The watchwords are: "train" and "supervise"
By Helen Hierschbiel
Lawyers have traditionally used the services of nonlawyers, such as secretaries, legal assistants, law clerks, bookkeepers and investigators, to assist them in providing efficient legal services to their clients. Skilled assistants can be invaluable in a law practice. Lawyers should take care, however, not to become complacent about their supervisory responsibilities for their nonlawyer assistants. The "it wasn’t me" defense will not always work. Although nonlawyers are not bound by the ethics rules applicable to lawyers, there are several ways lawyers can be held responsible for the misconduct of their assistants. A lawyer’s responsibility for nonlawyer assistants typically arises in the following contexts: 1) ordering or ratifying misconduct; 2) failing to screen nonlawyers to avoid disclosure of confidences and conflicts of interest; 3) assisting in the unlawful practice of law; 4) failing to safeguard client property and 5) failing to adequately train and supervise.
ORDERING OR RATIFYING MISCONDUCT
DR 1-102(A)(1), which is identical to Oregon RPC 8.4(a)(1), provides that "It is professional misconduct for a lawyer to violate these disciplinary rules, knowingly assist or induce another to do so, or to do so through the acts of another."1 With respect to a nonlawyer employed, retained, supervised or directed by a lawyer, Oregon RPC 5.3(b) states:
(E)xcept as provided by Rule 8.4(b), a lawyer shall be responsible for conduct of such a person that would be a violation of the Rules of Professional Conduct if engaged in by a lawyer if:
(1) the lawyer orders, or with the knowledge of the specific conduct, ratifies the conduct involved; or
(2) the lawyer is a partner or has comparable managerial authority in the law firm in which the person is employed, or has direct supervisory authority over the person, and knows of the conduct at a time when its consequences can be avoided or mitigated but fails to take reasonable remedial action.
"Knowingly" or "knows" means the lawyer has "actual knowledge of the fact in question" and may be inferred from the circumstances. Oregon RPC 1.0(h).
Oregon lawyers have been disciplined for ordering or ratifying misconduct by their assistants. See e.g., In re Ebner, 13 DB Rptr 76 (1999)(lawyer disciplined for directing office notary to falsely complete a notarial certificate); In re Miller, 11 DB Rptr 165 (1997)(lawyer disciplined for instructing secretary to falsely represent herself as opposing party’s bookkeeper in talking to opposing party’s creditors); In re Benziger, 6 DB Rptr 51 (1992)(lawyer disciplined for directing his secretary to misrepresent to client that a default order had been signed).
The moral of these stories is simple: don’t tell your employees to do something that you are not ethically permitted to do yourself.
Guarding against the unauthorized disclosure of client confidences and secrets and against conflicts of interest resulting from employment of a nonlawyer are also important obligations of lawyers with respect to their nonlawyer assistants. DR 4-101(D) requires lawyers to "exercise reasonable care to prevent the lawyer’s employees, associates, and others whose services are utilized by the lawyer in connection with the performance of legal services from disclosing or using confidences or secrets of a client. . . ." What constitutes "reasonable" care will be explored later in this column.
Regarding conflicts, "there is no clear basis for applying DR 5-105 directly to nonattorneys." OSB Legal Ethics Op No 1991-44. Nevertheless, relying primarily on DR 4-101(D), the opinion concludes that if a nonlawyer acquired client secrets or confidences during prior employment and thereafter was employed by a lawyer adverse to that former client, then the new employer would have to obtain consent of both the former and the current clients as provided by DR 5-105(C).
Avoiding conflicts occasioned from the employment of nonlawyers is also addressed in ABA Informal Ethics Op. 88-1526 (1988). The issue presented was whether a law firm employing a nonlawyer who formerly worked for another firm could continue representing clients adverse to those clients of the other firm on whose matters the nonlawyer had worked. Applying ABA Model Rule 5.3, the committee found the employing firm could do so, but "(t)he nonlawyer should be cautioned: (1) not to disclose any information relating to the representation of a client of the former employer; and (2) … the employee should not work on any matter on which the employee worked for the prior employer or respecting which the employee has information relating to the representation of the client of the former employer."
For conflict purposes, the safest course for lawyers is to treat the hiring of nonlawyer assistants similarly to the hiring of attorneys. As for confidences and secrets, train and supervise.
UNLAWFUL PRACTICE OF LAW
DR 3-101(A) states that a "lawyer shall not aid a nonlawyer in the unlawful practice of law." See also Oregon RPC 5.5(a). Violations of this rule generally arise either because of a failure to supervise and control what is done in the lawyer’s name, or the delegation of tasks to nonlawyers that should not be delegated because they constitute the "practice of law." See e.g., In re Jones, 308 Or 306, 779 P2d 1016 (1989)(lawyer suspended for six months for allowing his name and status as lawyer to be used by a nonlawyer); In re Morin, 319 Or 547, 878 P2d 393 (1994)(lawyer violated DR 3-101(A) by failing to advise nonlawyer employee of precise contours of what constitutes practicing law and allowing nonlawyer too much freedom in dealing and meeting with clients without supervision or oversight); OSB Legal Ethics Op No 1991-20.
Oregon has no statutory definition of the "practice of law."2 The Board of Governors of the Oregon State Bar has defined the practice of law to include "(h)olding one’s self out, in any manner, as an attorney or lawyer authorized to practice law in the State of Oregon; appearing, personally or otherwise, on behalf of another in any judicial or administrative proceeding; or providing advice or service to another on any matter involving the application of legal principles to rights, duties, obligations or liabilities." OSB Bylaws §20.1(B).
