Proposed Opinions

Council Actions

At its meeting on January 24, 2014, the State Bar Council adopted the ethics opinions summarized below:

2013 FEO 2
Providing Defendant with Discovery During Representation

Opinion rules that if, after providing a criminal client with a summary/explanation of the discovery materials in the client’s file, the client requests access to the entire file, the lawyer must afford the client the opportunity to meaningfully review all of the relevant discovery materials unless the lawyer believes it is in the best interest of the client’s legal defense not to do so.

2013 Formal Ethics Opinion 13
Disbursement Against Funds Credited to Trust Account by ACH and EFT

Opinion rules that a lawyer may disburse immediately against funds that are credited to the lawyer’s trust account by automated clearinghouse (ACH) transfer and electronic funds transfer (EFT) despite the risk that an originator may initiate a reversal.

2013 Formal Ethics Opinion 15
Return of Records to Client upon Termination of Representation

Opinion rules that records relative to a client’s matter that would be helpful to subsequent legal counsel must be provided to the client upon the termination of the representation, but may be provided in an electronic format if readily accessible to the client without undue expense.

Ethics Committee Actions

At its meeting on January 23, 2014, the Ethics Committee voted to send the following proposed opinions to subcommittees for further study: Proposed 2013 FEO 12, Disclosure of Settlement Terms to Former Lawyer Asserting a Claim for Fee Division, and Proposed 2013 FEO 14, Representation of Parties to a Commercial Real Estate Loan Closing. The Ethics Committee also voted to publish three new proposed opinions. The comments of readers on the proposed opinions are welcomed.

At its October 24, 2013, meeting, the committee voted to send proposed 2013 FEO 8, Responding to the Mental Impairment of Firm Lawyer, to the staff for revisions to be considered by the committee at its meeting in January 2014. Unfortunately, this item was not considered by the committee at the January meeting, but will be considered by the committee at its April meeting.

Proposed 2014 Formal Ethics Opinion 1
Protecting Confidential Client Information when Mentoring
January 23, 2014

Proposed opinion discusses actions necessary to protect confidential client information when mentoring law students and lawyers.

Note: This opinion applies to mentoring relationships established informally, outside the context of a mentoring program of a bar organization or law school, as well as to formal mentoring relationships established through a bar organization or law school. However, the opinion does not apply to law students certified under the Rules Governing the Practical Training of Law Students (27 N.C.A.C 1C, Section .0200) or to lawyers supervising such students. In addition, this opinion does not apply to lawyers, employees, or law clerks being mentored or supervised by a lawyer within the same firm. See Rule 5.1-5.3.

Inquiry #1:

May a lawyer who is mentoring a law student allow the student to observe confidential client consultations between the lawyer and the lawyer’s client?

Opinion #1:

Yes. The lawyer may allow the law student to observe the consultation so long as the student signs a confidentiality agreement and the lawyer’s client gives his or her informed consent, confirmed in writing.

Rule 1.6(a) of the Rules of Professional Conduct provides that a lawyer shall not reveal information acquired during the professional relationship with a client unless (1) the client gives informed consent; (2) the disclosure is impliedly authorized; or (3) one of the exceptions set out in Rule 1.6(b) applies. “Informed consent” is defined by Rule 1.0(f) as denoting “the agreement by a person to a proposed course of conduct after the lawyer has communicated adequate information and explanation appropriate to the circumstances.”

The attorney-client privilege prohibits a lawyer from testifying as to confidential communications between the lawyer and the client for the purpose of legal representation. State v. McIntosh, 336 NC 517, 523, 444 S.E.2d 438, 441 (1994). The privilege is fundamental to the client-lawyer relationship and the trust that underpins that relationship. To seek the client’s informed consent, the lawyer must research the law relating to the attorney-client privilege and explain to the client what effect the law student’s presence during the consultation may have on the attorney-client privilege, including a potential waiver of the privilege. The lawyer must also explain any other adverse effect on the client’s interests. ABA Standing Comm. on Ethics and Prof’l Resp., Formal Op. 98-411 (1988). The lawyer must not ask for consent unless, in his professional opinion, either the attorney-client privilege will not be waived by the presence of the law student, or a potential waiver of the attorney-client privilege will cause minimal, or no, detriment to the client’s interests such that to ask for consent is reasonable.

