Answering Your Questions about Legal Ethics

The Virginia State Bar’s legal staff includes the ethics unit. The ethics hotline, (804) 775-0564 or ethicshotline@vsb.org, serves members of the bar and the public by answering questions regarding ethics and the unauthorized practice of law. Below, are some of the most frequently asked questions, along with summary answers. References in these answers are made to the Rules of Professional Conduct (RPCs)[1] the Unauthorized Practice Rules (UPRs)[2], Legal Ethics Opinions (LEOs) and Unauthorized Practice of Law Opinions (UPLs). The rules and many of the opinions can be found at the Virginia State Bar’s Web site: www.vsb.org.

1. The Missing Client and Abandoned Client Funds

What should a lawyer do when he cannot locate a client, yet has client funds in the trust account and/or a statute of limitations deadline is looming?

As part of the duties in an attorney/client relationship, Rule 1.3 requires that the attorney "act with diligence and promptness" and "not intentionally prejudice or damage a client." The attorney faced with a missing client with unclaimed funds in the trust account should "exercise reasonable diligence" in locating that client. LEO 1644. The attorney can deduct the costs of the search from the client’s funds, if the costs incurred are reasonable and do not completely deplete the funds as that would defeat the purpose of the search. LEO 1673. However, unlike those costs, the attorney may not deduct a fee for his services in performing the search, nor may he have a client agree in advance that the attorney may keep any unclaimed property. Id. When diligent efforts have failed to locate the client, the attorney can follow the Uniform Disposition of Unclaimed Property Act. Va. Code §55-210.1 et seq. The act prescribes that the attorney should consider the funds abandoned five years after the money became distributable. At that point, the attorney can transfer the funds to the commonwealth as outlined in the act.

Under Rule 1.3, as highlighted above, an attorney should never intentionally prejudice a client. Thus, where a client is missing, and reasonable efforts to locate him have proved fruitless, an upcoming statute of limitations deadline must not be ignored by the attorney. The attorney should file the lawsuit needed to prevent the statute of limitations from running; the attorney may also at that time, if he wishes, file a contemporaneous motion to withdraw. LEOs 841, 872, 1088 and 1173.

2. The Witness/Advocate Rule

Can a lawyer represent a client in litigation if a member of that lawyer’s firm might testify in the matter?

This question triggers an application of what is commonly referred to as the "witness/advocate" rule. The witness/advocate rule addresses the effect of a lawyer testifying in one of his client’s cases. Rule 3.7 (a) directs a lawyer to decline a representation of a client where the lawyer would be a necessary witness, unless the testimony comes within three specific exceptions: where testimony would be related to uncontested issues, where testimony would be related to the lawyer’s provision of legal services and where disqualification of the particular lawyer would prove a hardship for the client. Rule 3.7(b) provides, in effect, an additional exception that may arise when the need to testify is not evident until after the representation has begun: The lawyer is permitted to continue the representation even should he learn, or it is obvious, that the lawyer would be called as a witness other than on behalf of his client in pending or contemplated litigation, unless it becomes apparent that the testimony is or may be prejudicial to the client.

In addition to addressing a lawyer testifying in his own client’s case, Rule 3.7 also addresses the propriety of member of a lawyer’s firm testifying in the matter. Under the former Code of Professional Responsibility, the witness/advocate rule was imputed to all members of an attorney’s firm. Thus, if an attorney could not represent a client because of the attorney’s need to testify, no other member of that firm could represent the client. In contrast, Rule 3.7 (c), which became effective January 1, 2000, eliminates the automatic imputing of this conflict to a whole firm. Thus, the witness/advocate rule alone does not prohibit one attorney from testifying as a witness in the case of a firm member; such testimony would only prevent the representation where the lawyer has either a current conflict of interest (Rule 1.7) or a conflict of interest arising out of representation of a former client (Rule 1.9).

3. Disclosing Former Client’s File

What should a lawyer do if he receives a subpoena seeking either his testimony about a former client or the contents of the file from that representation?

