Board of Governors acts on recent supreme court case
By Peter R. Jarvis, David J. Elkanich & René C. Holmes
This article completes our review of the new Oregon RPCs which will take effect on Jan. 1, 2005. As before, we caution the reader that we are attempting to focus on changes of particular note, rather than identify each and every change.
Up the Ladder Reporting Obligations
Oregon long ago adopted the so-called entity theory of attorney-client relationships, whereby a lawyer that represents an entity, such as a corporation or partnership, will typically represent only the entity itself and not its owners, officers or employees. See, e.g., OSB Legal Ethics Op No 1991-85 and sources cited. Oregon has never had a black letter rule that espouses the entity theory. Similarly, Oregon has never had a rule that clarifies what a lawyer must or may do when the lawyer learns that the employees or other agents of an entity client are acting or proposing to act in a manner that the lawyer believes to be inconsistent with the interests of the entity.
These gaps will be filled by Oregon RPC 1.13:
(a) A lawyer employed or retained by an organization represents the organization acting through its duly authorized constituents.
(b) If a lawyer for an organization knows facts from which a reasonable lawyer, under the circumstances, would conclude that an officer, employee or other person associated with the organization is engaged in action, intends to act or refuses to act in a matter related to the representation that is 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, then the lawyer shall proceed as is reasonably necessary in the best interest of the organization. Unless the lawyer reasonably believes that it is not necessary in the best interest of the organization to do so, the lawyer shall refer the matter to higher authority in the organization, including, if warranted by the circumstances, referral to the highest authority that can act on behalf of the organization as determined by applicable law.
(c) Except as provided in paragraph (d),
(1) if despite the lawyer’s efforts in accordance with paragraph (b) the highest authority that can act on behalf of the organization insists upon or fails to address in a timely and appropriate manner an action or a refusal to act, that is clearly a violation of law, and
(2) the lawyer reasonably believes that the violation is reasonably certain to result in substantial injury to the organization, then the lawyer may reveal information relating to the representation whether or not Rule 1.6 permits such disclosure, but only if and to the extent the lawyer reasonably believes necessary to prevent substantial injury to the organization.
(d) Paragraph (c) shall not apply with respect to information relating to a lawyer’s representation of an organization to investigate an alleged violation of law, or to defend the organization or an officer, employee or other constituent associated with the organization against a claim arising out of an alleged violation of law.
(e) A lawyer who reasonably believes that he or she has been discharged because of the lawyer’s actions taken pursuant to paragraphs (b) or (c), or who withdraws under circumstances that require or permit the lawyer to take action under either of those paragraphs, shall proceed as the lawyer reasonably believes necessary to assure that the organization’s highest authority is informed of the lawyer’s discharge or withdrawal.
(f) In dealing with an organization’s directors, officers, employees, members, shareholders or other constituents, a lawyer shall explain the identity of the client when the lawyer knows or reasonably should know that the organization’s interests are adverse to those of the constituents with whom the lawyer is dealing.
(g) A lawyer representing an organization may also represent any of its directors, officers, employees, members, shareholders or other constituents, subject to the provisions of Rule 1.7. If the organization’s consent to the dual representation is required by Rule 1.7, the consent may only be given by an appropriate official of the organization other than the individual who is to be represented, or by the shareholders.
Oregon RPC 1.13(f), which requires lawyers to inform client representatives about the identity of the lawyer’s clients when they may otherwise be misled is consistent in principle with Oregon DR 7-104(A)(2) (regarding not giving advice to non-clients) and DR 1-102(A)(3) (prohibiting a lawyer from making knowing misrepresentations or concealments). The balance of the rule is generally consistent with current Oregon practice as well: an Oregon lawyer who learns of wrongdoing by client representatives is free to go "up the ladder" but is not obligated to do so in all cases. As a practical matter, however, and particularly when the risk of harm to the entity client is significant, "may" will often become "must," whether as a matter of the lawyer’s duty of competent representation under Oregon RPC 1.1, or as a matter of lawyer self-protection against potential malpractice claims.