Pursuant to Rule 1.0(c), “confirmed in writing” in this context “denotes informed consent that is given in writing by the person or a writing that a lawyer promptly transmits to the person confirming an oral informed consent.”

Inquiry #2:

If a lawyer is mentored by a lawyer in a different law firm, do the requirements in Opinion #1 apply when the lawyer-mentee observes a client consultation between the lawyer-mentor and a client or when the lawyer-mentor observes the lawyer-mentee conducting such a consultation with his client?

Opinion #2:

Yes. The lawyer conducting the consultation must evaluate the effect of the observing lawyer’s presence on the attorney-client privilege. If the lawyer concludes that, in his professional opinion, either the attorney-client privilege will not be waived by the presence of the other lawyer, or a potential waiver of the attorney-client privilege will cause minimal, or no, detriment to the client’s interests such that to ask for consent is reasonable, the lawyer may ask the client to consent to the observation. The lawyer must obtain the client’s informed consent confirmed in writing.

The lawyer conducting the consultation must also obtain an agreement from the observing lawyer to maintain the confidentiality of the information as well as an agreement that the observing lawyer will not engage in adverse representations. Rule 1.7 and Rule 1.9.

Both lawyers should check for conflicts of interest in advance of the consultation. Rule 1.7 and Rule 1.9.

Inquiry #3:

When a lawyer seeks advice from a lawyer-mentor on the representation of a client of the lawyer, what actions should be taken to protect confidential client information?

Opinion #3:

If possible, the lawyer should try to obtain guidance without disclosing client information, which can be done by using a hypothetical. If the consultation is general and does not involve the disclosure of client information, no client consent is necessary and the lawyers do not have to comply with the requirements set out in Opinion #2.

If the consultation is intended to help the lawyer-mentee comply with the ethics rules, no client consent is necessary and the lawyers do not have to comply with the requirements set out in Opinion #2. Rule 1.6(b)(5) provides that a lawyer may reveal protected client information to the extent the lawyer reasonably believes necessary “to secure legal advice about the lawyer’s compliance with [the Rules of Professional Conduct].” Pursuant to Comment [10] to Rule 1.6:

A lawyer’s confidentiality obligations do not preclude a lawyer from securing confidential legal advice about the lawyer’s personal responsibility to comply with [the Rules of Professional Conduct.] In most situations, disclosing information to secure such advice will be impliedly authorized for the lawyer to carry out the representation. Even when the disclosure is not impliedly authorized, paragraph (b)(5) permits such disclosure because of the importance of a lawyer’s compliance with the Rules of Professional Conduct.

If the consultation does not involve advice about the lawyer’s compliance with the Rules of Professional Conduct, a hypothetical is not practical, or making the inquiry risks disclosure of information relating to the representation, the lawyer-mentee must comply with the requirements set out in Opinion #2.

Both the lawyer-mentee and the lawyer-mentor should avoid the creation of a conflict of interest with any existing or former clients by virtue of the mentoring relationship. For example, the lawyer-mentee should not consult with a lawyer he knows has represented the opposing party in the past without first ascertaining that the matters are not substantially related and that the opposing party is not represented in the current matter by the lawyer-mentor. Similarly, the lawyer-mentor should obtain information sufficient to determine that the lawyer-mentee’s matter is not one affecting the interests of an existing or former client. Rule 1.7 and Rule 1.9.

Inquiry #4:

Is a lawyer prohibited from subpoenaing a law student, lawyer-mentee, or lawyer-mentor to obtain information about a client consultation in which the attorney-client privilege may have been waived because of the presence of such third parties?

