. Legal ethics

Local counsel arrangements, RPC 1.2(c), and trying to avoid the wrath of court

This month the New York City Bar Association has issued an interesting formal ethics opinion on what is, in some respects, a surprisingly little discussed ethical situation:  What it can mean for a lawyer’s ethical obligations to simply be serving in a matter as “local counsel.”  When I first saw some of the media coverage of the issuance of this opinion — with some headlines/blurbs in the style of: “formal ethics opinion indicates that local counsel have all the same ethical obligations to the client as other counsel,” I started to worry that all the NYCBA did was make the kind of obvious point for which issuance of a formal ethics opinion should have been deemed unnecessary.  But, upon actually reading the full opinion, it is much more valuable than an exercise in stating the obvious.

The heart of the opinion focuses upon a concept that is (or at least should be) entirely uncontroversial in light of the existence of RPC 1.2(c) – someone serving as local counsel can certainly pursue an agreement with the client to limit the scope of their responsibilities as long as the limitations are reasonable.  The opinion smartly explains that this kind of arrangement “does not absolve a lawyer from complying with her ethical duties.  Rather, it narrows the universe within which those ethical obligations apply.”

The opinion then goes to some length to try to tease out examples of restrictions that would be viewed as reasonable and others that should not be reasonable.  One of which I’d like to note but put a pin in for just a second because it plays very much into what is sorely missing from the guidance in the opinion.  The first example the opinion offers as being acceptable would be where “[a] local counsel is asked to file a pro hac vice motion on behalf of an out-of-state lawyer in a multimillion dollar securities action, but not to perform any other work on the case once the out-of-state lawyer is admitted.”

The opinion then, at its conclusion, rightly stresses that local counsel still has to make certain to comply with relevant court rules regarding counsel’s responsibilities but then immediately points out that those kind of rules are outside the scope of what the NYCBA can opine about.  But the rub is that the first example proffered by the committee in its opinion is the kind of situation that it is difficult to imagine local counsel could ever manage to pull off and comply with relevant court rules.

From a loss prevention perspective, the risk for local counsel who serves in a very limited role like this where they find themselves being counsel of record in name only isn’t a compliance with the ethics rules question but one of ending up on the hook for lead counsel’s missteps, either in terms of the wrath of the trial court or a lawsuit for malpractice by the client.  Obviously, a limited scope arrangement signed off on by the client will go a long way toward chopping the legs out from under the malpractice suit.  But, in any jurisdiction like Tennessee’s where the pro hac vice rule still requires the local counsel to be present for hearings generally and to be on the pleadings, whether or not the lead counsel is the one calling the shots and running the litigation, to the trial court the “local” counsel is likely to be viewed as being on the hook for what happens in the litigation just as much as the lead counsel regardless of what sort of agreement may have been reached with the client.

Thus, in the end, this kind of opinion is of limited usefulness to lawyers looking for practical guidance on how risky it might be for them, as local counsel, to agree to be truly a passive almost bystander in connection with litigation.  In my opinion, the one additional piece of guidance that the committee could have offered that would have been within the scope of its mission was to suggest that a well-done limited scope representation engagement agreement for a local counsel in a litigation matter would include a provision that would expressly authorize the local counsel, should it become necessary, to produce the agreement to the court to make the court fully aware of the division of labor and responsibilities.  That might not be a bullet-proof way of deflecting a court’s wrath about something lead counsel did wrong, but it could only help.