Simon on New Rules: Rule 2.1 Through 3.3(a)(1)

By Roy Simon

[Originally published in NYPRR September 2009]

This month’s column, which continues my series of columns on the new New York Rules of Professional Conduct, begins with Rule 2.1 and ends with Rule 3.3(a)(1).

Rule 2.1: The Lawyer as Advisor

Perhaps the most ethereal rule in the new Rules is Rule 2.1 (“The Lawyer as Advisor”), which provides as follows:

In representing a client, a lawyer shall exercise independent professional judgment and render candid advice. In rendering advice, a lawyer may refer not only to law but to other considerations such as moral, economic, social, psychological, and political factors that may be relevant to the client’s situation.

These two sentences compress the lofty sentiments expressed in old EC 7-8, which a respected legal ethics scholar once identified as her “favorite” Ethical Consideration. EC 7-8 provided, in pertinent 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. Advice of a lawyer to the client need not be confined to purely legal considerations. A lawyer should advise the client of the possible effect of each legal alternative. A lawyer should bring to bear upon this decision making process the fullness of his or her experience as well as the lawyer’s objective viewpoint. In assisting the client to reach a proper decision, it is often desirable for a lawyer to point out those factors which may lead to a decision that is morally just as well as legally permissible. The lawyer may emphasize the possibility of harsh consequences that might result from assertion of legally permissible positions. In the final analysis, however, the 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. …

Although Rule 2.1 is an enforceable rule equivalent to a mandatory DR rather than an aspirational Ethical Consideration, the effect is the same. Rule 2.1 is more of a concept than a command. The enforcement and the details are left to other rules. In particular, the mandate in the first sentence of Rule 2.1 to exercise “independent professional judgment” is enforced through the rules governing conflicts of interest, and the duty to render “candid advice” is enforced both through Rule 1.4 (“Communication”) and through Rule 8.4(c) (prohibiting “conduct involving dishonesty, fraud, deceit or misrepresentation”).

In the second sentence, Rule 2.1 explicitly says “may,” not “must,” so lawyers have discretion to abide by it or not. But good lawyers will take Rule 2.1 to heart and will make sure that their clients are aware not only of legal considerations but also of “other considerations such as moral, economic, social, psychological, and political factors ….” Such wide-ranging advice, putting a lawyer’s basic legal advice in a broader context, elevates lawyers from mere technicians to true ministers of justice.

Rule 2.2: [Reserved]

The “reserved” designation for Rule 2.2 is merely a device to keep the numbering of the New York Rules of Professional Conduct in line with the ABA Model Rules of Professional Conduct. As originally adopted in 1983, the ABA Model Rules contained a Rule 2.2, entitled “Intermediary.” The rule governed situations in which a lawyer represented opposing parties to a dispute for the purpose of attempting to resolve the dispute, and it imposed some sensible restrictions on such representations (e.g., the lawyer had to believe that each client could make adequately informed decisions in the matter, and the lawyer could not continue to represent any of the clients if the intermediation failed). In 2002, on the recommendation of the ABA Ethics 2000 Commission, the ABA deleted Rule 2.2, mainly because common representation was already adequately covered by Rule 1.7 (“Conflicts of Interest: Current Clients”). However, the ABA addressed some of the concepts in old Rule 2.2 by expanding the commentary to Rule 1.7 — see Comments 29-33, which are now part of New York’s commentary as well. (New York has also added a new Comment 29A that is not in the ABA Model Rules.)

At the same time that it deleted old Rule 2.2, the ABA realized that no Model Rule governed the situation in which a lawyer was serving as a neutral without representing any party to a dispute. Therefore, the ABA added a new Rule 2.4 (“Lawyer Serving as Third-Party Neutral”) to cover the ethical duties of lawyers serving as arbitrators, mediators, or other types of neutrals. Rule 2.4 is now part of New York’s rules as well. My comment on Rule 2.4 appears below.

Rule 2.3: Evaluation for Use by Third Persons

In our adversary system, lawyers are generally taught to attack the opposing parties, not to help them. Litigators generally view litigation as a zero-sum game (and it often is), and in a zero-sum game helping the opposing client would inevitably harm your own client. Intentionally harming your own client in connection with a representation is forbidden. Indeed, the Courts imported old DR 7-101(A)(3) into new Rule 1.1(c)(2), which provides that a lawyer shall not intentionally “prejudice or damage the client during the course of the representation except as permitted or required by these Rules.”

