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Advertising – What are false or misleading claims?

Question:

When marketing legal services, lawyers must be able to factually substantiate their claims. Statements that mislead are violations of the Rules of Professional Conduct. My law firm is planning to launch a new website and has hired a marketing agency to help with both the design and the content. The marketing agency has researched the websites and marketing techniques of our main competitors and has recomm​ended that we should be more “aggressive” in our marketing. The marketing agency has recommended that we use the following phrases on our new website: that our law firm is a “premier personal injury law firm” in Wisconsin; that our law firm has “over 50 years of experience” even though that number is based on the combined years of experience of the lawyers in the firm; and that our law firm “can help when others cannot.” Do these statements violate the Rules of Professional Conduct?

Answer:

SCR 20:7.1 prohibits a lawyer from making a false or misleading communication about a lawyer or a lawyer’s services.1 Under SCR 20:7.1(a), a statement is false or misleading if it “contains a material misrepresentation of fact or law, or omits a fact necessary to make the statement considered as a whole not materially misleading.”

ABA Comment [2] following SCR 20:7.1 provides further guidance: “Truthful statements that are misleading are also prohibited by this Rule. A truthful statement is misleading if it omits a fact necessary to make the lawyer's communication considered as a whole not materially misleading.”

Consequently, a law firm’s advertisement was found to violate Rule 7.1 when that advertisement contained the statement: “Put our 30 years of experience to work for you.”2 While the combined legal experience of the lawyers in the firm equaled 30 years, no individual lawyer in the firm had practiced law for more than 10 years. The North Carolina ethics opinion concluded that such a statement was false or misleading because it omitted a fact necessary to make the statement considered as a whole not materially misleading. The opinion further concluded that to comply with the Rule, the firm’s “advertisement must state that the ‘combined legal experience’ of the lawyers with the firm is 30 years.”3

To comply with SCR 20:7.1(a), the law firm’s advertisement must include the necessary fact that the 50 years of experience is based on the combined years of experience of the lawyers in the firm.

A statement is also false or misleading under SCR 20:7.1(c) if it “compares the lawyer's services with other lawyers' services, unless the comparison can be factually substantiated.” ABA Comment [3] following SCR 20:7.1 provides further guidance: “Similarly, an unsubstantiated comparison of the lawyer's services or fees with the services or fees of other lawyers may be misleading if presented with such specificity as would lead a reasonable person to conclude that the comparison can be substantiated.”

Consequently, lawyers in a firm were privately reprimanded when they described their firm as a “premier personal injury law firm.” 4 “By describing their firm as the ‘premier’ personal injury law firm in their area, the lawyers offered an opinion as to the quality of the services they render, implying that their legal services are better than those provided by other area practitioners.” 5

To comply with SCR 20:7.1(c), the lawyers must not state that the firm is a premier personal injury law firm unless that statement can be factually substantiated. Lawyers should be mindful that implicit statements of superiority have the potential to mislead because there is often no objective way to verify the claim.

Similarly, an advertising claim that a lawyer can help a client “when others cannot” violates SCR 20:7.1(c) because it is incapable of substantiation.6Furthermore, such a claim may violate SCR 20:7.1(b) because it “is likely to create an unjustified expectation about results the lawyer can achieve.” A person unfamiliar with personal injury litigation might understand the advertisement to promise that any claim or case handled by the lawyer would result in a favorable outcome.

1SCR 20:7.1 Communications concerning a lawyer’s services
A lawyer shall not make a false or misleading communication about the lawyer or the lawyer's services. A communication is false or misleading if it: 
          (a) contains a material misrepresentation of fact or law, or omits a fact necessary to make the statement considered as a whole not materially misleading;
          (b) is likely to create an unjustified expectation about results the lawyer can achieve, or states or implies that the lawyer can achieve results by means that violate the Rules of Professional Conduct or other law; or
         (c) compares the lawyer's services with other lawyers' services, unless the comparison can be factually substantiated; or
         (d) contains any paid testimonial about, or paid endorsement of, the lawyer without identifying the fact that payment has been made or, if the testimonial or endorsement is not made by an actual client, without identifying that fact. 

2North Carolina Legal Ethics Opinion 2004-7.

3Id.

4 In re Anonymous, 689 N.E.2d 442,443,444 (Ind. 1997).

5Id.

6District of Columbia Legal Ethics Opinion 249 (1994)

Can I offer a discount on a client's bill for a referral?

Question

I regularly represent a contractor and he recently asked me to give a presentation at a seminar on the construction business. My client introduced me at the seminar as an excellent attorney who he “highly recommends.” Several of the people I spoke to at the seminar became new clients, and out of gratitude, I gave my client a substantial discount on his next bill. I talked to another lawyer about the new business I got and was surprised when he said it wasn’t a good idea because it was in-person solicitation. Do I have something to worry about?

Answer

The problem is not in-person solicitation, because the seminar attendees initiated the contact with the lawyer. However, a lawyer may not give anything of value, other than money paid for ads, to someone for recommending the lawyer’s services. Thus, it is not permissible to give a discount on a bill to a client who sends other clients to the lawyer.

References: SCR 20:7.2 and 7.3, State Bar of Wisconsin Formal Ethics Opinion E-94-4

Can lawyers who office share refer to themselves as a partnership?

Question:

I share office space and a secretary with another lawyer. We have a very good relationship and we often refer clients to each other and cover each other’s cases. Since we are so closely associated, can we advertise ourselves as “Smith & Jones” as long as we have a disclaimer that we are not a partnership?

Answer

No. This practice is explicitly prohibited and such a disclaimer is insufficient to render the name non-misleading.

References: SCR 20:7.5; State Bar of Wisconsin Formal Ethics Opinions E-00-2 and E-90-1.

