Vol. 70, No. 2, February 1997
ABA Formal Opinion 88-356: Temporary Lawyers (Dec. 16, 1988)
In order to satisfy the requirements of the Model
Rules and predecessor Model Code when a lawyer is engaged temporarily to
work for clients of a law firm (including a corporate legal department),
the lawyer and the firm must exercise care, in accordance with the
guidelines in this opinion, to avoid conflicts of interest, to maintain
confidentiality of information relating to the representation of
clients, to disclose to clients the arrangement between the lawyer and
the firm in some circumstances, and to comply with other applicable
provisions of the Rules and Code. The use of a lawyer
placement agency to obtain temporary lawyer services where the agency's
fee is a proportion of the lawyer's compensation does not violate the
Model Rules or predecessor Model Code as long as the professional
independence of the lawyer is maintained without interference by the
agency, the total fee paid by each client to the law firm is reasonable,
and the arrangement otherwise is in accord with the guidelines in this
opinion.
The committee has received a number of inquiries relating to the
increasing use by law firms of temporary lawyers.1 The temporary lawyer may work on a single matter
for the firm or may work generally for the firm for a limited period,
typically to meet temporary staffing needs of the firm or to provide
special expertise not available in the firm and needed for work on a
specific matter. The temporary lawyer may work in the firm's office or
may visit the office only occasionally when the work requires. The
temporary lawyer may work exclusively for the firm during the period of
temporary employment or may work simultaneously on other matters for
other firms.
In this opinion, the committee addresses ethical issues affecting the
firm and the temporary lawyer involving the application to temporary
lawyer practice of rules relating to conflicts of interest;
confidentiality of client information; disclosure to the client of
arrangements between the firm and the lawyer (including fee division);
and arrangements with lawyer placement agencies. These issues are
addressed under the Model Rules and the predecessor Model Code.
Conflicts of Interest
In the Model Rules, the general conflict of interest provision is
Rule 1.7, which standing alone applies only to an individual lawyer and
a client about to be represented or currently represented by that
lawyer. Rule 1.7 prohibits a lawyer from representing a client if the
representation of that client will be directly adverse to another client
or may be materially limited by the lawyer's responsibilities to another
client or to a third person or by the lawyer's own interests, unless the
lawyer reasonably believes that there will be no adverse effect (as
described in the Rule), and the client consents after consultation.
Rule 1.9 relates to conflicts of interest involving former clients of
a lawyer. It provides:
A lawyer who has formerly represented a client in a matter shall not
thereafter:
- (a) represent another person in the same or a substantially related
matter in which that person's interests are materially adverse to the
interests of the former client unless the former client consents after
consultation; or
- (b) use information relating to the representation to the
disadvantage of the client except as Rule 1.6 or Rule 3.3 would permit
or require with respect to a client or when the information has become
generally known.
It is clear that a temporary lawyer who works on a matter for a
client of a firm with whom the temporary lawyer is temporarily
associated "represents" that client for purposes of Rules 1.7 and 1.9.
Thus, a temporary lawyer could not, under Rule 1.7, work simultaneously
on matters for clients of different firms if the representation of each
were directly adverse to the other (in the absence of client consent and
subject to the other conditions set forth in the Rule). Similarly, under
Rule 1.9, a temporary lawyer who worked on a matter for a client of one
firm could not thereafter work for a client of another firm on the same
or a substantially related matter in which that client's interests are
materially adverse to the interests of the client of the first firm (in
the absence of consent of the former client and subject to the other
conditions stated in the Rule).2
DR 5-105(A) and DR 5-105(B) of the Model Code require a lawyer to
decline employment if it will or is likely adversely to affect the
lawyer's independent judgment in behalf of an existing client or would
involve the representation of differing interests, except with the
informed consent of both clients and then only where it is obvious that
the lawyer can represent adequately the interests of each. DR 5-105(C).
Thus, a temporary lawyer could not, under DR 5-105, work simultaneously
for clients of different firms with differing interests except as
permitted by DR 5-105(C).3
- The most difficult conflict of interest questions involving
temporary lawyers arise under the imputed disqualification provisions of
Rule 1.10, which provides:
- (a) While lawyers are associated in a firm, none of them shall
knowingly represent a client when any one of them practicing alone would
be prohibited from doing so by Rules 1.7, 1.8(c), 1.9 or 2.2.
