February 2006

Informal Opinion Roundup 2005

by Chris Sutton

The Rules of Professional Conduct (RPC) Committee receives, researches, and prepares responses to written ethical inquiries submitted by Bar members. Upon receipt, each written inquiry is assigned to two Committee members for research. If the response to an inquiry could have wide impact, additional information from knowledgeable experts may be sought. Those assigned to the inquiry present a response memo to the entire RPC Committee for discussion. Specific language is proposed and voted on by the Committee, and a response letter is directed to the inquirer. The response letter is redacted to remove identifying information and is designated an informal opinion. If the inquirer acts in accordance with the response letter, a rebuttal presumption arises that the action is ethical. Informal opinions are based on the specific facts of the inquiry and reflect only the opinion of the RPC Committee and not the official opinion of the WSBA.

While informal opinions are generally concerned with situations specific to the inquiry, many of the recently issued informal opinions may be of interest to Bar members. Below are summaries of some informal opinions of interest.

Informal Opinion 1970: The inquiry concerns whether a lawyer may set up a booth at a street fair using a sign that reads "legal questions answered or referrals given." The Committee opined that RPC 7.3 does not prohibit a lawyer from setting up a booth at a public event. Informal Opinion 914 states that a lawyer may set up a booth at a county fair. The answer is also in line with the commentaries on 7.3 that state the rule is designed to prohibit solicitation by a lawyer to prospective clients outside of a previously established professional or personal relationship. Opening a booth is not direct solicitation, since — as with opening an office — the lawyer waits for the client to approach him/her.

Informal Opinion 1973: This opinion deals with whether a lawyer has an ethical duty to convey a creditor's offer of reaffirmation of a bankruptcy client's debt. The committee stated that RPC 1.4, delineating a lawyer's duty of communication, does not contain a requirement to transmit all correspondence to a client or discuss it with the client. Rather, RPC 1.4 provides that a lawyer has an ethical obligation to keep a client reasonably informed about the status of a matter and promptly comply with reasonable requests for information and shall explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation. The substantive law and the facts of individual cases will dictate whether particular items of correspondence should be transmitted to, or discussed with, a client in order to comply with a lawyer's duty under RPC 1.4(a) to ". . . keep a client reasonably informed." Authorities beyond the text of RPC 1.4 also suggest that a lawyer's duty to keep a client reasonably informed includes an obligation to inform the client of the substance of any offer of settlement (RPC 1.2(a)), unless prior discussions with the client have made clear that the proposal is unacceptable. Whether the reaffirmation offer involved in the inquiry constitutes such a settlement offer or is otherwise material to your representation of your client appears to be a matter of substantive bankruptcy law beyond the purview of the committee. If the letter from the creditor also has been sent to the client, RPC 1.4(b) would also be implicated, thereby requiring the lawyer to explain the matter to the extent reasonably necessary to allow the client to make an informed decision.

Informal Opinion 1975: This opinion deals with a networking and business referral association that has a mandatory requirement of referrals and potential loss of membership if no referrals take place. The Committee states that a reciprocal obligation between the lawyer and the nonlawyer members referring potential clients to the attorney appears to violate RPC 7.2, because such reciprocal referrals constitute giving "something of value" in return for recommendation of the lawyer's services. The Committee also raised a concern about the lack of control over how other members of the affinity group describe the lawyer's services to generate referrals to the lawyer. Such a system has the potential of violating RPC 7.1 and 7.3.

Informal Opinion 1990: This opinion offers guidance in a situation where a lawyer is representing a client in a lawsuit and learns that the other party's lawyer dies and no substitute counsel has appeared. The Committee opined that the relevant rule is RPC 4.3 because the inquirer has a reasonable basis for believing that, after the death of the other lawyer, the other party is no longer represented. The lawyer may directly contact the other party to ask if they are currently represented. If the response is yes, the lawyer may ask the identity and means of contacting the new lawyer, and all further communication with the other party must cease. If the response is no, the lawyer may communicate with the other party to discuss the merits of the dispute. Alternatively, the lawyer may move the court in which the matter is pending for supervisory direction.