Your Client Wants to Name You Trustee in the Will You Drafted

Question:

For several years I have represented an elderly gentleman in his business and in his estate planning. He and his wife, who recently died, had no children. He has asked me to serve as the trustee of the trust for which I am drafting the documents. May I do so consistent with the Rules of Professional Conduct?

Answer:

SCR 20:7.3(e) states that “a lawyer, at his or her instance, shall not draft legal documents, such as wills, trust instruments or contracts, which require or imply that the lawyer's services be used in relation to that document.” This rule makes clear that a lawyer cannot solicit either directly or by any indirect means a request or direction that the lawyer be named the trustee or personal representative, or be employed as the lawyer to probate the estate. Moreover, the Wisconsin Supreme Court concluded that it is both the solicitation and the appearance of solicitation that must be avoided. 1

Nevertheless, the court concluded that a lawyer may draft a will in which the lawyer is designated as the personal representative or which contains a direction to employ the lawyer to represent the personal representative if, in fact, that is the unprompted intent of the client.2 The court noted, however, that “the number of times this will occur will be few.” 3

In determining whether the lawyer solicited an appointment as the trustee, personal representative, or lawyer employed to probate the estate, the court will consider three factors:

  • First, the court will consider whether there is a legitimate reason for the lawyer to be chosen over all other potential trustees, personal representatives, or lawyers employed to probate the estate. In other words, the court will consider whether the case is one of “those fairly rare cases” where the lawyer has unusual familiarity with the testator’s business or family problems or has a relationship that transcends the ordinary client-attorney relationship.4
  • Second, the court will consider whether there is a statement in the will or trust document stating that no solicitation occurred. 5
  • Third, the court will consider the number of times the lawyer has drafted wills or trust instruments with these types of appointments. 6

Because SCR 20:7.3(e) has no counterpart in the ABA Model Rules, Wisconsin lawyers should be aware that ABA Comment [8] to SCR 20:1.8 is inconsistent with SCR 20:7.3(e) and Wisconsin case law. ABA Comment [8] states that Model Rule 1.8 “does not prohibit a lawyer from seeking to have the lawyer or partner or associate of the lawyer named as executor of the client’s estate or to another potentially lucrative fiduciary position.” This language is inconsistent with SCR 20:7.3(e), which prohibits a lawyer from soliciting such appointments. For this reason, ABA Comment [8] is inapplicable in Wisconsin.

Moreover, such appointments will be subject to the general conflict of interest provision in SCR 20:1.7 when there is a significant risk that the lawyer's interest in obtaining the appointment will materially limit the lawyer's independent professional judgment in advising the client concerning the choice of an executor or other fiduciary. In obtaining the client's informed consent to the conflict, the lawyer should advise the client concerning the nature and extent of the lawyer's financial interest in the appointment, as well as the availability of alternative candidates for the position.

1Schmeling v. Devroy, 109 Wis. 2d 154, 161, 325 N.W.2d 345, 348 (1982) (citing Disciplinary Proceedings against Gulbankian, 54 Wis. 2d 605, 612, 196 N.W.2d 733, 737 (1972)).

2 Gulbankian, 54 Wis. 2d at 612, 196 N.W.2d at 737.

3 Id.

4Id

5Devroy, 109 Wis. 2d at 161, 325 N.W.2d at 348.

6 Id.

7Disciplinary Proceedings against Felli, 291 Wis. 2d 529, 564, 718 N.W.2d 70, 88 (2006).

May a lawyer state he is a “specialist,” practices a “specialty,” or “specializes in” a particular field?

Question: 

My practice is limited to worker’s compensation cases, and I have been in practice for 12 years. I would like to advertise that “I specialize in worker’s compensation claims” or that “I am a workers’ compensation specialist.”  Am I permitted to do so under the Rules of Professional Conduct?

Answer

A lawyer may state that he or she is a "specialist," practices a "specialty," or "specializes in" a particular field, but such statements cannot be "false and misleading.”

SCR 20:7.4(a) permits a lawyer to communicate that he or she practices in a particular field of law. SCR 20:7.4(d), however, prohibits a lawyer from stating or implying that he or she is certified as a specialist in a particular field of law, “unless the lawyer has been certified as a specialist by an organization that has been approved by an appropriate state authority or that has been accredited by the American Bar Association,” and the name of the certifying organization is clearly identified in the communication.

SCR 20:7.4(d) does not prohibit a lawyer from stating that he or she is a "specialist," practices a "specialty," or "specializes in" a particular field. The ABA Comment [1] to SCR 20:7.4 explains: . . . A lawyer is generally permitted to state that the lawyer is a "specialist," practices a "specialty," or "specializes in" particular fields, but such communications are subject to the "false and misleading" standard applied in Rule 7.1 to communications concerning a lawyer's services. 1

SCR 20:7.1 prohibits a lawyer from making a false or misleading communication about the lawyer or the lawyer's services. A communication is false or misleading under SCR 20:7.1 if “it contains a material misrepresentation of fact or law, or omits a fact necessary to make the statement considered as a whole not materially misleading.”

Consequently, when a lawyer states that he or she is a specialist, that statement must not be a material misrepresentation or misleading. The lawyer must have some objective basis for that statement. On these facts, where the lawyer has practiced law for 12 years and has limited his or her practice to worker’s compensation cases for those 12 years, a reasonable person would not be misled by the lawyer’s statement that the lawyer “specializes” in worker’s compensation matters. Thus, SCR 20:7.4 would not prohibit this statement.

1 Some jurisdictions prohibit claims of specialization or expertise without an accompanying certification. A chart setting out each jurisdiction’s variations of Model Rule 7.4 can be found at www.abanet.org/cpr/pic/rule_charts.html.

Can a firm use the name of a retired and departed or deceased partner?

Question:

One of the partners in our small firm is retiring. His name is part of the firm name and generates a lot of good will because he is a very active member of the community. Can we keep the same name after the partner retires?

