1-6
7-12
13-18
19-24
25-30
31-36
37-42
43-48
49-54
55-60
61-66
67-72
73-78
79-84
85-90
91-96
97-102
103-108
109-114
115-120
121-126
127-132
133-138
139-144
145-150
151-156
157-162
163-168
169-174
175-180
181-186
187-192
193-198
199-204
205-210
211-216
217-222
223-228
229-231
Paragraph (a) is substantially similar to DR 9-101(A), which provides that a lawyer "shall
not accept private employment in a matter upon the merits of which he has acted in a judicial
capacity."Paragraph (a) differs, however, in that it is broader in scope and states more specifically
the persons to whom it applies. There is no counterpart in the Disciplinary Rules to Paragraphs (b),
(c) or (d). With regard to arbitrators, EC 5-20 states that "a lawyer [who] has undertaken to act as
an impartial arbitrator or mediator, . . . should not thereafter represent in the dispute any of the
parties involved."DR 9-101(A) does not provide a waiver of the disqualification applied to former
judges by consent of the parties. However, DR 5-105(C) is similar in effect and could be construed
to permit waiver.
The Proposed Rule is identical to ABA Model Rule 1.12, except that it has been modified
so that the screening required by this rule conforms to the requirements set forth in Proposed Rules
1.10 and 1.11. Unlike Model Rule 1.12, the Proposed Rule does not prohibit the personally
disqualified lawyer from sharing financially in fees earned by the firm for handling the matter in
which the lawyer could not participate.
Made
PROPOSED RULE 1.13
ORGANIZATIONAL CLIENTS
duly authorized constituents.
the organization has engaged or is engaged in action, has refused or refuses to act, or intends to act
or refrain from acting in a matter related to the representation that is or will be a violation of a legal
obligation to the organization, or a violation of law which reasonably might be imputed to the
organization, and is likely to result in substantial injury to the organization, the lawyer shall proceed
as is reasonably necessary in the best interest of the organization. In determining how to proceed,
the lawyer shall give due consideration to the seriousness of the violation and its consequences, the
scope and nature of the lawyer's representation, the responsibility in the organization and the
apparent motivation of the person involved, the policies of the organization concerning such matters
and any other relevant considerations. Any measures taken shall be designed to minimize
disruption of the organization and the risk of revealing information relating to the representation to
persons outside the organization. Such measures may include among others:
appropriate authority in the organization; and
the seriousness of the matter, referral to the highest authority that can act on behalf of the
organization as determined by applicable law.
act on behalf of the organization insists upon action, or a refusal to act, that is clearly a violation of
law and is likely to result in substantial injury to the organization, the lawyer may resign
withdraw
in accordance with Rule 1.16 and may make such disclosures of information relating to the
organization’s representation only to the extent permitted to do so by Rules 1.6 and 4.1.
constituents, a lawyer shall explain the identity of the client when it is or becomes apparent that the
organization’s interests are adverse to those of the constituents with whom the lawyer is dealing.
employees, members, shareholders or other constituents, subject to the provisions of Rule 1.7 and
2.2. If the organization's consent to the dual representation is required by Rule 1.7 or 2.2, the
consent shall be given by an appropriate official of the organization other than the individual who is
to be represented or by the shareholders.
[1] An organizational client is a legal entity, but it cannot act except through its officers,
directors, employees, shareholders and other constituents. Officers, directors, employees and
shareholders are the constituents of the corporate organizational client. The duties defined in this
Comment means the positions equivalent to officers, directors, employees and shareholders held by
persons acting for organizational clients that are not corporations.
[2] When one of the constituents of an organizational client communicates with the
organization's lawyer in that person's organizational capacity, the communication is protected by
Rule 1.6. Thus, by way of example, if an organizational client requests its lawyer to investigate
allegations of wrongdoing, interviews made in the course of that investigation between the lawyer
and the client's employees or other constituents are covered by Rule 1.6. This does not mean,
however, that constituents of an organizational client are the clients of the lawyer. The lawyer may
not disclose to such constituents information relating to the representation except for disclosures
explicitly or impliedly authorized by the organizational client in order to carry out the representation
or as otherwise permitted by Rule 1.6.
