Clucking Defiance In D.C.
The D.C. Bar Rules of Professional Conduct Review Committee submitted a draft report in November 2020.
The committee identifies the issues that, in its view, needs a number of rule fixes
In recent years, a number of issues have arisen regarding the relationship between clients and prospective clients, on the one hand, and outside counsel, on the other. These issues typically arise in the context of engagement letters or outside counsel guidelines (collectively, “OCGs”) generated by large institutional clients that require outside counsel serving such clients, as a matter of contract, to engage or refrain from engaging in specified conduct or practices.
The D.C. Rules strike a balance between allowing clients and lawyers latitude to contract with one another as they see fit, on the one hand, and protecting essential elements of the practice of law, on the other. These essential elements include access to legal services, confidentiality of client information, loyalty to clients, and the independence of lawyers.
Some believe that this balance is being upset by a growing profusion of OCGs that overreach, unduly restrict the public’s access to legal representation, compromise confidentiality, and restrict the professional independence of lawyers. In some cases, these types of OCGs reflect nothing more than clients using the same processes to procure legal services that they use for such other procurements as office furniture and catering services. In other instances, such OCGs may reflect a shift in the economic balance between corporate clients and private practitioners.
Why do institutional clients prescribe OCGs? The responses to the Rule of Professional Conduct Review Committee’s (“Committee”) May 2019 request for comments did not include any explanation from the client perspective of the need for such provisions. Some outside counsel providing comments offered their views on why clients are requesting such provisions, including the following:
• A leading participant in a particular economic sector may want to make it more difficult for newer, smaller companies to gain a competitive foothold there. Conflicting out lawyers who are knowledgeable about the sector can be part of this strategy.
• In-house counsel do not like having to explain to their company’s non-lawyer executives how it is that a law firm that represents the company in one matter can sue the company’s affiliate in another matter, so long as the second matter is unrelated to the first.
• Business enterprises want to minimize their risks, wherever and however they can. They may see their outside lawyers as appropriate sharers of those risks.
• Clients believe that if they pay for an outside lawyer’s creation of a document or acquisition of knowledge, that document or information should belong to them—just as a purchased machine, building, or vehicle belongs to them.
Whatever the reason, OCGs such as these can have a deleterious effect on aspects of the legal profession that make the profession valuable to clients.
The multi-rule proposed solutions
The proposed amendments would limit certain practices that: (1) restrict the ability of prospective clients to engage counsel of their choice, (2) impose restrictions on lawyers’ independence and right to practice, (3) can render outside counsel liable for damages sustained by clients or others through no fault of such counsel, (4) restrict a lawyer’s right to retain a copy of a client’s file, including the lawyer’s work product, (5) restrict a lawyer’s right to make use of general, nonconfidential information acquired in the course of a representation, and (6) can compel outside counsel to accept clients’ unilateral changes in the terms of a representation.
The proposed amendments would:
• Amend Rules 1.7 and 5.6 to remove the existing open-ended permission for a lawyer and client to expand the scope of what constitutes a conflict of interest under the D.C. Rules, except where broader coverage is required by other law;
• Amend Rule 1.8 to prohibit a lawyer from proposing or accepting conditions that impose liability on a lawyer that is broader than the liability imposed by statute or common law;
• Amend Rule 1.16 to make clear that a lawyer may retain copies of client files, including the lawyer’s work product, but may not use that work product in other matters if the Rules’ confidentiality provisions prohibit such use;
• Amend Rule 1.6 to make clear that a lawyer is not only permitted, but obligated, to use general (i.e., not client-specific) knowledge gained in the course of a representation for the benefit of subsequent clients; and
• Amend Rule 1.16 to provide that where a lawyer has agreed that her client may make unilateral changes in the terms of a representation, the lawyer may withdraw if the client makes a material change to which the lawyer is unwilling to assent.
Excuse me if my initial reaction is that these amendments promote the parochial, self-intetested concerns of the Bar to the detriment of client interests and concerns. (Mike Frisch)