204 Pa. Code r. 5.7 - Responsibilities Regarding Nonlegal Services
(a) A lawyer who provides nonlegal services
to a recipient that are not distinct from legal services provided to that
recipient is subject to the Rules of Professional Conduct with respect to the
provision of both legal and nonlegal services.
(b) A lawyer who provides nonlegal services
to a recipient that are distinct from any legal services provided to the
recipient is subject to the Rules of Professional Conduct with respect to the
nonlegal services if the lawyer knows or reasonably should know that the
recipient might believe that the recipient is receiving the protection of a
client-lawyer relationship.
(c) A
lawyer who is an owner, controlling party, employee, agent, or is otherwise
affiliated with an entity providing nonlegal services to a recipient is subject
to the Rules of Professional Conduct with respect to the nonlegal services if
the lawyer knows or reasonably should know that the recipient might believe
that the recipient is receiving the protection of a client-lawyer
relationship.
(d) Paragraph (b) or
(c) does not apply if the lawyer makes reasonable efforts to avoid any
misunderstanding by the recipient receiving nonlegal services. Those efforts
must include advising the recipient that the services are not legal services
and that the protection of a client-lawyer relationship does not exist with
respect to the provision of nonlegal services to the recipient.
(e) The term "nonlegal services" denotes
services that might reasonably be performed in conjunction with and in
substance are related to the provision of legal services, and that are not
prohibited as unauthorized practice of law when provided by a nonlawyer.
Comment:
(1) For many years, lawyers have provided to
their clients nonlegal services that are ancillary to the practice of law.
Examples of nonlegal services include providing title insurance, financial
planning, accounting, trust services, real estate counseling, legislative
lobbying, economic analysis, social work, psychological counseling, tax return
preparation, and patent, medical or environmental consulting. A broad range of
economic and other interests of clients may be served by lawyers participating
in the delivery of these services.
The Potential for Misunderstanding
(2) Whenever a lawyer directly provides
nonlegal services, there exists the potential for ethical problems. Principal
among these is the possibility that the person for whom the nonlegal services
are performed may fail to understand that the services may not carry with them
the protection normally afforded by the client-lawyer relationship. The
recipient of the nonlegal services may expect, for example, that the protection
of client confidences, prohibitions against representation of persons with
conflicting interests, and obligations of a lawyer to maintain professional
independence apply to the provision of nonlegal services when that may not be
the case. The risk of such confusion is especially acute when the lawyer
renders both types of services with respect to the same matter.
Providing Nonlegal Services that Are Not Distinct from Legal Services
(3) Under some circumstances, the legal and
nonlegal services may be so closely entwined that they cannot be distinguished
from each other. In this situation, confusion by the recipient as to when the
protection of the client-lawyer relationship applies is likely to be
unavoidable. Therefore, Rule
5.7(a) requires
that the lawyer providing the nonlegal services adhere to all of the
requirements of the Rules of Professional Conduct.
(4) In such a case, a lawyer will be
responsible for assuring that both the lawyer's conduct and, to the extent
required by Rule
5.3, that of nonlawyer employees,
comply in all respects with the Rules of Professional Conduct. When a lawyer is
obliged to accord the recipients of such nonlegal services the protection of
those Rules that apply to the client-lawyer relationship, the lawyer must take
special care to heed the proscriptions of the Rules addressing conflict of
interest (Rules
1.7 through
1.11, especially Rules
1.7(b) and
1.8(a), (b) and
(f)), and to scrupulously adhere to the
requirements of Rule
1.6 relating to disclosure of
confidential information. The promotion of the nonlegal services must also in
all respects comply with Rule
5.8 relating to prohibitions and
restrictions on dealing in investment products, and with Rules
7.1 through
7.3, dealing with advertising and
solicitation.
(5) Rule
5.7(a) applies
to the provision of nonlegal services by a lawyer even when the lawyer does not
personally provide any legal services to the person for whom the nonlegal
services are performed if the person is also receiving legal services from
another lawyer that are not distinct from the nonlegal services.
Avoiding Misunderstanding when a Lawyer Directly Provides Nonlegal Services that Are Distinct from Legal Services
(6) Even
when the lawyer believes that his or her provision of nonlegal services is
distinct from any legal services provided to the recipient, there is still a
risk that the recipient of the nonlegal services will misunderstand the
implications of receiving nonlegal services from a lawyer; the recipient might
believe that the recipient is receiving the protection of a client-lawyer
relationship. Where there is such a risk of misunderstanding, Rule
5.7(b) requires
that the lawyer providing the nonlegal services adhere to all the Rules of
Professional Conduct, unless exempted by Rule
5.7(d).
Avoiding Misunderstanding when a Lawyer Is Indirectly Involved in the Provision of Nonlegal
Services
(7) Nonlegal services also may be provided
through an entity with which a lawyer is somehow affiliated, for example, as
owner, employee, controlling party or agent. In this situation, there is still
a risk that the recipient of the nonlegal services might believe that the
recipient is receiving the protection of a client-lawyer relationship. Where
there is such a risk of misunderstanding, Rule
5.7(c) requires
that the lawyer involved with the entity providing nonlegal services adhere to
all the Rules of Professional Conduct, unless exempted by Rule
5.7(d).
Avoiding the Application of Paragraphs (b) and (c)
(8) Paragraphs
(b) and (c) specify that the Rules of Professional Conduct apply to a lawyer
who directly provides or is otherwise involved in the provision of nonlegal
services if there is a risk that the recipient might believe that the recipient
is receiving the protection of a client-lawyer relationship. Neither the Rules
of Professional Conduct nor paragraphs (b) or (c) will apply, however, if
pursuant to paragraph (d), the lawyer takes reasonable efforts to avoid any
misunderstanding by the recipient. In this respect, Rule
5.7 is analogous to Rule
4.3(c).
(9) In taking the reasonable measures
referred to in paragraph (d), the lawyer must communicate to the person
receiving the nonlegal services that the relationship will not be a
client-lawyer relationship. The communication should be made before entering
into an agreement for the provision of nonlegal services, in a manner
sufficient to assure that the person understands the significance of the
communication, and preferably should be in writing.
(10) The burden is upon the lawyer to show
that the lawyer has taken reasonable measures under the circumstances to
communicate the desired understanding. For instance, a sophisticated user of
nonlegal services, such as a publicly-held corporation, may require a lesser
explanation than someone unaccustomed to making distinctions between legal
services and nonlegal services, such as an individual seeking tax advice from a
lawyer-accountant or investigative services in connection with a lawsuit.
The Relationship Between Rule 5.7 and Other Rules of Professional Conduct
(11) Even before Rule
5.7 was adopted, a lawyer
involved in the provision of nonlegal services was subject to those Rules of
Professional Conduct that apply generally. For example, Rule
8.4(c) makes a
lawyer responsible for fraud committed with respect to the provision of
nonlegal services. Such a lawyer must also comply with Rule
1.8(a). Nothing
in this rule is intended to suspend the effect of any otherwise applicable Rule
of Professional Conduct such as Rule
1.7(b), Rule
1.8(a) and Rule
8.4(c).
(12) In addition to the Rules of Professional
Conduct, principles of law external to the Rules, for example, the law of
principal and agent, may govern the legal duties owed by a lawyer to those
receiving the nonlegal services.
Notes
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