Temporary Lawyers: Ethical Considerations
Temporary Lawyers: Ethical Considerations
A little over a decade ago, the ABA BNA Lawyers’ Manual on Professional Conduct, an authoritative secondary source of ethics opinions, did not even have an index category for “Temporary Lawyers”: ethics opinions related to this form of legal services were non-existent. Yet, a few years later, as a 1994 article in The Wall Street Journal proclaimed,”[T]he use of legal temps has gone mainstream.” With the increasing numbers of temporary lawyers, ethics committees of various bar associations have become concerned with the implications of their use in representing clients. This article addresses the ethical implications of temporary lawyers. 1
Conflicts of Interest
Over the course of a career, the typical temporary lawyer will work for a variety of firms and clients. As a consequence, real and potential conflicts of interest are common and should be investigated at the outset of the relationship. In addition to performing an adequate conflict of interest check before the relationship begins, firms should be wary of imputed disqualification concerns that may dictate that a temporary lawyer decline the work, even if there is no real or possible conflict.
Present vs. Former Client. ABA Model Rule (“Rule”) 1.7 and 1.9 cover conflicts of interest involving present and former clients. The key difference between these two rules is that representation adverse to a former client is prohibited only for the same or substantially related matters (Rule 1.9), while representation adverse to a present client may be prohibited even for unrelated matters (Rule 1.7). For purposes of interpreting applicability of these ethics rules, ABA Formal Opinion 88-356 does not address the stickier issue of how long a client for whom a temporary lawyer has handled only one distinct project remains a client. Does the client become “former” immediately upon completion of the project by the temporary lawyer, or does the relationship continue during the pendency of the firm’s representation of the client in that matter? If the latter is the standard, temporary lawyers might not actually know when the firm’s representation ends, as their work on the matter has concluded.
Imputed Disqualification. The area of imputed disqualification presents the most troubling potential ethical problems for both the temporary lawyer and the hiring firm. Imputed disqualification may arise when the temporary hire performs work on one or several ongoing projects on the firm’s premises, without being shielded from information about firm clients or pending matters. Under the Rules, knowledge of all matters in which the firm has been hired is imputed to the temporary lawyer, even if the temporary lawyer has not worked on those representations. Later, if the temporary lawyer is hired by another firm in a matter opposing a client of a firm at which the temporary lawyer had previously worked, the new firm may be disqualified from the representation on the basis of the temporary lawyer’s imputed knowledge. This is true, even when the temporary lawyer had never worked on the case for either law firm.
Temporary lawyers may present unique issues with respect to imputed disqualification under the Model Rules. The applicable provision is Rule 1.10 which provides: “While lawyers are associated in a law firm, none of them shall knowingly accept or continue employment when any one of them practicing alone would be prohibited from doing so....” Because a temporary lawyer, by definition, moves from firm to firm and may be exposed to a multitude of different clients and matters, the use of a temporary lawyer can present significant issues for the hiring firm in terms of imputed disqualification. A key threshold in conflicts determination is whether a temporary lawyer is considered to be “associated in a law firm” for purposes of the rule’s application.
“Association.” In Op. 88-356, the ABA states that whether a temporary lawyer is associated in or with a firm for purposes of the rule “must be determined by a functional analysis of the facts and circumstances involved in the relationship between the temporary lawyer and the firm consistent with the purposes of the rule.”
This functional analysis is a question of whether the temporary lawyer’s assignment at the firm provided extensive or limited access to information in relation to the firm’s clients in general. The more extensive the access, the greater the risk that the temporary lawyer be “associated” with the firm for purposes of imputed qualification.
The ABA provided a useful example: a temporary lawyer who works for a firm, in the firm office, on a number of matters for different clients, under circumstances where the temporary lawyer is likely to have access to information relating to the representation of other firm clients, may well be deemed “associated with” the firm... unless the firm, through accurate records or otherwise, can demonstrate that the temporary lawyer had access to information relating to the representation only of certain other clients. ABA Op. 88-356.
Thus, to reduce the risk of disqualification, efforts should be taken by both the temporary lawyer and the firm to limit access to information relating to other firm clients. Accurate records of the temporary lawyer’s work should also be maintained by both the firm and the temporary lawyer. If these precautions are taken, it might be argued that the temporary lawyer is not “associated with the firm” and therefore the other permanent members of the firm will not be subject to imputed disqualification.
