Professional ResponsibilityLaw 115

Wed., Sept. 19

Allocation of Authority between lawyer and client

Two issues1) when can lawyer bind client

- issue of agency law2) when can lawyer be disciplined (1.2a) for

acting contrary to the client’s wishes or without consultation with client

Lawyer may bind client if

• Express agency– Client explicitly tells lawyer that he can act on his

behalf concerning the matter– In some cases client is prohibited from giving

express authority• Eg pleading guilty or not guilty in criminal case

– Can revoke at any time

MR 1.2(a) “lawyer shall abide by client’s decision as to whether to settle a matter”

• Implied agency–Authority that is assumed by virtue of

creation of attorney-client relationship, or authority that reasonable follows from the particular express agency conferred by the client• can by overridden by client’s express

wishes• If overridden, the client cannot be bound

by lawyer’s actions

Inherent authority

- assumed to exist by virtue of the lawyer-client relationship

- cannot be overridden by cleint’s express wishes

- e.g. the power to make admissions binding on the client before court

• Apparent authority–Restatement § 27. A Lawyer's Apparent

Authority–A lawyer's act is considered to be that of

the client in proceedings before a tribunal or in dealings with a third person if the tribunal or third person reasonably assumes that the lawyer is authorized to do the act on the basis of the client's (and not the lawyer's) manifestations of such authorization.

disciplinary law on the division of authority in lawyer-client

relationship

• MR 1.2(a)• Subject to paragraphs (c) and (d), a lawyer

shall abide by a client's decisions concerning the objectives of representation and, as required by Rule 1.4, shall consult with the client as to the means by which they are to be pursued.

• Comment 2 to 1.2• “Because of the varied nature of the matters

about which a lawyer and client might disagree and because the actions in question may implicate the interests of a tribunal or other persons, this Rule does not prescribe how such disagreements are to be resolved.”

special problems in criminal cases

• Anders Brief• request to withdraw but includes brief “that

refers to anything in the record that might ‘arguably support the appeal.’”

Jones v. Barnes(U.S. 1983)

disabled clients

• Rule 1.14 • (a) When a client's capacity to make

adequately considered decisions in connection with a representation is diminished, whether because of minority, mental impairment or for some other reason, the lawyer shall, as far as reasonably possible, maintain a normal client-lawyer relationship with the client.

• (b) When the lawyer reasonably believes that the client has diminished capacity, is at risk of substantial physical, financial or other harm unless action is taken and cannot adequately act in the client's own interest, the lawyer may take reasonably necessary protective action, including consulting with individuals or entities that have the ability to take action to protect the client and, in appropriate cases, seeking the appointment of a guardian ad litem, conservator or guardian.

• Compulsory Limitations on Scope – counseling or assisting crime/fraud

• Counseling or assisting crime or fraud is a different question from collaborating in a way that would make one subject under other law (e.g. as criminal accomplice or joint tortfeasor)– Narrower• Only crime/fraud, not all legal violations

– Broader• Can counsel or assist crime/fraud without aiding in a

manner that would make one criminally or civilly liable under the law of crime/fraud

• 1.2(d) • A lawyer shall not counsel a client to engage,

or assist a client, in conduct that the lawyer knows is criminal or fraudulent, but a lawyer may discuss the legal consequences of any proposed course of conduct with a client and may counsel or assist a client to make a good faith effort to determine the validity, scope, meaning or application of the law.

Applies even to agreeing to defend in connection with future

crime/fraud

but not test cases

only crime/fraud – not any illegal purpose of client

although you might become a joint tortfeasor

• You and your client are engaging in the negotiation of an agreement between your client and a retailer. You discover that while you were out of the room your client falsely told the retailer that no significant competitor for your client's product is likely. In fact, you and the client know that a competitor is about to introduce a cheaper and better version of your product in a few weeks. Negotiations are about to continue. Under the Model Rules, must you withdraw?

• You represented a company that obtained loans from a local bank. In issuing the loans, the bank relied upon your opinion letter, which certified that the company had sufficient valid contracts with customers to repay the loans. You subsequently learn that the company is in a worse financial situation than you were led to believe, because many of the documents that you relied upon were forged by the company's officers. You know that the company intends to apply for future loans from the same bank. The company has agreed that it will not ask you to represent it in further dealings in which the validity of your opinion concerning the company's worth would be relevant. May you represent the company in another capacity?