Whether or not litigation is usually a zero-sum game, transactions decidedly are not, because transactions look forward rather than backward, seeking to create a better world in the future rather than recreating a broken world from the past. As a condition of engaging in transactions, however, many transactors insist on an opinion letter from the counterparty’s lawyer providing a positive evaluation of certain parts of the transaction. For example, a lender may demand a letter from the borrower’s lawyer stating that the borrower is duly authorized to borrow the funds and that the borrower has complied with all applicable federal and state laws. Such a letter may help the other side, however, and may even reveal or jeopardize the client’s confidential information. Is a lawyer allowed to write an opinion letter that may help the opposing party in a transaction and expose the client’s confidential information?

New York Rule 2.3 (“Evaluation for Use by Third Persons”) resolves these issues by giving lawyers the authority they need to write opinion letters to opposing parties. Rule 2.3 provides as follows:

(a) A lawyer may provide an evaluation of a matter affecting a client for the use of someone other than the client if the lawyer reasonably believes that making the evaluation is compatible with other aspects of the lawyer’s relationship with the client.

(b) When the lawyer knows or reasonably should know that the evaluation is likely to affect the client’s interests materially and adversely, the lawyer shall not provide the evaluation unless the client gives informed consent.

(c) Unless disclosure is authorized in connection with a report of an evaluation, information relating to the evaluation is protected by Rule 1.6.

Thus, Rule 2.3(a) generally authorizes a lawyer to provide an evaluation about a client to a non-client. The evaluation need not be totally positive, but neither may it be incompatible with the lawyer’s relationship with the client. The limited authority granted by Rule 2.3(a) is thus loosely analogous to a lawyer’s implied authority to disclose confidential information pursuant to Rule 1.6(a)(2), which allows a lawyer to reveal information to “advance the best interests of the client” (if reasonable or customary) but not to harm the client. Indeed, Comment 1 to Rule 2.3 begins by saying that a lawyer may perform an evaluation either at the client’s direction “or when impliedly authorized in order to carry out the representation.”

If the lawyer’s evaluation will probably harm the client — if the evaluation is “likely” to have a material adverse effect on the client — then Rule 2.3(b) overrides the general authorization in paragraph (a). Rule 2.3(b) prohibits the lawyer from providing the evaluation absent the client’s informed consent. Curiously, Rule 2.3(b) — unlike the conflict of interest provisions in Rules 1.7, 1.9, 1.11, 1.12, and 1.18 — does not require that the client’s consent be confirmed in writing, but a wise practitioner in a Rule 2.3(b) situation will confirm the client’s consent in writing anyway.

Finally, Rule 2.3(c) makes clear that performing an evaluation for a third party does not diminish a lawyer’s duty of confidentiality under Rule 1.6 unless disclosure is “authorized in connection with a report of an evaluation.” That authorization is equivalent to obtaining the client’s informed consent to disclose confidential information pursuant to Rule 1.6(a)(1). The authorization may be included in the retainer agreement at the outset of the representation or the lawyer may seek the client’s authorization when the situation arises during the representation.

Rule 2.4: Lawyer Serving as Third-Party Neutral

Lawyers are often called upon to serve as mediators, arbitrators, and other neutrals. What are the ethical restrictions on lawyers serving as neutrals? These questions are answered by New York Rule 2.4 (“Lawyer Serving as Third-Party Neutral”), which provides as follows:

(a) A lawyer serves as a “third-party neutral” when the lawyer assists two or more persons who are not clients of the lawyer to reach a resolution of a dispute or other matter that has arisen between them. Service as a third-party neutral may include service as an arbitrator, a mediator or in such other capacity as will enable the lawyer to assist the parties to resolve the matter.

(b) A lawyer serving as a third-party neutral shall inform unrepresented parties that the lawyer is not representing them. When the lawyer knows or reasonably should know that a party does not understand the lawyer’s role in the matter, the lawyer shall explain the difference between the lawyer’s role as a third-party neutral and a lawyer’s role as one who represents a client.

This is a vast improvement over the old Code of Professional Responsibility, which had no Disciplinary Rule addressing lawyers as neutrals and had only one inadequate Ethical Consideration on the subject (EC 5-20) which provided as follows:

A lawyer is often asked to serve as an impartial arbitrator or mediator in matters which involve present or former clients. The lawyer may serve in either capacity after disclosing such present or former relationships. A lawyer who has undertaken to act as an impartial arbitrator or mediator should not thereafter represent in the dispute any of the parties involved.

