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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.

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Ohio Legal Ethics Narrative

v. law firms and associations

5.7 RULE 5.7 RESPONSIBILITIES REGARDING LAW-RELATED SERVICES

5.7:100 Comparative Analysis of Ohio Rule

5.7:101 Model Rule Comparison

Division (a) of Ohio Rule 5.7 is substantively identical to MR 5.7(a).

Divisions (b), (c), and (d) have been added to Ohio Rule 5.7; they have no Model Rule counterpart.

Division (e) of Ohio Rule 5.7 is comparable to MR 5.7(b); it differs only in that it deletes the "and in substance are related to" language contained in MR 5.7(b) following "in conjunction with".

5.7:102 Ohio Code Comparison

The following sections of the Ohio Code of Professional Responsibility are listed in the Correlation Table (Appendix A to the Rules) as related to Ohio Rule 5.7: None.

5.7:200 Applicability of Ethics Rules to Ancillary Business Activities

Provision of law-related services – In general: Lawyers at times engage in both legal and "law-related services," which Ohio Rule 5.7(e) defines as

services that might be reasonably performed in conjunction with and in substance are related to the provision of legal services, and that are not prohibited as unauthorized practice of law when provided by a nonlawyer.

Examples of such services are set forth in Rule 5.7 cmt. [9]; they "include providing title insurance, financial planning, accounting, trust services, real estate counseling, legislative lobbying, economic analysis, social work, psychological counseling, tax preparation, and patent, medical, or environmental consulting."

Allowing lawyers to engage in both legal and law-related services, however, may potentially harm clients in two ways. First, when a lawyer performs law-related services or owns or controls an entity that does, the client may not fully understand that when the lawyer engages in these activities the full protections that normally attach to the client-lawyer relationship may not apply. Ohio Rule 5.7 cmt. [1]. This concern can arise even when the lawyer provides no legal services. Ohio Rule 5.7 cmt. [2]. Merely being associated with the law-related services entity could be enough to confuse the client. Second, if the lawyer owns or controls a business to provide law-related services, there may be impermissible steering of clients between the lawyer and entity providing law-related services, thereby undercutting informed client choice. See Ohio Rules 5.7(b) & (c).

Ohio Rule 5.7 addresses both of these concerns.

Provision of law-related services – Client confusion as to lawyer's status: To assure that clients are not misled as to the role the lawyer is playing and the protections, like confidentiality, that may attach, the Rule provides that the rules of professional conduct apply when the services are not distinct from the provision of legal services (5.7(a)(1)) and in other circumstances when provided by an entity controlled or owned by the lawyer individually or with others, if the lawyer does not take reasonable steps to assure that the person receiving the services knows that the services are not legal services and that the protections of the client-lawyer relationship do not exist. Rule 5.7(a)(2). If the provisions of the Rule are met, then only those professional conduct rules that apply to conduct regardless of the context, such as Ohio Rule 8.4, apply. Ohio Rule 5.7 cmt. [2]. Of course other law may still apply to regulate the provision of the law-related services. Ohio Rule 5.7 cmt. [11].

The Rule itself does not address how to determine if the provision of legal services and the provision of law-related services are "distinct," but the comments provide some guidance. Comment [3] discusses structural arrangements that may help make the services distinct from each other. This could be done "for example through separate entities or different support staff within the law firm." Ohio Rule 5.7 cmt. [2]. Nevertheless, "under some circumstances the legal and law-related services may be so closely entwined that they cannot be distinguished from each other" and hence cannot be made distinct. Ohio Rule 5.7 cmt. [8].

Nor does the Rule address how one measures whether a lawyer "controls" the law-related services entity within the meaning of the Rule, but Comment [4] states that "control of an entity extends to the ability to direct its operation" which, in turn, depends "upon the circumstances of the particular case." Ohio Rule 5.7 cmt. [4].

The comments also give some guidance on the "reasonable measures" that need be taken to assure that persons dealing with an entity providing law-related services owned or controlled by a lawyer know that the services are not legal services and that the protections arising from a client-lawyer relationship do not apply. Notice should be given "before entering into an agreement" to provide the law-related services and "preferably should be in writing." Ohio Rule 5.7 cmt. [6].

Hazard and Hodes note that if a practicing lawyer were to provide financial-planning services directly to persons who are not law-practice clients, this is apparently not covered by Rule 5.7: The financial-planning

services are "distinct" from the legal services the lawyer normally provides; moreover, the services are not being provided through a "separate entity." In this situation, therefore, Rule 5.7(a) neither prohibits their delivery nor regulates the lawyer's conduct in any way. Given the legislative history of both the 1991 and 1994 versions of Rule 5.7, it is doubtful that the drafters of the latter intended this result, but that is the effect of the language they chose.