However, Op. 88-356 cautions that the “association” test is a guideline and not a set rule. The Opinion goes on to state that “it would be inadvisable for a second firm representing other parties in the same matter whose interests are directly adverse to those of the client of the firm to engage the temporary lawyer during the pendency of the matter, even for working on other matters.” Thus, a careful review of each situation is advisable to avoid potential imputed disqualification concerns.
With respect to confidences and secrets, the Model Rules may differ from those adopted in various states. Where these rules differ, Op. 88-356 analysis may not be particularly helpful on this issue. In New York, for example, the Lawyers’ Code of Professional Responsibility provisions on confidences and secrets resembles provisions of the earlier ABA Model Code of Professional Responsibility. Sec. DR 4-101 of the New York Code provides that a lawyer shall not reveal a confidence or secret of the client.
These terms are defined as follows: confidence refers to information protected by the attorney-client privilege under applicable law, and secret refers to other information gained in the professional relationship that the client has requested be held inviolate or the disclosure of which would be embarrassing or would likely be detrimental to the client. DR 4-101(a).
Thus, when the relationship with the firm is limited, it is less likely that the temporary lawyer will be in a position to learn “secrets” or “confidences” of clients for whom the temporary lawyer is not working. However, if the temporary lawyer does learn the confidences or secrets of a firm client, the temporary lawyer must not reveal those confidences or secrets regardless of the nature of the temporary lawyer’s relationship with the firm.
Special care must be given, however, to shielding temporary lawyers from client confidences of those clients for whom they are not performing services. It is possible that, since the temporary lawyer is not employed by the firm, the attorney-client privilege does not attach to the temporary lawyer with respect to confidences learned or overheard as to other clients. This raises the specter of waiver of the privilege. Associates or partners supervising temporary attorneys should also be aware that ethics rules may require that they exercise reasonable care to prevent employees, associates, and others whose services are utilized by the lawyer from “disclosing” client confidences or secrets.
Disclosure to Clients of Temporary Lawyer Work-Product Lawyer-Client Relationship
Clients who retain a law firm to represent them expect a certain level of quality to be produced by the lawyers they hire. Even if a temporary lawyer is supervised closely, the temporary lawyer is not an “employee” of the firm that the client chose to “hire.” Further, the client’s right to know precisely who represents the client’s interests is an intrinsic aspect of the lawyer-client relationship.
Level of Supervision
In Ethics Opinion 88-356, the ABA concluded that the disclosure requirement is contingent upon the level of supervision the firm exercises over the temporary lawyer. The ABA opined that if there is close supervision, Ethical Consideration (EC 2-22) of the Model Code of Professional Responsibility (“Model Code”) is inapplicable because such employment does not involve an “association with a lawyer outside the firm.” Thus, no client disclosure is required.
In contrast, if there is no direct supervision of the temporary lawyer, client disclosure and consent is required because the client, by retaining the firm, cannot reasonably be deemed to have consented to the involvement of an independent lawyer.
The ABA also questioned the applicability of Disciplinary Rule DR 2-107(a) of the Model Code and stated that it is only applicable when the firm actually splits the gross fee received by the client with the temporary lawyer.
Potential Future Use of Temporary Lawyer
After considering the applicable ethical provisions, many states conclude that if the use of temporary lawyers is a possibility or is contemplated, then disclosure to the client regarding such use or potential use of a temporary lawyer must be made. Thus, ethics opinions in this area suggest a law firm has an obligation to disclose when the firm considers the use of a temporary lawyer to render services for the client.
Billing the Client for the Services of a Temporary Lawyer
Method of Billing: The use of a temporary lawyer by a law firm also raises potential ethics concerns with respect to the method of billing the client for the services provided. The issue is whether the services of a temporary lawyer can be considered a disbursement or a professional fee for billing purposes. A disbursement is an expense incurred on behalf of the client by the firm, which is subsequently reimbursed by the client. A professional fee is the cost to the client for the legal services rendered.
The ethics consideration raised by this issue is whether a law firm should benefit financially from the use of a temporary lawyer. Should a firm also desire to charge the client for the “finder’s fee” imposed by a temporary lawyer placement agency, disclosure and consent to that charge may be required, according to the ethics opinions of some states. However, the ethics issues (and the divergence of opinion) related to billing the client for the agency’s fee is beyond the scope of this article.
