United States: Recent N.Y. Ethics Opinions: September 2015

Last Updated: September 2 2015
Article by Tyler Maulsby

Here are summaries of ethics opinions issued March through June 2015. The opinions were issued by the NYSBA Committee on Professional Ethics and the NYC Bar Association Committee on Professional Ethics. NYLER will continue to provide updates on new ethics opinions issued by these and other ethics committees in New York State.

For information about how to obtain an ethics opinion from the NYS Bar Association Committee on Professional Ethics, please visit http://www.nysba.org/Ethics/.

For information about how to obtain an ethics opinion from the NYC Bar Association Committee on Professional Ethics, please visit http://www.nycbar.org/ethics/informal-ethics-opinions/.


NYSBA Ethics Op. 1051 (March 25, 2015):
Taking Percentage of an Amount Loaned to Client by Third Party

A lawyer represents numerous plaintiffs in a class action that has settled. The settlement established a fund to which the plaintiffs may apply in the future if they should meet the specific criteria for damages. The lawyer's fee, however, is a contingent arrangement based on any recovery "by settlement or judgment." Based on the settlement, a third-party company is offering payment to plaintiffs in the form of a loan, in exchange for any proceeds that person eventually recovers under the settlement (up to the amount of the advance plus interest).

The lawyer asked the Committee whether she may take a contingent fee from the advance the client receives from the third-party company. Rule 1.5(a) requires that the lawyer not charge an "excessive or illegal" fee. Additionally, Rule 1.5(c) under the New York Rule of Professional Conduct (Rules) contains detailed requirements for contingent fee agreements.

The opinion first concludes that if the retainer agreement had originally provided for the payment of the lawyer's fees from the loan contemplated, such an agreement would not violate Rule 1.5 provided the fee was not excessive. However, if the retainer agreement did not contain such a provision, the lawyer and the client may amend the retainer but the amendment would be subject to Rule 1.8(a) governing business transactions with clients.

The opinion reasons that the central question about whether Rule 1.8(a) applies is whether the client "expects the lawyer to exercise professional judgment [in the transaction] for the benefit of the client." The opinion concludes that such an expectation would be created in this instance.

Therefore Rule 1.8(a) requires that: (i) the amendment to the retainer be fair and reasonable to the client; (ii) the terms of the transaction be fully disclosed to the client in writing in a manner that can be reasonably understood by the client; (iii) the client be advised in writing of the desirability of seeking the advice of independent counsel, and (iv) the client give informed consent in writing regarding the essential terms of the transaction "including whether the lawyer is representing the client in the transaction and whether the lawyer is receiving a referral fee or other compensation from the litigation funding firm."

The full opinion is available at: https://www.nysba.org/CustomTemplates/Content.aspx?id=55647.

NYSBA Ethics Op. 1052 (March 25, 2015):
Compensating Clients to Rate Lawyer on Internet Websites

Opinion 1052 addresses whether a lawyer may offer his clients a $50 credit on their bills if they rate him on Avvo. The inquiring lawyer stated that the credit would not be contingent on the content of the review or answers to any of the questions on the website. The opinion concludes that Rule 7.2(a), which prohibits lawyers from compensating another person for recommending the lawyer, does not apply to the inquiry because "the inquirer is asking for a rating not a recommendation *** the client remains free not to check the box saying she would recommend the lawyer to others *** [and] the $50 credit [is not] contingent on whether some future person retains the lawyer as a result of the rating."

The opinion also concludes that the review would not constitute an "advertisement" under Rule 1.0(a) because it is not made "by or on behalf" of the lawyer. Two exceptions to this would be if the lawyer somehow coerced or compelled the client to write the review, or if the lawyer wrote the review for the client and then had the client post it under the client's name. In the former scenario, not only would the review be an advertisement because it is "by or on behalf of the lawyer" but it would also violate Rule 7.1(e)(4), which requires the client to give informed consent in writing in connection with any testimonial. The latter scenario would also violate Rule 8.4(c) which prohibits lawyers from engaging in conduct involving "dishonesty, fraud, deceit or misrepresentation" because the lawyer would be attempting to pass off the lawyer's own words and opinions as those of the former client's.

The full opinion is available at: https://www.nysba.org/CustomTemplates/Content.aspx?id=55648.

NYSBA Ethics Op. 1053 (April 10, 2015):
Attorney-Client Privilege in Presence of Sign Language Interpreters

A lawyer represents several clients who communicate through sign language. The lawyer asked the Committee whether his use of a sign language interpreter jeopardizes the confidentiality of the communications with his client. With regard to the lawyer's ethical duty to maintain client confidences, the Committee opined that the lawyer or firm employing the interpreter should ensure that the interpreter understands her obligation to maintain confidentiality.

