| |
Vol.
70, No. 2, February 1997
ABA Formal Opinion 88-356:
Temporary Lawyers (Dec. 16, 1988)
In order to satisfy the requirements of the Model Rules and predecessor
Model Code when a lawyer is engaged temporarily to work for clients of a
law firm (including a corporate legal department), the lawyer and the firm
must exercise care, in accordance with the guidelines in this opinion, to
avoid conflicts of interest, to maintain confidentiality of information
relating to the representation of clients, to disclose to clients the arrangement
between the lawyer and the firm in some circumstances, and to comply with
other applicable provisions of the Rules and Code.
The use of a lawyer placement
agency to obtain temporary lawyer services where the agency's fee is a proportion
of the lawyer's compensation does not violate the Model Rules or predecessor
Model Code as long as the professional independence of the lawyer is maintained
without interference by the agency, the total fee paid by each client to
the law firm is reasonable, and the arrangement otherwise is in accord with
the guidelines in this opinion.
The committee has received a number of inquiries relating to the increasing
use by law firms of temporary lawyers.1 The
temporary lawyer may work on a single matter for the firm or may work generally
for the firm for a limited period, typically to meet temporary staffing
needs of the firm or to provide special expertise not available in the firm
and needed for work on a specific matter. The temporary lawyer may work
in the firm's office or may visit the office only occasionally when the
work requires. The temporary lawyer may work exclusively for the firm during
the period of temporary employment or may work simultaneously on other matters
for other firms.
In this opinion, the committee addresses ethical issues affecting the
firm and the temporary lawyer involving the application to temporary lawyer
practice of rules relating to conflicts of interest; confidentiality of
client information; disclosure to the client of arrangements between the
firm and the lawyer (including fee division); and arrangements with lawyer
placement agencies. These issues are addressed under the Model Rules and
the predecessor Model Code.
Conflicts of Interest
In the Model Rules, the general conflict of interest provision is Rule
1.7, which standing alone applies only to an individual lawyer and a client
about to be represented or currently represented by that lawyer. Rule 1.7
prohibits a lawyer from representing a client if the representation of that
client will be directly adverse to another client or may be materially limited
by the lawyer's responsibilities to another client or to a third person
or by the lawyer's own interests, unless the lawyer reasonably believes
that there will be no adverse effect (as described in the Rule), and the
client consents after consultation.
Rule 1.9 relates to conflicts of interest involving former clients of
a lawyer. It provides:
A lawyer who has formerly represented a client in a matter shall not
thereafter:
- (a) represent another person in the same or a substantially related
matter in which that person's interests are materially adverse to the interests
of the former client unless the former client consents after consultation;
or
- (b) use information relating to the representation to the disadvantage
of the client except as Rule 1.6 or Rule 3.3 would permit or require with
respect to a client or when the information has become generally known.
It is clear that a temporary lawyer who works on a matter for a client
of a firm with whom the temporary lawyer is temporarily associated "represents"
that client for purposes of Rules 1.7 and 1.9. Thus, a temporary lawyer
could not, under Rule 1.7, work simultaneously on matters for clients of
different firms if the representation of each were directly adverse to the
other (in the absence of client consent and subject to the other conditions
set forth in the Rule). Similarly, under Rule 1.9, a temporary lawyer who
worked on a matter for a client of one firm could not thereafter work for
a client of another firm on the same or a substantially related matter in
which that client's interests are materially adverse to the interests of
the client of the first firm (in the absence of consent of the former client
and subject to the other conditions stated in the Rule).2
DR 5-105(A) and DR 5-105(B) of the Model Code require a lawyer to decline
employment if it will or is likely adversely to affect the lawyer's independent
judgment in behalf of an existing client or would involve the representation
of differing interests, except with the informed consent of both clients
and then only where it is obvious that the lawyer can represent adequately
the interests of each. DR 5-105(C). Thus, a temporary lawyer could not,
under DR 5-105, work simultaneously for clients of different firms with
differing interests except as permitted by DR 5-105(C).3
- The most difficult conflict of interest questions involving temporary
lawyers arise under the imputed disqualification provisions of Rule 1.10,
which provides:
- (a) While lawyers are associated in a firm, none of them shall knowingly
represent a client when any one of them practicing alone would be prohibited
from doing so by Rules 1.7, 1.8(c), 1.9 or 2.2.
