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Some portions of the collection may already be severely out of date, so please be cautious in your use of this material.


New York Legal Ethics

II. COUNSELOR

2.1   Rule 2.1 Advisor

2.1:100   Comparative Analysis of New York Rule

Primary New York References: Canon 5, DR 5-107(B), EC 7-8
Background References: ABA Model Rule 2.1, Other Jurisdictions
Commentary:
NY Commentary: Simon's N.Y. Code of Prof. Resp. Annot. (1999 ed.) Canon 5, et seq.

2.1:101      Model Rule Comparison

The New York Code contains no direct counterpart to Model Rule 2.1. However, NY Canon 5 addresses “independent professional judgment" as follows: “A Lawyer Should Exercise Independent Professional Judgment on Behalf of a Client.”

The ten Disciplinary Rules and the twenty-four Ethical Considerations of Canon 5 govern conflicts of interest and seek to ensure that lawyers exercise their best judgment on behalf of each client, free from all competing or conflicting influences.

In particular, NY DR 5-107(B) specifically prohibits a lawyer from permitting a person who recommends, employs or pays the lawyer to represent another to "direct or regulate" the lawyer's professional judgment in such representation.

The language of NY EC 7-8 is similar to the second sentence of Model Rule 2.1, and provides: "Advice of a lawyer to the client need not be confined to purely legal considerations . . . 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 . . . In the final analysis, however, . . . the decision whether to forego legally available objectives or methods because of non-legal factors is ultimately for the client . . ."

2.1:102      Model Code Comparison

NY Canon 5 is virtually identical to Model Code Canon 5. DR 5-107(B) is identical to the Model Code. The NY Ethical Considerations ("EC"s) are virtually identical to the Model Code ECs.

2.1:200   Exercise of Independent Judgment

Primary New York References: DR 5-105, DR 5-102, DR 5-103, DR 5-104, DR 5-105
Background References: ABA Model Rule 2.1, Other Jurisdictions
Commentary: ABA/BNA § 31:701, ALI-LGL § 151, Wolfram § 4.3
NY Commentary: Simon's N.Y. Code of Prof. Resp. Annot. (1999 ed.) Canon 5, et seq.

Relevant Disciplinary Rules

The ten Disciplinary Rules of Canon 5 seek to ensure that a lawyer will not be subject to influences which impair the lawyer's ability to exercise independent professional judgment on behalf of the lawyer's client.

NY DR 5-101 restricts a lawyer’s right to accept matters that may conflict with the lawyer’s own “financial, business, property, or personal interests” and where the lawyer may be called as a witness for or against a client. See Model Rules 1.7, 1.9, 3.7.

NY DR 5-102 restricts a lawyer’s right to continue working on a matter where the lawyer may be called as a witness. See Model Rules 1.16(a), 3.7.

NY DR 5-103 prohibits a lawyer from acquiring a “proprietary interest” in a client’s matter or giving a client financial assistance during litigation. See Model Rules 1.5(c), 1.8(e), 1.8(j).

NY DR 5-104 restricts a lawyer from entering into business transactions with a client. See Model Rules 1.7(a-b), 1.8(d), 1.16(a).

NY DR 5-105 governs conflicts of interest with other clients. See Model Rules 1.10(a), 1.16(a), 1.7, 2.2.

NY DR 5-106 prohibits a lawyer who represents two or more clients from participating in an aggregate settlement unless he obtains each client's consent following the requisite disclosure. See Model Rule 1.8(g).

NY DR 5-107 restricts a lawyer from receiving compensation from third parties for representing a client. See Model Rules 1.7(b), 1.8(f), 5.4.

NY DR 5-108 governs conflicts of interest with former clients. See Model Rules 1.9 (a) and (c).

NY DR 5-109 affirms that a lawyer who represents an organization such as a corporation, partnership, non-profit association, or other entity is the lawyer for the organization, not any of its constituents. See Model Rules 1.13(a) and (d).

NY DR 5-110 concerns potential conflicts among arising from a lawyer’s membership in a legal service organization. See Model Rules 1.7, 6.3.

Relevant Ethical Considerations

In addition, several NY EC's pursuant to Canon 5 stress the importance of maintaining the independence of the lawyer's professional judgment.

