The Absurdity Of Lawyer Codes of Ethics

Over at Crime and Federalism, Mike and Norm have shared comments on how new ethics rules in Connecticut create a significant burden for small firm lawyers, and will make many lawyers think twice before agreeing to represent a difficult client. Mike writes

Connecticut has recently adopted new rules of professional conduct. These new rules, according to legal ethics experts, require lawyers to obtain a client's permission before withdrawing a frivolous claim. If the client refuses to withdraw a frivolous claim, the lawyer's only recourse is to withdraw from representation. Under the new rules, lawyers will also be required to explain (in painstaking detail) every routine decision made in the client's case.

Norm explains,

The old rules required mere reasonable communications, giving lawyers some breathing room. Under the new rule, however, you are tethered to a client's needs. Thus, a client in a habeas case will write asking why it is not a conflict of interest for a lawyer to represent another client at the same time. Why is this not a conflict? Or try explaining to an angry client in an employment case why they must answer interrogatories -- for the second, third, or fourth time.

A lawyer notes in a comment,

First, for hourly/monthly firms, especially insurance defense firms, this is the lawyer's equivalent of Sarbox for accountants---make work on a massive scale. Now, every insurance defense lawyer will need to have a million conversations with the insured, for which the insurer will have to pay. I have been watching this in action in another state where I am co-counsel. Simple issues require a fortune to resolve.

As the posts suggest, ethics rules are often created by people who have no experience in legal practice, or whose experience is limited and probably does not involve work as a small firm practitioner or solo. They hear client complaints which usually revolve around legal fees and communication, and try to come up with rules which will minimize the number of future complaints. They cannot change the behavior of clients, so they focus on the lawyers.

A "reasonableness" standard may in fact be the most appropriate standard - was the lawyer's effort to communicate with the client reasonable under the circumstances - but to apply that rule somebody needs to examine the facts of the case and determine whether the lawyer's actions were in fact reasonable. Judgment? Discretion? That sounds time-consuming. So why not take away a lawyer's discretion, require clear, written communication of everything, and hold the lawyer responsible if a client complains (however unreasonably) and the paper trail is incomplete?

I once had a client complain bitterly about her trial lawyer, as she unpacked stacks of papers from a bag, that he sent her "everything", and that she found it overwhelming and confusing to receive so much correspondence. These rules don't seem to contemplate that they may not only create undue expense, but they may make things even more confusing for a client.

The Michigan Attorney Grievance Commission for years has played a game of "hide the ball" on attorney legal fees. You can read all of the Michigan Rules of Professional Conduct, read all of the formal and informal ethics rulings interpreting those rules, write a retainer agreement that appears to be 100% compliant with the rules, and still be told that your fee agreement is not ethical. ICLE, Michigan's non-profit legal publisher and CLE provider, tried to step in by having lawyers submit standard fee agreements, vetted for ethical compliance, edited by lawyers, and published in a convenient soft-bound book. It was discontinued after the AGC indicated that it had problems with the fee agreements in the book. At legal seminars where fee agreements are discussed, it is not unusual for a lawyer to submit a standard fee agreement, and then to have that fee agreement taken to pieces by an AGC lawyer. I saw this happen to a highly experienced, highly competent large firm family lawyer a couple of years ago. Ask the AGC to provide samples of fee agreements it would deem entirely ethical? The loudest thing you'll hear is the sound of crickets.

One consistent thing you will note about the rules of ethics is that they are structured to favor large firm practice. The billing systems used by large firms, no matter how inappropriate or unfair they would be to an individual client, are deemed ethical. There is no question but that you can ethically bill in minimum time increments, as long as you indicate how that will occur in the retainer agreement, such that a one minute phone call can be billed as a quarter hour of work. Had that system of billing been pioneered by small firms as opposed to large, I doubt that any state would deem it ethical.

One of my favorites: The AGC permits engagement fees (a fee charged by a law firm to take on a new client, and guarantee that it will allocate sufficient resources to handle the client's case) and has no problem with them as long as the client gets no further benefit from the engagement fee. But if the lawyer who charged the engagement fee gives the client credit against the engagement fee for any work performed, whatever the terms of the engagement fee contract, they will recharacterize the fee as a retainer fee. What if your impoverished client has a change of heart about litigating and, as it is early in the process, you decide that it is only fair if you give a partial refund of an engagement fee his mother obtained for him by mortgaging her house? Oops - if you give a partial refund, once again the ACG will recharacterize the engagement fee as a retainer, entitling the client to a much larger refund and subjecting you to possible penalties if you don't comply. The "ethical" approach is to tell the client, "Too bad, so sad."

Informally, I heard an AGC lawyer propose a compromise for smaller firms - charge the engagement fee, but instead of giving the client credit against it charge a lower hourly rate for subsequent work. Nothing in the Michigan Rules of Professional Conduct would support the distinction whereby the former approach was "unethical" and the latter approach "ethcial." Why in the world should it be more "ethical" to fudge the numbers to create a fee agreement satisfactory to the AGC, as opposed to simply putting down in writing a clear understanding betwen the lawyer and the client which is acceptable to both of them, is consistent with the actual text of the rules of professional conduct, and results in roughly the same amount being billed? How is the client exploited by the honest fee agreement, but not by one which is designed to circumvent (unpublished) restrictions on how clients are to be billed?

Meanwhile, in some rather cutthroat circles, lawyers have been known to advise clients to threaten grievances against their former lawyers in order to squeeze refunds out of them. Often this seems to be done in the context of a client who wishes to switch to a different lawyer, but who lacks funds for a retainer the new lawyer deems sufficient. Some heavy users of legal services have figured out, perhaps after receiving such instruction, that they can use threats of grievances or actual grievances as a weapon against their former lawyers, demanding refunds of well-earned legal fees. I am aware of a client who grieved six different lawyers in his criminal case - before the case even got to trial.

I personally believe that ethics codes should be drafted with the concept of providing a minimum framework of rules with a maximum benefit to clients. The drafters of the rules seem instead to look at those areas which generate the greatest number of client complaints, and creating new rules or applying new interpretations of those rules in a manner which they believe will minimize their work in reviewing complaints against lawyers, or if that's not possible to make it easier to resolve the complaint by pointing to a bright line rule that the lawyer violated. I am not sure if that approach will actually reduce the work of grievance panels, but to the extent that it increases costs to the client, or results in a confusing deluge of paperwork on a client who feels perfectly informed by existing "reasonable" communication, I think it is misguided. Ethics codes should reflect ethics, not a byzantine system of "gotchas" for lawyers who act ethically and responsibly except in their failure to meet arbitrary and artificial standards of conduct. I oppose any ethics rule which necessitates the interjection of dishonesty into the lawyer-client relationship, even if passed with the best of intentions.