Answer:

Paragraph [1] of the Comment to SCR 20:7.5 states, in part:

It may be observed that any firm name including the name of a deceased partner is, strictly speaking, a trade name. The use of such names to designate law firms has proven a useful means of identification. However, it is misleading to use the name of a lawyer not associated with the firm or a predecessor of the firm, or the name of a nonlawyer.

Thus, provided the departed named partner is genuinely retired or deceased, it is permissible to continue to sue the name.

Confidentiality

When a Client Threatens Suicide

Question:

I represent a man charged with sexual assault of a child and he has steadfastly maintained his innocence. However, as trial approaches, he has become more depressed and agitated. I was just on the phone with him and he during the phone call, the client stated “I know you’ve done all you could for me, but there’s no way I can beat this. I’m going to save the state the expense of locking me up for life, because I won’t be alive for the trial” then hangs up the phone.

Answer:

Most authorities consider genuinely suicidal clients to be incapable of acting in their own interests, thus allowing the lawyer to take reasonable steps, including revealing information that would otherwise be confidential, to protect the client under SCR 20:1.14. SCR 20:1.6(c)(1) also allows a lawyer to reveal information to prevent reasonably likely death or substantial bodily harm. Note that both of these provisions permit the lawyer to disclose information to the extent reasonably necessary to prevent the foreseen harm. The Rules do not impose an affirmative duty to make such a disclosure and it is within the discretion of the lawyer.

References: SCR 20:1.6, SCR 20:1.14; Alaska Bar Association Ethics Opinions No. 2005-1.

Lawyer knows of planned false testimony

Question

I represented Smith, who is charged with DUI third offense. After his arrest, and despite blood alcohol evidence to the contrary, Smith told the police that he had only two beers over the course of the evening. Smith has told me that he had more drinks that night, but that he was going to trial, sticking to his story and taking the stand because his friend, Jones, who was in the car when Smith was pulled over, would corroborate his story. Jones admitted to me that he wasn’t with Smith that night, but he “had to do what he had to do.” I will try to withdraw, but what if the judge doesn’t let me off the case?

Answer

With respect to the client, in the McDowell case, the Wisconsin Supreme Court held that when a lawyer knows that a criminal defendant client insists on testifying falsely, the lawyer must inform the court and prosecutor that the client will testify in narrative form, then allow the client to do so. The lawyer must be careful not to argue the false evidence in closing argument. With respect to the alibi witness, SCR 20:3.3(a)(3) prohibits a lawyer from presenting evidence that the lawyer knows to be false.

References: SCR 20:3.3; State v. McDowell, 2004 WI 70, 272 Wis.2d 488, 681 N.W.2d 500

Prospective Client – duty of confidentiality with respect to unsolicited communications.

Question:

I represent a small corporation on most matters that come up for them. My partner, who does a lot of employment law, just told me that he received an unsolicited e-mail from one of my client’s employees (he must have visited our firm’s website), saying that he had heard that my partner was one of the best employment lawyers in town and he needed someone to sue his employer. The employee said it would be an easy case because he had clearly been treated unfairly in a number of ways, which he explained in detail, and that he was currently being harassed by his manager. My partner is not going to respond because we know we can’t represent this employee, but I want to tell my client about this situation. If my client knows, they can take some remedial action, which might prevent my client from being sued and help the disgruntled employee. Can I let my client know to head off this problem?

Answer:

If the law firm’s website has adequate disclaimers to the effect that persons transmitting information by unsolicited e-mails cannot expect confidentiality or the formation of a lawyer-client relationship, then the lawyer has no duty to hold the information in confidence. If, conversely, the website simply invites e-mail contacts without an adequate and conspicuous disclaimer, the lawyer cannot disclose the information.

Reference: SCR 20:1.6; SCR 20:1.18; Wisconsin Formal Ethics Opinion EF-11-03; “To Whom it May Concern,” David Hricik, The Professional Lawyer, Vol. 16 No. 3 (2005).

Your client threatens you, now what?

Question:

I represent a man charged with sexual assault of a child and he has steadfastly maintained his innocence. However, as trial approaches, he has become more depressed and agitated. I was just on the phone with him, and he became angry with me and said, “You haven’t done anything for me – in fact you’re on their side! If I’m going down on this you’re going down, too!” With that, he hung up the phone. What do I do?

Answer

If the lawyer reasonably believes the threat is credible, the lawyer should take necessary steps to protect him or herself, which may include disclosure of the threat to others.

References: SCR 20:1.6(b) and (c); NACDL Formal Ethics Opinion 04-02.

Conflicts

Can a lawyer provide financial assistance to a client?

Question:

I represent a client on a personal injury matter. I’ve represented this client on several matters over the years and consider her a friend as well. The accident has resulted in hard times for her because she hasn’t been able to work and is danger of being evicted. I’d like to give the client a loan/gift so she can stay afloat until the case is settled or tried. Can I do this?

Answer:

No. SCR 20:1.8(e) prohibits giving financial assistance to clients in connection with pending or contemplated litigation, and loans or help with living expenses has consistently been considered “financial assistance.” Some states have read a “humanitarian” exception into this Rule, but Wisconsin is not one of them. Note that the Rules do allow lawyers to make costs contingent on the outcome of a matter and to pay court costs and expenses on behalf of indigent clients. Neither of these exceptions allow a lawyer to help a client with living expenses.

Reference: SCR 20:1.8(e)

Is it ethical for a lawyer, as a condition of settlement, to agree to personally indemnify opposing party and counsel from any claims by third persons?

Question:

I represent plaintiffs in personal injury cases. Recently, I have been asked, as a condition of settlement, to personally indemnify the opposing party and counsel from any and all claims by third persons, such as hospitals, health care providers, Medicare and Medicaid, and worker’s compensation insurers. Is it ethical for me to enter into such an agreement? Is it ethical for opposing counsel to propose or demand that I enter into such agreement?

