Abstract No. 2007-7
Statement of Facts
A nonprofit legal services organization provides pro bono representation in civil legal matters to eligible indigent and near-indigent persons. Examples of the representation are: tenant rights, evictions, debts, small claims actions, custody, divorce, civil rights, employment, elder law, and public benefits. The representation is provided to the individuals by the organization’s executive director and staff attorneys. The organization’s board of directors includes several attorneys from the surrounding legal community. When the organization cannot represent an individual because of workload limitations or a conflict of interest, the organization obtains pro bono representation for the individual from an attorney in the legal community. To entice community lawyers to accept matters the organization cannot handle, the organization wants to provide the pro bono lawyers with secondary malpractice insurance, costs of litigation, and legal advice.
1. Is it ethically permissible for attorney members of the organization’s board of directors or their firms, and the organization’s executive director, to represent their respective clients against one another in adversary proceedings or otherwise?
2. Is it ethically permissible for attorney members of the organization’s board of directors or their firms, and the organization’s staff attorneys, to represent their respective clients against one another in adversary proceedings or otherwise?
3. Is it ethically permissible for the organization to refer otherwise qualified individuals whom it cannot represent because of workload limitations or conflicts of interest, to community attorneys for pro bono representation, and assist those attorneys by providing secondary malpractice insurance, costs of litigation, and legal advice?
1. Attorney members of the organization’s board of directors or their firms, and the organization’s executive director, may represent their respective clients against one another in adversary proceedings or otherwise without violating the C.R.C.P., even though the board has authority over the hiring, firing, and salary of the executive director, only if the situation is fully disclosed to each client and the client consents to the representation.
2. Attorney members of the organization’s board of directors or their firms, and the organization’s staff attorneys, may represent their respective clients against one another in adversary proceedings or otherwise without violating the C.R.C.P., only if:
a) the organization’s bylaws vest authority over individual personnel matters principally in the executive director;
b) the attorney board members uniformly and consistently do not discuss or vote on such matters as individual staff attorney salaries, promotions, or evaluations; and
c) the adverse representation is fully disclosed to the respective client and the client consents to continue the representation.
3. It is ethically permissible for the organization to refer individuals it cannot represent based on workload limitations or conflicts of interest to other lawyers in the community. When the referral occurs as the result of workload limitations on the organization’s staff attorneys, the organization may provide counsel with secondary malpractice insurance, costs of litigation, and legal advice. When the referral occurs as the result of an applicant’s conflict of interest with the organization’s staff attorneys, the organization may provide counsel with secondary malpractice insurance and costs of litigation, but may not provide counsel with legal advice on the matter in such a way as to violate the prohibitions articulated in C.R.P.C. 1.6 regarding confidentiality.
Generally, C.R.P.C. 1.10 prohibits lawyers "associated in a firm" from knowingly representing a client when one of them practicing alone would be prohibited from doing so by C.R.P.C. 1.7, 1.8(c), 1.9, or 2.2. This general rule of imputed disqualification presumes that lawyers in a law firm, or other association, have access to each others’ confidential client information and share that information to facilitate the representation of clients. Comment  to C.R.P.C. 1.10 states that the term "firm" includes lawyers in a legal services organization.
Unfortunately, C.R.P.C. 1.10 does not specifically address the questions: (1) whether board members should be automatically disqualified from representing parties adverse to clients of a legal services organization on whose boards they sit; (2) whether the legal services organization’s staff attorney should be automatically disqualified when the client is seeking the organization’s assistance in an adversary proceeding; or (3) when the attorney on the other side is a board member of the organization. Consequently, there has been conflicting authority on this subject. Some authorities have concluded that such representation may be improper. See, e.g., S.D. Ethics Opinion 88-6 (1998); New Jersey Bar Opinion 126, 91 N.J. 257 (1968); Estep v. Johnson, 383 F.Supp. 1323 (D.Conn. 1974). Other authorities suggest that where the board of a legal services organization restricts its activities to the formulation of broad policies and guidelines and refrains from involvement with individual cases, board members may represent such parties, provided requisite consideration is given to the conflict of interest provisions of the applicable ethics rules. See, e.g., N.Y. State Ethics Opinion 688 (1997); Oregon Ethics Opinion 1991-66 (1991); S.C. Ethics Opinion 90-08 (1990); Philadelphia Ethics Opinion 89-29 (1989); American Bar Association (ABA) Informal Opinion 1309 (1975).
