ALA Training: Legal Ethics

ABA Model Rules

Key Concepts and Overview
For Legal Managers

Beverly Michaelis
Practice Management Advisor
Professional Liability Fund

ABA Model Rules – Topics
1. Conflicts of Interest/Ethical Walls
2. IOLTA (IOTA)
3. Rules Relating to the Attorney-Client
Relationship, Fees, Communication, and more
4. Advertising and Solicitation
5. Current Trends
6. Sample Test Questions

Key Concepts for Legal Managers

ABA Model Rules & Legal Managers
Conflict of Interest Systems

• Conflict systems are used to determine if potential
new clients have conflicts with existing clients
• Written waivers are required if a conflict exists
• People & organizations representing a potential
conflict are entered in the system
• Ethical or “Chinese” Walls may be necessary

How Conflicts Arise

Other lawyers in the firm:
1. Have represented opposing parties
2. Possess inside knowledge
Disqualified lawyers should be screened

The Firm Rule

• If one member of the firm has a conflict, all
members have a conflict
• Conflicts leave with the departing lawyer
• Incoming lawyers should be screened for
potential conflicts

Ethical Walls
1. Obtain consent
2. Issue notice to all employees
3. Place memorandum in file
4. Visibly mark file
5. Move file away from lawyers/staff
6. Respect the wall at all times
7. Issue periodic reminders

Why are Walls Erected?

 Protect client confidences
 Avoid limiting a legal professional’s job
mobility

Some states are more restrictive – know your
state’s rules!

Assessing Conflicts

1. The firm’s risk avoidance attorney will
determine if a conflict exists.
2. Not all conflicts require ethical walls
3. The risk avoidance attorney will:
– Define the conflict
– Obtain client consent
– Neutralize the conflict

Group and Organization Representation

Groups:
• Lawyer should explain advantages and risks
• All clients must stay fully informed
Organization:
• Duty is to organization

Avoid the Following

1. Gifts from clients
2. Book or TV deals (until case concluded)
3. Loans to clients
4. Third party payment with strings attached
5. Aggregate settlements
6. Business transactions with clients

Avoid the Following

7. Sexual relations with clients
8. Proprietary interest in case
9. Agreement in advance to limit liability
without independent legal advice
10. Settling a claim with an unrepresented or
former client without independent legal
advice

Procedures for Legal Managers

→ Know how to set up a database
→ Have familiarity with software
→ Know how to do a conflict search
→ Know how to supervise staff

IOLTA (or IOTA) – What is It?

• Mandated by state authorities
• Requires interest-bearing accounts for
client deposits that are:
– Nominal in amount or
– Not long in duration
• Interest is pooled and administered by
state bar

IOLTA (or IOTA) – What is It?

Funds being held for a client must be placed in:
1. An account paying interest to the client or
2. An IOLTA account

IOLTA (or IOTA) – How to Do It

• Instruct bank to open a NOW or other interest-
bearing checking account
• Account is opened in state where lawyer’s
office is situated
• Lawyers are responsible for minimum balance
& fee requirements

IOLTA (or IOTA) – How to Do It

• Many banks waive fees
• Maximum amount in IOLTA depends on rules in
each jurisdiction
• Bank responsible for paying interest & sending
statements to IOLTA committee and lawyer

IOLTA (or IOTA) – Dealing with Client Funds

1. Client funds must be segregated.
2. If client can net interest – set up
separate account unless client
directs otherwise

IOLTA (or IOTA) – Avoiding Trouble

• Know your jurisdiction’s rules
• Notify client promptly
o when money is added or
o when money is taken out
• Keep unearned fees or unearned costs in trust

IOLTA (or IOTA) – Avoiding Trouble

• Promptly deliver funds when entitled
• Promptly render full accounting upon request
• Keep disputed funds separate
• Keep complete records (usually 5 years)

IOLTA (or IOTA) – Notes for Legal Managers

1. Rule 1.15 on Safekeeping provides the ethical
guidelines for establishing & maintaining accounts
2. All lawyers must establish IOLTA accounts, EXCEPT:
• Lawyers who do not hold client funds
• Lawyers who make loan transactions through
lending banks


3. No lawyer, law firm, or client pays taxes on IOLTA
interest per IRS ruling
4. Contact IOLTA Committee immediately if you
receive a 1099 on an IOLTA account
5. Banks file informational reports with IRS re interest
paid to IOLTA Committees
6. IOLTA Committees are non-profit (pay no tax)


• You may, but are not required, to notify clients
of your participation in IOLTA
• Clients have no say re use of IOLTA funds
• Remember that funds must go into an interest-
bearing account benefiting the client if the client
can “net” interest

Rule 1.0 Attorney-Client Relationship

A fiduciary relationship commanding
 Respect
 Competence
 Diligence
 Independent professional judgment
 Preservation of confidences

Rule 1.0 Attorney-Client (Fiduciary) Relationship

 Fair play
 Honesty
 Responsiveness
 Reasonable fees
Much the same is expected of the client in return

Rule 1.3 – Diligence

DOs:
1. Zealously represent
2. Complete entire task
3. Timely manage workload

DON’TS
1. Cause client anxiety Legal Managers should
2. Lose client’s trust calendar deadlines to
ensure due diligence

Rule 1.4 – Communication

• Keep the client informed
• Consult with the client
• How will client’s objectives be met?
• What is acceptable/ethical

