Kansas Bar Journal
75 J. Kan. Bar Assn. 1, 22-29 (2006).
From Solo to Megafirm: You Need a General Counsel
Kansas Bar Journal75 J. Kan. Bar Assn. 1, 22-29 (2006)From Solo to Megafirm: You Need a General CounselBy J. Nick Badgerow(fn1)I. Overview
As the practice of law has become more complex, so has the law of lawyering. Constant attention must be paid to ethics, professionalism, and client relations - even while addressing the important and immediate needs of business development, firm management, and the actual representation of clients in the everyday practice of law. These issues confront every lawyer, from solo practitioners to those practicing with large firms.
At times these competing interests can seem to be adverse. They are certainly time-consuming. But if ethics is to be more than a once-a-year continuing legal education concern, significant attention needs to be paid to the issues of ethics and professionalism as a daily and constant theme.
The purpose of this article is to explore the ethical rules and considerations that confront lawyers in daily practice, to explore how those issues are handled in law firms, and then to suggest similar applications to law firms and solo practitioners generally. The question is whether a law firm should appoint a "general counsel" to take on responsibility for these rules and considerations.
Appointing a general counsel can have benefits. While the other members of the firm do not abdicate their professional responsibilities, they have a resource to whom questions and issues might be posed.
This article focuses mainly on the Kansas Rules of Professional Conduct (KRPC),(fn2) as well as to the Third Restatement of the Law Governing Lawyers.(fn3) The Kansas Model Rules are based on the Model Rules of Professional Conduct (MRPC). Thirty-eight states and the District of Columbia have adopted all or significant portions of the MRPC.(fn4)
Is Your Practice a "Law Firm"?
The Official Comment to KRPC 1.10 loosely defines a "firm" as including "lawyers in a private firm, and lawyers employed in the legal department of a corporation or other organization or in a legal services organization."(fn5) The comment does not reference office-sharing arrangements, but acknowledges that whether a group of lawyers constitutes a firm will depend on the specific facts of the situation and the ethics rule being applied.(fn6) Such a determination requires the examination of several factors: (1) do the lawyers present themselves to the public in a way suggesting that they are a firm; (2) do the lawyers conduct themselves as a firm; (3) do the lawyers have mutual access to confidential information; (4) the terms of the agreement between the lawyers; and (5) the purpose of the rule involved.(fn7)
Even if one's practice is not a "law firm," most of the KRPC apply to the lawyer's practice, regardless of whether the lawyer practices alone or in a firm or other association of lawyers. Having reviewed the background of "law firms," the next step is to examine the issues involved in getting, and handling, business.
General Counsel and the Attorney-Client Privilege
One benefit of designating a partner as general counsel may be to clothe communications with that partner in the protection of the attorney-client privilege.
In a federal appeals case from California,(fn8) a law firm assigned two associates to conduct an investigation to determine if one of the firm's lawyers mishandled client funds. When a grand jury subpoenaed the associates to testify regarding their in-house investigation, the firm asserted the attorney-client privilege. The court found that the associates were acting as in-house counsel in conducting their investigation and held that the privilege would attach to their confidential communications with the members of the firm. Id. at 1296-97.
For this protection to be accorded the partner should be officially designated with the title of general counsel, in-house counsel, firm counsel, or some such designation.(fn9)
In New York State Bar Ethics Opinion 789, the committee cited three recent cases that call into question the validity of the privilege between a lawyer and his or her in-house counsel, at least in a subsequent litigation between the law firm and the client.(fn10) This is an evidentiary matter to be handled by the trial court, but the wisdom of such holdings could be questioned in view of the larger picture that consultation with counsel should be encouraged, even if that counsel happens to be a partner.
Getting Business - Advertising
A. Applicable rules
The modern KRPC permit lawyers to advertise their services through public media, including telephone directories, legal directories, newspapers and other periodicals, and the Internet. Even outdoor advertising and radio and television promotion are acceptable.(fn11) Of course this permission runs contrary to the common tradition that lawyers, members of a dignified profession, should not promote themselves.
Advertising involves an active quest for clients, contrary to the tradition that a lawyer should not seek clientele. However the public's need to know about legal services can be fulfilled in part by advertising. This need is particularly acute in the case of persons of moderate means who have not made extensive use of legal services. The interest in expanding public information about legal services ought to prevail over considerations of tradition.(fn12)
Rather than being limited by constraints of dignity or taste, which may involve "matters of speculation and subjective judgment,"(fn13) the limitations on lawyer advertising are somewhat more objective: advertisements shall not be "false or misleading"(fn14) by containing material misrepresentations of fact or law, creating unjustified expectations about results, or making unjustifiable comparisons to the services of other lawyers.(fn15)
Direct solicitation of clients is also limited by Rule 7.3, which prohibits direct in-person or live telephone contact(fn16) with prospective clients with whom the lawyer has no family or prior professional relationship.(fn17) While this rule appears to be more observed in the breach, it should guide the practitioner in deciding how far to go in promoting prospective services.
The designated advertising reviewer should also keep in mind Rule 7.2(b), which requires that copies of all advertising materials (including Web and Internet advertising) be maintained for two years after the advertising has been published.(fn18)
General counsel's duties
In law firms there should be a person assigned by the firm management or the general counsel to review all advertising and promotional materials. That person should be familiar with the particular iterations of Rules 7.1, 7.2, and 7.3 in each of the states where the law firm practices. The designated advertising counsel should review the advertising materials - before they are published - and consider whether they contain any material misstatements of fact.(fn19) This may involve a discussion with the lawyers involved in the area of practice being promoted in the advertising.
Advertising review counsel should also consider whether the proposed advertising could create any unjustified expectations by implying the likelihood of particular results or costs.(fn20) The advertising should be reviewed to ensure that it does not make objectively verifiable comparisons to the services offered by other lawyers or law firms.(fn21)
A. Applicable rules
Rule 1.7(a) prohibits conflicts of interest with current clients. This means that a law firm cannot take on the representation of one client if that representation would be adverse to another existing client.(fn22) The purpose for the rule is obvious: if a lawyer or his firm attempts to represent one client adverse to another client, neither can be sure of undivided loyalty.(fn23)
Rule 1.7(b) prohibits conflicts between a current client and the lawyer's own interests, e.g., where the lawyer's interest would be better served by a bad result for the client or where the lawyer's personal interest runs contrary to that of the client.(fn24) For example, a client wishing to sue a corporation may not be well-served by a lawyer who is a major shareholder in that corporation.(fn25)
Rule 1.9 prohibits conflicts with
the interests of former clients, if the adverse representation of the new client is in a matter that is the same or substantially related to the prior matter on which the lawyer or his or her firm represented the "former" client.(fn26) In addition, even if the lawyer or his firm are representing a new client against the interests of a former client in a matter that is not the same as that which was involved in the prior representation, the lawyer cannot use or disclose confidential information about the former client if that information was learned in the context of the former representation.(fn27)
Of course if the lawyer takes on adverse representation in violation of these rules, the result is often disqualification of the lawyer and his or her firm.(fn28) Even if the representation is not taken on by the particular lawyer in the firm who represents the other "current client" or who personally...