Opinion #4:

Yes. Mentoring is critical to the development of competent legal skills in both law students and lawyers—especially new lawyers. If lawyers who want to serve as mentors cannot rely upon their colleagues to refrain from taking advantage of a potential waiver of the privilege, there is a risk that no lawyers will be willing to serve as mentors. This would be a detriment to the bar and, ultimately, consumers of legal services. Therefore, it would be prejudicial to the administration of justice in violation of Rule 8.4(d) for a lawyer to subpoena a law student, lawyer-mentee, or lawyer-mentor to obtain information that would be protected by the attorney-client privilege but for an inadvertent waiver as a consequence of a mentoring relationship.

Proposed 2014 Formal Ethics Opinion 2
Dual Representation of Trustee and Secured Creditor in Contested Foreclosure
January 23, 2014

Proposed opinion rules that a lawyer may not represent both the trustee and the secured creditor in a contested foreclosure proceeding.

Inquiry:

A law firm has entered into a contract with an independent corporation to serve as substitute trustee in any foreclosure proceeding initiated by the law firm. No member of the law firm, or anyone related to any member of the law firm, has any affiliation with or financial interest in the corporation.

May the law firm represent the corporation serving as the trustee in a contested foreclosure proceeding, while also representing the secured creditor in the proceeding?

Opinion:

No. As noted in NC Gen. Stat. §45-21.16(c), a trustee on a deed of trust is “a neutral party and, while holding that position in the foreclosure proceeding, may not advocate for the secured creditor or for the debtor in the foreclosure proceeding.” Because of the conflict between the neutral, fiduciary role of trustee and the role of an advocate for one of the parties to a contested foreclosure, a number of ethics opinions hold that a lawyer serving as a trustee in a contested foreclosure proceeding may not represent the secured creditor or the debtor in the proceeding. 2008 FEO 11 (listing opinions).

By extension, a lawyer representing the trustee in a contested foreclosure proceeding is also prohibited from representing the secured creditor or the debtor in the proceeding. This is because the lawyer must advise the trustee on maintaining a neutral role, and this representation would be materially limited by the advocacy required to represent either the secured creditor or the debtor. In fact, 2008 FEO 11 specifically prohibits the simultaneous representation in a contested foreclosure proceeding of the secured creditor and a corporate trustee specifically created by the lawyer’s firm to serve in this capacity. 2008 FEO 11, Opinion #5.

The Ethics Committee has recognized a limited exception to the prohibition on representation of the secured creditor by a lawyer for the trustee in a contested foreclosure proceeding. This exception permits joint representation of both the trustee and the secured creditor, but not in the contested foreclosure itself. In 2004 FEO 3, a lawyer proposed to represent both the secured creditor and the trustee in an unfair debt collection action filed by the borrower against the secured creditor and the trustee. To enjoin the pending foreclosure proceeding, the trustee was named as a party-defendant in the action. The opinion holds that the lawyer may represent both the secured creditor and the trustee as codefendants in this separate, tangential lawsuit brought by the borrower if the lawyer determines that his representation will not be impaired, and both the secured creditor and the trustee give informed consent. 2004 FEO 3 (applying a conflict of interest analysis under Rule 1.7).

Proposed 2014 Formal Ethics Opinion 3
Pro Bono Legal Services Provided by Government and Public Sector Lawyers
January 23, 2014

Proposed opinion encourages government lawyers to engage in pro bono representation unless prohibited by law from doing so.

Inquiry:

May a lawyer who works for the government or the public sector (hereafter “government lawyer”) provide pro bono legal services to private individuals and organizations pursuant to Rule 6.1?

Opinion:

Yes, if the government lawyer is not otherwise prohibited by law from engaging in the private practice of law.
All lawyers have a professional responsibility to provide legal services to those who are unable to pay as stated in Rule 6.1:

Every lawyer has a professional responsibility to provide legal services to those unable to pay. A lawyer should aspire to render at least (50) hours of pro bono publico legal services per year. In fulfilling this responsibility, the lawyer should:

(a) provide a substantial majority of the (50) hours of legal services without fee or expectation of fee to:

(1) persons of limited means;

(2) charitable, religious, civic, community, governmental, and educational organizations in matters that are designed primarily to address the needs of persons of limited means; or

(3) individuals, groups, or organizations seeking to secure or protect civil rights, civil liberties, or public rights, or charitable, religious, civic, community, governmental, and educational organizations in matters in furtherance of their organizational purposes, where the payment of standard legal fees would significantly deplete the organization’s economic resources or would be otherwise inappropriate.

