Oregon Legal Ethics

V. LAW FIRMS AND ASSOCIATIONS

5.1   Rule 5.1 Responsibilities of a Partner and Supervisory Lawyer

5.1:100   Comparative Analysis of Oregon Rule

• Primary OR References: DR 1-102(B), (C), 1-103(B)
• Background References: ABA Model Rule 5.1, Other Jurisdictions
• Commentary:
• OR Commentary:

5.1:101      Model Rule Comparison

The DRs do not include counterparts to MR 5.1(a) or (b).

DR 1-102(B) is almost identical to MR 5.1(c), except that DR 1-102(B)(2) does not extend responsibility to partners in the law firm, just to those with direct supervisory authority.

DR 1-103(A) provides that a lawyer with unprivileged knowledge that “another lawyer has committed a violation of DR 1-102 that raises a substantial question as to that lawyer’s honesty, trustworthiness or fitness as a lawyer in other respects” shall inform the OSB Disciplinary Counsel. DR 1-103(B) requires a lawyer who has unprivileged knowledge or evidence regarding a lawyer or judge under investigation shall reveal such knowledge or evidence “upon proper request of a tribunal or other authority empowered to investigate or act upon the conduct of lawyers or judges.”

5.1:102      Model Code Comparison

The ABA Model Code does not have a direct counterpart for any portion of MR 5.1. DR 1-103(A) and (B) track the language of the ABA Model Code.

5.1:200   Duty of Partners to Monitor Compliance with Professional Rules

• Primary OR References:
• Background References: ABA Model Rule 5.1(a), Other Jurisdictions
• Commentary: ABA/BNA § 91:201, ALI-LGL § 11, Wolfram § 16.2
• OR Commentary:

The DRs do not include a counterpart to this rule.

5.1:300   Monitoring Duty of Supervising Lawyer

• Primary OR References: DR 1-102(B), 1-102(A)(1), 4-101(D)
• Background References: ABA Model Rule 5.1(b), Other Jurisdictions
• Commentary: ABA/BNA § 91:201, ALI-LGL § 11, Wolfram § 16.2
• OR Commentary: EOL §§ 7.3, 16.6-.7, 16.20

DR 1-102(B) provides that a lawyer will be responsible for another lawyer’s violation of the disciplinary rules if “(1) [t]he lawyer orders or, with knowledge of the specific conduct, ratifies the conduct involved; or (2) [t]he lawyer has direct supervisory authority over the other lawyer and knows of the conduct at a time when its consequences can be avoided or mitigated but fails to take reasonable remedial action.” DR 1-102(A)(1) also prohibits lawyers from engaging in unethical conduct through, or accepting the benefits of such conduct by, the acts of another. See, e.g., In re Benziger, 6 DB Rptr 51 (1992) (attorney disciplined for instructing his secretary to misrepresent to client that default order had been signed). DR 4-101(D) requires a lawyer to “exercise reasonable care” to prevent the lawyer’s employees, associates, and other representatives from “disclosing or using confidences or secrets of a client.” See, e.g., OSB Legal Ethics Op No 1991-44.

In the context of malpractice, the personal liability of an individual lawyer-partner in a limited liability partnership or for a lawyer-owner of a professional corporation is generally limited to the lawyer’s own acts or omissions or to the professional misconduct of those under the lawyer’s direct supervision. See ORS 67.105(3)-(4), 58.185(3).

5.1:400   Failing to Rectify the Misconduct of a Subordinate Lawyer

• Primary OR References: DR 1-102(B)(2)
• Background References: ABA Model Rule 5.1(c), Other Jurisdictions
• Commentary: ABA/BNA § 91:201, ALI-LGL § 5, Wolfram § 16.2
• OR Commentary:

The terms of DR 1-102(B)(2) imply that a supervising attorney who knows of a subordinate’s violation of the disciplinary rules at a time when the consequences of that violation can be avoided or mitigated has an affirmative duty to “take reasonable remedial action.”

