ALA Training: Legal Ethics

ABA Model Rules

Key Concepts and OverviewFor Legal Managers

Beverly MichaelisPractice Management Advisor

Professional Liability Fund

ABA Model Rules – Topics1. Conflicts of Interest/Ethical Walls2. IOLTA (IOTA)3. Rules Relating to the Attorney-Client

Relationship, Fees, Communication, and more4. Advertising and Solicitation5. Current Trends6. Sample Test Questions

Key Concepts for Legal Managers

ABA Model Rules & Legal Managers

Conflict of Interest Systems

• Conflict systems are used to determine if potential new clients have conflicts with existing clients

• Written waivers are required if a conflict exists

• People & organizations representing a potential conflict are entered in the system

• Ethical or “Chinese” Walls may be necessary


How Conflicts Arise

Other lawyers in the firm:

1. Have represented opposing parties

2. Possess inside knowledge

Disqualified lawyers should be screened


The Firm Rule

• If one member of the firm has a conflict, all members have a conflict

• Conflicts leave with the departing lawyer

• Incoming lawyers should be screened for potential conflicts


Ethical Walls

1. Obtain consent

2. Issue notice to all employees

3. Place memorandum in file

4. Visibly mark file

5. Move file away from lawyers/staff

6. Respect the wall at all times

7. Issue periodic reminders


Why are Walls Erected?

Protect client confidences

Avoid limiting a legal professional’s job mobility

Some states are more restrictive – know your state’s rules!


Assessing Conflicts

1. The firm’s risk avoidance attorney will determine if a conflict exists.

2. Not all conflicts require ethical walls

3. The risk avoidance attorney will:

– Define the conflict– Obtain client consent– Neutralize the conflict


Group and Organization Representation

Groups:

• Lawyer should explain advantages and risks

• All clients must stay fully informed

Organization:

• Duty is to organization


Avoid the Following

1. Gifts from clients

2. Book or TV deals (until case concluded)

3. Loans to clients

4. Third party payment with strings attached

5. Aggregate settlements

6. Business transactions with clients


Avoid the Following

7. Sexual relations with clients

8. Proprietary interest in case

9. Agreement in advance to limit liability without independent legal advice

10. Settling a claim with an unrepresented or former client without independent legal advice


Procedures for Legal Managers

→ Know how to set up a database

→ Have familiarity with software

→ Know how to do a conflict search

→ Know how to supervise staff


IOLTA (or IOTA) – What is It?

• Mandated by state authorities • Requires interest-bearing accounts for

client deposits that are:– Nominal in amount or– Not long in duration

• Interest is pooled and administered by state bar

ABA Model Rules & Legal ManagersIOLTA (or IOTA) – What is It?

Funds being held for a client must be placed in:

1. An account paying interest to the client or

2. An IOLTA account

ABA Model Rules & Legal ManagersIOLTA (or IOTA) – How to Do It

• Instruct bank to open a NOW or other interest-bearing checking account

• Account is opened in state where lawyer’s office is situated

• Lawyers are responsible for minimum balance & fee requirements

ABA Model Rules & Legal ManagersIOLTA (or IOTA) – How to Do It

• Many banks waive fees• Maximum amount in IOLTA depends on rules in

each jurisdiction• Bank responsible for paying interest & sending

statements to IOLTA committee and lawyer


IOLTA (or IOTA) – Dealing with Client Funds

1. Client funds must be segregated.

2. If client can net interest – set up separate account unless client directs otherwise


IOLTA (or IOTA) – Avoiding Trouble

• Know your jurisdiction’s rules• Notify client promptly

o when money is added oro when money is taken out

• Keep unearned fees or unearned costs in trust


IOLTA (or IOTA) – Avoiding Trouble

• Promptly deliver funds when entitled• Promptly render full accounting upon request• Keep disputed funds separate• Keep complete records (usually 5 years)


IOLTA (or IOTA) – Notes for Legal Managers

1. Rule 1.15 on Safekeeping provides the ethical guidelines for establishing & maintaining accounts

2. All lawyers must establish IOLTA accounts, EXCEPT:• Lawyers who do not hold client funds• Lawyers who make loan transactions through

lending banks



3. No lawyer, law firm, or client pays taxes on IOLTA interest per IRS ruling

4. Contact IOLTA Committee immediately if you receive a 1099 on an IOLTA account

5. Banks file informational reports with IRS re interest paid to IOLTA Committees

6. IOLTA Committees are non-profit (pay no tax)



• You may, but are not required, to notify clients of your participation in IOLTA

• Clients have no say re use of IOLTA funds• Remember that funds must go into an interest-

bearing account benefiting the client if the client can “net” interest


Rule 1.0 Attorney-Client Relationship

A fiduciary relationship commanding Respect

Competence

Diligence

Independent professional judgment

Preservation of confidences


Rule 1.0 Attorney-Client (Fiduciary) Relationship

Fair play

Honesty

Responsiveness

Reasonable feesMuch the same is expected of the client in return


Rule 1.3 – Diligence

DOs:1.Zealously represent2.Complete entire task3.Timely manage workload

DON’TS1.Cause client anxiety2.Lose client’s trust

Legal Managers should calendar deadlines to ensure due diligence


Rule 1.4 – Communication

• Keep the client informed• Consult with the client• How will client’s objectives be met?• What is acceptable/ethical


