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Frequently asked Ethics questions

When a lawyer is discharged by a client who was represented on a contingent fee basis, may that lawyer recover a fee for the legal services that were rendered prior to the discharge?

What limitations are imposed upon a lawyer representing a person whose interests are adverse to those of a former client?

When may a lawyer reveal information relating to representation of a client?

When may a lawyer share fees with another lawyer?

When may a lawyer share fees with a non-lawyer?

What steps must a lawyer take to protect funds and property of a client?

Must a lawyer present to the client an offer of settlement which the lawyer regards as inadequate?

May a lawyer negotiate and draw a settlement agreement in which the client agrees to refrain from criminal prosecution, so long as the other party pays restitution damages?

What continuing duty does a lawyer have to a former client as it relates to information about that former client?

What should be done if one believes that another lawyer has violated the Rules of Professional Conduct or if a judge has violated the Rules of Judicial Conduct?

How long must a lawyer retain closed files and documents contained therein?

May a lawyer make a direct mail solicitation to unknown potential clients?

 

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When a lawyer is discharged by a client who was represented on a contingent fee basis, may that lawyer recover a fee for the legal services that were rendered prior to the discharge?
Every client has the right to select a lawyer and to discharge that lawyer at any time when the client wants to terminate the relationship. See e.g., RPC Rule 5.6, comment. This is true even though the client may have entered into a contingent fee agreement with the lawyer.

Where the client exercises a right to discharge the lawyer before completion of the matter, the contingent fee provision no longer has any meaning or relevance since no recovery has yet been had. On the other hand, the client may not avoid an obligation to pay for legal services rendered by discharging the lawyer. Accordingly, where the contingent fee agreement has been rendered moot by discharge of the lawyer before recovery, the lawyer is entitled to recover a fee based upon quantum meruit. Determining the amount of a fee which is reasonable within the scope of RPC Rule 1.5 is sometimes contentious. Where disagreement exists, reference to the ACBA Fee Dispute Committee should be explored.

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What limitations are imposed upon a lawyer representing a person whose interests are adverse to those of a former client?
A lawyer is free to represent a person whose interests are adverse to those of a former client so long as (a) the matter is not “substantially related” to the matter in which the lawyer represented the former client and (b) in representing such person, the lawyer does not use to the disadvantage of the former client non-public information relating to the representation of the former client. Both of these limitations, however, may be waived by the former client after full disclosure of the circumstances and consultation.

In seeking the former client’s consent to the new representation, the lawyer should not only fully disclose in writing the circumstances regarding such representation, but should also specify, to the extent possible, any confidential information relating to the prior representation that the lawyer may use in the new representation.

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When may a lawyer reveal information relating to representation of a client?
A lawyer may not reveal information relating to representation of a client unless the client consents after consultation. There are, however, certain exceptions.

A lawyer may reveal such information to the extent that the lawyer reasonably believes it necessary: (1) to prevent the client from committing a criminal act that the lawyer believes is likely to result in death or substantial bodily harm or substantial injury to the financial interest or property of another; (2) to prevent or to rectify the consequences of the client’s criminal or fraudulent act in the commission of which the lawyer’s services are being or had been used; or (3) to establish a claim or defense on behalf of the lawyer in the controversy between the lawyer and the client, to establish a defense to a criminal charge or a civil claim or disciplinary proceeding against the client/lawyer based upon conduct in which the client was involved, or to respond to allegations in any proceeding concerning the lawyer’s representation of the client.

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When may a lawyer share fees with another lawyer?
Generally, a lawyer may not divide a fee for legal services with another lawyer who is not in the same law firm. A division of a fee with another lawyer not in the same firm is permitted if the client is advised of and does not object to the participation of all of the lawyers who are involved, and if the total fee of the lawyers is not illegal or clearly excessive for all legal service rendered to the client.

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When may a lawyer share fees with a non-lawyer?
Rule 5.4(a) provides that a lawyer shall not share legal fees with a non-lawyer, except in certain circumstances. By agreement, money may be paid to the lawyer’s estate or to one or more specified persons for a reasonable period of time after the lawyer’s death. Payment may be made to the estate of a deceased lawyer from fees derived from the completion of matters initiated by the deceased lawyer. Non-lawyer employees can be included in a compensation or retirement plan, even if the plan is based upon a profit-sharing arrangement.

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What steps must a lawyer take to protect funds and property of a client?
A lawyer who hold funds and property of a client stands in a fiduciary relationship to that client. Such funds and property may not be commingled with the lawyer's personal assets. In the case of funds, they must be deposited in a bank account which is separate from the lawyer’s personal account and is identified as a “trust account” or a “lawyer’s account," or the like. If the assets include such things as stock certificates and bonds, they must be kept separate from the lawyer’s personal assets and clearly identified as property of the client. This might involve placing the documents in a lawyer’s professional safe-deposit box, clearly identified as the property of the particular client, or it might even involve maintaining a separate safe-deposit box for the affairs of one client only.

If the lawyer has the responsibility for managing investments, the investments must normally be placed in securities approved for fiduciaries in Pennsylvania.

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Must a lawyer present to the client an offer of settlement that the lawyer regards as inadequate?
Rule 1.2 of the Rules of Professional Conduct requires that a lawyer abide by a client’s decision whether to accept an offer of settlement of a matter. In order for a client to be able to make an informed decision, the client must be aware of the offer and must have an opportunity to consider the offer. As a generality, therefore, the lawyer must inform the client of an offer of settlement, even thought the lawyer may believe the offer to be inadequate.