Answer:

No, it is not ethical for a lawyer to enter into such an agreement, and it is not ethical for opposing counsel to propose or demand that a lawyer enter into such an agreement. A plaintiff’s or claimant’s lawyer may not agree, as a condition of settlement, to personally indemnify the opposing party and counsel from any and all claims by third persons to the settlement proceeds. Such an indemnification agreement constitutes improper financial assistance to the client in violation of SCR 20:1.8(e). Such an agreement would obligate the lawyer to pay the client’s debts, which are the subject of, and therefore connected to, the pending litigation. Moreover, the exceptions to SCR 20:1.8(e) do not apply: the client’s debts are neither court costs nor expenses of litigation.

Just as a plaintiff’s or claimant’s lawyer may not agree, as a condition of settlement, to personally indemnify the opposing party and counsel from any and all claims by third persons to the settlement proceeds, a lawyer may not propose or demand that other lawyers enter into such an indemnification agreement. It is an ethical violation under SCR 20:8.4(a) for a lawyer to “knowingly assist or induce another” to violate the Rules of Professional Conduct.

References: State Bar of Wisconsin Formal Ethics Opinion E-87-11; Utah State Bar Ethics Advisory Opinion 11-01; Virginia Legal Ethics Opinion 1858 (2011); Ohio Supreme Court Ethics Opinion 2011-1; Florida Bar Staff Opinion 30310 (2011); Alabama Ethics Opinion RO 2011-01; Maine Ethics Opinion 204 (2011).

Confidentiality and prospective clients in divorce situations

Question:

I met with a woman who was considering a divorce. I spoke with her for about an hour, discussing what would be involved in a divorce, what she might be able to expect in her situation, and what she hoped to achieve. She stated she was unsure if she wanted to proceed, but would let me know. I heard nothing from her for quite some time and more or less forgot about her. Then, 14 months later, a man called about possible divorce representation, stating that he had just been served by his wife’s lawyer. I ran a conflicts check and discovered that the wife was the woman I spoke to 14 months earlier, but who has never retained me. Can I represent this man?

Answer:

The lawyer has a conflict and may only represent the husband with signed conflict waivers from both the wife and the husband. Lawyers owe duties of confidentiality and, to a certain extent, loyalty to prospective clients and hence may have conflicts with respect to prospective clients. When a lawyer has received information from a prospective client that could be significantly harmful to that prospective client, and here the lawyer clearly has received such information because the lawyer discussed the prospective client’s desired goals, that lawyer may not represent a client adverse to the prospective client in the same or substantially related matter. Note that the lawyer must keep information relating to the consultation with the prospective client confidential unless the lawyer has the informed consent of the prospective client to reveal that information.

References: SCR 20:1.18; State Bar of Wisconsin Formal Opinion EF-10-03: Restatement of the Law Governing Lawyers, §15.

Representing husband in business matter likely precludes representing spouse in divorce

Question:

I have been approached by a woman seeking representation in a divorce. In running a conflicts check, I found that I had represented her husband’s small business on several matters over the course of a few years. Can I represent the woman in the divorce?

Answer:

Probably not. This situation presents a conflict if it is reasonable to assume that in the prior representation of the husband, the lawyer would have had access to information that would be relevant in the divorce, and thus the prior representation is substantially related to the present representation in which the lawyer is adverse to the former client. For example, it is almost always a conflict for a lawyer to do estate planning work for a couple and then to represent one spouse against the other in a divorce because the lawyer would have had access to information about the spouses' assets and their wishes with respect thereto. While this situation presents a conflict, it is important to remember that the Rules do not prohibit all adversity to former clients – conflicts only arise when the matters are the same or substantially related.

References: SCR 20:1.9; Wisconsin Ethics Opinion E-89-4; Burkes vs. Hales, 165 Wis. 2d 585, 478 N.W.2d 37(1991), and Mathias v. Mathias, 188 Wis. 2d 280, 525 N.W.2d 81 (1994).

Information conflicts between clients

Question:

I represent a client, Smith, who is accused of armed robbery. His case is set for trial, and he has consistently maintained his innocence. One day, while visiting other clients at the jail, I met with another client, Jones, who I also represent on robbery charges. Jones told me that he knew that I represented Smith and that he would be watching how I handled that case because he knew Smith was innocent. I asked how he knew that, and he told me that maybe he was the one who actually committed the burglary. Jones made it very clear that I did not have his permission to reveal this information to anyone. What do I do now?

Answer:

Withdraw without revealing what Jones said. The lawyer now has an unresolvable conflict between the duty of competence, diligence, and communication to Smith and the duty of confidentiality to Jones.

References: SCR 20:1.1, SCR 20:1.4, SCR 20:1.6, SCR 20:1.7, SCR 20:1.9, SCR 20:1.16; Lettley v. State, 358 Md. 26, 746 A.2d 392 (2000).

Duties to Lawyers and Law Firms

Does the firm I’m leaving own my clients?

Question:

I’m an associate at a small firm, and I have been looking for other jobs for some time because of personality conflicts with two of the partners. I have just been offered a job at another firm that I intend to accept. However, because of the strained relationships at my current job, I don’t expect things to go smoothly when I give my notice. I have many clients who are quite happy with me and who I believe would follow me to my new firm. How should I go about making my departure?

Answer:

No one, neither the firm nor the departing lawyer, “owns” clients, and clients have a right to go with the departing lawyer, remain with the firm, or seek other counsel altogether. Both the departing lawyer and the firm have a duty under SCR 20:1.4(b) to notify those clients for whom the departing lawyer is primarily responsible of the lawyer’s departure. The clients should be informed as well, preferably in a joint letter from the departing lawyer and the firm, of the clients’ options to go with the departing lawyer, remain with the firm or seek other representation.