NY EC 5-1 provides: "The professional judgment of a lawyer should be exercised, within the bounds of the law, solely for the benefit of the client and free of compromising influences and loyalties. Neither the lawyer's personal interests, the interests of other clients, nor the desires of third persons should be permitted to dilute the lawyer's loyalty to the client."

NY EC 5-14 provides: "Maintaining the independence of professional judgment required of a lawyer precludes acceptance or continuation of employment that will adversely affect the lawyer's judgment on behalf of or dilute the lawyer's loyalty to a client. This problem arises whenever a lawyer is asked to represent two or more clients who may have differing interests, whether such interests be con flicting, inconsistent, diverse, or otherwise discordant."

NY EC 5-15 provides: "If a lawyer is requested to undertake or to continue representation of multiple clients having potentially differing interests, the lawyer must weigh carefully the possibility that the lawyer's judgment may be impaired or loyalty divided if the lawyer accepts or continues the employment. The lawyer should resolve all doubts against the propriety of the representation. A lawyer should resolve all doubts against the propriety of the representation. A lawyer should never represent in litigation multiple clients with differing interests; and there are few situations in which the lawyer would be justified in representing in litigation multiple clients with potentially differing interests. If a lawyer accepted such employment and the interests did become actually differing, the lawyer would have to withdraw from employment with likelihood of resulting hardship on the clients; and for this reason it is preferable that the lawyer refuse the employment initially. On the other hand, there are many instances in which a lawyer may properly serve multiple clients having potentially differing interests in matters not involving litigation. If the interests vary only slightly, it is generally likely that the lawyer will not be subjected to an adverse influence and that the lawyer can retain his or her independent judgment on behalf of each client; and if the interests become differing, withdrawal is less likely to have a disruptive effect upon the causes of the clients."

2.1:300   Non-Legal Factors in Giving Advice

Primary New York References:
Background References: ABA Model Rule 2.1, Other Jurisdictions
Commentary: ABA/BNA § 31:701, ALI-LGL § 151, Wolfram § 4.3
NY Commentary: Simon's N.Y. Code of Prof. Resp. Annot. (1999 ed.) Canon 5, et seq.

[The discussion of this topic has not yet been written.]

2.2   Rule 2.2 Intermediary

2.2:100   Comparative Analysis of New York Rule

Primary New York References: DR 5-105
Background References: ABA Model Rule 2.2, Other Jurisdictions
Commentary:
NY Commentary: Simon's N.Y. Code of Prof. Resp. Annot. (1999 ed.) Canon 5, et seq.

2.2:101      Model Rule Comparison

The NY Code of Professional Responsibility does not contain any direct counterpart to Model Rule 2.2, which addresses issues arising when a lawyer proposes to act as an intermediary. On the general topic of multiple representation, NY DR 5-105(A), (B) and (C) address circumstances where a lawyer may not serve two or more clients due to conflicts of interest.

NY DR-5 105(A) provides that “[a] lawyer shall decline proffered employment if the exercise of independent professional judgment in behalf of a client will be or is likely to be adversely affected by the acceptance of the proffered employment, or if it would be likely to involve the lawyer in representing differing interests, except to the extent permitted under DR 5-105(C).”

NY DR 5-105(B) requires a lawyer to discontinue multiple employment which has already been undertaken if the exercise of the lawyer's independent judgment will or is likely to be adversely affected, or if it is likely that the lawyer will be required to represent "differing interests."

NY DR 5-105(C) allows a lawyer to represent multiple clients in the situations described in NY DR 5-105(A) & (B) provided that (1) it is “obvious that the lawyer can adequately represent the interests of each” client; and (2) each client consents after “full disclosure of the possible effect of such joint representation on the lawyer's independent professional judgment on behalf of each client.”

On the related issue of a lawyer serving as an arbitrator or mediator, NY EC 5-20 acknowledges that 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 relationship.”

Cross References

See Model Rules 1.7 (a) and (b), which address conflicts of interest generally, and Model Rule 1.16(a), which mandates withdrawal when irreconcilable conflicts arise.}

2.2:102      Model Code Comparison

DR 5-105(A), (B) and (C) and EC 5-20 are virtually identical to the ABA Model Code.

