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End-of-life notice: American Legal Ethics Library

As of March 1, 2013, the Legal Information Institute is no longer maintaining the information in the American Legal Ethics Library. It is no longer possible for us to maintain it at a level of completeness and accuracy given its staffing needs. It is very possible that we will revive it at a future time. At this point, it is in need of a complete technological renovation and reworking of the "correspondent firm" model which successfully sustained it for many years.

Many people have contributed time and effort to the project over the years, and we would like to thank them. In particular, Roger Cramton and Peter Martin not only conceived ALEL but gave much of their own labor to it. We are also grateful to Brad Wendel for his editorial contributions, to Brian Toohey and all at Jones Day for their efforts, and to all of our correspondents and contributors. Thank you.

We regret any inconvenience.

Some portions of the collection may already be severely out of date, so please be cautious in your use of this material.


District of Columbia Legal Ethics

1.13   Rule 1.13 Organization as Client

1.13:100   Comparative Analysis of DC Rule

· Primary DC References: DC Rule 1.13
· Background References: ABA Model Rule 1.13, Other Jurisdictions
· Commentary:

1.13:101      Model Rule Comparison

Substantial changes, described below, were made in Model Rule 1.13 in 2003 as a result of the report of the ABA Corporate Responsibility Task Force, which was prompted by the corporate scandals that had been proliferating in recent years. Prior to those changes the Model Rule and its DC counterpart were very similar, and in many respects identical in substance. Thus, paragraph (a) of DC Rule 1.13, the general statement that the lawyer for an organization represents the organization acting through its constituents, was then and remains today identical to paragraph (a) of the Model Rule.

Paragraph (b) of the DC Rule (now redesignated as (c)), addressing a lawyer's obligations when dealing with an organizational client's constituents, was identical to what was then paragraph (d)(now (f)) of MR 1.13, except that that paragraph of the DC Rule said a lawyer must explain to a constituent of the organization with whom the lawyer is dealing that he represents the organization when it is apparent that the organization's interests "may be" adverse to those of the constituent; the Model Rule's paragraph (b) required such an explanation when it was apparent that the interests "are" adverse. One further small difference between the two provisions was added to the Model Rule on a recommendation of the Ethics 2000 Commission -- the only change in the rule recommended by that Commission -- by the replacement in the Model Rule of the phrase "it is apparent" by "the lawyer knows or reasonably should know."

Paragraph (c)(now (d)) of the DC Rule, regarding representation of constituents of the organizational client as well as the organization, was and is still also identical to paragraph (e)(now (g)) of MR 1.13. 

Prior to the 2003 amendments, the foregoing three provisions constituted the whole of DC Rule 1.13, but the Model Rule also contained two provisions that had no parallels in the DC Rule. One was the Model Rule's paragraph (b), suggesting various actions a lawyer might take on learning of actions taken, threatened or foregone by an organizational client's officers or employees that are likely to result in substantial injury to the organization, including "reporting up," which is to say referring the matter to higher organizational authority. The other provision in the Model Rule but not its DC counterpart was paragraph (c), making clear that if, despite the lawyer's efforts, the highest competent organizational authority insisted on action, or refused to refrain from action, that was clearly a violation of law and was likely to result in substantial injury to the organization, the lawyer could resign.  The Jordan Committee had considered following the Model Rules example with respect to these two provisions, but decided against doing so. The Board of Governors' petition forwarding the Jordan Committee report to the Court of Appeals explained the omission by observing that these paragraphs

merely suggest measures which may be taken by a lawyer for an organization if the lawyer knows that a person associated with the organization is acting or intends to act in one of the specified improper ways.  The Committee concluded that such advisory and precatory language is inappropriate for a black letter rule and that the substance of paragraphs (b) and (c) is adequately presented in the Comment to the Rule.