• Comment 10 to 1.2• A lawyer may not continue assisting a client in

conduct that the lawyer originally supposed was legally proper but then discovers is criminal or fraudulent. The lawyer must, therefore, withdraw from the representation of the client in the matter. See Rule 1.16(a). In some cases, withdrawal alone might be insufficient. It may be necessary for the lawyer to give notice of the fact of withdrawal and to disaffirm any opinion, document, affirmation or the like. See Rule 4.1.

• R. 4.1In the course of representing a client a lawyer

shall not knowingly:(a) make a false statement of material fact or

law to a third person; or(b) fail to disclose a material fact to a third

person when disclosure is necessary to avoid assisting a criminal or fraudulent act by a client, unless disclosure is prohibited by Rule 1.6.

• Permissive rejection of prospective clients

• Rule 6.2 Accepting AppointmentsA lawyer shall not seek to avoid appointment by a

tribunal to represent a person except for good cause, such as:

(a) representing the client is likely to result in violation of the Rules of Professional Conduct or other law;

(b) representing the client is likely to result in an unreasonable financial burden on the lawyer; or

(c) the client or the cause is so repugnant to the lawyer as to be likely to impair the client-lawyer relationship or the lawyer's ability to represent the client.

• TERMINATING REPRESENTATION

1.16(a) Except as stated in paragraph (c), a lawyer shall not represent a client or, where representation has commenced, shall withdraw from the representation of a client if:…(3) the lawyer is discharged.

In re Cooperman, 633 N.E.2d 1069 (N.Y. 1994).

• You work as in-house counsel for a large corporation. You are summarily fired, you believe as a result of your having made complaints about the corporation’s discriminatory treatment of you on the basis of your race. You sue for retaliatory discharge under Title VII. May your employer claim that under Rule 1.16(a)(3) you are not permitted to represent it?

1.16(a) Except as stated in paragraph (c), a lawyer

shall not represent a client or, where representation has commenced, shall withdraw from the representation of a client if:

(1) the representation will result in violation of the rules of professional conduct or other law;

(2) the lawyer's physical or mental condition materially impairs the lawyer's ability to represent the client; or

(3) the lawyer is discharged.

Permissive withdrawal

1.16(b) Except as stated in paragraph (c), a lawyer may withdraw from representing a client if:

(1) withdrawal can be accomplished without material adverse effect on the interests of the client;

• (2) the client persists in a course of action involving the lawyer's services that the lawyer reasonably believes is criminal or fraudulent;

1.2(d) A lawyer shall not counsel a client to engage, or assist a client,

in conduct that the lawyer knows is criminal or fraudulent.

• 1.16(b)(3) the client has used the lawyer's services to perpetrate a crime or fraud;

• (4) the client insists upon taking action that the lawyer considers repugnant or with which the lawyer has a fundamental disagreement;

• (5) the client fails substantially to fulfill an obligation to the lawyer regarding the lawyer's services and has been given reasonable warning that the lawyer will withdraw unless the obligation is fulfilled;

• (6) the representation will result in an unreasonable financial burden on the lawyer or has been rendered unreasonably difficult by the client; or

• (7) other good cause for withdrawal exists.

• 1.16(d) Upon termination of representation, a lawyer

shall take steps to the extent reasonably practicable to protect a client's interests, such as giving reasonable notice to the client, allowing time for employment of other counsel, surrendering papers and property to which the client is entitled and refunding any advance payment of fee or expense that has not been earned or incurred. The lawyer may retain papers relating to the client to the extent permitted by other law.

• You take a product liability case from a client, but the next day you decide that instead you want to take a trip to Greece. May you terminate the representation?

• You represent a plaintiff in a product liability case. A few days before trial, your client is offered what you think is a very generous settlement that he should snap up. He refuses. May you withdraw?

• Problem of organizational clients

• Rule 1.13 Organization As Client(a) A lawyer employed or retained by an

organization represents the organization acting through its duly authorized constituents.

• Two hundred people owning land adjoining an airport hire you to sue the airport for nuisance.

• They agree that a vote of the majority is enough to bind all of them to a settlement.

