New (and evolving) developments in the disciplinary rules
By Sylvia E. Stevens
The disciplinary rules are not static; they are an ever-changing body of authority that reflects the philosophy and nature of the practice of law and the legal profession as they change over time.
Oregon's Code of Professional Responsibility was adopted
in 1970 from the ABA Model Code of Professional Responsibility.
In 1983, partly in response to the perception of the profession
that resulted from 'Watergate,' the ABA adopted the Model
Rules of Professional Conduct in lieu of the former Model Code.
The Model Rules have been amended at various times since 1983, and
in the ensuing years more than 40 jurisdictions have adopted some
version of the Model Rules.
The most significant difference between the Model Code and the Model Rules is in style and format.1 Although some commentators suggest that the Model Rules reflect a less client-centered view of the lawyer's role than did the Model Code,2 there is not a great deal of difference in the kind of conduct that is prohibited under either set of rules. Moreover, as a result of continuous amendments, we have adopted and incorporated into Oregon's Code many of the provisions of the Model Rules while retaining the Code format. Only in a few areas are Oregon's rules unique or even significantly different from the majority of jurisdictions.
As mentioned, the disciplinary rules are constantly changing. In January 2002, the HOD adopted and the Oregon Supreme Court approved an amendment to DR 1-102 that is unlike anything in any other jurisdiction. At the same meeting, the HOD rejected (and referred to the Legal Ethics Committee for further study) a new rule that would have prohibited a lawyer from accepting anything of value in exchange for a referral to a non-lawyer professional.
In February 2002, the ABA House of Delegates approved amendments to the Model Rules based on the recommendations of the Ethics 2000 Commission. Few of the changes are significant ; for the most part the amendments to the Model Rules are intended to clarify and simplify the existing standards. In anticipation of the ABA action, the OSB Board of Governors appointed a Special Committee on Disciplinary Rules that is reviewing all of the Ethics 2000 proposals and preparing a recommendation to the BOG regarding which, if any, of the ABA Model Rules should be adopted in Oregon.
NEW DR 1-102(D)
Effective Jan. 31, 2002, the supreme court adopted a new subsection (D) to DR 1-102, which states:
(D) Notwithstanding DR 1-102(A)(1), (A)(3) and (A)(4) and DR 7-102(A)(5), it shall not be professional misconduct for a lawyer to advise clients or others about or to supervise lawful covert activity in the investigation of violations of civil or criminal law or constitutional rights, provided the lawyer's conduct is otherwise in compliance with these disciplinary rules. 'Covert activity,' as used in this rule, means an effort to obtain information on unlawful activity through the use of misrepresentations or other subterfuge. 'Covert activity' may be commenced by a lawyer or involve a lawyer as an advisor or supervisor only when the lawyer in good faith believes there is a reasonable possibility that unlawful activity has taken place, is taking place or will take place in the foreseeable future.
The development of this new rule began with the supreme court's decision in In re Gatti, 330 Or 517, 8 P3d 966 (2000), in which the court held that there are no exceptions to the prohibitions against dishonest conduct by lawyers and that lawyers not only cannot engage in such conduct directly, they cannot 'encourage' others to do so. The purpose of DR 1-102(D) is to clarify that lawyers who supervise covert investigations involving deception or who advise the investigators about how to conduct such an investigation are not themselves violating the disciplinary rules. The amendment clearly applies to lawyers involved in federal and state criminal prosecutions or civil enforcement matters and to lawyers who work with housing or employment testers. Beyond that, however, the full scope of the new rule is not known.
By its terms, the new rule must apply as well to lawyers in private practice, provided their conduct falls within the scope of permissible activity. Unfortunately, the rule offers no guidance as to what constitutes a 'violation of civil law,' such as whether it is limited to violations of statute or applies to breaches of the common law as well. Also, it is not clear whether there are any limitations on the relationship between the lawyer and the person supervised or advised. Does the rule only apply to a lawyer who is advising a client or other 'independent actor,' or does it apply to the lawyer's own agents? In other words, can a lawyer hire a person to conduct a deception for the lawyer?
Answers to these questions will have to wait for case law to develop. In the meantime, however, the Board of Governors has asked the Legal Ethics Committee to draft an opinion interpreting the rule in various situations. While not binding on the court, a BOG-endorsed opinion would articulate the bar's position about how the rule applies in certain situations and should provide helpful guidance to practitioners.