The portions  of the Comment to which the Jordan Committee here referred were Comments [4] and [5] (now [3] and [4]) to the DC Rule, which were identical to the Model Rule's Comments [2] and [3]. The Jordan Committee also recommended omitting what was then Comment [6] (now [9]) to the Model Rule, explaining MR 1.13's applicability to government lawyers, and proposed a substitute Comment stating that 1.13 did not apply to government lawyers and explaining the reasons why. That proposed substitute Comment also noted that the Bar's Board of Governors planned to appoint a special committee to consider whether the DC Rules should include special rules, comparable to Rule 1.13 but specifically dealing with government lawyers. The committee thus appointed, the Sims Committee, did not recommend such a special rule for government lawyers, but instead recommended changes to six of the DC Rules, or their Comments, to deal specifically with government lawyers. With respect to DC Rule 1.13, the Sims Committee recommended, and the Court of Appeals agreed, that it should have a Comment [7] (now [6]), differently phrased than the Model Rules' Comment [6], stating that the agency that employs a government lawyer is the lawyer's client and that the application of Rule 1.13 to government lawyers must take into account differences between government agencies and other organizations.

The changes made in 2003 to Model Rule 1.13 included amendment of paragraph (b) to omit mention of less drastic measures a lawyer might take in the face of corporate misconduct, and to focus on reporting up the organizational ladder including, if necessary the highest authority, unless the lawyer reasonably believes it not necessary in the best interest of the organization. The DC Rules Review Committee recommended, and the Court of Appeals in 2006 approved, addition to the DC Rule of a new paragraph (b) almost identical to the revised paragraph (b) of the Model Rule. In addition to this change in Model Rule 1.13, the 2003 amendments added three new paragraphs. The first of these, paragraph (c), provided that a lawyer in appropriate circumstances might "report out" -- i.e., to report organizational misconduct to third parties, if the highest competent organizational authority "insists on or fails to address in a timely and appropriate manner" an action or refusal to act that is clearly a violation of law and the lawyer reasonably believes likely to result in substantial injury to the organization. A new paragraph (d) was also added, to exempt from such disclosures under paragraph (c) information learned by a lawyer in connection with an engagement to investigate the client organization, or to defend the organization or an officer, employee or other constituent of the organization. And a new paragraph (e) was also added, to provide that a lawyer who reasonably believes that he or she has been discharged because of the lawyer's making the disclosures contemplated by paragraphs (b) and (c), to do what is necessary to see that the organization's highest authority is so informed. The DC Rules Review Committee did not recommend adding any of these three new provisions of the Model Rule to the DC Rule, and the Court of Appeals accepted this judgment. The Committee expressed the view that the amendment it had proposed to Rule 1.6 (in the new paragraph (d); see 1.6:101, above), allowing for disclosure of information otherwise protected by that Rule, to prevent the client from committing a crime or fraud using the lawyer's services, or to prevent or mitigate injury to financial interests or property resulting from such fraud or crime, provided sufficient latitude for a lawyer to blow the whistle on a client's misconduct when necessary, and to make any disclosure allowed or required by the Sarbanes-Oxley Act or SEC Rule 205.  The Committee did, however, recommend that a reference to Rule 1.6(d) be added to what is now Comment [7] (formerly [8]).

1.13:102      Model Code Comparison

There was no counterpart to Rule 1.13 in the disciplinary rules of the Model Code. EC 5-18 was similar to Rule 1.13 in admonishing that "[a] lawyer employed or retained by a corporation or similar entity owes his allegiance to the entity and not to a stockholder, director, officer, employee, representative, or other person connected with the entity." In Griva v. Davison, 637 A.2d 830, 837 (DC 1994), the questioned conduct occurred over a period that encompassed the reigns of both the Model Code and the Model Rules; the DC Court of Appeals reached substantially the same result under both DR 5-105, as informed by EC 5-18, and Rule 1.13.