5.1:500   Vicarious Liability of Partners

• Primary OR References: DR 1-102(B)(2)
• Background References: ABA Model Rule 5.1, Other Jurisdictions
• Commentary: ABA/BNA § 91:201, ALI-LGL §§ 8, 9
• OR Commentary:

DR 1-102(B)(2) is exactly the same as MR 5.1(c)(2) except that it omits reference to “a partner in the law firm in which the [violating] lawyer practices.” In Oregon, merely being a partner in a firm with knowledge of a disciplinary rule violation by another firm lawyer is insufficient to make a lawyer vicariously liable for the other lawyer’s DR violation. If another lawyer in the firm’s DR violation “raises a substantial question as to that lawyer’s honesty, trustworthiness or fitness as a lawyer in other respects,” DR 1-103(A) requires a partner with unprivileged knowledge of that violation to inform the OSB Disciplinary Counsel, just as all lawyers are required to do so. DR 1-103(B) requires a lawyer, including a law firm partner, who has unprivileged knowledge or evidence regarding a lawyer, including one in the partner’s own firm, who is under investigation to reveal such knowledge or evidence “upon proper request of a tribunal or other authority empowered to investigate or act upon the conduct of lawyers or judges.”

5.2   Rule 5.2 Responsibilities of a Subordinate Lawyer

5.2:100   Comparative Analysis of Oregon Rule

• Primary OR References: DR 1-102(C)
• Background References: ABA Model Rule 5.2, Other Jurisdictions
• Commentary:
• OR Commentary: EOL § 16.20

5.2:101      Model Rule Comparison

DR 1-102(C) is identical to MR 5.2(a). The DRs do not have a counterpart to MR 5.2(b).

5.2:102      Model Code Comparison

The ABA Model Code did not include a counterpart to any portion of MR 5.2.

5.2:200   Independent Responsibility of a Subordinate Lawyer

• Primary OR References: DR 1-102(C)
• Background References: ABA Model Rule 5.2(a), Other Jurisdictions
• Commentary: ABA/BNA § 91:201, ALI-LGL § 5, Wolfram § 16.2
• OR Commentary:

DR 1-102(C) provides that a subordinate lawyer is independently responsible for her or his violations of the rules of professional conduct, “notwithstanding that the lawyer acted at the direction of another person.”

5.2:300   Reliance on a Supervisor's Resolution of Arguable Ethical Issues

• Primary OR References:
• Background References: ABA Model Rule 5.2(b), Other Jurisdictions
• Commentary: ABA/BNA § 91:201, ALI-LGL § 5, Wolfram § 16.2
• OR Commentary:

There is no counterpart to this rule or its conceptual basis in the DRs.

5.3   Rule 5.3 Responsibilities Regarding Nonlawyer Assistants

5.3:100   Comparative Analysis of Oregon Rule

• Primary OR References: DR 4-101(D), 7-107(C)
• Background References: ABA Model Rule 5.3, Other Jurisdictions
• Commentary:
• OR Commentary: EOL §§ 16.24, 19.19, 19.25

5.3:101      Model Rule Comparison

The DRs do not include a direct counterpart to MR 5.3, but DR 4-101(D) specifically requires a lawyer to take reasonable steps to ensure that a client’s confidences are preserved by nonlawyer staff.

On the issue of conflicts, OSB Legal Ethics Op No 1991-44 noted that “there is no clear basis for applying DR 5-105 [client conflict rules] directly to nonattorneys.” Nevertheless, the opinion went on to conclude that if a nonattorney had acquired client confidences or secrets in the course of other employment and then was employed by a firm on a matter adverse to that former client, consent of both the former and current clients would be required. DR 7-107(C) requires a lawyer to “exercise reasonable care to prevent the lawyer’s employees from making an extrajudicial statement that the lawyer would be prohibited from making under DR 7-107(A).”

In the malpractice context, the guiding maxim regarding clerical and support staff in a law office is that the supervising attorney will be held responsible for errors committed by subordinates. The lawyer will either be vicariously liable via respondeat superior or be found to be actually negligent for failing to properly supervise or perform the tasks, regardless of whether those jobs were delegated to others. If a subordinate discloses confidential information to a third party, the attorney may be responsible for the resulting damage, even if the lawyer was ignorant of the disclosure.

5.3:102      Model Code Comparison

The DRs track their ABA Model Code counterparts.