-
- (b)When a lawyer becomes associated with a firm, the firm may not knowingly
represent a person in the same or a substantially related matter in which
that lawyer, or a firm with which the lawyer was associated, had previously
represented a client whose interests are materially adverse to that person
and about whom the lawyer had acquired information protected by Rules 1.6
and 1.9(b) that is material to the matter.
-
- (c) When a lawyer has terminated an association with a firm, the firm
is not prohibited from thereafter representing a person with interests
materially adverse to those of a client represented by the formerly associated
lawyer unless:
-
- (1) the matter is the same or substantially related to that in which
the formerly associated lawyer represented the client; and
-
- (2) any lawyer remaining in the firm has information protected by Rules
1.6 and 1.9(b) that is material to the matter.
-
- (d) A disqualification prescribed by this rule may be waived by the
affected client under the conditions stated in Rule 1.7.4
The basic question is under what circumstances a temporary lawyer should
be treated as "associated in a firm" or "associated with
a firm."5 The question whether a temporary lawyer
is associated with a firm at any time must be determined by a functional
analysis of the facts and circumstances involved in the relationship between
the temporary lawyer and the firm consistent with the purposes for the Rule.
The Comment to Rule 1.10, although not addressing specifically the temporary
lawyer situation, provides helpful guidance. It provides in relevant part:
"For purposes of the Rules of Professional Conduct, the term 'firm'
includes lawyers in a private firm, and lawyers employed in the legal department
of a corporation or other organization, or in a legal services organization.
Whether two or more lawyers constitute a firm within this definition can
depend on the specific facts. For example, two practitioners who share office
space and occasionally consult or assist each other ordinarily would not
be regarded as constituting a firm. However, if they present themselves
to the public in a way suggesting that they are a firm or conduct themselves
as a firm, they should be regarded as a firm for purposes of the Rules.
The terms of any formal agreement between associated lawyers are relevant
in determining whether they are a firm, as is the fact that they have mutual
access to confidential information concerning the clients they serve. Furthermore,
it is relevant in doubtful cases to consider the underlying purpose of the
rule that is involved. A group of lawyers could be regarded as a firm for
purposes of the rule that the same lawyer should not represent opposing
parties in litigation, while it might not be so regarded for purposes of
the rule that information acquired by one lawyer is attributed to another."
***
When lawyers have been associated in a firm but then end their association,
however, the problem is more complicated. The fiction that the law firm
is the same as a single lawyer is no longer wholly realistic. There are
several competing considerations. First, the client previously represented
must be reasonably assured that the principle of loyalty to the client is
not compromised. Second, the rule of disqualification should not be so broadly
cast as to preclude other persons from having reasonable choice of legal
counsel. Third, the rule of disqualification should not unreasonably hamper
lawyers from forming new associations and taking on new clients after having
left a previous association. In this connection, it should be recognized
that today many lawyers practice in firms, that many to some degree limit
their practice to one field or another, and that many move from one association
to another several times in their careers. If the concept of imputed disqualification
were defined with unqualified rigor, the result would be radical curtailment
of the opportunity of lawyers to move from one practice setting to another
and of the opportunity of clients to change counsel.
After discussion of the two traditional rubrics under which these competing
principles have in the past been explained, the Comment notes that a rule
based on functional analysis is more appropriate for determining imputed
disqualification. Noting that two functions are involved, preserving confidentiality
and avoiding positions adverse to a client, the Comment continues:
"Preserving confidentiality is a question of access to information.
Access to information, in turn, is essentially a question of fact in particular
circumstances, aided by inferences, deductions or working presumptions that
reasonably may be made about he way in which lawyers work together. A lawyer
may have general access to files of all clients of a law firm and may regularly
participate in discussions of their affairs; it should be inferred that
such a lawyer in fact is privy to all information about all the firm's clients.
In contrast, another lawyer may have access to the files of only a limited
number of clients and participate in discussion of the affairs of no other
clients; in the absence of information to the contrary, it should be inferred
that such a lawyer in fact is privy to information about the clients actually
served but not those of other clients.
