The Supreme Court and the Disciplinary Board made recent changes to the Rules of Professional Conduct and indicated an interest in other areas suggesting changes may come. Although summer brings a chance for relaxation, it is also an excellent time to review your practice and get your compliance in order.
Rule 1.5 Change: Counsel’s Obligations To Clients When Taking Over A Contingency Fee Case From Predecessor Counsel
When a contingency fee client fires one lawyer without cause and hires another, new counsel has obligations to his or her new client related to predecessor counsel. Those obligations are contained in a new Comment to Pa.R.P.C. Rule 1.5, which the Supreme Court ordered added on November 25, 2020. The new Comment to the rule provides:
- New counsel must notify the client, in writing, that prior counsel may be owed a fee for services provided before termination.
- New counsel must discuss the effect of prior counsel’s claim on new counsel’s fee arrangement with the client.
- If new counsel undertakes to negotiate with prior counsel for the client, new counsel must consider the personal interest conflict, do disclosure and waiver.
- If no agreement occurs with prior counsel, new counsel must hold the disputed portion of the fee in his or her IOLTA account until any dispute with prior counsel is resolved.
- New counsel must consider ABA Formal Opinion 487 (June 18, 2019) (relating to successive contingent fee agreements). We previously reported on this opinion in our July 2019 update and the opinion can be found here: https://files.constantcontact.com/6d3dfdb5701/e595da1e-025c-4878-99da-cfd31e007399.pdf
The Comment and the Rules themselves require attorney conduct ensuring that the client understands their obligations and rights regarding fees. Counsel should advise regarding the total fee amount, how it will be computed, to whom it should be paid and the timing of payment. Ideally, the fee agreement with new counsel should address these issues and advise regarding the scope of counsel’s undertaking. Specifically, the fee agreement should address whether new counsel will negotiate with prior counsel on the client’s behalf regarding prior counsel’s claim.
When taking over a case from a prior lawyer, it may behoove new counsel to avoid later disputes and attempt to resolve the fee issue at the time of the transfer of the case. If there is no agreement, the fee agreement should state that any amount due to prior counsel will come out of the recovery, and new counsel must hold any disputed portion in his or her IOLTA account. In many circumstances, new counsel should hold both lawyers’ fees in escrow until the disputed fees issue resolves.
Keeping the client advised on fee issues makes it less likely that there is some misunderstanding resulting in an unhappy client who makes claims against counsel.
Disciplinary Board seeking to Overhaul to Advertising Rules
When you post on social media about your legal services or send an email to a prospective client, do you think about making sure those communications comply with the Rules of Professional Conduct regarding advertising? It may be necessary to do so. On February 20, 2021, the Pennsylvania Disciplinary Board announced its intent to recommend to the Supreme Court that the advertising rules be amended that in many ways will make it easier to make sure your communications about legal services comply. The amendments are intended to update and streamline the advertising Rules and to make them more consistent with the Model Rules.
In 2018, the American Bar Association updated the Model Rules to better reflect practice in a digital age. These proposed updates to the Pennsylvania Rules keep some of the Pennsylvania specific Rules, but recognize that lawyers in 2021 communicate about their services much differently than lawyers did when the Rules were initially adopted. The central focus of the Rules is to make certain that lawyers’ communications about their services are not misleading.
Anti-bias Rule Deemed Unenforceable
In June 2020, the Supreme Court directed the addition of Rule 8.4(g) which prohibits intentional harassment and discrimination in the practice of law. The Rule was to go into effect on December 9, 2020. However, on December 7, 2020, U.S. District Judge Chad Kenney of the Eastern District of Pennsylvania issued a preliminary injunction against the Rule finding that it was likely unconstitutional because it discriminated based on viewpoint and would chill speech. The Board appealed to the Third Circuit, but earlier this year, withdrew its appeal.
Although the anti-bias rule is on pause as an ethics requirement, lawyers who have employees must still be cognizant of the risk of an employment practices lawsuit. There are many federal, state and even local laws prohibiting harassment or discrimination. Accordingly, law firms and employers would be wise to ensure that they have up to date written anti-discrimination and anti-harassment policies in place and ensure compliance by all lawyers and all staff.
We trust that the above article was useful and thought-provoking; however, please note that it is intended as a general guide and opinion only, not a complete analysis of the issues addressed, and readers should always seek specific legal guidance on particular matters. For more information on LPL coverage generally, contact USI Affinity today.