Interesting Provisions in New Rules: Rule 1.0 through Rule 1.6

By Roy Simon

[Originally published in NYPRR April 2009]

It’s April and the new New York Rules of Professional Conduct are finally in effect. Some may say this development comes a quarter of a century too late — in 1984, the New York State Bar Association’s Halpern Committee (chaired by Ralph Halpern of Buffalo) recommended that New York become one of the first jurisdictions to adopt a version of the ABA Model Rules, but the State Bar’s House of delegates rejected that recommendation by a handful of votes. Still, better late than never.

In this article I will discuss some interesting provisions in New York’s new Rules. All of these new provisions differ in significant ways from either the ABA Model Rules of Professional Conduct or from the New York Code of Professional Responsibility. For convenience, I have quoted each provision that I discuss and have added emphasis by italicizing key words. For the sake of organization I discuss the provisions in numerical order, not in order of importance.

Rule 1.0(e) (Terminology): ‘Confirmed in Writing’

“Confirmed in writing” denotes (i) a writing from the person to the lawyer confirming that the person has given consent, (ii) a writing that the lawyer promptly transmits to the person confirming the person’s oral consent, or (iii) a statement by the person made on the record of any proceeding before a tribunal. If it is not feasible to obtain or transmit the writing at the time the person gives oral consent, then the lawyer must obtain or transmit it within a reasonable time thereafter.

The definition of “confirmed in writing” in Rule 1.0(e) had no equivalent in the old Code and differs significantly from the corresponding definition in the ABA Model Rules. It is one of the most important new definitions in the Rules because most of the new Rules governing conflicts of interest require that a client’s consent to a conflict be “confirmed in writing.” [See Rule 1.7(b)(4), Rule 1.9(a)–(b), Rule 1.11(a)(2), Rule 1.12(b), and Rule 1.18(d)(1).] Client consent to fee sharing with a lawyer in another firm must also be confirmed in writing. [See Rule 1.5(g)(2).]

The definition of “confirmed in writing” is helpful and clear. Many of my students, and many lawyers, mistakenly think that a written confirmation requires a client’s signature. That is not correct. A letter from the lawyer to the client confirming the client’s oral consent is sufficient. It is useful for the letter to recite the nature of the conflict and to summarize the full disclosure that the lawyer made before obtaining the client’s consent to the conflict, but that is not necessary.

The last sentence of the definition (which is as much a procedural rule as a definition) says the lawyer’s letter should preferably be given to the client at the time the client gives consent — meaning that the lawyer should have the letter ready in hand when asking for the client’s consent. But if writing the letter in advance is not “feasible” (and it often will not be feasible because the lawyer will want to provide details not known in advance), then the lawyer should send the letter to the client “within a reasonable time thereafter.”

A lawyer may of course ask the client to countersign the confirming letter, but that may lead to other problems. If the client does not countersign the letter, it could mean that the client simply didn’t get around to signing it, or it could mean that the client read the letter and did not agree with it. A client’s signature on the confirming paper gives the lawyer extra protection against a client’s later assertion that the client never consented and didn’t see or understand the lawyer’s confirming letter, but the value of that added protection has to be weighed against the risk that the client will forget or refuse to countersign the confirming letter.

The third option in the definition — “(iii) a statement by the person made on the record of any proceeding before a tribunal” — will apply mainly in criminal cases in which the court asks whether the defendant consents to a conflict. This is a sensible addition to the definition (and one not in the ABA Model Rules). If the client has consented to a conflict on the record in court, then a confirming letter from the lawyer is unnecessary. The new definition will thus lift an unnecessary administrative burden from the shoulders of criminal defense lawyers.

Rule 1.2(a): Allocation of Authority Between Lawyer and Client

[A] lawyer shall abide by a client’s decisions concerning the objectives of representation and … shall consult with the client as to the means by which they are to be pursued. A lawyer shall abide by a client’s decision whether to settle a matter. In a criminal case, the lawyer shall abide by the client’s decision, after consultation with the lawyer, as to a plea to be entered, whether to waive jury trial and whether the client will testify.

