|Oregon State Bar Bulletin JANUARY 2012|
FAQs of 2011
By Helen Hierschbiel
General Counsel’s Office receives an average of 20 calls per day from bar members looking for ethics advice and guidance. While each situation really is unique (and you should never hesitate to call us about yours) some questions come up more frequently than others. Here, for the benefit of everyone, are our answers to the most frequently asked questions of the past year.
Trust Accounts and Client Files
May I accept credit card payments? Yes. The more difficult question is whether to designate your business account or lawyer trust account as the merchant account. If you want to accept credit card payments for deposits of fees not yet earned, then you must designate the client trust account as the merchant account, because unearned funds must be deposited into the lawyer trust account. RPC 1.15-1(a). If you only accept credit card payments for fees already earned, then you may designate your business account as the merchant account. For additional information on this and other issues that can arise by accepting credit card payments, see OSB Formal Ethics Op No 2005-172.
How long should I wait after depositing a check before I disburse funds?
An excellent and very common question that the rules of professional conduct do not answer. If you disburse funds before they have been collected from the payor bank and credited to your account, you run the risk that the check will be returned (whether because of fraud, insufficient funds or some other reason), and your disbursement will overdraw the trust account or draw against the funds of some other client. Be careful not to confuse the time within which a bank must make funds “available” and the time it takes for a check to clear. For information on the amount of time to wait for checks to clear, see Stevens, “Waiting for ‘Go’ Dough: A Primer on Disbursing Client Funds,” OSB Bulletin June 2006. In addition, the PLF has a wealth of information on its website about how to manage your trust account.
What if there is a dispute over who gets the money in my trust account? Lawyers are required to deliver to the client or third person any funds that the client or third person is “entitled to receive.” RPC 1.15-1(d). The rules of professional conduct do not address who is entitled to receive particular funds. That question is generally a matter of substantive law or agreement of the claiming parties. When in doubt about who is lawfully entitled to funds in trust, lawyers should keep the disputed funds in trust until the dispute is resolved. See RPC 1.15-1(e). For additional information on resolving particular disputes over funds in trust, see OSB Formal Ethics Op No 2005-52, 2005-68 and 2005-149, and Morrill, “Disbursing Disputed Funds: RPC 1.15-1(d)(e),” OSB Bulletin January 2011.
How long should I keep my client files? This is yet another common question for which the ethics rules provide little guidance. Complete records of trust account funds and “other property” handled by a lawyer must be kept for five years after termination of representation. See RPC 1.15-1(a). Whether this rule applies to client files is unclear. The PLF has recommended retention periods, depending on the area of practice. The list can be found on the PLF website under Practice Aids and Forms.
Conflicts of Interest
Do I owe any duties to individuals who contact me for assistance but do not retain me? Yes. Individuals who discuss with a lawyer the possibility of forming a client-lawyer relationship, but do not retain the lawyer, are considered prospective clients. Lawyers owe them the same duty of confidentiality that they owe to regular clients. Determining whether a conflict exists with a prospective client, however, is different. Under RPC 1.18(c), a discussion with a prospective client will bar a lawyer from representing a client adverse to the prospective client in the same or substantially related matter only if the lawyer received information from the prospective client that could be significantly harmful to the prospective client in that matter. Even if the consulting lawyer is disqualified, other members in the firm may be able to represent the client if: 1) the disqualified lawyer took reasonable measures to avoid exposure to more information than was necessary to determine whether to represent the client; 2) the disqualified lawyer is timely screened from participation in the matter, and 3) written notice is promptly given to the prospective client. See RPC 1.18(d). For additional information on the prospective client rule, see OSB Formal Ethics Op No 2005-138 and Stevens, “Prospective Clients: Effective Use of RPC 1.18,” OSB Bulletin Feb/March 2010.
How do I figure out whether I have a conflict with regular clients? Start by looking at RPC 1.7 or RPC 1.9, depending on whether you are dealing with two current clients or a current and former client. For additional guidance, see Stevens, “Conflicts of Interest: A Periodic Series, Part 1,” OSB Bulletin October 2009 and Stevens, “Conflicts Part II: Former Client Conflicts,” OSB Bulletin December 2009. Finally, remember that many conflicts can be waived with the informed consent, confirmed in writing, from each affected client. Sample conflict waiver letters can be found on the PLF website.
