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Michigan Rules of Professional Conduct
Comment - Rule 1.13
The Entity as the Client
 In transactions with their lawyers, clients who are individuals can speak and decide for themselves, finally and authoritatively. In transactions between an organization and its lawyer, however, the organization can speak and decide only through agents, such as its officers or employees. In effect, the client-lawyer relationship is maintained through an intermediary between the client and the lawyer. This fact requires the lawyer under certain conditions to be concerned whether the intermediary legitimately represents the client.
 When officers or employees of the organization make decisions for it, the decisions ordinarily must be accepted by the lawyer even if their utility or prudence is doubtful. Decisions concerning policy and operations, including ones entailing serious risk, are not as such in the lawyer's province. However, different considerations arise when the lawyer knows that the organization may be substantially injured by action of an officer or employee that is in violation of law. In such a circumstance, it may be reasonably necessary for the lawyer to ask the officer, employee, or other agent to reconsider the matter. If that fails, or if the matter is of sufficient seriousness and importance to the organization, it may be reasonably necessary for the lawyer to take steps to have the matter reviewed by a higher authority in the organization. Clear justification should exist for seeking review over the head of the officer or employee normally responsible for it. The stated policy of the organization may define circumstances and prescribe channels for such review, and a lawyer should encourage formulation of such a policy. Even in the absence of organization policy, however, the lawyer may have an obligation to refer a matter to higher authority, depending on the seriousness of the matter and whether the officer in question has apparent motives to act at variance with the organization's interest. Review by the chief executive officer or by the board of directors may be required when the matter is of importance commensurate with their authority. At some point it may be useful or essential to obtain an independent legal opinion.
 In an extreme case, it may be reasonably necessary for the lawyer to refer the matter to the organization's highest authority. Ordinarily, that is the board of directors or similar governing body. However, applicable law may prescribe that under certain conditions highest authority reposes elsewhere, for example, in the independent directors of a corporation. The ultimately difficult question is whether the lawyer should be permitted to circumvent the organization's highest authority when it persists in a course of action that is clearly violative of law or a legal obligation to the organization and that is likely to result in substantial injury to the organization.
 In such a situation, if the lawyer can take remedial action without a disclosure of information that might adversely affect the organization, the lawyer as a matter of professional discretion may take such actions as the lawyer reasonably believes to be in the best interest of the organization. For example, a lawyer for a close corporation may find it reasonably necessary to disclose misconduct by the board to the shareholders. However, taking such action could entail disclosure of information relating to the representation with consequent risk of injury to the client. When such is the case, the organization is threatened by alternative injuries: the injury that may result from the governing board's action or refusal to act, and the injury that may result if the lawyer's remedial efforts entail disclosure of confidential information. The lawyer may pursue remedial efforts even at the risk of disclosure in the circumstances stated in subparagraphs (c)(1) and (c)(2).
Relation to Other Rules
 The authority and responsibility provided in Rule 1.13(b) and (c) are concurrent with the authority and responsibility provided in other rules. In particular, this rule does not limit the lawyer's responsibility under Rule 1.6, the responsibilities to the client under Rules 1.8 and 1.16 and the responsibilities of the lawyer under Rule 3.3 or 4.1. If the lawyer's services are being used by an organization to further an illegal act or fraud by the organization, Rule 1.2(c) can be applicable. In connection with complying with Rule 1.2(c), 3.3 or 4.1, or exercising the discretion conferred by Rule 1.6(c), a lawyer for an organization may be in doubt whether the conduct will actually be carried out by the organization. To guide conduct in such circumstances, the lawyer ordinarily should make inquiry within the organization as indicated in Rule 1.13(b).
 When the lawyer involved is a member of a firm, the firm's procedures may require referral of difficult questions to a superior in the firm. In that event, Rule 5.2 may be applicable.
 The duty defined in this rule applies to governmental organizations. However, when the client is a governmental organization, a different balance may be appropriate between maintaining confidentiality and assuring that the wrongful official act is prevented or rectified because public business is involved. In addition, duties of lawyers employed by the government or lawyers in military service may be defined by statutes and regulations. Therefore, defining precisely the identity of the client and prescribing the resulting obligations of such lawyers may be more difficult in the government context. In some circumstances, it may be a specific agency, but in others it may be the government as a whole. For example, if the action or failure to act involves the head of a bureau, the department of which the bureau is a part may be the client for purposes of this rule. With these qualifications, the lawyer's substantive duty to the client and reasonable courses of action are essentially the same as when the client is a private organization.
Clarifying the Lawyer's Role
 The fact that the organization is the client may be quite unclear to the organization's officials and employees. An organization official accustomed to working with the organization's lawyer may forget that the lawyer represents the organization and not the official. The result of such a misunderstanding can be embarrassing or prejudicial to the individual if, for example, the situation is such that the client-lawyer privilege will not protect the individual's communications to the lawyer. The lawyer should take reasonable care to prevent such consequences. The measures required depend on the circumstances. In routine legal matters, a lawyer for a large corporation does not have to explain to a corporate official that the corporation is the client. On the other hand, if the lawyer is conducting an inquiry involving possible illegal activity, a warning might be essential to prevent unfairness to a corporate employee. See also Rule 4.3.
 Paragraph (e) recognizes that a lawyer for an organization may also represent a principal officer or major shareholder. Such common representation, although often undertaken in practice, can entail serious potential conflicts of interest.
 Under generally prevailing law, the shareholders or members of a corporation may bring suit to compel the directors to perform their legal obligations in the supervision of the organization. Members of unincorporated associations have essentially the same right. Such an action may be brought nominally by the organization, but usually is, in fact, a legal controversy over management of the organization.
 The question can arise whether counsel for the organization may defend such an action. The proposition that the organization is the lawyer's client does not alone resolve the issue. Most derivative actions are a normal incident of an organization's affairs, to be defended by the organization's lawyer like any other suit. However, if the claim involves serious charges of wrongdoing by those in control of the organization, a conflict may arise between the lawyer's duty to the organization and the lawyer's relationship with the board. In those circumstances, Rule 1.7 governs who should represent the directors and the organization.