Considering the duties owed to prospective clients
By Chris Mullmann
Most of the time, it is not difficult to recognize the existence of an attorney-client relationship. The obvious indicia include a formal attorney-client fee agreement, an engagement letter, a billing statement or other written documents formally outlining the duties the lawyer has agreed to undertake for the client. However, on occasion there may be a dispute about the existence of the relationship, which may have serious consequences for the lawyer and the "prospective client." Before adoption of the Oregon Rules of Professional Conduct (Jan. 1, 2005) Oregon’s Code of Professional Responsibility did not have a specific rule defining the responsibilities that a lawyer owed to a prospective client. However, the absence of a specific rule did not mean that the Oregon Supreme Court had never considered the duties owed to prospective clients.
Two relatively recent Oregon Supreme Court cases are illustrative. In In re Spencer, 335 Or 71, 58 P3d 228 (2002) the court was asked to consider what duty a lawyer owed to a prospective client regarding documents left with the lawyer to assist in the lawyer’s decision whether to take the client’s case, when the lawyer ultimately declined the case. The bar argued that the court should be guided by Rule 503 of the Oregon Evidence Code (OEC), which identifies persons who may claim the attorney-client privilege to include those who consult a lawyer "with a view to obtaining professional legal services from the lawyer." In examining former DR 9-101(C)(4) which provided that a lawyer must "promptly pay or deliver to a client as requested by the client the funds, securities, or other properties in the possession of the lawyer which the client is entitled to receive" (emphasis added), the court agreed, in part, with the bar’s argument. The court held:
When a person delivers "funds, securities or other properties" to a lawyer who is considering whether to represent that person, the person has entrusted those materials to the lawyer and, as such, is as much entitled to be considered a "client" for that limited purpose as if the person had made a confidential, verbal communication to the lawyer. In the latter case, the confidential communication is protected by the attorney-client privilege. [335 Or at 84.]
The court concluded that the proper application of former DR 9-101(C)(4) required that it apply to one who consults with a lawyer with a view to obtaining professional services from the lawyer as the prospective client had in Spencer. However, the court specifically noted that:
Our holding does not expand the rule to include all persons who might conceivably be considered "prospective" clients. The universe of "prospective" clients is potentially limitless, and [the client] was not simply a "prospective" client. She delivered documents to the accused in the course of seeking professional legal services from him. Although the accused ultimately decided not to represent [the client], when the accused accepted [her] documents to review to make that decision, [she] became the accused’s "client" for purposes of DR 9-101(C)(4). [335 O4 at 84-85.]
More recently, the court had the opportunity to further explain its holding in Spencer in the context of a current and former client conflict of interest allegation and the applicability of former DR 5-105(C). In re Knappenberger, 338 Or 341 (2005), involved a divorce where the husband met with the accused to discuss representation. Husband asked whether the consultation was confidential, and, although the accused did not provide a direct answer, he did not disabuse husband of that understanding. The accused was provided with a copy of documents husband and his wife had signed; he described the main issues in the divorce and husband disclosed to the accused his general goals in the divorce. Husband also disclosed to the accused details concerning a prior restraining order and his wife’s past behavior towards him. On Oct. 12, 2000, the accused wrote husband expressing a desire to represent him in the divorce proceeding. Husband subsequently spoke with the accused and advised him that he had hired another lawyer. The accused sent husband a bill for the initial consultation that husband never paid.
On Nov. 30, 2000, wife interviewed the accused, discussed the divorce and restraining order and retained him to represent her in the divorce. The accused never discussed with wife that fact that he had consulted with her husband about their divorce. Over the next few days, the accused took steps in representing wife, including sending a letter to husband’s retained lawyer. On Dec. 4, 2000, husband’s counsel confronted the accused with the fact that he could not represent wife due to his previous representation of husband in the same matter in which the accused obtained confidential information from husband. The accused responded that he "did not remember" husband, but would discuss the matter with his ethics lawyer. The accused subsequently withdrew from representing wife.