May I loan my client money? It depends. If you are representing a client in connection with contemplated or pending litigation, then you may not loan the client any money, other than the expenses of litigation, and then only if the client remains ultimately liable for such expenses to the extent of the client’s ability to pay. See RPC 1.8(e). If the representation does not involve litigation, then you may loan your client money as long as you follow the requirements of RPC 1.8(a).
If my client has a potential malpractice claim against me, must I withdraw? Not necessarily. Missing a deadline or making some other mistake for which a client may have a malpractice claim could give rise to a self-interest conflict. Self-interest conflicts can be difficult to identify because they require assessing both your own subjective personal interests and whether such interests might reasonably limit your responsibilities to your client. See RPC 1.7(a)(2). For assistance with the analysis, take a look at OSB Formal Ethics Op No 2005-61 and 2005-182 as well as In re Knappenberger, 337 Or 15 (2004). Even if a conflict exists, you may be able to continue representation with informed consent from the client, confirmed in writing. See RPC 1.7(b) and 1.0(g).
If my client threatens a bar complaint, must I withdraw? It depends on whether the client’s threats create a self-interest conflict between you and your client such that your representation of the client will be materially limited. See RPC 1.7(a)(2) and OSB Formal Ethics Op No 2005-182.
Duties to Clients vs. Duties to Others
My client just gave me documents that I think were stolen. What do I do? First, remember your duty of confidentiality to your client. See RPC 1.6. Second, consider whether your possession of those documents would constitute a crime. See ORS 164.095. If so, you should not accept them from your client, or you should seek your client’s consent to return them to their rightful owner. See OSB Formal Op No 2005-105. Finally, even assuming that they were not stolen, but were simply copied without authorization, consider whether the documents may be entitled to protection under the substantive law of privilege or otherwise. See OSB Formal Op No 2011-186.
What if my client commits, or plans to commit, perjury? Lawyers have a duty to protect their clients’ confidentiality. See RPC 1.6. At the same time, lawyers may not knowingly offer evidence that they know is false, or otherwise engage in conduct involving dishonesty or deceit. See RPC 3.3(a) and RPC 8.4(a). How to resolve the conflict presented by this situation was addressed in In re A, 276 Or 225 (1976). In short, the lawyer must ask the client to correct the statement. If the client refuses, then the lawyer must withdraw. Similarly, a lawyer must attempt to dissuade a client from carrying out a plan to commit perjury. If the lawyer remains uncertain about the client’s intention, the lawyer should withdraw. See OSB Formal Ethics Op No 2005-34 and 2005-53.
What do I do if I have completely lost contact with my client and litigation is pending? One thing for certain is that you cannot settle the case unless the client has given you authority to do so. See RPC 1.2(a) and OSB Formal Ethics Op No 2005-33. On the other hand, you cannot simply stop working on the client’s case. As long as you are counsel of record, you have a continuing duty to provide competent and diligent representation. RPC 1.1 and 1.3. At the same time, you cannot substitute your judgment for the client’s in going forward. Your client’s disappearance would certainly be good cause for withdrawing from representation under RPC 1.16(b), but in doing so, you must first seek and obtain leave from the court to withdraw as provided in RPC 1.16(c). See OSB Formal Ethics Op No 2005-33. Be sure to also consider the requirements of RPC 1.16(d).
How much can I tell the court about my reasons for withdrawing? Not much. While you may have good cause to withdraw, you still have a duty not to disclose your client’s confidential information. See RPC 1.6(a). Thus, to the extent that your withdrawal is based on that confidential information, you may not reveal the basis to the court unless permitted by one of the exceptions in RPC 1.6(b). See OSB Formal Op No 2011-185.
Where do I find all these ethics opinions and resources you keep talking about? The ethics opinions can be found at www.osbar.org/ethics. Past bar counsel columns can be found at: www.osbar.org/publications/bulletin/archive.html. PLF Practice Aids can be found on the PLF website www.osbplf.org under Practice Aids and Forms, or for a complete list click here www.osbplf.org/docs/PracticeAidList.pdf. And last, but not least, the bar’s general counsel’s office is available to provide guidance with questions regarding the rules of professional conduct. Give us a call or send us a request for an informal written advisory opinion as provided in RPC 8.6 and OSB Bylaw 19.1. We are here to help when we can!
ABOUT THE AUTHOR
Helen Hierschbiel is general counsel for the Oregon State Bar. She can be reached at (503) 620-0222, or toll-free in Oregon at (800) 452-8260, ext. 361, or by email at firstname.lastname@example.org.
© 2012 Helen Hierschbiel