The Ethical Landscape of Ad Hoc Legal Engagements
| Publication year | 2014 |
| Author | By Danielle Lackey |
By Danielle Lackey
Danielle Lackey is President and CEO of CadenceCounsel, Inc., a national talent community of experienced lawyers supporting law firms (and their lawyers). Cadence bridges the gap between fixed firm capacity and variable client demand. With support from CadenceCounsel, law firms can supplement their high-end practice and capabilities in a wide range of business, litigation, transactional, and advisory areas, and nimbly respond to the ebb and flow of a busy law practice.
The inevitable peaks and valleys of legal practice present challenges for law firms of all sizes, but the variable nature of client demand is particularly difficult for solo and small firm attorneys. How do we meet client needs during the busiest times; financially weather months when we don't have a full workload; and provide "full service" when handling sophisticated, interdisciplinary legal matters with a small team?
A growing answer is the interim support of temporary attorneys ("Ad Hoc Counsel") who have the experience to handle substantive legal projects (as compared to traditional "contract" document review attorneys). During peaks, temporary attorneys provide firms extra capacity or expertise on an as-needed basis, bridging the gap between variable client demand and fixed firm resources. During valleys, to level workflow and cash flow, solo and small firm attorneys can offer their own services to other law firms.
Are these temporary legal relationships ethical? Very simply, yes. This article provides four hypotheticals illustrating what California lawyers should consider about ad hoc lawyering, and the professional ethics rules that allow you to meet your clients' needs through the use of Ad Hoc Counsel.
SCENARIO 1:
You are a partner at a small firm. Your firm has the capacity to handle up to the two mergers (or active litigation matters) that you're already handling. A third project comes in.
This is a good problem, and no one wants to turn away business. Although long days are part and parcel of a lawyer's existence, can you create sustainable alternatives to pushing beyond capacity (or turning down good work) by ethically working with experienced ad hoc attorneys outside your firm? The answer is "Yes".
Conflicts of Interest: Although temporary, ad hoc attorneys "represent" your client under the Rules of Professional Conduct, including those governing conflicts of interest1 Since temporary lawyers routinely work with multiple firms, clearing conflicts depends on whether the ad hoc lawyer is deemed "associated in/with" a firm. If "associated," then the lawyer takes on the conflicts of a firm as a whole - not just the matters on which they are engaged. To avoid imputed disqualification, firms should grant ad hoc lawyers access to confidential client information only where necessary, and restrict their access to information about firm clients "other than [those] on whose matters the lawyer is working."2
Best practices for screening ad hoc lawyers from unrelated client matters include limiting access to firm databases, excluding temporary attorneys from internal meetings, and encouraging remote work arrangements to reduce inadvertent sharing of client confidences.3 If you engage a company that screens and places ad hoc attorneys, confirm they have policies requiring attorneys to maintain up-to-date conflict lists. Also consider your own interaction with this intermediary. Did they ask you to screen ad hoc lawyers from unrelated client matters? A responsible intermediary will have this critical conversation with each of its law firm clients. Finally, because ad hoc attorneys support multiple law firms, monitor potential conflicts regularly.4
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Disclosure: You've retained a talented attorney to get through your peaks. What do you tell your client? In California, disclosing the use of ad hoc attorneys to clients is required only if their use constitutes a "significant development" in the legal matter,5 determined as follows: (1) responsibility for overseeing the client's matter is being changed; (2) the new attorney will be performing a significant portion or aspect of the work; (3) lawyer staffing (or related costs) has been changed from what was represented to (or agreed with) the client; and (4) whether staffing is different from the client's reasonable expectation.6
Even though the fact of ad hoc staffing requires disclosure, the terms do not need it. Profit from providing legal services is "expected and appropriate."7 A firm has no duty to inform the client of its "profit margin" on an ad hoc lawyer's work - only to ensure that the total fee not be unconscionable.8
SCENARIO 2
An existing client comes to you with a large matter that you'd like to handle. A portion of the representation requires expertise outside your areas of practice.
This is a common dilemma for small firm practitioners. Referrals to another firm can be risky - what if that firm encroaches upon your client relationship? "Associating with" Co-Counsel or Of Counsel is also tricky. Co-Counsel arrangements - requiring multiple engagement...
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