Inadvertently Produced Privileged Documents
The present Oregon rules do not explicitly address what a lawyer must or may do when the lawyer receives what would appear to be inadvertently produced privileged documents of another party. To date, there are also no Oregon Supreme Court cases on point. This leaves Oregon lawyers with nothing more than a single formal ethics opinion, OSB Legal Ethics Op No 1998-150, to guide them.
New Oregon RPC 4.4(b) fills a part of the present void: "A lawyer who receives a document relating to the representation of the lawyer’s client and knows or reasonably should know that the document was inadvertently sent shall promptly notify the sender."
In other words, the lawyer who receives apparently privileged and inadvertently sent documents must notify the sender about the possible mistake. On the other hand, the new rule does not prohibit the lawyer-recipient from arguing that privilege has been waived and does not specify the standard to be used by a court in making that determination. Cf. Goldsborough v. Eagle Crest Partners, Ltd., 314 Or 336, 838 P2d 1069 (1992); GPL Treatment, Ltd. v. Louisiana-Pacific Corp., 133 Or App 633, 638-39, 894 P2d 470 (1995), aff’d on other grounds, 323 Or 116 (1996).
Ex Parte Communications
Present DR 7-110(B) only prohibits ex parte communications between a lawyer for a party and a judge if the communications relate to "the merits" of a case.1 Even though "merits" was broadly interpreted in cases such as In re Smith, 295 Or 755, 760-61, 670 P2d 1018 (1983), it seems clear that Oregon RPC 3.5(b) places further limits upon a lawyer’s ability to communicate ex parte with a judge. It provides without exception that a lawyer shall not "communicate ex parte with such a person during the proceeding unless authorized to do so by law or court order * * *. "
There may be some de minimis exceptions permissible under Oregon RPC 3.5(b) that arguably parallel at least some of the circumstances that would have been held to be permissible not "on the merits" communications under the Oregon DR. For example, some jurisdictions have held that ex parte communications regarding administrative or procedural matters do not violate the RPC. See Annotated ABA Model Rule of Professional Conduct 3.5(b), p.361 (5th Ed. 2003).
The Choice of Disciplinary Law Rule
Although most Oregon attorneys are presently unaware of it, Oregon State Bar Rule of Procedure 1.4(b) contains a choice of disciplinary law rule.2 Oregon RPC 8.5(b) will increase the visibility of the choice of law rule and will also change the applicable law in some cases:
In any exercise of the disciplinary authority of this jurisdiction, the Rules of Professional Conduct to be applied shall be as follows:
(1) for conduct in connection with a matter pending before a tribunal, the rules of the jurisdiction in which the tribunal sits, unless the rules of the tribunal provide otherwise; and
(2) for any other conduct, the rules of the jurisdiction in which the lawyer’s conduct occurred, or, if the predominant effect of the conduct is in a different jurisdiction, the rules of that jurisdiction shall be applied to the conduct. A lawyer shall not be subject to discipline if the lawyer’s conduct conforms to the rules of a jurisdiction in which the lawyer reasonably believes the predominant effect of the lawyer’s conduct will occur.
The portion of the rule that deals with trials in other states is unchanged. On the other hand, the new rule applies a "predominant effect" test to all non-litigation matters and further contains a safe harbor for lawyers who reasonably guess wrong about the state of predominant effect. In at least some cases, this will lead to the applicability of non-Oregon professional responsibility law to situations that would previously have been governed by Oregon professional responsibility law.
Unauthorized Practice Rules
Recent years have seen a great deal of interest in and controversy over the extent to which a lawyer licensed only in State A may nonetheless engage in acts that might constitute the practice of law in State B.3 Present Oregon law provides no meaningful guidance.4 Oregon RPC 5.5 provides sufficient guidance to answer most, if not all, questions that lawyers may have:
(a) A lawyer shall not practice law in a jurisdiction in violation of the regulation of the legal profession in that jurisdiction, or assist another in doing so.
(b) A lawyer who is not admitted to practice in this jurisdiction shall not:
(1) except as authorized by these Rules or other law, establish an office or other systematic and continuous presence in this jurisdiction for the practice of law; or
(2) hold out to the public or otherwise represent that the lawyer is admitted to practice law in this jurisdiction.