...

Some government lawyers, however, are prohibited by statute from engaging in the private practice of law. See, e.g., NC Gen. Stat. §84-2 (“No justice, judge, magistrate, full-time district attorney, full-time assistant district attorney, public defender, assistant public defender, clerk, deputy, or assistant clerk of the General Court of Justice, register of deeds, deputy, or assistant register of deeds, sheriff, or deputy sheriff shall engage in the private practice of law.”) and NC Gen. Stat. §7A-754 (“Neither the chief administrative law judge nor any administrative law judge may engage in the private practice of law...”).

A government lawyer is subject to the requirements of the Rules of Professional Conduct when providing pro bono legal services. Although the pro bono legal services may be very different from the legal work that the government lawyer performs for his or her employer, the government lawyer must provide competent and diligent representation. See Rule 1.1 and Rule 1.3. Therefore, the government lawyer must ensure that he or she has the training necessary to represent the pro bono client competently. In addition, the government lawyer must communicate to the pro bono client that, in the course of providing pro bono legal services, the lawyer is not acting on behalf of a government agency or office but in his or her private capacity. See Rule 1.2 and Rule 1.4.

A government lawyer must also avoid conflicts of interests that may arise when providing pro bono legal services to private persons or entities. See Rule 1.7. The Arizona State Bar opined that the unique position of a lawyer employed by the government suggests that a heightened level of scrutiny for possible conflicts of interest is warranted when a government lawyer engages simultaneously in the private practice of law, albeit on a pro bono basis. Az. State Bar, Ethics Op. 93-08 (1993). The government lawyer must examine whether his or her employer and/or any public body that the government lawyer represents has an interest in the pro bono matter. If so, and the interests of the prospective private client are adverse to the government, or the government lawyer’s representation of either the government or the prospective private client will be materially limited, the lawyer must decline the representation unless both the government and the prospective client give informed consent. See Rule 1.7. Similarly, if the government lawyer formerly represented a public body in the same matter or a matter that is substantially related to the proposed pro bono representation, the government lawyer is prohibited from taking on the pro bono representation if it would be adverse to formerly represented public body unless this former client gives informed consent. See Rule 1.9. Because of the potential for conflicts to arise, it is recommended that a government lawyer limit his or her pro bono activities to practice areas that are unrelated to the lawyer’s government work.

Government and public sector lawyers must abide by the confidentiality rule. Rule 1.6(a) provides that a lawyer shall not reveal information acquired during the professional relationship with a client unless the client gives informed consent, the disclosure is impliedly authorized to carry out the representation, or the disclosure is permitted by an exception set forth in paragraph (b) of the rule. If the government lawyer is prohibited by his or her employer from entering into a confidentiality agreement with a private person or entity, the lawyer may not provide pro bono legal services to private clients. Nevertheless, the government lawyer may still find opportunities to provide pro bono service by participating in activities for improving the law, the legal system, or the legal profession. See Rule 6.1(b)(2).

If a government lawyer intends to provide pro bono services outside the context of a legal services organization or a nonprofit organization, before doing so the lawyer would be wise to consult with a liability insurance carrier to determine whether to carry malpractice insurance. If the government lawyer will be providing pro bono services under the auspices of a legal services organization or other nonprofit or charitable organization, the government lawyer would be wise to determine whether the legal services or nonprofit organization has liability insurance that will cover the government lawyer’s pro bono activities.

Government agencies and public sector offices are encouraged to adopt internal policies that will facilitate pro bono legal service by government lawyers. These policies should address, inter alia, the definition of pro bono, the types of pro bono services to be performed, conflicts of interests, use of the employer’s resources such as support staff and office equipment, and whether pro bono legal services are to be provided during working hours or after.

 

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