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District of Columbia Legal Ethics
5.1:100 Comparative Analysis of DC Rule
As originally adopted, the black letter texts of DC Rule 5.1 and of its Model Rule counterpart were identical except for subparagraph (c)(2), where the DC Rule varied from the Model Rule in one significant respect: that provision of the Model Rule made a lawyer responsible for another lawyer's violation of the rules of professional conduct if the lawyer is a partner in a firm in which the other lawyer practices or has direct supervisory authority over the other lawyer, and knows of the misconduct in time to take remedial or preventive action, while the DC Rule, holding supervisory lawyers to a higher standard than the Model Rule, added or should have known.
Most of the Comments to the two versions of the Rule were also identical, but the two Comments to the Model Rule that elaborated on paragraph (c) of the Rule (numbers  and ) were replaced by three Comments in the DC version (now renumbered as -), in which the Jordan Committee endeavored to spell out as precisely as possible the circumstances under which subparagraph (c)(2) of the Rule would be applicable.
A number of small changes were made to the Model Rule and its Comments in 2002 -- and in addition, to its caption -- on the recommendation of the Ethics 2000 Commission, mainly to clarify that the obligations imposed by the Rule applied not only to law firm partners but also to supervisory lawyers in corporate legal departments, government agencies, and legal services organizations. The DC Rules Review Committee recommended that comparable changes be made in the DC Rule and its Comments and caption, and these were approved by the DC Court of Appeals in 2006.
The caption of both versions of the Rule was changed in these revisions from Responsibilities of a Partner or Supervisory Lawyer to speak more broadly of Responsibilities of Partners, Managers and Supervisory Lawyers. Paragraph (a) of the text of both versions of the Rule was revised to supplement the introductory phrase A partner in a law firm by adding and a lawyer who individually or together with other lawyers possesses comparable managerial authority in a law firm; and the DC Rule also added or a government agency. Similarly, the Model Rule's subparagraph (c)(2) was expanded by the addition, after its initial phrase the lawyer is a partner, the phrase or has comparable managerial authority; and the DC version also added or government agency after law firm. Related, largely minor changes were made to most of the Comments to both versions of the Rule, and both had two new (and identical) Comments added: a new Comment  to highlight the additional ethical obligations of lawyers with managerial responsibilities with respect to the organization's policies and procedures for assuring compliance with ethical requirements; and a new final Comment to each Rule (numbered  for the Model Rule and  for the DC Rule) to emphasize that the duties imposed by the Rule on managing and supervisory lawyers do not modify the personal obligations of the subordinate lawyers under Rule 5.2.
Rule 5.1 had no counterpart in the Model Code. The most nearly pertinent provision, DR 1-103(A), predecessor to Rule 8.3, provided that a lawyer "possessing unprivileged knowledge of a violation of DR 1-102 [predecessor of Rule 8.4] shall report such knowledge to a tribunal or other authority empowered to investigate or act upon such violation."
5.1:200 Duty of Partners to Monitor Compliance with Professional Rules
Rule 5.1(a) requires that partners and lawyers with comparable managerial authority in a firm make "reasonable efforts" to ensure that the firm has in effect measures giving reasonable assurance that all lawyers in the firm conform to the rules of professional conduct. Comment  observes that the duty of partners, as well as of supervisory associate lawyers, to ensure compliance with the rules of professional conduct will vary according to a law firm's structure and practice. Comment  notes with approval firms that designate a senior partner or a special committee for junior lawyers to consult when potential ethical problems arise. The comment also states that "reasonable efforts" will be interpreted to encompass continuing legal education courses that the firm's lawyers are required to take. While partners have a duty under Rule 5.1(a) to monitor general compliance with professional rules of conduct among members of the firm, the mere fact of partnership is not sufficient, without more, to impute a junior lawyer's misconduct to a partner under Rule 5.1(c). See Comment .
In re Cohen, 847 A.2d 1162 (DC 2004), which is more fully discussed under 5.1:400, below, was mainly concerned with a violation of DC Rule 5.1(c)(2) by a supervising partner who had failed to detect or take remedial action about violations by an associate he was supervising that had violated two other Rules. However, the respondent there was also found to have violated Rule 5.1(a)’s requirement of reasonable efforts to ensure that the firm had in effect measures giving reasonable assurance that lawyers in the firm conformed to the rules of professional conduct, observing in this connection that “Respondent conceded . . . that there was no system in place to impart rudimentary ethics training to lawyers in the firm, particularly the less experienced ones. Equally troubling was the lack of a review mechanism which allowed an associate’s work to be reviewed and guided by a supervisory attorney.” Id. at 1166.
D.C. Ethics Opinion 278 (1998) addressed the question whether a member of the D.C. Bar could practice law in a partnership or other professional association with a lawyer licensed to practice in a foreign jurisdiction but not any U.S. jurisdiction. The Opinion's answer was affirmative, so long as the partnership or association would not compromise the D.C. lawyer's ability to uphold ethical standards The Opinion pointed in particular to the possible pertinence of Rule 5.1(a) to the question whether the foreign lawyer would adhere to ethical standards such as the need to maintain client confidentiality and avoid conflicts of interest, and to the importance of avoiding assisting another in the unauthorized practice of law, under Rule 5.1(b). The Opinion also noted the possible pertinence of Rule 7.5(b) (Firm Names and Letterheads) and 7.5(d) (Implying Practice in a Partnership).
The only other decisional authority making reference to DC Rule 5.1(b) appears to be DC Ethics Opinion 256 (1995), which briefly refers to that provision and Rule 5.3(b), along with Rule 1.6(e), in the context of a supervising lawyer's responsibility to see to it that subordinate lawyers or non-lawyers engaged in document production do not mistakenly make disclosures of information subject to confidentiality requirements.
The only decisional authority making reference to DC Rule 5.1(b) appears to be DC Ethics Opinion 256 (1995), which briefly refers to that provision and Rule 5.3(b), along with Rule 1.6(e), in the context of a supervising lawyer's responsibility to see to it that subordinate lawyers or non-lawyers engaged in document production do not mistakenly make disclosures of information subject to confidentiality requirements.
5.1:300 Monitoring Duty of Supervising Lawyer
Rule 5.1(b) requires that a lawyer with direct supervisory authority over another lawyer make "reasonable efforts" to ensure that the junior lawyer conforms to the rules of professional conduct. According to Comment , the reasonableness of a supervisory lawyer's efforts depends on the nature of the firm and its practice. Comment  states that whether a lawyer has supervisory authority over another lawyer is a question of fact. Direct supervisory authority requires "an actual supervisory role with respect to directing the conduct of other lawyers in a particular representation." A lawyer who is designated a "supervisor" in organizational terms without actually being involved in directing the efforts of other lawyers is not a supervisory lawyer for purposes of the rule.
The only DC court decision touching on this subject appears to be Wallace v. Skadden, 715 A.2d 873 (DC 1998), where the Court addressed, inter alia, a claim by a lawyer that she had been wrongfully discharged by a law firm for reporting to her superiors various acts of malfeasance and unethical conduct by other lawyers in the firm. Asserting that she was ethically required by Rules 5.1 and 5.2 to report such misconduct, she asserted that her claim for wrongful discharge was governed by Adams v. George W. Cochran & Co., 597 A. 2d 28 (DC 1991), which held that "a discharged at-will employee may sue his or her former employer for wrongful discharge when the sole reason for the discharge is the employee's refusal to violate the law." Id. at 34. The Court disposed of this claim by pointing out that Rule 5.1 sets out responsibilities of a supervisory lawyer, and so had no applicability to the plaintiff, and that while Rule 5.1 focuses on the responsibilities of subordinate lawyer, it imposes no obligation to report the misconduct of others.
DC Ethics Opinion 304 (2001) [which is discussed more fully under 5.4:400, below] addresses Rule 5.1 in the context of a law firm contracting out its human resources functions to a separate, unrelated company.
5.1:400 Failing to Rectify the Misconduct of a Subordinate Lawyer
Rule 5.1(c)(2) states that a partner or a supervisory lawyer will be responsible for another lawyer's violation of the rules of professional misconduct if the partner or supervisory lawyer knows or reasonably should know of the misconduct at a time when its consequences can be mitigated but fails to take remedial action. Comment  explains that appropriate remedial action depends on (1) the immediacy of the involvement and (2) the seriousness of the misconduct. A supervisory lawyer is required to intervene to prevent avoidable consequences of misconduct after the lawyer learns of the misconduct. Rule 5.1(c)(2) requires, for example, a supervisory lawyer to correct the misapprehension of an opposing party when it is caused by a junior lawyer's misrepresentation during a negotiation. See Comment .
In re Cohen, 847 A.2d 1162 (DC 2004) involved a partner in a small firm who was held to have violated DC Rule 5.1(c)(2) in failing to be aware of and prevent or correct conduct that violated Rules 3.3(a) and 8.4(c) on the part of an associate in the firm who was handling a client matter under the partner’s supervision. The acts of the associate that violated the latter two rules consisted of the erroneous filing with the Patent and Trademark Office of a document withdrawing a previously filed trademark application, and in that filing falsely and dishonestly representing to the PTO that the client had expressly abandoned the application. The respondent challenged the charge that he violated Rule 5.1(c)(2) on the ground that he had not been aware of the incorrect filing. The Court, however, pointed out that although Model Rule 5.1(c)(2) makes a lawyer who exercises managerial authority over another lawyer responsible for the supervised lawyer’s conduct only if the managing lawyer knows of the conduct at a time when its consequences can be avoided or mitigated, the DC Rule imposes that responsibility if the lawyer either knows or reasonably should know of the conduct, and held that that provision of the Rule applied in the circumstances of this case. As the Court explained, “We believe a lawyer of reasonable prudence and competence would have made the inquiry necessary to determine the status of the application proceeding.” Id. at 1167. Although Bar Counsel had charged the respondent with himself violating, in effect vicariously, the rules that the supervised lawyer had violated, the Hearing Committee had recognized, and the Board and the Court agreed, that only the supervised lawyer had violated those Rules, not the respondent as supervising lawyer. Although the Court’s decision was principally concerned with the charge under Rule 5.1(c)(2), the Board had also held that the respondent had violated DC Rule 5.1(a)’s requirement that a partner in a law firm make reasonable efforts to see that the firm has in effect measures providing reasonable assurance that all firm lawyer conform to the rules, and the Court observed in this connection that “[r]espondent conceded . . . that there was no system in place to impart rudimentary ethics training to lawyers in the firm, particularly the less experienced ones. Equally troubling was the lack of a review mechanism which allowed an associate’s work to be reviewed and guided by a supervisory attorney.” Id. at 1166.
5.1:500 Vicarious Liability of Partners
Under Rule 5.1(c), a partner or supervisory lawyer is vicariously liable for the misconduct of a junior lawyer if the partner orders the misconduct, ratifies the misconduct, or knows or reasonably should have known of the misconduct at a time when the consequences could have been avoided but failed to take remedial action. An objective standard based on an evaluation of all the facts is used to determine whether a partner, or a supervisory lawyer, should reasonably have known of a junior lawyer's misconduct. See Comment . A lawyer's position and responsibility within the firm, the type and frequency of his or her contacts with the junior lawyer, and the nature of the misconduct at issue are used to determine whether the lawyer should have known of the junior lawyer's misconduct.
There appear to be no pertinent DC court decisions or ethics opinions on this subject.
5.2:100 Comparative Analysis of DC Rule
DC Rule 5.2 is identical to MR 5.2 . Both MR 5.2(a) and DC Rule 5.2(a) state that a lawyer is bound by the rules of professional conduct even if he or she acts at the direction of a supervisory lawyer. MR 5.2(b) and DC Rule 5.2(b) both provide further that a subordinate lawyer does not violate the rules of professional conduct if that lawyer acts in accordance with a supervisory lawyer's reasonable resolution of an arguable question of professional duty.
Neither the Ethics 2000 Commission nor the DC Rules Review Committee saw any reason to change either the text or the commentary to this Rule, and none were made in the respective 2002 and 2006 revisions.
Rule 5.2 had no counterpart in the Model Code.
5.2:200 Independent Responsibility of a Subordinate Lawyer
Rule 5.2(a), sometimes known as the "Nuremburg Rule," prevents a junior lawyer from relying on the fact that he or she was acting at the direction of another lawyer to avoid sanctions under the disciplinary code. Comment  states, however, that the fact that a lawyer acted at another lawyer's direction "may be relevant in determining whether a lawyer had the knowledge required to render conduct a violation of the disciplinary rules." If, for example, a junior lawyer files a frivolous pleading on the instructions of a supervisor, the junior lawyer would not be guilty of professional misconduct unless he or she knew the pleading was frivolous. See Comment .
There appear to be no pertinent DC court decisions or ethics opinions on this subject. See, however, the discussion of Wallace v. Skadden, under 5.1:300, above.
5.2:300 Reliance on a Supervisor's Resolution of Arguable Ethical Issues
Rule 5.2(b) states that a junior lawyer does not violate the rules of professional conduct by acting in accordance with a supervisor's instructions if those instructions provide a "reasonable resolution of an arguable question of professional duty." Rule 5.2(b) therefore provides a defense for a junior lawyer carrying out the instructions of his or her supervisor where the conduct required by the disciplinary rules is uncertain and the supervisor's proposed course of action is reasonable in light of that uncertainty. Comment  to Rule 5.2 explains that the rule allows for a consistent course of action in instances where the disciplinary rules do not provide clear guidance to lawyers. Under Rule 5.2(b), the supervisory lawyer has the authority to guide the conduct of a junior lawyer where there is some degree of doubt as to the proper course of conduct required under the rules. Comment  also says, however, that if the rule leaves no doubt as to the proper course of conduct, both the supervisory lawyer and the junior lawyer are equally responsible for complying with the rules of professional conduct.
There appear to be no pertinent DC court decisions or ethics opinions on this subject.
5.3:100 Comparative Analysis of DC Rule
The black letter text of DC Rule 5.3 as first adopted was identical to Model Rule 5.3, except that DC Rule 5.3(c)(1) substituted "requests" for "orders" in describing the nature of the directions a lawyer must have given to a nonlawyer employee in order for the lawyer to be responsible for the ensuing conduct, and DC Rule 5.3(c)(2) omitted "or reasonably should know," leaving only "knows," and thereby required that the lawyer actually know of a nonlawyer employee's misconduct before he or she becomes responsible for it.
Changes made in the Model Rule in 2002 and in the DC Rule in 2006, pursuant to the respective recommendations of the Ethics 2000 Commission and the DC Rules Review Committee widened the differences slightly.
Paragraph (a) of the Model Rule, requiring that a partner in a law firm make "reasonable efforts" to ensure that the firm has in effect measures giving reasonable assurance that the behavior of nonlawyer personnel will be compatible with the professional obligations of the lawyer, was modified in 2002 to apply to lawyers other than partners who, individually or together with others, possess comparable managerial authority in a law firm; identical language was added in 2006 to the DC Rule, together with additional language making clear that the provision also applied to lawyers with managerial authority in a government agency.