- (b)When a lawyer becomes associated with a firm, the firm may not
knowingly represent a person in the same or a substantially related
matter in which that lawyer, or a firm with which the lawyer was
associated, had previously represented a client whose interests are
materially adverse to that person and about whom the lawyer had acquired
information protected by Rules 1.6 and 1.9(b) that is material to the
matter.
- (c) When a lawyer has terminated an association with a firm, the
firm is not prohibited from thereafter representing a person with
interests materially adverse to those of a client represented by the
formerly associated lawyer unless:
- (1) the matter is the same or substantially related to that in which
the formerly associated lawyer represented the client; and
- (2) any lawyer remaining in the firm has information protected by
Rules 1.6 and 1.9(b) that is material to the matter.
- (d) A disqualification prescribed by this rule may be waived by the
affected client under the conditions stated in Rule 1.7.4
The basic question is under what circumstances a temporary lawyer
should be treated as "associated in a firm" or "associated with a
firm."5 The question whether a temporary
lawyer is associated with a firm at any time 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 for the Rule. The Comment to Rule 1.10, although not
addressing specifically the temporary lawyer situation, provides helpful
guidance. It provides in relevant part:
"For purposes of the Rules of Professional Conduct, the term 'firm'
includes lawyers in a private firm, and lawyers employed in the legal
department of a corporation or other organization, or in a legal
services organization. Whether two or more lawyers constitute a firm
within this definition can depend on the specific facts. For example,
two practitioners who share office space and occasionally consult or
assist each other ordinarily would not be regarded as constituting a
firm. However, if they present themselves to the public in a way
suggesting that they are a firm or conduct themselves as a firm, they
should be regarded as a firm for purposes of the Rules. The terms of any
formal agreement between associated lawyers are relevant in determining
whether they are a firm, as is the fact that they have mutual access to
confidential information concerning the clients they serve. Furthermore,
it is relevant in doubtful cases to consider the underlying purpose of
the rule that is involved. A group of lawyers could be regarded as a
firm for purposes of the rule that the same lawyer should not represent
opposing parties in litigation, while it might not be so regarded for
purposes of the rule that information acquired by one lawyer is
attributed to another."
***
When lawyers have been associated in a firm but then end their
association, however, the problem is more complicated. The fiction that
the law firm is the same as a single lawyer is no longer wholly
realistic. There are several competing considerations. First, the client
previously represented must be reasonably assured that the principle of
loyalty to the client is not compromised. Second, the rule of
disqualification should not be so broadly cast as to preclude other
persons from having reasonable choice of legal counsel. Third, the rule
of disqualification should not unreasonably hamper lawyers from forming
new associations and taking on new clients after having left a previous
association. In this connection, it should be recognized that today many
lawyers practice in firms, that many to some degree limit their practice
to one field or another, and that many move from one association to
another several times in their careers. If the concept of imputed
disqualification were defined with unqualified rigor, the result would
be radical curtailment of the opportunity of lawyers to move from one
practice setting to another and of the opportunity of clients to change
counsel.
After discussion of the two traditional rubrics under which these
competing principles have in the past been explained, the Comment notes
that a rule based on functional analysis is more appropriate for
determining imputed disqualification. Noting that two functions are
involved, preserving confidentiality and avoiding positions adverse to a
client, the Comment continues:
"Preserving confidentiality is a question of access to information.
Access to information, in turn, is essentially a question of fact in
particular circumstances, aided by inferences, deductions or working
presumptions that reasonably may be made about he way in which lawyers
work together. A lawyer may have general access to files of all clients
of a law firm and may regularly participate in discussions of their
affairs; it should be inferred that such a lawyer in fact is privy to
all information about all the firm's clients. In contrast, another
lawyer may have access to the files of only a limited number of clients
and participate in discussion of the affairs of no other clients; in the
absence of information to the contrary, it should be inferred that such
a lawyer in fact is privy to information about the clients actually
served but not those of other clients.
