Vol. 28, No. 7
ABA Delegates' Report
ABA to Consider the Future of the Practice of Law At its Annual Meeting
by Robert R. Keatinge
The American Bar Association House of Delegates ("House") will meet on August 9 and 10, 1999, in Atlanta, Georgia. The following is a brief description of the items on the preliminary agenda reflecting reports filed by May 26, 1999, the preliminary agenda cutoff date. The issues being considered by the House this year and next, particularly with respect to revision of ethical rules in response to the environment in which lawyers practice, will have a profound impact on the practice of law as it changes over the coming years. The Bar's response to the development of multi-disciplinary practice and the question of lawyers' contributions to political campaigns (known as "Pay to Play") this year and the amendments to the Model Rules of Professional Conduct to be considered next year may change the way in which many lawyers practice in firms and deal with clients and others. In addition, this year's meeting will consider a number of administrative matters and matters of general policy.
While some of the proposals are in final form, many will be refined over the coming months. Current versions of all proposals will be available on the ABA website at: www.abanet.org/leadership/delegates.html. Copies of reports are available on request to the Division for Policy Administration. Some of the issues being considered at this year's meeting and over the next year bear watching by all lawyers. With the advent of the Internet, many of the reports are available for review and, in some cases, public comment.
Practice of Law
As noted above, the House will consider the appropriate responses to multi-disciplinary practice and political contributions by lawyers.
Over the past few years, the five largest accounting firms have developed global consulting practices that provide a variety of professional services sometimes referred to as Multi-Disciplinary Practice ("MDP"), including, in many countries in Europe and Asia, legal services. In addition, in the United States, consulting and accounting firms have been providing services in the areas of tax, estate planning, litigation consulting, and advice on mergers and acquisitions that could be considered "legal services." The accounting and consulting firms now employ thousands of lawyers throughout the world, including a large number of tax and other attorneys within the United States. The Texas state bar unsuccessfully attempted to prevent a consulting firm from performing some services using prohibitions against the unauthorized practice of law. Similarly, the Virginia bar is considering an unauthorized practice complaint against an accounting firm that is providing "corporate compliance" services to a health care provider.
The firms engaged in MDP provide a variety of professional services (sometimes referred to as "one-stop shopping"), providing internal coordination of professional services as disparate as accounting, engineering, counseling, and legal services. This, the firms assert, responds to the fact that most of clients' problems require the services of more than one type of professional. Beyond the question of unauthorized practice of law, the performance of legal services by an MDP firm gives rise to several ethical issues, the most significant of which include the question of ownership of a firm providing legal services by non-lawyers, conflicts of interest, confidentiality, independence of judgment, and attorney-client privilege.
In August 1998, in response, ABA President Phillip Anderson appointed a Commission on Multi-disciplinary Practice to study MDP, the practice of services that may be considered legal services by firms in which non-lawyers are owners. The Commission conducted hearings on MDP and issued a background paper for consideration of the House in January 1999. On March 9, 1999, the Commission provided the members of the House with a series of Models and Hypotheticals to aid in the discussion of alternative manners of dealing with MDP.
Several issues have to be resolved by the House in connection with the final report: (1) Should Rule 5.4 be modified to permit ownership of a firm providing legal services by, and fee sharing with, non-lawyers? (2) If so, how should the rules governing confidentiality apply to the firm? It should be noted that while a lawyer has a duty of loyalty and confidentiality to a client, accountants, particularly as part of the audit function, have a duty of objectivity and disclosure. If both legal and audit services are being provided by the same firm, how can those duties be reconciled. (3) How will the conflict of interest rules apply to the lawyers and non-lawyers in a firm providing MDP? In an international firm with tens of thousands of employees, imputed conflicts of interest become an even greater issue than currently exists with large national law firms that employ hundreds of people. (4) How are conflicts between the ethical rules governing other professionals and those governing lawyers to be resolved? (5) What name may a firm providing legal services use? (6) Can any specific instances of harm to a client by such a change be identified in either the United States or a foreign jurisdiction? If the benefit to clients would outweigh the harm, what restrictions, if any, should the Commission recommend? (7) Should the restrictions follow or differ from those adopted in Rule 5.4 of the Washington, D.C. Rules of Professional Conduct? The background reports and testimony of the Commission are available at www.abanet.org/cpr/multicom.html.
On June 8, 1999, President Anderson released the final Report and Recommendation of the Commission for consideration by the House. The recommendation was unanimously approved by the Commission and provides:
RESOLVED, that the American Bar Association amend the ABA Model Rules of Professional Conduct consistent with the following principles:
1. The legal profession should adopt and maintain rules of professional conduct that protect its core values, independence of professional judgment, protection of confidential client information, and loyalty to the client through avoidance of conflicts of interest, but should not permit existing rules to unnecessarily inhibit the development of new structures for the more effective delivery of services and better public access to the legal system.