Paragraph (b) of the DC Rule, addressing a supervising lawyer's responsibility for nolawyer assistants' conduct, is and always has been identical to its Model Rule counterpart.
A purely editorial change was made in 2006 in subparagraph (c)(1) of the DC Rule by the omission of the unnecessary article "the" before "knowledge," but no such change had been made in the Model Rule.
Subparagraph (c)(2) of the Model Rule was amended in 2002 in a fashion similar to the change then made in paragraph (a), to extend the scope of the provision to lawyers who exercise managerial authority comparable to that of partners, but unlike the addition made to paragraph (a), this added phrase did not include a reference to the authority being held individually or together with others. Subparagraph (c)(2) of the DC Rule was changed in 2006 by addition of the same broader reference to lawyers exercising comparable authority that had been added to paragraph (a) of both versions of the Rule; and in addition, language making clear that it applied to supervisors in a government agency as well as those in a law firm.
As originally adopted, Model Rule 5.3 had a single Comment, elaborating on lawyers' responsibilities with respect to the conduct of nonlawyer assistants, and the DC Rule had an identical Comment, but in addition had a Comment , discussing the responsibility of prosecutors and other government lawyers for governmental investigators acting under their direction even though not formally reporting to them. That Comment also notes that what are now Comments - to DC Rule 5.1 apply to DC Rule 5.3 as well. The 2002 amendments to the Model Rule added a Comment  that simply explains the differences between the obligations imposed by the three paragraphs of the Rule. No such Comment has been added to the DC Rule.
There was no direct counterpart to Rule 5.3 in the Model Code. DR 4-101(D), carried forward in DC Rule 1.6(e), provided that a lawyer should exercise reasonable care to prevent employees, associates and others from disclosing client confidences or secrets. DR 7-107(J) provided that "[a] lawyer shall exercise reasonable care to prevent his employees and associates from making an extrajudicial statement that he would be prohibited from making under DR 7-107."
5.3:200 Duty to Establish Safeguards
Rule 5.3(a) requires that a partner in a firm establish "measures" giving reasonable assurance that the conduct of nonlawyer personnel in the firm is compatible with the professional obligations of the lawyer. Comment  to Rule 5.3 states that a lawyer should give nonlegal assistants "appropriate instructions and supervision" about the ethical aspects of their employment, "particularly regarding the obligation not to disclose information relating to representation of the client." The comment also notes that lawyers should account for the fact that nonlawyers lack legal training and are not subject to rules of professional discipline.
There appear to be no pertinent DC court decisions or ethics opinions on this subject.
5.3:300 Duty to Control Nonlawyer Assistants
Rule 5.3(b) requires lawyers with direct supervisory authority over nonlawyer personnel to make "reasonable efforts" to ensure that the conduct of nonlawyer personnel is compatible with the professional obligations of the lawyer.
In In re Cater, 887 A.2d 1 (DC 2005), there were four consolidated proceedings against the same lawyer, in one of which the respondent was charged with violating DC Rules 5.3(b) and 1.1(b) by failing to act competently and failing adequately to supervise a nonlawyer assistant, in connection with a former secretary’s embezzlement of $47,000 from the estates of two incapacitated adults for whom the respondent had been the court-appointed guardian and conservator. (In the three other proceedings, the respondent had been charged with violating DC Rules 8.1(b) and 8.4(d) by reason of her repeated failures to respond to inquiries from Bar Counsel; these are more fully discussed under 8.1.500, below.) With respect to the Rule 5.3(b) proceeding, the evidence showed that over a nine-month period, the respondent’s secretary had forged respondent’s signature on thirty-four checks totaling $42,000 from the account of one of the clients, and two checks totaling a little over $5,000 from the other client’s account -- facts that the respondent did not discover until she examined the accounts a year after he secretary had disappeared without notice. The respondent had delegated to the secretary entire responsibility for handling the two accounts, and had done nothing to check or supervise her handling of them. The Hearing Committee had concluded that the respondent had not violated these two rules because she had offered an explanation that the Committee found persuasive, and a divided Board had concurred, albeit with four members dissenting. The Court, however, agreed with the minority on the Board, and quoted the commentary in the Annotated Model Rules of Professional Conduct to the following effect:
Courts view holding money in trust for clients as a nondelegable fiduciary responsibility that is not excused by ignorance, inattention, incompetence or dishonesty. Although lawyers may employ nonlawyers to assist in fulfilling this fiduciary duty, lawyers must provide adequate training and supervision to ensure that ethical and legal obligations to account for clients’ monies are being met.
Id. at 13. Having concluded that respondent had violated Rule 5.3(b), the court stated that it followed a fortiori that she had also failed to provide competent representation and thereby violated Rule 1.1(a), since the same evidence supported both charges.
DC Ethics Opinion 321 (2003) [which is discussed more fully under 4.3:200, above] addressed the ethical obligations of a lawyer with respect to the conduct of an investigator sent by the lawyer to interview a person not represented by counsel, in a context where the person to be interviewed was seeking a contempt order against the lawyer's client, for violation of a Civil Protection Order (CPO). The Opinion recognized that although the applicable ethical restrictions governing the interview were to be found in Rule 4.3, the lawyer's official responsibility for the investigator's conduct rested on Rules 5.3 and 8.4(a).
DC Ethics Opinion 298 (2000) [which is discussed more fully under 1.5:240, above] held that a lawyer using a collection agency to recover unpaid client fees has an obligation under Rule 5.3 to see to it that the agency preserves appropriately the confidentiality of client information imparted to it for purposes of its collection activities.
DC Ethics Opinion 304 (2001) [which is discussed more fully under 5.4:400, below] addresses Rule 5.1 in the context of a law firm contracting out its human resources functions to a separate, unrelated company.
DC Ethics Opinion 282 (1998) [more fully discussed under 1.6:320, below] addresses the problem presented by the conflict between a lawyer's duty under DC Rules 1.6(e) and 5.3 to see that non-lawyer collaborators preserve client confidences and secrets, and the statutory duty imposed on a social worker collaborator to report suspected child abuse or neglect.
The only other decisional authority applying DC Rule 5.3(b) appears to be DC Ethics Opinion 227 (1992) [discussed under 1.10:200 above]. The Opinion required screening of a paralegal who at the firm where she had previously been employed had worked on a matter that created a conflict with a client of the firm that now employed her. The opinion identified steps that the inquiring law firm could take to satisfy its obligation under Rule 5.3(b): (a) instruct the paralegal in writing not to discuss the case with any firm personnel, and give reciprocal instructions to those personnel; (b) "sticker" pertinent files with the same instructions; and (c) investigate whether the paralegal has brought with her any sensitive files or information.
See also DC Ethics Opinion 285 (1998), discussed under 4.4:200, above (relying on Opinion 227).
5.3:400 Responsibility for Misconduct of Nonlawyer Assistants
Rule 5.3(c) provides that a lawyer is responsible for the conduct of nonlawyer personnel that would violate the rules of professional conduct if engaged in by the lawyer where the lawyer (1) requests or knowingly ratifies the conduct or (2) knows of the conduct at a time when its consequences can be avoided but fails to take reasonable remedial action. Comment  states that the rule applies to prosecutors and other government lawyers who effectively direct the conduct of police or other governmental investigative personnel, even though the lawyers technically might not have any formal authority over the actions of such personnel. Under Rule 5.3, the relationship between prosecutors and other governmental lawyers with police or investigative personnel is subject to the same restrictions that apply to the relationship between private lawyers and their retained investigators. Comment  also indicates that Comments , , and  to Rule 5.1 apply to Rule 5.3 as well. [See 5.1:101, above]. Accordingly, whether a lawyer has supervisory authority over nonlegal personnel is a question of fact; the rule applies only to lawyers who have actual supervisory authority. Additionally, the remedial action required by the rule depends on the immediacy of the involvement and the seriousness of the nonlawyer personnel's misconduct.
Rule 5.3(c)(2) was found to be violated (along with Rule 1.15 and Rules 8.4(b), (c) and (d)) in a case involving commingling and misappropriation of trust funds, where improper checks were drawn by the Respondent's wife and office manager at respondent's direction. In re Moore, 704 A.2d 1187 (DC 1997).
5.4:100 Comparative Analysis of DC Rule
DC Rule 5.4(a)(1), (2) and (3) as originally adopted copied the original version of Model Rule 5.4(a) without change. In 1990, however, Model Rule 5.4(a)(2) was substantially rewritten, to change its focus from a lawyer's completing the unfinished business of a deceased lawyer to the lawyer's purchasing a practice of a deceased, disabled or disappeared lawyer, a subject also addressed by the new Model Rule 1.17 on the sale of a law practice. DC Rule 5.4(a)(2) remained unchanged until 2006, when it was revised on the recommendation of the DC Rule Review Committee by the addition of the new language of Model Rule 5.4(a)(2) rather than its substitution for the previous language of that subparagraph. Subparagraph (a)(3) remains identical and unchanged in both versions of Rule 5.4. A new subparagraph (a)(4) was added to the Model Rule on the recommendation of the Ethics 2000 Commission, recognizing the permissibility of a lawyer sharing court-awarded fees with a nonprofit organization that employed, retained or recommended employment of the lawyer in the matter, as first announced in ABA Formal Opinion 93-374. The Commission's report expressed agreement with the reasoning of Formal Opinion 93-374, but thought it useful to have its conclusion incorporated in the text of Rule 5.4, since some state ethics committees, while agreeing with the policy underlying the Opinion, had nonetheless found that their state's version of Rule 5.4 did not allow such fee sharing. In 2006 a new subparagraph (a)(5) similar to the Model Rule's 5.4(a)(4) was added to the DC Rule, but this provision applies to fees received in settlement as well as court-ordered ones, and adds a requirement that the organization qualify under Section 501(c)(3) of the Internal Revenue Code.
Paragraph (c) of Rule 5.4, prohibiting a lawyer from permitting a person who recommends, employs or pays a lawyer to provide services to a third person to direct or regulate the lawyer's judgment, has always been identical in both the Model Rule and the DC Rule.
The major substantive difference between the DC and the Model Rule versions of Rule 5.4 is in the way they treat lawyers practicing law in partnership with nonlawyers, a matter mainly addressed in paragraph (b) of both versions. Paragraph (b) of the Model Rule prohibits a lawyer from forming a partnership with a nonlawyer if any of the activities of the partnership consists of the practice of law, and paragraph (d) of the Model Rule (for which there is no corresponding provision in the DC Rule), extends the prohibition to professional corporations or other associations authorized to practice law in which nonlawyers have an ownership or management role. On the other hand, paragraph (b) of the DC Rule has from the beginning permitted a lawyer to practice in a partnership or other organization where a nonlawyer has a financial interest or managerial role, so long as the nonlawyer performs professional services that assist the organization in performing legal services, and the following four additional requirements set out in subparagraphs (1)-(4) are also met: (1) the sole purpose of the organization must be to provide legal services to clients; (2) all the nonlawyer owners or managers must agree to abide by the Rules of Professional Conduct; (3) the lawyer owners or managers must undertake to be responsible for the nonlawyers as if they were lawyers under Rule 5.1; and (4) the foregoing three conditions must be set forth in writing. Supplementing these provisions of paragraph (b) of the DC Rule, subparagraph (a)(4) of that Rule (which has no counterpart in the Model Rule) permits a lawyer to share legal fees in a partnership or other organization that meets the requirements of paragraph (b).
The DC Rules' version of Rule 5.4(b) is based on the Model Rule 5.4 that was proposed by the ABA Commission on Evaluation of Professional Standards (the "Kutak Commission"), the body that wrote the Model Rules that were proposed to the ABA House of Delegates in 1983. The House of Delegates, however, rejected this proposal and chose instead to preserve the prior Model Code's categorical prohibition in DR 3-103(A) on a lawyer practicing law in a partnership with a nonlawyer. The Jordan Committee, however, preferred the Kutak Commission's approach, and the Board of Governors and the Court of Appeals accepted its recommendation. For a discussion of the background of the DC rule, see Susan Gilbert and Larry Lempert, The Nonlawyer Partner: Moderate Proposals Deserve a Chance, 2 Geo. J. Legal Ethics 383, 392-400 (1988). See also DC Ethics Opinion 93 (1980) (holding that a law firm could ethically offer services of other professionals — in this case psychologists, social workers and family counselors — who were employees of the firm).
In the late 1990's, an ABA Commission on Multidisciplinary Practice was appointed to study the issue of lawyers practicing law in partnerships and comparable organizations in which members of other professions were partners, and its final report to the House of Delegates, considered at the ABA's annual meeting in 2000, recommended revision of the ethical rules to allow multidisciplinary practice under somewhat less restrictive conditions than those of the Kutak Commission's proposal or the provisions of DC Rule 5.4, but its proposals were rejected by the House of Delegates. Thereafter, a number of jurisdictions, including the District of Columbia, established their own committees to consider the proposals of the ABA Commission, most of which recommended rejection of those proposals. The District of Columbia's committee was an exception; it recommended, and the DC Bar's Board of Governors concurred, that DC Rules 5.4 be amended to allow multidisciplinary practice, but on December 21, 2004, the DC Court of Appeals concluded that adoption of the recommendation was not warranted at that time, although the Court remained open to reconsideration at some future time.
DC Rule 5.4(a)(1), (2) and (3) are substantially identical to DR 3-102(A). Paragraph (b) is a significant change from the Model Code, particularly DR 3-103(A) which prohibited a lawyer from forming a partnership with a nonlawyer if any of the activities of the partnership consisted of the practice of law. DC Rule 5.4(c) is substantially identical to DR 5-107(B).
5.4:200 Sharing Fees with a Nonlawyer
DC Rule 5.4(a) is based on a concern for the independence of a lawyer's professional judgment. "[F]ee splitting between lawyer and layman . . . poses the possibility of control by the layperson, interested in his own profit, rather than the client's fate." ABA Formal Opinion 95-392 (Sharing Legal Fees with a For-Profit Corporate Employer).
Major issues concerning the prohibition against a lawyer's sharing a fee with a nonlawyer have arisen in, broadly, two situations. The first is the case of a salaried lawyer for a corporation who receives a fee for performing legal services for others. In DC Ethics Opinion 135 (1984) the Legal Ethics Committee concluded that it was permissible for a lawyer employed by a consultant corporation to perform services for the corporation's clients, but that any fees so generated could be used only to compensate the lawyer and any lay staff working under the lawyer's supervision in performing the services; the fees could not be used to compensate or profit other nonlawyer employees or owners of the corporation. The opinion was rendered under the Model Code, but the result would presumably be the same under DC Rule 5.4. DC Rule 5.4(a)(4) permits the sharing of fees in a partnership or other organization that has nonlawyer principals, but the first condition of the permissibility of such an arrangement is that the partnership or other organization "has as its sole purpose providing legal services to clients." DC Rule 5.4(b)(1). To the same effect as Opinion 135 but on more complicated facts is DC Ethics Opinion 182 (1987); see also DC Ethics Opinion 94 (undated).
