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    Wisconsin Lawyer
    August 01, 1997

    Wisconsin Lawyer August 1997: Ethics Opinions

    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.

    Wisconsin Lawyer


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