PROPOSED DR 2-105
Some time ago the Legal Ethics Committee (LEC) was asked about the propriety of a lawyer accepting a commission or fee from a securities broker/financial advisor in exchange for referring the lawyer's client to the broker/advisor. Depending on the circumstances, the commission would be a percentage of the broker/advisor's fee for a one-time service or a percentage of the broker/advisor's future fees for continuing management of the client's assets. After considerable discussion and debate, a majority of the LEC concluded that, while fraught with some peril, the arrangement was not per se a violation of the disciplinary rules, but gave rise to a self-interest conflict under DR 5-101(A) that the client could waive after full disclosure. The BOG asked the LEC to draft a disciplinary rule that would prohibit such arrangements.
DR 2-105 COMPENSATION FROM NON-LAWYERS
The LEC drafted the following rule, which the BOG presented to the House of Delegates (HOD) in January 2002:
Except as provided in DR 2-107, a lawyer shall not accept a fee, commission or anything of value from a person to whom the lawyer refers a client for other professional services in exchange for such referral.
The LEC drafted the rule to be consistent with DR 2-103(A), which says that a lawyer may not 'compensate or give anything of value to a person … to promote, recommend or secure employment by a client, or as a reward for having made a recommendation resulting in employment by a client….' In other words, DR 2-103(A) prohibits a lawyer from giving 'anything of value' to a person who refers clients to the lawyer; DR 2-105 would prohibit the lawyer from accepting 'anything of value' from a person to whom the lawyer refers clients.
At the HOD meeting, there was considerable discussion about the meaning of 'anything of value.' Does it include a bottle of wine? Theater tickets? Use of a private jet? It was suggested that a dollar limit might be easier to comply with, although other speakers countered that it would be embarrassing to have to inquire of the donor about the cost of a gift. There was some support for a rule that flatly prohibits accepting anything, regardless of value, in exchange for referrals. Another approach discussed was to modify the language so that only quid pro quo gifts were prohibited. That is, the rule would prohibit a lawyer from accepting anything given expressly in exchange for a referral, but would allow the accptance of what the judicial code refers to as 'ordinary hospitality' from those to whom the lawyer makes referrals generally.
Unable to resolve the varying points of view by motions to amend, the HOD referred the proposed rule to the LEC for further study and a recommendation to be presented at the October 2002 HOD meeting.
ABA MODEL RULES (ETHICS 2000)
In October 2001, the OSB Special Committee on Disciplinary Rules began a comprehensive review of Oregon's disciplinary rules in comparison to the ABA Model Rules and the Ethics 2000 Commission proposals.
The first meeting was devoted largely to a discussion of the pros and cons of adopting the Model Rules as a whole versus incorporating desirable provisions into the existing DRs. Adopting the Model Rules would make Oregon's rules consistent with those of Washington and Idaho, Oregon's 'reciprocity partners.' It would also bring us in line with the other 40-plus Model Rules jurisdictions. Arguments for retaining our code format includes the desire to keep our interpretative history intact, a sense that the Code approach to a lawyer's professional responsibility is preferable to the Model Rules approach, and of course, comfort with the familiar. The committee decided to defer that decision until all the rules had been reviewed and there was a better sense of how much of the substance of the Model Rules would be recommended for adoption.
In its review of each rule, the committee is considering whether a rule's language is easier to understand and apply and whether the scope or application of the rule is more desirable than the current Oregon rule. The committee will also consider whether there are Model Rule provisions not found in Oregon that should be included in our rules.
Both the Legal Ethics Committee, in connection with drafting an opinion interpreting DR 1-102(D) and studying proposed DR 2-105, and the Special Committee on Disciplinary Rules, in its study of the entire Code, welcome suggestions and comments from members. If you would like to share your views with either committee, please submit them in writing by regular mail or e-mail (see below).
ABOUT THE AUTHOR
Sylvia E. Stevens is assistant general counsel of the Oregon State Bar. She can be reached by regular mail at 5200 S.W. Meadows Road, Lake Oswego, Ore. 97035, or by e-mail at sstevens@ osbar.org.
1. The Model Code used the 1-101 style; the Model Rules uses the 1.1 style. The Model Code combined rules under general areas of prohibition, such as confidences and secrets, conflicts of interest, competence, etc. The Model Rules combines rules according to the lawyer's role, such as Client-Lawyer Relationship, Advocate and Counselor.
2. See, e.g., Chapter 1, Friedman, Understanding Lawyers' Ethics (Matthew Bender 1990).
© 2002 Sylvia E. Stevens