The other situation presenting major issues regarding fee-sharing is the receipt or proposed receipt by a salaried lawyer of an award of attorneys fees in litigation, the amount thereof determined not by the particular lawyer's salary but by the (almost always higher) market value of lawyers' services generally. In National Treasury Employees Union v. Department of the Treasury, 656 F.2d 848 (DC Cir 1981), salaried lawyer employees of a union represented a union member in successful litigation pursuant to the union's prepaid legal services plan. The successful litigant was entitled to attorneys' fees. Any awarded fee, it was acknowledged, would go into the union's general treasury. The United States Court of Appeals affirmed the district court's order limiting the fees in these circumstances to the expenses incurred by the union -- the relevant proportion of the lawyer's salaries and out-of-pocket expenses.
In Jordan v. Department of Justice, 691 F.2d 514, 516 n.14 (DC Cir 1982), the litigant entitled to an award of attorneys' fees was represented by lawyers employed by a law school-sponsored public interest representation institute. In these circumstances the court allowed a market-value fee award on the assumption that, if the institute shared in any "fee award beyond recoupment of its own expenses, it will maintain a fund exclusively for litigation, into which its share will be deposited." In DC Ethics Opinion 176 (1986), the Legal Ethics Committee found it "unclear" but unnecessary to decide whether a market-value fee award for the work of salaried union lawyers would violate DR 3-102 and 3-101(A) even if not deposited in a separate litigation fund. The Committee found it "clear" that, if the fee were so deposited, there was no ethical prohibition of a market-value fee award even if the union were thereby to receive some indirect benefit.
Somewhat more broadly, ABA Formal Opinion 93-374 (Sharing of Court-Awarded Fees with Sponsoring Pro Bono Organizations) concluded that Model Rule 5.4(a) does not prohibit a lawyer agreeing to share court-awarded fees with a non-profit organization that sponsors litigation.
There have been rulings on other aspects of sharing fees with nonlawyers.
DC Ethics Opinion 322 (2004) addressed an inquiry from a small law firm engaged in a series of class actions against defendants who were all members of a particular industry. The law firm had hired a nonlawyer employee who had worked as a consultant in the relevant industry, to assist the firm in those class actions, and proposed to compensate the employee by a small salary which would be supplemented by a share of fee recovered in the class actions - that share to be proportional to time spent by the consultant on all the class actions, multiplied by a stated hourly rate, in relation to a corresponding calculation of the value of lawyer's time spent. The questions posed were whether such an arrangement by the law firm was permissible under DC Rule 5.4, and if not, whether some other arrangement would be.
The Opinion considered previous DC Ethics Opinions 307 (2001), 298 (2000) and 233 (1993), as well as a number of ethics committee opinions from other jurisdictions, and observed that
Although blurred somewhat by the past opinions of this Committee, there emerges a prohibition on splitting fees with a nonlawyer employee on a contingent basis arising out of a case or category of cases, at least unless the client approves in advance (an impracticality here).
(Emphasis added.) Although the Opinion saw little logic in the indicated distinction between bonuses contingent on fees from a particular case or category of cases and bonuses based on the entirety of a law firm's profit, it nonetheless accepted the distinction and so held that the inquiring law firm's proposal would violate DC Rule 5.4(a).
The Opinion went on, however, to consider the exception, unique among America jurisdictions, that is contemplated by DC Rule 5.4(a)(4), namely, an organization meeting the requirements of DC Rule 5.4(b), which allows lawyers to practice law in an organization in which a nonlawyer has a financial interest or exercises managerial authority, provided that four specified conditions are met. The Opinion concluded that the inquiring firm could set up a joint venture with the nonlawyer employee which would engage solely in the pursuit of the sort of class actions relevant to the nonlawyer's qualifications, and so long as it met the requirements of DC Rule 5.4(b), could permissibly share the resulting profits with the nonlawyer. It also pointed out, however, that since no other jurisdiction has a provision comparable to DC Rule 5.4(b), the arrangement would only be viable for class actions pending in the District of Columbia.
DC Ethics Opinion 302 (2000) [which is discussed more fully under 7.1:200, below] observed that when a web site sponsoring client requests for bids for legal services offers assistance to law firms in responding to such requests, the law firm's accepting such assistance would not offend Rule 5.4(a)'s prohibition on allowing a non-lawyer to direct or regulate the lawyer's professional judgment.
DC Ethics Opinion 253 (1994) addressed the "considerable tension" between DC Rule 5.4(a), which prohibits a lawyer from sharing legal fees with nonlawyers, and DC Rule 7.1(b)(5), which permits the payment of referral fees to intermediaries when specified conditions are met. Finding DC Rule 7.1(b)(5) to be a narrow exception to Rule 5.4, the Committee concluded that only those lawyers who disclose the requisite information under DC Rule 7.1(b)(5) can avoid Rule 5.4(a)'s ban against sharing legal fees with nonlawyers. Opinion 253 was largely overruled by DC Ethics Opinion 286 (1999), holding that a referral fee contingent on the paying lawyer's receipt of fees from the case involves the sharing of a lawyer's fee, and so is subject to DC Rule 5.4(a) -- and Rule 1.5(e) -- rather than DC Rule 7.1(b)(5). See 7.2:400, below. The DC Bar Ethics Committee subsequently came to a contrary conclusion, however, in an opinion dealing with a governmentally-sponsored referral service that charged a contingent fee. See DC Ethics Opinion 307 (2001) [which is described more fully under 7.2:400, below].
DC Ethics Opinion 329 (2005) also addressed the tension between DC Rule 5.4(a) and DC Rule 7.1(b)(5) in the context of a proposal by a non-profit organization to pay a lawyer a $10,000 annual retainer to handle small workers’ compensation claims on behalf of day laborers; allow the attorney to take a 10 percent contingency fee from client awards; and require the attorney to pay the non-profit the first $10,000 the lawyer receives in contingent fees each year to permit the non-profit to recoup its retainer costs. In concluding that the proposed arrangement complied with the DC Rules, the Opinion relied heavily on DC Ethics Opinion 307 (2001), which had opined that a lawyer may “participate in a federal government referral service that negotiates contracts to provide legal services to federal agencies where that program requires the lawyer to submit one percent of the legal fees received through the service to the government office in order to fund the program.” The Opinion also distinguished DC Ethics Opinion 286 (1999), explaining that the fee agreement it was addressing was different from the precluded in Opinion 286 because the lawyer’s payment to the non-profit allowed the non-profit to recoup its out-of-pocket costs for the retainer and would not be tied to the amount of fees collected in connection with the lawyer’s representation of a particular client.
DC Ethics Opinion 233 (1993) concluded that a firm's payment of a "success fee" to a nonlawyer consultant under a client's agreement with the consultant does not constitute an impermissible "sharing" of fees between a lawyer and nonlawyer even if the funds flow through the law firm to the consultant.
All other DC authority arose under the Model Code.
DC Ethics Opinion 182 (1987) stated that DR 3-102(A) prohibited a law firm from borrowing a lawyer from a lay organization and paying that organization a fee for the borrowed lawyer's time that included an element of profit. The law firm need not disclose to the clients that the lawyer had been borrowed or that reimbursement has been provided to the lender but must bill its own clients for the borrowed lawyer's services at reasonable rates.
DC Ethics Opinion 176 (1986) emphasized that DR 3-102(A) imposed no ethical restrictions on placing market value fees in a separate legal assistance fund even if the umbrella organization received some indirect benefit from the arrangement.
DC Ethics Opinion 160 (1985) found that it would violate DR 3-102(A) for a lawyer to divide legal fees with a suspended lawyer for services rendered after the other lawyer was suspended.
DC Ethics Opinion 155 (1985) concluded that a prepaid legal services plan under which clients would pay a set monthly amount to receive legal services on a reduced fee basis and the parent organization would receive 10 percent of the monthly fee to cover administrative expenses did not violate DR 3-102(A). The Opinion emphasized, however, that the percentage paid the parent corporation must bear a reasonable relationship to the nonlegal costs incurred.
DC Ethics Opinion 94 (1980) concluded that a general counsel of a national trade association could accept fees for services rendered to a related educational association provided the fees accrue to the benefit of the trade association. Emphasizing that the association was not in the business of practicing law, the Legal Ethics Committee found that the arrangement did not raise a concern about the exercise of control by nonlawyers over lawyers in the practice of law. [See 5.4:400]
DC Ethics Opinion 93 (1980) concluded it was ethically proper for a lawyer, law firm or professional corporation, while engaging in the practice of law, also to offer and furnish services of other professionals, such as psychologists, social workers and family counselors, as long as the nonlawyers did not share in any fees paid for legal services. The nonlawyers could receive fees for any nonlegal services they performed.
DC Ethics Opinion 39 (1977) ruled that money paid by a law firm to a referral service for use of the temporary services of a lawyer registered with the service was not the unauthorized sharing of "legal fees" prohibited under DR 3-102(A). Defining "legal fees" as the fee a lawyer or law firm charges a client being served, the Legal Ethics Committee found that a salary paid by a law firm to a referral service or a referred lawyer who does some or all of the work does not constitute legal fees. Similarly, the portion of a fixed salary paid by a referral service to the lawyer registered with the service for the lawyer's temporary work at a law firm was not prohibited by DR 3-102(A) so long as "the mode of payment to the referred lawyer" did not "become a means by which the referral agency exercises any control over the manner in which the referred lawyer's professional services are rendered."
DC Ethics Opinion 10 (1975) addressed whether there was an ethical prohibition against a lawyer's joining with a nonlawyer in the performance of a contract requiring not only legal skills but the skills of other professions or disciplines as well. The Committee found no ethical problem under DR 3-102(A) so long as a portion of the fees received pertained only to nonlegal portions of the work performed.
5.4:300 Forming a Partnership with Nonlawyers
Alone among American jurisdictions, DC allows lawyers to have nonlawyer partners -- subject, however, to fairly stringent conditions that few firms have thought it worth satisfying. DC Rule 5.4(a)(4) makes an exception to the prohibition on sharing fees with nonlawyers for organizations meeting the requirements of DC Rule 5.4(b), and that provision states that a lawyer may practice law in a partnership or other organization in which a financial interest is held or managerial authority is exercised by an individual nonlawyer who performs professional services which assist the organization in providing legal services to clients. Numbered subparagraphs follow stating the conditions of this permission: (1) the sole purpose of the organization must be the provision of legal services, (2) all nonlawyer partners must undertake to abide by the Rules of Professional Conduct, (3) the lawyer partners must be responsible for the nonlawyers as if they were lawyers, per Rule 5.1, and (4) all of these requirements must be put in writing.
DC Ethics Opinion 244 (1993) permits the name of a nonlawyer partner to be included in the name of a law firm but requires that firm stationery, cards and professional listings make clear that the nonlawyer partner is not a lawyer.
5.4:400 Third Party Interference with a Lawyer's Professional Judgment
Among the problems Rule 5.4 seeks to prevent is the interference by laypersons with a lawyer's practice. "The involvement of nonlawyers, such as corporate employers, in the legal process is of concern because the lawyer's independent professional judgment can be impaired by the involvement and control of nonlawyers who, by definition, are not subject to the same ethical mandates . . . of the professional code of conduct." ABA Formal Opinion 95-392 (Sharing Legal Fees with a For-Profit Corporate Employer).
DC Ethics Opinion 289 (1999) addressed an inquiry regarding the conduct of "cause" litigation involving the representation of third persons, by a non-profit membership organization run by non-lawyers. The organization, whose activities included legislative lobbying and public education efforts on behalf of a particular population group, also sought to advance its public policy purposes through litigation intended to establish useful precedents, or to challenge undesirable ones. Such litigation had previously been conducted by staff lawyers representing the organization itself, as a party or amicus curiae, but was being expanded to include the representation of third persons in suitable "cause" cases. For this purpose, a special unit had been set up, within (but not separate from) a charitable foundation affiliated with the organization. Among the relevant features of the arrangement were that
-- The personnel of that unit were all either lawyers or legal support personnel.
-- While the lawyer in charge of the unit would report to the foundation's non-lawyer management, non-lawyers could have no role in the conduct of cases involving third person representation.
-- Non-lawyers outside the unit would, however, participate in the selection of cases undertaken, so as to assure that the cases would be consistent with the organization's policy goals, the representation of other clients, and the organization's relationship with other entities.
-- The unit had a charter and litigation guidelines, written procedures, and a standard retainer agreement, providing inter alia that client confidences and secrets would be appropriately protected, and that no one other than a staff lawyer of the unit or a lawyer in the organization's office of general counsel could interfere in the management or conduct of third person litigation. (As will be seen, the Opinion concluded that the exception for lawyers in the general counsel's office in the latter provision presented an ethical problem.)
-- A standard retainer agreement provided that if in a particular case it became to the client's advantage to take a legal position in conflict with the organization's policies, the client would have the last word; but in such a case, the unit's lawyers would be free to seek leave to withdraw (there being, in every case, other cooperating counsel also involved in the representation).
-- The clients would not be responsible for payment of any fee for lawyers' services, but where court-awarded fees were available such fees would be sought, and if recovered, split between the unit and cooperating counsel in proportion to lawyer time spent. Fees obtained by unit lawyers would be placed in a separate account, to be used solely in support of other "cause" litigation.
-- The standard retainer agreement obligated the client to cooperate in obtaining an award of attorneys fees where available, and in publicizing the case. It also required -- and here the Opinion found two more sticking points -- that the client agree not to accept a settlement offer conditioned on either (a) a waiver of the right to pursue attorney's fees, or (b) keeping the fact or the terms of the settlement confidential.
The Opinion concluded that the structure and operation of these representations of third persons, although in other respects evidently unexceptionable, presented ethical problems of three kinds. First, participation by lawyers in the organization's general counsel's office, in the day-to-day conduct of third person litigation (as distinct from the decision whether to undertake the representation) was deemed to present a possible violation of the prohibitions of DC Rules 5.4(c) and 1.8(e)(2) on lay interference in a lawyer's professional judgment because, although lawyers in the general counsel's office were indeed lawyers, they would be acting as agents of a lay entity, and not as counsel for the third person client. On the same reasoning, client confidences and secrets protected by Rule 1.6 could not be shared with such lawyers. (The Opinion also suggested, in a footnote, that such participation by lawyers in the general counsel's office might violate Rule 5.5.)
Second, the Opinion held that the provision of the standard retainer agreement by which the client agreed not to accept a settlement offer that was conditioned on keeping the fact and/or terms of the settlement confidential impermissibly interfered with the client's right, under Rule 1.2, to accept or reject a settlement. Recognizing that Rule 1.2(c) allows a lawyer and client to agree to limit the objectives of a representation, the Opinion nonetheless expressed doubt that it would be possible in this situation for a client to offer informed consent in advance to this condition. The Opinion also found this provision to offend the prohibitions on lay interference in Rules 1.8(e)(2) and 5.4(c), and to risk improper disclosure of client confidences and secrets, in violation of Rules 1.6 and 1.8(e)(3). (In this connection, the Opinion again referred, in a footnote, to a possible violation of Rule 5.5.)