The Oregon Supreme Court has further defined the practice of law, the issue of whether conduct is the "practice of law" often turning on whether the act requires exercise of independent legal judgment. See In re Devers, 328 Or 230, 974 P2d 191 (1991)(negotiating on behalf of client, drafting and reviewing a settlement agreement constitutes practice of law); Oregon State Bar v. Gilchrist, 272 Or 552, 563, 538 P2d 913 (1975)(practice of law includes personal contact with clients "in the nature of consultation, explanation, recommendation or advice or other assistance in selecting particular forms, in filling out any part of the forms, or suggesting or advising how the forms should be used in solving the particular (client’s) problems . . ."); Oregon State Bar v. Security Escrows, Inc., 233 Or 80, 377 P2d 334 (1962)(practice of law includes drafting documents when informed or trained discretion must be exercised in drafting the document). See also Taub v. Weber, 366 F3d 966 (9th Cir. 2004)(applying discretionary legal principles in connection with completion of bankruptcy forms is practice of law).
In sum lawyers should train their nonlawyer assistants about what constitutes the "practice of law" and provide adequate supervision to ensure they work within permissible boundaries.
SAFEGUARDING CLIENT FUNDS
Lawyers have a fiduciary duty to safeguard client funds. See DR 9-101(C); Oregon RPC 1.15-1. Monica Malek-Yonan, a former personal injury attorney in California, provides a frightening example of what can happen to client funds when placed in the hands of an unsupervised nonlawyer. Malek-Yonan had a high-volume personal injury practice operating out of two offices. Although she personally negotiated settlements, she directed her staff to disburse the funds, allowing them to sign the trust account checks with a rubber stamp and providing no oversight in handling of the trust account. Her failure to supervise resulted in her employees embezzling $1.7 million in less than two years. The California State Bar Court suspended her for 18 months and imposed probation for five years thereafter. In the Matter of Monica Malek-Yonan, 4 Cal. State Bar Ct. Rptr. 627 (Cal. Bar Ct. 2003).
Malek-Yonan’s story is a reminder that lawyers should adequately train and supervise their nonlawyer assistants who have access to or manage client property.
FAILING TO TRAIN AND SUPERVISE
As may be obvious by now, most of the ethical problems that stem from nonlawyer conduct arise because lawyers have abdicated their training and supervisory responsibilities.
Oregon RPC 5.3(a) states that "a lawyer having direct supervisory authority over (a) nonlawyer shall make reasonable efforts to ensure that the person’s conduct is compatible with the professional obligations of the lawyer." "Reasonable" efforts are those of "a reasonably prudent and competent lawyer." Oregon RPC 1.0(k). The current Oregon Code of Professional Responsibility has no counterpart to this rule.
Further guidance may be found from In re Jones, supra. In deciding to impose an enhanced sanction for aiding another in the unlawful practice of law, the Oregon Supreme Court found Jones failed to adequately supervise his staff. Specifically, the Court cited Jones’ failure to enforce and monitor instructions to his staff, failure to review documents that were being submitted to the courts and failure to meet with or talk with clients. Id. at 309.
Other jurisdictions have articulated similar guidelines. See e.g., In re Sledge, 2003-1148 (La. 10/31/03) 859 So.2d 671(lawyer disbarred for neglect, failure to supervise and unlawful practice of law by allowing staff to handle all facets of personal injury cases except court appearances and depositions, including signing his name to documents, without supervision); In re Bright, 171 B.R. 799 (E.D. Mich. 1994)(lawyer provided inadequate supervision when he did not know about existence or content of meetings between his client and staff, failed to meet directly with client and failed to exercise independent judgment in determining which documents should be prepared and forwarded to the client); Spencer v. Steinman, 179 F.R.D. 484(E.D. Pa. 1998)(lawyer held vicariously liable for abuse of process by paralegal when lawyer did not adequately train paralegal or supervise her work after delegating task of issuing subpoenas). Finally, the ABA Standing Committee on Paralegals promulgated the revised ABA Model Guidelines for the Utilization of Paralegal Services in 2003. The guidelines may be found online at www.abanet.org/legalservices/ legalassistants/home.html.
THE COMMON THEME
Train. Supervise. Repeat.
1. A limited exception for certain investigative activities was carved out of DR 1-102(A)(1) when the Oregon Supreme Court adopted DR 1-102(D) following the Court’s decision in In re Ositis, 333 Or 366, 40 P3d 500 (2002). In that case, the lawyer was disciplined for suggesting to his investigator a line of inquiry, knowing the investigator would misrepresent his identity and purpose. OSB Formal Op. No. 2003-173 provides additional guidance about the application of DR 1-102(D). The Oregon Rules of Professional Conduct maintains this exception with its Rule 8.4(b).
2. ORS 9.160 does provide that certain activities by real estate agents, title insurance agents and escrow agents are not the unlawful practice of law. Nevertheless, in undertaking those activities the agents may not "draft, select or give advice regarding any real estate document if those activities require the exercise of informed or trained discretion." ORS 9.160(5).
© 2004 Helen Hierschbiel
ABOUT THE AUTHOR
Helen Hierschbiel is assistant general counsel in the OSB Client Assistance Office. She can be reached at (503) 620-0222, or toll-free in Oregon at (800) 452-8260, ext. 361, or by e-mail at firstname.lastname@example.org.