Rule 1.2(a) divides a representation into “objectives” and “means.” A lawyer must abide by a client’s decisions concerning objectives, but merely has to consult with a client concerning means. To avoid any confusion as to which is which, the rule specifies that a lawyer must honor a client’s decision whether to settle a civil matter (or not), and must honor a client’s decision whether to plead guilty, waive a jury trial, and testify in a criminal matter. Rule 1.2(a) thus generally mirrors and clarifies old ECs 7-7 and 7-8, which provided, in relevant part, as follows:

EC 7-7 in certain areas of legal representation not affecting the merits of the cause or substantially prejudicing the rights of a client, a lawyer is entitled to make decisions. But otherwise the authority to make decisions is exclusively that of the client and, if made within the framework of the law, such decisions are binding on the lawyer. As typical examples in civil cases, it is for the client to decide whether to accept a settlement offer or whether to waive the right to plead an affirmative defense. A defense lawyer in a criminal case has the duty to advise the client fully on whether a particular plea to a charge appears to be desirable and as to the prospects of success on appeal, but it is for the client to decide what plea should be entered and whether an appeal should be taken.

EC 7-8 [T]he lawyer should always remember that the decision whether to forego legally available objectives or methods because of non-legal factors is ultimately for the client and not for the lawyer. …

Curiously, Rule 1.2(a) does not by its terms require a lawyer to abide by a client’s decision as to “whether an appeal should be taken.” Perhaps that reflects the notion that a lawyer who represents a client at trial is not required to represent a client on appeal unless the retainer agreement obligates the lawyer to do so — but a lawyer who disobeys a client’s express instruction to take an appeal is asking for a malpractice suit.

Rule 1.2(d): Limited Representation

(d) a lawyer may limit the scope of the representation if the limitation is reasonable under the circumstances, the client gives informed consent and where necessary notice is provided to the tribunal and/or opposing counsel.

Every jurisdiction permits a lawyer to limit the scope of the representation if the limitation is reasonable under the circumstances and the client consents. That’s not news. The interesting feature of Rule 1.2(d) is the requirement that a lawyer provide “necessary notice” to the tribunal and/or opposing counsel, a requirement added entirely by the courts, with no equivalent in the ABA Model Rules of Professional Conduct, the existing New York Code of Professional Responsibility, or the proposals by COSAC or the New York State Bar association.

When is notice necessary? Since the courts have not explained any of their departures from the COSAC or NYSBA recommendations, I can only speculate. My speculation is that notice is necessary when an attorney is providing substantial assistance to a pro se party in litigation but the attorney has not entered an appearance in the action. In ABA Informal Op. 1414 (1978), the ABA opined that a ghostwriting attorney must disclose the fact of her participation in the pro se litigant’s case to the court (though the attorney need not disclose her actual identity). Otherwise, a court or an opposing lawyer might bend over backwards to give special treatment to the pro se party.

Rule 1.4: Communication

(a) a lawyer shall:

(1) promptly inform the client of:

(i) any decision or circumstance with respect to which the client’s informed consent, as defined in Rule 1.0(j), is required by these Rules;

(ii) any information required by court rule or other law to be communicated to a client; and

(iii) material developments in the matter including settlement or plea offers.

(2) reasonably consult with the client about the means by which the client’s objectives are to be accomplished;

(3) keep the client reasonably informed about the status of the matter;

(4) promptly comply with a client’s reasonable requests for information; and

(5) consult with the client about any relevant limitation on the lawyer’s conduct when the lawyer knows that the client expects assistance not permitted by these Rules or other law.

(b) A lawyer shall explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation.

Rule 1.4 mandates a series of responsibilities in communicating with clients. It thus carries forward the aspirational goals of EC 7-8, which provided, in relevant part, as follows:

EC 7-8 a lawyer should exert best efforts to ensure that decisions of the client are made only after the client has been informed of relevant considerations. a lawyer ought to initiate this decision-making process if the client does not do so. …

However, Rule 1.4 is more specific and — like nearly all of the Rules of Professional Conduct — is mandatory, not just aspirational. Good communications with a client have always been good business. Now good communications are required by the Rules.

Rule 1.5(b): Communicating About Fee Arrangements

(b) A lawyer shall communicate to a client the scope of the representation and the basis or rate of the fee and expenses for which the client will be responsible. This information shall be communicated to the client before or within a reasonable time after commencement of the representation and shall be in writing where required by statute or court rule. This provision shall not apply when the lawyer will charge a regularly represented client on the same basis or rate and perform services that are of the same general kind as previously rendered to and paid for by the client. Any changes in the scope of the representation or the basis or rate of the fee or expenses shall also be communicated to the client.

