Maryland Bar Bulletin
Publications : Bar Bulletin

December, 2004

Changes in Maryland's Rules of Professional Conduct On Horizon
~Court of Appeals to hear proposals on January 10~
By Andrew Jay Graham

An overhaul of Maryland’s Rules of Professional Conduct has been in progress for the past two years, and significant changes are likely to be made to the Rules in the near future. In April 2002, the Court of Appeals appointed a special committee, chaired by the Honorable Lawrence F. Rodowsky, to study the existing Rules, an undertaking that culminated in a lengthy report submitted to the Court of Appeals on December 16, 2003. The 400-page report can be accessed and read online at www.courts.state.md.us/lawyersropc.html in both clean and redlined versions.

The Court of Appeals will hold a hearing on the proposed changes on January 10, 2005, when interested Maryland lawyers will have the opportunity to express their views. While the Rules, in large measure, remain substantively more or less as they were, there are quite a few proposed material changes in which every member of the Bar should be interested.

In anticipation of that hearing, here is a brief summary of the proposed changes:

Proposed Preamble. The recommended Preamble to the Rules sets forth several new advisory guideposts respecting lawyers’ responsibilities under the Rules. The new Preamble informs lawyers that they will be bound by the Rules when serving as a third-party neutral or when acting in a nonprofessional capacity. The Preamble will urge lawyers to devote professional time and resources to ensure access to our system of justice for those who cannot otherwise afford it. And the new Preamble strikes a theme that appears throughout the proposed Rules: civility is a fundamental cornerstone of the legal profession. Lawyers are warned up front that the Rules do not endorse junkyard-dog tactics in the name of zealous advocacy.

Proposed Scope. Perhaps the most material change in the Scope section is the provision dealing with consequences of Rules violations in the context of civil litigation for legal malpractice. Item 20 states that the Rules “...are not designed to be a basis for civil liability,” but rather to provide guidance and a structure for regulating conduct through disciplinary agencies. The same paragraph, however, provides that, “Nevertheless, in some circumstances, a lawyer’s violation of a Rule may be evidence of breach of the applicable standard of conduct (emphasis added).” A number of reported cases, both state and federal, support the proposition that the purpose of the Rules is not to provide a legal basis upon which to impose civil liability. Exactly how the Rules will be used in civil actions against lawyers in the days ahead remains to be seen, but because all lawyers potentially face the prospect of such claims the Scope language concerning the evidentiary impact of a violation of the Rules should be of interest to all of us.

Proposed Rule 1.0. Terminology. Two new and important concepts appear in the Terminology section – “Informed consent” and “Confirmed in writing.” Informed consent signifies agreement by a person to a proposed course of conduct after the lawyer has communicated adequate information and explanation as to its material risks and reasonably available alternatives. It will not suffice to simply toss an issue to the client and ask whether he or she agrees to its proposed handling. Counsel must discuss the risks and alternatives of the proposed course of action, and in certain circumstances the lawyer must advise the client to consult with independent counsel. In some situations (e.g., business transactions with clients), the client’s consent must be “confirmed in writing” and signed off on by the client, as well. “Confirmed in writing”, when used in reference to informed consent, means that the consent is given in writing by the client or other person, or, in the alternative, at least confirmed by the lawyer in a letter to the person.

The Terminology section will also define the term “Screened” and establish clear and stringent guidelines for how a firm should handle situations involving the representation of a client when one of the firm’s lawyers has been disqualified.

Proposed Rule 1.2. Scope of representation and authority. Current and proposed Rule 1.2(a), relating to the scope of representation and allocation of authority between client and lawyer, provides that a lawyer shall abide by the client’s decisions concerning the objectives of the representation. When appropriate, the lawyer must even consult with the client as to the means by which the objectives are to be pursued. Read literally, this provision might suggest that the lawyer must consult with his or her client at every juncture about every issue; however, the proposed Rule will clarify that a lawyer may take such action on behalf of a client as is impliedly authorized to carry out the representation.

Rule 1.2(c) addresses the issue of whether a lawyer may limit the scope of his or her representation. The answer under proposed Rule 1.2(c) is that he or she may, but only so long as the limitation is reasonable under the circumstances and the client gives “informed consent.” Comment [7] to proposed Rule 1.2 offers the example of a lawyer and a client agreeing that the lawyer’s services will be limited to a brief telephone consultation. This kind of representation will be deemed permissible so long as it is not unreasonable to conclude that the client would be able to reasonably rely on this sort of limited advice.

Proposed Rule 1.2(d), like the current Rule, will state that a lawyer may not counsel a client to engage in criminal or fraudulent conduct. But Proposed Comment [9] to the Rule will make it clear that this prohibition does not preclude the lawyer from giving an honest opinion about the consequences likely to result from a client’s conduct.

