Potential Implications For New Jersey's Rules Of Professional Conduct

In 1997, the American Bar Association (ABA) commissioned a panel of 13 experts in the field of legal ethics to conduct a review of the Model Rules of Professional conduct, originally adopted by the ABA in 1983. Following three years of intense work by the commission and its 250-member advisory panel, in November 2000, the Ethics 2000 Commission presented to the ABA House of Delegates its Report on the Evaluation of the Model Rules of Professional Conduct.

While preserving the essential substance and structure of the model rules, the commission has recommended several significant reforms. The revised rules embrace the use of screening to prevent attribution of personal conflicts to other lawyers in a conflicted lawyer's firm. The conflict of interest rules have been re-written to simplify and clarify application. The revised rules also provide safe harbor for certain conduct of in-house counsel and out-of-state lawyers.

The ABA's model rules are not binding in any jurisdiction unless adopted by the appropriate state body responsible for regulating the conduct of lawyers. In New Jersey, that power is vested in the New Jersey Supreme Court.

Following the ABA's adoption of the original model rules, the Supreme Court commissioned its own study by a body known as the Debevoise Committee. The Court then used the rules, and the Debevoise Committee's report as the template for the New Jersey Rules of Professional Conduct (RPC), adopted in 1985.

While this marked the first adoption of the ABA Model Rules by any state, the RPCs as adopted differed from the original model rules in many respects. Some of these differences were suggested by the Debevoise Committee; others were included by the Court on its own initiative.

Given the passage of time and the significance of the ABA's review, the Court can be expected to follow a similar process with respect to the Ethics 2000 revisions. Indeed, in In re Admin. Hearing on R.P.C. 1.7 (c)(2), E-82-98 (2/15/00) , the Court stated its intent to'soon undertake a complete review of its ethics-disciplinary rules in light of anticipated revisions to be recommended by the ABAís Commission on Evaluations of the Rules of Professional Conduct, known as the Ethics 2000 Commission.

The most dramatic difference between the RPC and the Model Rules (both in their original form and as revised) is New Jersey's perpetuation of the appearance of impropriety standard. Elimination of this unpredictable standard was one of the centerpieces of the original model rules, and it was retained by the Court in R.P.C. 1.7(c)(2) (and elsewhere) against the recommendation of the Debevoise Committee. Recently, while declining to take action pending its anticipated review, the Court recognized concerns that the standard was vague and subject to tactical abuse. It expressly acknowledged that review of the Ethics 2000 revisions will necessarily require that the Court consider the application of the appearance of impropriety in both the public and private sector and the effect of any change in the Rules and the substantive law derived therefrom.¹

There is nothing in Ethics 2000 remotely supporting perpetuation of the appearance of impropriety standard. Action on this issue is likely to be a major topic of discussion by whatever committee is commissioned to conduct New Jersey's review of the proposed Ethics 2000 revisions.

That committee will have other issues to address as well. The revised rules reflect a substantial departure from current New Jersey law on the issue of screening.The RPCs currently permit screening only with respect to former government lawyers. This remains the general rule in New Jersey, although over the years case law and ethics opinions have utilized screening in limited contexts. The revised rules, however, embrace screening to avoid imputation of personal conflicts, such as those caused by attorneys moving between firms that are on opposite sides of a litigation. In many contexts, screening not only cures what would otherwise be a conflict, but even obviates the need for client consent. Given the realities of modern practice and the acceptance of screening elsewhere, this is another area that will likely be the focus of consideration in revision of the RPCs.

A more overarching issue implicated by the revised rules is the value to be placed on national uniformity. Due to the growing frequency of lawyers' practices crossing state lines, the revised rules seek not only to facilitate such conduct, but also to minimize differences in state ethics rules. As set forth above, when New Jersey adopted the RPCs, it deviated from the original model rules in several significant respects.

