Wisconsin Lawyer: Ethics Taking Care of Business: Supervising Nonlawyer Employees:

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Format: MM/DD/YYYY
    October
    08
    2019

    Ethics
    Taking Care of Business: Supervising Nonlawyer Employees

    Lawyers clearly have a duty to supervise nonlawyer employees. The harder question is how much supervision is required.

    Dean R. Dietrich

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    Question

    I delegate law office management to a business manager. What duty do I have to oversee the business manager’s decisions?

    Answer

    It is very common for lawyers to delegate business operations for their firm to an office manager or business manager. Doing so makes sense in terms of having an efficient firm, but it does not relieve the lawyer from overseeing the business decisions made by that employee or outside contractor.

    Dean R. Dietrichcom dietrich dvlawgroup Dean R. Dietrich, Marquette 1977, of law firm of Dietrich VanderWaal Law Group SC, Wausau, is chair of the State Bar Professional Ethics Committee.

    Three lawyers in a New York law firm recently learned the importance of the duty to oversee and supervise an office manager after the individual embezzled more than $200,000 of client funds. The three partners’ licenses were suspended for six months for the lawyers’ failure to properly supervise the office manager and failure to report the embezzlement of funds when it came to their attention. Each lawyer previously had an unblemished record, but they received the six-month suspensions for failing to take appropriate action when they learned about the office manager’s improprieties.

    SCR 20:5.3 of the Wisconsin Rules of Professional Conduct addresses this situation for Wisconsin lawyers. This rule provides as follows:

    SCR 20:5.3 Responsibilities regarding nonlawyer assistants

    With respect to a nonlawyer employed or retained by or associated with a lawyer:

    (a) a partner, and a lawyer who individually or together with other lawyers possesses comparable managerial authority in a law firm shall make reasonable efforts to ensure that the firm has in effect measures giving reasonable assurance that the person's conduct is compatible with the professional obligations of the lawyer;

    (b) a lawyer having direct supervisory authority over the nonlawyer shall make reasonable efforts to ensure that the person's conduct is compatible with the professional obligations of the lawyer; and

    (c) a lawyer shall be responsible for conduct of such a person that would be a violation of the Rules of Professional Conduct if engaged in by a lawyer if:

    (1) the lawyer orders or, with the knowledge of the specific conduct, ratifies the conduct involved; or

    (2) the lawyer is a partner or has comparable managerial authority in the law firm in which the person is employed, or has direct supervisory authority over the person, and knows of the conduct at a time when its consequences can be avoided or mitigated but fails to take reasonable remedial action.

    It would be logical that a lawyer must review the office’s expenses and business transactions on a monthly basis to avoid a potential misuse or misappropriation of funds.

    A Wisconsin lawyer has a duty to supervise nonlawyer employees of the law firm and can be disciplined for failing to take appropriate action when overseeing the handling of funds by office employees. Several lawyers have been disciplined in Wisconsin for failing to properly supervise employees who have taken money from a law firm or clients.

    The more challenging question concerns the degree to which the supervising lawyer must monitor employees’ business activities. The rule would generally be interpreted under a reasonableness standard such that it would be logical that a lawyer must review the office’s expenses and business transactions on a monthly basis to avoid a potential misuse or misappropriation of funds. Simply signing checks without taking the time to verify the documentation for the checks that are written would put the lawyer at risk of discipline for failing to supervise the office employee and the law office business. A review of monthly bank statements would also be a logical additional step.

    To take appropriate steps to ensure proper supervision under the Supreme Court Rules, lawyers cannot merely rely on law office employees, who may be very honest and very trusted.

    Need Ethics Advice?

    As a State Bar member, you have access to informal guidance and help in resolving questions regarding Wisconsin’s Rules of Professional Conduct for Attorneys.

    Ethics Hotline: To informally discuss an ethics question, contact State Bar ethics counselors org tpierce wisbar Timothy Pierce or org akaiser wisbar Aviva Kaiser. They can be reached at (608) 229-2017 or (800) 254-9154, Monday through Friday, 9 a.m to 4 p.m.




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