[3] When constituents of the organization make decisions for it, the decisions ordinarily
must be accepted by the lawyer even if their utility or prudence is doubtful. Decisions concerning
policy and operations, including ones entailing serious risk, are not as such in the lawyer's province.
However, different considerations arise when the lawyer knows that the organization may be
substantially injured by action of a constituent that is in violation of law. In such a circumstance, it
may be reasonably necessary for the lawyer to ask the constituent to reconsider the matter. If that
fails, or if the matter is of sufficient seriousness and importance to the organization, it may be
reasonably necessary for the lawyer to take steps to have the matter reviewed by a higher authority
in the organization. Clear justification should exist for seeking review over the head of the
constituent normally responsible for it. The stated policy of the organization may define
circumstances and prescribe channels for such review, and a lawyer should encourage the
formulation of such a policy. Even in the absence of organization policy, however, the lawyer may
have an obligation to refer a matter to higher authority, depending on the seriousness of the matter
and whether the constituent in question has apparent motives to act at variance with the
organization's interest. Review by the chief executive officer or by the board of directors may be
required when the matter is of importance commensurate with their authority. At some point it may
be useful or essential to obtain an independent legal opinion.
[4] In an extreme case, it may be reasonably necessary for the lawyer to refer the matter to
the organization's highest authority. Ordinarily, that is the board of directors or similar governing
body. However, applicable law may prescribe that under certain conditions highest authority
reposes elsewhere; for example, in the independent directors of a corporation.
[5] The authority and responsibility provided in paragraph (b) are concurrent with the
authority and responsibility provided in other Rules. In particular, this Rule does not limit or
expand the lawyer's responsibility under Rules 1.6, 1.8, 1.16, 3.3 or 4.1. If the lawyer's services are
being used by an organization to further a crime or fraud by the organization, Rule 1.2(d) can be
applicable. The lawyer’s right to withdraw from the representation of an organizational client in the
circumstances specified in paragraph (c) is in addition to the right to withdraw in the various
circumstances specified in Rule 1.16(b).
[6] The duty defined in this Rule applies to governmental organizations. However, when the
client is a governmental organization, a different balance may be appropriate between maintaining
business is involved. In addition, duties of lawyers employed by the government or lawyers in
military service may be defined by statutes and regulations. Therefore, defining precisely the
identity of the client and prescribing the resulting obligations of such lawyers may be more difficult
in the government context. Although in some circumstances the client may be a specific agency, it is
generally the government as a whole. For example, if the action or failure to act involves the head of
a bureau, either the department of which the bureau is a part or the government as a whole may be
the client for purposes of this Rule. Moreover, in a matter involving the conduct of government
officials, a government lawyer may have authority to question such conduct more extensively than
that of a lawyer for a private organization in similar circumstances. This Rule does not limit that
authority. See note on Scope.
[7] 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.
[8] Whether such a warning should be given by the lawyer for the organization to any
constituent individual may turn on the facts of each case.
[9] Paragraph (e) recognizes that a lawyer for an organization may also represent a principal
officer or major shareholder.
[10] Under generally prevailing law, the shareholders or members of a corporation may
bring suit to compel the directors to perform their legal obligations in the supervision of the
organization. Members of unincorporated associations have essentially the same right. Such an
action may be brought nominally by the organization, but usually is, in fact, a legal controversy over
management of the organization.
[11] The question can arise whether counsel for the organization may defend such an
action. The proposition that the organization is the lawyer's client does not alone resolve the issue.
Most derivative actions are a normal incident of an organization's affairs, to be defended by the
organization's lawyer like any other suit. However, if the claim involves serious charges of
wrongdoing by those in control of the organization, a conflict may arise between the lawyer's duty
to the organization and the lawyer's relationship with the board. In those circumstances, Rule 1.7
governs who should represent the directors and the organization.