References: State Bar of Wisconsin Formal Opinion E-97-2; and ABA Formal Ethics Opinion 99-414, Joint Philadelphia-Pennsylvania Bar Ethics Opinion 2007-300; Restatement (Third) of the Law Governing Lawyers, § 9.

Threats to File a Disciplinary Complaint Against Opposing Counsel

Question

During settlement discussions in an acrimonious divorce action, opposing counsel called me unethical and threatened to file a disciplinary complaint against me. Is it unethical for opposing counsel to threaten to file a disciplinary complaint against me in order to induce settlement? Is it unethical for opposing counsel to call me unethical?

Answer:

The Rules of Professional Conduct do not expressly prohibit a lawyer from threatening to report opposing counsel to the disciplinary authority to gain an advantage in a civil case. However, the lawyer’s use of such a threat is constrained by the lawyer's obligation to report certain professional misconduct under SCR 20: 8.3(a), as well as by the prohibitions of SCR 20:8.4(a), SCR 20:8.4(b), SCR 20:8.4(c), SCR 20:3.1(a), SCR 20:4.1(a), and SCR 20:4.4(a).1

SCR 20:8.3(a) provides that a “lawyer who knows that another lawyer has committed a violation of the Rules of Professional Conduct that raises a substantial question as to that lawyer's honesty, trustworthiness or fitness as a lawyer in other respects, shall inform the appropriate professional authority.” The Rule does not require a lawyer to report every violation: it limits reporting to “those offenses that a self-regulating profession must vigorously endeavor to prevent.” 2 However, in those instances when a lawyer is required by SCR 20:8.3(a) to report the conduct of another lawyer, the lawyer’s failure to do so is a violation of SCR 20:8.4(a). 3

A lawyer’s threat to file a disciplinary complaint is the logical precursor to an agreement to not file a complaint in return for an advantage in the civil case. An agreement to not file a disciplinary complaint would violate SCR 20:8.4(a) where the lawyer is required by SCR 20:8.3(a) to file a complaint.

Where the lawyer is not required by SCR 20:8.3(a) 4 to report, a threat to do so may violate several other rules such as SCR 20:8.4(b), SCR 20:3.1(a), SCR 20:4.1(a), and SCR 20:4.4(a). Under SCR 20:8.4(b), it is misconduct for a lawyer to “commit a criminal act that reflects adversely on the lawyer’s honesty, trustworthiness or fitness as a lawyer in other respects.” If the lawyer’s threat constitutes extortion under the criminal law, then that conduct violates SCR 20:8.4(b).5 Moreover, a lawyer who threatens to file a disciplinary complaint when there is no intent to do so or when there is no violation of the Rules, violates SCR 20:8.4(c), which prohibits a lawyer from engaging in conduct involving dishonesty, deceit or misrepresentation.

A lawyer who threatens to file a disciplinary complaint that is not warranted under existing law violates SCR 20:3.1(a). In addition, a lawyer who threatens to file a disciplinary complaint without any actual intent to do so violates SCR 20:4.1, which prohibits a lawyer from making a false statement of material fact. Such threats also violate SCR 4.4(a), which prohibits a lawyer from using “means that have no substantial purpose other than to embarrass, delay, or burden a 3rd person,” because it burdens both the lawyer threatened and his or her client by “introducing extraneous factors into their assessment of whether to settle.” 6

Similarly, calling opposing counsel unethical to gain an advantage is “the antithesis of professionalism,” 7 and may violate the attorney’s oath, which requires the lawyer to “abstain from all offensive personality.” 8 Violating the attorney’s oath is misconduct under SCR 20:8.4(g).

While the Rules of Professional Conduct do not expressly prohibit a lawyer from threatening to file a disciplinary complaint against opposing counsel, the Rules do constrain a lawyer’s use of such threats. A lawyer considering making such a threat should carefully consider the Rules of Professional Conduct.

1See ABA Formal Op. 94-383.

2ABA Comment [3] to SCR 20:8.3. “The term ‘substantial’ refers to the seriousness of the possible offense.”

3SCR 20:8.4(a) states that it is professional misconduct for a lawyer to  “(a) violate or attempt to violate the Rules of Professional Conduct, knowingly assist or induce another to do so, or do so through the acts of another.”

4For example, the lawyer may not “know” but may only suspect that the other lawyer violated a Rule, or the violation may not raise a substantial question of the other lawyer’s “honesty, trustworthiness or fitness as a lawyer in other respects.”

 

5See ABA Formal Op. 94-383. 

6Id.

7Iowa State Bar Ass’n Comm. On Ethics & Practice Guidelines, Op. 14-02 (Oct. 24, 2014).

8SCR 40.15.

Can You Ask a New Associate to Sign a Noncompete Agreement?

Question:

I’m considering hiring an associate fresh out of law school. I’m the only tax lawyer in the area, and I don’t want him to develop a practice with me then take away clients if he decides to go out on his own. I would like to require this associate to sign an agreement not to practice tax law in this area for three years if he leaves the firm. Can I do this?

Answer:

No. SCR 20:5.6 explicitly prohibits lawyers from offering or making any employment or partnership agreement that restricts the lawyer’s right to practice upon termination of the agreement. Therefore, it is misconduct to ask the associate to sign a non-compete and it would be misconduct for the associate to do so.

When Is There a Duty for a Lawyer to Self-report to the Office of Lawyer Regulation?

Question:

While there is no duty to self-report rule violations, all Wisconsin lawyers must self-report criminal convictions and public discipline from other jurisdictions.

Answer:

Lawyers are sometimes required to report the misconduct by SCR 20:8.3. Under SCR 20:8.3(a), a lawyer “who knows that another lawyer has committed a violation of the Rules of Professional Conduct that raises a substantial question as to that lawyer's honesty, trustworthiness or fitness as a lawyer in other respects, shall inform the appropriate professional authority.” By its black-letter language, however, SCR 20:8.3(a) does not obligate a lawyer to self-report.