5.3:200   Duty to Establish Safeguards

• Primary OR References:
• Background References: ABA Model Rule 5.3(a), Other Jurisdictions
• Commentary: ABA/BNA § 91:201, ALI-LGL §§ 4, 5, Wolfram § 16.3
• OR Commentary: EOL § 19.27

The Oregon DRs do not affirmatively require lawyers to establish safeguards to protect against misconduct by their subordinates, whether nonattorneys or attorneys—except insofar as client confidences and secrets are concerned. Compare DR 4-101(D) with DR 1-102(B), (C). However, the state’s Professional Liability Fund provides help, free of charge, in the review, initiation, and implementation of internal office procedures and office management consultation to reduce the risk of malpractice due to clerical error or otherwise. The Professional Liability Fund can be reached at (503) 639-6911.

5.3:300   Duty to Control Nonlawyer Assistants

• Primary OR References:
• Background References: ABA Model Rule 5.3(b), Other Jurisdictions
• Commentary: ABA/BNA § 21:8601, ALI-LGL §§ 4, 5, Wolfram § 16.3
• OR Commentary:

5.3:400   Responsibility for Misconduct of Nonlawyer Assistants

• Primary OR References:
• Background References: ABA Model Rule 5.3(c), Other Jurisdictions
• Commentary: ABA/BNA § 91:201, ALI-LGL §§ 4, 5, Wolfram § 16.3
• OR Commentary:

5.4   Rule 5.4 Professional Independence of a Lawyer [Restrictions on Form of Practice]

5.4:100   Comparative Analysis of Oregon Rule

• Primary OR References: DR 3-102(A), 3-103(A), 5-108(B), 5-108(D)
• Background References: ABA Model Rule 5.4, Other Jurisdictions
• Commentary:
• OR Commentary:

5.4:101      Model Rule Comparison

DR 3-102(A) and 3-103(A) are substantially identical to MR 5.4(a) and (b), respectively. DR 5-108(B) and (D) are substantially identical to MR 5.4(c) and (d), respectively.

5.4:102      Model Code Comparison

DR 3-102(A) and 3-103(A) are identical to their ABA Model Code counterparts. DR 5-108(B) and (D) are identical to MC DR 5-107(A) and (C), respectively.

5.4:200   Sharing Fees with a Nonlawyer

• Primary OR References: DR 3-102(A)
• Background References: ABA Model Rule 5.4(a), Other Jurisdictions
• Commentary: ABA/BNA § 41:801, ALI-LGL § 60, Wolfram §§ 16.4, 16.5
• OR Commentary: EOL §§ 4.40-.41

(A) Payments to Laypersons

Pursuant to ORS 9.520, an attorney is prohibited from offering to pay or paying compensation to laypersons for referring personal injury or death claims. The statute further prohibits an attorney from accepting any personal injury claim solicited in violation of ORS 9.500.

The purpose of the proscription against fee sharing articulated in DR 3-102(A) is to discourage laypersons from practicing law. EC 3-8; In re Griffith, 304 Or 575, 611, 748 P2d 86 (1987). DR 3-102(A) does not prohibit a lawyer from using laypersons, either as employees or as independent contractors, to collect attorney fees, but an attorney should not agree to pay a nonlawyer a portion of a legal fee earned as a result of the nonlawyer’s use of his or her influence to help the attorney control the client. See In re Little and King, 247 Or 503, 431 P2d 284 (1967). Nor should an attorney participate as a lawyer-mediator with nonlawyers as partners or shareholders in a divorce mediation center. OSB Legal Ethics Op No 1991-101.

(B) Lawyers Not Licensed to Practice in Oregon

In Peterson v. Anderson, 745 P2d 166 (Ariz App 1987), the Arizona Court of Appeals held that an agreement to split fees with an out-of-state attorney was unenforceable because the out-of-state attorney was in effect a layperson under DR 3-102. However, the Peterson rule should be limited to the practice of Oregon law by out-of-state lawyers; experts retained to consult with Oregon practitioners on matters of federal law or the law of other jurisdictions should not be considered laypersons for purposes of DR 3-102. Further, the result reached in Peterson should be otherwise if the out-of-state attorney were admitted to practice before the Oregon courts pro hac vice.

(C) Payments on Suspension or Disbarment

An attorney who is suspended or disbarred before terminating representation of a client, for reasons unequivocally unrelated to the representation of the client, is not necessarily prohibited from recovering an attorney fee from the client or dividing a fee with the successor attorney. See OSB Legal Ethics Op No 1991-25.