Finally, the Opinion held that the retainer agreement's standard advance commitment by the client not to accept an offer of settlement conditioned on waiver of the right to pursue court-awarded fees also violated Rule 1.2(a). Recognizing that relevant authority on the point from other jurisdictions is divided, the Opinion nonetheless concluded that "a client's right to accept or reject a settlement is absolute," and, without extensive analysis, found Rules 1.7, 1.8(e)(2) and 5.4(c) implicated as well.
DC Ethics Opinion 304 (2001) addressed the ethical implications of a law firm's contracting out its human resources functions to a separate, unrelated company, concluding that such contracting out is permissible even under arrangements where the law firm's employees, including its lawyers, are considered for certain purposes employees of the other company, so long as the arrangement does not prevent or inhibit our lawyer from conforming to the applicable Rules of Professional conduct and does not attempt to insulate any lawyer from liability her own malpractice. The Opinion responded to an inquiry that contemplated that a firm of two lawyers (one of whom was the owner, the other an employee) with sixteen non-lawyer employees, would contract with a management company to employ all eighteen and be responsible for payroll services, employee benefits, withholding and similar tax payments, compliance with employment laws, personnel recordkeeping, unemployment compensation, workers' compensation, and the like. The law firm (or rather its single owner) would retain full management and supervisory authority over all employees, and would have custody and control of all client files and accounting information (other than employment related information). The management company might provide similar services to other companies, including law firms, and become the employer or co-employer of their employees, but there would be no contact between the firms by reason of their using the same employee management company. The Opinion observed that in recent years an increasing number of businesses have engaged unrelated companies to perform one or more human resources functions, and pointed out several advantages of such arrangements. It also noted that there are several forms of such arrangements, one being a "professional employer organization," or PEC; and other an administrative service organization, or ASO. Whatever the form of the arrangement, the Opinion held--or, for that matter, whatever the nature of an individual lawyers' employment arrangement--the arrangement most not impair the responsibilities of a lawyer to exercise independent professional judgment, per Rules 5.4, 2.1 and 1.8(e)(2); to maintain confidentiality of information gained in the representation, per Rule 1.6 and 1.8(e)(3); to act zealously on behalf of the client, per Rule 1.3(a); to avoid conflicts, per Rule 1.7, and to supervise adequately the conduct of other lawyers, per Rules 5.1 and 5.3.
The Opinion focused principally upon the latter two rules, and the importance of supervisory authority with respect to all activities constituting or assisting in the practice of law, resting solely with the firm's lawyers. It noted in this connection that the supervisory responsibilities imposed by Rules 5.1 and 5.3 are not limited to circumstances where the supervised lawyers or non-lawyers are actually in the employ of the supervising lawyer. It also observed that the management company may not exercise authority over hiring, firing, promotion, compensation or work assignments of lawyers and legal assistants, or even of clerical or secretarial employees except as unrelated to the provision of legal services. The Opinion further made clear that the management company's compensation must not be a function of fees earned by the firm, which would violate Rule 5.4(a). It also observed that because there would be no sharing of employees among the firms serviced by the management company, there should be no problems about confidentiality or conflicts. And it said that since the management company would not be holding the lawyers out to clients, exercising control over the selection of lawyers or supervising their practice of law, there would be no problem of unauthorized practice of law.
The Opinion warned that a lawyer could not use the device of an employee management company to limit her liability for malpractice without violating Rule 1.8(g)(1). It also noted that some PEO's adhere to standards of a trade organization known as Employer Services Assurance Corporation (ESAC), which require that a PEO share with its client organization, and in some instances exercise exclusively the power to hire and fire, that it have at least a shared right to direct and control the work of the employees, and that ESAC have access to client firm work sites and records. The Opinion concluded that a lawyer owner who permitted such an arrangement would violate the Rules of Professional Conduct.
DC Ethics Opinion 314 (2002) addressed the permissibility, under Rule 5.4(c), of a nonlawyer employee of a union supervising a lawyer who represents the union or a member of the union. It concluded that where the lawyer is representing the union as an entity, supervision of the lawyer's work by a nonlawyer union employee is no more inconsistent with Rule 5.4(c )'s prohibition on allowing "a person who recommends, employs or pays the lawyer to render services for another to direct or regulate the lawyer's professional judgment" in rendering such services than it is to have a nonlawyer officer of a corporation direct the services of in-house counsel for the corporation. In each case, the organization involved is a client (and of necessity a nonlawyer), which has a client's entitlement, within the limits imposed by Rule 1.2, to direct the services of a lawyer who is representing it. The fact that it is an organization means, as recognized by Rule 1.13, that it must act through some individual, and that individual may also be a nonlawyer. On the other hand, where the union lawyer is representing only a member of a union, on a matter not arising out of the collective bargaining process (for example, through a legal services program under which a lawyer paid by the minor drafts a will, handles a divorce or litigates a personal injury suit), then Rule 5.4(c) has full force and the representation may not be supervised by a union employee. Finally, in between these two extremes are situations where substantive labor law will govern the question of who the client is. Thus, it is generally recognized that where a union represents one of its members in connection with a grievance under a collective bargaining agreement, the grievance belongs to the union, not its member, so that "an attorney handling a labor grievance on behalf of a union does not enter into an 'attorney-client' relationship with the union member asserting the grievance." Gwin v. Nat'l Marine Engineers Beneficial Ass'n, 966 F.Supp. 4, 7 (DDC 1997), aff'd, 159 F.3d 636 (DC Cir. 1998). The Opinion pointed out that if in such circumstances the union member involved is not a client, the lawyer will be obliged, per Rules 1.13 and 4.3, to make that clear to the employee. Finally, the Opinion observed that there may well be circumstances where the lawyer represents both a union and a member of the union, in which case there would be the same potential for conflicts under Rule 1.7 as in any other dual representation.
DC Ethics Opinion 201 (1989) concluded that a "Hotline" project operated by a non-profit public interest legal service project through which clients could retain lawyers at reduced fees did not violate DR 5-107(B) where the project had agreed not to interfere with or control the performance of any lawyer.
DC Ethics Opinion 176 (1986) concluded that a lawyer's independent professional judgment would not be compromised in violation of DR 5-107(B) when a federal employee labor union employed a salaried lawyer to provide legal services for its members, "since the clients and the union that recommends counsel to them normally have the same goals."
DC Ethics Opinion 173 (1986) concluded that under DR 5-107(B) a lawyer hired and paid by an insurance company to represent an insured could not allow his relationship with the insurance company to affect his representation of the insured.
DC Ethics Opinion 155 (1985) concluded that a prepaid legal services plan under which member organizations were billed a monthly fee for legal services rendered by a law firm working for the parent organization did not violate DR 5-107(B) where the plan protected the law firm's obligation of independent professional judgment on behalf of each individual member organization for which it did legal work. Specifically, the Committee emphasized that the member organizations were (1) charged a monthly amount based on the number of hours each organization needed and (2) billed directly by the law firm.
DC Ethics Opinion 135 (1984) concluded that a lawyer employed by a consultant corporation whose officers and directors were nonlawyers could perform legal work for the corporation's clients if, among other things [see 5.4:200, above], the nonlawyers involved in the corporation did not exercise any control or influence over the lawyer's professional judgment in performing legal services.
DC Ethics Opinion 93 (1980) concluded that DR 5-107(B), prohibiting a lawyer from allowing a person who recommends, employs or pays him to "direct or regulate his professional judgment," was concerned with lay control of a lawyer's activities. Accordingly, when the direction of control was reversed, so that a lawyer had control over a nonlawyer's activities, DR 5-107(B) did not apply.
5.4:500 Nonlawyer Ownership in or Control of Profit-Making Legal Service Organizations
DC Rule 5.4(b) permits a lawyer to practice in an "organization" in which a nonlawyer has financial or managerial control in limited circumstances. The rule therefore permits nonlawyer ownership in or control of a profit making legal service organization provided such organization is in the business of practicing law and the other conditions outlined in DC Rule 5.4(b) are satisfied. [See 5.4:300, above].
DC Rule 5.4 does not mention group legal services. However, DC Rule 6.3, permitting a lawyer to serve as "director, officer or member of a legal services organization" and its Comment , stating that "lawyers should be encouraged to support and participate in legal service organizations," indicate that such groups are permissible. DC Rule 5.4 does not proscribe group legal services plans so long as the plan and its administrators do not attempt to direct a lawyer's professional judgment. [See 5.4:400, above]
DC Rule 5.4(b), permitting a lawyer to practice in an organization in which a nonlawyer has a financial interest or managerial control under specified conditions, draws no distinction based on whether the organization is for profit or nonprofit. [See 5.4:300, above.]
5.5:100 Comparative Analysis of DC Rule
As originally adopted, DC Rule 5.5 was identical to the Model Rule, and so consisted of an introductory phrase "A lawyer shall not," followed by two lettered paragraphs, respectively addressing (a) the practice of law in a jurisdiction where doing so violates the regulation of the legal profession, and (b) assisting a nonmember of the bar in an activity that constitutes the unauthorized practice of law. The black letter text of the DC remains in its original form, but in 2002 the Model Rule was substantially revised to incorporate the numerous changes that had been recommended by the ABA Commission on Multijurisdictional Practice. (The ABA Ethics 2000 Commission had also considered various amendments to Rule 5.5, but eventually deferred to the other Commission, which had studied the issues more comprehensively.)
Recognizing that the ABA had a commission studying the subject of multijurisdictional practice, the DC Bar Board of Governors in November 2001 appointed a Special Committee on Multijurisdictional Practice to study and make recommendations on the same general subject. That Committee focused its attention principally on Rule 49 of the DC Court of Appeals Rules, dealing with unauthorized practice of law, rather than on Rule 5.5 of the DC Rules of Professional Conduct, because Rule 49, which had been substantially revised in 1988 after a comprehensive study by the Schaller Committee, plays a more important role in the regulation of unauthorized practice in DC than Rule 5.5. The DC Bar's Special Committee issued its report in February 2004, and the DC Bar Board of Governors approved the report two months later. The Special Committee's Report recommended several changes to Rule 49 whose effect would bring the DC regulatory regime governing the unauthorized practice largely into conformity with that contemplated by the revised Model Rule 5.5, but as of this writing (January 2007), the DC Court of Appeals had not yet acted on the proposed changes to Rule 49.
The DC Rules Review Committee, taking account of the recommendations of the Special Committee on Multijurisdictional Practice, recommended no changes to DC Rule 5.5 save the addition of a new Comment  making reference to DC Court of Appeals Rule 49, so as to "assist DC Bar members seeking guidance on unauthorized practice rules." The provisions of Rule 49 and the decisional law thereunder are described in 5.5:210, below.
Paragraph (a) is substantially identical to DR 3-101(B) of the Model Code, which provided that "[a] lawyer shall not practice law in a jurisdiction where to do so would be in violation of regulations of the profession in that jurisdiction."
5.5:200 The Prohibition on Unauthorized Practice
DC Ethics Opinion 224 (1991) discusses the application of Rule 5.5 to a prepaid legal services program in which a third party markets legal services to potential subscribers and pays a law firm a fee for providing legal advice to subscribers. This was found not to violate Rule 5.5 under the arrangement described in the inquiry.
DC Rule 5.5, like the other disciplinary rules, is addressed to lawyers. “Lawyer” is not a defined term. But it apparently denotes, at the core, an enrolled active member of the District of Columbia Bar. Rule 49 of the Rules of the District of Columbia Court of Appeals, the District’s substantive unauthorized practice rule (discussed under 5.5:211, below) prohibits the practice of law by anyone not “enrolled as an active member of the Bar.” Thus, an enrolled active member of the Bar, however unprofessional or unethical his conduct, cannot be engaged in the unauthorized practice of the law in the District. The term “lawyer” as used in the disciplinary rules also includes an inactive member of the Bar and a member whose license has been suspended or revoked. See DC Ethics Opinion 271 (1997) (inactive member of DC Bar treated as subject to DC disciplinary rules); In re Kennedy, 542 A.2d 1225 (DC 1988) (suspended member of the Bar violated predecessor to Rule 5.5 by practicing while under suspension); In re Burton, 614 A.2d 46 (DC 1992) (Bar Counsel allowed to proceed against disbarred DC lawyer for unauthorized practice). DC Rule 8.5, in stating that “A lawyer admitted to practice in this jurisdiction is subject to the disciplinary authority of this jurisdiction regardless of where the conduct occurs” (a proposition that Comment  says “restates long-standing law”), implies unmistakably what has always been assumed: that the disciplinary authority of the Court of Appeals as exercised in the disciplinary rules extends no farther. The rules apply only to lawyers who if not now active members of the DC Bar were once “admitted to practice in this jurisdiction.” Thus, the lawyer admitted to practice only in another jurisdiction who practices law in the District of Columbia is subject to action under Rule 49 but not to action under Rule 5.5; similarly as to the law-trained person not licensed to practice anywhere (who might loosely refer to himself as a lawyer) who undertakes to practice in the District.
DC Rule 5.5, then, has a limited office:
1. It makes subject to discipline in the District the active enrolled lawyer admitted to practice in the District who practices elsewhere in violation of another jurisdiction’s unauthorized practice statute or rule.
2. It makes subject to discipline in the District the inactive lawyer admitted to practice in the District and the active enrolled District lawyer whose license to practice has been suspended or revoked if such lawyer practices either in the District in violation of Rule 49 or elsewhere in violation of another jurisdiction’s unauthorized practice statute or rule.
3. By paragraph (b), it makes subject to discipline in the District any District lawyer who assists another to do something that constitutes the unauthorized practice of law in the District or elsewhere.
The real prohibition of unauthorized practice of law in the District of Columbia is in Rule 49 of the Rules of the District of Columbia Court of Appeals. That Rule was revised substantially (albeit more in form than in substance), effective February 1, 1998, with the Court of Appeals’ adoption, in December 1997, of the recommendations of the DC Bar Committee on the Examination of Rule 49 (known for its chairman, James P. Schaller, Esq., as the Schaller Committee). The revised Rule 49 is now organized as a general prohibition followed by definitions, exceptions, provisions regarding the Committee on Unauthorized Practice of Law, and provisions governing enforcement proceedings before the Court of Appeals. Adopted along with the revised Rule was a quite detailed and informative Commentary, addressing each of the provisions of the revised Rule. The Committee on Unauthorized Practice of Law is authorized by Rule 49(d)(3)(G) to issue opinions “as to what constitutes the practice of law,” and the Committee has exercised this authority with vigor, as indicated by the summaries of its opinions to be found below. [Opinions of the Committee, which are cited herein as DC UPL Opinion ____, are retrievable at http://www.dcappeals.gov.]
The general prohibition of unauthorized practice is set out in section (a) of the Rule, which provides that
No person shall engage in the practice of law in the District of Columbia or in any manner hold out as authorized or competent to practice law in the District of Columbia unless enrolled as an active member of the District of Columbia Bar, except as otherwise permitted by these Rules.