While the Ethics 2000 revisions reduce some of these differences (indeed, the New Jersey RPCs foreshadowed some of the revisions), in other circumstances the proposed changes increase the differences between the model rules and the RPCs. Going forward, it will be necessary for the committee conducting the New Jersey review to determine if the benefit gained by a state-specific rule is sufficient to offset the resulting loss of uniformity and predictability.

The complete Ethics 2000 Report is available on line at www.abanet.org. The following is a brief summary of some of the more significant issues raised in the report and how they might relate to revision of New Jersey's RPCs.

Rule 1.0 Terminology. This is a new rule. It introduces some definitions and collects others previously set forth elsewhere. Among the significant additions are:

Informed Consent. This denotes 'the agreement to a proposed course of conduct after the lawyer has communicated adequate information and explanation about the material risks of and reasonably available alternatives to the proposed course of action.' The term 'informed consent' replaces 'consent after consultation.'

Confirmed in writing.  This refers to informed consent that is given in writing by the person or a writing that a lawyer promptly transmits to the person confirming an oral informed consent. In most instances consent can be memorialized by a confirming letter. There are very few places where a writing signed by the client is required.

Screened.  This denotes the isolation of a lawyer from participation in a matter under procedures that are reasonably adequate to protect information the isolated lawyer is obligated to protect.

Rule 1.2 Scope of Representation and Allocation of Authority. The modest revisions to this rule recognize that a lawyer may limit the scope of a representation as long as those limits are reasonable and the client has given informed consent. A new comment seeks to soften the distinction between control of the objectives of the representation and control over the means to carry this out. The revised rules view both issues as matters to be resolved through agreement with the client.

Rule 1.4 Communication. This rule has been substantially re-written. The general admonition to keep clients informed has been replaced by several specific requirements. Clients must be promptly informed of circumstances (such as conflicts or settlement) requiring informed consent, reasonably consulted regarding the means used to accomplish the representation, and kept reasonably informed of the status of a matter. They also must receive prompt responses to reasonable requests for information. New Jersey's current, less detailed version of Rule 1.4 is the source of New Jersey's obligation that lawyers disclose potential malpractice to a client. There is nothing in the revised rule that would justify a retreat from this position.

Rule 1.5 Fees. This rule contains two of the rare express provisions requiring a written consent signed by the client. The first instance involves contingent fee agreements. The second involves division of fees between lawyers in different firms.

Rule 1.6 Confidentiality of Information. Compared to the original model rules, the revised rule broadens the circumstances in which disclosure of client confidences is permitted. The threshold of'imminent death or substantial bodily harm' has been broadened to include circumstances (such as release of toxic substances) where harm is 'reasonably certain' but will not be immediate. The revised rule also permits disclosure to prevent or rectify substantial financial harm caused by a crime or fraud in furtherance of which the lawyer's services have been used. It also permits disclosure to permit a lawyer to obtain legal advice on his or her ethical obligations. The revised rule falls short of current New Jersey R.P.C. 1.6, which requires disclosure of confidences where necessary to prevent criminal or fraudulent conduct by a client that would result in death or substantial personal or financial injury, or would be likely to result in a fraud on a tribunal.

Rule 1.7 Conflict of Interest: Current Clients. This rule has been rewritten to focus only on conflicts involving current clients. Rule 1.9 has been enhanced to address former clients. A new, specific rule, Rule 1.18, has been added to define duties to prospective clients. Revised Rule 1.7 has two subparts: one defining when a conflict arises and a second that specifies when and how a conflict can be waived:

1. Except as provided in paragraph (b), a lawyer shall not represent a client if the representation involves a concurrent conflict of interest. A concurrent conflict of interest exists if: (1) the representation of one client will be directly adverse to another client; or (2) there is a significant risk that representation of one or more clients will be materially limited by the lawyer's responsibilities to another client, a former client, or by a personal interest of the lawyer.

2. Notwithstanding the existence of a concurrent conflict of interest under paragraph (a), a lawyer may represent a client if each affected client gives informed consent, confirmed in writing, and (1) the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client; (2) the representation is not prohibited by law; and (3) the representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation or other proceeding before a tribunal.

