflict check on either seller or
buyer. The lawyer sends a statement for legal services rendered to the title
company. And the lawyer's fee is deducted from the proceeds received by
the seller from the buyer. The title company then issues a check to the
lawyer for payment of the fee.
Question: May a lawyer
ethically limit the scope of the lawyer's representation in a residential
real estate transaction to drafting a deed and transfer return?
Opinion
The Rules of Professional Responsibility for Attorneys support several
models, or approaches, to legal representation in residential real estate
transactions. Among the parties that might be represented either individually
or collectively in a residential real estate transaction are the seller,
the buyer, the lender, and the title company. In some situations, a lawyer
might represent one party to the transaction, and in other situations multiple
representation might be appropriate. Although many residential real estate
transactions are straightforward and routine, some are not. Furthermore,
unanticipated problems can develop in apparently routine transactions. Consequently,
the model of representation appropriate to a specific transaction will vary
with the complexity of the transaction and the extent to which the needs,
interests and expectations of the parties to the transaction vary.
Single client model. A lawyer representing only one party in a residential
real estate transaction should be aware of the danger that the other parties
might assume incorrectly that the lawyer is either acting on their behalf
or is disinterested. Consequently, the lawyer should be careful not to state
or imply either that the lawyer is acting on behalf of a party who is not
a client or that the lawyer is disinterested. See SCR
20:4.3 and comment. Furthermore, SCR 20:4.3 requires that a lawyer who
knows or reasonably should know that an unrepresented party misunderstands
the lawyer's role in the matter make reasonable efforts to correct the misunderstanding.
To avoid possible misunderstanding, the lawyer should be proactive and communicate
with all parties about the nature of the representation that is being provided.
If the lawyer is representing a party other than the title company, the
lawyer must ensure that the lawyer's relationship with the title company
does not interfere with the duties owed by the lawyer to the client, whether
the client is the seller, the buyer or the lender. SCR
20:5.4(c). Similarly, if the lawyer is representing a party other than
the seller, the lawyer must ensure that the fact that the seller is paying
the lawyer's fee does not interfere with the lawyer's professional judgment
or with the client-lawyer relationship and that the client consents after
consultation. SCR 20:1.8(f).
Multiple client model. Under SCR 20:2.2
a lawyer may act as an intermediary and represent more than one party to
a residential real estate transaction if:
1) The lawyer consults with each client concerning the implications of
the common representation, including the advantages and risks involved and
the effect on the attorney-client privileges and obtains each client's consent
in writing to the common representation;
2) The lawyer reasonably believes that the matter can be resolved on
terms compatible with the clients' best interests, that each client will
be able to make adequately informed decisions in the matter and that there
is little risk of material prejudice to the interests of any of the clients
if the contemplated resolution is unsuccessful; and
3) The lawyer reasonably believes that the common representation can
be undertaken impartially and without improper effect on other responsibilities
the lawyer has to any of the clients.
In residential real estate transactions of the type described above,
the lawyer normally would accomplish the consultation by some form of letter
that fully describes the implications of the common representation. Under
some circumstances, however, personal consultation with clients may be necessary
to fully apprise them of the implications of the common representation.
Limiting representation. Under SCR 20:1.2(c)
a lawyer may limit the scope of representation, after consulting with the
client, to preparing the deed and transfer return. When the scope of representation
is so limited, it is the lawyer's responsibility to ensure that the client
understands and accepts the limited nature of the representation. This obligation
exists whether the lawyer is representing a single client or multiple clients.
In residential real estate transactions of the type described above, a lawyer
normally would accomplish this purpose by a letter that fully describes
the limited role that the lawyer will serve in the transaction. Under some
circumstances, however, more specific or personal consultation with the
client or clients may be necessary to fully apprise them of the limited
nature of the representation.
