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ETHICS ISSUES FOR CORPORATE AND GOVERNMENT COUNSEL Identifying Your Client

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Alan D. Pratzel Office of Chief Disciplinary Counsel October 18, 2012 (Reprinted with the permission of Jeffrey E. Lewis) – PowerPoint PPT presentation

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Title: ETHICS ISSUES FOR CORPORATE AND GOVERNMENT COUNSEL Identifying Your Client


1
ETHICS ISSUES FOR CORPORATE AND GOVERNMENT
COUNSEL Identifying Your Client
  • Alan D. Pratzel
  • Office of Chief Disciplinary Counsel
  • October 18, 2012
  • (Reprinted with the permission of Jeffrey E.
    Lewis)

2
The Disciplinary System
  • In 2011, the OCDC received 2,164 complaints.
  • Investigative files were opened on 905 (42) of
    the complaints received.
  • Jurisdiction rejected for a variety of reasons
    fee disputes, trial strategy or advice, legal
    issues, availability of PCR, informal dispute
    resolution process.

3
The Disciplinary System
  • Of the 905 complaints on which investigative
    files were opened in 2011
  • - 446 (49) involved a communications
    component
  • - 364 (40) involved diligence
  • - 290 (32) involved safekeeping property
  • - 111 (12) involved excessive fees

4
2011 Data re Overdraft Notifications
Cause Disposition Disposition Disposition Disposition Disposition Files Disposed 2011
Close Caution Diversion Admonition Referred for Information Files Disposed 2011
Bank Error 39 2 0 0 0
Accounting/Math Error 4 52 0 9 1
Failure to Reconcile 0 9 0 0 0
Premature Disbursement 0 41 0 3 0
Comingling/Misuse 0 2 0 3 6
Misappropriation 0 0 0 0 0
Other 5 20 0 1 0
Totals 48 126 0 16 7 222
5
The Disciplinary System
  • Of the 905 complaints on which investigative
    files were opened in 2011
  • - 196 (22) involved domestic relations
  • - 120 (13) involved criminal law
  • - 105 (12) involved personal injury
  • - 42 (5) involved estate probate law

6
Identifying Your Client - Background
  • Role of in-house lawyer becoming increasing
    complex.
  • Ascendency of in-house corporate law department
    attributable to confluence of several factors,
    including
  • Corporations need for continuous legal
    assistance.
  • Escalating expense of retaining outside law firm
    representation.
  • In-house advantage in understanding corporations
    business and learning details necessary for
    effective representation.
  • Attractiveness of single client specialty.
  • See Duggin, Sarah H., The Pivotal Role of the
    General Counsel in Promoting Corporate Integrity
    and Professional Responsibility 51 St. Louis
    L.J. 989 (2007)
  • See Missouri Supreme Court Rule 8.105 (Limited
    license to practice law if a) is employed in
    Missouri as a lawyer exclusively for a
    corporation, its subsidiaries or affiliates an
    association a business or a governmental entity
    and the employers lawful business consists of
    activities other than the practice of law or the
    provision of legal services b) Was conferred a
    first professional degree in law (J.D. or LL.B.)
    by a law school that at the time of the lawyer's
    graduation was approved by the American Bar
    Association c) Has filed such application forms
    as prescribed by the board and paid the
    prescribed fee, which is non-refundable and d)
    Receives the approval of the board.)

7
Identifying Your Client - Rules
  • Missouri Supreme Court Rule 4-1.13
  • A lawyer employed or retained by an organization
    represents the organization acting through its
    duly authorized constituents. (Emphasis added.)
  • Up-the-corporate ladder reporting.
  • In dealing with an organizations directors,
    officers, employees, members, stockholders or
    other constituents, a lawyer shall explain the
    identity of the client when the lawyer knows or
    reasonably should know that the organizations
    interests are adverse to those of the
    constituents with whom the lawyer is dealing.
  • Missouri Supreme Court Rule 4-1.13(d).
  • See also ABA Rule 1.13 Organization as Client
    (ABA Rule and Mo Rule are essentially identical).

