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Ethics Opinion

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CI-637

September 3, 1981

    SYLLABUS

    A non-profit corporation may ethically terminate its operations if it loses all sources of funding to maintain its operations. Neither staff lawyers nor lawyers serving on the Board of Directors are required to personally continue to represent the former clients of the corporation after it is dissolved.

    The Board of legal services corporation is responsible for establishing policies as to how the transition will be made from normal operations to the closing of the corporation.

    Staff attorneys are required to promptly notify each existing client of the impact upon him or her if funding is not continued.

    Staff attorneys are required to promptly advise every potential client who applies for services of the impact upon him or her if funding is terminated.

    Staff attorneys are individually responsible for compliance with DR 2-110, including the duty to take reasonable steps to avoid foreseeable prejudice to the client, to give proper notice to the client, to assist the client in obtaining other counsel by providing time to do so and delivering to the client all papers and property necessary for the transition. A staff lawyer is required to obtain permission for withdrawal from a tribunal that requires such permission.

    References: EC 2-31 and 2-32; ABA Formal Opinion 324, ABA i1208.

TEXT

You state that you are the Director of a non-profit corporation providing legal services to indigent persons. The facts upon which this opinion is based are as follows: The board of Directors consists of 18 members, 12 whom are attorneys. Some are in private practice; some in public practice and some are judges. All are unpaid volunteers. The Corporation has 19 full-time attorneys who are all precluded from private practice. The Corporation has approximately 1,500 open cases and serves approximately 800 new clients per month. Many of the cases are in litigation and a large number are domestic cases. There are no similar programs available to your client should you terminate your services.

You further indicate the President of the United States has requested that the Corporation not be funded in the Federal budget for the coming year. Your major source of funding is from the Corporation and that without this income source you will be unlikely to continue your Corporation. While there is a possibility of other funding sources, this opinion will be directed to the question of what are your ethical obligations if you do not receive alternate financing. Obviously, if you do receive alternate financing, and can continue to provide services to your clients at your current level, there is no ethical dilemma. Your inquiry requests an opinion on two separate questions:

  1. You request an opinion on the liability and/or ethical obligations of staff attorneys.
  2. You request an opinion on the liability and/or ethical obligations with regard to attorney board members.

At the outset it must be made clear that the Committee's responsibilities do include providing ethical guidelines to practicing attorneys, the Committee does not have authority to issue opinions with regard to legal liability. These questions are questions of law that must be decided by the courts. The Committee will, however, endeavor to answer the ethical questions that are within its jurisdiction.

The issues you raise are apparently ones of first impression, not only in Michigan but nationally. This Committee was unable to locate any precedent dealing directly with the issue of a Legal Aid Clinic that loses its funding. An individual lawyer-staff member is employed full-time by the Corporation and not permitted outside practice. One may presume that his/her caseload would require full-time attention. Could any ethical obligation be imposed upon the lawyer that would require the lawyer to take his or her caseload, with fee, and continue to represent clients until their cases were resolved? Not only would such an arrangement be devastating to the individual lawyer, but also if that were the ethical obligation of a staff lawyer under the circumstances, many bright and talented lawyers who might otherwise become legal aid attorneys would choose careers elsewhere for fear of this result.

A similar situation exists with regard to the Board members. As you noted, the Board members serve without compensation of any kind. The Committee views this to be a noble undertaking, consistent with attempting to make legal services available to the public. If however, the individual lawyer-board members were required to personally accept the responsibility for the Corporation's clients when the Corporation closes, this burden would be unfair indeed. If the Code of Professional Responsibility required Board members to accept this burden, future legal aid corporations would have a difficult time finding attorney willing to serve on the Board. This result would have a devastating effect on the future availability of legal services to indigents.

If however, the Code of Professional Responsibility did not require either attorney-board members or attorney-staff members to continue representing their clients once the Corporation closes, the hardship on clients is obvious. In the first place, their chances of obtaining counsel elsewhere are substantially reduced by their financial conditions. In the second place, many of your cases are currently in litigation and many are domestic cases. It is difficult to imagine all of the hardship that will be imposed upon your clients if there is no obligation on the part of either the lawyers on the Board or on the staff to assist them in some way after the Corporation Board members to current clients who may come to the Corporation seeking assistance during this period of transition.

The first question that must be answered is whether or not the Corporation (Board members, staff, etc.), can cease some precedent for withdrawal under proper circumstances. In the Committee comment to the Code of Professional Responsibility for the American Bar Association (while this Code is not binding upon Michigan lawyers, it is instructive) under DR 2-110, it is noted that a law firm is not at liberty to abandon a case without justifiable or reasonable cause in the absence of the consent of the justifiable or reasonable cause. Deciding, however, that the Corporation may close begs the question of the duties of he individual lawyers on the staff and on the Board.