Assisting in the unauthorized practice of law. Under SCR
20:5.5 a lawyer cannot assist a nonlawyer in the unauthorized practice
of law. The committee is of the opinion that an attorney who limits the
scope of representation in real estate transactions to drafting deeds and
transfer returns does not solely by that limitation assist a title company
in the unauthorized practice of law. Such a conclusion would depend upon
the specific activities of the title company both before and during the
closing; a legal determination that the activities of the title company
amounted to the unauthorized practice of law; and a review of the involvement
of the lawyer in the activities of the title company related to and at the
closing.
E-97-2: Obligations of a lawyer and a law firm when
a lawyer terminates association with a law firm
Question: What are
the obligations of a lawyer and a law firm (either a partnership or a corporation)
when a lawyer who has been responsible for client matters decides to leave
the firm before completing work on such matters?
Opinion
It is generally recognized that absent a special agreement, a client
retains a law firm to provide legal services rather than a particular lawyer
in the law firm. ABA Standing Committee on Ethics and Professional Responsibility
Informal Opinion 1428 (Feb. 1, 1979). Therefore, subject to the contrary
wishes of the client, a law firm is obligated to continue to handle matters
that were handled by a departing lawyer. If the law firm is unable or unwilling
to continue to handle the matters that were the responsibility of the department
lawyer, the law firm must assist the client to obtain other legal representation.
ABA Committee Informal Opinion 1428
If the client decides not to continue representation by the law firm,
the law firm is required by SCR 20:1.16(d)
to take reasonable steps to protect the client's interests, including preserving
timelines and filing obligations and surrendering papers and property to
which the client is entitled. See State Bar Professional Ethics Committee
Formal Opinions E-82-7 (Copying client's files) and E-95-4 (Lawyer self-help
in enforcing fee agreement with clients). If the client decides to retain
another lawyer for continuing representation, there may be an agreement
for a division of fees between that other lawyer and the law firm. SCR 20:1.5(e).
Before departing a law firm, a lawyer has obligations to the clients
for whom the lawyer has been responsible for handling legal matters. Under
SCR 20.1.3 a lawyer must act with reasonable
diligence and promptness in representing a client, and under SCR
20.1.4 a lawyer is obligated to keep a client reasonably informed about
the status of a matter. Consequently, a departing lawyer must communicate
the fact that the lawyer is departing the law firm to all clients for whom
the lawyer has been responsible for handling legal matters within a reasonable
time period after deciding to depart the law firm.
The communication, whether written or by personal contact, should be
accomplished in a professional and noninflammatory manner, and should not
be disparaging of either the departing lawyer or the law firm. Unless the
understanding of the original employment contract was that the client desired
to hire the specific attorney rather than the law firm, the communication
should state that the law firm is obligated to continue to represent the
client or to assist the client in securing counsel if the client desires
to discontinue representation with the law firm, or if the firm is unable
or unwilling to continue representation. The communication should indicate
that the client has the right to decide who will represent the client both
in pending and further legal matters. The communication should not request
that the client sever the relationship with the law firm, but may indicate
a willingness on the part of the departing lawyer to represent the client.
After departing the firm, communications between the lawyer and clients
of the lawyer's former firm that are made for the purpose of obtaining employment
must comply with SCR 20:7.3.
If a departing lawyer joins another law firm, both the lawyer and the
new firm must take note of conflicts of interest that might be created with
clients of the lawyer's former firm because of the lawyer's move from one
firm to another. See SCR 20:1.7; 20:1.9; 20:1.10.
For further clarification, see ABA Formal Opinion 96-400.
The committee notes that its opinion is limited to ethical issues relating
to the departure from a law firm of an attorney who has been responsible
for client matters, and does not purport to address legal issues relating
to such a departure. See generally, The Lawyer's Manual on Professional
Conduct 91:701.
Formal Opinion E-80-18 is hereby withdrawn.
E-97-3: Mediation of divorces
Opinion
An attorney may serve as an intermediary between two current clients,
such as a husband and wife in a divorce action, if the requirements of SCR
20:2.2 are met. The committee withdraws Formal Opinion E-79-2 (Mediation
of divorces) because it is inconsistent with current SCR
20:2.2. |