With regard to services rendered by a disbarred or suspended lawyer after disbarment or suspension, the current Oregon law is that employment of a disbarred or suspended attorney is permitted under the same unauthorized-practice limitations that govern nonattorneys generally. State ex rel Oregon State Bar v. Lenske, 284 Or 23, 584 P2d 759 (1978) (attorneys disciplined for dividing fees with nonlawyer friend of client, purportedly for services friend rendered to client); OSB Legal Ethics Op No 1991-25. The compensation paid to such disbarred or suspended attorneys should not be contingent on or tied to any attorney fees paid by the hiring attorney’s clients. The disbarred or suspended attorney must be compensated by straight salary or wages.

5.4:300   Forming a Partnership with Nonlawyers

• Primary OR References: DR 3-103(A), 5-108(D)
• Background References: ABA Model Rule 5.4(b), Other Jurisdictions
• Commentary: ABA/BNA § 91:401, ALI-LGL § 60, Wolfram §§ 16.4, 16.5
• OR Commentary: EOL §§ 13.13, 16.6 et seq.

(A) Generally

A lawyer is effectively barred from practicing law with a nonlawyer. See DR 3-103(A) (prohibits lawyer from forming “a partnership with a nonlawyer if any of the activities of the partnership consist of the practice of law”), 5-108(D) (lawyer prohibited from practicing law in form of corporation or association if any shareholders or owners are nonlawyers), 3-101(A) (prohibiting aiding unlawful practice of law), 3-102 (generally prohibiting division of fees for legal services with nonlawyer); ORS 9.160 (generally limiting practice of law in Oregon to members of OSB).

As noted in OSB Legal Ethics Op No 1991-101, “the practice of law involves the application of a general body of legal knowledge to the problem of a specific entity or individual.” Accord In re Morin, 319 Or 547, 562-63, 878 P2d 393 (1994). An attorney, therefore, may operate a law-related business with a nonlawyer as long as that law-related business does not constitute the “practice of law.” See, e.g., OSB Legal Ethics Op Nos 1991-10 (real estate and title insurance business), 1991-106 (tax return preparation business).

(B) Co-mediation [see also 5.4:200(A)]

Co-mediation between lawyer- and nonlawyer-mediators is permissible only when the nonlawyer-mediator is either an employee of the lawyer-mediator or an independent contractor of the mediating parties. OSB Legal Ethics Op No 1991-101. When a lawyer and nonlawyer offer co-mediation services, the lawyer can advertise as an attorney in the “counselor” section of the Yellow Pages as long as the advertisement is not false, misleading, or otherwise in violation of DR 1-102(A)(3), 2-101, and 2-102. OSB Legal Ethics Op No 1991-108.

5.4:400   Third Party Interference with a Lawyer's Professional Judgment

• Primary OR References: DR 5-108(A)-(B)
• Background References: ABA Model Rule 5.4(c), Other Jurisdictions
• Commentary: ABA/BNA § 51:901, ALI-LGL § 60, Wolfram § 8.8
• OR Commentary: EOL §§ 4.37, 6.1

An attorney may not ethically receive compensation or anything of value related to the attorney’s representation of a client without full disclosure and the client’s consent. DR 5-108(A). An attorney may not permit one who recommends, employs, or pays the attorney to render legal service to another to “direct or regulate” the attorney’s professional judgment with respect to such legal representation. Information from a client may not be disclosed to a nonclient who employs the attorney; the nonclient who employs the attorney may not interfere with the attorney-client relationship. DR 5-108(B).

DR 5-108(B) does not proscribe the payment of attorney fees by a client’s friends or relatives. The purpose of the rule, as clearly stated in EC 5-23, is simply to prevent a lawyer from dividing his or her loyalty between the client and the one who made the referral or who pays the bills. OSB Legal Ethics Op No 1991-115. The fact that a person pays a fee to an attorney is not necessarily enough to make that person a client.