A series of LEOs establishes the proper response in this situation. See, LEOs 300, 334, 645, 967, 1352 and 1628. The underlying principle is that an attorney’s duty to maintain the confidentiality of his client’s information survives both the end of the relationship and even the client’s death. Rule 1.6, Comment 22; LEO 1664. Therefore, if an attorney is asked to disclose confidential information about a former client, the attorney must be sure to fulfill his obligation under Rule 1.6 to maintain a client’s confidentiality. While there are exceptions in the Rule allowing disclosure in certain situations, receipt of a subpoena is not one of those exceptions. That attorney should first determine whether disclosure of the information would be favorable or prejudicial to his client. If the former, the attorney should seek client consent to disclose. If the latter, the attorney should move to quash the subpoena, informing the court that the attorney’s ethical duty precludes him from voluntarily disclosing the information requested. If the court rules against the motion and orders the attorney to provide the documents or to answer the questions, the attorney then is within one of the exceptions to the general 1.6 duties. Rule 1.6 (b)(1) permits an attorney to disclose information to comply with a court order.

LEO 1859 concludes that the fact that a former client has filed a habeas petition alleging ineffective assistance of counsel does not on its own permit an attorney to reveal confidential information in response to the allegation. Unless additional facts and circumstances justify earlier disclosure, the attorney should not provide this information voluntarily.

4. Returning File to Client

What if a client wants his file? Does it matter whether he’s paid his bill or whether the matter has concluded?

Prior to January 1, 2000, a lawyer had to go searching through the legal ethics opinions for advice on these file questions. However, on that date, Rule 1.16(e) went into effect; that provision directly addresses how to handle the client’s file. To the extent that the prior ethics opinions conflict with Rule 1.16 (e), they are overruled and the lawyer should follow Rule 1.16 (e) in resolving client file issues. Rule 1.16(e) breaks the contents into three categories.

The first is "all original, client-furnished documents and any originals of legal instruments or official documents." Those documents are deemed to be the client’s property, and the attorney must unconditionally return them to the client upon request.

The second category includes lawyer/client and lawyer/third-party communications, copies of client-furnished documents (unless the original has already been returned), working and final drafts of legal instruments, official documents, investigative reports, legal memoranda and other attorney work product documents, research materials and copies of prior bills. For this second category, a lawyer may charge the client for the expense of making a copy of the items for his own retention.

For both of these categories, an attorney must provide the requested items regardless of whether the client has paid his bill. The old common law "retaining" lien on the client’s file is overruled by Rule 1.16 (e). A lawyer may ethically pursue all normal collection options against a former client for unpaid fees; however, the retention of the file must never be held up in exchange for payment of the bill for fees, the copying cost, or other costs associated with the representation.

A third category presented in Rule 1.16(e) includes copies of billing records and documents intended only for internal use, such as memoranda prepared by the lawyer discussing conflicts of interest, staffing considerations or difficulties arising with the attorney/client relationship. A lawyer is not required to provide those items to the client. It is important to note that attorney work product is not in this category. An attorney must provide copies of things like his research, witness interview notes, drafts of documents and outlines of case strategies to the client upon request, as those items are within the second category discussed above.

This provision is a part of the general rule 1.16, addressing an attorney’s duties upon the end of the attorney/client relationship. The intent of this rule is that an attorney be required to provide the outlined items at the termination of the representation, upon request of the client, one time.

5. File Retention

How long must an attorney retain the files of former clients?

The only express requirement regarding file retention found in the ethics rules applies to trust account records. Rule 1.15 (e) requires that all records required to be maintained under that rule should be retained for five years after the end of the fiduciary relationship. For all other files, the ethics rules do not direct an exact time period; however, Rule 1.16 does establish a general duty not to prejudice a client upon termination of the relationship. Thus, an attorney should not destroy a former client’s file so quickly that the client’s interests are prejudiced. LEO 1305 provides detailed suggestions for the destruction of client files. Some considerations to keep in mind are whether files still contain any client property or original legal documents. Also, consider which documents are worth retaining for malpractice protection and which documents are necessary for conflicts checks. Certainly, any relevant statute of limitations must be kept in mind. The exact retention period for any file will depend on the area of law and nature of the particular matter.

6. Clients of Departing Attorneys

When a lawyer leaves a law firm, who "owns" the clients for which that lawyer had been working?