• In the end, 101 people want to settle -- the remaining 99 have told you that they do not want you to settle and do not give you the authorization to settle for them.

• Can you enter into a settlement for the 99 if dissenters if you are representing a group entity alone?

• Can you do so if you are merely representing 200 people jointly?

• 1.13(f) In dealing with an organization's directors, officers, employees, members, shareholders or other constituents, a lawyer shall explain the identity of the client when the lawyer knows or reasonably should know that the organization's interests are adverse to those of the constituents with whom the lawyer is dealing.

• Comment 10: There are times when the organization's interest may be or become adverse to those of one or more of its constituents. In such circumstances the lawyer should advise any constituent, whose interest the lawyer finds adverse to that of the organization of the conflict or potential conflict of interest, that the lawyer cannot represent such constituent, and that such person may wish to obtain independent representation. Care must be taken to assure that the individual understands that, when there is such adversity of interest, the lawyer for the organization cannot provide legal representation for that constituent individual, and that discussions between the lawyer for the organization and the individual may not be privileged.

You are corporate counsel and like to talk with people on the assembly

line about cases that the corporation is pursuing. Is this OK?

going up

Two mistakes:

1) thinking a constituent is your organizational client, such that you treat the constituent’s illegal purposes as a case in which your client has illegal purposes

2) thinking that your organizational client can never have illegal purposes and that any such purposes must always be attributed to a constituent

• 1.13(b) If a lawyer for an organization knows that an officer, employee or other person associated with the organization is engaged in action, intends to act or refuses to act in a matter related to the representation that is a violation of a legal obligation to the organization, or a violation of law that reasonably might be imputed to the organization, and that is likely to result in substantial injury to the organization, then the lawyer shall proceed as is reasonably necessary in the best interest of the organization.

• Unless the lawyer reasonably believes that it is not necessary in the best interest of the organization to do so, the lawyer shall refer the matter to higher authority in the organization, including, if warranted by the circumstances to the highest authority that can act on behalf of the organization as determined by applicable law.

Lawyer for Corp. discovers that a manager of Corp. has decided to allow certain mild toxins to be dumped in a creek, in violation of EPA regulations. The result will be some destruction of the environment and a chance that some people swiming in the creek will suffer rashes. The manager concluded that the cost of possible fines and civil suits are worth absorbing because of the difficulty of alternative disposal of the toxins. What should Lawyer do?

What if dumping the toxins was criminal?

• You find out that the corporation that you are counsel for is a front for the Mob. Does MR 1.13(b) apply?

• You are counsel for a corporation and find out that an employee has cheated on his income taxes. Does MR 1.13(b) apply?

You are counsel for a small corporation with three shareholders. Two of the shareholders, who are also officers, ask you to draw up a contract between the corporation and what you discover are entities owned by the officers. This is illegal self-dealing, but neither crime nor fraud. May you draw up the contracts?

You are counsel for a public corporation. The CEO asks you to draw up a contract between the corporation and what you discover are entities owned by the CEO. When you refuse and say you will go to the Board of Directors, he fires you. Can you still go to the Board of Directors?

• (e) A lawyer who reasonably believes that he or she has been discharged because of the lawyer's actions taken pursuant to paragraphs (b) or (c), or who withdraws under circumstances that require or permit the lawyer to take action under either of those paragraphs, shall proceed as the lawyer reasonably believes necessary to assure that the organization's highest authority is informed of the lawyer's discharge or withdrawal.

Sarbanes-Oxley

Who is covered?Anyone “practicing before the commission”Includes:- providing advice in respect of the US securities laws regarding any document that he has notice will be filed or incorporated into document that will be filed to Commission- advising issuer as to whether information is required under securities law to be filed with Commission

What triggers duty to go up:

evidence of material violation

“credible evidence, based upon which it would be unreasonable not

to conclude that it is reasonably likely that a material violation has

occurred or will occur”

What is a material violation

- state or fed securities law, breach of fiduciary duty under state or federal law, or similar violation

Go up to whom?

Qualified Legal Compliance Committee

or"the issuer's chief legal officer" or

"to both the issuer's chief legal officer and its chief executive

officer"

What if no appropriate response

report to audit committee on board (or its equivalent) or to board

• DUTY OF CONFIDENTIALITY vs. ATTY CLIENT PRIVILEGE