"Application of paragraphs (b) and (c) [of Rule 1.10] depends on a
situation's particular facts. In any such inquiry, the burden of proof
should rest upon the firm whose disqualification is sought.
"Paragraphs (b) and (c) operate to disqualify the firm only when the
lawyer involved has actual knowledge of information protected by Rules
1.6 and 1.9(b). Thus, if a lawyer while with one firm acquired no
knowledge of information relating to a particular client of the firm,
and that lawyer later joined another firm, neither the lawyer
individually nor the second firm is disqualified from representing
another client in the same or a related matter even though the interests
of the two clients conflict."
***
The second aspect of loyalty to client is the lawyer's obligation to
decline subsequent representations involving positions adverse to a
former client arising in substantially related matters. This obligation
requires abstention from adverse representation by the individual lawyer
involved, but does not properly entail abstention of other lawyers
through imputed disqualification. Hence, this aspect of the problem is
governed by Rule 1.9(a). Thus, if a lawyer left one firm for another,
the new affiliation would not preclude the firms involved from
continuing to represent clients with adverse interests in the same or
related matters so long as the conditions of paragraphs (b) and (c)
concerning confidentiality have been met.
Ultimately, whether a temporary lawyer is treated as being
"associated with a firm" while working on a matter for the firm depends
on whether the nature of the relationship is such that the temporary
lawyer has access to information relating to the representation of firm
clients other than the client on whose matters the lawyer is working and
the consequent risk of improper disclosure or misuse of information
relating to representation of other clients of the firm. For 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 to be
"associated with" the firm generally under Rule 1.10 as to all other
clients of 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. If such limited access can be demonstrated, then the temporary
lawyer should not be deemed to be "associated with" the firm under Rule
1.10. Also, if a temporary lawyer works with a firm only on a single
matter under circumstances like the collaboration of two independent
firms on a single case, where the temporary lawyer has no access to
information relating to the representation of other firm clients, the
temporary lawyer should not be deemed "associated with" the firm
generally for purposes of application of Rule 1.10. This is particularly
true where the temporary lawyer has no ongoing relationship with the
firm and does not regularly work in the firm's office under
circumstances likely to result in disclosure of information relating to
the representation of other firm clients.
As the direct connection between the temporary lawyer and the work on
matters involving conflicts of interest between clients of two firms
becomes more remote, it becomes more appropriate not to apply Rule 1.10
to disqualify a firm from representation of its clients or to prohibit
the employment of the temporary lawyer. Whether Rule 1.10 requires
imputed disqualification must be determined case by case on the basis of
all relevant facts and circumstances, unless disqualification is clear
under the Rules.
The distinction drawn between when a temporary lawyer is or is not
associated with a firm is only a guideline to the ultimate determination
and not a set rule. For example, if a temporary lawyer was directly
involved in work on a matter for a client of a firm and had knowledge of
material information relating to the representation of that client, 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 first firm to engage the temporary lawyer during the pendency of
the matter, even for work on other matters. The second firm should make
appropriate inquiry and should not hire the temporary lawyer or use the
temporary lawyer on a matter if doing so would disqualify the firm from
continuing its representation of a client on a pending matter.
Although at the time of the adoption of the Model Code in 1969 the
temporary lawyer phenomenon had not yet appeared, the purpose of DR
5-105(D),6 the imputed disqualification
provision of the code, coincides with the purpose of Rule 1.10. The
committee is of the opinion that the foregoing functional analysis
applies equally under DR 5-105(D).
For the reasons discussed above, in order to minimize the risk of
disqualification, firms should, to the extent practicable, screen each
temporary lawyer from all information relating to clients for which the
temporary lawyer does no work. All law firms employing temporary lawyers
also should maintain a complete and accurate record of all matters on
which each temporary lawyer works. A temporary lawyer working with
several firms should make every effort to avoid exposure within those
firms to any information relating to clients on whose matters the
temporary lawyer is not working. Since a temporary lawyer has a coequal
interest in avoiding future imputed disqualification, the temporary
lawyer should also maintain a record of clients and matters worked
on.