Section (b) of the Rule provides definitions of certain terms. The key term “practice of law” is defined in subsection (b)(2) as:
the provision of professional legal advice or services where there is a client relationship of trust or reliance. One is presumed to be practicing law when engaging in any of the following conduct on behalf of another:
(A) Preparing any legal document, including any deeds, mortgages, assignments, discharges, leases, trust instruments or any other instruments intended to affect interests in real or personal property, wills, codicils, instruments intended to affect the disposition of property of decedents’ estates, other instruments intended to affect or secure legal rights, and contracts except routine agreements incidental to a regular course of business;
(B) Preparing or expressing legal opinions;
(C) Appearing or acting as an attorney in any tribunal;
(D) Preparing any claims, demands or pleadings of any kind, or any written documents containing legal argument or interpretation of law, for filing in any court, administrative agency or other tribunal;
(E) Providing advice or counsel as to how any of the activities described in sub-paragraph (A) through (D) might be done, or whether they were done, in accordance with applicable law;
(F) Furnishing an attorney or attorneys, or other persons, to render the services described in subparagraphs (a) through (e) above.
The Commentary to Rule 49(b)(2)(F) provides a safe harbor for referral services:
The conduct described in section (b)(2)(F) concerning the furnishing of attorneys is not intended to include legitimate or official referral services, such as those offered by the District of Columbia Bar, bar associations, labor organization, non-fee pro bono organizations, and other court-authorized organizations.
The Commentary also notes that
The presumption that one’s engagement in one of the enumerated activities is the “practice of law” may be rebutted by showing that there is no client relationship of trust or reliance, or that there is no explicit or implicit representation of authority or competence to practice law, or that both are absent.
Section (b) of the Rule, in addition to defining “practice of law,” provides an all-inclusive definition of the term “Person,” as well as definitions of the phrases “In the District of Columbia,” and “Hold out as authorized or competent to practice law in the District of Columbia”.
DC ULP Opinion 14-05 (Dec. 10, 2004) concluded that lawyers authorized to practice law in foreign jurisdictions but not in the District of Columbia may practice law in the District when their presence is of only incidental or occasional duration. The Opinion observed that Rule 49(b)(3)’s definition of “in the District of Columbia,” which allows out-of-town lawyers to practice law in the District on an incidental basis, does not distinguish between lawyers authorized to practice law in foreign jurisdictions and lawyers authorized to practice law in other U.S. jurisdictions.
A significant issue regarding the applicability of Rule 49(b) to “cause” organizations, such as the NAACP Legal Defense and Education Fund and the American Civil Liberties Union, is addressed by DC UPL Opinion 4-98 (Sep. 14, 1998). That Opinion responded to an inquiry that pointed out that the definition of “person,” in Rule 49(b)(1), includes a comprehensive array of organizations, and Rule 49(b)(2)’s definition of the “practice of law” includes the “[f]urnishing [of] an attorney” to render the various kinds of services specifically mentioned (see Rule 49(b)(2)(F), quoted above). The inquiry pointed out that a literal reading of these provisions would have the consequence that such cause organizations – and, for that matter, law firms as well – since they are “persons” subject to the UPL prohibition, but cannot themselves be members of the DC Bar, could be viewed as necessarily engaged in the unauthorized practice of law. The inquirer suggested that “cause” organizations should, like the “referral services” specifically excepted by the Commentary to 49(b)(2)(F) (quoted above), not be treated as coming within the prohibition because they do not hold themselves out as having a client relationship of trust or reliance. The Opinion rejected this reasoning, holding instead that “cause” organizations, like law firms, do indeed have -- and hold themselves out as having -- “client relationships of trust and reliance,” but that, nonetheless,
[A]n organization that engages in referring persons seeking legal services to attorneys within itself or to attorneys volunteering through the organization does not act in violation of Rule 49 where there is a member of the District of Columbia Bar within the organization who is responsible for the referral judgment.
Elaborating on the central premise on which Opinion 4-98 rested, DC UPL Opinion 6-99 (June 30, 1999) addressed the applicability of the unauthorized practice prohibitions to the activities of commercial firms that locate and offer lawyers to law firms, corporate law departments and other legal service organizations, for temporary projects. The Opinion held that such commercial firms do not engage in the practice of law even though they are “furnishing an attorney or attorneys” to do so, and so nominally within the terms of Rule 49(b)(2)(F), quoted above, so long as –
1. An attorney in the legal service organization that has an attorney-client relationship with the prospective client will select the temporary attorney.
2. The lawyer providing services on a temporary basis will be directed or supervised by a lawyer in the legal services organization that represents the client; and
3. The commercial firm does not otherwise engage in the practice of law within the meaning of Rule 49(b)(2)(A-E), or attempt to direct or to supervise the practice of law by the attorneys it places.
By way of explanation, the Committee emphasized that--
it considers essential to this opinion the predicate that professional legal judgments concerning retention of individual lawyers on a temporary basis are made by competent and authorized attorneys within a legal service organization that has an attorney-client relationship with the client whose legal needs give rise to the need for temporary attorneys.
Section (c) of Rule 49 lists a number of exceptions to the general prohibition against unlicensed practice, all subject to the proviso that “the person is not otherwise engaged in the practice of law or holding out as authorized or competent to practice law in the District of Columbia.”
Subsection (1) covers U.S. government employees.
Subsection (2) covers practice before a U.S. special court, department or agency, where the governmental entity has a rule permitting and regulating such practice and the practitioner gives prominent notice in all business documents that the practice is “limited to matters and proceedings before federal courts and agencies.” (As to such notice, see the discussion of DC UPL Opinion 5-98, below.)
In re Banks, 805 A.2d 990 (DC 2002), made clear that Rule 49(c)(2) does not constitute an affirmative grant of authority to practice before a federal agency; it merely provides that if such an agency has a rule permitting such practice, that practice by a person not admitted to the DC Bar does not in itself constitute the unauthorized practice of law. Banks also made clear that even if one is permissibly practicing before a governmental agency, he is not thereby entitled to hold himself out as qualified to practice law in the District of Columbia.
Subsection (3) allows practice before a U.S. court.
DC UPL Opinion 17-06 (July 21, 2006) states that lawyers qualify for the exception in Rule 49(c)(3) only if they make clear in business documents that they are not admitted in D.C. and their practice is limited to matters within the scope of the exception. The Opinion explains that the exception and disclosure requirements are comparable to the exception and disclosure requirements in Rule 49(c)(2).
Subsection (4), regarding lawyer employees of the District of Columbia, allows such a lawyer who is a member in good standing of another bar to provide services to his employer agency (without becoming a member of the DC Bar), but only for the first 360 days of employment.
DC UPL Opinion 13-04 (March 25, 2004) states that the 360-day exception does not permit D.C. government employees to practice law for a longer period even if they have a pending application to the D.C. Bar. The Opinion explained that the Rule contains no exception and makes no provision for waiver or extension. It also stated that the Committee may decide not to take enforcement action in extraordinary circumstances but that the Committee’s decision would not bind other entities.
Subsection (5) provides for practice before agencies of the District of Columbia on terms parallel to those governing practitioners before federal government agencies under subsection (2), described above, including appropriate public notice of the limitations of practice. (As to such notice, see the discussion of DC UPL Opinion 5-98, below.)
Subsection (6) covers in-house counsel, allowing for the provision of “legal advice only to one’s regular employer, where the employer does not reasonably expect that it is receiving advice from a person authorized to practice law in the District of Columbia.”
Subsection (7) provides for pro hac vice appearances in DC courts by members of other bars not admitted to the DC Bar, allowing no more than five such appearances a year, requiring a $100 fee for each application, and limiting such appearances to persons not having an office in the District of Columbia.
The pro hac vice admission process is fully described in DC UPL Opinion 2-98 (March 2, 1998), and forms of application for admission pro hac vice are attached to the Opinion. DC UPL Opinion 9-01 (February 27, 2001) addresses a dissonance between this subsection (7) and certain other exceptions to the prohibition of unauthorized practice provided in other subsections of Rule 49(c). Subsection (7) sets out a form of sworn statement to be executed by each applicant for admission pro hac vice, which includes the statement “I do not practice or hold out to practice law in the District of Columbia.” The problem this presents is that lawyers properly practicing in DC under other subsections of section (c) cannot truthfully make the prescribed statement, since they are (legitimately) practicing law in DC in the limited ways provided by such subsections. The Opinion solves this problem by concluding that an applicant for admission pro hac vice can make changes in the language of the prescribed sworn statement that are necessary to make the statement accurate and complete: for example, instead of saying “I do not practice or hold out to practice law in the District of Columbia,” they may say “I practice law in the District of Columbia pursuant to Rule 49(c)(8).”
Subsection (8) (a wholly new provision added by the February 1, 1998, revision) provides that a member of another bar who has timely filed an application for admission to the DC Bar (within 90 days of commencing practice) may for a period of 360 days practice in the District of Columbia under the direct supervision of a member of the DC Bar, provided that the latter takes responsibility for the quality of the work and gives notice to the public of the member’s supervision and the practitioner’s bar status.
The Rule does not specify how the notice is to be given, but DC UPL Opinion 1-98 (Feb. 2, 1998), issued immediately after the new Rule 49 went into effect, specifies that the following legend must be included on “all business documents signed or expressly presented by” the supervised lawyer, including letters, business cards, promotional materials, and filings or formal submissions:
Admitted only in [the other jurisdiction]; supervision by [name of DC Bar member], a member of the DC Bar.
(As to this notice, see also DC UPL Opinion 5-98, discussed below.)
Rule 49 provides that a lawyer practicing under the exception in subsection (8) must be admitted pro hac vice to the extent the lawyer provides legal services in the courts of the District. However, DC UPL Opinion 18-06 (Oct. 20, 2006) states that lawyers practicing under the (c)(8) exception who are representing a party pro bono may follow a simplified certification process (set forth in (c)(9)) rather than file an application and motion to appear pro hac vice (unless a judge requires an application in a particular case), that they are not required to pay the pro hac vice application fee, and that the case does not count against the limit in Rule 49(c)(7)(i) of five pro hac vice cases per calendar year.
An important passage in the Commentary to Rule 49(c)(8) asserts the following:
Neither this section, nor other sections of the Rule are intended to prohibit lawyers admitted and in good standing to the bars of other jurisdictions from providing professional services to their clients in the District of Columbia, where the principal offices of those lawyers are located elsewhere and their presence in the district is occasional and incidental to a practice located elsewhere.
DC UPL Opinion 10-01 (February 27, 2001) addressed the requirement of subsection (8) that an application for admission to the Bar must be submitted within 90 days of commencement of practice in DC, as applied to an applicant who has previously been engaged in practice under an exception provided by another subsection of section (c). The Opinion concluded that the period of practice under such other exception is not to be counted in determining whether an application for admission was filed within 90 days of commencing practice under section (c)(8).
Subsection (9) of Rule 49(c) allows for the provision of pro bono publico services (A) by inactive members of the DC Bar employed by or affiliated with a legal services or referral program; (B) by employees of the Public Defender Service or non-profit organizations providing legal services for indigent clients provided they are members in good standing of another Bar and have timely applied for admission to the DC Bar — the allowance being good only for 360 days; and (C) by an officer or employee of the United States and a member in good standing of another Bar, who is assigned a referral by an organization providing legal services without fee.
DC UPL Opinion 3-98 (Mar. 3, 1998), after observing that “[t]he purpose of the exception set forth in 49(c)(9) is to provide the broadest access to pro bono legal services, while serving the purposes of Rule 49 to protect the public from unlicensed legal practitioners,” specified that entitlement to practice requires only completion of a certificate that the applicant satisfies the requirements of 49(c)(9); neither an application nor a motion pro hac vice in litigation is required. A form of certificate, adequate for the purpose, is attached to the Opinion.
DC UPL Opinion 12-02 (September 16, 2002) offers guidance, in response to several requests, as to the meaning of the requirement in Rule 49(c)(8), Rule 49(c)(9)(B) and Rule 49(c)(9)(C), that unadmitted lawyers practicing law pursuant to those provisions be supervised by a member of the D.C. Bar, and in particular, whether the supervision requirement means that the supervising lawyer must be present whenever the supervised lawyer appears in court. The Opinion stated that the same standard governs the supervision requirement of Rule 49 as applies under DC Rules of Professional Conduct. Specifically, DC Rule 5.1(b) provides that
A lawyer having direct supervisory authority over another lawyer shall make reasonable efforts to ensure that the other lawyer conforms to the Rules of Professional Conduct.
This provision, the Opinion observed, requires the supervising lawyer to make reasonable efforts to ensure conformity with, among other Rules, Rule 1.1 requiring competent representation and Rule 1.3 requiring zealous and diligent representation within the bounds of the law. Whether this standard requires the supervising lawyer to attend with the supervised lawyer various events in litigation depends on the circumstances, including the experience and skill of the supervised lawyer, the nature of the case and the type of proceeding.
Subsection (10) of Rule 49(c) provides an exception for programs specifically authorized by DC courts.
Subsection (11) of Rule 49(c) allows authorized officers, directors or employees of corporations or partnerships to appear on behalf and in defense of such organizations in small claims actions or in settlement of landlord-tenant matters; but the organization must be represented by a lawyer if it files a cross-claim or counterclaim, or if the matter is certified to the Civil Action Branch of the Superior Court.
DC UPL Opinion 5-98 (Dec. 23, 1998) addresses in some detail the notices of limitation of practice required under subsections (2), (5) and (8) of Rule 49(c), recognizing differences in the necessary detail of such notices given practical differences between directory listings, marketing materials, letterhead, business cards and telephone lists. (The Opinion does not address lobby listings.)
DC UPL Opinion 11-02 (June 10, 2002) elaborates on the changes in Rule 49(c)(2), (c)(5), (c)(8), (c)(9) and (c)(10) made by the Court in April 2002, all relating to the notices required to be given by lawyers not licensed in DC but practicing there pursuant to one or more of the special exceptions provided by the referenced portions of Rule 49. To some extent, Opinion 11-02 supersedes Opinion 5-98, described immediately above.
Section (d) of Rule 49, which sets forth the mandate, powers, and procedures of the Committee on Unauthorized Practice of Law, includes in subsection (3)(G) a new provision granting the Committee specific authority to issue opinions as to what constitutes the unauthorized practice of law, to be published “in the same manner as opinions rendered under the Rules of Professional Conduct.” That provision also states that conduct of a person “undertaken in good faith, in conformity with, and in reliance on” such an opinion “shall constitute a prima facie showing of compliance with Rule 49.”
Section (e) of the Rule, addressing enforcement proceedings before the Court of Appeals, provides, in subsection (2), that violations of Rule 49 are punishable as contempt or subject to injunctive relief, or both, and in addition states that the Court has power to grant remedial compensation to persons harmed by violations of the Rule. (The Schaller Committee considered recommending the addition of criminal sanctions for the unauthorized practice of law, but concluded that this was not necessary.)