Proposed Rule 1.5 (Fees). Rule 1.5(b) will provide that a lawyer must advise the client of the scope of the representation and state the basis or rate of the fee and expenses for which the client will be responsible, before or within a reasonable time after commencing the representation, unless the lawyer has regularly been representing the client on agreed financial terms. The proposed Rule will recommend that all fee agreements be in writing, and will require that contingency fee arrangements be in writing and signed by the client. The proposed Rule will also provide that the expenses of the representation may not be unreasonable and that contingency fee agreements notify the client of any expenses for which the client will be responsible, whether the client prevails or not. The Comment to this Rule advises that the client must either agree in advance to what these reasonable charges will be, or counsel may simply charge an amount actually reflecting the costs incurred by the lawyer. Finally, proposed Rule 1.5 will provide as to fee divisions between lawyers that the client’s agreement to the joint representation must be confirmed in writing. It will not be enough for the client simply not to object.

Proposed Rule 1.6 (Confidentiality). Under proposed Rule 1.6(b), a lawyer will be permitted to disclose information relating to a representation to “prevent reasonably certain death or substantial bodily harm....” There will no longer be a requirement that the anticipated bad conduct be criminal or fraudulent. Counsel may also make disclosures to prevent crime or fraud reasonably certain to result in financial injury to others. The Comment to proposed Rule 1.6 urges lawyers to first attempt to persuade their clients to take appropriate action to eliminate the need for disclosure and warns lawyers to keep the adverse disclosure as limited as possible. Proposed Rule 1.6 will also explicitly provide that a lawyer may disclose client confidences in order to secure legal advice about the lawyer’s own compliance with the Rules of Professional Conduct, a court order or other law.

Proposed Rule 1.7 (Conflict of interest – general rule). The proposed Rule still essentially forecloses representation of clients who are directly adverse or where the representation of client A will be limited by the representation of client B or by the lawyer’s own interests. Where a conflict develops after the representation has begun, Comment [4] teaches that the lawyer must ordinarily withdraw unless the lawyer has obtained her clients’ informed consent and one client is not asserting a claim against another. Informed client consent will require that each affected client be made aware of the relevant circumstances and the material and reasonably foreseeable ways in which the conflict might have adverse effects on the interests of that client.

As to future conflicts, proposed Comment [22] blesses advance waivers of conflicts under certain circumstances.

Proposed Rule 1.8 (Conflicts – current clients). Addressing business transactions by attorneys with clients, proposed Rule 1.8 will provide that such deals will not be upheld unless the terms are fair and reasonable, the arrangements are confirmed in writing and the client provides informed consent in a signed writing. Additionally, counsel must advise the client in writing that he or she should seek independent legal counsel. Counsel must describe in writing for the client the essential terms of the transaction and state whether the attorney is representing the client in the transaction as well as participating as a party.

Proposed Rule 1.8(g) will prohibit a lawyer representing multiple clients from making an aggregate settlement of civil claims or a joint plea deal in a criminal case unless each client gives informed consent in a signed writing or the clients confirm their consent on the record before a judge.

Finally, as to lawyers’ efforts to deal defensively with prospective malpractice claims, Comment [14] will state that lawyer/client agreements to arbitrate legal malpractice claims are permissible so long as the client is informed of the scope and effect of such an agreement.

Proposed Rule 1.15 (Safekeeping property). Whether lawyers may deposit “flat fees” in their operating accounts and deem them earned upon receipt is a controversial issue. We all know lawyers, particularly those with high-volume, small-fee practices, who charge only flat fees. But in Attorney Grievance Commission v. McLaughlin, the Court of Appeals stated that “flat fees” received by the respondent should have been placed in his trust account to be drawn against as work was performed. The Rodowsky Committee recommends a Rule like the District of Columbia’s, allowing flat fees to be placed in the lawyer’s operating account upon receipt, but only if the client provides written informed consent to the arrangement.

Proposed Rule 1.18 (Duties to prospective clients). Proposed Rule 1.18 is brand-new. Under Rule 1.18, if a lawyer speaks with a prospective client and obtains information that is significantly harmful to an existing client, the lawyer and his firm will be conflicted out of the case unless counsel receives informed consent to the contrary or the disqualified lawyer is screened from participation in representing the firm’s client and receives no part of the fee. Comment [5] provides some comfort: a lawyer may condition conversations with a prospective client upon receipt of the person’s informed consent that no information disclosed by the prospective client will prohibit the lawyer from representing a different client in the matter.