Revised Rule 1.7(b)(2) recognizes, without defining, non-consentable conflicts in which representation is prohibited regardless of consent. The examples given are limited, and primarily involve statutory restrictions on multiple representation of criminal defendants.

In contrast, New Jersey's current R.P.C. 1.7 preserves the appearance of impropriety standard, expressly prohibits public entity consent, and contains a precursor of the non-consentable conflict rule based on apparent conflicts. It would appear changes to R.P.C. 1.7 are inevitable. Over the years, however, New Jersey case law and ethics opinions have also recognized numerous non-consentable conflicts, many expressly or implicitly predicated on appearance of impropriety grounds. It will be necessary to decide which, if any, of these prohibitions should be deemed preserved by the revised Rule 1.7(b)(2) prohibited by law provision. This process may also serve as an impetus for reconsideration of New Jersey's per se ban on consent by government entities, which may have outlived its usefulness.

Furthermore, New Jersey ethics Opinion 679 imposes disclosure and consent obligations, and raises the spectre of a non-consentable 'appearance of impropriety' disqualification, in circumstances in which a firm undertakes representation of opposing counsel in another matter. This issue is not addressed in the Ethics 2000 Report. Comments to revised Rule 1.7, however, make clear that personal interests of similar magnitude do not normally give rise to a conflict. A further central concept of Ethics 2000 is the recognition that most such'personal conflicts that do arise should not be attributed to other lawyers in a firm if the conflicted lawyer is screened. Opinion 679 and revised Rule 1.7 belong to different, and incompatible, conflict schemes.

The Ethics 2000 revision includes a new comment addressed to prospective waivers. The comment generally supports the validity of such waivers if they are the products of informed consent. Another comment takes the position that representations adverse to a clientís corporate affiliate are permissible as long as the subsidiary is not also deemed a client and there is not an understanding in place that the lawyer will not undertake representations adverse to corporate affiliates.

Rule 1.8 Conflict of Interest: Current Clients: Specific Rules. This section, more accurately captioned Prohibited Transactions in the current New Jersey RPCs, addresses business dealings with clients. New Jersey's current rule is more detailed than either the original or revised model rule. One new, and controversial, addition is the revised rule's prohibition of engaging in sexual relations with a client unless the sexual relationship pre-dates the attorney-client relationship. How the producers of the television show Ally McBeal will deal with this remains to be seen.

Rule 1.9 Duties to Former Clients. This rule has been expanded to clarify it embraces not only conflicts but all duties (i.e., confidentiality and loyalty) applicable to former clients. There has been little substantive change, however.

Rule 1.10 Imputation of Conflicts. This section has been rewritten to embrace screening. It avoids imputation of personal conflicts to a firm if 'the prohibition is based on a personal interest of the prohibited lawyer and does not present a significant risk of materially limiting the representation of the client by the remaining lawyers in the firm, and the prohibited lawyer is screened. Rule 1.10(c) specifically addresses disqualifications arising from a lawyer's prior employment. In such circumstances, the lawyer's new firm is not disqualified, and is not even required to obtain client consent if the following criteria are satisfied:

1. The matter does not involve a proceeding before a tribunal in which the personally disqualified lawyer had a substantial role;

2. the lawyer is screened and is apportioned no part of the fee thereof, although the lawyer may receive a salary or partnership share established by prior independent agreement; and

3. written notice is promptly given to enable the client to ascertain compliance.

Even if these criteria are not satisfied, the resulting conflict can be waived through informed consent. As set forth above, New Jersey's current version of R.P.C. 1.10, while in some ways more elaborate than either the original model rule or the revised rule, does not contain any provisions addressing screening.