Rule 1.5(b) sounds a lot like the Written letter of Engagement Rule (22 NYCRR §1215) that the courts adopted in 2002. That rule represented something of a compromise. The New York State Bar Association opposed a mandatory rule on letters of engagement, arguing that the concepts in the rule were simply best practices. The courts insisted on a mandatory rule, but the courts heeded the State Bar’s desires by making the engagement letter rule a court rule rather than a disciplinary Rule and by stating publicly that the engagement letter rule would not be enforced through the disciplinary process.

That was then. This is now. Unlike §1215, Rule 1.5(b) is a disciplinary Rule (if I can still call it that). But Rule 1.5(b) differs in two crucial respects from §1215. First, Rule 1.5(b) applies to every new engagement — no matter how small the fee is expected to be — unless the lawyer has “regularly represented” the client and will charge that client “on the same basis or rate and perform services that are of the same general kind as previously rendered to and paid for by the client.” This is more stringent than §1215, which does not apply in any matter where the lawyer expects the fees to be less than $3,000. Second, Rule 1.5(b) does not require a written communication about fees, expenses, and the scope of the representation unless an existing statute or court rule independently requires a writing. See, e.g., Rule 1.5(c), which requires a writing in all contingent fee agreements, and §1215. Thus, whenever fees in a matter are not contingent and are expected to be less than $3,000 (the trigger amount for a writing under §1215), an oral explanation will suffice. As a practical matter, if fees are expected to be under $3,000, then Rule 1.5(b) applies. If fees are expected to be $3,000 or more, §1215 applies.

Rule 1.5(d): Nonrefundable Retainer Fees

(d) a lawyer shall not enter into an arrangement for, charge or collect: …

(4) a nonrefundable retainer fee; provided that a lawyer may enter into a retainer agreement with a client containing a reasonable minimum fee clause if it defines in plain language and sets forth the circumstances under which such fee may be incurred and how it will be calculated; or…

Rule 1.5(d) essentially codifies the famous case of In re Cooperman, 83 N.Y.2d 465 (1994), in which the Court of appeals held that nonrefundable fees generally violate DR 2—106(a) because if the work is not completed then the retainer fee is excessive. However, the court also held that “minimum fees” may be acceptable as long as the minimum fee is refunded, per DR 2-110(a)(3), in the event the work is not completed.

The trick under Rule 1.5(d), as under Cooperman and its progeny, is to distinguish a “minimum fee” from a “nonrefundable fee.” Basically, a minimum fee is the least a lawyer will charge for completing a specified task. A minimum fee is ethical as long as it is reasonable. A nonrefundable fee, in contrast, is a fee that the lawyer claims he is entitled to keep whether or not he completes the contemplated work — exactly what the Court of appeals condemned in Cooperman.

Rule 1.5(g): Dividing Fees with a Lawyer in Another Firm

(g) a lawyer shall not divide a fee for legal services with another lawyer who is not associated in the same law firm unless …

(2) the client agrees to employment of the other lawyer after a full disclosure that a division of fees will be made, including the share each lawyer will receive, and the client’s agreement is confirmed in writing.

Rule 1.5(g) carries forward the intent of DR 2-107(a) to require the client’s consent to an agreement to share fees with a lawyer in another law firm — but there are two important differences.

First, under DR 2-107(a)(1), a lawyer merely had to obtain a client’s consent to employment of another lawyer “after a full disclosure that a division of fees will be made.” The content of that full disclosure was not specified. Under Rule 1.5(g), the lawyer must reveal how much of the fee each lawyer will be receiving. This disclosure will enable the client to gauge the magnitude of each lawyer’s incentive to work hard on the case or, if the referring lawyer is not working on the case, the magnitude of the referring lawyer’s incentive to monitor the performance of the receiving lawyer, to influence how the receiving lawyer is handling the case, and to influence the decision whether and when to recommend a settlement. The larger a referring lawyer’s share of the fee, the greater the referring lawyer’s incentive to do all of these things.

Second, under DR 2-107(a)(2), a writing was required only if the fee was not being shared in proportion to the services performed by each lawyer and the sharing lawyers were each assuming “joint responsibility” for the representation. Under Rule 1.5(g), a writing confirming the client’s agreement is required in every matter in which there is a fee-sharing arrangement.