See Rule 1.0(f)
“Reasonably”See Rule 1.0(k)
See Rule 1.0(l)
There is no counterpart to the Proposed Rule in the Disciplinary Rules. EC 5-18 states that
"[a] lawyer employed or retained by a corporation or similar entity owes his allegiance to the entity
and not to a stockholder, director, officer, employee, representative, or other person connected with
the entity. In advising the entity, a lawyer should keep paramount its interests and his professional
judgment should not be influenced by the personal desires of any person or organization.
Occasionally, a lawyer for an entity is requested by a stockholder, director, officer, employee,
representative, or other person connected with the entity to represent him in an individual capacity;
in such case the lawyer may serve the individual only if the lawyer is convinced that differing
interests are not present."
The Proposed Rule is identical to ABA Model Rule 1.13 except that we have extended the
application of Paragraph (b) to past as well as future misconduct of a constituent and modified
Paragraph (c) adding a cross-reference to the disclosures of information relating to the
representation that are permitted by Proposed Rules 1.6 and 4.1.
Paragraph (c): A cross-reference to Proposed Rules 1.6 and 4.1 has been added to
Paragraph (c). The cross-reference is needed because of changes made to Rule 1.6 to permit
disclosure of information necessary to prevent a client from committing a crime and to rectify
substantial financial loss resulting from a client’s commission of a crime or fraud in furtherance of
which the client used the lawyer’s services.
Comment [5]: A sentence has been added to Comment [5] clarifying that the right to
withdraw under the circumstances specified in Paragraph (c) supplements the right to withdraw in
the various circumstances specified in Rule 1.16(b).
Made
1. The Board of Professional Responsibility has recommended the deletion of Paragraph
(b), which specifies a lawyer’s duties to an organizational client in circumstances in which an
organizational constituent intends to engage, is engaging, or has engaged in conduct that is
detrimental to the client. The only specific objection is that the Rule specifies that one of the
remedial measures the lawyer might be required to take would be to advise the constituent to obtain
a separate legal opinion for presentation to a proper authority within the organization. The Board
voices a concern about the constituent obtaining a self-serving opinion. The simple answer to this
is that the reference to a second opinion is only an example of a remedial measure that may be
reasonable in some circumstances. Dropping the matter after a constituent had compounded the
misconduct by seeking a bogus second opinion would not satisfy Paragraph (b)’s core requirement
that the lawyer take reasonable remedial action to the protect the organization. Apart from this
particular response, however, the Committee does not agree with the Board’s more sweeping
recommendation to delete Paragraph (b). It is extremely important that lawyers for organizational
misconduct of its officers or employees. Finally, because Rule 1.13 has been widely adopted,
leaving it unchanged is consistent with the Committee’s desire for uniformity among state ethics
rules, and this Rule provides crucial, needed guidance to lawyers.
2. The Board of Professional Responsibility has also recommended the deletion of
paragraph (e). Paragraph (e) provides that an organization’s lawyer may jointly represent the
organization and a director, officer or employee to the extent permitted by Rules 1.7 or 2.2. The
Board believes that public protection is sacrificed by the waiver incorporated in Paragraph (e). This
reflects a misunderstanding of Paragraph (e). Paragraph (e) does not waive anything, but it simply
serves to recognize (1) that it is quite common for a single lawyer to jointly represent an
organization and one of its constituents, (2) that such a representation may involve a conflict of
interest, (3) that such conflicts are be resolved in compliance with Rule 1.7 or 2.2, as the case may
be, and (4) that if client consent is required, the organization’s consent must be secured from an
official other than the person who will be jointly represented by the organization’s lawyer. By
dropping Paragraph (e), the Court would not change the conflict of interest rules applicable to the
joint representation of organizational clients and their constituents. On the other hand, Paragraph
(e) helpfully alerts lawyers to this type of conflict of interest, directs them to the pertinent rules, and
appropriately requires that the organization’s consent be given by a person other than the
constituent who will be jointly represented by the organization’s lawyer. This latter point willbe
unaddressed if Paragraph (e) is deleted. Thus, the Committee supports its retention.