Confidentiality of information
Model Rule 1.6 prohibits revealing "information relating to
representation of a client," subject to exceptions set forth in the
Rule. The Rule applies to each lawyer in a firm with respect to each
client of the firm and not solely to clients with whom that lawyer
works. The prohibition against revealing information relating to
representation of a client serves its purpose only to the extent that
each lawyer with a firm (who may have information about any firm client)
is bound by the Rule with respect to each client of the firm. Similarly,
the temporary lawyer who works for a firm on matters of a firm client is
bound by Rule 1.6 not to reveal information relating to the
representation of that client (except as otherwise authorized by the
Rule). The temporary lawyer also is bound not to reveal information
relating to representation of other clients of the firm which the
temporary lawyer learns as a result of working with the firm.
The application of Rule 1.6 does not, however, generally depend upon
the source of information relating to representation of a client. Thus,
a lawyer with a firm is prohibited from revealing information relating
to representation of a client of the firm even if the lawyer's knowledge
of the information did not arise from the representation or through the
firm and even if knowledge was acquired before the lawyer-client
relationship existed.
In contrast, the definition of protected information set forth in DR
4-101 of the Code is narrower than that of Rule 1.6. DR 4-101 protects
information subject to the attorney-client privilege and information
"gained in the professional relationship" which would be embarrassing or
detrimental to the client or which the client has asked be held
inviolate.7
The extent to which the prohibitions in the Rules against revealing
protected information will affect a temporary lawyer depends on the
nature of the relationship between the temporary lawyer and the firm.
Thus, 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 ordinarily would be deemed to be
"associated with" the firm as to all other clients of the firm, unless
through accurate records or otherwise, it can be demonstrated that the
temporary lawyer had access to information relating to the
representation only of certain other clients. If such limited access
cannot be demonstrated, the temporary lawyer in that situation must not
disclose information relating to the representation of persons known to
the lawyer to be firm clients regardless of the source of the
information.
Under other circumstances, however, the relationship of the firm with
the temporary lawyer is more like the relationship between a firm and a
totally independent lawyer. This ordinarily is the case where the
temporary lawyer has been screened from access to information relating
to the representation of firm clients for whom the temporary lawyer is
not working, whether the temporary lawyer is working in the firm office
or not. In that situation, the temporary lawyer's obligations under Rule
1.6 are, in the committee's opinion, limited to not revealing (1)
information relating to the representation of any client for whom the
temporary lawyer is working, and (2) information relating to the
representation of other firm clients only to the extent that the
temporary lawyer in fact obtains the information as a result of working
with the firm.
Thus, where the temporary lawyer is in a position to have obtained
information relating to the representation of other clients in the
course of employment by the firm, it is assumed for purposes of the
Rules that such information was in fact learned in that capacity. On the
other hand, where the temporary lawyer actually has information relating
to the representation of a firm client which could not have been
obtained in the course of employment by the firm, the Rule is no more
applicable to the temporary lawyer than it would be to a totally
independent lawyer associated with a firm in a particular matter only,
who obtains information relating to the representation of firm clients
other than through working with the firm.
The same standards apply with respect to other provisions of the
Rules which relate to disclosure or use of information relating to
representation of a client, such as Rule 1.8(b) prohibiting use of such
information to the disadvantage of the client.8
Under the Code, the temporary lawyer could learn "confidences" and
"secrets" of firm clients, as defined in DR 4-101, only as a direct
result of working with the firm. When the relationship with the firm is
limited, it is less likely that the temporary lawyer will learn
confidences or secrets about firm clients for whom the temporary lawyer
is not working. However, under the Code, if the temporary lawyer does
learn the confidences or secrets of a firm client, then the temporary
lawyer must not reveal those confidences or secrets regardless of the
nature of the temporary lawyer's relationship with the firm.
Supervising lawyers with the firm also have an obligation to make
reasonable efforts to ensure that the temporary lawyer conforms to the
rules of professional conduct, including those governing the
confidentiality of information relating to representation of a client.