While SCR 20:8.3 does not require a lawyer to self-report, two other rules do require self-reporting in certain limited circumstances.

  1. Under SCR 21.15(5), a lawyer who is found guilty or convicted of any crime must notify the Office of Lawyer Regulation and the clerk of the Supreme Court within five days after the finding or conviction, whichever occurs first. A lawyer’s failure to self-report a criminal conviction is misconduct and may be prosecuted by OLR as a rule violation itself.
  2. Under SCR 22.22, a lawyer who has been publicly disciplined for misconduct or whose license has been suspended for medical incapacity by another jurisdiction must promptly notify the director of the Office of Lawyer Regulation. A lawyer’s failure to do so within 20 days of the effective date of the order of the other jurisdiction is misconduct.

Trust Accounts

Client whereabouts unknown – what to do with trust account funds

Question

I represented a client in a small claims matter that resulted in a settlement of a few hundred dollars. The first settlement check was NSF, and it took a few weeks to get the other side to cough up another check. I deposited the money in my checking account and tried to contact my client, but her phone was disconnected. I wrote two letters and received no response to the first and the second was returned because she had moved and left no forwarding address. I waited to see if she would contact me. I now have $600 in my trust account and don’t know where the client is – the last contact I had with the client was more than one year ago. What do I do with the money?

Answer

The lawyer must make reasonable efforts to locate the client, but eventually the funds will be considered abandoned and taken over by the Unclaimed Property Office of the Department of Revenue. See https://www.revenue.wi.gov/Pages/UnclaimedProperty/Home.aspx

References: SCR 20:1.15; Wis. Stat. Chap. 177

Proceeds of Settlement Promised to Another, What If ‘Good Faith’ Dispute Arises? Who Gets the Money?

Question

I represent a client in a personal injury action, and we have agreed to a settlement. I just received a letter from the chiropractor who treated my client, enclosing a “Chiropractor’s Lien,” signed by my client, wherein my client agreed to pay the chiropractor’s substantial bill out of any settlement. The chiropractor demands to be paid in full out of the pending settlement. I asked my client about this, and he acknowledged signing the document, but told me not to worry about it and simply pay the client the entire settlement minus my fees. What should I do?

Answer

The chiropractor has a contractual interest (actually an assignment) in the proceeds of the settlement, and the lawyer must either honor the assignment or, if the client has a good faith dispute about the bill, hold the disputed funds in trust until the dispute is resolved. If the dispute cannot be resolved by other means, the lawyer may file an action for declaratory judgment and deposit the funds with the clerk of court.

References: SCR 20:1.15(e); Wisconsin Ethics Opinion E-09-01

Duties to Adversaries

Can opposing counsel contact former employees of a represented entity?

Question:

I am representing a financial services company, alleging fraudulent acts by a broker. The broker’s manager left the company two months ago to take a job with a different company. Can I have my investigator contact the broker’s former manager?

Answer:

Yes. SCR 20:4.2 does not cover former employees regardless of the position once held with the company. Comment [7] to SCR 20:4.2 makes plain that the rule does not apply to former employees.

References: SCR 20:4.2, SCR 20:4.3, SCR 20:4.4; State Bar of Wisconsin Formal Opinion E-07-01; and ABA Formal Ethics Opinion 91-359.

A lawyer may not communicate with an individual with court-appointed counsel unless court dismisses counsel.

Question:

I represent a mother seeking the termination of the parental rights of the father of her two children. The father is indigent and has appointed counsel representing him in this matter. A few days ago, the father showed up at my office unannounced. I had my secretary tell him that I couldn’t speak to him because he was represented, but he insisted that he wanted to see me and said that he no longer had a lawyer. I met the father and he said that he didn’t need or want a lawyer, his appointed lawyer was “not my attorney” and he just wanted to give up his rights and get the whole thing over with. I called his appointed lawyer and got a message that he was out of the office for few days so I left a message on the machine.

After asking again and being assured that the father did not want a lawyer in this matter, I had the father sign affidavits stating that he wanted to terminate his rights with respect to the children and filed them with the court. I just got an angry phone call from opposing counsel saying that I’m going to have to answer to the OLR for what I’ve done. Will I?

Answer:

A client may not waive the protections of SCR 20:4.2 and when an opposing party claims to have discharged their lawyer, the lawyer should not discuss the matter with the person until confirming that fact or having taken reasonable steps to do so. Further, lawyers appearing before a tribunal normally must seek the permission of the tribunal to withdraw, so a lawyer would be able to ascertain with relative ease whether opposing counsel had been permitted to withdraw in a litigated matter. A party’s statement that they wish to discharge their lawyer is not a substitute for permission of the court.

References: SCR 20:4.2; OLR Private Reprimand 2003-4.

Is It Ethical for Me to Contact the Opposing Party’s Expert Witness?

Question:

I represent the plaintiff who was injured in a car accident caused by faulty mechanical repairs. I have learned that the defendant, the automobile dealership that repaired the plaintiff’s car, has hired an expert witness. Is it ethical for me to contact and interview the defendant’s expert witness prior to any formal discovery?

Answer:

As a general rule, attorneys for one party in a pending cause of action are free to interview the intended witnesses, including expert witnesses, of the opposing party without the consent or presence of opposing counsel. Wisconsin Formal Ethics Op. E-83-13. As with all general rules, there are exceptions.

The primary exception to the general rule arises when the opposing party’s expert witness is also the treating physician. The Wisconsin Supreme Court has held, as a matter of public policy based on the physician’s ethical obligation of confidentiality and the physician-patient privilege, that defense counsel may not engage in ex parte "discovery" with the plaintiff's treating physician. Steinberg v. Jensen, 194 Wis. 2d 439, 466-67, 534 N.W.2d 361, 371 (1995).