The Committee finds that three formal ABA opinions—ABA Formal Ethics Opinion 324 (1970), ABA Formal Ethics Opinion 334 (1974), and ABA Formal Ethics Opinion 345 (1979)—persuasively delineate the role and scope of authority a legal services organization’s governing board may assume in prescribing organizational rules and regulations or operational methods for the organization without its board members and staff attorneys being deemed a "firm" for purposes of the imputed disqualification rule.
To avoid attorney board members and staff attorneys of a legal services organization from being considered a "firm," ABA Opinions 324, 334, and 345 require that:
1) the scope and authority of the board of directors of a legal aid organization be limited to broad goals and policies, such as the establishment of guidelines delineating categories or kinds of clients and cases the staff attorneys may represent;
2) no board member participate in the particular cases handled by staff attorneys;
3) the board members not infringe on the professional independence of the staff attorneys; and
4) there be no disclosure of confidences either by or to the board members with respect to a particular case by staff counsel.
These requirements ensure that the relationship between staff attorneys and the legal services board members is significantly different from the relationship between two lawyers in the same firm; the "critical difference" being "the absence of a general opportunity for shared knowledge by the board member of the affairs of the staff attorney’s client." See ABA Opinion 345. Where the board of directors is effectively screened off from the professional relationship between staff and client, there is no shared knowledge between board members and staff attorneys regarding the affairs of the organization’s clients. Consequently, "clients" of the board member ought not to be imputed to the organization and clients of the organization ought not to be imputed to the board member. If the board’s authority is consistent with the restrictions articulated in the ABA Opinions, C.R.P.C. 1.10 simply does not apply because there is no representation of multiple clients.
The conclusions in the ABA Opinions mirror and support the conclusions contained in C.R.P.C. 6.3, which states:
A lawyer may serve as a director . . . of a legal services organization, apart from the law firm in which the lawyer practices, notwithstanding that lawyers provided by the organization serve persons having interests adverse to a client of the lawyer. The lawyer shall not knowingly participate in a decision or action of the organization:
(a) if participating in the decision or action would be incompatible with the lawyer’s obligations to a client under Rule 1.7; or
(b) where the decision or action could have a material adverse effect on the representation of a client of a lawyer provided by the organization whose interests are adverse to a client of the lawyer.
The Comment to C.R.P.C. 6.3 states:
It may be necessary in appropriate cases to reassure a client of a lawyer provided by the organization that the representation will not be affected by conflicting loyalties of a member of the board. Established, written policies in this respect can enhance the credibility of such assurances.
When a new client comes to a legal services organization, one of whose board members represents a client in an adverse proceeding or otherwise, it cannot reasonably be concluded under C.R.P.C. 1.10 that the board member’s client also is the organization’s "client." Likewise, when a client comes to the board member, it cannot reasonably be concluded that the organization’s client is a "client" of the board member. Strictly speaking, this type of conflict is simply a special instance of a C.R.P.C. 1.7(b) conflict. Therefore, if the organization’s board is structured in such a way that members do not discuss pending cases with the executive director or the staff attorneys, and have no access to the organization’s case files, then ABA Opinions 324, 334, and 345 and C.R.P.C. 6.3 permit an organization’s board member, executive director, and staff attorneys to represent their respective clients against one another where full disclosure of the potential conflict is made to the client and the client consents to the representation.
Disclosure and Client Consent
C.R.P.C. 1.7(b) provides:
A lawyer shall not represent a client if the representation of that client 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: (1) the lawyer reasonably believes the representation will not be adversely affected; and (2) the client consents after consultation.
What kind of disclosure is required to obtain the informed consent of the client to the representation? Depending on the nature of the case and the circumstances of the clients, the board member or the staff attorney may feel constrained in representing the client in the fullest sense. See ABA Formal Opinion 345. It is one thing to assure a client that no disclosures of confidences will occur. It is quite another to assure a client that the future course of his or her representation by a staff attorney or a board member might not in some subtle way be influenced by the relationship between the lawyers as a result of their association through the organization. See Estep v. Johnson, 383 F.Supp. 1323, 1326 (D.Conn. 1974). These concerns, when appropriate, should be disclosed and discussed with the client. Also, some clients may be submissive and acquiesce in the representation, feeling that they have no choice, but at the same time feeling concerned that they may not be getting independent representation. ABA Formal Ethics Opinion 345. Lawyers must be sensitive to these possibilities. Accordingly, it is important that the organization’s clients be made aware of the board member’s role in the organization, as well as the fact that the board member or a lawyer in his or her firm is representing a client opposing the organization’s client.
