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NYCLA PROFESSIONAL ETHICS COMMITTEE
FORMAL OPINION 747
June 9, 2014
TOPIC: Whether corporate counsel’s offer to represent corporate employee or former employee constitutes improper solicitation within the meaning of Rule of Professional Conduct (RPC) 7.3.
DIGEST: A lawyer representing a corporation in a lawsuit has arranged to interview unrepresented corporate employees and former employees, who are potential parties or witnesses, for purposes of learning relevant information. The corporation has requested the lawyer to offer to represent the individuals in connection with the lawsuit if the lawyer would not have a conflict of interest and the individuals would benefit from representation. If the lawyer reasonably concludes based on an interview that the multiple representation is permissible under the conflict of interest rules, the lawyer may personally offer to represent the employee or former employee without violating the rule against solicitation (RPC 7.3).
RULES OF PROFESSIONAL CONDUCT: 1.6, 1.7, 1.13, 7.3
Corporations and other entities frequently provide legal representation to current or former officers or employees who are potential testifying witnesses or parties in legal proceedings. In some situations, the corporation is contractually or statutorily obligated to provide legal representation, or has an internal policy so providing. In other situations, the decision to provide counsel to corporate constituents is made on an ad hoc basis in connection with the particular lawsuit. The corporation may compensate separate counsel for representing the corporate constituent or, where consistent with conflict of interest rules, for jointly representing multiple constituents. However, for financial and/or strategic reasons, the corporation may prefer that its own lawyer concurrently represent one or more corporate constituents, insofar as it is permissible under the conflict of interest rules. The corporation may therefore authorize its lawyer to offer representation to an otherwise unrepresented employee or former employee who may benefit from representation in a lawsuit. One question this raises is whether, consistently with the rule against solicitation, the lawyer may personally offer to represent the employee or former employee. This opinion addresses the question in the context where the lawyer begins by interviewing the current or former employee as a non-client to learn potentially relevant information and, based on the information acquired, concludes that a joint representation of the corporation and employee is permissible.
By way of background, the ordinary practice is for the corporation’s lawyer initially to meet with the employee or former employee in his or her capacity as a non-client who is a potential witness, not as a prospective client. The corporation may arrange the meeting or the lawyer may do so independently. The purpose will be to learn relevant information from the individual in order to advance the representation of the corporate client in the lawsuit. The lawyer will provide any necessary warnings under Rules 1.13(a) and 4.3 to ensure that the individual understands the lawyer’s role as counsel only for the corporation. One reason to make clear at this stage that the lawyer represents only the corporation is to avoid assuming a confidentiality obligation to the current or former employee under Rule 1.18. In communications with the witness, the lawyer should avoid assuming a confidentiality obligation to the employee that might later conflict with the lawyer’s duties to the corporation.
After interviewing the employee, the lawyer should be in a position to determine whether the employee would benefit from legal representation. If not, establishing a lawyer-client representation solely to benefit the corporate client may be impermissible from the perspective of the individual, who may be misled regarding the need for a lawyer or who may be burdened by a representation that exclusively benefits the employer. If the representation is established in bad faith, it may also be impermissible from the perspective of the opposing party, who may be disabled by Rule 4.2 from communicating directly with the represented employee. Whether a lawyer may permissibly represent an employee or former employee exclusively for the corporation’s benefit, where the individual has no need of legal services as a party or potential testifying witness in the lawsuit, is a question beyond the scope of this opinion. For purposes of this opinion, we assume the representation does serve the interests of the current or former employee as well as the corporate employer.
After the initial interview, the lawyer should also be in a position to determine whether a joint representation of the corporation and employee is permissible under Rules 1.7 and 1.13(d) with the respective clients’ informed consent. See N.Y. City Bar Assoc. Comm. on Prof’l and Jud. Ethics, Formal Op. 2004-2 (2004) (discussing representation of a corporation and its constituents in a government investigation). Rule 1.7, the conflict of interest rule, is implicated when the lawyer’s representation of two or more clients “will involve the lawyer in representing differing interests,” which is often the case when the lawyer represents both a corporation and its individual employee in connection with a lawsuit. In that event, the representation is permissible only if “the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client” and “each affected client gives informed consent, confirmed in writing.” Among other things, “informed consent” requires an understanding of the risks of, and alternatives to, the joint representation; whether and to what extent confidences will be shared between the joint clients; and what will occur if a client withdraws from the joint representation or a later conflict arises that precludes continuing the joint representation.