Rule 5.1(b) and (c); DR 4-101(D).9
Disclosure to client
Rule 7.5(d), which prohibits lawyers from implying that they practice
in a partnership or other organization when that is not the fact,
articulates the underlying policy that a client is entitled to know who
or what entity is representing the client. A question therefore arises
as to whether the client must be told that a temporary lawyer engaged by
the firm is working on the client's matter as well as other information
relating to the arrangement between the firm and the temporary lawyer.
Relevant to the inquiry are Rule 1.2(a), requiring a lawyer to consult
with the client as to the means by which the client's objectives are to
be pursued, and Rule 1.4, relating to client communication.
The committee is of the opinion that where the temporary lawyer is
performing independent work for a client without the close supervision
of a lawyer associated with the law firm, the client must be advised of
the fact that the temporary lawyer will work on the client's matter and
the consent of the client must be obtained. This is so because the
client, by retaining the firm, cannot reasonably be deemed to have
consented to the involvement of an independent lawyer. On the other
hand, where the temporary lawyer is working under the direct supervision
of a lawyer associated with the firm, the fact that a temporary lawyer
will work on the client's matter will not ordinarily have to be
disclosed to the client. A client who retains a firm expects that the
legal services will be rendered by lawyers and other personnel closely
supervised by the firm. Client consent to the involvement of firm
personnel and the disclosure to those personnel of confidential
information necessary to the representation is inherent in the act of
retaining the firm.10
Assuming that a law firm simply pays the temporary lawyer reasonable
compensation for the services performed for the firm and does not charge
the payments thereafter to the client as a disbursement, the firm has no
obligation to reveal to the client the compensation arrangement with the
temporary lawyer. Rule 1.5(e), relating to division of a fee between
lawyers, does not apply in this instance because the gross fee the
client pays the firm is not shared with the temporary lawyer. The
payments to the temporary lawyer are like compensation paid to nonlawyer
employees for services and could also include a percentage of firm net
profits without violation of the Rules or the predecessor Code. See ABA
Informal Opinion 1440 (1979).
If, however, the arrangement between the firm and the temporary
lawyer involves a direct division of the actual fee paid by the client,
such as percentage division of a contingent fee, then Rule 1.5(e)(1)
requires the consent of the client and satisfaction of the other
requirements of the Rule regardless of the extent of the
supervision.
The requirement of Rule 1.5(a) that the total fee be reasonable is,
of course, a restriction only on the fee charged to the client and not
on how much is paid to the temporary lawyer. That requirement must be
satisfied in all events.
EC 7-7 and EC 7-8 are Code analogues to Rules 1.2(a) and 1.4 defining
the obligations of the law firm in informing a client of the use of a
temporary lawyer and, in appropriate instances, to obtain client
consent. The committee notes that DR 2-107(A) of the Code requires
client consent to a division of fees between lawyers and that EC 2-22
provides: "Without the consent of his client, a lawyer should not
associate in a particular matter another lawyer outside his firm." The
committee nevertheless is of the opinion that where a temporary lawyer
is working under the close firm supervision described above, such
employment does not involve "association with a lawyer outside the
firm," within the meaning of this Ethical Consideration. The underlying
purposes of the Rule and Code provisions and their functional analyses
are similar. For the reasons set forth above, absent a division with the
temporary lawyer of the actual fee paid by the client to the firm, the
client need not be informed of the financial arrangement with the
temporary lawyer under the Model Code since it does not involve a
division of the gross fee between lawyers.
Arrangements with placement agencies
Law firms wishing to hire temporary lawyers frequently use lawyer
placement or other employment agencies. Questions have been raised
whether a law firm which engages a temporary lawyer through such an
agency may pay the agency a fee which is a percentage of the
compensation paid by the law firm to the temporary lawyer without
violating the provisions of Model Rule 5.4 or DR 3-102(A) of the
Code.11
Arrangements among placement agencies, law firms and temporary
lawyers vary. Usually the law firm will contact the placement agency and
provide general information as to the nature of the matter and the area
of practice and level of experience desired in the temporary lawyer.