2.2:200   Relationship of Intermediation to Joint Representation

Primary New York References: DR 5-105, DR 1-102
Background References: ABA Model Rule 2.2, Other Jurisdictions
Commentary: ABA/BNA § 51:1501, ALI-LGL § 153, Wolfram §§ 8.7, 13.6
NY Commentary: Simon's N.Y. Code of Prof. Resp. Annot. (1999 ed.) Canon 5, et seq.

Relevant Ethics Opinions

Preparation of Surrogate Parenting Contracts: NYSBA Comm. on Prof. Ethics, Op. No. 584, 1987 WL 109300 (December 15, 1987) (attorney may assist in preparation of surrogate parenting contract and provide nonlegal consulting services in relation thereto, if not illegal; but attorney may not represent both a party to such contract and act as an intermediary).

Relevant Cases

Amicable Divorces: New York courts have recognized that an attorney may attempt an intermediary role in an amicable divorce. In Levine v. Levine, 56 N.Y.2d 42, 451 N.Y.S.2d 26 (1982), the court refused the wife’s motion to set aside a separation agreement when the husband had contacted the lawyer, stating that he and his wife agreed on the essential terms of the agreement. The lawyer met with the couple and told the wife he was acting as an attorney for both parties only because basic terms had already been settled and that she was free to seek advice from another attorney. Finding no evidence of overreaching or unfairness, the court noted that the lawyer had “managed to preserve neutrality” throughout joint representation. Compare In re Gould, 207 A.D.2d 98, 620 N.Y.S.2d 491 (2d Dept. 1995) (ordering two year suspension of attorney who engaged in impermissible conflict of interest by representing both husband and wife in matrimonial matter while having an undisclosed sexual relationship with the wife. Conduct violated DR 5-105(A), (B) and (C) and DR 1-102(A)(4)).

Prior Representation of One Client: Where an attorney formerly represented one spouse in non-matrimonial litigation, the same attorney could not represent the other spouse in their divorce action. See Carimati v. Carimati, 94 A.D.2d 659, 462 N.Y.S.2d 220 (1st Dept. 1983) (granting husband’s motion to disqualify his wife’s counsel on appeal where, prior to representing the wife in the instant litigation, the wife’s counsel had, for the better part of a decade, been giving the husband legal advice on various immigration, corporate and leasehold matters).

Adoptions: In the case of adoption, courts are hesitant to find an alliance of interests between the parties so as to permit joint representation or intermediation. See, e.g., In re Michelman, 202 A.D.2d 87, 616 N.Y.S.2d 409 (2d Dept. 1994) (suspending attorney for three years for engaging in an impermissible conflict of interest by representing and/or advising both adoptive parents and biological mothers in two private placement adoptions), appeal denied, 84 N.Y.2d 811 (1994); In re Anonymous, 131 Misc.2d 666, 501 N.Y.S.2d 240 (Surr. Ct. N.Y. County 1986) (deeming improper adopting parents' attorney's review of natural mother's legal documents and arrangement of natural mother's housing in and transportation; to avoid conflict, natural mother should be represented by independent counsel of own selection).

2.2:300   Preconditions to Becoming an Intermediary

Primary New York References: DR 5-105, EC 5-16, EC 5-19
Background References: ABA Model Rule 2.2, Other Jurisdictions
Commentary: ABA/BNA § 51:1501, ALI-LGL § 153, Wolfram § 8.7, 13.6
NY Commentary: Simon's N.Y. Code of Prof. Resp. Annot. (1999 ed.) Canons 4 and 7, et seq.

Relevant Disciplinary Rules

The New York Code does not address preconditions to becoming an intermediary per se. On the related issue of joint representation, however, NY DR 5-105(C) permits joint representation even if there is a potential or actual conflict as long as it is obvious that the lawyer can adequately represent the interests of each party and each party consents to representation after full disclosure of the possible effect of such representation on the exercise of the lawyer's professional judgment on behalf of each.

Relevant Ethical Considerations

NY EC 5-16 provides: "In those instances in which a lawyer is justified in representing two or more clients having differing interests, it is nevertheless essential that each client be given the opportunity to evaluate the need for representation free of any potential conflict and to obtain other counsel if the client so desires. Thus before a lawyer may represent multiple clients, the lawyer should explain fully to each client the implication of the common representation and should accept or continue employment only if the clients consent. If there are present other circumstances that might cause any of the multiple clients to question the undivided loyalty of the lawyer, the lawyer should also advise all of the clients of those circumstances.