"Application of paragraphs (b) and (c) [of Rule 1.10] depends on
a situation's particular facts. In any such inquiry, the burden of proof
should rest upon the firm whose disqualification is sought.
"Paragraphs (b) and (c) operate to disqualify the firm only when
the lawyer involved has actual knowledge of information protected by Rules
1.6 and 1.9(b). Thus, if a lawyer while with one firm acquired no knowledge
of information relating to a particular client of the firm, and that lawyer
later joined another firm, neither the lawyer individually nor the second
firm is disqualified from representing another client in the same or a related
matter even though the interests of the two clients conflict."
***
The second aspect of loyalty to client is the lawyer's obligation to
decline subsequent representations involving positions adverse to a former
client arising in substantially related matters. This obligation requires
abstention from adverse representation by the individual lawyer involved,
but does not properly entail abstention of other lawyers through imputed
disqualification. Hence, this aspect of the problem is governed by Rule
1.9(a). Thus, if a lawyer left one firm for another, the new affiliation
would not preclude the firms involved from continuing to represent clients
with adverse interests in the same or related matters so long as the conditions
of paragraphs (b) and (c) concerning confidentiality have been met.
Ultimately, whether a temporary lawyer is treated as being "associated
with a firm" while working on a matter for the firm depends on whether
the nature of the relationship is such that the temporary lawyer has access
to information relating to the representation of firm clients other than
the client on whose matters the lawyer is working and the consequent risk
of improper disclosure or misuse of information relating to representation
of other clients of the firm. For example, a temporary lawyer who works
for a firm, in the firm office, on a number of matters for different clients,
under circumstances where the temporary lawyer is likely to have access
to information relating to the representation of other firm clients, may
well be deemed to be "associated with" the firm generally under
Rule 1.10 as to all other clients of the firm, unless the firm, through
accurate records or otherwise, can demonstrate that the temporary lawyer
had access to information relating to the representation only of certain
other clients. If such limited access can be demonstrated, then the temporary
lawyer should not be deemed to be "associated with" the firm under
Rule 1.10. Also, if a temporary lawyer works with a firm only on a single
matter under circumstances like the collaboration of two independent firms
on a single case, where the temporary lawyer has no access to information
relating to the representation of other firm clients, the temporary lawyer
should not be deemed "associated with" the firm generally for
purposes of application of Rule 1.10. This is particularly true where the
temporary lawyer has no ongoing relationship with the firm and does not
regularly work in the firm's office under circumstances likely to result
in disclosure of information relating to the representation of other firm
clients.
As the direct connection between the temporary lawyer and the work on
matters involving conflicts of interest between clients of two firms becomes
more remote, it becomes more appropriate not to apply Rule 1.10 to disqualify
a firm from representation of its clients or to prohibit the employment
of the temporary lawyer. Whether Rule 1.10 requires imputed disqualification
must be determined case by case on the basis of all relevant facts and circumstances,
unless disqualification is clear under the Rules.
The distinction drawn between when a temporary lawyer is or is not associated
with a firm is only a guideline to the ultimate determination and not a
set rule. For example, if a temporary lawyer was directly involved in work
on a matter for a client of a firm and had knowledge of material information
relating to the representation of that client, it would be inadvisable for
a second firm representing other parties in the same matter whose interests
are directly adverse to those of the client of the first firm to engage
the temporary lawyer during the pendency of the matter, even for work on
other matters. The second firm should make appropriate inquiry and should
not hire the temporary lawyer or use the temporary lawyer on a matter if
doing so would disqualify the firm from continuing its representation of
a client on a pending matter.
Although at the time of the adoption of the Model Code in 1969 the temporary
lawyer phenomenon had not yet appeared, the purpose of DR 5-105(D),6 the imputed disqualification provision of the code, coincides
with the purpose of Rule 1.10. The committee is of the opinion that the
foregoing functional analysis applies equally under DR 5-105(D).
For the reasons discussed above, in order to minimize the risk of disqualification,
firms should, to the extent practicable, screen each temporary lawyer from
all information relating to clients for which the temporary lawyer does
no work. All law firms employing temporary lawyers also should maintain
a complete and accurate record of all matters on which each temporary lawyer
works. A temporary lawyer working with several firms should make every effort
to avoid exposure within those firms to any information relating to clients
on whose matters the temporary lawyer is not working. Since a temporary
lawyer has a coequal interest in avoiding future imputed disqualification,
the temporary lawyer should also maintain a record of clients and matters
worked on.