Circumstances may arise, however, in which it is unnecessary for the lawyer to communicate the fact of an offer to the client. Where, for example, a client has set a minimum condition for settlement, it is not necessary for the lawyer to communicate to the client an offer which substantially fails to meet the client’s preset condition. Likewise, if the offer is purely frivolous, it is unnecessary to communicate the offer to the client.

Often offers of settlement pass back and forth in the course of negotiations. Assuming that the client is kept generally informed of the existence and progress of such negotiations, it is not necessary to interrupt the negotiations after each settlement offer has been made so as to consult with the client.

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May a lawyer negotiate and draw a settlement agreement in which the client agrees to refrain from criminal prosecution so long as the other party pays restitution damages?
Yes, under the proper facts and circumstances, such an agreement is permissible. The Rules of Professional Conduct contain no specific prohibition against such an agreement, but the impact of the criminal statute defining Theft by Extortion, 18 Pa. C.S. §3923, should be considered. Under this statute, a person who intentionally obtains property of another by threatening to accuse anyone of a criminal offense or to cause an official to take or withhold action is guilty of theft. No theft occurs, however, if the property obtained was honestly claimed as restitution or indemnification for harm done. Rule 314 of the Rules of Criminal Procedure for dismissal of certain criminal matters should also be reviewed.

It is misconduct for a lawyer to commit a criminal act that reflects adversely on the lawyer's honesty, trustworthiness, or fitness as a lawyer in other respects, Rule 8.4(b); engage in conduct involving dishonesty, fraud, deceit, or misrepresentation, Rule 8.4(c); engage in conduct that is prejudicial to the administration of justice, Rule 8.4(d); state or imply an ability to influence improperly a government agency or official, Rule 8.4(e).

Thus, if the negotiation and agreement did not constitute a crime under 18 Pa. C.S. §3923, and did not violate Rule 8.4 prohibiting, inter alia, dishonesty, fraud, deceit or misrepresentation, then the agreement would not violate the Rules of Professional Conduct.

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What continuing duty does a lawyer have to a former client as it relates to information about that former client?
During the existence of the lawyer-client relationship, the lawyer may not reveal information relating to representation of the client, unless the client consents after consultation. Certain specific exceptions are set forth in Rule of Professional Conduct 1.6. After termination of the lawyer-client relationship, however, the obligation to preserve the client’s confidences continues unchanged. The lawyer still may not reveal confidential information. Furthermore, after the termination of a lawyer-client relationship, the lawyer may not employ information acquired through the earlier representation, whether that information is confidential or not, unless the information has become generally known.

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What should be done if one believes that another lawyer has violated the Rules of Professional Conduct or if a Judge has violated the Rules of Judicial Conduct?
A lawyer must consider whether the conduct of the other lawyer raises a substantial question as to the other lawyer’s honesty, trustworthiness, or fitness as a lawyer in other respects, or as to the Judge’s fitness for office. If so, then Rule 8.3 requires informing the appropriate authority.

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How long must a lawyer retain closed files and documents contained therein?
The question of file retention mixes legal, ethical, and business management implications, requiring consideration of (1) the problems and costs of retention and safeguarding; (2) the business purposes for retaining files, such as retaining proof of the quantity and quality of work performed; and (3) any statutory or contractual obligations to retain files.

Rule of Professional Conduct 1.15(a)-(c) frames this issue as requiring the safeguarding of the property of clients or others. For questions of handling of money of others, please see Rule 1.15(d) et seq. and the Regulations of the Interest on Lawyers Trust Accounts Board.

A lawyer has a fiduciary relationship with a client and must hold property of others with the care required of a professional fiduciary. Rule 1.15 requires that a lawyer hold funds and property of others separate from the funds and property of the attorney, and promptly deliver any funds or other property to one who is entitled to receive it. The lawyer must also render a full accounting regarding such property upon request. Rule 1.15 also provides that "[c]omplete records of such account funds and other property shall be preserved for a period of five years after termination of representation."

Thus, it is incumbent upon the lawyer to safeguard any property of a client held by the lawyer and deliver it as directed by the client. There is no limitation on the time that property must be safeguarded. The five year period identified in Rule 1.15 is applicable to retention of the records, not retention of the property itself.

The PBA's Committee on Legal Ethics and Professional Responsibility has suggested that a written retention policy be developed and perhaps be set out in the initial engagement letter. When the time comes to dispose of the file, written inquiry should be sent to the client requesting advice on the disposition of their files. Unless the client consents or cannot be located, a lawyer should not destroy or discard any of the contents of a file which can reasonably be considered to be the property of the client.

Client property includes any client documents and other property given to the lawyer for purpose of representation, and property for which the client has paid during the course of representation. This may include items such as depositions, equipment, books, visual aids, exhibits, and the like. All client property should be returned to the client upon client demand or at the end of the representation.

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May a lawyer make a direct mail solicitation to unknown, potential clients?
Under Rule 7.3, a lawyer is permitted to send written communication by targeted, direct mail to unknown, potential clients. Rule 7.3 (b) prohibits the written communication only (1)if the lawyer knows or reasonably should know that the physical emotion or mental state of the person is such that he or she could not exercise reasonable judgment; (2) if the person has expressed his or her wish not to receive such written communication; or (3) if the written communication involves coercion, duress, or harassment.

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