Rule 1.6: ‘Confidential Information’

Rule 1.6 of the New York Rules of Professional Conduct, which articulates the scope of a lawyer’s duty of confidentiality, is arguably the most fundamental provision in the new Rules, and it features some interesting changes from the duty of confidentiality under the old Code. These changes begin with the definition of “confidential information,” which provides as follows:

“Confidential information” consists of information gained during or relating to the representation of a client, whatever its source, that is (a) protected by the attorney-client privilege, (b) likely to be embarrassing or detrimental to the client if disclosed, or (c) information that the client has requested be kept confidential. “Confidential information” does not ordinarily include (i) a lawyer’s legal knowledge or legal research or (ii) information that is generally known in the local community or in the trade, field or profession to which the information relates.

The first half of this definition — the positive part — essentially tracks the definition in old DR 4-101(A), which said:

“Confidence” refers to information protected by the attorney-client privilege under applicable law, and “secret” refers to other information gained in the professional relationship that the client has requested be held inviolate or the disclosure of which would be embarrassing or would be likely to be detrimental to the client.

Rule 1.6, however, abandons the confusing dichotomy between a “confidence” and a “secret.” (I once heard a panelist at a CLE program on legal malpractice react to another panelist’s speech by saying that he had never before heard of the distinction between confidences and secrets. I was in shock.) Instead, Rule 1.6 wraps both concepts inside a single package called “confidential information.” That package contains everything that DR 4-101(a) contained — (a) information protected by the attorney-client privilege, (b) information likely to be embarrassing or detrimental to the client if disclosed, and (c) information that the client has requested be kept confidential.

Rule 1.6 also replaces the ambiguous phrase “gained in the professional relationship” with the phrase “gained during or relating to the representation of a client, whatever its source,” making clear that confidential information includes not only information obtained from the client but also information obtained from any other source (e.g., witnesses, bank documents, police reports) if the information is “gained during … the representation” or the information is “relating to the representation,” which would cover information gained before or after the representation. The theory is that loyalty restricts a lawyer’s use of information to harm a client no matter when or where the lawyer obtained the information.

However, the second half of Rule 1.6 narrows the definition of confidential information by expressly excluding two categories of information — (i) the lawyer’s legal knowledge or legal research, and (ii) information that is generally known. These exclusions reflect both custom and reality. Both excluded categories potentially fall within the literal language of DR 4-101(a), but no one ever thought that a client could say to a lawyer, “don’t use any of your legal research or any of your knowledge of my industry in any other case — keep it all in-violate.” If lawyers could not use industry knowledge in later cases, lawyers could not specialize. Moreover, most lawyers believe that they have the right to disclose “generally known” information without asking for client consent or fitting within one of the exceptions to the duty of confidentiality.

However, Rule 1.6 qualifies these exclusions by saying that confidential information does not “ordinarily” include the excluded categories. This leaves open the possibility that — as a Comment says — “in some circumstances, including where the client and the lawyer have so agreed, a client may have a proprietary interest in a particular product of the lawyer’s research,” and may therefore instruct the lawyer to keep legal research, legal knowledge, or even generally known information confidential (i.e., “inviolate”).

My discussion of the new Rules will continue in NYPRR May 2009.

Professor Roy Simon is the author of Simon’s New York Rules of Professional Conduct Annotated. The brand new 2015 edition analyzes more than 100 new cases, ethics opinions, and other developments critical to New York practice. It’s the legal ethics bible for all New York-area lawyers. To purchase, click here.

In addition, Professor Simon advises lawyers and law firms on questions of professional conduct and serves as an expert witness in cases raising issues of lawyer conduct. You may reach Professor Simon at 516-463-5289 or Roy.Simon@hofstra.edu.

DISCLAIMER: This article provides general coverage of its subject area and is presented to the reader for informational purposes only with the understanding that the laws governing legal ethics and professional responsibility are always changing. The information in this article is not a substitute for legal advice and may not be suitable in a particular situation. Consult your attorney for legal advice. New York Legal Ethics Reporter provides this article with the understanding that neither New York Legal Ethics Reporter LLC, nor Frankfurt Kurnit Klein & Selz, nor Hofstra University, nor their representatives, nor any of the authors are engaged herein in rendering legal advice. New York Legal Ethics Reporter LLC, Frankfurt Kurnit Klein & Selz, Hofstra University, their representatives, and the authors shall not be liable for any damages resulting from any error, inaccuracy, or omission.

Roy Simon