No one. Clients in no way "belong" to a particular attorney or to the firm. Clients retain the right at all times to fire and/or replace their attorney. This common misconception frequently arises when a lawyer’s departure from a firm, or a firm dissolution, is less than amicable. Arguments arise file-by-file regarding which attorney or firm gets to keep which clients. The clients always get to choose who will represent them in the future. As recommended in LEO 1332, the preferred way to handle this issue is for the departing attorney and the firm to send a joint letter to each client that the attorney served. That letter should, in a neutral tone, recommend that the client needs to select one of the following options: stay with the firm, go with the new attorney or hire new counsel altogether. The client should be encouraged to make that selection as quickly as possible to ensure a smooth transition. The physical (or electronic) file should follow that choice. As discussed in Question 5 regarding file retention, no attorney or firm should hold the file "hostage." A seemingly obvious, but at times disregarded, point is that the remaining firm must always provide the contact information for the new attorney whenever asked. A firm must not refuse to provide that new address and phone number to clients, potential clients and other attorneys who contact the firm seeking the departed attorney. LEO 1506.

7. Malpractice Liability

What advice is available regarding malpractice avoidance?

The purpose of the Ethics Hotline is to provide interpretation of and advice regarding the Rules of Professional Conduct. Thus, the ethics staff is prepared to answer questions regarding discipline exposure; however, this service is not the appropriate source of advice regarding exposure to civil damages such as malpractice liability. An attorney with questions in that area would be better served by discussing the matter with either his malpractice carrier and/or the Attorney Consultation Service. The Attorney Consultation Service is the Virginia State Bar’s risk management service. John Brandt, an attorney in private practice, and Wendy Inge, risk manager for ALPS, are available for free consultation regarding malpractice prevention, law office management, claims repair and liability insurance. John Brandt can be reached at (800) 215-7854 and Wendy Inge can be reached at (800) 367-2577.

8. Attorneys on Associate Status

What services may an attorney perform if he is on associate status?

A lawyer who wants to retain his license to practice, but whose legal work is on hiatus, may find switching from active to associate status an appropriate option. Attorneys on associate status are "entitled to all privileges of active members except that they may not practice law, vote or hold office (other than as members of committees) in the Virginia State Bar."[3] While on associate status, the member pays reduced dues and does not need to comply with the usual Continuing Legal Education requirements. If an associate member is going to take an occasional case, he would need to return to active status. However, while on associate status, the lawyer could provide legal work directly to another attorney in a paralegal/law clerk type of arrangement, teach law as an adjunct professor or serve as an expert/consultant for a licensed attorney.

9. Foreign Attorneys Working in Virginia

Is there any sort of legal work that an attorney licensed in another state may perform in Virginia?

Effective February 1, 2009, Virginia adopted revised versions of Rules 5.5 and 8.5 of the Rules of Professional Conduct. Virginia's rules now mirror similar versions of Rules 5.5 and 8.5 adopted by a majority of other jurisdictions and based on the ABA Model Rules. Rule 8.5 places jurisdiction and authority to discipline non-Virginia lawyers for any unauthorized practice of law with the Virginia State Bar. These attorneys now are subject to the same discipline as Virginia-licensed attorneys. Rule 5.5 controls and sets the limits of practice in Virginia of non-Virginia licensed attorneys. Attorneys who are not licensed in Virginia cannot establish an office or continuous presence in Virginia for the practice of law. They can, however, engage in certain temporary or occasional practice: (1) undertaken in association with a Virginia-licensed attorney (including an attorney admitted under Part I of the corporate counsel rule, Rule 1A:5 Rules of the Virginia Supreme Court); (2) related to pending or potential proceeding before a Virginia tribunal if the foreign attorney expects to be authorized to practice before that tribunal or is assisting someone who is authorized; (3) related to a pending or potential ADR proceeding; or (4) related to representation of a client by the foreign attorney in the foreign attorney's licensing jurisdiction or regarding international law. Before undertaking these various services the foreign attorney must tell the client and any interested third parties that he/she is not admitted to practice in Virginia, where the lawyer is licensed to practice and the lawyer's office address in the foreign jurisdiction. LEO 1856 provides a detailed analysis of how the provisions for temporary and occasional practice apply to foreign lawyers who are physically located in Virginia.

Another safe harbor for a foreign attorney performing services in Virginia is a pro hac vice appearance in a Virginia court case. Rule 1A:4 of the Rules of Supreme Court of Virginia allows for a court to grant a motion upon application by a foreign attorney, after the foreign attorney has associated with a Virginia-licensed attorney, to appear in a particular matter before the court. The Virginia attorney must appear and participate in proceedings conducted before the tribunal and must accept joint responsibility for the client and the case. The foreign attorney must pay a $250 fee per case along with his/her application and is limited to admission on twelve (12) cases within a twelve (12)-month period preceding a current application.