Does the client hire the individual employee attorney assigned to him or her (such that that attorney would have individual obligation to the client after the Corporation closes) or does the client hire the staff collectively? The question is explicitly answered in i1428 of the American Bar Association Committee on Ethics and Professional Responsibility. Therein the Committee held that:

    "It is the opinion of this Committee that absent a special agreement, the client employs the legal services office as a firm and not a particular lawyer."

Consequently, the individual staff lawyer does not have an obligation to continue to represent the client after the Corporation closes and the staff position terminates.

Do the individual lawyers on the Board have any ethical responsibility to the existing clients of the Corporation? A large portion of this answer can be found in ABA i1208. That opinion states:

    "The lawyer-client relationship exists between the clients and the . . . clinic lawyers, not between the client and the governing body."

Obviously, if there is no lawyer-client relationship between the Board members and the clients of the Corporation, there is no ethical duty for the individual-lawyer-board members to represent the clients of the Corporation in the future. However, both the staff attorney and attorney-board members have ethical obligations to existing clients and to future clients who consult the Corporation between now and the time it potentially closes.

The Board functions are those traditionally allocated to such Boards. In formal 324 of the ABA, the Committee noted that the Board's function is that of formulating broad goals and policies pertaining to the operation of the Corporation. The Board may establish guidelines respecting the categories of kinds of clients staff attorneys may represent and the types of cases they handle. Both this formal opinion and formal opinion 334 emphasize that the Board's duty is to make these broad policy guidelines and not to become individually involved on a case-by-case basis. This broad policy-making duty, however, applies not only to good times but bad timed as well. In light of the circumstances described, it is the Board's obligation to set the policies as to what cases can continue to be received for handling under the circumstances. In EC 2-31 it states:

    "Full availability of legal counsel requires both that persons be able to obtain counsel and that lawyers who undertake representation complete the work involved."

The Board should take this into account in determining whether or not, and under what circumstances, future cases will be accepted. Some minimum guidelines are obvious. The Board, for example, should adopt a policy of requiring staff attorneys to explain the financing dilemma to persons consulting the Corporation with regard to future services. Guidelines should require staff attorneys to explain what decisions the Corporation Board has made with regard to the handling of cases under the circumstances, and guidelines should require staff attorneys to explain the impact upon a client's individual case of those guidelines. The Board may wish to adopt a guideline that would require staff attorneys to discuss with potential clients other sources of legal services for which the client might be eligible.

The ethical requirements for individual staff attorneys in dealing with their individual clients are broader. DR 2-110 of Canon 2 of the Michigan Code of Professional Responsibility requires as follows:

    "(A) In general.

      "(1) If permission for withdrawal from employment is required by the rules of a tribunal, a lawyer shall not withdraw from employment in a proceeding before that tribunal without its permission.

      "(2) In any event, a lawyer shall not withdraw from employment until the lawyer has taken reasonable steps to avoid foreseeable prejudice to the rights of his or her client, including giving due notice to the client, allowing time for employment of other counsel, delivering to the client all papers and property that the client is entitled, and complying with applicable laws and rules."

The aspirational guidelines established in EC 2-32 should also be followed. It provides:

    "A decision by a lawyer to withdraw should be made only on the basis of compelling circumstances, and in a matter pending before a tribunal the lawyer must comply with the rules of the tribunal regarding withdrawal. A lawyer should not withdraw without considering carefully and endeavoring to minimize the possible adverse effect on the rights of the client and the possibility of prejudice to the client as a result of the lawyer's withdrawal. Even when the lawyer justifiably withdraws, a lawyer should protect the welfare of the client by giving due notice of withdrawal, suggesting employment of other counsel, delivering to the client all papers and property to which the client is entitled, cooperating with counsel subsequently employed, and otherwise endeavoring to minimize the possibility of harm. Further, the lawyer should refund to the client any compensation not earned during the employment."

The individual staff lawyer must explain to potential new clients a sufficient amount of information to both inform that potential new client of the Board's policies and of the financial condition of the Corporation in order for the client to make an informed decision about whether to use the services of the Corporation or not.

The Committee believes that there is no duty on the part of either staff attorney or a board member attorney to personally represent clients after the Corporation loses its funding and is disbanded. The only specific obligations to the clients are those of making the transition to other counsel as smooth as possible, and in taking appropriate steps to protect potential future clients from using the services without a clear understanding of what the ramifications will be if the Legal Aid Clinic is closed. F this committee were to conclude that the staff attorneys or attorney board members are ethically obligated to gratuitously finish each and every case in process at the termination of the Legal Aid Program, we believe the existing program would be severely jeopardized by the exodus of a significant number of currently paid lawyers leaving the clinic rather than to run the risk of assuming the financial burden of personally completing all cases in process if funding is terminated.

 
     

 

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