The placement agency maintains files on attorneys willing to accept
independent contractor assignments or may recruit a lawyer with the
desired capabilities and will attempt to match the lawyer with the task
and attributes needed by the law firm. Some agencies allow each attorney
to establish his or her own hourly rate, and this will be part of the
information in the file of that attorney maintained by the placement
agency. The placement agency informs the law firm of the name and
background of the lawyer and the hourly cost to the law firm for that
lawyer's services. This hourly cost includes the attorney's hourly rate
as set by the lawyer and the fee to be paid to the placement agency,
which is either a fixed hourly sum that does not vary in relation to the
temporary lawyer's hourly rate or a percentage of the lawyer's
compensation. Under either arrangement, the amount of the placement
agency's fee will, of course, vary with the number of hours worked by
the temporary lawyer for the law firm on the engagement.
This committee is of the opinion that an arrangement whereby a law
firm pays to a temporary lawyer compensation in a fixed dollar amount or
at an hourly rate and pays a placement agency a fee based upon a
percentage of the lawyer's compensation, does not involve the sharing of
legal fees by a lawyer with a nonlawyer in violation of Rule 5.4 or DR
3-102(A) of the Code. There is a distinction between the character of
the compensation paid to the lawyer and the compensation paid to the
placement agency. The temporary lawyer is paid by the law firm for the
services the lawyer performs under supervision of the firm for a client
of the firm. The placement agency is compensated for locating,
recruiting, screening and providing the temporary lawyer for the law
firm just as agencies are compensated for placing with law firms
nonlawyer personnel (whether temporary or permanent).
Moreover, even assuming there is a total amount comprised of a
lawyer's compensation and the placement agency fee that is split, the
total is not a "legal fee" under the commonly understood meaning of the
term. A legal fee is paid by a client to a lawyer. Here the law firm
bills the client and is paid a legal fee for services to the client. The
fee paid by the client to the firm ordinarily would include the total
paid the lawyer and the agency, and also may include charges for
overhead and profit. There is no direct payment of a "legal fee" by the
client to the temporary lawyer or by the client to the placement agency
out of which either pays the other.
In addition, the rationale for the rule forbidding the sharing of
legal fees with nonlawyers, the maintenance of the lawyer's professional
independence, does not support the view that these arrangements involve
fee-splitting. The title of Rule 5.4 itself focuses on this underlying
rationale: "Professional Independence of a Lawyer." In Formal Opinion
87-355 (Dec. 5, 1987), the committee concluded that the sponsor of a
for-profit prepaid legal service plan might retain a portion of the
monthly fee paid by plan members to cover the plan sponsor's overhead
and profit without violating the fee-sharing prohibitions of Rule 5.4 or
of Rule 7.2(c) (prohibition against giving anything of value to a person
for recommending a lawyer's services). That opinion restated the two
principal reasons for the fee-sharing prohibition: "first, to avoid the
possibility of a nonlawyer being able to interfere with the exercise of
a lawyer's independent professional judgment in representing a client;
and second, to insure that the total fee paid by a client is not
unreasonably high." See also Informal Opinion 1440 (1979) (a law firm's
compensation arrangement with its office administrator, including
payment of a percentage of the net profits of the law firm, did not
involve improper fee splitting).
The committee perceives no adverse impact upon the exercise of the
temporary lawyer's independent professional judgment in the lawyer's
work for the law firm which results from payment of a placement agency
fee as a percentage of or in proportion to the lawyer's compensation.
The same factors that are present in any law firm which relates its
compensation of lawyers to the time worked by the lawyer are presented
by the arrangement here. The only variation is that another payment in
relation to the time spent by the lawyer is paid for a different service
to a third party, the placement agency.
With respect to the reasonableness of the total fee to each client on
whose matters the temporary lawyer works, the case is no different than
that of a law firm hiring a temporary secretary or other temporary help
through an agency. There is no meaningful difference between the
practice of lawyer placement agencies charging a fee to a law firm for
recruiting a permanent associate or partner, which often is a percentage
of the lawyer's first year compensation (a practice not challenged), and
a fee based on the temporary lawyer's actual compensation paid over a
period of less than a year. There is no reason to assume that the actual
cost to the law firm of the temporary lawyer hired through an agency
(and consequently the impact on the fee to the client) would be higher
than the cost of that lawyer's services hired direct by the firm,
without the intervention of a placement agency. The increasing use of
placement agencies for temporary lawyers lends support to the view that
this is an efficient and cost-effective way for law firms to manage
their work flow and deployment of resources.
