Risk Update

Conflicts & OCGs — Commentary on Proposed DC Rule Changes

Posted Dan Bressler

Happy New Year. May 2021 find us all facing a bit less risk and surprise. With that, let’s start off the new year with an old topic that’s a favorite of many, conflicts, OCGs and terms of engagement. Professional liability lawyer Brian Faughnan offers fresh food for thought on the DC Bar’s proposed changes in: “Protecting lawyers and law firms from themselves” —

  • “And, if you know, then based on the post title you’ve guessed we are going to talk about the D.C. Bar Rules of Professional Conduct Review Committee’s draft Report on proposing changes to the ethics rules to address outside counsel guidelines and client-generated engagement letters.”
  • “Now, to repeat myself on the overriding issue associated with proposed changes to RPC 5.6 and 1.7 that are designed to make it unethical for clients to propose certain approaches to conflicts under an engagement letter, I fail to see how any such effort is at all consistent with the idea that lawyers can also ask clients to waive situations that would otherwise be conflicts.”
  • “It is very, very difficult to find a path where it seems fair to allow lawyers to ask clients to waive conflicts but also say that clients cannot ask lawyers to agree to very broad definitions of what constitutes a conflict in a matter.”
  • “Having repeated myself on that, let me say that the D.C. report does a pretty admirable job of trying to find that path. I’ll let you go read the report for the full treatment of that issue, but the rationale offered is rooted in the notion of not allowing one client to improperly limit a lawyer from being available to represent other clients. I still don’t find it sufficiently persuasive, but they’ve laid it out as well as can be managed, I think.”
  • “Agreements between lawyers/firms and clients involving indemnification. This again is wrapped within the mantle of provisions included by clients in engagement letters or outside counsel guidelines, but this one feels like a more appropriate topic for pushback through rulemaking, at least to me.”
  • “Specifically, the D.C. report proposes revising D.C.’s current rules to add a provision to RPC 1.8 that would prohibit a lawyer from agreeing to any conditions that would impose liability on the lawyer under circumstances where liability wouldn’t flow from either existing common law or existing statutory law.”
  • “Oh, also, there is one other topic that the report addresses on which I cannot control myself to avoid weighing in… The topic addressed is outside counsel guidelines that give the client the right to unilaterally change the guidelines/change the terms of engagement. This is another thing that lawyers could protect themselves against simply by refusing to agree to such a term.”
  • “Now, if you absolutely believe there needs to be a rule revision to protect lawyers from this, why would you want to offer the protection only if a lawyer has already agreed that a client can make unilateral changes? Wouldn’t the better course of action simply be to have the rule say: ‘the client unilaterally makes a material change in the conditions of engagement or other terms of the representation to which the lawyer is unwilling to assent’?”