Proposed Rule 2.4 (Lawyers as third-party neutrals). This is another brand-new Rule. In essence, Rule 2.4 recognizes that attorneys function as mediators and arbitrators, as well as advocates, and brings this activity within the Rules of Professional Conduct. It will provide that lawyers serving as third-party neutrals must make clear to unrepresented parties that the neutral is not representing them. The purpose of the Rule is to prevent unsophisticated parties from becoming confused or developing a false sense of security by virtue of the third-party neutral lawyer’s participation in the dispute.

Proposed Rule 3.6 (Trial publicity). Like the current Rule, the proposed Rule restricts a lawyer’s right to make public extrajudicial statements that have a substantial likelihood of materially prejudicing an adjudicative proceeding. Subsection (c), however, will provide that a lawyer may make a statement that he or she reasonably believes is required to protect a client from the substantial undue prejudicial effect of recent publicity not initiated by the lawyer or by his or her client.

Proposed Rule 5.1 (Responsibility of partners, managers and supervisory lawyers). Rule 5.1 is the Rule requiring lawyers in firms to establish policies and procedures ensuring that other lawyers at the firm comply with the Rules of Professional Conduct. Under the proposed Rule, anyone with “comparable managerial authority in the firm” to that of a partner will be responsible for establishing such policies and procedures and may incur vicarious liability for Rules violations when the lawyer with the managerial authority has knowledge of the conduct and fails to take remedial action.

Rule 5.5 (Unauthorized practice of law; multijurisdictional practice of law). Proposed Rule 5.5 makes major changes as to the type and extent of services non-Maryland lawyers may perform in Maryland. While the starting point remains that a lawyer not admitted in Maryland may not establish an office or have a systematic or continuous presence here, out-of-state lawyers will be allowed to do many things that were previously off-limits. For example, an out-of-state lawyer is on safe ground (1) if the legal services being performed in Maryland by the out-of-state lawyer relate to a pending or potential proceeding either here or in another jurisdiction, and if the lawyer is authorized to appear in that proceeding or reasonably expects to be so authorized, or (2) where the services are reasonably related to the lawyer’s practice in the jurisdiction in which he or she is admitted. The Comments will provide that non-Maryland lawyers may now have meetings with the client, conduct interviews of potential witnesses and review documents in Maryland.

Proposed Rule 5.7 (Responsibilities regarding law-related services). Rule 5.7 is entirely new. It makes lawyers subject to the Rules of Professional Conduct when they perform “law-related services.” Such services include activities like title insurance, accounting work and trust services. Under Rule 5.7, a lawyer will be subject to the Rules of Professional Conduct when providing “law-related services” if they are provided (1) by the lawyer in circumstances that are not distinct from the lawyer’s provision of legal services to clients, or (2) in other circumstances, by an entity controlled by the lawyer if the lawyer fails to take reasonable measures to assure that a person obtaining the law-related services knows that the services are not legal services and that the protections of the client-lawyer relationship do not apply.

Proposed Rule 7.2 (Advertising). Rule 7.2 will provide in subsection (c)(4) that reciprocal referrals of clients pursuant to an agreement between a lawyer and a non-lawyer professional are acceptable, but only if (1) the reciprocal agreement is not exclusive and (2) the client is informed of the existence and nature of the agreement. The Comments to the Rule warn that these reciprocal referral agreements should not be of indefinite duration and should be reviewed periodically to ensure their compliance with the Rules of Professional Conduct.

Proposed Rule 8.4 (Misconduct). Proposed Rule 8.4(e) may engender some controversy. It will provide that it is professional misconduct for a lawyer to “knowingly manifest by words or conduct when acting in a professional capacity bias or prejudice based upon race, sex, religion, national origin, disability, age, sexual orientation or socioeconomic status when such action is prejudicial to the administration of justice...” Some concerns have been expressed that this provision could be subject to abuse and used tactically by opposing parties or counsel. As we all know, it is easier to commence a grievance against an attorney than it is for an attorney to terminate it. The Rodowsky Committee, however, perceived that the Rules should expressly condemn this kind of inappropriate conduct.

Conclusion

While in large measure the Rules will remain substantively more or less as they were, there are quite a few proposed material changes of which every member of the Bar should be aware. As the Preamble states, “every lawyer is responsible for observance of the Rules of Professional Conduct.” Accordingly, Maryland lawyers should become familiar with what these proposed Rules will provide, if adopted, and what they will mean for all of us whose professional lives will be governed by them.


Andrew Jay Graham is a partner in the law firm of Kramon & Graham, P.A., and Chair of MSBA’s Ethics 2000 Committee.

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Publications : Bar Bulletin: December, 2004

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