EC 5-20 was narrow and ambiguous. It seemed to cover only the situations in which one of the parties was a present or former client, and it did not address whether the lawyer was representing the parties or not. Rule 2.4 offers far more guidance.

For example, Rule 2.4(a) makes it clear that a “third-party neutral” is not representing the parties. When a lawyer is representing multiple parties to a dispute, the lawyer must consult Rule 1.7 (“Conflict of Interest: Current Clients”), and the conflict may not even be consentable under Rule 1.7(b)(1) (invalidating client consent to a conflict unless the lawyer “reasonably believes” that she can “provide competent and diligent representation to each affected client”). As mentioned above in the discussion of Rule 2.2, the whole point of Rule 2.4 is to address the situation in which a lawyer is strictly a neutral and is not representing any party (much less multiple parties).

Rule 2.4(b) reinforces subparagraph (a)’s definition of a “third-party neutral” by requiring a lawyer neutral to inform the parties that the lawyer does not represent them. Moreover, if the lawyer realizes that any party is confused and thinks the lawyer represents him, the lawyer has to “explain the difference” — for example, to say to a confused party to an arbitration: “I am not your lawyer. I am not representing you. I am not looking out for you or advocating your best interests. I am just a neutral arbitrator and my job is to decide this dispute fairly in light of all the facts and circumstances.” This is similar to the requirement that Rule 4.3 imposes when a lawyer is communicating with an unrepresented person. Rule 4.3 states, in part: “When the lawyer knows or reasonably should know that the unrepresented person misunderstands the lawyer’s role in the matter, the lawyer shall make reasonable efforts to correct the misunderstanding.”

Rule 3.1: Non-Meritorious Claims & Contentions

In 1998, in an effort to clamp down on frivolous litigation, the Courts adopted 22 NYCRR Part 130, which authorized courts to impose sanctions as high as $10,000 “for any single occurrence of frivolous conduct” in litigation. Part 130 largely matched DR 2-109 and DR 7-102(A)(1)-(2) of the old Code, but the Code provisions did not use the term “frivolous.” COSAC attempted to bring the rules in line with Part 130 by recommending Rule 3.1(a), which the Courts adopted without change. Rule 3.1(a) provides as follows:

(a) A lawyer shall not bring or defend a proceeding, or assert or controvert an issue therein, unless there is a basis in law and fact for doing so that is not frivolous. A lawyer for the defendant in a criminal proceeding or for the respondent in a proceeding that could result in incarceration may nevertheless so defend the proceeding as to require that every element of the case be established.

Thus, Rule 3.1(a) simultaneously bans frivolous conduct in civil litigation and makes clear that in criminal matters (or any proceeding that could lead to imprisonment) it is never frivolous to “require that every element of the case be established.” Thus, the lawyer for a criminal defendant may ethically demand that the prosecution prove every element of its case even if the defendant has no factual or legal defense to the charges. The old Code did not expressly give this right to lawyers for criminal defendants (though lawyers were expected to provide a zealous defense for all of their criminal defense clients, guilty or not). Notably, Rule 3.1(a) does not give an equivalent right to lawyers for defendants in civil cases or other proceedings that could not result in incarceration. Thus, a civil defendant does not automatically have the right to require the plaintiff to prove every element of his case even if the defendant has no defense. In civil matters, the rules of procedure weed out cases in which the defendant does not have a meritorious defense.

COSAC also tried to harmonize the Rules of Professional Conduct with the court rules by recommending a definition of “frivolous” that generally matched the definition of “frivolous” in 22 NYCRR § 130-1.1(c), which provides as follows:

(1) it is completely without merit in law and cannot be supported by a reasonable argument for an extension, modification or reversal of existing law;

(2) it is undertaken primarily to delay or prolong the resolution of the litigation, or to harass or maliciously injure another; or

(3) it asserts material factual statements that are false.

The Courts disrupted COSAC’s attempt at harmony, however, by adopting a definition of “frivolous” in Rule 3.1(b) that differs in several ways from the definition in Part 130. The definition of “frivolous” in Rule 3.1(b) is as follows:

A lawyer’s conduct is “frivolous” for purposes of this Rule if:

(1) the lawyer knowingly advances a claim or defense that is unwarranted under existing law, except that the lawyer may advance such claim or defense if it can be supported by good faith argument for an extension, modification, or reversal of existing law;

(2) the conduct has no reasonable purpose other than to delay or prolong the resolution of litigation, in violation of Rule 3.2, or serves merely to harass or maliciously injure another; or

(3) the lawyer knowingly asserts material factual statements that are false.

