Protecting lawyers and law firms from themselves.

Let’s talk about something coming out of D.C. but entirely unrelated to politics for a change. If you know, you know. And, if you know, then based on the post title you’ve guessed we are going to talk about the D.C. Bar Rules of Professional Conduct Review Committee’s draft Report on proposing changes to the ethics rules to address outside counsel guidelines and client-generated engagement letters.

A long time ago in Internet time, I wrote a bit about how problematic the calls in certain segments of our profession for protection against outside counsel guidelines are. Even back then I made a tie-in to politics by comparing the arguments in favor of trying to change the rules to stop clients from being able to get what they want through outside counsel guidelines to demands for term limits. For those that don’t want to go back and refresh, they both suffer from a similar Achilles heel – they both are solutions to problems that have a more organic solution.

Term limits. Just stop electing the incumbent when they are awful.

Outside counsel guidelines. Don’t agree to them.

Rather than offering that solution, the D.C. bar draft report runs 26 pages, proposes revisions to RPC 1.6, 1.7, 5.6, and 1.16 in D.C., and asks for public comments on the proposed revisions by February 11, 2021. (For those keeping track, this is actually the second go-round for D.C. in asking for public comment, they previously requested public comment in 2019 with respect to issues raised by outside counsel guidelines. This report is generated in response to that feedback.)

Now, to repeat myself on the overriding issue associated with proposed changes to RPC 5.6 and 1.7 that are designed to make it unethical for clients to propose certain approaches to conflicts under an engagement letter, I fail to see how any such effort is at all consistent with the idea that lawyers can also ask clients to waive situations that would otherwise be conflicts. It is very, very difficult to find a path where it seems fair to allow lawyers to ask clients to waive conflicts but also say that clients cannot ask lawyers to agree to very broad definitions of what constitutes a conflict in a matter.

Having repeated myself on that, let me say that the D.C. report does a pretty admirable job of trying to find that path. I’ll let you go read the report for the full treatment of that issue, but the rationale offered is rooted in the notion of not allowing one client to improperly limit a lawyer from being available to represent other clients. I still don’t find it sufficiently persuasive, but they’ve laid it out as well as can be managed, I think.

The report, and the proposed revisions, also address some other issues. Some of them are a bit unique to D.C. given D.C.’s variations on aspects of the Model Rules, but at least one other topic of note has more universal applicability.

Agreements between lawyers/firms and clients involving indemnification. This again is wrapped within the mantle of provisions included by clients in engagement letters or outside counsel guidelines, but this one feels like a more appropriate topic for pushback through rulemaking, at least to me.

Specifically, the D.C. report proposes revising D.C.’s current rules to add a provision to RPC 1.8 that would prohibit a lawyer from agreeing to any conditions that would impose liability on the lawyer under circumstances where liability wouldn’t flow from either existing common law or existing statutory law.

And, I don’t think it is hypocritical for me to take this position because I think it fundamentally avoids the hypocrisy of the conflicts issue. Of course, I might only think that because I practice in Tennessee where we have a rule that restricts lawyers’ ability to ask clients, in advance, to waive any liability for malpractice. Given that RPC 1.8 deals with that issue in that fashion, I see nothing unfair – or otherwise in violation of any goose/gander protocols – with protecting lawyers from agreeing to indemnify clients for things that the lawyers otherwise could never be held responsible for.

Oh, also, there is one other topic that the report addresses on which I cannot control myself to avoid weighing in. In terms of overall importance, it might not be the most important issue, but in terms of ham-handedness it might be the most egregious piece of the report. This is so because it addresses an issue a lawyer can simply avoid on the front end and proposes a poorly-drafted rule revision as a solution.

The topic addressed is outside counsel guidelines that give the client the right to unilaterally change the guidelines/change the terms of engagement. This is another thing that lawyers could protect themselves against simply by refusing to agree to such a term. Nevertheless, the D.C. proposal would revise RPC 1.16 to provide for a new subsection on when a lawyer has the discretion to seek to withdraw reading as follows:

(5) a lawyer has agreed that a client may make unilateral changes in the
conditions of engagement or other terms of the representation, and the
client unilaterally makes a material change to which the lawyer is
unwilling to assent;

Now, if you absolutely believe there needs to be a rule revision to protect lawyers from this, why would you want to offer the protection only if a lawyer has already agreed that a client can make unilateral changes? Wouldn’t the better course of action simply be to have the rule say: “the client unilaterally makes a material change in the conditions of engagement or other terms of the representation to which the lawyer is unwilling to assent” ?

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