NY EC 5-19 provides: A lawyer may represent several clients whose interests are not actually or potentially differing. Nevertheless, the lawyer should explain any circumstances that might cause a client to question the lawyer's undivided loyalty. Regardless of the belief of a lawyer that he or she may properly represent multiple clients, the lawyer must defer to a client who holds the contrary belief and withdraw from representation of that client."

Relevant Ethics Opinions

Consent to Conflicts by Government Entity: In NYSBA Comm. on Prof. Ethics, Op. No. 629, 1992 WL 465631 (March 23, 1992), the New York State Bar Association Ethics Committee reversed its former determination that a governmental entity cannot consent to a conflict under DR 5-105(A) or (B) because the public interest is involved. After considering the so-called “government cannot consent” rule in depth, the committee “concluded that a per se ban is unjustified and should no longer be imposed in this State," and determined that the conditions imposed by DR 5-105(C) adequately protect the public interest.

Representation of Purchaser and Lender in Real Estate Transaction: Nassau County Bar Op. 98-10 (1998): Under DR 5-105(A) and (C) an attorney may not simultaneously represent both the purchaser and the lender in a real estate transaction. Such simultaneous representation is proper only if it is "obvious" the lawyer can adequately represent both, and each client consents after full disclosure. Here, the lawyer has an "inherent conflict of interest when the attorney's fee depends on the closing of the transaction." Moreover, the lender and purchaser may also have "differing interests in the details and structure of the transaction," thereby causing the lawyer's loyalty to be divided in violation of NY DR 5-101(A) and (C).

Representation of Buyer and Seller: NYSBA Comm. On Prof. Ethics, Op. No. 611, 1990 WL 304218 (June 20, 1990): A lawyer should not represent both the seller and the lender in the same transaction except in unusual circumstances and where transaction.

Representation of Insurer and Insured: Nassau County Bar Op. 91-36 (1991): Under DR 5-105(B), when any “dichotomy” develops between an insurance company and its insured, the attorney retained by the insurance company “owes his loyalty to the insured.”

Firm Participation in Defense of Pro Bono Criminal Defendants and Criminal Appeals by District Attorney: N.Y. City Bar Op. 1996-4 (1996): A large New York City law firm may simultaneously participate in pro bono program of The Legal Aid Society, handling appeals by criminal defendants, and a pro bono program of a District Attorney's Office, handling criminal appeals on behalf of the State for one of the counties in New York City. In the D.A. program, a lawyer would be named a special assistant D.A. when an appeal was assigned. The appointment would be limited to handling the assigned appeal and would last only during the appeal in the assigned case. The New York State Bar Association, in N.Y. State Bar Ops. 544 and 670, has opined that a part-time prosecutor is disqualified from practicing criminal law in all courts of the state. But those opinions "do not apply to a private lawyer appointed to serve as a special district attorney" because a special district attorney "does not present the same potential for public distrust and suspicion as would a regularly employed prose cutor representing criminal defendants in private practice." Under DR 5-105(C), therefore, a lawyer appointed as a special district attorney "may represent defendants in criminal cases outside the county of appointment." But:

Whether such a lawyer may, during the term of appointment, also represent defendants prosecuted by the District Attorney in the county of appointment will depend upon the circumstances of the particular appointment, including the relationship of the special district attorney to the District Attorney and any facts that might lead the public to believe that the professional judgment of the appointee would be influenced by factors extrinsic to the matters the appointee undertakes.

Representation of Corporation and Officer in Arbitration Proceeding Where Officer Commits Perjury: N.Y. State Bar Op. 674 (1995): Inquiring attorney represented both a corporation and one of its officers in an arbitration proceeding. After the arbitration proceeding began, the officer revealed to the attorney that he had committed perjury. If the perjury is imputed to the corporation, then the lawyer has a duty to remonstrate with both the individual officer client and the corporate client to correct the perjury, and "we conclude that differing interests necessarily are present and continuation of the multiple representation would create an impermissible representation of differing interests" that cannot be cured by consent under DR 5-105(C) unless it is "obvious" that the attorney can "adequately represent the interest of each" client and the attorney may ethically make the "full disclosure" necessary to obtain valid consent from each client.

