July 2010Volume 98Number 7Page 376

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New Ethics Rules

Labor and Employment Lawyers and the New Rules

Especially noteworthy are rules governing lawyers who represent i) organizations and ii) clients who appear before agencies and boards, along with rules aimed at prospective clients, misdirected documents, and lawyer-arbitrators.

Keeping in mind that all of the recently promulgated Illinois Rules of Professional Conduct can affect any Illinois lawyer, this article focuses on five rules of particular interest to those who practice labor and employment law.

Rule 1.13 and representing organizations

New rule 1.13 is similar to the previous rule. But, as with all the rules, Illinois lawyers now benefit from the comments provided. The basic rule makes clear that a lawyer employed by an organization represents the organization, not necessarily its constituents, such as officers, directors, employees, and shareholders.

It is noteworthy that Rule 1.13(g) nevertheless allows a lawyer representing an organization to also represent its directors, officers, employees, members, shareholders, or other constituents, subject to the conflict of interest rules found in Rule 1.7. Organizations include government agencies as well as unincorporated associations like labor unions.

A significant new aspect of the rule is a reporting duty that may be imposed when an organization's constituent engages in wrongful conduct. In particular, there may be a reporting obligation if a lawyer learns that a constituent acts or refuses to act in a manner that violates a legal obligation to the organization - or constitutes a crime, fraud, or other violation of law - that might be imputed to, and is likely to result in substantial injury to, the organization.

The lawyer must always act in the best interest of the organization, which in many cases requires bringing the wrongful conduct to the attention of higher authority. If the organization's highest authority neglects to address a crime or fraud in a timely and appropriate way, the lawyer may even reveal confidential information relating to the representation to prevent substantial injury to the organization.

Labor and employment lawyers are frequently called upon to counsel officers and employees of organizations and in the course of the representation may uncover potential crime, fraud, or other wrongdoing. Rule 1.13 helps to sharpen the lawyer's focus on the best interests of the organization.

Rule 1.18 and prospective clients

New Rule 1.18 makes clear that a person who discusses the possibility of forming a lawyer/client relationship is a prospective client. According to the comments, a prospective client should receive some, but not all, of the protection afforded actual clients. The rule prohibits the lawyer from using or revealing information learned in the consultation, except as permitted by Rule 1.9 with respect to information of a former client.

The rule also prohibits a lawyer from representing a client with interests materially adverse to those of a prospective client in the same or substantially related matter if the lawyer received information from the prospective client that could be significantly harmful to him or her. Where a lawyer is disqualified from representation under this provision, no lawyer in his or her firm may knowingly undertake or continue representation in such a matter, except as further provided in the rule.

Note that the rule gives the lawyer an out. A comment indicates that the lawyer can condition conversations with the prospective client. Thus, if the prospective client gives informed consent, the lawyer may still represent a different client in the matter.

This rule may affect plaintiff's more than defense attorneys. Lawyers who represent plaintiffs frequently meet with many individuals only to decline representation because of the weakness of the potential case or for other reasons. Also, in some cases one lawyer may represent multiple potential clients, as in a claim alleging discriminatory employment policies or a class action.

Rule 2.4 and lawyer-arbitrators

Experienced labor and employment lawyers are sometimes hired to serve as third-party neutrals. New Rule 2.4 deals with this situation, such as when an attorney serves as an arbitrator/mediator or in some other capacity that allows two or more non-clients to resolve a dispute. The rule makes clear that the lawyer serving as a neutral must inform unrepresented parties that he or she is not representing them and explain the difference between the lawyer's role as a third-party neutral as opposed to an advocate.

The rule goes somewhat beyond the ABA model rule, which only requires a lawyer to inform unrepresented parties that the lawyer does not represent them. A comment to the rule points out that the potential for confusion is significant when parties are not represented by counsel.

Additionally, for individuals who are using the process for the first time, or who are legally unsophisticated, the lawyer may need to provide more information to make clear his or her role as a neutral. A comment also recognizes that lawyers acting as neutrals may nevertheless remain subject to court rules, other law, or codes of ethics.

Rule 3.9 and representing clients before legislative and administrative bodies

New Rule 3.9 provides that a lawyer representing a client before a legislative body or administrative agency in a nonadjudicative matter must disclose that the lawyer is acting in a representative capacity. The comment makes clear that a decision-making body, just like a court, must be able to rely on the integrity of the submissions made to it.

The comment further makes clear that the rule only applies when a lawyer represents the client in an official hearing or meeting of a governmental agency or legislative body to which the lawyer or client is presenting evidence or argument. It does not apply to representation in permitted lobbying activities, a negotiation, or other bilateral transactions with the governmental agency, or in connection with an application for a license or other privilege. Nor does the rule apply to representing a client in connection with an investigation or exam ination of the client's affairs conducted by the government.

This latter point is significant. It is common in a labor and employment practice for a client to be investigated by an agency such as the Illinois Department of Human Rights, Equal Employment Opportunity Commission, National Labor Relations Board, or state or federal department of labor. The comment to Rule 3.9 makes clear that representation in such matters is governed by Rules 4.1 through 4.4, which address (1) truthfulness in statements to others, (2) communications with another person represented by counsel,
(3) dealings with unrepresented persons, and (4) the lawyer's respect for the rights of third persons.

In this regard, Rule 4.2, which discusses communications with a person represented by counsel, deals with an issue that comes up often in labor and employment practice. However, this rule, which generally prohibits a lawyer from communicating about the subject of the representation with a person the lawyer knows to be represented by counsel, is not appreciably different from the previous rule.

Rule 4.4(b) and misdirected documents

Particularly in the era of electronic discovery, lawyers occasionally receive documents that were inadvertently produced. New Rule 4.4(b) states that a lawyer who receives a document relating to the representation of the lawyer's client and who knows that the document was inadvertently sent must promptly notify the sender. The comment makes clear that "document" includes e-mail or other electronic modes of transmission.

The comments to the rule point out that whether the lawyer is required to take steps beyond notifying the sender - for example, returning the document - is beyond the scope of the rule, as is the question of whether the sender has lost a privilege. The rule also fails to address the legal duties of a lawyer who receives a document the lawyer knows may have been wrongfully obtained by the sending person. A comment points out that if a lawyer is not required to return the document as unread by applicable law, the decision to voluntarily return a document is a matter of professional judgment.

Peoria lawyer Michael R. Lied <mlied@howardandhoward.com> practices with Howard & Howard Attorneys PLLC. He is newsletter editor and past chair of the ISBA Labor and Employment Section Council.

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