The American Bar Association Standing Committee on Ethics and Professional Responsibility has released two recent Formal Opinions.
Formal Opinion 504: Choice of Law addresses which rules of professional conduct control for attorneys licensed in multiple jurisdictions. The Opinion is issued under Model Rule 8.5 Disciplinary Authority; Choice of Law, which is substantively identical to Ohio Prof. Cond. R 8.5. This Opinion is an important read for firms with lawyers licensed in or authorized to practice in more than one jurisdiction.
Five scenarios are presented in the Opinion to discuss the application of Rule 8.5 to determine which disciplinary rules govern a lawyer’s conduct:
- Fee Agreements
- Law Firm Ownership
- Reporting Professional Misconduct
- Confidentiality Duties
- Screening for Laterals Lawyers
The scenarios demonstrate the complexity of analysis required in each situation.
The Opinion concludes that when a lawyer’s conduct is in connection with a matter pending before a tribunal, the lawyer must comply with the ethics rules of the jurisdiction in which the tribunal sits, unless otherwise provided. For all other conduct, including conduct in anticipation of litigation not yet filed and conduct not involving litigation, a lawyer must comply with the ethics rules of the jurisdiction where the lawyer’s conduct occurs or, if different, where the predominant effect of the lawyer’s conduct occurs. A lawyer will not be subject to discipline if the lawyer’s conduct conforms to the rules of a jurisdiction in which the lawyer reasonably believes the predominant effect of the lawyer’s conduct will occur.
We are happy to discuss these situations as they occur in your practice and provide our OBLIC policyholders ethics consults to address fact-specific issues.
Formal Opinion 505: Fees Paid in Advance for Contemplated Services, issued under the Model Rules of Professional Conduct, finds that Model Prof. Cond. Rule 1.15 requires that fees paid in advance must be held in a trust account and may be withdrawn only when the services for which the fees are paid are actually rendered. The Opinion also reminds attorneys that all fees must be reasonable and unearned fees must be returned to the client. According to this ABA Opinion, it is not accurate to label a fee as “nonrefundable” before it is actually earned and labeling a fee “earned on receipt” does not accurately determine whether a fee has actually been earned.
The Ohio Rules of Professional Conduct differ from the Model Rules. The Ohio Rules include Prof. Cond. R. 1.5(d)(3) and Comment [6A]. Ohio lawyers must read ABA Opinion 505 in conjunction with Ohio Board of Professional Conduct Opinion 2016-1 Flat Fee Agreements Paid in Advance of Representation, issued under Ohio Rules of Professional Conduct.
Opinion 2016-1 stated that flat fee agreements must comport with the Ohio Rules of Professional Conduct. Like ABA Opinion 505, Opinion 2016-1 states that under Prof.Cond.R. 1.15(c), a lawyer is required to deposit flat fees and expenses paid in advance for representation into an IOLTA account and may withdraw the fee only as it is earned or the expense as it is incurred.
However, Opinion 2016-1 states that an “earned upon receipt” fee is a flat fee paid in advance that is deemed earned upon payment regardless of the amount of future work performed, thus permitting the flat fee to be deposited into an operating account. If a lawyer designates a fee “earned upon receipt,” “nonrefundable,” or similarly, however, the attorney must advise the client in writing that the client may be entitled to a refund under Ohio Prof. Cond. R. 1.16(e) if the work anticipated for the flat fee is not completed. Under Ohio Prof. Cond. R. 1.5(a), the flat fee must not be excessive.
These Opinions convey the importance of clearly defining the fee the lawyer will charge the client, how and when it will be billed, and that if for any reason the representation is not completed, the client may be entitled to a refund of any unearned portion of the fee paid in advance. See also OBLICAlert New ABA Formal Opinion 505 on Fees Paid in Advance Contracts with 2016 Ohio Advisory Opinion.