Proposed Representation of Wife in Divorce Action During Joint Representation of Husband and Wife in Malpractice Suit: N.Y. County Lawyers' Ass'n Op. 704 (1995): A lawyer represents a husband and wife in a medical malpractice suit that they brought together on behalf of their infant child. The lawyer now wishes to represent the wife in a divorce action while simultaneously continuing to represent the husband and wife in the malpractice action. Suing a current client is not permissible unless the lawyer meets the criteria of DR 5-105(C)--it must be "obvious" that the lawyer can adequately represent each client, and the lawyer must obtain each client's consent "after full disclosure. . . . " The "test" is whether any factor makes it less likely that the lawyer will be able to represent the wife zealously in the divorce action, "free of any compromising influence or loyalty," while also zealously representing both the husband and wife in the malpractice action. "Typical factors" that would call into question a lawyer's zealous (i.e., adequate) representation include the following:

"the existence of any legal or factual argument that is potentially helpful in one action, yet possibly detrimental in the other,"

"any interest of the lawyer in the adverse party,"

"any financial interest that the lawyer has with respect to the adverse party, such as, for example, the possibility of future employment by that party."

"the nature of the litigation,"

"the type of information to which the lawyer may have had access,"

"whether the client is in a position to protect his interests or know whether he will be vulnerable to disadvantage as a result of the multiple representation (i.e., whether the client is sophisticated in legal matters)," and "the questions in dispute (e.g., statutory construction versus facts)."

Even if it is obvious at the outset that the lawyer can adequately represent the interests of both clients, "the lawyer must evaluate the situation throughout the course of the litigation. . . . If it is not obvious that the lawyer can adequately represent the interests of both clients, consent alone will not suffice."

Simultaneous Representation of Prospective Adoptive Parents and Foster Care Agency: N.Y. State Bar Op. 708 (1998): Under DR 5-105(A) a lawyer may not simultaneously represent a foster care agency and prospective adoptive parents who are seeking to adopt a child who has been either voluntarily surrendered to the agency by the natural parents or placed by court order with the agency. The agency's interest is to act in the best interests of the child. The adoptive parents' goal is to adopt, and may sometimes differ from the interests of the agency. Consent of the parties cannot cure the conflict because it is not "obvious" that the same lawyer can adequately represent both the interests of the agency and the prospective adoptive parents.

Relevant Cases

Effect of Consent: The clients' knowing consent to the joint representation may preclude a subsequent challenge by either party. See, e.g. Fischer v. Deitch, 198 A.D.2d 327, 605 N.Y.S.2d 703 (2d Dept. 1993) (denying motion to disqualify counsel representing multiple parties with potentially adverse interests, where all parties knowingly consented to such representation); Oneida of Thames Band v. New York, 757 F.2d 19 (2d Cir. 1985) (remanding for on-the-record consent to joint representation of two Indian tribes to preclude any subsequent challenge to judgment by either tribe); Softel Inc. v. Dragon Medical and Scientific Communications, Ltd., No. 87 Civ. 0167 (MGC), 1995 WL 75490 (S.D.N.Y. Feb. 23, 1995) (motion to disqualify defendant’s counsel on conflict of interest grounds at the end of liability phase of trial denied because defendants ex pressly consented to potential conflict); but see Greene v. Greene, 47 N.Y.2d 447, 418 N.Y.S.2d 379 (1979) (“Because dual representation is fraught with the potential for irreconcilable conflicts, it will rarely be sanctioned even after full disclosure has been made and the consent of the clients obtained.”); Sapienza v. New York News, Inc., 481 F. Supp. 676 (S.D.N.Y. 1979) (counsel disqualified despite consent of parties where it was far from “obvious” that the lawyer could adequately represent the interests of each client).

Hardship Exception: Even when representation of multiple parties may pose a conflict, it may nonetheless be permitted in order to avoid the greater hardship to the jointly represented parties occasioned by requiring separate counsel. Allegretti-Freeman v. Baltis, 205 A.D.2d 859, 613 N.Y.S.2d 449 (3d Dept. 1994) (court found it was proper for a law firm to continue to continue to represent multiple plaintiffs despite emergence of potential conflict, but where disqualification would have posed great hardship for plaintiffs by delaying action and increasing plaintiffs' litigation expenses).