The committee is aware that the temporary lawyer often is on a
permanent roster maintained by the placement agency and may wish
repeated placements by the agency with a succession of law firms. This
factor conceivably could limit the temporary lawyer's exercise of
independent professional judgment in some respects because of the
lawyer's need to maintain the goodwill of the placement agency. See ABA
Formal Opinion 87-355, Section I, and ABA Formal Opinion 87-354. Unlike
the situation in those opinions where the lawyers are dealing directly
with clients, here the temporary lawyer is working for a law firm which
itself has supervisory obligations over the temporary lawyer by the
provisions of Rule 5.1. But as long as the temporary lawyer avoids the
excessive controls exercised by nonlawyers noted in those opinions, the
arrangement is in our opinion permissible under the constraints imposed
by the Rules and the predecessor Code.12
Sound practice suggests that the agreement between a temporary lawyer
and a placement agency should make clear in explicit terms that the
agency will not exercise any control or influence over the exercise of
professional judgment by the lawyer, including limiting or extending the
amount of time the lawyer spends on work for the clients of the
employing firm. Moreover, the law firm must make certain that the
compensation received by the temporary lawyer, whether paid directly by
the firm to the lawyer or paid by the placement agency to the lawyer
from sums which the firm pays the agency, is adequate to satisfy the
firm that it may expect the work to be performed competently for the
firm's clients. These matters fall within the responsibilities of the
law firm.
In summary, both the temporary lawyer and the law firm hiring the
lawyer must be sensitive to the need to protect and prevent misuse of
information relating to the representation (or under the Code, the
secrets or confidences) of firm clients. The application of the
conflicts rules of the Model Rules or the predecessor Model Code depend
upon all the facts and circumstances of the arrangement between the
temporary lawyer and the firm in accordance with the general guidelines
discussed in this opinion. Disclosure to a firm client on whose matters
the temporary lawyer works of the arrangement with a temporary lawyer
may be required, except where the temporary lawyer is working under the
direct supervision of a lawyer associated with the firm. Provided the
temporary lawyer maintains independence of professional judgment against
any influence by a placement agency, the law firm may pay placement
agency fees, even where the amount of the fees is related to the amount
of the temporary lawyer's compensation.
End Notes
1For purposes of this opinion, "firm"
or "law firm" includes a sole practitioner and a corporate legal
department. See ABA Model Rules of Professional Conduct (1983, amended
1987), Terminology, Rule 1.10 Comment. The term "temporary lawyer" means
a lawyer engaged by a firm for a limited period, either directly or
through a lawyer placement agency. The term does not, however, include a
lawyer who works part-time for a firm or full-time but without
contemplation of permanent employment, who is nevertheless engaged by
the firm as an employee for an extended period and does legal work only
for that firm. That person's relationship with the firm, during the
period of employment, is more like the relationship of an associate of
the firm, and the Model Rules or the predecessor Model Code of
Professional Responsibility (1969, amended 1980) will govern the lawyer
and the firm and their relationship as with any associate of the firm.
Similarly, "temporary lawyer" does not include a lawyer who has an "of
counsel" relationship with a law firm or who is retained in a matter as
independent associated counsel.
2The
consent of the current client may also be required under Rule 1.7(b).
3The Code does not address
specifically representation of a client with interests adverse to a
former client, but the standards relating to confidentiality and
disqualification rules applied by the courts ordinarily would prohibit
representation of the second client under the Code in the same
circumstances as under the Rules.
4The
Comment to Rule 1.10 explains the Rule as follows: "The rule of imputed
disqualification stated in paragraph (a) gives effect to the principle
of loyalty to the client as it applies to lawyers who practice in a law
firm. Such situations can be considered from the premise that a firm of
lawyers is essentially one lawyer for purposes of the rules governing
loyalty to the client, or from the premise that each lawyer is
vicariously bound by the obligation of loyalty owed by each lawyer with
whom the lawyer is associated. Paragraph (a) operates only among the
lawyers currently associated in a firm. When a lawyer moves from one
firm to another, the situation is governed by paragraphs (b) and (c)."