Another safe harbor available for some foreign attorneys is Comment [4] to Rule 5.5. That provision acknowledges, and defers to, the administrative regulatory provisions of particular practice areas that do not require membership in the local bar. This rule allows foreign attorneys to work in Virginia in a number of areas of law. Common examples include immigration, patents and federal tax. The allowable parameters of such a practice would be determined by the rules of the appropriate agency.

Other areas of permissible practice include matters involving exclusively the law of the lawyer’s licensing jurisdiction and matters before a federal court that involve no Virginia issues (assuming the lawyer has authority to appear before that court). UPL Op. 158.

Finally, a foreign attorney may perform certain legal work as in-house corporate counsel pursuant to Rule 1:A5. An extended explanation of that Rule appears with Question 11, below.

10. Recent Law School Graduates

What can a recent law school graduate do while waiting for bar admission?

Law school graduation alone does not provide any authority to practice law. The law degree does not change the person’s status as a nonlawyer under the UPRs. As such, the graduate can only work in a law clerk status with all of his work being provided to a lawyer to review, and not directly to clients, opposing counsel or a court. Therefore the graduate cannot give legal advice to any person. The graduate will be deemed a member of the Virginia State Bar and, therefore, able to practice law when they have met all criteria for admission to the bar and the membership staff at the bar has assigned that person a membership number. That bar membership authorizes the person to practice law; however, to appear in court, the lawyer would also need to be properly sworn in.

11. In-House Counsel

Must a corporation’s in-house counsel be licensed to practice in Virginia?

The Supreme Court of Virginia adopted Rule 1A:5[4] to govern corporate counsel in Virginia, effective September 1, 2003.  That rule requires all attorneys, not active members in good standing of the Virginia State Bar, who wish to serve as in-house counsel in Virginia to either be certified or registered under the terms of the rule. 

Under Part I of the rule, a lawyer may obtain a corporate counsel certificate permitting limited representation of one Virginia employer.  The certificate authorizes in-house counsel to represent his or her employer in state courts without a pro hac vice appearance as would otherwise be required by Rule 1A: 4.[5]  The lawyer must meet all the requirements for Virginia State Bar membership, including CLE requirements.  Should this lawyer ever choose to become an active member of the Virginia State Bar without examination pursuant to Rule 1A:1[6], work done pursuant to a corporate counsel certificate constitutes the practice of law for that determination. In addition to his practice for his employer, a lawyer certified pursuant to Part I of the rule may provide pro bono legal services in Virginia.

Under Part II of the rule, a lawyer may choose, instead of a certificate, to merely register as a corporate counsel.  Registration does not entitle the lawyer to represent the employer in state court; a pro hac vice appearance would be needed.  Also, should the registered attorney seek to become a member of the Virginia State Bar without examination, the time spent as a registrant will not constitute the practice of law for purposes of Rule 1A:1.

Note that Part I's certificate is only available to foreign attorneys licensed in another state.  For foreign attorneys licensed only in foreign countries, only registration under Part II is available.

12. Initial Consultations

Does an attorney owe any duty of confidentiality to someone who meets with, but never retains, the attorney?

A frequent scenario is one in which, for example, a wife comes in to meet with a potential divorce attorney. After discussion of the matter, the wife does not retain this attorney. Later, the husband comes in and wants the same attorney to represent him in the same divorce. Rule 1.18 provides that when a person comes in and shares information in good faith with an attorney in order to seek representation, the attorney must maintain the confidentiality of the information even where the attorney is not retained; the person clearly provides the information to the attorney with a reasonable expectation that confidentiality will be protected. Although the lawyer may not use or reveal any information learned during the consultation with the wife, the lawyer is only disqualified from representing the husband if he learned information from the wife that “could be significantly harmful” to the wife in the divorce proceeding. Even if the lawyer has received such information, he may represent the husband if both husband and wife consent to the representation, or another lawyer in the firm may represent the husband if the lawyer who received the information from the wife took reasonable measures to avoid exposure to more disqualifying information than was reasonably necessary to determine whether to represent the wife, is screened from the representation, and gives written notice of the screening to the wife. Rule 1.18(d).

13. Chinese Walls/Screens

When can a law firm use a "Chinese wall" to screen an attorney to avoid a conflict of interest?