Confidentiality of information
Model Rule 1.6 prohibits revealing "information relating to representation
of a client," subject to exceptions set forth in the Rule. The Rule
applies to each lawyer in a firm with respect to each client of the firm
and not solely to clients with whom that lawyer works. The prohibition against
revealing information relating to representation of a client serves its
purpose only to the extent that each lawyer with a firm (who may have information
about any firm client) is bound by the Rule with respect to each client
of the firm. Similarly, the temporary lawyer who works for a firm on matters
of a firm client is bound by Rule 1.6 not to reveal information relating
to the representation of that client (except as otherwise authorized by
the Rule). The temporary lawyer also is bound not to reveal information
relating to representation of other clients of the firm which the temporary
lawyer learns as a result of working with the firm.
The application of Rule 1.6 does not, however, generally depend upon
the source of information relating to representation of a client. Thus,
a lawyer with a firm is prohibited from revealing information relating to
representation of a client of the firm even if the lawyer's knowledge of
the information did not arise from the representation or through the firm
and even if knowledge was acquired before the lawyer-client relationship
existed.
In contrast, the definition of protected information set forth in DR
4-101 of the Code is narrower than that of Rule 1.6. DR 4-101 protects information
subject to the attorney-client privilege and information "gained in
the professional relationship" which would be embarrassing or detrimental
to the client or which the client has asked be held inviolate.7
The extent to which the prohibitions in the Rules against revealing protected
information will affect a temporary lawyer depends on the nature of the
relationship between the temporary lawyer and the firm. Thus, a temporary
lawyer who works for a firm, in the firm office, on a number of matters
for different clients, under circumstances where the temporary lawyer is
likely to have access to information relating to the representation of other
firm clients ordinarily would be deemed to be "associated with"
the firm as to all other clients of the firm, unless through accurate records
or otherwise, it can be demonstrated that the temporary lawyer had access
to information relating to the representation only of certain other clients.
If such limited access cannot be demonstrated, the temporary lawyer in that
situation must not disclose information relating to the representation of
persons known to the lawyer to be firm clients regardless of the source
of the information.
Under other circumstances, however, the relationship of the firm with
the temporary lawyer is more like the relationship between a firm and a
totally independent lawyer. This ordinarily is the case where the temporary
lawyer has been screened from access to information relating to the representation
of firm clients for whom the temporary lawyer is not working, whether the
temporary lawyer is working in the firm office or not. In that situation,
the temporary lawyer's obligations under Rule 1.6 are, in the committee's
opinion, limited to not revealing (1) information relating to the representation
of any client for whom the temporary lawyer is working, and (2) information
relating to the representation of other firm clients only to the extent
that the temporary lawyer in fact obtains the information as a result of
working with the firm.
Thus, where the temporary lawyer is in a position to have obtained information
relating to the representation of other clients in the course of employment
by the firm, it is assumed for purposes of the Rules that such information
was in fact learned in that capacity. On the other hand, where the temporary
lawyer actually has information relating to the representation of a firm
client which could not have been obtained in the course of employment by
the firm, the Rule is no more applicable to the temporary lawyer than it
would be to a totally independent lawyer associated with a firm in a particular
matter only, who obtains information relating to the representation of firm
clients other than through working with the firm.
The same standards apply with respect to other provisions of the Rules
which relate to disclosure or use of information relating to representation
of a client, such as Rule 1.8(b) prohibiting use of such information to
the disadvantage of the client.8
Under the Code, the temporary lawyer could learn "confidences"
and "secrets" of firm clients, as defined in DR 4-101, only as
a direct result of working with the firm. When the relationship with the
firm is limited, it is less likely that the temporary lawyer will learn
confidences or secrets about firm clients for whom the temporary lawyer
is not working. However, under the Code, if the temporary lawyer does learn
the confidences or secrets of a firm client, then the temporary lawyer must
not reveal those confidences or secrets regardless of the nature of the
temporary lawyer's relationship with the firm.