Do the changes from Part 130 matter? Yes — in each case the differences make it harder to prove that the conduct was frivolous. Why did the Courts reject language tracking their own court rule in 22 NYCRR §130-1.1(c)? My initial reaction was negative. Why should the word “frivolous” mean one thing in Part 130 and another in Rule 3.1? But on reflection, I believe that the Courts were motivated by the different purposes of Part 130 and Rule 3.1 and that they got it right. The purpose of Part 130 is to deter frivolous litigation conduct and to compensate opposing parties for the costs (up to $10,000) of responding to frivolous conduct. The purpose of Rule 3.1, in contrast, is disciplinary. A lawyer who violates Rule 3.1 — even once — is theoretically subject to discipline.

The Courts rightly decided that the standards for exposing a lawyer to the potential loss or suspension of a law license — a shameful and very public penalty that can cost a lawyer his reputation and hundreds of thousands of dollars — should be higher than the standards for exposing a lawyer to a $10,000 sanction. Therefore, it makes sense for Rule 3.1 to use “good faith” instead of “reasonable;” to demand “no reasonable purpose” instead of conduct undertaken “primarily” to delay or prolong litigation; to penalize only conduct whose purpose is “merely” to harass; and to excuse a lawyer who does not “knowingly” assert material false statements of fact. As a corollary, case law interpreting Part 130 will be of limited value when interpreting Rule 3.1.

Rule 3.2: Delay of Litigation

Rule 3.2 (“Delay of Litigation”) is a new rule that had no equivalent in the Disciplinary Rules of the Code of Professional Responsibility. Rule 3.2 provides:

In representing a client, a lawyer shall not use means that have no substantial purpose other than to delay or prolong the proceeding or to cause needless expense.

The key to understanding Rule 3.2 is the phrase “no substantial purpose.” What does this mean? In a breach of contract suit, may the defendant’s lawyer make a hopeless but time-consuming motion for summary judgment so that the defendant can continue to earn interest on his money before offering a settlement? In a foreclosure action, may a lawyer seek a continuance to give his client more time to raise money to avoid foreclosure? May a plaintiff’s lawyer ratchet up discovery demands, or refuse to stipulate to indisputable facts, to wear down the defendant financially? The answer to all of these questions will be “no” under Rule 3.2 unless the lawyer has some legitimate and reasonably important justification beyond those given in my examples.

What might those additional justifications be? The Comment to Rule 3.2 — the shortest Comment in the new rules, consisting of a single paragraph — is of minimal help. It says that “[d]ilatory practices” — even if they are “often tolerated by the bench and bar” — are prohibited “if their only substantial purpose is to frustrate an opposing party’s attempt to obtain rightful redress or repose.” Is the test subjective or objective? Is good faith enough?

Yes, good faith is enough. The Comment says: “The question is whether a competent lawyer acting in good faith would regard the course of action as having some substantial purpose other than delay or needless expense.” But that brings us back to square one, trying to define a “substantial” purpose. The Comment offers only negative advice: “Seeking or realizing financial or other benefit from otherwise improper delay in litigation is not a legitimate interest of the client.” With so little guidance and so many incentives to delay litigation or use tactics that impose significant costs on opposing parties, courts and ethics committees will need to be very discerning to determine whether a proffered justification for suspicious conduct rises to the level of a “substantial purpose.”

Rule 3.3: Conduct Before a Tribunal

Rule 3.3 (“Conduct before a Tribunal”) represents the most radical shift between the old Code and the new Rules, and may significantly alter the way that lawyers behave toward courts, toward clients, and toward each other in our adversary system. Rule 3.3 has many parts, but the key parts concern a lawyer’s responsibilities if the lawyer realizes that the lawyer himself, or a client, or a witness has spoken or written a falsehood directly to a tribunal or otherwise on the record (e.g., at a deposition, in an affidavit, at an oral argument, or in live testimony at trial).

Rule 3.3(a)(1): Correcting a False Statement

Rule 3.3(a)(1) is a marriage of the old and the new. It provides:

(a) A lawyer shall not knowingly:

(1) make a false statement of fact or law to a tribunal or fail to correct a false statement of material fact or law previously made to the tribunal by the lawyer.