A common misconception regarding conflicts of interest is that a law firm can "cure" a conflict of interest stemming from one lawyer’s work by screening that attorney from the rest of the firm with regard to that matter. Actually, the ethics rules do not allow for a screen, or Chinese wall, to cure conflicts of interest in most contexts. Specifically, most conflicts involve an attorney’s work for a current or former client. Rule 1.7 addresses conflicts regarding current clients and Rule 1.9 addresses conflicts triggered by work done for former clients. Both of those types of conflicts are imputed to all members of the lawyer’s firm under Rule 1.10. Thus, if an attorney must decline or withdraw from a case because of work he’s done for a current or former client, all members of his firm face the same conflict. The "cure" for such conflicts, for the lawyer or any member of his firm, is not a screen, but rather consent from the former and/or the current client. Note that for conflicts under Rule 1.7, consent is not sufficient in certain instances.

There are three exceptions in the rules where a screen is acceptable: to avoid imputation of a conflict: "revolving door" situations involving government attorneys and situations involving former judges and arbitrators. Rule 1.11 addresses attorneys switching from government practice to private practice, and vice versa. Paragraph (b) of that rule outlines a screening procedure for an attorney in a private firm who had worked "personally and substantially" on a matter where another member of that firm now will represent a party "in connection with" that matter. Rule 1.12 addresses the private practice of former judges and arbitrators. Paragraph (c) outlines a screening procedure for an attorney in a private firm who had participated in a matter as judge or arbitrator where another member of the firm will now represent a party in that same matter. Rule 1.18 addresses duties to prospective clients, and paragraph (d) outlines a procedure for screening an individual lawyer who has received disqualifying information from a prospective client while permitting another lawyer in the firm to represent a party adverse to the potential client. Outside the scenarios addressed by Rules 1.11, 1.12 and 1.18, a screen is not a sufficient cure for conflicts of interest triggered by the ethics rules.

14. Executor

When a lawyer is hired by the executor of an estate, who is the client?

Attorneys hired by executors are not always clear to whom they owe duties of loyalty and confidentiality. Both the executor and beneficiaries may interact with the attorney as if he represents the interests of everyone involved. However, as outlined in LEOs 1452, 1599 and 1720, when an attorney is hired by the executor, she represents that person in that role. She does not represent the beneficiaries. Nonetheless, beneficiaries are not always knowledgeable on that point and may look to the attorney for advice and share personal information with the attorney. An attorney always has a duty to clarify his role whenever dealing with an unrepresented person when that person is confused on the point. Rule 4.3. Accordingly, where a beneficiary is under the impression that the attorney is protecting that beneficiary’s individual interest, the lawyer has an affirmative duty to clarify the matter. Also, while the executor’s attorney does not represent the beneficiary personally, she must, nonetheless, maintain awareness of the executor’s fiduciary duty to the beneficiaries and never assist in a breach of that duty. LEO 1599 and 1778.

15. Second Opinions

May an attorney provide a second opinion to a client of another attorney?

Clients at all times retain the right to counsel of their own choosing. That right includes the right to fire and replace their attorneys at any time. As part of that right, a client may need to consult another attorney regarding the case to be able to make an informed decision as to whether a change in attorney is warranted. Comment [3] to Rule 4.2 makes clear that it is not improper for an attorney to speak with a represented party regarding that person’s legal matter. Of course, an attorney would be prohibited from such contact if he represented any other party in the matter. While an attorney may provide a consultation in the manner of a second opinion, he should take no action in the matter and decline actual representation of the person unless and until the original lawyer is fired, withdraws or agrees to joint representation as co-counsel. See LEOs 369 & 1328.

16. Guardians Ad Litem

Are there any special considerations regarding conflicts of interest for guardians ad litem?

Two fairly recent LEOs provide guidance for attorneys serving as guardians ad litem. In LEO 1725, the question is whether one attorney can serve both as guardian ad litem in matters involving the Department of Social Services and, in other matters, represent the Department of Social Services. The opinion points out that as the attorney can not obtain effective consent from a minor, the attorney must look to the court for consent regarding a potential conflict of interest. The attorney should disclose the pertinent information to the appointing court necessary for that court to determine the appropriateness of that attorney serving as guardian ad litem.

In LEO 1729, the issue raised is whether one attorney may serve as guardian ad litem in a matter and also testify as a witness (having been the visitation supervisor) in that same matter. The opinion concludes that as the testimony to be given is part of the statutory duties of a guardian ad litem, (i.e., to present a report to the court), the usual witness/advocate rule does not apply. The opinion establishes as a basic principle that, "where fulfilling a specific duty of a guardian ad litem conflicts with traditional duties required of an attorney under the [ethics rules], the specific duty of the guardian ad litem should prevail."

