June 2, 1997
A lawyer cannot enter into an agreement to have fees paid by a third party, if the circumstances lead the lawyer to believe that there would be any interference with the lawyer's independence of professional judgment or with the client-lawyer relationship, nor can the agreement be made if any of its terms lead the lawyer to believe that the representation would be adversely affected, regardless of the consent of the client. If the lawyer is satisfied that there would be no interference with the lawyer's professional judgment, and if the agreement would not adversely affect the lawyer's representation, the agreement can be entered into only if the client consents after full disclosure.
References: MRPC 1.9(b), 1.8(f), 2.1, 5.4(c); CI-976.
A lawyer represented a university professor on appeal of an affirmative action proceeding wherein a university affirmative action officer determined that the professor had sexually harassed a student. The lawyer prepared a report in representation of the professor which resulted in the reversal of the decision by the university's dean. Apparently the reversal was based on a lack of credibility of the complainant, and errors in the affirmative action officer's investigation.
The student filed an assault and battery charge against the professor arising out of the circumstances. The university and its insurer are willing to enter into an agreement to provide the legal defense, and pay the legal fees for the lawyer that represented the professor in the affirmative action proceeding. The payment will be made with certain conditions, including a "reservation of rights," in that the university is to be repaid if the defense to the civil cause of action is unsuccessful.
The university seeks various agreements as a contingency to the attorney's representation of the client. These restrictions include a prohibition on the lawyer's future representation or participation "directly or indirectly" in any action adverse to the interests of the university arising out of the circumstances. This includes any potential party, including the professor or the professor's family. The university also demands disclosure of information relative to ongoing legal theories and defenses. While the agreement does not cede any control of the defense to the university or it's insurer, it does require "consultation" before there is any "major turn in the direction of the defense" of the case.
MRPC 1.7(b) states:
"(b) a lawyer shall not represent a client if the representation of that client may be materially limited by the lawyer's responsibilities to another client or to a third person, or by the lawyer's own interests unless:
"(1) the lawyer reasonably believes the representation will not be adversely affected; and
"(2) the client consents after consultation. When representation of multiple clients in a single matter is undertaken, the consultation shall include explanation of the implications of the common representation and the advantages and risks involved." Emphasis added.
The attorney-client relationship is not simply one to appear and prosecute a legal proceeding. "In representing a client, a lawyer shall exercise independent professional judgement and shall render candid advise. In rendering advise, a lawyer may fully refer not only to the law but to other considerations such as moral, economic, social, and political factors that may be relevant to the client's situation." MRPC 2.1.
MRPC 5.4(c) states:
"(c) A lawyer shall not permit a person who recommends, employs, or who pays the lawyer to render legal services for another to direct or regulate the lawyer's professional judgement in rendering such legal services."
Finally, the transaction involved must comply with MRPC 1.8(f) which states:
"(f) A lawyer shall not accept compensation for representing a client from one other than the client unless:
"(1) the client consents after consultation;
"(2) there is no interference with the lawyer's independence of professional judgment or with the client-lawyer relationship; and,
"(3) information relating to representation of a client is protected as required by Rule 1.6." Emphasis added.
The lawyer representing the party must exercise judgment in determining whether the agreement is appropriate. Consent is not sufficient to allow the agreement if any of the following will result:
- The agreement will in any way adversely affect the representation of the client;
- The agreement is thought by the lawyer to represent an attempt to regulate the lawyers professional judgment and advice;
- If the lawyer determines that there will be any interference in the independence of professional judgment, or otherwise interfere with the client-lawyer relationship; or
- If the agreement fails to protect privileged information relating to representation of the client.
There is nothing in the terms of the retention that would ethically prohibit the arrangement. There does not appear to be any provision which would necessarily require any of the above factors to come into play, and result in an inability to enter into the contract. It is possible that the lawyer is aware of circumstances of facts that would cause one or more of the above factors to be present. The lawyer must consider whether there are factors which make the violation of the above terms likely. Absent more, the agreement could be entered into, provided there is full and knowing consent by the client. However, consent would not allow the agreement if any of the factors specified above were present.
It should be noted that the standard is not entirely subjective on the part of the lawyer. The Comments to MRPC 1.7 states in part:
". . . when a disinterested lawyer would conclude that the client should not agree to the representation under the circumstances, the lawyer involved cannot properly ask for such agreement or provide representation on the basis of the client's consent."
It would be prudent to recommend that the client seek independent advice on the arrangement from a disinterested lawyer. This would allow a better development of all facts and likely future scenarios. It would also eliminate any possibility that the lawyer's interest in being retained would affect the lawyer's judgment and advice relative to entering into the agreement.