Ethics Opinion Articles - NC State Bar Journal

“Who You Gonna’ Call?” New Admittee’s FAQs, Part Three

By Suzanne Lever

Welcome back. Hopefully you have read the first and second article in this series and have been anxiously awaiting the third and final installment.

But first, let’s recap:

The North Carolina State Bar (the Bar) is the state agency responsible for regulating the practice of law in North Carolina. The Bar website, along with the North Carolina State Bar Journal, is a place to:

• Learn more about the regulation of the legal profession in North Carolina;
• Review proposed ethics opinions and proposed amendments to the rules and regulations of the Bar;
• Research the existing rules, regulations and ethics opinions of the Bar; and
• Catch up on the latest news and information from the Bar.

Not sure where to find or who to ask for the information you need? Check out our Bar Staff Contacts page: ncbar.gov/contacts/c_staff.asp.

Now for the new stuff.

To get you started, I have compiled a Q&A of the questions most frequently asked by new lawyers seeking advice from the Bar.

FAQs Relating to Client Files

Q: Do I have to give the client a copy of her file at the termination of the representation?

The original file belongs to the client. If the client requests the file at the conclusion of the representation, Rule 1.16 of the Rules of Professional Conduct obligates the lawyer to surrender to the former client all papers and property to which the client is entitled. Comment [10] to Rule 1.16 provides further guidance:

Generally, anything in the file that would be helpful to successor counsel should be turned over. This includes papers and other things delivered to the discharged lawyer by the client such as original instruments, correspondence, and canceled checks. Copies of all correspondence received and generated by the withdrawing or discharged lawyer should be released as well as legal instruments, pleadings, and briefs submitted by either side or prepared and ready for submission. The lawyer's personal notes and incomplete work product need not be released.

If the lawyer turns over the original file but elects to keep a copy of the client’s file for her own records, the lawyer must pay the copying costs.

Q: How long am I required to keep original closed client files?

If a lawyer retains the original file, the ethics opinions require the lawyer to keep a file for six years unless there is a limitations period requiring the lawyer to keep it longer. See RPC 209 for additional requirements. The lawyer should check with her malpractice carrier to see what it requires.

RPC 234 addresses the electronic storage of inactive client files. The opinion provides that an inactive client file may be stored in an electronic format so long as original documents with legal significance are preserved and documents in the electronic file can be reproduced on paper.

Q: When a client fails to pay a legal bill, may a lawyer withdraw from the representation? May the lawyer retain the file until the bills are paid?

A lawyer generally may withdraw from the representation when the client fails to pay the lawyer's fees if the client has been given reasonable warning that the lawyer will withdraw unless the obligation is fulfilled. See Rule 1.16(b)(6). However, be aware that in litigation proceedings, court rules commonly require consent of the court before withdrawing.

Upon withdrawal, the lawyer must take steps to the extent reasonably practicable to protect the client’s interests, including 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 part of a fee paid in advance that has not been earned. See Rule 1.16(d). The lawyer must surrender the client file regardless of whether the client has paid the lawyer’s fees.

Discharge by a Contingency Fee Client

Q: When a lawyer is discharged by a client who was represented on a contingent fee basis, may that lawyer recover a fee for the legal services that were rendered prior to the discharge?

Every client has the right to select a lawyer and to discharge that lawyer at any time. When a client discharges the lawyer before the case is settled or reaches final judgment, the contingent fee provision in the employment contract no longer has any meaning. In addition, North Carolina strictly limits the availability of lawyer charging liens (an equitable lien that gives a lawyer the right to recover his fee from a fund recovered by his aid). Therefore, when the contingent fee agreement has been rendered moot by discharge of the lawyer before recovery, the exclusive remedy for the former lawyer is to bring an action in quantum meruit to recover the reasonable value of the legal services he performed for the client.

Changing Firms

Q: May a lawyer who is planning to leave a law firm let her clients know her plans and ask them to take their business to her new firm?