17. Contingent Fee Where Representation Terminates Prior to Matter’s End

What right to his fee does an attorney have under a standard contingent/percentage fee agreement, when that attorney’s representation is terminated prior to the end of the case?

LEO 1606 squarely addresses the rightful compensation of an attorney who is fired or who withdraws prior to the end of a case where the original agreement had been for a contingent fee. As explained in that opinion:

When the attorney is discharged prior to the completion of the representation he may only recover the reasonable value of the services which he has rendered . . . and in instances where the fee is contingent upon the outcome of the matter, the attorney may not recover the full agreed upon fee. He is entitled only to a recovery in quantum meruit for services actually rendered.

While that opinion was issued prior to the current ethics rules, the committee has endorsed that conclusion more recently in LEO 1766 and 1812. The basic principle in these opinions comes from Heinzman v. Fine, Fine, Legum and Fine, 217 Va. 958 (1977).

18. Representation of Former Client in Divorce

Can an attorney represent a spouse in a divorce where the attorney previously represented the couple jointly in some other legal matter?

Satisfied clients usually return to former counsel when new matters arise. This is generally a good thing. However, potential conflicts of interest must be considered where the prior representation was part of joint representation of spouses. Frequently, an attorney will have done estate planning, bankruptcy or real estate work for a couple only to be contacted by one of the spouses when the marriage is dissolving. Each of these new representations must be analyzed regarding two rules: 1.6 governing client confidentiality and 1.9 regarding former clients. Rule 1.9(a) prohibits an attorney from representing a party adverse to a former client in a matter substantially related to the prior representation. This prohibition is often not the hindrance to accepting these new representations, as while the divorce certainly is adverse to the former client, it is not usually "substantially related" to the prior matter. Nevertheless, Rule 1.9(c), together with Rule 1.6, may be the source of a conflict in many of these instances. Rule 1.9(c) prohibits a lawyer from using confidential information obtained during a prior representation to the disadvantage of the former client. Attorneys must consider whether any of the information obtained during the first matter would be pertinent in the divorce. If such information was received, then, under Rules 1.6 and 1.9(c), the attorney may only represent one spouse in the divorce if the other spouse consents to the use of that information against him or her. See, LEOs 569, 677, 707, 774, 792, 1032 and 1181, reaching the same conclusions under the former Code of Professional Responsibility.

19. Trust Accounts

How does an attorney handle bank fees for his trust account?

Under Rule 1.15, an attorney must place all client funds in a trust account, operated according to the specific requirements of that rule. The attorney’s own funds are not to be in that account; thus, the normal arrangement is for each attorney or each law firm to have a trust account and an operating account. Client funds should only be moved from the trust account to the operating account when those funds have been earned. See, LEO 1606. While Rule 1.15 does require this separation of client funds from attorney funds, paragraph (a)(3) of that rule permits an attorney to deposit into his trust account, "funds reasonably sufficient to pay service or other charges or fees imposed by the financial institution or to maintain a required minimum balance to avoid the imposition of service fees, provided the funds deposited are no more than necessary to do so." This provision permits the trust account to contain attorney funds to cover both traditional service fees as well as the fees charged by credit card companies.

(See Trust Accounting Frequently Asked Questions found at http://www.vsb.org/site/regulation/trust-accounting-FAQs ).

20. Clients with a Disability

How should an attorney provide legal services to a client who appears to have less than full mental capacity?

Particularly in the practice area of elder law, attorneys frequently face difficult issues as the mental competency of some clients may be in decline. Rule 1.14 provides specific guidance to attorneys in that situation. Entitled, "Client under a Disability," that rule discusses both the situation where a client’s abilities are merely limited and where that client just cannot act in his or her own best interest. The comments to Rule 1.14 provide helpful direction to an attorney making the difficult decision as to what, if any, protective action he needs to take on behalf of his client. Note that the rule does contemplate that such protective action may include, where appropriate, seeking the appointment of a guardian for the client. However, the attorney should not represent some third party in bringing that guardianship petition but instead should himself serve as petitioner. LEO 1769. An attorney dealing with his client’s possible incapacity should, throughout the course of the representation, be mindful of Rule 1.14’s directive that the attorney "as far as reasonably possible, maintain a normal client-lawyer relationship with the client."