The first clause of Rule 3.3(a)(1) is nothing new. It is essentially a reprise of the mandate in old DR 7-102(A)(5) that in the representation of a client, a lawyer shall not “[k]knowingly make a false statement of law or fact.” Indeed, the Code duty was more stringent because it was not limited to statements “to a tribunal. “ But the second clause of Rule 3.3(a)(1) creates a new duty. It requires a lawyer to “correct a false statement of material fact or law previously made to the tribunal by the lawyer.” This is the first time that New York’s ethics rules have expressly required a lawyer to “correct” a false statement that the lawyer has made to a court.

Arguably, old DR 7-102(B)(2) impliedly imposed a similar requirement. It provided that a lawyer who received “information clearly establishing that … [a] person other than the client has perpetrated a fraud upon a tribunal shall reveal the fraud to the tribunal.” A lawyer was literally a “person other than the client,” and a material false statement of law or fact might well have been a “fraud upon a tribunal.” But I am not aware of any case or ethics opinion that invoked DR 7-102(B) (2) to require a lawyer to correct the lawyer’s own false statement to a tribunal.

In 1990, however, the Courts added DR 4-101(C)(5), which permitted (but did not require) a lawyer to reveal confidences or secrets of the client to the extent “implicit in withdrawing a written or oral opinion or representation previously given by the lawyer and believed by the lawyer still to be relied upon by a third person where the lawyer has discovered that the opinion or representation was based on materially inaccurate information or is being used to further a crime or fraud.”

In 2004 and 2006, by reading DR 4-101(C)(5) and DR 7-102(B) (1) in combination, two New York State Bar ethics opinions converted permission to withdraw an opinion into a mandate to withdraw an opinion in certain circumstances. Specifically, the ethics opinions concluded that a lawyer must withdraw misstatements that the lawyer had previously made in certifying a client’s false statements to the court — see N.Y. State 781 (2004) (lawyer who certified accuracy of client’s financial statement to family court in a divorce case must withdraw certification upon learning that client had concealed assets), and N.Y. State 797 (2006) (lawyer who filed petition seeking to have letters testamentary issued to client must withdraw petition upon learning that client lied in “oath” submitted in support of petition).

Does the duty in Rule 3.3(a)(1) to “correct” a false statement to a tribunal go further than the duty in N.Y. State 781 and 797 to “withdraw” a prior false statement? Yes — but the nature of the correction will depend on the situation. Let us look at two different situations: (1) a certification by the lawyer that the client’s statement is accurate; and (2) a material false statement of fact or law by the lawyer.

If the lawyer has merely certified the accuracy of a statement made by the client (which was the situation in N.Y. State 781 and 797) and the lawyer later learns that the certification is false (because the client’s information on which it is based was false), then the result is essentially the same as the result under the two ethics opinions. The lawyer has made a false statement to the tribunal and must not “fail to correct” it. But the false statement by the lawyer to the court is not the same as the client’s false statement to the lawyer; the lawyer’s false statement is merely the lawyer’s own certification that the client’s statement is accurate. Therefore, correcting the lawyer’s false statement simply means advising the court that the lawyer is withdrawing his certification of accuracy (“I previously certified that my client’s statement was accurate, but I am withdrawing my certification”) or flatly advising the court that the client’s statement was false (“Contrary to my earlier certification, your Honor, I have now learned that my client’s statement was false, so I am duty bound to correct my own certification based on that false statement”). These two methods of correction amount to the same thing. In either case, the court may delve into the nature of the inaccuracy by asking the lawyer what part of the client’s statement is false. At that juncture, the lawyer must decide whether to claim the attorney-client privilege or otherwise resist the court’s inquiries — but those are questions to be answered by other rules, not by Rule 3.3(a)(1).

In contrast, if the lawyer has personally made a false statement to the court, then merely withdrawing the statement is not enough. Under Rule 3.3(a)(1), the lawyer must actually correct whatever portion of the statement is false. For example, suppose a lawyer told the court at a sentencing hearing that the lawyer’s client has never been disciplined by the SEC, but the lawyer later learns that in the 1980s the SEC banned the client from serving as a director for three years. The lawyer cannot simply say, “You Honor, my prior statement was untrue.” Rather, the lawyer has to “correct” the false statement by furnishing the court with the true facts. This goes beyond merely withdrawing the prior written or oral representation — and in contrast to Rule 1.6(b)(3), the duty to correct under Rule 3.3(a)(1) applies even if neither the court nor any third party is continuing to rely on the false statement. If the lawyer’s own statement is false, the lawyer must correct it. This is a new duty that did not appear n the old Code.

Next month, I will continue my discussion of the new New York Rules of Professional Conduct.

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.

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Roy Simon