When a lawyer leaves a firm, every current client with whom the departing lawyer has a personal professional relationship must be notified. See RPC 200. The State Bar encourages the departing lawyer and the firm to agree on a joint written notice. The notice must inform the client of the lawyer’s departure and of the client’s right to stay with the firm, continue with the departing lawyer, or retain completely new counsel. See RPCs 48 and 200.

Although a written joint notice is preferable, it is not required. See RPC 200. If the lawyer has a personal professional relationship with the client, she may contact the client personally or by telephone, but the communication may not interfere with the client’s right to select counsel. Likewise, a representative lawyer with the firm also may contact the client directly to notify the client of the departure and advise the client of the right to freely choose counsel.

The Anti-Contact Rule

Q: When may I interview an opposing party’s employee?

Rule 4.2 prohibits a lawyer who is representing a client in a matter from communicating directly with a person who is represented by counsel in the same matter, unless the person’s lawyer consents. When the opposing party is an organization, there is a distinction between communications with management and “rank and file” employees of the organization and between current and former employees.

There are four situations where a current employee is considered off-limits: (1) the employee supervises, directs, or consults with the organization’s lawyer concerning the legal matter; (2) the employee has authority to obligate the organization with respect to the matter; (3) the employee’s act or omission in connection with the matter may be imputed to the organization; and (4) the employee participates substantially in the legal representation of the organization.

There is a different standard for former employees. Rule 4.2 generally permits ex parte communications with former employees. This is true even though a former employee’s acts or omissions may be the subject of the representation. A lawyer may communicate directly with a former employee of a represented organization, unless the former employee participated substantially in the legal representation of the organization relative to the particular matter.

Conflicts

Q: When can I represent a client in a matter against a former client?

Clients often believe that once a lawyer has represented them, that lawyer may never be adverse to them in any other matter. That is not correct. However, there are limitations on when a lawyer may represent a client in a matter against a former client.

Pursuant to Rule 1.9(a), a lawyer who has formerly represented a client in a matter is restricted from thereafter representing 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 gives informed consent, confirmed in writing).

Matters are “substantially related” if they involve the same transaction or legal dispute or if there otherwise is a substantial risk that information that would normally have been obtained in the prior representation would materially advance the client's position in the subsequent matter. Rule 1.9, cmt. [3].

If the current matter is the same or substantially related to your representation of a former client, you have a conflict and cannot represent the new client unless the former client gives consent. If the matters are unrelated, you still have a conflict if information from your representation of the former client must be used to the detriment of the former client or must be disclosed to competently represent the current client in the current litigation See Rule 1.9(c). (For example, financial information obtained during the representation of a former client in a business matter may be relevant to a subsequent domestic matter involving the former client.)

Reporting Lawyer Misconduct

Q: When am I required to report another lawyer’s misconduct to the Bar?

The relevant parts of Rule 8.3 provide:

(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...shall inform the North Carolina State Bar or the court having jurisdiction over the matter.

(c) This Rule does not require disclosure of information otherwise protected by Rule 1.6.

The mandatory reporting requirement is an important way that our profession enforces the Rules of Professional Conduct. However, only serious violations must be reported. Note that the reporting requirement is triggered by the lawyer’s actual knowledge of a violation of the Rules—not speculation or conjecture. Next, note that only a violation that “raises a substantial question” about specific traits of the other lawyer—honesty, trustworthiness, or fitness —must be reported. For example, in most instances, failure to follow the technical requirements of the advertising rules would not raise a “substantial question” about honesty, trustworthiness, or fitness. Similarly, a conflict of interest or an inadvertent communication with a represented person would not ordinarily rise to this level. One other thing to note: the duty of confidentiality, as set forth in Rule 1.6, limits a lawyer’s duty to report the misconduct of another lawyer. If a client’s interests would be harmed by reporting to the Bar (or a court with jurisdiction) or the client instructs the lawyer not to report, the lawyer may not report unless one of the exceptions in Rule 1.6(b) applies.

Many of these issues, as well as other issues pertaining to professional responsibility, have been the subject of articles previously published in the Journal. These articles are great resources and can be found on the Bar website: ncbar.gov/ethics/eth_articles. asp.

Suzanne Lever is assistant ethics counsel for the North Carolina State Bar.

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