DC UPL Opinion 16-05 (June 17, 2005) addressed several issues regarding the use of “contract” lawyers – i.e., lawyers other than partners or regular employees of a firm or other entity. The Opinion stated that Rule 49 makes no exception for contract lawyers, and thus a contract lawyer who practices law in the District on a regular basis must be a member of the D.C. Bar. It also discussed whether Rule 49 applies when a contract lawyer is hired to do “paralegal work.” It explained that Rule 49 does not prevent a firm from hiring a person who is admitted to the practice of law in another jurisdiction as a paralegal, but if the person is being held out or billed out as a lawyer, or is being supervised as a subordinate attorney, the person and the person’s employer must comply with Rule 49. The Opinion also warned that a contract lawyer whose presence in the District as a contract lawyer is not occasional or incidental within the meaning of rule 49(b)(3) is subject to Rule 49, even if each assignment, considered in isolation, might constitute only incidental or occasional presence in the District.
There are several cases dealing with what is the practice of law under the prior Rule 49. In In re Banks, 561 A.2d 158 (DC 1987), the Court concluded that a law school graduate who had never been a member of the DC Bar or any other Bar had violated Rule 49(b) by engaging in a continuous course of conduct designed to foster the impression that he was a qualified member of the DC Bar. Instances of conduct that the Court found objectionable were: (1) representing himself to the public as a “lawyer”; (2) representing to the public that he was a former “administrative law judge,” in describing his former positions as a hearing examiner for the DC Office of Human Rights and the DC Rental Accommodations Office; and (3) using terms and titles such as “administrative trial advocate,” “in-house counsel,” “member of the World Council (or Association) of Lawyers,” and “member of the National District Attorneys Association” in his advertisements, resumes, business cards and stationery. Id. at 164-66. The Court found that these representations and titles misled the public by creating the impression in a reasonable mind that the respondent was qualified to practice law in the District, notwithstanding a disclosure statement he gave to his clients that stated that his firm was not licensed to practice law. Id. at 166-67.
Brookens v. Committee on Unauthorized Practice of Law, 538 A.2d 1120 (DC 1988), involved a lawyer who was not a member of the DC Bar but who had represented parties in proceedings before the DC Rental Accommodations Office. The Court affirmed the trial court’s holding that these activities did not constitute the unauthorized practice of law, because Rule 49 does not address representation before administrative agencies and because the Rental Office’s regulations authorized lay representation of parties in its proceedings. However, the Court cautioned that it was not finally deciding the larger issue of whether the definition of “practice of law” includes or excludes lay representation before agencies, in light of the review of Rule 49 then currently underway. Notably, the revised Rule 49(b)(2) defines this sort of activity as presumptively the “practice of law.” Subsection (c)(5) of the revised Rule, however, provides an exception to this general rule and allows lay representation before DC agencies if (a) the representation is confined to appearances in proceedings before that agency, (b) the representation is authorized by statute or agency rule; and (c) the practitioner expressly and prominently gives notice of the limitations of his practice.
The Court in re Amalgamated Development Co., 375 A.2d 494 (DC 1977), found a non-lawyer who was not registered with the Patent Office as a patent agent to be engaged in the unauthorized practice of law where he advised investors as to patentability, prepared patent applications, advised clients of what action to take after rejection of an application, and prepared and filed amendments to applications. The fact that the non-lawyer did not sign any correspondence with the Patent Office and expressly disclaimed that he and his organization were patent lawyers did not “remove these efforts from the realm of the practice of law,” according to the Court. Id. at 499.
The Court in J.H. Marshall & Associates, Inc. v. Burleson, 313 A.2d 587 (DC 1973), held that a collection agency was engaged in the unauthorized practice of law where it conducted its debt collection business in the following manner: the agency publicly solicited accounts, charged a contingent fee, prepared statements of claims that it filed in the Civil Division of Superior Court or in the Small Claims Branch, made payment of court costs, and then notified its retained lawyers so that they could appear on the designated return date. It remitted to the original creditor two-thirds of the amount collected in the litigation and retained one-third of that amount, out of which it paid its retained lawyer. The Court found the result of this arrangement was that “the credit agency, . . . retaining a contingent fee and advancing costs, sells the services of a lawyer, whom it controls and directs, thereby destroying the privity between attorney and client.” Id. at 597. Moreover, the Court was not reassured by the lawyer’s role in the business, stating that “the fact that an agent of the unauthorized practitioner, who is himself authorized to practice law, actually performs some legal services does not remove the taint from the entire scheme. It is axiomatic that one cannot do through an employee or agent that which he cannot do himself.” Id. The Court enjoined the collection agency from engaging in a long list of activities it considered constituted the practice of law:
 advising creditors when to bring suit;  soliciting or receiving assignments of claims or debts for collection under which payment, to the assignor or creditor, is dependent on collection from the debtor and which contemplates or authorizes the enforcement of collection by suit, brought in the name of either party, by an attorney at law;  employing a lawyer on behalf of the creditor or an assignor without specific written authority to do so;  interposing itself between the creditor and the lawyer handling legal action on the claim;  instituting or maintaining legal actions for others; and  appropriating to its own use as attorney fees sums adjudged against debtors on assigned claims except when such judgment is its bona fide property.
Id. at 600.
The Court in Shamey v. Hickey, 433 A.2d 1111 (DC 1981), again found unauthorized practice of law where Hickey, the appellee, purportedly purchased from a home improvement company that he “operated” or “r[a]n” its claim against a customer, appellant Shamey. Hickey then filed a pro se suit in Small Claims Court to collect on the assigned claim. The Court found that he was engaged in the unauthorized practice of law because Hickey, “though purporting to be appearing for himself, was in reality representing the interests of the corporate party to the subject contract.” Id. at 1112.
Jack Faucett Associates, Inc. v. American Telephone & Telegraph Co., 1985 WL 25746 (DDC Oct. 18, 1985), involved two companies that offered their services to class members in a class action suit in exchange for 50 percent of the amount the class members would receive under a proposed settlement agreement. The Court found that the companies were engaged in the unauthorized practice of law, specifically objecting to the following activities: (1) soliciting the class members with offers to perform such services as preparing, completing and filing claim forms with the court on behalf of class members; (2) advising the class members as to whether or not they were eligible to participate in the settlement; and (3) participating on behalf of the class members in court proceedings.
In In re Burton, 614 A.2d 46 (DC 1992), the Court affirmed the trial court’s finding that a disbarred lawyer was engaging in the unauthorized practice of law within the meaning of Rule 49 where the lawyer had not only taken responsibility for the administrative aspects of his client’s discrimination claim but had also drafted a complaint for filing in federal district court, prepared her for a deposition, prepared a memorandum opposing summary judgment, counseled her on her court appearances, advised her on courses of action after the trial court’s decision, held himself out as authorized to perform these services, and accepted checks tendered as attorney’s fees. Further, the Court held that it was proper for Bar Counsel to petition the court for contempt proceedings in this case, despite the fact that Rule 49(d) expressly commits the decision whether to initiate contempt proceedings for violating the Rule to the Committee on Unauthorized Practice of Law. The Court distinguished between the situation of a disbarred attorney practicing law and other forms of unauthorized practice and concluded that Rule 49 did not require that the former type of unauthorized practice be channeled through the investigative and hearing procedures of the Committee on Unauthorized Practice.
Inquiries to the Legal Ethics Committee from or concerning lawyers worried that they would be violating 5.5(b) or its predecessor by assisting another in engaging in the unauthorized practice of law have resulted in opinions of that Committee marking the boundaries of law practice in the District.
DC Ethics Opinion 225 (1992) found that it would not violate Rule 5.5 for a law firm to participate in a prepaid legal services program under which a third party company would market the program to potential subscribers and pay the law firm a fee for providing advice to these subscribers. As no employees of the marketing company would be providing legal services under the program and the company’s role would be limited to the establishment, marketing and administration of the program, the Opinion concluded that the marketing company’s activities could not be considered the practice of law.
DC Ethics Opinion 182 (1987) involved an inquiry into the permissible financial arrangements between a law firm and a consulting firm where some of the lawyers employed by the consulting firm were also partners in the law firm. Specifically, the inquiring firms asked whether the lawyer-employees needed to be removed from the consulting firm’s payroll when performing legal work for clients unrelated to the consulting firm, as partners of the law firm, or could stay on the consulting firm’s payroll and be “rented” to the law firm for a fee. The Legal Ethics Committee concluded that the consulting firm could “rent” the lawyer-employees to the law firm to the extent that the fee paid to the consulting firm represented only a reimbursement of the cost of “lending” the lawyer-employee and no part of the fee represented profit from the lawyers’ practice of law. The Committee stated that a consulting firm that received any profit from its lawyer-employees’ practice of law on behalf of unrelated clients would be engaged in the unauthorized “business” of practicing law. See also, in this connection, ABA Formal Opinion 95-392 (Sharing Legal Fees With a For-Profit Corporate Employer).
DC Ethics Opinion 94 (1980) involved a situation very similar to that in DC Ethics Opinion 182. The inquirer in this instance was the general counsel of a national trade association that wanted to provide legal services to a “related” educational association for a fee. The Legal Ethics Committee approved the arrangement as consistent with DR 3-101, citing ABA Informal Opinion 973 (1967) as support. ABA Informal Opinion 973 found a similar arrangement permissible as long as the lawyer’s employer did not employ him “for the basic purpose” of supplying his legal services to other corporations and the lawyer would be retained directly by the related corporation with a pro rata reduction in salary based upon the portion of his time spent servicing the related corporation.
DC Ethics Opinion 55 (1978), discussed in more detail in 5.5:500, below, found that a lay organization that arranged for medical expert testimony for lawyers and sometimes charged a contingent fee for this service was not engaged in the practice of law.
DC Ethics Opinion 52 (1978) stated that a non-lawyer campaign consultant is generally free to impart his knowledge of federal campaign laws to his customers without engaging in the unauthorized practice of law, but cautioned that only lawyers could advise the consultant’s customers on matters concerning their individual legal problems under the campaign laws where those problems were difficult or complex.
DC Ethics Opinion 39 (1977) involved an inquiry by a non-lawyer as to whether he could establish a referral service for lawyers willing to accept temporary assignments from other lawyers and law firms. The Opinion found this service permissible under DR 3-101(A), as the service did not provide legal services to the general public and, under the terms of their agreement, lawyers registered with the service were not its employees, but rather the principals for whom the service was the agent.
As discussed above, Rule 49 of the District of Columbia Court of Appeals Rules provides for injunctions against unauthorized practice and contempt penalties for unauthorized practice in the District. In addition, if the unauthorized practice is engaged in by a D.C. lawyer who is subject to Rule 5.5, that lawyer may, like any D.C. lawyer, be censured, suspended from practice or expelled from the Bar by the Court of Appeals. DC Code § 11-2502 (1981). Further, a non-lawyer practicing law may be found to have committed unlawful trade practices in violation of the Consumer Protection Procedures Act, DC Code § 28-3904 (1991), in addition to violating Rule 49. Thus, the Court in Banks v. District of Columbia Department of Consumer and Regulatory Affairs, 634 A.2d 433 (DC 1993), held that the Department of Consumer and Regulatory Affairs (DCRA) had the authority to proceed against a non-lawyer engaged in the unauthorized practice of law and sustained the DCRA’s ruling that the non-lawyer had engaged in three deceptive trade practices in violation of DC Code § 28-3904(a), (b), and (d) by reason of his unauthorized practice of law.
Another potential penalty for a non-lawyer engaged in the unauthorized practice of law is the denial of admission to the DC Bar. The Court in In re Demos, 579 A.2d 668 (DC 1990), denied an application for admission to the DC Bar, in part because of the applicant’s earlier engaging in the unauthorized practice of law. While working as a law clerk, the applicant had participated in a deposition as the sole representative of his law firm present, asked questions of the person being deposed and failed to inform opposing counsel of his non-lawyer status.
It should be noted, however, that Court of Appeals Rule 49 does provide for the limited practice of law in the District of Columbia by eligible law students, subject to several requirements and restrictions. DC Superior Court Rule of Civil Procedure 101(e) and DC Superior Court Rule of Criminal Procedure 44-I(f) also govern the limited practice of law by law students in the District of Columbia.
In Landise v. Mauro, 725 A.2d 445 (DC 1998), the Court held that a lawyer who was a member of the bar of another jurisdiction but not admitted in the District of Columbia, and who had practiced law with a DC lawyer pursuant to an oral partnership agreement, was not barred from recovering amounts due her as a partner by the fact that she had engaged in the unauthorized practice of law in the District of Columbia.
Agapito v. District of Columbia, 477 F.Supp.2d 103 (DDC March 7, 2007) concerned claims for attorney’s fees for five lawyers who had successfully represented special needs children in administrative proceedings before hearing officers of the DC Public Schools (DCPS) under the Individuals with Disabilities Education Act (IDEA), 20 U.S.C. § 4000 et seq. All five lawyers came from the same out-of town firm, and were apparently admitted to the bar of the jurisdiction where that firm had its offices, but only one of the five was a member of the DC Bar, and one other was found to be entitled to practice in the District of Columbia under the terms of Rule 49(c)(8), which allows an attorney licensed elsewhere with a pending application for admission to the DC Bar to practice under the supervision of a DC-licensed lawyer for a limited period of time. The principal issue before the court was whether the other three lawyers, having been engage in the unauthorized practice of law in their representations before the DCPS, were nonetheless entitled to receive the attorneys’ fees authorized by IDEA. As to this, the court, having determined that there was no statutory provision specifically authorizing specified categories of persons other than lawyers authorized to practice before the DCPS, so as to come under the exception provided by Rule 49(c)(2), described above under where?, held that these lawyers were not entitled to statutory attorneys fees for what had been the unauthorized practice of law.
The respondent in In re Coleman, 919 A.2d 1135 (DC 2007) was a lawyer who, three years after admission to the Pennsylvania Bar, was transferred by that Bar to inactive status for failure both to file a registration statement and to pay annual bar dues; and then a year later again moved to inactive status for failure to complete the necessary CLE courses. While in that inactive status, he entered into an arrangement to serve as local counsel in Pennsylvania for a New Jersey lawyer to whom he represented himself as a member of the Pennsylvania Bar, and signed and filed pleadings in that capacity in Pennsylvania courts. These activities drew the attention of the Pennsylvania disciplinary authorities, and resulted in a determination that he had violated Pennsylvania’s Rule 5.5(a) as well as Rules 1.16(a), 7.1(a), 7.5(a), 7.5(b) ad 8.4(c) and (d), for which he was suspended from the Pennsylvania Bar for two years. The respondent had also been a member of the DC Bar, and when this discipline was reported to the DC disciplinary authorities, an identical suspension was imposed on him.
See also In re Devaney, 870 A.2d 53 (DC 2005), where, as more fully discussed under 1.8:400, above, a lawyer who was disbarred for violating DC Rule 1.8(b) by preparing codicils to a client’s will that amended the will to give members the of the lawyer’s family substantial gifts was also held to have violated Rule 5.5(a) because he had not been admitted to practice in the state where he and his client resided and the codicils were prepared.
The Court in In re Kennedy, 542 A.2d 1225 (DC 1988), held that a lawyer suspended from active practice for nonpayment of Bar membership dues violated DR 3-101(B) by continuing to practice law.