Rule 1.11 Special Conflicts of Interest for Former and Current Government Officers. The revised rule permits a lawyer who has moved from private to public practice to participate in a matter in which he or she was involved as a private attorney if there is no other public attorney qualified to act, or if the affected government agency consents. Such a lawyer, however, is still subject to confidentiality and conflict of interest obligations to the former private client. There are substantial differences between New Jersey's current R.P.C. 1.11 and the revised rule. Consistent with the prohibition of public entity consent, New Jersey's RPC prohibits lawyers' participation in matters in which they had a substantial involvement while in public service. This is permitted by consent of the government agency in the revised rules.

Rule 1.12 Former Judge, Arbitrator, Mediator or Other Third-Party Neutral. The New Jersey RPC requires formal consent for a firm to be involved in a matter in which a lawyer in the firm served as a third-party neutral, such as an arbitrator or mediator. The revised rule merely requires screening and notice to the client.

Rule 1.13 Organization as Client. The revised rule clarifies that a lawyer for an organization has an obligation to explain the identity of the lawyer's client to persons associated with the organization when the lawyer knows or has reason to know that the organization's interests may be adverse to those of the associated person. The original model rule merely required disclosure if such a conflict was apparent. New Jersey's RPC is broader in requiring disclosure whenever the lawyer believes such an explanation is necessary to avoid a misunderstanding.  New Jersey's RPC is also broader than the revised rule in permitting a lawyer to take remedial action, involving disclosure of confidential information, in circumstances in which the highest authority of an organization is intent on taking action harmful to the organization. The revised rule merely permits the lawyer to resign.

New Jersey's R.P.C. 1.13 also includes a definition of litigation control group for the purposes of defining who is or is not represented for the purpose of ex parte contacts pursuant to R.P.C. 4.2 and R.P.C. 4.3. The model rules (original and revised) contain no text addressing this issue, although revised Rule 4.2 contains a comment defining control group. A comment to revised Rule 4.2 also explicitly states that consent of the organization's lawyer is not necessary for communication with any former constituent member of the organization. New Jersey's RPC deems former control group members to be represented by the organization's lawyers, but permits a former member to disavow that representation at any time.

Rule 1.14 Client with Diminished Capacity. The revised rule permits a lawyer to take steps to protect a client the lawyer believes may be of diminished capacity, and to reveal confidential information to the extent necessary to take such protective action. New Jersey's R.P.C. 1.14 had gone beyond the original model rule by permitting attorneys to take protective action. The revised rule goes beyond the current RPC by expressly authorizing release of confidential information.

Rule 1.18 Duties to Prospective Client. This is a new rule. Prospective client is defined as a person who discusses with a lawyer the possibility of forming a client-lawyer relationship with respect to a matter. Even if no attorney-client relationship results, a lawyer still has duty not to use or reveal information learned in the consultation, except to the extent Rule 1.9 would permit disclosure of information from a former client. If the lawyer has received information that could be harmful to the prospective client, both the lawyer and the lawyer's firm are conflicted from any representation materially adverse to the prospective client. The lawyer's conflict can be resolved only by informed consent confirmed in writing. The conflict of the lawyer's firm can be cured either by consent or by screening the lawyer on notice to the prospective client.

Rule 2.2 Intermediary. The revised rules delete this rule, as circumstances in which the lawyer has an attorney-client relationship with both parties to a dispute are now viewed as a common representation covered by revised Rule 1.7. New Jersey's RPC still contain this rule.

Rule 2.4 Lawyer Serving as Third-Party Neutral. The primary thrust of this new rule requires a lawyer serving in a neutral capacity to make sure the parties understand the limited nature of this role. New Jersey's RPCs contain no comparable rule.

Rule 3.1 Meritorious Claims and Contentions. The revised rule differs slightly from the original model rule and New Jersey's RPC by requiring a lawyer have a good faith belief in law and fact that a claim is not frivolous.

Rule 3.3 Candor Toward the Tribunal . The revised rule permits broader disclosure of client confidences than the original model rules. Under the revised rules, lawyers are prohibited from making false statements of law or fact, and must correct previously made materially false statements. A lawyer (subject to restrictions in certain criminal contexts) is prohibited from offering evidence that he or she knows is false, and is required to take reasonable remedial measures, including disclosure to the tribunal if necessary, to correct misstatements by the lawyer, his or her client or a witness called by the lawyer. If a lawyer does not know that evidence is false but reasonably believes this to be the case, he or she is permitted, but not obligated, to refuse to present such evidence, the only exception being testimony of a criminal defendant.