Informal Opinion 1998: A clause in the employment agreement of the inquiring lawyer's firm provides that partners/shareholders of the firm will not solicit, hire, or recruit lawyers at the firm for a period of years after termination of employment. Is such a provision ethical? The committee states that an employment agreement that prevents a partner/shareholder who is leaving the firm from soliciting, hiring, or recruiting other lawyers in the firm appears to violate RPC 5.6(a). It constitutes a restriction on the right to practice of the partner/shareholder who is leaving and the right to practice of the other lawyers of the firm. The provision also impacts consumers of legal services, because it can prevent formation of teams of lawyers that might best represent those consumers.

Informal Opinion 2013: The inquirer formerly practiced law with other lawyers in a professional limited-liability company named "The Smith Law Group" (a hypothetical name). Smith left the firm and formed a separate limited-liability company under the name "The Family Law Group" (a hypothetical name). Smith requested the lawyers in the old firm to cease using his name after his departure, but they contended that the name "The Smith Law Group" has been trademarked and, thus, may be used by the remaining lawyers in the old firm. May lawyers practice under a trade name that includes the name of a former member of the firm who has left the firm and who continues to practice law within the same community? The Committee opined that a firm may not continue to use a former member's name as a trade name under these circumstances.

Informal Opinion 2025: This opinion deals with whether a particular disclosure and authorization form to be used when referring clients to a real-estate office with which a lawyer is associated satisfies the RPCs relating to conflicts of interest. The Committee concluded that it would not. The inquiring lawyer also asked several questions concerning ethical constraints in serving clients as a lawyer and a real-estate agent. For details, please see the full opinion at www.wsba.org/io/search.asp.

Informal Opinion 2023: This inquiry concerns a law firm's file-retention policy. After approximately six months from when a client matter (file) has been administratively closed and the firm has returned to the client or the client has had the opportunity to receive any original documents provided to the firm, the firm wants to destroy the paper file and simply maintain the identical electronic file for purposes of complying with the RPC. Would such a file retention policy comply with the RPC? The Committee opined that a file-retention policy that returns original documents from administratively closed files to the client and converts the remaining documents into an electronic format would comply with the RPC, provided the firm has appropriate controls in place to ensure that original documents or other documents with intrinsic value belonging to the client are not destroyed without client permission. However, there may be specific cases where reasonable prudence or some other duty, such as a contractual agreement with the client, requires retention of the physical documents.

Informal Opinion 2042: This inquiry concerns whether a lawyer may take a security interest in real property in a divorce proceeding where a prenuptial agreement provides that the property is separate. Specifically, the inquirer asks if an attorney may take a security interest in the separate real property of the client in a divorce proceeding where the client and spouse have signed a prenuptial agreement (each having independent counsel for the agreement), which agreement provides that the identified separate property of each party shall remain the separate property, and that neither spouse shall later claim an interest in such property in the event of a divorce proceeding. The Committee states that a lawyer may not acquire a proprietary interest in the subject matter of litigation the lawyer is conducting for the client. Property of both spouses, whether community or separate, is subject to the jurisdiction of the court in all dissolution actions. Since a security interest is a proprietary interest and separate property is subject to the jurisdiction of the court, an attorney who is representing a party in a dissolution action is prohibited from taking a security interest in the property described.

Under Washington law, all property owned by either party to a marriage is subject to the jurisdiction of the court in a dissolution action, regardless of its character as community or separate. A judge always has the power to award any property to either spouse if the award is necessary for an equitable distribution of the property. Therefore all property owned by either spouse is the "subject matter of the litigation" and thus subject to the strictures of RPC 1.8(j). Since a security interest is a "proprietary interest," a lawyer representing a party is prohibited from acquiring a security interest unless it falls within the exception contained in RPC 1.8(j)(1) for "a lien granted by law." The only lien granted by law to attorneys in Washington is the attorney's lien provided in RCW 60.40.010. That statute limits the subject matter of an attorney's lien to papers of the client, money of the client in the lawyer's hands, money in the hands of an adverse party, and a judgment. Thus, real property cannot be the subject of an attorney's lien. Since no exception applies, RPC 1.8(j) prohibits the course of action the inquirer proposes.

Chris Sutton is a graduate of the College of William & Mary and the Marshall-Wythe School of Law. He has been practicing law for over 30 years in many areas including domestic relations, trusts and wills, and business transactions. Chris worked as a WSBA disciplinary counsel for two years. Presently, he is the WSBA professional responsibility counsel and professional responsibility program manager. He operates the Ethics Line and supervises the WSBA ADR Program. Chris can be reached at chriss@wsba.org.