Profit: In other areas, the ABA has determined that a firm should not surcharge disbursements made on behalf of the client and thereby earn a profit. If, for example, a firm hires an independent copying center to produce documents for a client, the client should be charged the amount the firm paid for such services. The firm should not “profit” by charging the client a higher rate. ABA Op. 93-379 (1993). For “in-house” services, such as the production of documents for the client internally, the ABA has determined that the client may properly be charged the actual cost of the services plus a reasonable amount of overhead expense directly related to the services provided. ABA Op. 93-379.
Reasonableness: Professional fees charged to the client for the legal services rendered must be reasonable. Specifically, Model Rule 1.5 prohibits a lawyer from charging an “excessive fee.” The determination of what is excessive is dependent on whether a lawyer of “ordinary prudence would be left with a definite and firm conviction that the fee is in excess of a reasonable fee” after consideration of several factors, including the time and labor required, the fee customarily charged in the locality, the amount involved and the results obtained, the time limitations imposed on the lawyer, and the experience, skill and reputation of the lawyer.
Professional Fee or Disbursement: Whether charges for the services of a temporary lawyer should be billed as a disbursement or as the average associate is billed (with a reasonable profit margin) is the subject of some debate. If it is determined that the services of a temporary lawyer should be billed as a disbursement, there would be no profit margin available for the firm in charging the client for the services of the temporary lawyer. However, a reasonable charge for overhead expenses such as secretarial services, office supplies, and office space could be included. Conversely, if it is determined that the services of a temporary lawyer should be billed as the average associate is billed to the client, a reasonable fee including a profit margin could be charged for the temporary lawyer’s services as long as it is not “excessive.”
Factors to Consider: Several different factors may be considered when determining whether to characterize the services of temporary lawyers as professional fees or disbursements. For example, the services rendered by the temporary lawyer are typically “legal” in nature. The experience and qualifications of a temporary lawyer may actually exceed that of a comparable associate. Also, because a firm’s stock in trade is the sale of legal services, a mark-up on a temporary lawyer’s services may be less objectionable than a mark-up on photocopies or other non-legal services. On the other hand, the firm is not paying the temporary lawyer directly and likely has not conducted the type of interview process used to hire an associate. As this is an evolving area of ethics discourse and there is little direct guidance in the ethics rules and opinions, it is important to note that it is likely that opinions and rules in this area will develop in the near future. Thus, it is important to keep up with current ethics view.
Billing Rate: In reviewing this issue, the ABA stated that it would be improper to assess a surcharge on disbursements over and above the amount incurred in the absence of disclosure. ABA Op. 93-379. However, the ABA has left open the possibility that a fee, which includes a “profit” or “surcharge,” is ethically sound after disclosure and consent. Thus, provided the arrangement is disclosed to the client, billing temporary lawyers at a “reasonable rate” that yields a profit to the firm would appear to be ethically acceptable.
“Fairness”: Disclosure also may obviate any potential unfairness to the unsophisticated client who fails to question the fees charged for temporary lawyer services. However, disclosure will not obviate the requirement that the fee not be excessive in violation of Model Rule 1.5 as the rule states that the lawyer may not “enter into an agreement” with the client.
1 In this article, “temporary lawyer” is used to mean “a lawyer engaged by a firm for a limited period, for one firm exclusively (although without contemplation of permanent employment), as well as those who have ‘of counsel’ relationships or are associated as independent counsel on a particular case.” This is the same definition used in ABA Formal Opinion 88-356. Although Op. 88-356 is not binding, several states have adopted some or all of its conclusions, and it provides a useful structure for looking at issues and contrasting its view with opinions of individual states.
This article is intended to inform the reader of potential liability exposures for attorneys. This article reflects general principles only and does not render legal advice. Readers should consult legal, financial, insurance, and other advisors if they have specific concerns. Neither the Los Angeles County Bar Association nor Aon and its affiliates assumes any responsibility for how the information in this article is applied in practice or for the accuracy and completeness of the information. Reproduction without written permission is prohibited. This article, which originally appeared in the Aon Attorneys’ Advantage Risk Management Newsletter, The Quarter Hour, is reprinted with the permission of Aon Attorneys’ Advantage and is made available to County Bar Update by Aon Direct Insurance Administrators, administrators of the LACBA Sponsored Aon Insurance Solutions Program.
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