2 Geoffrey C. Hazard, Jr. & W. William Hodes, The Law of Lawyering § 48.3, at 48-6 (3d ed. 2001). If anything, this unintended result would seem to be even clearer under the slightly different language used in Ohio Rule 5.7(a) (lawyer subject to Rules of Professional Conduct in providing law-related services if such services are provided "in either of the following circumstances:" (1) not distinct from provision of legal services or (2) through separate entity).

Provision of law-related services – Improper cross-referrals: To guard against improper referrals between a lawyer and a law-related services entity owned or controlled by the lawyer, Ohio Rules 5.7(b) and (c) impose several restrictions. First, the provision of services by either the lawyer or the law-related services entity cannot be conditioned on a requirement that the client use the services of the other. Second, the Rule imposes a notice requirement before services may be provided. The provider must disclose to the client the overlapping interest and the fact that the client may obtain those services from another provider. These provisions, like division (d), have no counterpart in the Model Rules.

Additional restrictions may arise from Ohio Rule 1.8(a), which regulates business transactions with clients. See section 1.8:220. As Comment [5] points outs, "[w]hen a client-lawyer relationship exists with a person who is referred by a lawyer to a separate law-related services entity controlled by the lawyer, individually or with others, the lawyer must comply with Rule 1.8(a)." Ohio Rule 5.7 cmt. [5].

Provision of law-related services – Persons regulated: The Ohio Rule, unlike the Model Rule, extends beyond the individual lawyer. It applies to every lawyer in a firm that owns or controls a law-related services entity and every lawyer in a firm that knows another lawyer in the firm does so. Ohio Rule 5.7(d). See Ohio Rule 5.7 cmt. [12].

Provision of law-related services before the adoption of the Ohio Rules: Although there was nothing in the former OHCPR analogous to either Ohio Rule 5.7 or MR 5.7, there are two Board of Commissioners' opinions that cited, discussed, and agreed with the Model Rule. Thus, in both Bd. of Comm'rs on Grievances & Discipline Op. 2003-1, 2003 Ohio Griev. Discip. LEXIS 1 (Apr. 11, 2003), and Op. 2000-4, 2000 Ohio Griev. Discip. LEXIS 4 (Dec. 11, 2000), the Board, after quoting MR 5.7, noted that while the Model Rule did not (then) "govern Ohio attorneys, the ABA rule provides guidance" and stated as follows:

ABA Model Rule 5.7(a) acknowledges that lawyers may provide law-related services either in circumstances that are not distinct from the lawyer's provision of legal services to clients or through a separate entity. The rule identifies law-related services as services that might reasonably be performed in conjunction with and in substance are related to the provision of legal services. The rule requires that lawyers who provide law-related services must comply with professional rules of conduct.

Op. 2003-1, 2003 Ohio Griev. Discip. LEXIS 1, at *8; Op. 2000-4, 2000 Ohio Griev. Discip. LEXIS 4, at *4. In Opinion 2003-1, the Board opined that a law firm representing a seller or a buyer of a business may assist the seller/buyer client by helping to locate a buyer/seller, so long as the rules of professional conduct are adhered to. In Opinion 2000-4 the Board concluded that the former OHCPR did not prohibit a lawyer from providing financial-planning services through his law firm to business and estate-planning clients of the firm, so long as the law-related services were provided in connection with and were related to the provision of legal services. A lawyer who did so was subject to the OHCPR and had to heed applicable state and federal laws governing the law-related service. Thus, "Ohio attorneys may, as they have by tradition and perhaps by unspoken [now spoken] rule, provide law-related services as part of the practice of law to legal clients of the law firm." Id. at *5.

Presumably, these Board opinions are generally good law under Ohio Rule 5.7, although any limitation in Opinion 2000-4 requiring that the law-related services be provided in connection with the provision of legal services is now superseded by the express terms of Ohio Rule 5.7(a)(2). One should also remember that Ohio Rule 5.7 contains provisions (divisions (b), (c), and (d)) not found in the Model Rule.

The Task Force in its Ohio Code Comparison to Rule 5.7 does not refer to either of these BCGD opinions; instead it notes that the Rule is consistent with Bd. of Comm'rs on Grievances & Discipline Op. 94-7, 1994 Ohio Griev. Discip. LEXIS 8 (June 17, 1994), which generally approved of a lawyer's provision of law-related services through a separate entity. Opinion 94-7 is cited with approval in both Opinions 2003-1 and 2000-4.