Supervising lawyers with the firm also have an obligation to make reasonable
efforts to ensure that the temporary lawyer conforms to the rules of professional
conduct, including those governing the confidentiality of information relating
to representation of a client. Rule 5.1(b) and (c); DR 4-101(D).9
Disclosure to client
Rule 7.5(d), which prohibits lawyers from implying that they practice
in a partnership or other organization when that is not the fact, articulates
the underlying policy that a client is entitled to know who or what entity
is representing the client. A question therefore arises as to whether the
client must be told that a temporary lawyer engaged by the firm is working
on the client's matter as well as other information relating to the arrangement
between the firm and the temporary lawyer. Relevant to the inquiry are Rule
1.2(a), requiring a lawyer to consult with the client as to the means by
which the client's objectives are to be pursued, and Rule 1.4, relating
to client communication.
The committee is of the opinion that where the temporary lawyer is performing
independent work for a client without the close supervision of a lawyer
associated with the law firm, the client must be advised of the fact that
the temporary lawyer will work on the client's matter and the consent of
the client must be obtained. This is so because the client, by retaining
the firm, cannot reasonably be deemed to have consented to the involvement
of an independent lawyer. On the other hand, where the temporary lawyer
is working under the direct supervision of a lawyer associated with the
firm, the fact that a temporary lawyer will work on the client's matter
will not ordinarily have to be disclosed to the client. A client who retains
a firm expects that the legal services will be rendered by lawyers and other
personnel closely supervised by the firm. Client consent to the involvement
of firm personnel and the disclosure to those personnel of confidential
information necessary to the representation is inherent in the act of retaining
the firm.10
Assuming that a law firm simply pays the temporary lawyer reasonable
compensation for the services performed for the firm and does not charge
the payments thereafter to the client as a disbursement, the firm has no
obligation to reveal to the client the compensation arrangement with the
temporary lawyer. Rule 1.5(e), relating to division of a fee between lawyers,
does not apply in this instance because the gross fee the client pays the
firm is not shared with the temporary lawyer. The payments to the temporary
lawyer are like compensation paid to nonlawyer employees for services and
could also include a percentage of firm net profits without violation of
the Rules or the predecessor Code. See ABA Informal Opinion 1440 (1979).
If, however, the arrangement between the firm and the temporary lawyer
involves a direct division of the actual fee paid by the client, such as
percentage division of a contingent fee, then Rule 1.5(e)(1) requires the
consent of the client and satisfaction of the other requirements of the
Rule regardless of the extent of the supervision.
The requirement of Rule 1.5(a) that the total fee be reasonable is, of
course, a restriction only on the fee charged to the client and not on how
much is paid to the temporary lawyer. That requirement must be satisfied
in all events.
EC 7-7 and EC 7-8 are Code analogues to Rules 1.2(a) and 1.4 defining
the obligations of the law firm in informing a client of the use of a temporary
lawyer and, in appropriate instances, to obtain client consent. The committee
notes that DR 2-107(A) of the Code requires client consent to a division
of fees between lawyers and that EC 2-22 provides: "Without the consent
of his client, a lawyer should not associate in a particular matter another
lawyer outside his firm." The committee nevertheless is of the opinion
that where a temporary lawyer is working under the close firm supervision
described above, such employment does not involve "association with
a lawyer outside the firm," within the meaning of this Ethical Consideration.
The underlying purposes of the Rule and Code provisions and their functional
analyses are similar. For the reasons set forth above, absent a division
with the temporary lawyer of the actual fee paid by the client to the firm,
the client need not be informed of the financial arrangement with the temporary
lawyer under the Model Code since it does not involve a division of the
gross fee between lawyers.
Arrangements with placement agencies
Law firms wishing to hire temporary lawyers frequently use lawyer placement
or other employment agencies. Questions have been raised whether a law firm
which engages a temporary lawyer through such an agency may pay the agency
a fee which is a percentage of the compensation paid by the law firm to
the temporary lawyer without violating the provisions of Model Rule 5.4
or DR 3-102(A) of the Code.11
Arrangements among placement agencies, law firms and temporary lawyers
vary. Usually the law firm will contact the placement agency and provide
general information as to the nature of the matter and the area of practice
and level of experience desired in the temporary lawyer.