5.4:500   Nonlawyer Ownership in or Control of Profit-Making Legal Service Organizations

• Primary OR References: DR 5-108(D), 3-103(A), 2-103(C), ORS 750.505-.715
• Background References: ABA Model Rule 5.4(d), Other Jurisdictions
• Commentary: ABA/BNA § 91:401, ALI-LGL § 60, Wolfram § 16.4, 16.5
• OR Commentary: EOL §§ 3.25, 16.6, 16.8

DR 5-108(D) limits the ownership of law partnerships solely to attorneys (except for the fiduciary representative of a deceased attorney while the estate is being administered). Accord DR 3-103(A) (prohibiting lawyer from forming partnership with nonlawyer for practice of law).

5.4:510      Group Legal Services

Although a group legal plan is not technically a form of law-firm organization, ORS 750.505-.715 permits the formation of “legal expense organizations” or, as they are more commonly known, group or prepaid legal plans. Under these plans, the sponsoring organization contracts with attorneys to provide legal services to group members. See ORS 750.505(2); see generally OSB Legal Ethics Op Nos 1991-46 (concerning multiple-client conflicts of interest in context of group legal services plan), 1991-79 (lawyer may enter into prepaid legal services plan sponsored by church and initiate personal contact with potential clients concerning issues of interest to church).

DR 2-103(C) specifically permits a lawyer to be recommended, employed, or paid by a group legal plan as long as the recipient of the legal services is recognized as the client and no condition or restriction is imposed by the plan on the exercise of the lawyer’s professional judgment on behalf of the plan member. Further, the arrangement must not violate the disciplinary rules or statutes relating to the unlawful practice of law. See DR 3-101 through 3-103; ORS 9.160.

5.4:520      Nonprofit Organizations Delivering Legal Services

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

5.5   Rule 5.5 Unauthorized Practice of Law

5.5:100   Comparative Analysis of Oregon Rule

• Primary OR References: DR 3-101
• Background References: ABA Model Rule 5.5, Other Jurisdictions
• Commentary:
• OR Commentary:

5.5:101      Model Rule Comparison

DR 3-101(B) prohibits a lawyer from practicing law “in a jurisdiction where to do so would be in violation of regulations of the profession in that jurisdiction.” DR 3-101(A) prohibits a lawyer from aiding “a nonlawyer in the unlawful practice of law.”

5.5:102      Model Code Comparison

DR 3-101 is identical to its ABA Model Code counterpart.

5.5:200   Engaging in Unauthorized Practice

• Primary OR References: DR 3-101
• Background References: ABA Model Rule 5.5(a), Other Jurisdictions
• Commentary: ABA/BNA § 21:8001, ALI-LGL §§ 3, 4, Wolfram § 15.1
• OR Commentary: EOL §§ 13.13, 16.11

5.5:210      Practice of Law by Nonlawyers [see also 5.4:300]

ORS 9.160 states, “[e]xcept for the right reserved to litigants by ORS 9.320 to prosecute or defend a cause in person, no person shall practice law or represent that person as qualified to practice law unless that person is an active member of the Oregon State Bar.” As noted in OSB Legal Ethics Op No 1991-101, “the practice of law involves the application of a general body of legal knowledge to the problem of a specific entity or individual.” See Oregon Peaceworks Green, PAC v. Sec. of State, 311 Or 267, 810 P2d 836 (1991) (unincorporated associations may not be represented in court by their nonlawyer officers); Oregon State Bar v. Ortiz, 77 Or App 532, 713 P2d 1068 (1986) (OSB obtained injunctive relief against nonlawyer who was rendering legal advice to resident aliens on matters of immigration law).

5.5:220      Admission and Residency Requirements for Out-of-State Lawyers

Residence is not required for admission to the OSB. See Supreme Court of the State of Oregon Rules Regulating Admission to Practice Law in Oregon § 8.15 (Jan. 2002). Nonresidents of the state of Oregon are required to designate, for purposes of service of process, an in-state agent who is an Oregon resident and an active member of the OSB. Such designation must include a street address, and the Bar member must promptly notify the OSB in writing of any change of address or name of her or his agent.

5.5:230      Pro Hac Vice Admission [see also 8.1:240]

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

5.5:240      Performing Legal Services in Another Jurisdiction

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

5.5:300   Assisting in the Unauthorized Practice of Law

• Primary OR References: DR 3-101(A)
• Background References: ABA Model Rule 5.5(b), Other Jurisdictions
• Commentary: ABA/BNA § 21:8201, ALI-LGL § 4, Wolfram § 15.1
• OR Commentary: EOL § 16.11