21. Medical Liens

What is the obligation of the lawyer when the client and a third party claim a right to the same funds?

These situations normally arise in the circumstance where a medical provider asserts that they have a lien against any recovery in the client's matter.   The client may contest that lien or simply want distribution of the funds to themselves with the assertion they will handle or deal with the lien.   The lawyer cannot ignore a third party's legitimate legal interests in the settlement proceeds if those interests exist either by law or assignment. Further, the lawyer cannot disburse funds that are in controversy.  

The lawyer's ethical duties do not require the lawyer to make a legal determination as to who is entitled to the proceeds, only that the lawyer must protect both the client and the third party who appear to have conflicting claims to the funds (lawyer's fiduciary duty to the third party). If the dispute cannot be resolved, the lawyer may interplead the funds into court and request that the court determine the legal entitlement to the funds. Rule 1.15, Comment [4]; LEO 1747.

22. Flat Fees

When is a flat/fixed fee considered earned? What happens if the attorney’s representation is terminated before the representation is complete?

Unless the fee agreement specifies otherwise, the entire flat fee is unearned and must remain in the trust account until the entire representation is complete. If the representation is terminated before the matter is complete, the attorney is entitled to a fee based on quantum meruit for the work done prior to termination.

The fee agreement may provide for certain portions of the flat fee to be earned upon the completion of certain benchmarks, which would allow the attorney to draw down the flat fee in stages throughout the representation rather than earning the full fee at the conclusion of the matter. The fee earned at each benchmark must be reasonable considering the amount of work completed.

23. Self-reporting Potential Misconduct

Under what circumstances must an attorney report her own conduct to the Bar?

The Rules of Professional Conduct only require self-reporting for discipline by another state or federal disciplinary authority, agency, or court, conviction of a felony, or conviction of a crime involving theft, fraud, extortion, bribery or perjury or attempt/solicitation/conspiracy to commit those offenses. The Rule does not require self-reporting of traffic violations, including reckless driving. Rule 8.3(e). The Rules of Professional Conduct also do not require that an attorney report a personal bankruptcy.

24. Incorporating a Law Firm

What corporate structures are permissible for a limited liability law firm?

A law firm, if incorporated, may only incorporate as a professional corporation (PC), professional limited liability corporation (PLLC), or registered limited liability partnership (RLLP). After incorporating, the entity must also register with the Virginia State Bar. Code § 54.1-3902; http://www.vsb.org/site/members/professional-entities-registration-forms/

25. Contact with Employees of a Represented Organization

When can a lawyer communicate with current or former employees of an organization when that organization is represented by counsel in the matter?

In Virginia state courts, comment 7 to Rule 4.2 limits the application of the rule to members of the organization’s “control group” or “alter ego.” This group typically includes current officers and/or directors of an organization or other employees who have the authority to bind the corporation. Rule 4.2 does not bar contact with non-control group/alter ago employees unless they are independently represented by counsel.

Federal courts in Virginia have applied a more restrictive test, barring communication with: (1) persons having managerial responsibility for the organization; (2) any other person whose act or omission in connection with the matter may be imputed to the organization for purposes of criminal or civil liability; or (3) any other person whose statement may constitute an admission on the part of the corporate party. Armsey v. Medshares Mgt. Servs., Inc., 184 F.R.D. 569 (W.D. Va. 1998) (decided under former DR 7-103). At least one state court has interpreted the rule in the same way. Dupont v. Winchester Med. Ctr., Inc., 34 Va. Cir. 105 (Winchester Cir. Ct. 1994).

State and federal courts generally agree that a lawyer may communicate with former employees of the organization, whether or not they were members of the control group during their employment. See Bryant v. Yorktowne Cabinetry, Inc., 538 F. Supp. 2d 948 (W. D. Va 2008); Rule 4.2, Comment 7.

 

ENDNOTES –––––––––––––––––––

1 Rules of the Supreme Court of Virginia, Part 6, §II. back to top

2 Rules of the Supreme Court of Virginia, Part 6, §I. back to top

3 Rules of the Supreme Court of Virginia, Part 6, §IV, Para. 3. back to Attorneys on Associate Status

4 Rules of the Supreme Court of Virginia, Part 1 back to In-house Counsel

5 Id. back to In-house Counsel

6 Id. back to In-house Counsel

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