(c) A lawyer admitted in another United States jurisdiction, and not disbarred or suspended from practice in any jurisdiction, may provide legal services on a temporary basis in this jurisdiction that:
(1) are undertaken in association with a lawyer who is admitted to practice in this jurisdiction and who actively participates in the matter;
(2) are in or reasonably related to a pending or potential proceeding before a tribunal in this or another jurisdiction, if the lawyer, or a person the lawyer is assisting, is authorized by law or order to appear in such proceeding or reasonably expects to be so authorized;
(3) are in or reasonably related to a pending or potential arbitration, mediation, or other alternate dispute resolution proceeding in this or another jurisdiction, if the services arise out of or are reasonably related to the lawyer’s practice in a jurisdiction in which the lawyer is admitted to practice and are not services for which the forum requires pro hac vice admission;
(4) are not within paragraphs (c)(2) or (c)(3) and arise out of or are reasonably related to the lawyer’s practice in a jurisdiction in which the lawyer is admitted to practice; or
(5) are provided to the lawyer’s employer or its organizational affiliates and are not services for which the forum requires pro hac vice admission.
(d) A lawyer admitted in another United States jurisdiction, and not disbarred or suspended from practice in any jurisdiction, may provide legal services in this jurisdiction that are services that the lawyer is authorized to provide by federal law or other law of this jurisdiction.
Technically speaking, Oregon RPC 5.5 permits non-Oregon lawyers to take actions that might otherwise constitute the impermissible practice of law in Oregon but does not allow Oregon lawyers to take similar actions in other states. The fundamental premise behind this rule, however, is that all states should and will enact similar safe harbors so that temporary out-of-state lawyering that is reasonably related to a lawyer’s home state practice and does not involve the establishment of an office in a state in which the lawyer is not licensed will consistently be permitted under uniform rules. This change will also make it more difficult for disgruntled clients to refuse to pay attorney fee bills based upon an unauthorized practice defense. Compare Estate of Condon, 65 Cal App 4th 1138, 76 Cal Rptr 2d 922 (Cal App 1998), with Birbrower, Montalbano, Condon & Frank v. Superior Court, 949 P2d 1, 17 Cal 4th 119 (Cal 1998).
The final change to be discussed in this article focuses on the limitations on pretrial publicity by lawyers involved in a case. As a result of a series of free speech cases based upon the Oregon Constitution, present Oregon DR 7-107(A) contains a "clear and present danger" test under which there must, among other things, be a "serious and imminent threat to a fact-finding process in a governmental adjudicative proceeding" before a violation can exist. See generally, Peter R. Jarivs, Legal Ethics Limitations on Pretrial Publicity and the Case of Ron Hoevet, 31 Willamette L Rev 1 (1995). 5
For reasons that are not entirely clear to us, the committee that drafted the Oregon RPCs chose to abandon the constitutionally required clear and present danger/serious and imminent threat standard and to make it easier for the bar to prove a violation. Thus, Oregon RPC 3.6(a) provides:
A lawyer who is participating or has participated in the investigation or litigation of a matter shall not make an extrajudicial statement that the lawyer knows or reasonably should know will be disseminated by means of public communication and will have a substantial likelihood of materially prejudicing an adjudicative proceeding in the matter.
We understand that one of the advantages that the committee may have sought is the extended list of safe harbors contained in Oregon RPC 3.6(b) and (c):
(b) Notwithstanding paragraph (a), a lawyer may state:
(1) the claim, offense or defense involved and, except when prohibited by law, the identity of the persons involved;
(2) information contained in a public record;
(3) that an investigation of a matter is in progress;
(4) the scheduling or result of any step in litigation;
(5) a request for assistance in obtaining evidence and information necessary thereto;
(6) a warning of danger concerning the behavior of a person involved, when there is reason to believe that there exists the likelihood of substantial harm to an individual or to the public interest; and
(7) in a criminal case, in addition to subparagraphs (1) through (6):
(i) the identity, residence, occupation and family status of the accused;
(ii) if the accused has not been apprehended, information necessary to aid in apprehension of that person;
(iii) the fact, time and place of arrest; and
(iv) the identity of investigating and arresting officers or agencies and the length of the investigation.
