Proposed ethics opinion on reporting malpractice proves controversial 

Posted: 1:00 am Mon, July 13, 2009
By Barbara L. Jones

A proposed ethics opinion drafted to clarify when attorneys should report their own potential malpractice to clients raises more questions than it answers, according to ethics experts who spoke with Minnesota Lawyer.

Proposed Opinion 21 provides that lawyers who know that their conduct could reasonably be expected to be the basis for a malpractice claim by a current client should consult with that client about their conduct and the potential claim. In consulting with such a client, lawyers should disclose any significant risk that continued representation of the client will be materially limited by their own personal interest and should advise the client to seek independent legal advice about the potential claim and about continuing representation.

The proposed rule further provides that when there is a conflict of interest, lawyers should obtain a client’s informed consent, confirmed in writing, regarding continued representation, if the continued representation is not otherwise prohibited.

The Lawyers Board on Professional Responsibility began circulating Proposed Opinion 21 a few weeks ago to get feedback from attorneys. If ultimately adopted, it would be only the second ethics opinion the board has issued since 1998. (The board only recently decided to start issuing opinions again. Last June it issued its first opinion in a decade. In that opinion, the board found that it is deceptive advertising for solos and other firms without multiple associates to use “& associates” in their firm name.)

Proposed Opinion 21 grew out of court opinions issued in state and federal litigation involving the Minneapolis law firm of Dorsey & Whitney (see sidebar). But some lawyers say that the proposed ethics opinion conflicts with the law as stated by the 8th U.S. Circuit Court of Appeals in the Dorsey case and worry that, if adopted, the ethics opinion will lead to confusion rather than create clarity.

Minneapolis attorney David Sasseville, the former chair of the LPRB rules committee, said that the proposed opinion would make it easy for lawyers “to get wrapped around the axle trying to figure out what to do” in situations involving possible acts of malpractice.

The opinion is scheduled to be taken up in August at the Minnesota meeting of the American Bar Association Firm Counsel Project, which is composed of lawyers who work in-house on ethics matters and at a meeting of the Minnesota State Bar Association Rules of Professional Conduct committee. One of the points of discussion may be whether such an opinion should even be promulgated.

“When a duty to disclose is triggered is a subject of debate. I don’t know why a dispute among authorities should be a reason for the board to comment,” said Minneapolis attorney Eric Cooperstein, chair of the rules committee.

Sasseville agreed. “I don’t think it’s necessary. I question what led to the committee even drafting it,” he said.

Minneapolis attorney Stuart Williams, chair of the LPRB opinion committee, said that given the publicity about the Dorsey case and the conflicting opinions on an attorneys’ duty to disclose, the committee felt some guidance was needed.

Opinions’ authority questioned

The first issue, according to Minneapolis attorney William Wernz, former director of the Office of Lawyers Professional Responsibility, is whether the opinion is appropriate under the guidelines set forth in a 2001 Minnesota Supreme Court decision, In Re Admonition in Panel No. 99-42. In that case, the state high court held that an attorney cannot be disciplined solely for violating a board opinion. The court also said, “Board opinions that interpret pre-existing rules without either effectively creating new rules of professional conduct or exceeding the scope or plain meaning of the rules are entitled to careful consideration.”

An opinion that goes beyond that charter is not entitled to special consideration, and proposed Opinion 21 goes beyond the scope and plain meaning of the rules into an area of substantive law, that of fiduciary duty, Wernz said. “It is highly controversial and there is no direct case on point,” he said.

Wernz also questioned the lengthy comment and citations included with the proposed opinion, which is atypical. “Is this really a Bench & Bar article rather than a board opinion?” he asked.

Substantial and material

Wernz said that Proposed Opinion 21 differs from the law as set forth in the Restatement (Third) of the Law Governing Lawyers and by the 8th Circuit in the Dorsey case.

The restatement says that a lawyer’s conduct must give a client a “substantial” malpractice claim for a lawyer to have a duty to disclose to the client. The proposed opinion drops the word “substantial,” Wernz noted. “Opinion 21 deletes a material term,” Wernz said, adding that the OLPR has said in a 2006 article in Bench & Bar that the restatement language is authoritative.

Similarly, the comments to the proposed opinion quotes from the 2002 Minnesota Supreme Court case of STAR Centers, Inc. v. Faegre & Benson on the duty of an attorney to communicate to a client information the attorney obtains that may affect the interests of that client in respect to the matters entrusted to the attorney. The STAR Centers court made clear that the duty only arises where the information is material, but Opinion 21 deletes the materiality requirement from its analysis, Wernz said. “Wouldn’t you start with what the Minnesota Supreme Court says an attorney should disclose and use that as a cornerstone?” he asked.

Furthermore, Wernz continued, the comments to the proposed rule reject the 8th Circuit’s holding in the Dorsey litigation. The comments to the proposed rule state, “It may be argued that a lawyer need not disclose to a client conduct which the lawyer knows could reasonably be expected to be the basis for a malpractice claim so long as the lawyer determines there is not a significant risk the lawyer’s representation of the client would be materially and adversely affected by the lawyer’s own interest in avoiding malpractice liability.” In fact, Wernz said, that language sums up the 8th Circuit’s rationale in the Dorsey case.

The bottom line, Wernz said, is that the board is proposing an opinion saying that the 8th Circuit is wrong despite the Supreme Court’s mandate that ethics opinions remain within the scope of the existing rules.

By not including the word “substantial” or “material” in describing the trigger for an attorney’s duty to report suspected malpractice, Proposed Opinion 21 may leave attorneys to believe that they have to disclose every possible misstep in a case, which of course may be detrimental to the attorney-client relationship, Sasseville said. “Lawyers aren’t very objective when they think they’ve made a mistake. They don’t know if they need to report malpractice before bringing in the client. … It’s not a question the board should be out on. It’s a question of breach of fiduciary duty, not ethics rules,” he added.