Maryland Bar
Bulletin
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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.