2. A lawyer should be permitted to share legal fees with a nonlawyer, subject to certain safeguards that prevent erosion of the core values of the legal profession.
3. A lawyer should be permitted to deliver legal services through a Multidisciplinary Practice ("MDP"), defined as a partnership, professional corporation, or other association or entity that includes lawyers and nonlawyers and has as one, but not all, of its purposes the delivery of legal services to a client(s) other than the MDP itself or that holds itself out to the public as providing nonlegal, as well as legal, services. It includes an arrangement by which a law firm joins with one or more other professional firms to provide services, including legal services, and there is a direct or indirect sharing of profits as part of the arrangement.
4. Nonlawyers in an MDP, or otherwise, should not be permitted to deliver legal services.
5. A lawyer in an MDP who delivers legal services to the MDP's clients should be bound by the rules of professional conduct.
6. A lawyer acting in accordance with a nonlawyer supervisor's resolution of a question of professional duty should not thereby be excused from failing to observe the rules of professional conduct.
7. All rules of professional conduct that apply to a law firm should also apply to an MDP.
8. In connection with the delivery of legal services, all clients of an MDP should be treated as the lawyer's clients for purposes of conflicts of interest and imputation in the same manner as if the MDP were a law firm and all employees, partners, shareholders or the like were lawyers.
9. To the extent that the delivery of non-legal services to a client is compatible with the delivery of legal services to the same client and with the rules of professional conduct, a lawyer should be required to make reasonable efforts to ensure that the client sufficiently understands that the lawyer and nonlawyer may have different obligations with respect to disclosure of client information and that the courts may treat the client's communications to the lawyer and nonlawyer differently.
10. A lawyer in an MDP who delivers legal services to a client of the MDP and who works with, or is assisted by, a nonlawyer who is delivering nonlegal services in connection with the delivery of legal services to the client should be required to make reasonable efforts to ensure that the MDP has in effect measures to ensure that the nonlawyer's conduct is compatible with the professional obligations of the lawyer.
11. A lawyer in an MDP should not represent to the public generally or to a specific client that services the lawyer provides are not legal services if those same services would constitute the practice of law if provided by a lawyer in a law firm. Such a representation would presumptively constitute a material misrepresentation of fact.
12. A lawyer should not share legal fees with a nonlawyer or form a partnership or other entity with a nonlawyer if any of the activities of the partnership or other entity consist of the practice of law except that a lawyer in an MDP controlled by lawyers should be permitted to do so and a lawyer in an MDP not controlled by lawyers should be permitted to do so subject to safeguards similar to those identified in paragraph 14.
13. Allowing fee-sharing and ownership interest in an MDP does not change the rules of professional conduct prohibiting fee-sharing and partnership in any other respect, including the current provisions limiting the holding of equity investments in any entity or organization providing legal services.
14. As a condition of permitting a lawyer to engage in the practice of law in an MDP, the MDP should be required to give to the highest court with the authority to regulate the legal profession in each jurisdiction in which the MDP is engaged in the delivery of legal services (the "court"), a written undertaking, signed by the chief executive officer (or similar official) and the board of directors (or similar body), that:
(A) it will not directly or indirectly interfere with a lawyer's exercise of independent professional judgment on behalf of a client;
(B) it will establish, maintain and enforce procedures designed to protect a lawyer's exercise of independent professional judgment on behalf of a client from interference by the MDP, any member of the MDP, or any person or entity controlled by the MDP;
(C) it will establish, maintain and enforce procedures to protect a lawyer's professional obligation to segregate client funds;
(D) the members of the MDP delivering or assisting in the delivery of legal services will abide by the rules of professional conduct;
(E) it will respect the unique role of the lawyer in society as an officer of the legal system, a representative of clients and a public citizen having special responsibility for the administration of justice. This undertaking should acknowledge that lawyers in an MDP have the same special obligation to render voluntary pro bono publico legal service as lawyers practicing solo or in law firms;
(F) it will annually review the procedures established in subsection (B) and amend them as needed to ensure their effectiveness; and annually certify its compliance with subsections (A)-(F) and provide a copy of the certification to each lawyer in the MDP;
(G) it will annually file a signed and verified copy of the certificate described in subsection (F) with the court, along with relevant information about each lawyer who is a member of the MDP;
(H) it will permit the court to review and conduct an administrative audit of the MDP, as each such authority deems appropriate, to determine and assure compliance with subsections (A)-(G); and
(I) it will bear the cost of the administrative audit of MDPs described in subparagraph (H) through the payment of an annual certification fee.
15. An MDP that fails to comply with its written undertaking shall be subject to withdrawal of its permission to deliver legal services or to other appropriate remedial measures ordered by the court.