Rule 1.5 – Fees

1. Use written agreements

2. No contingent fees in domestic or criminal cases

3. Fee splits must be proportionate or client must consent


Rule 1.6 – Exceptions to Confidentiality

1. To carry out representation

2. Prevent reasonably certain death, harm, crime, or fraud

3. Defensively (complaint, claim, other)


Rule 1.16 – Withdrawal is Mandatory When

Representation would violate rules Lawyer is impaired (mentally or physically) Lawyer is discharged


Rule 1.16 – Voluntary Withdrawal

1. Accomplished without material adverse effect

2. Client persists with fraud/crime or uses lawyer

3. Fundamental disagreement

4. Client’s action is repugnant

5. Client fails to pay

6. Other good cause


Rule 1.16 – Voluntary Withdrawal

Withdrawal always requires:• Notice• Permission of tribunal • Protection of client’s interests

Refund fees Surrender papers and property (unless

retention is otherwise permitted)


Rule 1.17 – Sale of Law Practice

1. Lawyers may sell all or part of a practice or goodwill

2. Requires written notice to clients

3. 90 days must pass

4. Fees cannot be increased


Rule 5.3 – Non lawyers

• Must conform to rules of conduct

• Make reasonable efforts to supervise

• Lawyers responsible if:

o Conduct ordered or ratified

oLawyer is partner/manager fails to avoid, mitigate, remediate


Rule 5.7 – Rules of Conduct Apply to Other Professions

If services not distinct from legal workClient not informed there is no attorney-client relationship (reasonable efforts standard)

Lawyers must always comply with the rules of the other profession


Rule 6.1 – Pro Bono

1. Every lawyer has a duty to provide pro bono services

2. Aspirational goal is financial contribution and 50 hours per year


Rule 6.3 – Legal Services Membership

Lawyers can serve as directors, officers or members of legal organizations even if persons served by the

organization are adverse to the lawyer’s firm

Key Concept for Legal Managers:This is not a conflict of interest


Rule 7.6 – Political Contributions

Lawyers cannot accept judicial appointments or government jobs in exchange for

making or soliciting political contributions


Advertising and Solicitation

Lawyers cannot pay others for channeling professional work to the lawyer

Prepaid legal services OK Non-profit referral organizations OK Attorney referral organizations OK

Legal Managers must be able to evaluate these types of intermediary organizations


Direct Solicitation Prohibited

1. There is no relationship with soliciting lawyer

2. When client rejects contact

3. Solicitation involves duress or harassment

Other Material in this Section

Current Trends

Review material for current trends1. Fee alternatives (flat/fixed fees, task-based

billing, bonus system)

2. Technological changes (billing, legal research, software, e-mail, Web sites, extranets, intranets, printing to PDF, and video conferencing)

Technology can save clients money and keep them better informed

Sample Test QuestionsSharing Space & Common Expenses

• Sally Smith and Reba Rodman share office space

• Can they advertise as Smith & Rodman?

No! They must first establish a firm.

Sample Test QuestionsWeb Sites, Extranets, and Intranets

1.Web sites are public and used for advertising

2.Extranets are secure, private sites accessible only to clients or co-counsel. They are NOT used for:• E-mailing clients• Listing staff and lawyers• Providing documents to the public

3.Intranets are for internal use only by law firm personnel

Sample Test QuestionsTrust Accounts

The following are FALSE:• Attorneys need not notify clients every time a deposit is

made or funds withdrawn• IOLTA interest is taxable to the attorney• IOLTA interest is taxable to the client

The following is TRUE:• Attorneys need not notify clients that their funds will be

enrolled in IOLTA

Sample Test QuestionsConflicts

If a conflict is noted during a conflict search, an attorney shall:

1. File a claim against the perpetrator

2. Work with another attorney to minimize the conflict

3. Alert the client and erect an ethical wall

4. Submit the case to a hearing of peers

Sample Test QuestionsAdvertising

May criminal attorney Susie advertise on her Web site that she has successfully defended 90% of her cases?

• Yes – if it’s true and accurate• Yes – if she lists her name, address, and phone• No – even if the % was true, it violates the rules• No – we don’t know what “successfully

defended” means

Sample Test QuestionsAdvertising

May criminal attorney Susie advertise she is a certified criminal law specialist?

• Yes – if she has been certified by an organization approved in her state or accredited by the ABA

• Yes – if the name of the certifying organization is clearly identified

• No – lawyers cannot communicate specialties

Sample Test QuestionsLetterhead & Advertising

The following are permitted:• Trade names (Bayside Immigration Clinic)• Deceased founder• Multi-state listings if jurisdictions designated

What is not permitted:• Listing a current state Congressman in public office

who is not active with the firm

Sample Test QuestionsUnauthorized Practice of Law

Joe Justice, criminal lawyer, is in Florida. His office is one hour from Georgia. His former paralegal, Inez, who has a law degree, now has an Immigration Clinic in Georgia. She fills out forms for immigrants. Inez wants Joe to review the forms before they are filed.

May Joe assist Inez?

Sample Test QuestionsUnauthorized Practice of Law

1. Yes, as her former boss, if he is aware of her work product and can assist with quality control and legal advice.

2. Yes, if he is licensed in Georgia and Inez is licensed to practice law.

3. No, if he is not licensed in Georgia.4. No, if he is assisting Inez in UPL.

ALA Training: Legal Ethics

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