On October 6, 2023, the Ohio Board of Professional Conduct issued three new opinions. These nonbinding advisory opinions provide Ohio lawyers with answers to hypothetical or prospective questions from the bench and bar:
OPINION 2023-09 Opposing Counsel’s Preparation of Application to Settle a Minor’s Claim withdraws a previous opinion issued in 1996, Adv. Op. 1996-02. The Opinion states that the tortfeasor’s lawyer or a lawyer retained by the tortfeasor’s insurer may prepare the application to settle a minor’s claim and appear before the probate court for final approval of the settlement when the minor plaintiff and the minor’s parents/guardians are unrepresented by counsel.
The Opinion discusses that Prof.Cond.R. 4.3 Dealing with Unrepresented Person prohibits a lawyer, in dealing on behalf of a client, from giving legal advice to an unrepresented person whether or not the interests of the person are adverse to the lawyer’s client. The Opinion further says that in the Board’s view, when the parties seek probate court approval of an application for a minor settlement, the preparation of the requisite court forms by the tortfeasor’s counsel does not constitute the giving of legal advice to an unrepresented party.
The Opinion concludes that in order to remove any conflict of interest, pursuant to Prof.Cond.R 1.7, the lawyer should:
- inform the minor and the minor’s parents/guardians in writing that the lawyer is retained by the tortfeasor or the tortfeasor’s insurer and does not represent the minor;
- explain that the lawyer prepared the forms, but that the minor/guardian may secure their own independent counsel to review the filings; and
- make the same disclosures to the probate court during the hearing.
OPINION 2023-10 Lawyer’s Obligation When Letter of Protection Issued to Medical Services Provider also withdraws a previous opinion, Adv. Op. 1995-12. This Opinion addresses whether a lawyer may follow a client’s instructions to pay all proceeds from a settlement or judgment to the client when the client agreed to pay a medical services provider out of the proceeds through a letter of protection.
With a client’s consent, the lawyer may draft the letter of protection to a medical service provider in anticipation of payment from funds to be received by the lawyer for the client through the resolution or adjudication of the client’s personal injury claim. The Opinion instructs that the lawyer should advise the client of the consequences of a letter of protection, as the client, through the lawyer, has entered into a legal agreement with the provider.
The Opinion states that a letter of protection guaranteeing to withhold payment from a client’s settlement or award proceeds is permissible and distinct from a guarantee by the lawyer that all medical expenses as to that provider will be paid out of any settlement or judgment proceeds (emphasis added). Further, the lawyer should indicate in the letter to the provider that the lawyer is not promising to pay the provider from his or her own personal funds and that the lawyer will hold any disputed funds in a lawyer’s trust account in the event of a dispute about payment to the provider.
When the client entered into a written agreement to pay the provider from the proceeds through a letter of protection, a lawyer may decline to follow a client’s instruction not to pay medical care providers from proceeds obtained by settlement or award. A lawyer must hold disputed funds involving two or more persons with a lawful interest in the funds in a lawyer’s trust account until the dispute is resolved, pursuant to Prof.Cond.R.1.15(d).
OPINION 2023-11 Nonlawyer Employee Bonus Plan answers whether a lawyer may pay a bonus to nonlawyer staff members of a law firm solely based on being mentioned by name in a positive online review. The lawyer asking the question would like to compensate staff for providing exceptional service to the law firm’s clients and proposes incentivizing the provision of exceptional service by paying a bonus to any staff member who is named in a positive online review.
The Opinion discusses bonuses for nonlawyer employees. Prof.Cond.R. 5.4 Professional Independence of a Lawyer does not specifically prohibit a lawyer from providing bonuses to nonlegal employees as it allows law firms to include nonlawyer employees in compensation or retirement plans. However, law firms should avoid structuring bonuses for nonlawyer employees in any of the following ways:
(1) reliant on the outcome of a case,
(2) based on the number of clients worked with,
(3) as a “commission” or “referral” payment for bringing clients to the firm,
(4) solely based on number of hours billed by the nonlegal staff member, or
(5) based on the percentage of fees earned on any particular case.
The Board lists these factors law firms may consider in determining whether to pay a bonus to nonlegal staff members:
(3) profit, or
(4) the exceptional efforts of a nonlegal staff member.
The Opinion states that if a lawyer is fulfilling the obligation of Prof. Cond.R.5.3 to properly supervise nonlawyer staff, the lawyer should be aware of when a staff member is providing exceptional service. The Board concludes that a bonus structure reliant on a staff member obtaining a positive online review impermissibly ties the bonus to a particular client or matter.
Finally, the Opinion examines Prof.Cond.R. 7.2(b) stating that while a strict interpretation of that rule may not result in a conclusion that the lawyer has given something of value to a person for recommending the lawyer’s services, the lawyer should refrain from using a bonus structure that might call into question whether the lawyer or his or her staff has exercised undue influence, intimidation, or overreaching to further his or her own financial or business interests. The Board notes that it recommends that this Opinion be applied prospectively.
As always, if there are questions about these Opinions or any other loss prevention topic, please do not hesitate to contact us.
|Gretchen K. Mote, Esq.
Director of Loss Prevention
Ohio Bar Liability Insurance Co.
|Merisa K. Bowers, Esq.
Loss Prevention Counsel
Ohio Bar Liability Insurance Co.
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