5Based on a reading of the entire Rule
and the Comment to the Rule and an analysis of the reasons for the
restrictions in the Rule, the committee perceives no substantive
difference between the terms "in" and "with" in the context of the Rule.
6DR 5-105(D) provides: "If a lawyer is
required to decline employment or to withdraw from employment under a
Disciplinary Rule, no partner, or associate, or any other lawyer
affiliated with him or his firm, may accept or continue such
employment." See also Footnote 4, supra.
7DR 4-101(A) provides: "'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 be likely to be
detrimental to the client."
8 See Rule
1.9(b) and the Comment to Rule 1.10 quoted supra. The Code analogue, DR
4-101(D), applies only with respect to disclosures of client confidences
and secrets.
9 Rule 5.1(b) provides:
"A lawyer having direct supervisory authority over another lawyer shall
make reasonable efforts to ensure that the other lawyer conforms to the
Rules of Professional Conduct." Rule 5.1(c) provides: "A lawyer shall be
responsible for another lawyer's violation of the Rules of Professional
Conduct if: (1) the lawyer orders or, with knowledge of the specific
conduct, ratifies the conduct involved; or (2) the lawyer is a partner
in the law firm in which the other lawyer practices, or has direct
supervisory authority over the other lawyer, and knows of the conduct at
a time when its consequences can be avoided or mitigated but fails to
take reasonable remedial action." The temporary lawyer, of course, also
remains subject to the Rules. Rule 5.2(a) thus provides: "A lawyer is
bound by the Rules of Professional Conduct notwithstanding that the
lawyer acted at the direction of another person." The only analogue in
the Code to Rules 5.1 and 5.2 is DR 1-103(A), which requires disclosure
to the proper tribunal or authority of a lawyer's unprivileged knowledge
of the misconduct of another lawyer. Both the temporary lawyer and the
lawyers with the firm engaging the temporary lawyer retain all the
general obligations of lawyers prescribed by the Model Rules. For
example, the lawyers with the firm have the obligation to provide
competent representation to the client under Rule 1.1, as does the
temporary lawyer who undertakes work for the client. See DR 6-101 of the
Code.
10 See Rule 1.6 and the
Comment to Rule 1.6 which provides in part: "Lawyers in a firm may, in
the course of the firm's practice, disclose to each other information
relating to the representation of the client of the firm unless the
client has instructed that particular information be confined to
specified lawyers."
11 The Committee
on Professional and Judicial Ethics of the Association of the Bar of the
City of New York in Opinion No. 1988-3, April 6, 1988 (amended in
Opinion No. 1988-3-A, May 23, 1988), concluded that an arrangement under
which the law firm pays the agency and the agency, after retaining a
percentage as its fee, pays the lawyer constitutes improper sharing of
fees with a nonlawyer and aiding in the unauthorized practice of law by
the placement agency in violation of the New York Lawyer's Code of
Professional Responsibility. The committee also found infirm an
arrangement where the law firm pays the lawyer directly and pays the
agency a placement fee related to the compensation paid to the lawyer.
The Committee on Professional Ethics of the Connecticut Bar Association
in Informal Opinion 88-15 (Aug. 1, 1988) concluded that an arrangement
under which the law firm pays the lawyer's compensation direct to the
lawyer and separately pays the placement agency its fee based on a
percentage of the lawyer's compensation does not violate the Connecticut
Rules of Professional Conduct.
12
One could, of course, hypothesize the operation by nonlawyers of an
agency which places lawyers directly with clients (and not through the
legal department of the client) who pay compensation to the agency for
the lawyers' services. But in such a case the agency would also not only
be sharing fees with its lawyers but would almost certainly be engaged
in unauthorized practice of law under the law of every American
jurisdiction.
Copyright 1988 by the American Bar Association.
Editor's Note:This opinion is based on the Model
Rules of Professional Conduct and, to the extent indicated, the
predecessor Model Code of Professional Responsibility of the American
Bar Association. The laws, court rules, regulations, codes of
professional responsibility and opinions promulgated in the individual
jurisdictions are controlling.