1.13:200   Entity as Client

· Primary DC References: DC Rule 1.13(a)
· Background References: ABA Model Rule 1.13(a), Other Jurisdictions
· Commentary: ABA/BNA § 91:2001, ALI-LGL §§ 96, 97, Wolfram § 8.3

A common occasion for the application of Rule 1.13 is the representation of a closely held corporation. DC Ethics Opinion 216 (1991) ruled that the lawyer's client is the corporation and not one or more of its principals even in circumstances in which it takes a lawyerly mind singularly adept at reification to perceive what the corporation is. In Opinion 216, the corporation was owned in equal shares by two principals. It had sued a bank for wrongful termination of a banking relationship. The same bank had secured a judgment against one of the principals, who had defaulted on a loan, and in execution of the judgment became the owner of that principal's 50 percent interest in the corporation. The dispossessed principal had been the president of the corporation and claimed still to be president because it would take a majority vote to oust him and the other principal would not vote with the bank to do so. The lawyer for the corporation wanted to know whether he should follow the direction of the non-shareholder president of the corporation to pursue the suit against the shareholder bank. The Opinion said yes, at least until the dispute over control of the corporation was resolved. The Opinion acknowledged that the president might very well have his own, non-corporate, reasons for pursuing the suit but pointed to Comment [4], which tells the lawyer that, when the appropriate "constituent" makes decisions for the corporation, "the decisions must ordinarily be accepted by the lawyer even if their utility or prudence is doubtful."

DC Ethics Opinion 328 (2005) addresses issues that arise when a lawyer represents a constituent of an organization personally and not the organization.  The Opinion states that a lawyer should make clear to the client at the outset of the representation that the lawyer’s client is the constituent and not the organization.  It also warns the lawyer to be sensitive to the false impression that might be created among non-client constituents, particularly when the lawyer represents a constituent that participates in the organization’s management, and to make clear to them before being exposed to information that may constitute corporate confidences or secrets that the lawyer’s interests may be separate from those of the entity.

1.13:210      Lawyer with Fiduciary Obligation to Third Person

There appear to be no pertinent DC court decisions or ethics opinions on this subject.

1.13:220      Lawyer Serving as Officer or Director of an Organization

There appear to be no pertinent DC court decisions or ethics opinions on this subject.

1.13:230      Diverse Kinds of Entities as Organizations

In Griva v. Davison, cited above in 1.13:102, the DC Court of Appeals held that a partnership is an organization within the meaning of Rule 1.13. However, by approving quotations from ABA Formal Opinion 91-361, the Court suggested

-- there is no explicit statement of the comparison -- that a lawyer would properly be found to represent an individual partner (particularly in a small partnership) more readily than the same lawyer would be found to represent, say, an individual shareholder of a closely held corporation.

DC Ethics Opinion 305 (2001) addressed the ethical considerations arising from representation of a trade organization. Following the reasoning of ABA Formal Opinion 92-305, among other authorities, it held that representation of a trade association does not, without more, create an attorney-client relationship with individual members of the association; but also noted that the particular circumstances of a representation, such as where members of the association have disclosed confidential information to the lawyer in the belief that the lawyer was acting on their behalf, might result in such an attorney-client relationship. The Opinion also pointed out that representation of a trade association might bar the lawyer under Rule 1.7(2) through (4) from undertaking a representation adverse to a member of the association, if that representation was sufficiently related to the lawyer's representation of the association to present a risk either that the new client would not be represented with vigor or that unfair advantage would be taken of the adverse association member.

DC Ethics Opinion 159 (1985) ruled that, under the Model Code, the lawyer for a cooperative association did not, merely by virtue of his representation of the association, represent "each and every member" of the association even though the lawyer's fee was paid from members' dues. Subject to the usual conflict rules, expressed then in terms of adverse effect on professional judgment and differing interests, the lawyer could represent a member of the association in a dispute with another member, represent a member against a single director of the association, and represent the association against a member.

Under the substantive law of the District of Columbia the actual client of a lawyer described in lay (and probably most lawyers') terms as representing a decedent's estate is the personal representative. Poe v. Noble, 525 A.2d 190, 193 (DC 1987); Hopkins v. Akins, 637 A.2d 424, 428 (DC 1993). The Legal Ethics Committee in DC Ethics Opinion 259 (1995) considered itself bound by these decisions in ruling that a lawyer similarly represents the conservator of the estate of an incapacitated person and not the estate; thus the lawyer "for the estate" could not represent two conservators seeking to remove a third believed to have been profiting from the estate. However, under the DC Code a lawyer apparently may represent a trust as opposed to the trustees. DC Ethics Opinion 230 (1992).