The same applies to the client represented by the board member or a lawyer in his or her firm when the adversary counsel is the organization’s executive director or a staff attorney. The board member’s client should be made aware of the board member’s role in the organization and the board member’s relationship with the organization’s executive director or a staff attorney representing the opposing party. Clients and counsel on both sides must feel comfortable that neither client will be deprived of independent and uninhibited representation.
Not all clients may be capable of directly providing informed consent, such as when the client is a minor or is mentally impaired. For instance, in B.A. v. L.A., 761 N.Y.S.2d 805 (N.Y.Fam.Ct. 2003), the court concluded that a disinterested attorney would reasonably believe the professional judgment of a law guardian representing children in a custody matter might be influenced to the detriment of the clients because one parent’s attorney was on the board of directors of the legal aid society that employed the law guardian; however, the clients could not legally consent to the representation because they were minors. Thus, there may be situations where it is appropriate for either the board member or staff attorney to seek consent for the minor or impaired person from a parent, legal guardian, or court. This opinion does not address the situation where one party does not consent.
Preserving the Independent Professional Judgment of the Executive Director and Staff Attorneys
Once the organization has agreed to accept a matter where the opposing client already is represented by a board member or a member of his or her firm and has assigned the matter to the executive director or a staff attorney for representation, the board must take special precautions not to interfere with the attorney’s independent professional judgment. C.R.P.C. 5.4 requires that staff lawyers represent the legal service organization’s clients in accordance with their own professional judgment, without interference from the organization’s board. C.R.P.C. 5.4, Comment  states:
Various types of legal aid offices are administered by boards of directors composed of lawyers and non-lawyers. A lawyer should not accept employment from such an organization unless the board sets only broad polices and there is no interference in the relationship of the lawyer and the individual client the lawyer serves. Where a lawyer is employed by an organization, a written agreement that defines the relationship between the lawyer and the organization and provides for the lawyer’s independence is desirable since it may serve to prevent misunderstanding as to their respective roles. . . . [T]he responsibility of the lawyer to maintain the lawyer’s professional independence remains constant, and the legal profession must insure that changing circumstances do not result in loss of the professional independence of the lawyer. . . . A lawyer . . . should make certain that a relationship with a . . . legal assistance organization in no way interferes with the lawyer’s independent, professional representation of . . . the . . . client.
Consequently, if the organization’s board operates as described in ABA Opinions 324, 334, and 345 and C.R.P.C. 6.3, it would be ethically permissible for a board member, the executive director, and staff attorneys to represent their respective clients against one another without concern that there will be interference with each lawyer’s independent professional representation of the client’s interests. To avoid the appearance of impropriety, if at all possible, the board member should not be the lawyer selected by his or her firm to be adverse to the organization’s client and in such situations the board member should be screened off by his or her law firm from all contact with the matter. See CBA Ethics Committee Formal Opinion 88 (1991). Finally, if during the course of the representation it becomes apparent that independent representation is not being afforded or a client perceives that it is not afforded, no matter what the reality, then the lawyers should assist in change of counsel for one or both clients.
Referrals to Pro Bono Counsel
C.R.P.C. 5.4(c) provides that a lawyer shall not permit a person who recommends, employs, or pays the lawyer to render legal services for another to direct or regulate the lawyer’s professional judgment. C.R.P.C. 1.8(f) prohibits a lawyer from accepting compensation for representing a client from one other than the client unless the client consents after consultation, there is no interference with the lawyer’s independent professional judgment or with the client-lawyer relationship, and information relating to representation of a client is protected as required by C.R.P.C. 1.6.
Therefore, it is ethically permissible for the organization to refer individuals it cannot represent based on workload limitations or conflicts of interest to lawyers in the community for pro bono representation, and to provide pro bono counsel with secondary malpractice insurance and costs of litigation, as long as the client provides informed consent to the arrangement, the organization does not interfere with pro bono counsel’s exercise of independent professional judgment on behalf of the client, and pro bono counsel conforms to C.R.P.C. 1.6 concerning confidentiality of information related to the representation. See ABA Informal Ethics Opinion 1334. When the referral is made on the basis of workload limitations, the organization also may provide pro bono counsel with legal advice. When the referral is made on the basis of a conflict of interest, however, the organization may not provide pro bono counsel with legal advice on the matter in such a way as to violate the prohibitions articulated in C.R.P.C. 1.6.