In In re Stanton, 532 A.2d 95 (DC 1987), the Court held that a suspended lawyer’s petition for reinstatement to the Bar should be denied because he engaged in the unauthorized practice of law while he was under suspension. The suspended lawyer had identified himself as a lawyer and used his DC Bar number in proceedings before the DC Rental Housing Commission.
In re Willcher, 404 A.2d 185 (DC 1979), also involved a lawyer who had practiced law while suspended, in apparent violation of DR 3-101(B), the Code predecessor of Rule 5.5(a). The Court concluded that there was insufficient proof of a DR 3-101(B) violation by the lawyer, however, because it not shown that he knew he had been suspended at the time he was practicing law.
See the treatment of Rule 8.1, below, for discussion of bar admission in the District of Columbia. 8.1:210 and 220 discuss bar admission in the District of Columbia generally; and 8.1:230 discusses the requirements for admission on motion that apply to lawyers who are members of the bar of another jurisdiction.
As for residency requirements, DC Bar Rule II, Section 1 states that “[r]esidence in the District of Columbia shall not be a condition of eligibility to membership.” (Emphasis added.)
5.5:310 Pro Hac Vice Admission [see also 8.1:240]
See 8.1:240, below, for general information about admission pro hac vice in the District of Columbia.
The DC Court of Appeals has held that overuse of the pro hac vice admission exception may constitute the unauthorized practice of law, even where the lawyer has been in apparent technical compliance with its requirements. Brookens v. Committee on Unauthorized Practice of Law, 538 A.2d 1120 (DC 1988), involved a lawyer who was a member of the Wisconsin and Pennsylvania bars but had offices located in the District. The lawyer had appeared only in the courts and before the agencies of the District and had never practiced anywhere other than in the District. While, as a technical matter, the lawyer had always complied with the provisions of the Court’s rule governing pro hac vice admission by providing the correct paperwork for each appearance and never exceeding the maximum number of five permissible appearances per year, the Court found the lawyer had violated the “spirit” of the exception and was effectively engaged in the unauthorized practice of law. The Court emphasized that pro hac vice admission was “intended for special cases or unusual circumstances,” and is “not a device to circumvent bar membership requirements or rules against unauthorized practice.” Id. at 1124.
DC Court of Appeals Rule 46(c)(4) provides for the licensing of certain foreign lawyers for limited practice of law in the District of Columbia, using the title Special Legal Consultant. To qualify for such licensing an applicant must have been admitted to practice in a foreign country and have engaged in the practice of law and been in good standing in that country for five of the previous eight years. Rule 46(c)(4)(A). The practice permitted to such Special Legal Consultants is effectively confined to advice about foreign law, since it may not include advice about the law of DC, the United States or any state or territory (except in reliance on advice of a member of the Bar). Rule 46(c)(4)(D)(5). Special Legal Consultants also may not appear for another in court (unless admitted pro hac vice); prepare any instrument affecting title to real estate in the United States; prepare a will or trust affecting disposition of property located in the United States and owned in whole or part by a resident or an instrument relating to administration of an estate in the United States; or prepare any instrument relating to marital relations, rights or duties of a US resident or the custody or care of the children of such a resident. Rule 46(c)(4)(D) (1)-(4). In addition, Special Legal Consultants may not hold themselves out as members of the Bar of the DC Court of Appeals, Rule 46(c)(4)(D)(6), or use any title other than “Special Legal Consultant,” his or her foreign title and/or the name of his or her foreign firm, in each case together with the name of the country of admission to practice. Rule 46(c)(4)(D)(7).
DC UPL Opinion 8-00 (July 28, 2000) responded to several inquiries concerning the relationship of Rule 46(c)(4) to Rule 49, dealing with the unauthorized practice of law. The Opinion made clear that Rule 49 does not prohibit practice of law in the District of Columbia by a foreign lawyer licensed as a Special Legal Consultant under Rule 46(c)(4), so long as the practice is within the limitations imposed by that rule (described above). A foreign lawyer who is not eligible for license as a Special Legal Consultant, however, is in the same position as a lawyer admitted to practice in another U.S. jurisdiction but not eligible for admission to the DC Bar. Such a lawyer may only do legal work in DC as a law clerk under the supervision of a member of the DC Bar, and the supervising member must make sure there is no holding out of the supervised lawyers as a member of the DC Bar. The Opinion also held that Rule 49 does not permit a foreign lawyer to engage in the practice of law while his or her application for license is pending, since the special provisions in Rule 49(c)(8) for a 360-day grace period for applicants seeking admission on the basis of membership in another Bar applies only to applicants for admission to the DC Bar, and Special Legal Consultants do not attain the status of members of that Bar.
DC Ethics Opinion 105 (1981) involved inquiries by lawyers licensed in the District concerning the propriety of multijurisdictional newspaper advertisements and letters of solicitation. The Opinion found that advertising alone does not constitute the practice of law and therefore “the provisions of DR 3-101(B) of the D.C. Code would not be violated even were the advertisements to constitute a violation of another jurisdiction’s requirements.”
DC Ethics Opinion 134 (1984) also was in response to an inquiry concerning advertising. The opinion found that a law firm would not violate DR 3-101(B) of the DC Code by sending a newsletter to recipients in various states, citing DC Ethics Opinion 105 for the proposition that advertising alone does not constitute the practice of law. However, the opinion qualified this by stating that DR 3-101(B) required that the newsletter conform to the requirements of the recipient jurisdiction if it was sent to a jurisdiction where members of the firm practiced law or were members of the bar. (The Legal Ethics Committee’s almost offhand remark to this effect appears to be a misreading of DR 3-101(B). Like Rule 5.5(b), it forbade practicing law in violation of another jurisdiction’s unauthorized practice statute or rule; it did not make subject to discipline in the District of Columbia a lawyer who had violated any disciplinary rule of another jurisdiction or district where the lawyer practiced law or was admitted.)
DC Ethics Opinion 167 (1986) involved an inquiry by a member of the DC and California bars who wanted to advertise his immigration law services in London and Hong Kong. Again, the Opinion cited DC Ethics Opinion 105 for the proposition that advertising alone does not constitute the practice of law under DC’s ethics rules and concluded that as long as the lawyer merely advertised in those foreign jurisdictions and did not practice law there, he would not violate DR 3-101(B). However, the opinion cautioned that the overseas jurisdictions might reach a different conclusion on the issue of whether advertising constitutes the “practice of law.”
The DC Court of Appeals has imposed sanctions on DC bar members who engaged in unauthorized practice in another jurisdiction in violation of Rule 5.5 or its predecessor, DR 3-101. See, e.g., In re Spiegelman, 694 A.2d 59 (DC 1997) (imposing a one-year suspension for engaging in unauthorized practice in Maryland on several occasions, as well as for other disciplinary rule violations occurring in Maryland); In re Ray, 675 A.2d 1381 (DC 1996) (imposing a six-month suspension for engaging in unauthorized practice in Maryland, as well as other disciplinary rule violations arising out of the same transaction); In re Kennedy, 605 A.2d 600 (DC 1992) (imposing a nine-month suspension for engaging in unauthorized practice in Maryland); In re Washington, 489 A.2d 452 (DC 1985) (imposing a three-month suspension for engaging in unauthorized practice in Maryland, as well as other disciplinary rule violations).
5.5:500 Assisting in the Unauthorized Practice of Law
DC Ethics Opinion 289 (1999) [discussed more fully under 5.4:400, above], addressing various issues potentially presented by a nonprofit organization's program of "cause" litigation involving the representation of third persons, found certain aspects of the program to raise problems of lay interference with the lawyers conducting the litigation, in violation of Rule 1.8(e)(2) as well as Rule 5.4(c), and suggested, in footnotes, that such problems might implicate Rule 5.5 as well.
DC Ethics Opinion 278 (1998), addressing the question whether a member of the DC Bar could practice law in a partnership or other professional association with a lawyer licensed to practice in a foreign jurisdiction but not in any U.S. jurisdiction, referred to the possible application of Rule 5.5 in such circumstances. [The Opinion is discussed somewhat more fully under 5.1:200, above.]
DC Ethics Opinion 225 (1992) [discussed in more detail under 5.5:210, above] found that a law firm would not assist the unauthorized practice of law by participating in a prepaid legal services program that was to be administered and marketed to potential subscribers by a lay company. This is the only opinion under Rule 5.5(b).
DC Ethics Opinion 182 (1987) [also discussed in more detail under 5.5:210, above] concluded that a lawyer employed by a consulting firm would be aiding in the unauthorized practice of law in violation of DR 3-101(A) if the lawyer allowed the firm to receive any part of the profits from his practice of law on behalf of clients unrelated to the firm. However, the Opinion stated that the lawyer would not be aiding in the unauthorized practice of law if the consulting firm received compensation that merely represented a reimbursement of the cost to the firm of allowing its lawyer-employee to work on matters unrelated to the firm.
DC Ethics Opinion 176 (1986) addressed the ethical propriety of a salaried attorney employed by a federal employee labor union accepting an attorney's fee award calculated at the prevailing market rate when the amount awarded would be deposited in a separate fund to be used solely by the union's lawyers to finance legal assistance. The Opinion found that this arrangement would not violate DR 3-101(A) of the DC Code.
Case authority is to the same effect. See, e.g., American Fed'n of Gov't Employees, AFL-CIO, Local 3882 v. Federal Labor Relations Auth., 944 F.2d 922 (DC Cir. 1991) (concluding that it does not constitute the unauthorized practice of law for union attorneys to be awarded market-rate attorneys' fees under the Back Pay Act in connection with the union's successful representation of an aggrieved employee, provided the fees are placed in a legal representation fund, separate from the union's general treasury, to be used solely in connection with legal matters); Jordan v. United States Dep't of Justice, 691 F.2d 514 (DC Cir. 1982) (awarding attorneys' fees to attorney employed on legal staff of law school public interest organization for services rendered in successful Freedom of Information Act case, on the assumption that the organization would deposit any fees beyond recoupment of its expenses into a fund maintained exclusively for litigation).
DC Ethics Opinion 172 (1986) advised lawyers involved in joint ventures with non-lawyers to structure these ventures carefully in order to insure that no legal work is performed by the joint enterprise, so that the lawyers can be sure they are not assisting non-lawyers in the unauthorized practice of law in violation of DR 3-101(A).
DC Ethics Opinion 160 (1985) concluded that a lawyer would violate DR 3-101(A) if he continued to practice as an associate in a law firm where the partners of the firm had been suspended or if he sought the approval or advice of a suspended lawyer regarding decisions made for firm clients. The Opinion found that these activities would be aiding a non-lawyer in the unauthorized practice of law: it considered a suspended lawyer to be a “non-lawyer” within the meaning of the DR 3-101(A), and a firm’s holding itself out as a law firm authorized to practice law and exercising the responsibility to approve decisions on legal matters undertaken on behalf of a client to constitute the “practice of law.” Thus, for the lawyer to participate in these activities would be aiding a non-lawyer in the unauthorized practice of law in violation of DR 3-101(A).
DC Ethics Opinion 135 (1984) addressed the question whether a lawyer employed by a corporation whose directors and officers were non-lawyers can perform legal work for the corporation's clients without violating DR 3-101(A). The Opinion concluded that this was allowed under the disciplinary rule, but only if: (1) the fees generated by the work went only to compensate the lawyer and those under his supervision and were not used to compensate or profit a non-lawyer in the corporation; and (2) the non-lawyers in the corporation did not exercise any control or influence over the exercise of the lawyer’s professional judgment in performing legal services for the corporation’s clients.
DC Ethics Opinion 93 (1980) concluded that it did not violate DR 3-101(A) for a lawyer or law firm to offer and furnish the services of other professionals, such as psychologists, social workers and family counselors, while engaging in the practice of law, as long as the lawyer or firm ensured that non-lawyers did not control the activities of lawyers in the practice of law, share in fees generated from such practice, or engage in unethical activities connected with the practice of law. This Opinion, and the unique DC Rule that was its ultimate progeny, are discussed under 5.4:101, above.
DC Ethics Opinion 55 (1978) concluded that an attorney representing claimants in personal injury actions might employ a lay organization to arrange for medical expert testimony on their behalf, even where that lay organization charged a contingent fee for its services, without violating DR 3-101(A)'s prohibition on aiding a non-lawyer in the unauthorized practice of law. The Opinion found that the services rendered by the lay organization in finding appropriate medical expert witnesses, paying them for their testimony, and assuming a portion of the injured party’s financial risk of prosecuting the lawsuit did not constitute the practice of law.
DC Ethics Opinion 39 (1977), discussed in more detail under 5.5:203 above, found that lawyers could participate in a temporary attorney referral service without violating DR 3-101(A)'s prohibition against assisting in the unauthorized practice of law.
DC Ethics Opinion 10 (1975) discussed whether a lawyer could bid on a government contract that required both legal and non-legal work. The Opinion found this would not violate DR 3-101 as long as the services to be provided by non-lawyers were non-legal services. Specifically, the Opinion stated that, “where identifiable aspects of such projects fall within a lawyer’s professional ken, so as to constitute the practice of law, the lawyer’s professional responsibility for those aspects of the work should not be shared in specific respects with laymen.”
The Court in In re Smith, 5 B.R. 92 (Bankr. DC 1980), aff’d in part and rev’d in part sub nom. In re Devers, 12 B.R. 140 (DDC 1981), found a lawyer had violated DR 3-101 by assisting a “debt adjusting” corporation in the unauthorized practice of law. The Court stated that “[i]t is . . . clear that the activities of a debt-adjusting business constitute the unauthorized practice of law in this and many jurisdictions.” Id. at 104. Thus, the lawyer’s active involvement as general counsel, officer and director of the corporation plainly amounted to assistance in the unauthorized practice of law in violation of DR 3-101.
5.6:100 Comparative Analysis of DC Rule
DC Rule 5.6 as first adopted was identical to Model Rule 5.6, except that in paragraph (b), addressing restrictions imposed on a lawyer's practice in connection with the settlement of a controversy, where the Model Rule refers to a "controversy between private parties," the DC Rule omitted the word "private," making clear that the rule applies to settlements involving a governmental party the government as well as private parties. In 1995, ABA Formal Opinion 95-394 addressed the question whether the Model Rule applied to settlements with governmental parties despite the reference to "private" parties, and concluded that it did, thus rendering the term "private" inoperative surplusage. In 2002, the Model Rule was amended, pursuant to a recommendation of the Ethics 2000 Commission, to eliminate this surplusage by substituting for the phrase "settlement between private parties" in paragraph (b), the phrase "settlement of a client controversy."