However, a lawyer is not prohibited from interviewing or engaging in ex parte “discovery” with an opposing party’s expert witness – other than the treating physician. Wisconsin Formal Ethics Op. E-94-1.

Another exception to the general rule arises when the expert witness is represented by counsel in the matter. SCR 20:4.2 prohibits a lawyer from communicating about the subject of the representation with a person the lawyer knows is represented by another lawyer in the matter, unless the lawyer has the consent of the other lawyer or is authorized by law or court order. The mere fact, however, that opposing counsel retains an expert does not mean that opposing counsel represents the expert witness.

When a lawyer interviews the opposing party’s expert witness who is unrepresented by counsel, the lawyer must first explain his or her role in the matter pursuant to SCR 20:4.3.

References: Wisconsin Formal Ethics Op. E-83-13, Wisconsin Formal Ethics Op. E-94-1, Steinberg v. Jensen, 194 Wis. 2d 439, 534 N.W.2d 361 (1995), SCR 20:4.2, SCR 20:4.3.

Can a lawyer contact an employee of a represented organization?

Question:

I represent an individual suing a company in a products liability matter. Discovery is under way. I believe that a current assembly line worker may have some knowledge about the company’s claim that it discontinued making some parts seven years ago. The worker is simply a low-level employee who may have some relevant factual information about the matter. The lawyers for the company have claimed that they represent all employees of the company. Can I send my investigator out to interview this worker away from the job site?

Answer:

The lawyer may contact this worker without the consent of opposing counsel. SCR 20:4.2 only prohibits contact with employees who direct or consult with the organization’s lawyer about the matter, who have authority to bind the organization with respect to the matter, or whose acts or omissions may be imputed to the organization in the matter. This employee is simply a fact witness and may be contacted without consent of the organization’s lawyer.

References: SCR 20:4.2, SCR 20:4.3, SCR 20:4.4, SCR 20:1.13; State Bar of Wisconsin Formal Opinion E-07-01; and ABA Formal Ethics Opinion 95-396.

Files

How long must I hold files?

Question:

I’ve been in solo practice for a few years now and I’m starting to run out of room for all the old files. How long do I have to hold on to the old files?

Answer:

The Rules of Professional Conduct do not impose an obligation to retain client files in perpetuity but do not provide a specific time period to retain closed files. How long a lawyer must retain a specific file depends to a large extent on the underlying matter, but the most commonly suggested minimum is six years, because this is the statute of limitation for certain malpractice actions and lawyers are required to keep trust account records for six years. Another suggestion is 10 years because this is the statute of limitations for filing grievances. Whether a firm chooses six years, 10 years, or some other reasonable period of time to maintain client files, clients should be informed of the firm’s file retention policies.

References: SCR 20:1.16(d); Wisconsin Ethics Opinion EF-17-01.

Unhappy client won't pay, and he wants his files

Question

My client owes me more than $5,000 in fees, and I have asked him repeatedly to make some effort to become current. In our last conversation, the client told me that I wasn’t worth what I charged and demanded his file in order to go to another lawyer. I told him that he could have his file when he paid copying charges of 10 cents per page. He then told me that he wasn’t asking for a copy – he wanted his file. Can’t I expect him to pay the costs of copying the file?

Answer:

No. The file is the property of the client and must be provided when requested by a client seeking other representation. The lawyer is responsible for the costs of making the lawyer’s copy of the file.

References: SCR 20:1.15, SCR 20:1.16(d); State Bar of Wisconsin Formal Ethics Opinion EF-16-03; OLR Public Reprimand 2005-09.

I Have Electronic Files. Do I Need Paper Too?

Question:

I’ve found that most of what now constitutes a client’s file exists on my computer. I keep my notes on the computer, generate all my documents on the computer and scan in all documents that I receive from opposing parties. Do I still have to keep paper files?

Answer:

It is not a violation of the Rules of Professional Conduct to maintain client files in electronic form as long as the lawyer is able to provide the file in a format usable by the client, preserves important original documents, and takes reasonable steps to preserve confidentiality.

References: SCR 20:1.15, 20:1.16; Wisconsin Ethics Opinions EF-16-03 and EF-17-01.

May a lawyer charge a former client for the time spent providing the file?

Question:

A client who I represented years ago has contacted me out of the blue and asked for her file. It will take me some time to retrieve the client’s file from off-site storage. Can I charge the client for my time in doing so?

Answer:

No. The file is the property of the client and the lawyer must provide the file upon request. In the Kitchen case, the Wisconsin Supreme Court held that it is a violation of SCR 20:1.5(a) when a lawyer charged for the time spent in retrieving a file.

References: SCR 20:1.16, SCR 20:1.5; Disciplinary Proceedings Against Kitchen, 273 Wis.2d 279, 682 N.W.2d 780. Wisconsin Ethics Opinion EF-16-03.

Fees and Fee Agreements

Reporting a delinquent client to a credit bureau

Question:

Lawyer represented Client in civil litigation on an hourly fee basis. Trial did not go well and Client was a contentious and difficult client who did not pay fee invoices on a timely basis and owes Lawyer a substantial sum. Now that case is over, Lawyer has sent several reminders of the fees owed and has received no response from Client for six months. Lawyer has considered suing Client for unpaid fees but decided not to after consulting with Lawyer’s malpractice insurance carrier. While Lawyer is resigned to the fees going unpaid, Lawyer would like to report Client’s unpaid debt to the credit bureaus.

Is Lawyer’s proposal ethical?