Under Rule 5.3, the lawyer has a duty to adequately supervise nonlawyer employees, which includes appropriate instructions regarding confidentiality. The Committee also noted that if the use of an interpreter is necessary for the lawyer to communicate with the client then it is required under Rule 1.4, which governs a lawyer's duty to communicate meaningfully with his or her clients. Finally, the Committee reasoned, if the sign language interpreter is required for effective communication with the client, then, if the lawyer failed to utilize an interpreter, he would violate his duty of competence under Rule 1.1. The Committee noted that while the issue of whether the presence of an interpreter violates the attorney-client privilege is a question of law beyond the Committee's jurisdiction, several courts have repeatedly held that the attorney-client privilege is not waived by a lawyer's use of an agent to facilitate communication with a client.

The full opinion is available at: https://www.nysba.org/CustomTemplates/Content.aspx?id=55888.

NYSBA Ethics Op. 1054 (April 10, 2015):
Multijurisdictional Practice with Limited Presence in One State

In Opinion 1054, an attorney licensed to practice in both New York and Pennsylvania sought to practice in Virginia only before the federal courts and the Administrative Board of Veterans Appeals. The inquiring lawyer intended to use a physical office in Virginia two days per month and otherwise use a virtual office for his Virginia practice. The Committee conducted a detailed analysis of Rule 8.5's choice of law provisions to determine which state's ethics rules would apply. Though a New York attorney is subject to the disciplinary authority of New York regardless of where her conduct occurs [Rule 8.5(a)], Rule 8.5(b) governs whether the disciplinary authority will apply New York's rules or the rules of a different jurisdiction. The Committee reasoned that under Rule 8.5(b)(1), a lawyer practicing before any state or federal court in another jurisdiction (to which she is admitted) would be subject to the rules of that jurisdiction.

Assuming the lawyer was admitted to practice before the federal courts in Virginia, Virginia's Rules of Professional Conduct would therefore apply, absent a court rule stating otherwise. However, with regard to the lawyer's intention to also appear before the Administrative Board of Veterans Appeals — a branch of an administrative agency — Rule 8.5(b)(2) would control. Rule 8.5(b)(2) states that a lawyer engaged in "any other conduct" beyond appearing before a court is subject to the rules of the "admitting jurisdiction" where the lawyer "principally practices" unless the lawyer's conduct "clearly has its predominant effect in another jurisdiction in which the lawyer is licensed to practice." The Committee concluded that Virginia's rules would apply since the lawyer was deemed to be "licensed to practice" in Virginia for the purposes of the Rules. However, if the lawyer were to solicit business in either New York or Pennsylvania, then her conduct would have a predominant effect in those states and she would be required to comply with New York's rules governing attorney advertising and, with regard to her intention to use a virtual law office, the requirement that New York attorneys maintain a physical office in the state.

The full opinion is available at: https://www.nysba.org/CustomTemplates/Content.aspx?id=55889.

NYSBA Ethics Op. 1055 (May 27, 2015):
Conflicts of Interest with Government Lawyers Doing Business with City

A lawyer for a municipal agency regularly represents the City on tax foreclosure matters. After foreclosure, the City markets the property through its Urban Renewal Agency (URA), which in turn sells the properties to individuals, organizations, or other developers interested in redeveloping foreclosed or abandoned properties. The lawyer asked the Committee whether he could ethically purchase a property through the URA given his position with the city.

The Committee concluded that, depending on the structure of the URA program, the lawyer's conduct was governed by Rules 1.8 or 1.7. If the City were the entity selling the property then the lawyer would be engaging in a business transaction with a client. Rule 1.8 — which addresses special conflict of interest rules with current clients — would therefore apply if the City expected the lawyer to exercise professional independent judgment for the protection of the City.

If the City would expect the lawyer to protect its interests in such a transaction then Rule 1.8 would prohibit the transaction unless: (1) the terms are fair and reasonable to the client and the terms of the transaction are fully disclosed and transmitted in writing in a manner that can be reasonably understood; (2) the client is advised to seek the advice of independent legal counsel; and (3) the client gives informed consent in writing. The informed consent should include the essential terms of the transaction and a description of the lawyer's role in the transaction.

If the City does not expect the lawyer to exercise professional independent judgment on its behalf then Rule 1.8 does not apply. However, the lawyer's conduct would still be subject to Rule 1.7(a)(2), which would prohibit the transaction if it created a significant risk that the lawyer's professional judgment on behalf of the city would be adversely affected by his personal interest in the transaction.