8
Identifying Your Client - Rules
  • Missouri Supreme Court Rule 4-1.13 (Comment 7)
    (Continued)
  • There are times when the organizations interest
    may be or become adverse to those of one or more
    constituents. In such circumstances the lawyer
    should advise any constituent, whose interest the
    lawyer finds adverse to that of the organization,
    of the conflict or potential conflict of
    interest, that the lawyer cannot represent such
    constituent, and that such person may wish to
    obtain independent representation. Care must be
    taken to assure that the individual understands
    that, when there is such adversity of interest,
    the lawyer for the organization cannot provide
    legal representation for that constituent
    individual and that discussions between the
    lawyer for the organization and the individual
    may not be privileged.
  • An individual may be entitled to indemnification
    from the corporation when interests diverge.
  • Missouri Supreme Court Rule 4-1.13 (Comment 8
    )(Whether such a warning should be given by the
    lawyer for the organization to any constituent
    individual may turn on the facts of each case).
  • See Missouri Rev. Stat. 351.355(A corporation
    created under the laws of this state may
    indemnify any person who was or is a party or is
    threatened to be made a party to any threatened,
    pending or completed action, suit, or
    proceeding)

9
Identifying Your Client - Rules
  • Missouri Supreme Court Rule 4-1.13(Continued)
  • Missouri Rule 4-1.13 (and Model Rule 1.13, in
    particular) make clear that in-house attorney has
    obligation to represent the corporations
    interests.
  • In-house counsels ultimate responsibility is
    always the client, and the highest authority
    capable of speaking on behalf of a corporate
    client is ordinarily its Board of Directors.
  • Duggin 51 St. Louis L.J. 989, 1004.

10
Identifying Your Client - Examples
  • Instances where distinction between organization
    and client is likely to surface
  • Internal Investigations suspicion of problems
    with potential significant legal consequences
    investigations for purpose of providing legal
    advice and preparing for litigation.
  • Compliance activities compliance efforts
    designed to prevent problems.

11
Identifying Your Client Tensions When
Corporation is the Client
  • Attorney has duty to clearly communicate scope of
    representation to corporate clients. But
    corporate employee may be less likely to
    communicate and put himself/herself at risk in
    litigation in the case of limited protection of
    corporate constituents.
  • Clarifying with corporate constituents that
    client is only the corporation may potentially
    lead to breakdown in communication with corporate
    constituents who are in position to terminate
    attorneys employment. Even more difficult
    because corporation is an entity and corporate
    constituency is a live body.
  • However, Rule 4-1.13 makes clear that in-house
    attorneys primary duty is to represent the
    organizational client and effectively
    communicating ethical duties as a lawyer is
    necessary even though in-house counsel may risk
    damaging lines of communication within
    organization.

12
Identifying Your Client Courts
  • Courts have made clear that in-house attorney
    represents the corporation not the officer or
    employee in his/her individual capacity.
  • See U.S. v. Martin, 278 F.3d 988 (2002)
    (Attorney client privilege did not apply and
    motion to suppress evidence denied, General
    Counsel for Defendants fraudulently created
    company reported information about Defendants
    background to federal law enforcement officials.
    Court rejected Defendants arguments that General
    Counsel was both his personal and corporate
    lawyer and that law enforcement improperly
    intruded on Defendants attorney client
    relationship. No attorney client relationship
    with former corporate officer who had no
    personal contact and limited personal
    interactions with outside counsel retained by the
    corporation. Professional Service Industries,
    Inc. v. Kimbrell, 758 F. Supp. 676 (D.C.S. 1991).

13
Multijurisdictional Practice
  • Governed by Rule 4-5.5
  • Lawyer admitted in another state and not subject
    to discipline may provide legal services on a
    temporary basis in Missouri, if
  • Services are in association with a lawyer
    admitted in Missouri who actively participates in
    the matter
  • Services are related to a pending or potential
    case in which the lawyer is authorized to appear
  • Services are related to a pending or potential
    ADR proceeding and are reasonably related to the
    lawyers practice in the state of licensure and
    are not services for which pro hac vice admission
    is required
  • Services are provided to the lawyers employer or
    affiliates and are not services for which pro hac
    vice admission is required.

14
Multijurisdictional Practice
  • Governed by Rule 4-5.5
  • Lawyer admitted in another state and not subject
    to discipline may establish an office or provide
    legal services to the lawyers employer or its
    organizational affiliates if the lawyer obtains a
    limited license or a general license pursuant to
    Rule 8.
  • A lawyer engaging in the a multijurisdictional
    practice in Missouri must comply with continuing
    legal education requirements of this state.
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