Joint Representation of Insured and Insurer: Public Service Mutual Insurance Co. v. Goldfarb, 53 N.Y.2d 392, 442 N.Y.S.2d 422 (1981) (In the event of a conflict between an insured client and his insurance company, an in-house attorney for an insurance company may not continue to represent the insured client because the attorney has "divided loyalty" to both the insurance company and the insured); Hartford Fire Insurance Co. v. Masternak, 55 A.D.2d 472, 390 N.Y.S.2d 949 (4th Dept. 1981) (disclosure and consent irrelevant where insurance company’s lawyers were first retained to defend the insured, who thus “became clients of those attorneys and deserving of total fidelity,” even though the insurance company paid the legal fees).

Joint Representation of Company and Outside Directors: In In re Leslie Fay Companies Inc., 175 B.R. 525 (S.D.N.Y. 1994), the court sanctioned a law firm which had previously assisted a company's Audit Committee in investigating internal accounting irregularities at the Company, and later sought to represent the company as bankruptcy counsel in connection with its Chapter 11 petition. Unsecured creditors challenged whether the law firm was “disinterested” as required by 11 U.S.C. Section 327(a) and whether the firm had disclosed its connections with parties in interest as required by Fed.R.Bankr.P. 2014. The Bankruptcy Court held that the firm was not disinterested because it represented two outside directors on the Audit Committee who were potential targets of the Committee’s investigation, as well as the Company's independent auditor. The firm had not disclosed these relationships. Because the reorganization proceedings were at a critical stage, the court did not disqualify the firm. However, as a sanction, the court ordered that new counsel be brought in to handle new matters arising in the bankruptcy proceeding, and ordered the firm to provide background information to new counsel without charge. Moreover, the firm was required to pay the costs and legal fees of the examiner’s inquiry, which amounted to some $800,000.

2.2:400   Communication During Intermediation

Primary New York References:
Background References: ABA Model Rule 2.2, Other Jurisdictions
Commentary: ABA/BNA § 51:1501, ALI-LGL § 153, Wolfram § 8.7, 13.6

Relevant Ethics Opinions

Confidential Communications As Between Joint Clients: NYSBA Comm. on Prof. Ethics, Op. No. 555, 1984 WL 50010 (January 17, 1984): Where a lawyer jointly representing two clients (partners in a partnership) receives a confidential communication from one concerning the subject matter of the representation which if disclosed to the other client would adversely affect the first client vis-a-vis the second, the lawyer may not disclose the confidence to the second client but must withdraw from the joint representation.

2.2:500   Consequences of a Failed Intermediation

Primary New York References:
Background References: ABA Model Rule 2.2, Other Jurisdictions
Commentary: ABA/BNA § 51:1501,ALI-LGL § 153, Wolfram § 8.7, 13.6

[The discussion of this topic has not yet been written.]

2.3   Rule 2.3 Evaluation for Use by Third Persons

2.3:100   Comparative Analysis of New York Rule

Primary New York References:
Background References: ABA Model Rule 2.3, Other Jurisdictions
Commentary:

2.3:101      Model Rule Comparison

There is no direct counterpart to Rule 2.3 in the NY Code.

2.3:102      Model Code Comparison

[The discussion of this topic has not yet been written.]

2.3:200   Undertaking an Evaluation for a Client

Primary New York References:
Background References: ABA Model Rule 2.3, Other Jurisdictions
Commentary: ABA/BNA § 71:701, ALI-LGL § 152, Wolfram § 13.4

Relevant Ethics Opinions

Requirement of Impartiality and Independence: Assoc. of the Bar of the City of New York Comm. On Taxation, Proposed Amendments to Circular 230 with Respect to Tax Shelter Opinions, 36 Rec.A.B.City of N.Y. 133, 135 (1981) (“When rendering opinions for the use of third persons, the lawyer . . . should assume an independent posture . . . In these capacities a lawyer should not act as a partisan . . .” (citations omitted)). On the issuance of third-party opinions generally, see Legal Opinions to Third Parties: An Easier Path, 34 Bus. Law. 1891, 1905-22 (1979) (report by New York County Lawyers' Association Special Commission on Legal Opinions in Commercial Transactions, analyzing requirements for opinion letters in commercial transactions). (See also addenda to report at 36 Bus. Law. 429 (1981) and 44 Bus. Law. 563 (1989)).