The placement agency maintains files on attorneys willing to accept independent
contractor assignments or may recruit a lawyer with the desired capabilities
and will attempt to match the lawyer with the task and attributes needed
by the law firm. Some agencies allow each attorney to establish his or her
own hourly rate, and this will be part of the information in the file of
that attorney maintained by the placement agency. The placement agency informs
the law firm of the name and background of the lawyer and the hourly cost
to the law firm for that lawyer's services. This hourly cost includes the
attorney's hourly rate as set by the lawyer and the fee to be paid to the
placement agency, which is either a fixed hourly sum that does not vary
in relation to the temporary lawyer's hourly rate or a percentage of the
lawyer's compensation. Under either arrangement, the amount of the placement
agency's fee will, of course, vary with the number of hours worked by the
temporary lawyer for the law firm on the engagement.
This committee is of the opinion that an arrangement whereby a law firm
pays to a temporary lawyer compensation in a fixed dollar amount or at an
hourly rate and pays a placement agency a fee based upon a percentage of
the lawyer's compensation, does not involve the sharing of legal fees by
a lawyer with a nonlawyer in violation of Rule 5.4 or DR 3-102(A) of the
Code. There is a distinction between the character of the compensation paid
to the lawyer and the compensation paid to the placement agency. The temporary
lawyer is paid by the law firm for the services the lawyer performs under
supervision of the firm for a client of the firm. The placement agency is
compensated for locating, recruiting, screening and providing the temporary
lawyer for the law firm just as agencies are compensated for placing with
law firms nonlawyer personnel (whether temporary or permanent).
Moreover, even assuming there is a total amount comprised of a lawyer's
compensation and the placement agency fee that is split, the total is not
a "legal fee" under the commonly understood meaning of the term.
A legal fee is paid by a client to a lawyer. Here the law firm bills the
client and is paid a legal fee for services to the client. The fee paid
by the client to the firm ordinarily would include the total paid the lawyer
and the agency, and also may include charges for overhead and profit. There
is no direct payment of a "legal fee" by the client to the temporary
lawyer or by the client to the placement agency out of which either pays
the other.
In addition, the rationale for the rule forbidding the sharing of legal
fees with nonlawyers, the maintenance of the lawyer's professional independence,
does not support the view that these arrangements involve fee-splitting.
The title of Rule 5.4 itself focuses on this underlying rationale: "Professional
Independence of a Lawyer." In Formal Opinion 87-355 (Dec. 5, 1987),
the committee concluded that the sponsor of a for-profit prepaid legal service
plan might retain a portion of the monthly fee paid by plan members to cover
the plan sponsor's overhead and profit without violating the fee-sharing
prohibitions of Rule 5.4 or of Rule 7.2(c) (prohibition against giving anything
of value to a person for recommending a lawyer's services). That opinion
restated the two principal reasons for the fee-sharing prohibition: "first,
to avoid the possibility of a nonlawyer being able to interfere with the
exercise of a lawyer's independent professional judgment in representing
a client; and second, to insure that the total fee paid by a client is not
unreasonably high." See also Informal Opinion 1440 (1979) (a law firm's
compensation arrangement with its office administrator, including payment
of a percentage of the net profits of the law firm, did not involve improper
fee splitting).
The committee perceives no adverse impact upon the exercise of the temporary
lawyer's independent professional judgment in the lawyer's work for the
law firm which results from payment of a placement agency fee as a percentage
of or in proportion to the lawyer's compensation. The same factors that
are present in any law firm which relates its compensation of lawyers to
the time worked by the lawyer are presented by the arrangement here. The
only variation is that another payment in relation to the time spent by
the lawyer is paid for a different service to a third party, the placement
agency.
With respect to the reasonableness of the total fee to each client on
whose matters the temporary lawyer works, the case is no different than
that of a law firm hiring a temporary secretary or other temporary help
through an agency. There is no meaningful difference between the practice
of lawyer placement agencies charging a fee to a law firm for recruiting
a permanent associate or partner, which often is a percentage of the lawyer's
first year compensation (a practice not challenged), and a fee based on
the temporary lawyer's actual compensation paid over a period of less than
a year. There is no reason to assume that the actual cost to the law firm
of the temporary lawyer hired through an agency (and consequently the impact
on the fee to the client) would be higher than the cost of that lawyer's
services hired direct by the firm, without the intervention of a placement
agency. The increasing use of placement agencies for temporary lawyers lends
support to the view that this is an efficient and cost-effective way for
law firms to manage their work flow and deployment of resources.