The Model Rule was also changed in 2002 to broaden the categories of agreement covered by the prohibition in paragraph (a) to include, in addition to partnership and employment agreements, shareholders, operating, and "other similar types of" agreements. In 2006, paragraph (a) of the DC Rule was amended identically. The 2006 changes to the DC Rule included several changes to its Comments. A sentence was added to Comment , asserting that whether provisions limiting benefits are retirement provisions, excepted by the Rule, will depend on a number of factors, citing Neuman v. Akman, 715 A.2d 127 (1998) (discussed under 5.6:200, below). A new Comment  was also added, asserting that restrictions other than those concerning retirement benefits, that impose a substantial financial penalty on a lawyer who competes after leaving a firm, might violate paragraph (a) of the Rule. And a new Comment  was added, asserting that the Rule doesn't prohibit restrictions that may be included in the terms of a sale of a law practice under the new Rule 1.17.
DC Rule 5.6 is substantially similar to its Model Code counterpart, DR 2-108. However, DC Rule 5.6(b) goes further than DR 2-108(B) by prohibiting the offer, as well as the acceptance, of a settlement agreement that restricts the lawyer's right to practice law. In the past, lawyers could make such offers without liability in the hope that opposing counsel would accept them either out of ignorance or in disregard of the Disciplinary Rule.
5.6:200 Restrictions on Lawyers Leaving a Firm
The imposition of a financial penalty on a departing lawyer is an unreasonable restriction in violation of DC Rule 5.6(a) unless it results from "an agreement concerning benefits upon retirement" (discussed at the conclusion of this section). Prohibited agreements include those that require the departing lawyer to forfeit earned, deferred compensation that the lawyer would receive if he or she were not leaving to compete with the firm for its business. See DC Ethics Opinion 241 (1993) (concluding that an agreement imposing a delay of up to five years in paying out funds of a departed partner's capital account where the departed partner continues to practice in the same location is a violation of Rule 5.6(a)). Also prohibited are agreements forcing the departing lawyer to pay a percentage of fees earned from clients who leave the former firm to become clients of the departing lawyer. See DC Ethics Opinion 65 (1979) (finding that an employment contract requiring a departing lawyer to pay a percentage of post-withdrawal fees for any work performed for a client of the former firm violated DR 2-108(A)); DC Ethics Opinion 181 (1987) (condemning, under DR 2-108(A), a restriction that prevented a withdrawing attorney from taking any action that would interfere with the business of the firm in any possible way).
Some financial disincentives are permitted under the rules. In DC Ethics Opinion 221 (1991), the Legal Ethics Committee concluded that an employment agreement that divides a client's fees between the departing attorney and the existing firm, including a division for work already performed by the firm, is valid so long as the percentages used in the agreement represent a generally fair allocation of fees based on historical experience. If, however, the firm's percentage is excessive, DC Rule 5.6 is violated. In addition, Opinion 221 found invalid a provision in the agreement that allowed only the firm to send clients notice of a lawyer's departure, and prohibited the lawyer from speaking to clients until after they had responded to the firm's notice, stating that such a provision allows too much control by the firm of communications between lawyer and client. Emphasizing that the client must be free to choose counsel on his own, the Opinion concluded that the firm may not restrict a lawyer's right to send an announcement notifying clients of his departure and may not prohibit discussion between the lawyer and the client if the client initiates such discussion.
Ashcroft & Gerel v. Coady, 244 F. 3d 948 (DC Cir. 2001) was a suit between a law firm and an individual lawyer who had been employed as managing attorney of the firm's Boston office, under an employment agreement providing, inter alia, for liquidated damages in the amount of $400,000 to be paid by either party upon a material breach of the agreement. Each party claimed breach of the agreement by the other, and the firm secured judgment on its claim in the amount of the liquidated damages as provided in the agreement. The lawyer challenged that provision as violating Rule 5.6(a)'s prohibition of an employment agreement restricting a lawyer's right to practice after termination of the agreement, but the Court held upheld provision in question, stating that the terms of the employment agreement at issue were "readily distinguishable from a contract not to compete."
DC Ethics Opinion 77 (1979) ruled that an agreement obligating a departing lawyer to pay liquidated damages if he solicited (i.e., actively sought to obtain) his former firm's clients otherwise than by sending a printed announcement card containing all of the information permitted by the Code did not violate DR 2-108(A). Clients were not restricted from seeking out the departing lawyer.
DC Ethics Opinion 122 (1983) ruled that a partnership agreement that absolutely prohibited a departing lawyer from representing firm clients for a specified period violated DR 2-108(A). The prohibition was ruled to be "inconsistent with the practice of law as a profession" and ethically impermissible also because it "directly interferes with clients' choice of an attorney." In addition, the Opinion held that an agreement requiring a departing lawyer to share a percentage of his fees from specific clients with his former firm violated DR 2-108(A). Such an agreement interfered with the departing lawyer's representation of his clients and gave the lawyer an incentive to charge larger fees to clients he represented at his former firm. See also ABA Formal Opinion 94-381 (1994) (finding a violation of Model Rule 5.6(a) in a retainer or employment agreement between a corporation and an outside lawyer whereby the lawyer agrees never to represent anyone against the corporation in the future); ABA Formal Opinion 93-371 (1993) (ruling invalid under Model Rule 5.6(a) provision by which a lawyer is restricted from representing certain other present and future clients against a specific defendant); ABA Informal Opinion 1171 (1971) (finding a violation of DR 2-108(A) in a provision that prohibited departing lawyers from representing clients of their former firm for two years, except those clients the departing lawyer brought to the firm).
DC Ethics Opinion 325 (2004) ruled that an agreement among partners in a firm that was about to merge with another firm to distribute profits from fee payments that were owed to the pre-merger firm for its previously completed legal work, but that were to be made over time, only to partners in the pre-merger firm who continued to practice for at least two years with the merged firm violates Rule 5.6(a). The Opinion distinguished situations in which an ongoing firm’s partnership agreement would cut off elements of compensation to which a departing lawyer would be entitled if he or she were to remain at the firm.
DC Ethics Opinion 97 (1980) examined whether it is proper for an associate who leaves a firm to solicit clients of his former firm, and if so, whether the firm could restrict such practices through an employment agreement. The answer to the first question was said to be yes because, unlike DR 2-103(A) of the standard version of the Model Code, DR 2-103(A) of the DC Code did not prohibit solicitation of clients except when "accompanied by wrongful conduct" -- untruths, coercion, overbearing. Finding that the answer to the latter question, whether the employment agreement could ethically restrict what would otherwise be permissible solicitation on the part of the departing associate, depended on whether it amounted to an impermissible restriction on the lawyer's right to practice, the Opinion concluded that, if the associate was allowed to send announcements of his departure to clients of the firm, the firm's employment agreement could prohibit, consistent with DR 2-108(A), other direct solicitation of the firm's clients by the associate.
Agreements that limit a departing lawyer's ability to compete with his or her former firm, through the use of financial penalties, geographical constraints or advertisement restrictions, are a violation of DC Rule 5.6(a). See DC Ethics Opinion 194 (1988) (finding it a violation of DR 2-108(A) to reduce a lawyer's payment for unrealized accounts receivable for withdrawing to enter into a competitive practice, noting that such a financial penalty affects the lawyer's willingness to accept clients of the former firm, thus interfering with such clients' choice of counsel). See also ABA Informal Opinion 1417 (1978) (concluding that an agreement whereby a withdrawing partner agrees not to hire any of the firm's associates who are working at the firm at the time of withdrawal for a certain period of years is an indirect restriction on the attorney's ability to practice and thus a violation of DR 2-108(A)); ABA Informal Opinion 1301 (1975) (examining an agreement in which a corporate employer prohibited its departing lawyers for a period of two years following termination from accepting employment from a competitor unless the company receives assurances that the lawyer will not render services in direct competition with the company, and deeming the covenant superfluous since a lawyer is already restricted from divulging secrets of a former client).
Rule 5.6(a) in terms excepts from its prohibition "an agreement concerning benefits upon retirement." In Neuman v. Akman, 715 A.2d 127 (1998) , the Court addressed a partnership agreement that provided certain lifetime benefits, generally payable beginning at age sixty-five, to withdrawing partners who satisfied certain age and longevity agreements or who left the firm by reason of death or permanent disability, but withheld such benefits from partners who left in order to "engage in the private practice of law anywhere in the United States." The latter provision was challenged, as in violation of Rule 5.6(a), by a partner who had left, at age fifty-six, to join another law firm in the District of Columbia. The Court upheld the provision in question as coming within the phrase "benefits upon retirement." It noted that the term "retire" can mean not only withdrawal from gainful employment but also withdrawal from a particular position within an occupation, but held that the term as used in Rule 5.6(a) has the former meaning. The Court also noted, citing the decision of the New York Court of appeals in Cohen v. Lord, Day and Lord, 550 N.E. 2d 410 (N.Y. 1989), that the term "benefits" implies a distinction between income that a departing partner had already earned (or a deferred payout of a current asset), and a future distribution of law firm profits (sometimes treated as compensation for a partner's share of a firm's goodwill). Here, the Court concluded, the benefits contemplated by the partnership agreement were of the former variety, not the latter. See also Gryce v. Lavine, 675 A.2d 67 (DC 1996), where, in a similar dispute about whether a partner who had withdrawn from a firm at age sixty-eight and continued the practice of law with another firm was entitled to retirement benefits, the Court held that the firm's partnership agreement was ambiguous, precluding the summary judgement that the trial court had awarded to the firm.
5.6:300 Settlements Restricting a Lawyer's Future Practice
DC Rule 5.6(b) forbids lawyers to enter into settlement agreements that restrict their right to represent or sue certain parties. Such agreements create a conflict between the interests of present and future clients and restrict the public's free access to lawyers. See ABA Formal Opinion 93-371 (1993) (explaining the rationale behind Model Rule 5.6); ABA Formal Opinion 95-394 (1995) (finding an agency in violation of Model Rule 5.6 for conditioning a settlement offer on the opposing counsel's agreement never to represent clients against that agency in the future).
One of the numerous ethical transgressions found in In re Hager, 812 A.2d 904 (DC 2002) [which is more fully discussed under 1.7:500, above] was a violation of Rule 5.6(b)'s prohibition on a lawyer making an agreement restricting the lawyer's right to practice as part of a settlement of a controversy between parties. In the underlying case the lawyers representing the plaintiffs in a potential class action had made a side deal with the defendant, unknown to their clients, under which the defendant paid them $225,000 as attorneys fees and expenses, the lawyers agreed never to represent anyone with related claims against the defendant and to keep totally confidential and not to disclose to anyone all information learned during their investigation relating to the case, and all the parties agreed not to disclose most of the terms of the settlement, even to the lawyers' clients. The Rule 5.6(b) violation found in this case rested on the lawyers' undertaking in the secret agreement never to represent anyone with related claims against the defendant. The respondent argued that the Rule did not apply because there was no settlement of a "controversy between parties:" the agreement did not actually settle any of the clients' claims against the defendant; indeed, by its terms it left them untouched. The Board on Professional Responsibility reasoned, nonetheless, and the Court agreed, that the clients did, by reason of the agreement, lose their lawyers, their lawyers' work product and the names of potential class members, which was close to the equivalent of a release of their claims.
DC Ethics Opinion 335 (2006) held that settlement agreements may not contain confidentiality provisions that prohibit a lawyer from disclosing public information about the case, such as the name of the defendant, the allegations of the complaint, and information that readily can be inferred from the public record, such as the fact that the litigation settled. The Opinion explained that such agreements would are contrary to the basic principle underlying Rule 5.6(b): that clients should have the opportunity to retain the best available lawyer to represent them. The Opinion observed that a lawyer must abide by a client’s instructions not to disclose public information, but noted that the client does not need the mechanism of a settlement agreement to enforce such instructions.
DC Ethics Opinion 147 (1985) condemned a settlement proposal that conditioned acceptance on the plaintiff's lawyer's waiver of a fee or acceptance of a reduced statutory fee. The Legal Ethics Committee stretched to find some disciplinary rule violated. The most it could say of DR 2-108(B), predecessor to Rule 5.6(b), was that its conclusion that the proposal of a waiver or reduced fee was unethical was "supported by the policy considerations reflected in" that disciplinary rule. Opinion 147 was subsequently modified by DC Ethics Opinion 207 (1989): see 8.4:500, below.
DC Ethics Opinion 130 (1983) concluded that the insistence on or acceptance of a term in a settlement agreement restricting plaintiff's lawyer from representing future clients against the defendant was unethical as in violation of DR 2-108(B).
And DC Ethics Opinion 35 (1977) concluded that DR 2-108(B) prohibited a lawyer for a settling plaintiff from agreeing as part of the settlement not to sue the defendant ever again in any matter. The inquiring lawyer also asked whether he could agree as part of a settlement agreement not to refer to another lawyer a potential client with a claim against the settling defendant. The Legal Ethics Committee answered no, finding the suggested abnegation "clearly contrary to the intent" of DR 2-108(b) because "DR 2-108(b) is an assurance of the public's right to counsel through the lawyer's right to practice."
5.7:100 Comparative Analysis of DC Rule
Prior to 2006, the DC Rules of Professional Conduct never included a Rule corresponding to Model Rule 5.7, in either its original form, adopted in 1971 and deleted in 1972, or in the more narrowly focused version that was adopted in 1994, although among the changes to the DC Rules recommended by the Peters Committee and adopted effective November 1, 1996, was a new Comment  (now renumbered ) to DC Rule 1.7 that addresses the general subject of "Businesses Affiliated with a Lawyer or Firm," and specifically the conflict of interest and disclosure considerations that may be involved in referrals between the law firm and the affiliated business, possible conflicts created by the work of the affiliated business, and problems of preserving confidences of firm clients who are also customers of the affiliated business.
However, the DC Rules Review Committee recommended, "in the interests of uniformity, and the DC Court of Appeals approved in 2006, the adoption of a DC Rule 5.7 that is identical, in both black letter text and Comments, to Model Rule 5.7 as it now stands.
There was no counterpart to this rule in the Model Code.
5.7:200 Applicability of Ethics Rules to Ancillary Business Activities
DC Ethics Opinion 306 (2001) addressed the ethical responsibilities of a lawyer who is also a licensed insurance broker. It observed that such a lawyer, in selling insurance products to the public generally, must comply with ethics rules applicable generally to lawyers acting in non-lawyer capacities, meaning principally Rule 8.4(c) (prohibiting conduct inviting dishonesty, fraud, deceit or misrepresentation); and must not mislead the customer into believing that the lawyer is acting as the customer's lawyer in the transaction. Where such a lawyer sells insurance to a client, on the other hand, both Rule 1.8(a) and Rule 1.7(b)(4) come into play, the first governing business transactions between a lawyer and a client, and the second addressing the potential conflicts of interest entailed by the lawyer's dual role. In those circumstances also, Rule 1.6 might come into play, in requiring the lawyer to refrain from disclosing confidences or secrets of the client to the insurer, even through the information involved was relevant to the insurer's evaluation of the proposed transaction -- the result being a conflict of interest that prevents the lawyer from consummating the sale.
DC Ethics Opinion 226 (1992) addressed, inter alia, a situation where a lawyer proposed to engage in the business of real estate broker as well as the practice of law. It held that this was permissible so long as the lawyer's engagement in the other business did not result in violations of any ethics rules, and so long as in any instance in which he was acting in dual roles in the same transaction there was full disclosure and, where necessary, consent.