(c) Notwithstanding paragraph (a), a lawyer may:
(1) reply to charges of misconduct publicly made against the lawyer; or
(2) participate in the proceedings of legislative, administrative or other investigative bodies.
Nevertheless, the "significant likelihood" standard contained in Oregon RPC 3.6(a) was recognized to establish a lower standard than the clear and present danger/serious and imminent threat standard and was upheld as a matter of federal Constitutional law in Gentile v. State Bar of Nevada, 501 US 1030, 111 S Ct 2720, 115 L Ed 2d 888 (1991). We question whether the change in Oregon RPC 3.6(a) will pass Oregon Constitutional muster, and we hope that the Oregon Supreme Court will stick to its prior decisions. We see no justification for a greater incursion into attorney free speech rights and see no proof of significant harm that can only be addressed through relaxing this disciplinary standard.
Oregon is in the midst of a very exciting change from the Oregon DRs to the Oregon RPCs. While the change may seem a little daunting to those who have become familiar with the rules over the past 30 years, it is important to remember that most of the changes aren’t that substantial at all; in general, things currently prohibited by the current rules will still be prohibited, and things permitted by the current rules will still be permitted.
ABOUT THE AUTHORS
Peter R. Jarvis, David J. Elkanich and René C. Holmes are the Oregon-based representatives of the Lawyers for the Profession (sm) practice group of Hinshaw & Culbertson LLP. They provide professional responsibility and risk management services to lawyers, law firms and corporate legal departments. The authors can be reached via email at firstname.lastname@example.org, email@example.com and firstname.lastname@example.org, or by phone at (503) 243-3243.
1. Oregon DR 7-110(B) provides:
In an adversary proceeding, a lawyer shall not communicate, or cause another to communicate, as to the merits of the cause with a judge or an official before whom the proceeding is pending except:
(1) In the course of official proceedings in the cause.
(2) In writing if the lawyer promptly delivers a copy of the writing to opposing counsel or to the adverse party if the adverse party is not represented by a lawyer.
(3) Orally upon adequate notice to opposing counsel or to the adverse party if the adverse party is not represented by a lawyer.
(4) As otherwise authorized by law or by Judicial Rule 2 of the Code of Judicial Conduct.
2. Bar Rule 1.4(b) provides:
In any exercise of the disciplinary authority of Oregon, the rules of professional conduct to be applied shall be as follows:
(1) For conduct in connection with a proceeding in a court before which an attorney has been admitted to practice, either generally or for purposes of that proceeding, the rules to be applied shall be the rules of the jurisdiction in which the court sits, unless the rules of the court provide otherwise, and
(2) For any other conduct,
(A) If the attorney is licensed to practice only in Oregon, the rules to be applied shall be the Oregon Code of Professional Responsibility and the bar Act; and
(B) If the attorney is licensed to practice in Oregon and another jurisdiction, the rules to be applied shall be the rules of the jurisdiction in which the attorney principally practices; provided, however, that if particular conduct clearly has its predominant effect in another jurisdiction in which the attorney is licensed to practice, the rules of that jurisdiction shall be applied to that conduct.
3. For an excellent summary and collection of the law on these issues, we recommend www.crossingthebar.com.
4. Oregon DR 3-101(B) provides: A lawyer shall not practice law in a jurisdiction where to do so would be in violation of regulations of the profession in that jurisdiction.
5. Oregon DR 7-107 provides:
(A) A lawyer engaged in a matter shall not make an extrajudicial statement pertaining to that matter that a reasonable person would expect to be disseminated by means of public communication if the statement poses a serious and imminent threat to the fact-finding process in a governmental adjudicative proceeding and if the lawyer either intends to affect that process or reasonably should know that the statement poses such a threat and acts with indifference to that effect.
(B) The foregoing provision of DR 7-107 does not preclude a lawyer from replying to charges of misconduct publicly made against the lawyer or from participating in the proceedings of legislative, administrative or other investigative bodies.
(C) A lawyer shall exercise reasonable care to prevent the lawyer’s employees from making an extrajudicial statement that the lawyer would be prohibited from making under DR 7-107(A).