The revised rule contains a new provision requiring a lawyer to take reasonable remedial measures, including disclosure, if he or she learns that a person has or intends to engage in criminal or fraudulent conduct related to the proceeding, such as jury tampering. In general, New Jersey's R.P.C. 3.3 is similar, but contains a provision that prohibits not only affirmative misstatements, but also requires disclose of a material fact if the lawyer has knowledge that the tribunal may tend to be misled by such failure.'

Rule 3.4 Fairness to Opposing Party and Counsel. The revised rule does not differ from the original model rule. New Jersey R.P.C. 3.4 differs by prohibiting threatening criminal charges to gain an improper advantage in a civil matter.

Rule 3.5 Impartiality and Decorum of the Tribunal. The revised rule adds a new provision expressly addressing the grounds under which counsel may communicate with a juror or prospective juror after the jury has been discharged. At present, such communications in New Jersey are prohibited, absent good cause shown, by Rule 1:16-1.

Rule 3.6 Trial Publicity. The original rule prohibited extra-judicial statements a reasonable person would expect to have a substantial likelihood of prejudice. Revised Rule 3.6 prohibits statements the lawyer  knows or reasonably should know will have this effect. New Jersey's R.P.C. 3.6 already contains the language contained in the revised rule. The New Jersey rule contains an illustrative list of extra-judicial statements likely to materially prejudice an adjudicatory proceeding. The revised rule contains no such list, but does contain safe harbor for reasonable statements required to protect a client from prejudicial publicity. New Jersey's RPC rule does not.

Rule 3.8 Special Responsibilities of a Prosecutor. The revised rule requires that a prosecutor exercise reasonable care to prevent other law enforcement officials from making improper extra-judicial statements. There is no such provision included in New Jersey's R.P.C. 3.8

Rule 4.2 Communication with Person Represented by Counsel. No substantive changes to the original model rule are proposed. New Jersey's RPC addresses the issue of ex parte contacts with employees and refers to R.P.C. 1.13's definition of litigation control group. The revised rules address this issue through comments.

Rule 4.3 Dealing with Unrepresented Person. The revised rule clarifies that a lawyer aware that an unrepresented person's interests may be adverse to those of the lawyer's client should give the unrepresented person no legal advice other than to secure independent legal advice. As is the case with Rule 1.13 and Rule 4.2, New Jersey's R.P.C. 4.3 contains an additional provision dealing with ex parte contacts.

Rule 4.4 Respect for Rights of Third Person. The revised rule provides that a recipient of misdirected communications should notify the sender, but takes no position on the effect upon the attorney-client privilege of the misdirection. New Jersey's R.P.C. 4.4 does not yet have such a provision.

Rule 5.1 Responsibilities of Partners, Supervisory Lawyers and Law Firms, and Rule 5.3 Responsibilities Regarding Non-Lawyer Assistants. The revised rules contain revisions imposing certain ethical obligations directly upon law firms and require every lawyer (not merely partners) to ensure that the conduct of the lawyer and non-lawyer employees they supervise are compatible with the rules. New Jersey's R.P.C. 5.3 already contains language extending supervisory responsibility to lawyers other than partners, but does not, as yet, impose specific obligations upon a firm as a separate entity. R.P.C. 5.3 contains an additional provision holding a lawyer responsible for a non-lawyer employee's conduct not only if the lawyer knows about the misconduct but also if a reasonable investigation of the non-lawyer employee should have put the lawyer on notice.

Rule 5.4 Professional Independence of a Lawyer. The revised rule makes no concessions for multidisciplinary practice, such as partnerships between law and accounting firms, and maintains the traditional prohibition on non-lawyers directing professional activities or sharing the fees of lawyers. The revised rule permits splitting court-awarded fees with a nonprofit organization. The otherwise similar New Jersey RPC does not.