Since the full report, appendices, summary of the recommendation, and the recommendation itself were released shortly before the July 1999 issue of The Colorado Lawyer went to press, and because it is important for each lawyer to consider the implications of the proposal before the ABA meeting in August, only the actual recommendation is included here. However, further explanation of the recommendation and the reports will appear in the August 1999 issue of The Colorado Lawyer.
Unauthorized Practice of Law: (Sponsored by Jay G. Foonberg, ABA Delegate-at-Large.) Foonberg has reproposed a resolution that would reaffirm the ABA's support of Rule 5.4 of the Model Rules of Professional Conduct stating non-lawyers should neither own nor control law firms or lawyers that offer their services to the public. The resolution also would require that the ABA monitor state unauthorized practice of law litigation and offer its legislative and judicial resources to assist states in their prosecution of the unauthorized practice of law. Foonberg proposed a similar resolution last year, which he agreed to withdraw pending the final report of the ABA Commission on Multi-Disciplinary Practice.
Pay to Play
Two years ago, the House considered a proposal from the New York City Bar Association to amend the Model Rules of Professional Conduct to prohibit lawyers who make campaign contributions to candidates for political office from obtaining work from the government bodies to which the candidates were elected. The ABA President appointed a task force to look into the question of lawyers' political contributions to government officials and the question of lawyers' contributions to judges before whom the lawyer appears. Last year, after a heated debate about whether a new rule was appropriate, the House voted to instruct the ABA Standing Committee on Ethics and Professional Responsibility to prepare and submit to the House in 1999 a Model Rule that would "prohibit lawyers from making or soliciting political contributions for the purpose of obtaining government legal engagements." To comply with the direction of the House, the Standing Committee included a draft of a rule that would "prohibit lawyers form making or soliciting political contributions for the purpose of obtaining government legal engagements." The proposed rule is as follows:
Rule 7.6: Political Contributions to
Obtain Government Legal
Engagements or Appointments by Judges
A lawyer or law firm shall not accept a government legal engagement or an appointment by a judge if the lawyer or law firm makes a political contribution or solicits political contributions for the purpose of obtaining or being considered for that type of legal engagement or appointment.
The Standing Committee included a draft of a rule, which it does not support, that follows the House's direction to prepare a rule that would "prohibit lawyers from making or soliciting political contributions for the purpose of obtaining government legal engagements." That proposed rule is as follows:
Rule 7.6: Political Contributions to
Obtain Government Legal
Engagements or Appointments by Judges
A lawyer or law firm shall not make a political contribution or solicit political contributions for the purpose of obtaining or being considered for a government legal engagement or an appointment by a judge.
The Standing Committee does not recommend the alternative version of the rule, believing that it is better to prohibit a lawyer from taking on work than to prohibit a lawyer from making contributions. In either case, the purpose of the contribution will be critical to operation of the rule. The rule recommended by the Standing Committee has been criticized by the U.S. Securities and Exchange Commission and a committee of the ABA Business Law Section as being too weak and difficult to enforce. The final rule should be debated heavily at the House meeting.
Although the final report of the Commission on Evaluation of the Rules of Professional Conduct ("Ethics 2000 Project") is not scheduled for consideration by the House until next year, there will be a report on the Commission's progress. It is possible to review the current drafts of the rules being considered by going to the Ethics 2000 webpage at: www.abanet.org/cpr/e2k. The Commission is undertaking a full review of the Model Rules of Professional Conduct and, among other things, is considering making significant revisions to the rules dealing with conflicts of interest and confidentiality by revising Model Rules 1.4, 1.6, 1.7, 1.8, 1.9 and 1.10, and deleting Model Rule 2.2.
Other Policy Issues with Respect
to the Practice of Law
Law Firm Discipline: (Sponsored by the Standing Committee on Professional Discipline and Standing Committee on Lawyer Competence.) The preliminary agenda includes a submission by the Standing Committee on Professional Discipline to amend the Model Rules for Lawyer Disciplinary Enforcement to assert disciplinary jurisdiction of the highest courts over law firms. This was proposed and withdrawn last year for further consideration, and will probably be withdrawn again this year in deference to the Ethics 2000 project.
Standards of Discovery: (Sponsored by the Section of Litigation, Judicial Division, and Section of Business Law.) The ABA would approve the Black Letter of the Civil Discovery Standards developed by the Section of Litigation. The Standards of Discovery are available at: www.abanet.org/litigation/ public/standards.html.
Standards on Judicial Selection: (Sponsored by the Section of Judicial Independence.) The ABA would adopt Standards on Judicial Selection, which will offer a model plan for a superior merit selection process and also will provide a model for a judicial election system that minimizes the deficiencies associated with electing judges (Special Committee on Judicial Independence). This probably will be considered at the ABA Annual Meeting of the House in 2000.