If the lawyer reasonably concludes that the current or former employee would benefit from legal assistance and that the conflict of interest rules allow joint representation, the lawyer may seek to convey the corporation’s willingness to compensate the lawyer to represent the employee. This raises a question concerning the application of Rule 7.3(a), which forbids “solicitation . . . [b]y in-person or telephone contact” with an individual who is not “a close friend, relative, former client or existing client.” Rule 7.3(b) defines “solicitation” for purposes of this Rule to mean
any advertisement initiated by or on behalf of a lawyer or law firm that is directed to, or targeted at, a specific recipient or group of recipients, or their family members or legal representatives, the primary purpose of which is the retention of the lawyer or law firm, and a significant motive for which is pecuniary gain. It does not include a proposal or other writing prepared and delivered in response to a specific request of a prospective client.
Rule 1.0(a), in turn, defines “advertisement” to mean “any public or private communication made by or on behalf of a lawyer or law firm about that lawyer or law firm’s services, the primary purpose of which is for the retention of the lawyer or law firm. It does not include communications to existing clients or other lawyers.”
Under Rule 7.3(b), the question of whether the lawyer properly may offer in-person (rather than in writing) to represent the corporation’s employee following the conclusion of the interview depends on whether the “primary purpose” of the lawyer’s “private communication” with the employee “is the retention of the lawyer or law firm, and a significant motive for [the communication] is pecuniary gain.” We conclude that conveying the corporation’s offer, and following up if the employee expresses interest, would not constitute a “solicitation” for several reasons.
First, the primary purpose of the in-person meeting at its inception is not to offer the lawyer’s services to the employee, but to interview the employee as a potential witness. Indeed, in many cases, that may turn out to be the exclusive purpose of the meeting, if the lawyer concludes that the employee does not require legal representation or that the lawyer cannot provide it. Second, when the lawyer initially offers to represent the employee, the lawyer is acting on behalf of the corporation, as its lawyer and agent, primarily for purposes of conveying the corporation’s offer to secure legal representation for an employee in need of legal assistance. The corporation could, of course, have one of its non-lawyer officers or its in-house counsel extend the offer on behalf of the corporation. But, as the corporation’s lawyer and agent, the lawyer may be in a better position to do so, because the lawyer may be better qualified to answer questions and provide information about the implications of the representation. Moreover, in conveying the corporation’s offer and, if the employee is interested, following up by offering representation, the lawyer’s “primary purpose” is not to secure legal fees from a new client but to render competent representation to a current corporate client by enabling it to fulfill its objective (and, in some cases, its statutory or contractual obligation or internal policy) of making legal assistance available to an employee who may need counsel. See, e.g., Wells Fargo Bank, N.A. v. LaSalle Bank Nat. Ass’n, No Civ-08-1125-C, 2010 WL 1558554 (W.D. Okla. Apr. 19, 2010) (finding that offering to represent corporate client’s former employees at corporation’s expense was not improper solicitation: “[D]efense counsel was attempting to represent its client, the corporation, and also to protect the interests of the former employees whose conduct forms the basis for Plaintiff’s claims in this case. In addition, Defense counsel would have spent a great deal of time with these individuals, regardless of whether they were clients, in order to fully and competently represent Defendant.”).
This situation is meaningfully distinguishable from the one addressed in Rivera v. Lutheran Medical Center, 22 Misc. 3d 178, 866 N.Y.S.2d 520 (Kings Cnty. Sup. Ct. 2008), aff’d, 73 A.D.3d 891, 899 N.Y.S.2d 859 (2d Dep’t 2010), in which the court found that a hospital’s counsel had improperly solicited current and former employees who were witnesses in the lawsuit. The court found that the firm’s motivation for offering to represent the individuals was not to provide them necessary legal services but “to gain a tactical advantage in th[e] litigation by insulating them from any informal contact with plaintiff’s counsel.” Id. at 185. Unlike the situation addressed in this Opinion, Rivera evidently was not a case where the entity’s lawyer communicated with employees first to secure their information and later to extend the corporate employer’s offer of assistance, but one where the primary, if not exclusive, purpose of the communication from its inception was to establish a legal representation in order to insulate the witnesses from opposing counsel’s informal contact. Rivera would not be inconsistent with the procedure and principles outlined in this Opinion.
When a corporation’s lawyer conveys in person or by telephone an offer to represent a corporate employee in connection with a lawsuit, the application of the solicitation rule, Rule 7.3(a), depends on the factual context and the lawyer’s motivation. Under Rivera, the communication would be improper if the lawyer’s motivation was exclusively “to gain a tactical advantage in th[e] litigation by insulating [witnesses] from any informal contact with plaintiff’s counsel.” However, we conclude that an offer of representation at the corporation’s request would be proper where the lawyer initially interviews the employee as a non-client witness in order to learn relevant information and subsequently determines that the individual is in need of legal services as a party or potential testifying witness and that the concurrent representation would be permissible.