Rule 5.5 Unauthorized Practice of Law. The original rule (which New Jersey's R.P.C. 5.5 mirrors) has been rewritten to facilitate multi-jurisdictional practice. The revised rule not only acknowledges pro hac vice admission, but permits a lawyer not yet so admitted to engage in preparatory conduct, including discovery, if the lawyer reasonably expects admission. Broader safe harbors are provided for transactional matters in which pro hac vice admission is not available. In such circumstances, in-house counsel are free to provide representation to their employer and, so long as the matter arises in connection with the client's matters, to provide such services to the client's corporate affiliates and employees.

The revised rule also includes a safe-harbor provision for transactional attorneys engaged in a particular matter that crosses state lines or that involve an association with an in-state attorney for a particular matter.

Rule 6.1 Voluntary Pro Bono Public Service. The revised rule supplements the model rule ís annual quota of 50 hours of pro bono work with an affirmative declaration that every lawyer has a professional responsibility to provide legal services to those unable to pay.  New Jersey's R.P.C. 6.1, which merely provides that [a] lawyer should render public interest legal services[,] does not include the quota or the affirmative obligation.

Rule 6.5 Non-Profit and Court-Annexed Limited Legal Service Programs. This new rule addresses court programs permitting lawyers to provide limited assistance to lay persons on issues such as completion of government forms. It creates a safe harbor for potential conflicts arising from such activities unless the lawyer is actually aware of the conflict. New Jersey currently has no such rule.

Rule 7.1 Communications Concerning a Lawyer's Service, and Rule 7.2 Advertising. The revised rules increase the existing divergence between New Jersey's RPCs and the model rules. The original model rules prohibited false and misleading statements, as well as statements that created an unjustified expectation of achievable results, or included comparisons with other lawyers not subject to factual substantiation. Revised Rules 7.1 and 7.2 further simplify the model rules by deleting the provisions prohibiting creation of unjustified expectations and requiring factual substantiation of comparisons. In contrast, New Jersey R.P.C. 7.1 supplements the original model rule provisions with specified permitted and prohibited advertising practices.

Rule 7.3 Direct Contact with Prospective Clients. This is another area in which the revised rule and the current New Jersey RPC part company. The revised rule prohibits direct solicitation of prospective clients. New Jersey's R.P.C. 7.3 permits this subject to detailed restrictions.

Rule 7.4 Communication of Fields of Practice and Specialization. The primary change effected by revised Rule 7.4 is that the original model rule (and New Jersey R.P.C. 7.4) permits advertisement of a certified speciality not recognized by the state Supreme Court or ABA if the lack of recognition is disclosed. Revised Rule 7.4 prohibits this practice entirely.

Rule 7.6 Political Contributions to Obtain Government Legal Engagements. The original and revised model rules ban'pay to play. New Jersey does not.

Rule 8.3 Reporting Professional Misconduct. The revised rule reflects minimal and non-substantive changes. New Jersey R.P.C. 8.3 differs in that the revised rule does not permit disclosure of misconduct learned through a lawyers' assistance program, but R.P.C. 8.3 requires this if the conduct is irremediable or poses a substantial and imminent threat to clients.

Rule 8.4 Misconduct. The changes to the model rule in the revised rule are minimal and non-substantive. New Jersey R.P.C. 8.4 goes beyond the revised rule by prohibiting professional conduct (other than employment) involving discrimination.

Rule 8.5 Disciplinary Authority: Choice of Law. In light of the expansion of practice by out-of-state attorneys permitted by Rule 5.5, the revised rule differs from the original rule and R.P.C. 8.5 in subjecting a lawyer providing legal services in a jurisdiction to discipline in that jurisdiction whether or not the lawyer is admitted. For matters before a tribunal, the rules of the forum control. For transactional matters, the rules of jurisdiction where the conduct will have its predominant effect control.