Answer:

SCR 20:1.6 protects all information relating to the representation of current or former clients. Lawyers are however, permitted to disclose information relating to the representation of a client to the extent reasonably necessary to establish a claim in a controversy with a client. SCR 20:1.6(c)(4) directly addresses the situation and states as follows:

(c) A lawyer may reveal information relating to the representation of a client to the extent the lawyer reasonably believes necessary: (4) to establish a claim or defense on behalf of the lawyer in a controversy between the lawyer and the client, to establish a defense to a criminal charge or civil claim against the lawyer based upon conduct in which the client was involved, or to respond to allegations in any proceeding concerning the lawyer's representation of the client;

ABA Comment [11] further explains:

A lawyer entitled to a fee is permitted by paragraph (b)(5) to prove the services rendered in an action to collect it. This aspect of the Rule expresses the principle that the beneficiary of a fiduciary relationship may not exploit it to the detriment of the fiduciary.

Thus it is clear that a lawyer may disclose information to the extent reasonably necessary to prove that their fees were earned and reasonable in an action to collect those fees. It is important to note that a lawyer’s disclosures under SCR 20:1.6(c)(4) must only be to the extent reasonably necessary to achieve the permissible goal under the exception. So the question becomes whether reporting to the credit bureaus is reasonably necessary to collect the lawyer’s fees.

Montana Ethics Opinion 001027 (2000) takes the position that such disclosures are not reasonably necessary:

Also, a lawyer may reveal only such client confidences and secrets as are necessary to establish or collect fees or as required by the Court. The lawyer must take care to dis-close no more information about the client and the client's legal affairs than is reasonably necessary for the agency to collect the debt. That said, a lawyer should not report non-paying clients to credit bureaus.

Reporting to a credit agency is not necessary to collect a fee because a delinquent fee can be collected without it.

The effect of a negative report is primarily punitive. Finally, it risks disclosure of confidential information about the former client which the lawyer is not permitted to reveal under Rule 1.6.

This is consistent with the position of many other ethics opinions; see Alaska Ethics Op. 86-3 (1986); Maryland Ethics Op. 04-20(2004); Nassau County (N.Y.) Ethics Op. 90-25 (1990); New Hampshire Ethics Op. 1987-8/8 (1988); New Mexico Ethics Op. 1988-7 (1988); New York State Ethics Op. 684 (1996); South Dakota Ethics Op. 95-3 (1995).

Retainer or advanced fee? Business or trust account?

Question:

I normally charge clients a $1,500 retainer for taking on a case, and after I have put in 10 hours, I begin to send them billing statements at my normal hourly billing rate of $150. I’ve always put the $1,500 in my business account because, as a retainer, I thought it was my property upon receipt. Now I’ve been told that I could get in trouble with Office of Lawyer Regulation if I don’t put these retainers in my trust account. Is that right?

Answer:

Retainers and advanced fees are now specifically defined under Wisconsin’s Rules, and what is described here is an advanced fee. It must, therefore, be placed in trust until earned, unless the lawyer complies with the alternative protection for advanced fees under SCR 20:1.5(g) and (f4). It is also arguably deceptive to call an advanced fee a retainer as those are defined terms under the Rules and may not be used interchangeably.

References: SCR 20:1.0(ag) and (mm), SCR 20:1.15(b) and SCR 20:7.1, New Trust Account Rules: Lawyer Fees and Fee Agreements, Timothy J. Pierce, 80 Wis. Law. 6 (June 2007).

Credit Card Transactions Okay, But Be Careful Where You Put Them

Question:

I’ve heard that other lawyers accept fee payments via credit card, but I’ve also been told that you can’t accept credit cards. What gives?

Answer:

As a general rule, lawyers may not permit electronic transactions, including credit card transactions, into trust accounts. However, by complying with the Alternative Protection for Advanced Fees provisions in SCR 20:1.5(g) and (f) a lawyer may accept advanced fee payments directly into the lawyer’s business account. Also, a lawyer may establish an E-Banking Trust Account pursuant to SCR 20:1.15(f)(3)b, or an “All-in-One” trust account pursuant to SCR 20:1.15(f)(3)c. Both of these options permit a lawyer to accept electronic payments, including credit cards, directly into a trust account. For a full description of these options, see E-Banking: Modernizing Trust Account Rules; Timothy J. Pierce, 89 Wis. Law. 7 (July 2016).

When Can You Modify a Fee Agreement? When Can You Withdraw?

Question:

I have been retained to represent a client, the plaintiff in a breach of contract action, for a flat fee. After some initial discussions with the defendant’s lawyer, who wants to fully litigate this case to establish precedent, it became apparent that the action was going to require much more time than I had originally expected. Is it unethical for me to renegotiate the fee agreement? If the client refuses to agree to modify the fee, may I withdraw as counsel?

Answer:

There is no prohibition under the Wisconsin Rules of Professional Conduct on a lawyer seeking modification of an existing fee agreement. Such a modification, however, is usually subject to special scrutiny because of the fiduciary nature of the client-lawyer relationship. The lawyer must show that the modification was reasonable under the circumstances at the time of the modification as required by SCR 20:1.5(a), that the modification was communicated to the client as required by SCR 20:1.5(b) and SCR 20:1.4(b), and that the modification was accepted by the client.

The justification for modifying a fee agreement lies in the reasonableness standard under SCR 20:1.5(a). Consequently, a modification sought by a lawyer that changes the basic nature of a fee arrangement or significantly increases the lawyer’s compensation absent an unanticipated material change in circumstances ordinarily will be unreasonable and thus violate SCR 20:1.5(a). Further, a lawyer may not use the threat of withdrawal to coerce a client into accepting a proposed modification.

Even when the client accepts, the modification may be suspect, and the modified contract may be found unenforceable. Generally, the lawyer must show that a reasonable client would have accepted the modification, typically because the modification benefitted the client in some substantial way.

References: SCR 20:1.5(a) and (b); SCR 20:1.4(b); SCR 20:1.16(b); ABA Comm. on Ethics & Prof'l Responsibility Formal Op. 11-458 (Aug. 4, 2011) (Changing Fee Agreements During Representation); Restatement (Third) of The Law Governing Lawyers § 18 (2000).


 

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