November 2007
Telling Your Client to Get Another Lawyer
What is a “reasonable opportunity” to consult independent counsel?
by Kevin M. Bank
Three weeks ago, lawyer Jack sent his client Penny a promissory note and deed of trust. Penny owes Jack $50,000 in legal fees that are past due. In his cover letter, Jack asked Penny to execute the note, as well as the deed of trust on property she owns, in case she defaults on the note. The terms of the note are no different than the terms of promissory notes used by institutional lenders, and Jack made sure to provide Penny with full disclosure in writing of all the facts of the transaction and his role in it. Penny called Jack after receiving the documents and told him that she would have no problem providing her informed consent in writing to the arrangement. But Jack is about to leave for vacation in Europe, and Penny has not returned the executed documents. Jack calls Penny and tells her she needs to drop off the signed papers in the next two days, and he also mentions for the first time that she may consult outside counsel before she signs the documents. Jack vaguely remembers Penny telling him when he first got hired that Penny’s neighbor is a personal injury lawyer, and Penny sometimes consults her for a “second opinion.”
Two Washington Rules of Professional Conduct, RPC 1.8(a) and RPC 1.8(h), require lawyers to advise their clients of the desirability of seeking independent counsel before the client executes an agreement with the lawyer. Both of these rules cover situations where the lawyer’s personal interests could potentially conflict with the interests of the client. RPC 1.8(a) governs business transactions with clients, including situations where the lawyer and client enter in a creditor-debtor relationship and/or the lawyer obtains a security interest adverse to the client. RPC 1.8(h) involves situations where the lawyer seeks to settle the client’s (or former client’s) malpractice claim against the lawyer. Both rules require that: (1) the lawyer advise the client (or former client if RPC 1.8(h) is involved) in writing of the desirability of obtaining independent counsel, and (2) the client be given a “reasonable opportunity to seek the advice” of independent counsel.
In the above scenario, has Jack adequately advised Penny about the need to consult independent counsel? Has Jack given her a “reasonable opportunity” to do so? The amended RPCs and recent Washington State Supreme Court cases indicate that the answer is “no.”
The RPCs (as amended in September 2006) explicitly state that just telling Penny in a telephone conversation that she may consult independent counsel is insufficient. RPC 1.8(a)(2) states that the client must be advised “in writing” of the “desirability” of seeking independent counsel. Because Penny did not receive the advice in writing, and because she was not told that such a consultation would be prudent, Jack is likely to have violated the rule.
The second requirement is that Penny be given a “reasonable opportunity” to consult with independent counsel. In a recent decision applying the pre-2006 version of the rule, Valley/50th Avenue, LLC v. Stewart,1 the Washington State Supreme Court addressed the meaning of “reasonable opportunity.” In that case, a law firm represented a businessman, Rose, in several matters, including an expensive litigation matter involving one of his companies, Valley/50th Avenue (Valley). Valley accumulated outstanding legal fees and costs of $160,000. The law firm approached Rose about this outstanding obligation. Ultimately, Rose agreed to sign a new representation agreement, a promissory note, and a deed of trust secured by property owned by Valley. Later, Rose defaulted, and Valley protested. Valley raised several defenses, including that the promissory note and deed of trust were unenforceable against it as violative of RPC 1.7 and RPC 1.8.
A crucial issue in the case was whether the firm had given Rose and Valley “a reasonable opportunity to seek the advice of independent counsel in the transaction” under former RPC 1.8(a).2 The Court stated that the client’s opportunity to consult independent counsel must be “real and meaningful,” and that it is not enough that in “some moment in time an opportunity existed, no matter how brief or fleeting that opportunity might have been” to consult independent counsel.3 Although the Court held that the definition of “reasonable opportunity” may depend on the circumstances, it set a minimum standard, i.e., that it will always mean more than the “mere physical ability to contact an attorney.”4 Finally, the Court made clear that the burden is on the lawyer to demonstrate that a real and meaningful opportunity to seek independent counsel was afforded to the client.5
The Valley/50th Avenue Court did not, however, resolve the factual issue of whether Rose (and Valley) had been advised and given a reasonable opportunity to consult independent counsel since the case was on appeal from a summary judgment and the relevant facts were in dispute.6 The Court noted that one of the law firm’s partners testified that he had orally informed Rose that he was entitled to consult independent counsel, and that he knew that Rose was employing several different lawyers at the time of the transaction. By contrast, Rose testified that a lawyer from the firm had come to his home and told him that the firm would withdraw from the litigation unless he signed the documents, and that he did not have any other lawyer review the documents. The Court remanded the case for further proceedings on these factual disputes.7
Another recent case, In re Disciplinary Proceeding Against Greenlee,8 provides further guidance. Greenlee was charged with violating former RPC 1.8(h), which prohibited (as does the amended version) a lawyer from settling a claim for malpractice with a current or former client unless the client is advised in writing to consult with independent counsel prior to agreeing to the settlement. The Court upheld the hearing officer’s undisputed factual findings, and adopted his conclusions of law that Greenlee had violated former RPC 1.8(h).9 Greenlee had his legal assistant give his client a six-page “Settlement Agreement and Mutual Release” that included the following language: “the parties acknowledge that they either consulted with legal counsel of their choosing prior to entering this agreement or knowingly waived the right to do so.” The hearing officer concluded that both the disclosure itself, and the circumstances in which it was communicated to the client, did not adequately advise the client of the appropriateness of seeking independent counsel and/or provide a reasonable opportunity to do so.10 The hearing officer noted that the meeting at which the client was given and signed the document was rushed and stressful for the client, and the client did not read the document carefully and felt pressured to sign it.11 Furthermore, the legal assistant’s claim that she told the client orally of the desirability of consulting independent counsel was insufficient because the legal assistant was not a lawyer capable of providing legal advice, and the rule required the advice itself to be in writing. Finally, the writing that Greenlee did provide to his client, even assuming that she had read it, was inadequate to explain the significance of the requirement to consult independent counsel because it did not specifically inform the client that it was appropriate for her to have independent representation in connection with signing the release.12
Let’s reconsider the opening facts. Even assuming Jack had notified Penny in writing that she should consult independent counsel, the short time Jack provided Penny to get such independent advice may be insufficient to meet the requirements of RPC 1.8. That Penny has a lawyer neighbor whom she “sometimes” consults is unlikely to cure the deficiencies either in the form of notice or the time period provided to Penny to obtain independent legal counsel.
Kevin M. Bank has been a disciplinary counsel at the WSBA since 1999. He graduated from New York University Law School in 1987 and practiced in a small private firm and with the federal government.
NOTES
1. 159 Wn.2d 736 (2007).
2. The pre-2006 rule did not explicitly require a writing, and also did not specify that the client be informed that consultation with independent counsel would be “desirable.”
3. Valley/50th Avenue, 159 Wn.2d at 746.
4. Id.
5. Id.
6. Id. at 746-47.
7. Id. at 747-48.
8. 158 Wn.2d 259 (2006).
9. Id. at 263-64. Greenlee did not challenge the hearing officer’s factual findings, and limited his appeal to the legal issue of whether a “potential” (rather than existing) malpractice claim triggered the pre-2006 rule. The Supreme Court concluded that the pre-2006 rule did cover the potential claim of Greenlee’s client for malpractice, even though the client had not filed a lawsuit or notified Greenlee of an intention to sue.
10. In re A. Graham Greenlee, Public No. 04#00057, Amended Findings of Fact and Conclusions of Law, ¶ 12 (February 7, 2005).
11. Id.
1 2. Id.