1.13:300   Preventing Injury to an Entity Client

· Primary DC References: DC Rule 1.13
· Background References: ABA Model Rule 1.13(b) & (c), Other Jurisdictions
· Commentary: ABA/BNA § 91:2001, ALI-LGL § 96, Wolfram § 13.7

In DC Ethics Opinion 216, cited in 1.13:200 above, the Legal Ethics Committee cautioned that, while the lawyer could and should continue to take directions from the dispossessed president of the close corporation up to a point, if the lawyer were convinced that the president's actions were clearly in violation of the president's own fiduciary duties to the corporation, "the lawyer may be forced to seek guidance from the courts as to who is in control of the corporation, there being no higher authority within the corporation to whom the lawyer can turn."

1.13:310      Resignation Versus Disclosure Outside the Organization

There appear to be no pertinent DC court decisions or ethics opinions on this subject.

1.13:400   Fairness to Non-Client Constituents Within an Entity Client

· Primary DC References: DC Rule 1.13(b)
· Background References: ABA Model Rule 1.13(d), Other Jurisdictions
· Commentary: ABA/BNA § 91:2001, ALI-LGL § 103, Wolfram § 13.7.5

In DC Ethics Opinion 148 (1985), under the Model Code, the Legal Ethics Committee anticipated Rule 1.13(b) by ruling that DR 1-102(A)(4) (generally forbidding deceitful conduct) required a lawyer for a government agency to caution an employee whom the lawyer was advising in the course of official duty against making any disclosures to the lawyer in the belief that they would be confidential as against the agency.

DC Ethics Opinion 269 (1997) addresses the ethical considerations that arise when a lawyer is retained by a corporation to conduct an internal investigation and interviews corporate constituents.  The Opinion emphasizes the provisions of Rule 1.13 that make clear that the lawyer’s client is the corporation only, as well as those that obligate the lawyer to explain the identity of the client when it is apparent that the organization’s interests may be adverse to those of the constituent.

1.13:500   Joint Representation of Entity and Individual Constituents

· Primary DC References: DC Rule 1.13(c)
· Background References: ABA Model Rule 1.13(e), Other Jurisdictions
· Commentary: ABA/BNA § 91:2601, ALI-LGL § 131, Wolfram § 13.7

In Griva v. Davison, 637 A.2d at 837, the court held that a lawyer representing a partnership of three could not represent two of the partners in a dispute with the third.

DC Ethics Opinion 269 (1997) discusses issues that arise when a lawyer is asked to represent a constituent and an organization in the same matter.

1.13:510      Corporate Counsel's Role in Shareholder Derivative Actions

There appear to be no pertinent DC court decisions or ethics opinions on this subject.

1.13:520      Representing Client with Fiduciary Duties

There appear to be no pertinent DC court decisions or ethics opinions on this subject.

1.13:530      Representing Government Client

There has apparently been no elucidation or amplification by the DC Court of Appeals or the Legal Ethics Committee of the statement in Comment [7], quoted in 1.13:101 above, that the application of Rule 1.13 to government lawyers must take account of the differences between government agencies and other organizations. Under the Model Code, DC Ethics Opinion 112 (1982) says that lawyers for the federal Office of Personnel Management could not be members of a union described as "consistently in an adversarial relationship" with the agency if their interests as union members would affect their judgment as lawyers for the agency. And DC Ethics Opinion 148 (1985) ruled that, because the employing government agency, and not the employee to whom the lawyer regularly provided legal advice relating to the employee's official duty, was the lawyer's client, the lawyer could communicate to the agency the employee's disclosures to the lawyer and could be a witness against the employee in a disciplinary proceeding.