Guidelines or Securities Opinion Letters: Assoc. of the Bar of the City of New York Special Comm. On Lawyer’s Role in Securities Transactions, Report, 33 Bus. Law. 1343, 1350 (1978) sets forth guidelines for the issuance of opinions relating to the sale of unregistered securities.

2.3:300   Duty to Third Persons Who Rely on Lawyer's Opinion [see also 1.1:420]

Primary New York References: DR 7-102(A)(5), DR 4-101(C)(5)
Background References: ABA Model Rule 2.3, Other Jurisdictions
Commentary: ABA/BNA § 71:701, ALI-LGL § 152, Wolfram § 13.4.4

Relevant Disciplinary Rules

Although no New York Disciplinary Rule specifically defines ethical duties to third persons who rely on a lawyer's opinion, at least two NY rules establish a duty of truth fulness, and a correlative obligation to withdraw an opinion later found to be false or misleading. Specifically, NY DR 7-102(A)(5) prohibits a lawyer from "knowingly making a false statement of law or fact" to anyone, including third persons. And NY DR 4-101(C)(5) contemplates the withdrawal by a lawyer of written or oral opinion given by the lawyer and believed to be relied on by a third party where the lawyer has discovered that the opinion was based on materially inaccurate information or is used to further a crime or fraud. In such a case, NY DR 4-101(C)(5) permits a lawyer to disclose confidences or secrets to the extent "implicit" in the withdrawal of such opinion.

Relevant Ethics Opinions

Withdrawal of Opinion Letter to Lender Due to Clients' Fraud: ABA Formal Op. 93-366 (1993): When a lawyer learns that his client is engaged in a fraud while a lender is still relying on an opinion letter prepared for the client by the lawyer, the lawyer must make a "noisy withdrawal" by withdrawing the opinion letter without stating the reasons for doing so.

2.3:400   Confidentiality of an Evaluation

Primary New York References:
Background References: ABA Model Rule 2.3, Other Jurisdictions
Commentary: ABA/BNA § 71:701, ALI-LGL § 152, Wolfram § 13.4.3

Relevant Cases

Waiver of Privilege by Disclosure to Third Parties: United States v. Tellier, 255 F.2d 441 (2d Cir.) (where a client asked counsel to prepare a letter to a third party stating the client’s position on a matter, counsel’s advice on that matter was not privileged despite the fact that the letter was never sent), cert. denied, 358 U.S. 821 (1958); see also In re John Doe Corp., 675 F.2d 482 (2d Cir. 1982) (where conversations between corporate general counsel and corporation’s accountants are part of an annual audit, they are not protected by attorney-client privilege or work-product immunity. Disclosure of the corporation’s business ethics review to outside underwriter counsel waived attorney-client privilege as to corporation’s documents).

2.4   Rule 2.4 Lawyer Serving as a Third-Party Neutral

2.4:100   Comparative Analysis of New York Rule

Primary New York References:
Background References: ABA Model Rule 2.4, Other Jurisdictions
Commentary:

MR 2.4 was added in February 2002. The Reporter's explanation of the change reads as follows:

The role of third-party neutral is not unique to lawyers, but the Commission recognizes that lawyers are increasingly serving in these roles. Unlike nonlawyers who serve as neutrals, lawyers may experience unique ethical problems, for example, those arising from possible confusion about the nature of the lawyer's role. The Commission notes that there have been a number of attempts by various organizations to promulgate codes of ethics for neutrals (e.g., aspirational codes for arbitrators or mediators or court enacted rules governing court-sponsored mediators), but such codes do not typically address the special problems of lawyers. The Commission's proposed approach is designed to promote dispute resolution parties' understanding of the lawyer-neutral's role.

2.4:101      Model Rule Comparison

New York has not adopted the new model rule.

2.4:200   Definition of "Third-Party Neutral"

Primary New York References:
Background References: ABA Model Rule 2.4, Other Jurisdictions
Commentary:

New York has not adopted the new model rule.

2.4:300   Duty to Inform Parties of Nature of Lawyer's Role

Primary New York References:
Background References: ABA Model Rule 2.4, Other Jurisdictions
Commentary:

New York has not adopted the new model rule.