Legal Assistant Education Programs: (Sponsored by the Section of Legal Education and the Bar and Standing Committee on Legal Assistants.) The ABA would approve, reapprove, and extend the approval of several legal assistant education programs in accordance with the Guidelines for the Approval of Legal Assistant Education Programs.
Reaccreditation of Programs: (Sponsored by the Standing Committee on Specialization.) This proposal would recommend the reaccreditation of five lawyer certification programs, all of which were originally accredited by the Association at the 1993 Annual Meeting and re-accredited at the 1996 Annual Meeting.
ABA Administration and Internal Policy
There are several resolutions dealing with the internal operation of the ABA:
Delegates-at-Large: There are two proposed amendments to § 6.5(a) of the ABA Constitution dealing with the ABA district to which a candidate for Delegate-at Large is accredited. Delegates-at-Large are elected by the members of the ABA at the Annual Meeting. One would provide that all members of the ABA are eligible for election as Delegates-at-Large, notwithstanding the fact that they are not accredited to a district. The second would provide that of the six Delegates-at-Large elected to the House of Delegates, no two shall be accredited to the same state, territory, or the District of Columbia.
Temporary State Bar Association Delegate: This proposal would amend § 9.2(d) of the ABA Constitution to provide for the appointment of a temporary state bar association delegate in circumstances where the State Delegate and the sole state bar association delegate are unable to attend the Nominating Committee meeting.
Creation of a Standing Committee on Judicial Independence: This proposal would amend § 31.7 of the ABA Bylaws to create the Standing Committee on Judicial Independence, which is currently a Special Committee.
Elimination of Standing Committee on Lawyer Competence: This proposal would amend § 31.7 of the ABA Bylaws to eliminate the Standing Committee on Lawyer Competence.
Name Changes: Two proposals would amend § 31.7 of the ABA Bylaws to change the names of ABA organizations. One would change the name of the Commission on Advertising to the Commission on Responsibility in Client Development. The other would change the name of the Standing Committee on the Delivery of Legal Services to the Standing Committee on the Delivery of Affordable Legal Services.
Eligibility of Certain Delegates to Serve on Committees: This proposal would amend the ABA House Rules of Procedure to provide that the delegates from the Guam Bar Association and Northern Mariana Islands Bar Association are eligible to serve on House Committees in the year when they are not the "official" delegate represented in the House.
Other ABA Positions
The preliminary agenda also includes the following items:
Crowding of Federal Prisons: (Sponsored by the Section of Criminal Justice.) The ABA would urge Congress and state legislatures to take appropriate and immediate steps to avoid an impeding crisis in the crowding of federal prisons.
International Criminal Court: (Sponsored by the Section of Criminal Justice.) The ABA would urge the United States, by all available means, to bring about changes to the International Criminal Court Statute, or through other measures, adequately to address and resolve its concerns relating to jurisdiction, prosecutorial powers, and other matters to enable the United States to become a party to the Statute and to participate fully in the work of the Court.
Reuse of Contaminated Property: (Sponsored by the Standing Committee on Environmental Law.) The ABA would recommend that Congress enact legislation promoting the reuse of contaminated property consistent with certain criteria specified.
Children in Custody and Visitation Proceedings: (Sponsored by the Section of Family Law.) The ABA would adopt principles for appointment of representatives for children in custody and visitation proceedings. This resolution may be postponed to a later meeting of the House.
Reproductive Technologies Act: (Sponsored by the Section of Family Law.) The ABA would adopt the Model Assisted Reproductive Technologies Act. This resolution may be postponed to a later meeting of the House.
Leadership Roles: (Sponsored by the Section of Government and Public Sector Lawyers and Task Force on Government Lawyer Participation in the ABA.) The ABA would adopt a resolution addressing the importance of enabling government lawyers to serve in leadership roles within the bar.
Office Facilities: (Sponsored by the Section of Government and Public Sector Lawyers and Task Force on Government Lawyer Participation in the ABA.) The ABA would adopt a resolution addressing the importance of allowing government lawyers to use, on a reasonable basis, office facilities and official time for their bar work.
Robert Keatinge is one of the Colorado Bar Association delegates to the ABA. Comments or questions may be directed to him or any of the other delegates at (303) 295-8595 or email@example.com. Other Delegates include the following: James Carr (303) 866-5283 (jim:carr@state. co.us); Diane Mauriello (970) 476-0300 (firstname.lastname@example.org. dacpc); Karen Mathis (303) 571-4500 (email@example.com); Kathleen Odle (303) 299-8116 (firstname.lastname@example.org); Fred Rogers (303) 582-5323 (email@example.com); Paul Willumstad (719) 543-3422 (firstname.lastname@example.org); and David Wood (970) 482-2727 (email@example.com).
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