The committee is aware that the temporary lawyer often is on a permanent
roster maintained by the placement agency and may wish repeated placements
by the agency with a succession of law firms. This factor conceivably could
limit the temporary lawyer's exercise of independent professional judgment
in some respects because of the lawyer's need to maintain the goodwill of
the placement agency. See ABA Formal Opinion 87-355, Section I, and ABA
Formal Opinion 87-354. Unlike the situation in those opinions where the
lawyers are dealing directly with clients, here the temporary lawyer is
working for a law firm which itself has supervisory obligations over the
temporary lawyer by the provisions of Rule 5.1. But as long as the temporary
lawyer avoids the excessive controls exercised by nonlawyers noted in those
opinions, the arrangement is in our opinion permissible under the constraints
imposed by the Rules and the predecessor Code.12
Sound practice suggests that the agreement between a temporary lawyer
and a placement agency should make clear in explicit terms that the agency
will not exercise any control or influence over the exercise of professional
judgment by the lawyer, including limiting or extending the amount of time
the lawyer spends on work for the clients of the employing firm. Moreover,
the law firm must make certain that the compensation received by the temporary
lawyer, whether paid directly by the firm to the lawyer or paid by the placement
agency to the lawyer from sums which the firm pays the agency, is adequate
to satisfy the firm that it may expect the work to be performed competently
for the firm's clients. These matters fall within the responsibilities of
the law firm.
In summary, both the temporary lawyer and the law firm hiring the lawyer
must be sensitive to the need to protect and prevent misuse of information
relating to the representation (or under the Code, the secrets or confidences)
of firm clients. The application of the conflicts rules of the Model Rules
or the predecessor Model Code depend upon all the facts and circumstances
of the arrangement between the temporary lawyer and the firm in accordance
with the general guidelines discussed in this opinion. Disclosure to a firm
client on whose matters the temporary lawyer works of the arrangement with
a temporary lawyer may be required, except where the temporary lawyer is
working under the direct supervision of a lawyer associated with the firm.
Provided the temporary lawyer maintains independence of professional judgment
against any influence by a placement agency, the law firm may pay placement
agency fees, even where the amount of the fees is related to the amount
of the temporary lawyer's compensation.
End Notes
1For purposes of this opinion, "firm" or "law
firm" includes a sole practitioner and a corporate legal department.
See ABA Model Rules of Professional Conduct (1983, amended 1987), Terminology,
Rule 1.10 Comment. The term "temporary lawyer" means a lawyer
engaged by a firm for a limited period, either directly or through a lawyer
placement agency. The term does not, however, include a lawyer who works
part-time for a firm or full-time but without contemplation of permanent
employment, who is nevertheless engaged by the firm as an employee for an
extended period and does legal work only for that firm. That person's relationship
with the firm, during the period of employment, is more like the relationship
of an associate of the firm, and the Model Rules or the predecessor Model
Code of Professional Responsibility (1969, amended 1980) will govern the
lawyer and the firm and their relationship as with any associate of the
firm. Similarly, "temporary lawyer" does not include a lawyer
who has an "of counsel" relationship with a law firm or who is
retained in a matter as independent associated counsel.
2The consent of the current client may also be required
under Rule 1.7(b).
3The Code does not address specifically representation
of a client with interests adverse to a former client, but the standards
relating to confidentiality and disqualification rules applied by the courts
ordinarily would prohibit representation of the second client under the
Code in the same circumstances as under the Rules.
4The Comment to Rule 1.10 explains the Rule as follows:
"The rule of imputed disqualification stated in paragraph (a) gives
effect to the principle of loyalty to the client as it applies to lawyers
who practice in a law firm. Such situations can be considered from the premise
that a firm of lawyers is essentially one lawyer for purposes of the rules
governing loyalty to the client, or from the premise that each lawyer is
vicariously bound by the obligation of loyalty owed by each lawyer with
whom the lawyer is associated. Paragraph (a) operates only among the lawyers
currently associated in a firm. When a lawyer moves from one firm to another,
the situation is governed by paragraphs (b) and (c)."