If such a conflict exists, the lawyer should determine whether the conflict is consentable under Rule 1.7(b). If the City is not the seller in the transaction, and it transferred the lien to the URA, then neither Rule 1.8 nor 1.7 would apply. In either scenario, however, the lawyer should ensure that he does not use confidential information in connection with the transaction without first obtaining informed consent under Rule 1.6.

The Committee also noted that the lawyer's inquiry was subject to any substantive laws governing conflicts of interest for city employees. Without opining on matters of substantive law, the Committee noted that if the transaction violated any laws governing conflicts of interest, it may also violate Rule 8.4(b) if the illegal conduct reflected adversely on the lawyer's honesty, trustworthiness, or fitness as a lawyer.

The full opinion is available at: http://www.nysba.org/CustomTemplates/Content.aspx?id=57392

NYSBA Ethics Op. 1056 (June 2, 2015):
Conflicts of Interest With Public Officials Engaged in Private Practice

Opinion 1056 addresses whether a lawyer who was elected to serve as county clerk may maintain a law practice in counties adjacent to the county where he serves as clerk. The lawyer's practice is limited to real estate transactions and he does not represent parties in transactions in the county where he serves as clerk. Citing to NYS 966 (2013), which addressed a similar situation, the Opinion concludes that a lawyer may engage in private practice in adjoining counties. The lawyer's conduct is subject to Rule 1.11(f)'s requirement that he not use his official position to obtain special treatment on behalf of his client and that the he refrain from using his private practice as a vehicle to receive anything of value to influence his judgment as a county official. The lawyer's conduct is also subject to any overriding law or regulation governing the lawyer's official office.

The full opinion is available at: https://www.nysba.org/CustomTemplates/Content.aspx?id=57392.


N.Y. City Formal Eth. Op. 2015-5 (June 2015):
Threatening to File Disciplinary Complaint Against Another Lawyer

Opinion 2015-5 addresses whether the New York Rules prohibit a lawyer from threatening to file a disciplinary complaint against another lawyer. Though Rule 3.4(e) prohibits a lawyer from threatening to "present criminal charges solely to obtain an advantage in a civil matter," the rule does not address threats to file a disciplinary complaint. The Opinion reasons, however, that the absence of such language does not mean that lawyers are "free to threaten disciplinary charges with impunity." Instead, an attorney who intends to threaten disciplinary charges against another lawyer should carefully consider whether doing so might violate rules other than Rule 3.4(e).

Specifically, the Opinion reasoned, Rule 8.3(a) requires attorneys to report certain misconduct by other lawyers. If an attorney concludes that she has a mandatory duty to report another lawyer, her failure to do so would violate Rule 8.3(a). The threat, in turn, would violate Rule 8.4(a), which prohibits a lawyer from "violat[ing] or attempt[ing] to violate the Rules of Professional Conduct." In such a situation, the threat of filing a disciplinary complaint unless the other lawyer accedes to some demand constitutes an attempt to violate the Rules since the lawyer never had a choice but to report.

That being said, there are situations where an attorney may threaten to file a disciplinary complaint but is not required to do so. In such a situation, the threat to file a grievance may be permissible if, for example, it is used to induce the other lawyer to remedy the harm caused by his misconduct. However, even if reporting is discretionary, a lawyer may not make a threat that she knows to be false. To do so would violate Rule 4.1, which prohibits lawyers from making a "false statement of fact or law to a third person" and also Rule 8.4(c), which prohibits "conduct involving dishonesty, fraud, deceit or misrepresentation." An unfounded disciplinary complaint could also violate Rule 3.1(a), which states that a lawyer "shall not bring or defend a proceeding or assert or controvert an issue therein, unless there is a basis in law and fact for doing so that is not frivolous."

Rule 4.4(a) may also be implicated if the threat to file a grievance has "no substantial purpose other than to embarrass or harm a third person." The Opinion concludes that an attorney who intends to threaten disciplinary charges against another lawyer should carefully consider whether doing so violates the New York Rules and should not limit her focus on Rule 3.4(e).

The full opinion is available at: http://www.nycbar.org/ethics/ethics-opinions-local/2015opinions

Originally published by the New York Legal Ethics Reporter.


This alert provides general coverage of its subject area. We provide it with the understanding that Frankfurt Kurnit Klein & Selz is not engaged herein in rendering legal advice, and shall not be liable for any damages resulting from any error, inaccuracy, or omission. Our attorneys practice law only in jurisdictions in which they are properly authorized to do so. We do not seek to represent clients in other jurisdictions.

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