The accused argued that former DR 5-105(C) did not apply because husband was, at most, a prospective client and the rule only applied to clients. The court rejected that argument, but did not find that anyone who consults with a lawyer with a view to obtaining professional service is a client. Instead, the court held that it would look for evidence that the putative client intended to establish a lawyer-client relationship and whether the putative client could assert the attorney-client privilege under OEC 503. In this case the court found that husband met with the accused for almost two hours and was provided substantive advice on various aspects of the divorce proceeding. Both expected that the consultation would be confidential and husband expected to be billed for the consultation and the accused did bill him for the meeting and advice. While the court recognized there was some evidence in the record to support a claim that husband was only a prospective client, it was clear that husband had been the accused’s client for some period of time, at least during their initial consultation. Thus, when husband advised the accused that he had selected another lawyer to handle the divorce, husband became a former client for purposes of conflict analysis and the accused had a conflict of interest in subsequently representing wife without husband’s consent.
With adoption of the Oregon Rule of Professional Conduct 1.18, the court has provided a more definitive approach to the "prospective client" issue:
Rule 1.18 Duties to Prospective Client
(a) A person who discusses with a lawyer the possibility of forming a client-lawyer relationship with respect to a matter is a prospective client.
(b) Even when no client-lawyer relationship ensues, a lawyer who has had discussions with a prospective client shall not use or reveal information learned in the consultation, except as Rule 1.9 would permit with respect to information of a former client.
(c) A lawyer subject to paragraph (b) shall not represent a client with interests materially adverse to those of a prospective client in the same or a substantially related matter if the lawyer received information from the prospective client that could be significantly harmful to that person in the matter, except as provided in paragraph (d). If a lawyer is disqualified from representation under this paragraph, no lawyer in a firm with which that lawyer is associated may knowingly undertake or continue representation in such a matter, except as provided in paragraph (d).
(d) Representation is permissible if both the affected client and the prospective client have given informed consent, confirmed in writing, or:
(1) the disqualified lawyer is timely screened from any participation in the matter; and
(2) written notice is promptly given to the prospective client.
This new rule (also new to the ABA Model Rules in 2002) recognizes that prospective clients, like traditional clients, may disclose information to a lawyer and provide the lawyer with documents as a preliminary to engaging the lawyer’s services. These preliminary discussions are often limited in time and scope, and often result in there being no formalized lawyer-client relationship. The new rule provides prospective clients with some but not all of the protection provided to traditional clients.
Oregon RPC 1.18 is a codification of a significant body of case law and other authority that has interpreted the duty of confidentiality to apply to prospective clients. Simply put, a prospective client is a person who discusses with a lawyer the possibility of forming a client-lawyer relationship with respect to a matter. The lawyer cannot use or reveal any information learned in the consultation except as permitted by other rules. The lawyer cannot represent a client with interests materially adverse to those of the prospective client in the same or a substantially related matter if the lawyer received information from a prospective client that could be significantly harmful to that person in the matter. If a lawyer is disqualified from representation by this rule, no lawyer in a firm with which that lawyer is associated may knowingly undertake or continue representation adverse to the prospective client. However, representation of an adverse party is permissible if both the affected client and prospective client have given informed consent confirmed in writing. Oregon RPC 1.18(d)(1). Alternatively, another member of the disqualified lawyer’s firm may represent the adverse party if the disqualified lawyer is timely screened from any participation in the matter and written notice is promptly given to the prospective client. ORPC 1.18 (d)(2).
Although ORPC 1.18 is a significant addition to the rules governing lawyer conduct, it is doubtful that the court will find that every person who consults with a lawyer has the protection afforded to a prospective client under the rule. The court rejected that broad reach in Spencer and reaffirmed that position in Knappenberger. As Comment 2 to ABA Model Rule 1.18 indicates:
Not all persons who communicate information to a lawyer are entitled to protection under this rule. A person who communicates information unilaterially to a lawyer, without any reasonable expectation that the lawyer is willing to discuss the possibility of forming a client-lawyer relationship, is not a "prospective client" within the meaning of the rule.
However, there can be no doubt that lawyers must be better attuned to the duties they owe to prospective clients and need to be ever cautious in establishing and maintaining an effective system for identifying and recognizing conflicts of interest that may result from meetings with "prospective clients." A lawyer "may not rely solely on his or her memory to avoid prohibited conflicts of interest." Knappenberger, supra.
© 2005 Chris Mullmann
ABOUT THE AUTHOR
Chris Mullmann is assistant general counsel and manager of the Client Assistance Office for the Oregon State Bar. He can be reached at (503) 620-0222 or toll-free in Oregon at (800) 452-8260, ext. 392, or by e-mail at firstname.lastname@example.org.