5Based on a reading of the entire Rule and the Comment
to the Rule and an analysis of the reasons for the restrictions in the Rule,
the committee perceives no substantive difference between the terms "in"
and "with" in the context of the Rule.
6DR 5-105(D) provides: "If a lawyer is required
to decline employment or to withdraw from employment under a Disciplinary
Rule, no partner, or associate, or any other lawyer affiliated with him
or his firm, may accept or continue such employment." See also Footnote
4, supra.
7DR 4-101(A) provides: "'Confidence' refers to
information protected by the attorney-client privilege under applicable
law, and 'secret' refers to other information gained in the professional
relationship that the client has requested be held inviolate or the disclosure
of which would be embarrassing or would be likely to be detrimental to the
client."
8 See Rule 1.9(b) and the Comment to Rule 1.10 quoted
supra. The Code analogue, DR 4-101(D), applies only with respect to disclosures
of client confidences and secrets.
9 Rule 5.1(b) provides: "A lawyer having direct
supervisory authority over another lawyer shall make reasonable efforts
to ensure that the other lawyer conforms to the Rules of Professional Conduct."
Rule 5.1(c) provides: "A lawyer shall be responsible for another lawyer's
violation of the Rules of Professional Conduct if: (1) the lawyer orders
or, with knowledge of the specific conduct, ratifies the conduct involved;
or (2) the lawyer is a partner in the law firm in which the other lawyer
practices, or has direct supervisory authority over the other lawyer, and
knows of the conduct at a time when its consequences can be avoided or mitigated
but fails to take reasonable remedial action." The temporary lawyer,
of course, also remains subject to the Rules. Rule 5.2(a) thus provides:
"A lawyer is bound by the Rules of Professional Conduct notwithstanding
that the lawyer acted at the direction of another person." The only
analogue in the Code to Rules 5.1 and 5.2 is DR 1-103(A), which requires
disclosure to the proper tribunal or authority of a lawyer's unprivileged
knowledge of the misconduct of another lawyer. Both the temporary lawyer
and the lawyers with the firm engaging the temporary lawyer retain all the
general obligations of lawyers prescribed by the Model Rules. For example,
the lawyers with the firm have the obligation to provide competent representation
to the client under Rule 1.1, as does the temporary lawyer who undertakes
work for the client. See DR 6-101 of the Code.
10 See Rule 1.6 and the Comment to Rule 1.6 which provides
in part: "Lawyers in a firm may, in the course of the firm's practice,
disclose to each other information relating to the representation of the
client of the firm unless the client has instructed that particular information
be confined to specified lawyers."
11 The Committee on Professional and Judicial Ethics
of the Association of the Bar of the City of New York in Opinion No. 1988-3,
April 6, 1988 (amended in Opinion No. 1988-3-A, May 23, 1988), concluded
that an arrangement under which the law firm pays the agency and the agency,
after retaining a percentage as its fee, pays the lawyer constitutes improper
sharing of fees with a nonlawyer and aiding in the unauthorized practice
of law by the placement agency in violation of the New York Lawyer's Code
of Professional Responsibility. The committee also found infirm an arrangement
where the law firm pays the lawyer directly and pays the agency a placement
fee related to the compensation paid to the lawyer. The Committee on Professional
Ethics of the Connecticut Bar Association in Informal Opinion 88-15 (Aug.
1, 1988) concluded that an arrangement under which the law firm pays the
lawyer's compensation direct to the lawyer and separately pays the placement
agency its fee based on a percentage of the lawyer's compensation does not
violate the Connecticut Rules of Professional Conduct.
12 One could, of course, hypothesize the operation by
nonlawyers of an agency which places lawyers directly with clients (and
not through the legal department of the client) who pay compensation to
the agency for the lawyers' services. But in such a case the agency would
also not only be sharing fees with its lawyers but would almost certainly
be engaged in unauthorized practice of law under the law of every American
jurisdiction.
Copyright 1988 by the American Bar Association.
Editor's Note:This opinion is based on the Model Rules
of Professional Conduct and, to the extent indicated, the predecessor Model
Code of Professional Responsibility of the American Bar Association. The
laws, court rules, regulations, codes of professional responsibility and
opinions promulgated in the individual jurisdictions are controlling. |