Rule 1.5 – Fees

1. Use written agreements
2. No contingent fees in domestic or criminal
cases
3. Fee splits must be proportionate or client must
consent

Rule 1.6 – Exceptions to Confidentiality

1. To carry out representation
2. Prevent reasonably certain
death, harm, crime, or fraud
3. Defensively (complaint, claim, other)

Rule 1.16 – Withdrawal is Mandatory When

 Representation would violate rules
 Lawyer is impaired (mentally or physically)
 Lawyer is discharged

Rule 1.16 – Voluntary Withdrawal

1. Accomplished without material adverse effect
2. Client persists with fraud/crime or uses lawyer
3. Fundamental disagreement
4. Client’s action is repugnant
5. Client fails to pay
6. Other good cause

Rule 1.16 – Voluntary Withdrawal

Withdrawal always requires:
• Notice
• Permission of tribunal
• Protection of client’s interests
 Refund fees
 Surrender papers and property (unless
retention is otherwise permitted)

Rule 1.17 – Sale of Law Practice

1. Lawyers may sell all or part of a practice or
goodwill
2. Requires written notice to clients
3. 90 days must pass
4. Fees cannot be increased

Rule 5.3 – Non lawyers

• Must conform to rules of conduct
• Make reasonable efforts to supervise
• Lawyers responsible if:
o Conduct ordered or ratified
o Lawyer is partner/manager fails to
avoid, mitigate, remediate

Rule 5.7 – Rules of Conduct Apply to Other Professions

 If services not distinct from legal work
 Client not informed there is no attorney-client
relationship (reasonable efforts standard)

Lawyers must always comply with the
rules of the other profession

Rule 6.1 – Pro Bono

1. Every lawyer has a duty to provide pro bono
services
2. Aspirational goal is financial contribution and
50 hours per year

Rule 6.3 – Legal Services Membership

Lawyers can serve as directors, officers or members of
legal organizations even if persons served by the
organization are adverse to the lawyer’s firm

Key Concept for Legal Managers:
This is not a conflict of interest

Rule 7.6 – Political Contributions

Lawyers cannot accept judicial appointments or
government jobs in exchange for
making or soliciting political contributions

Advertising and Solicitation

Lawyers cannot pay others for channeling
professional work to the lawyer
 Prepaid legal services OK
 Non-profit referral organizations OK
 Attorney referral organizations OK

Legal Managers must be able to evaluate
these types of intermediary organizations

Direct Solicitation Prohibited

1. There is no relationship with soliciting lawyer
2. When client rejects contact
3. Solicitation involves duress or harassment

Other Material in this Section
Current Trends

Review material for current trends
1. Fee alternatives (flat/fixed fees, task-based
billing, bonus system)
2. Technological changes (billing, legal research,
software, e-mail, Web sites, extranets, intranets,
printing to PDF, and video conferencing)

Technology can save clients money and keep them better informed

Sample Test Questions
Sharing Space & Common Expenses

• Sally Smith and Reba Rodman share office space
• Can they advertise as Smith & Rodman?

No! They must first establish a firm.

Web Sites, Extranets, and Intranets

1.Web sites are public and used for advertising
2.Extranets are secure, private sites accessible only
to clients or co-counsel. They are NOT used for:
• E-mailing clients
• Listing staff and lawyers
• Providing documents to the public
3. Intranets are for internal use only by law firm
personnel

Trust Accounts
The following are FALSE:
• Attorneys need not notify clients every time a deposit is
made or funds withdrawn
• IOLTA interest is taxable to the attorney
• IOLTA interest is taxable to the client
The following is TRUE:
• Attorneys need not notify clients that their funds will be
enrolled in IOLTA

Conflicts
If a conflict is noted during a conflict
search, an attorney shall:
1. File a claim against the perpetrator
2. Work with another attorney to minimize the conflict
3. Alert the client and erect an ethical wall
4. Submit the case to a hearing of peers

Advertising
May criminal attorney Susie advertise on her Web site
that she has successfully defended 90% of her cases?
• Yes – if it’s true and accurate
• Yes – if she lists her name, address, and phone
• No – even if the % was true, it violates the rules
• No – we don’t know what “successfully
defended” means

Advertising
May criminal attorney Susie advertise
she is a certified criminal law specialist?
• Yes – if she has been certified by an organization
approved in her state or accredited by the ABA
• Yes – if the name of the certifying organization is
clearly identified
• No – lawyers cannot communicate specialties

Letterhead & Advertising

The following are permitted:
• Trade names (Bayside Immigration Clinic)
• Deceased founder
• Multi-state listings if jurisdictions designated
What is not permitted:
• Listing a current state Congressman in public office
who is not active with the firm

Unauthorized Practice of Law

Joe Justice, criminal lawyer, is in Florida. His office is
one hour from Georgia.
His former paralegal, Inez, who has a law degree, now
has an Immigration Clinic in Georgia. She fills out
forms for immigrants.
Inez wants Joe to review the forms before they are
filed.
May Joe assist Inez?

Unauthorized Practice of Law

1. Yes, as her former boss, if he is aware of her work
product and can assist with quality control and legal
advice.
2. Yes, if he is licensed in Georgia and Inez is licensed
to practice law.
3. No, if he is not licensed in Georgia.
4. No, if he is assisting Inez in UPL.

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