At its meeting on October 25, 2013, the State Bar Council adopted the ethics opinions summarized below:
2012 Formal Ethics Opinion 7
Copying Represented Persons on Electronic Communications
Opinion provides that consent from opposing counsel must be obtained before copying opposing counsel’s clients on electronic communications. The consent required by Rule 4.2 may be implied by the facts and circumstances surrounding the communication.
2013 Formal Ethics Opinion 1
Release/Dismissal Agreement Offered by Prosecutor to Convicted Person
Opinion rules that, subject to conditions, a prosecutor may enter into an agreement to consent to vacating a conviction upon the convicted person’s release of civil claims against the prosecutor, law enforcement authorities, or other public officials or entities.
2013 Formal Ethics Opinion 9
Role of Lawyer for Public Interest Law Organization
Opinion provides guidance to lawyers who work for a public interest law organization that provides legal and non-legal services to its clientele and that has an executive director who is not a lawyer.
2013 Formal Ethics Opinion 10
Participation in Online Group Legal Advertising Using Territorial Exclusivity
Opinion rules that, with certain disclosures, a lawyer may participate in an online group legal advertising service that gives a participating lawyer exclusive rights to contacts arising from a particular territory.
Ethics Committee Actions
At its meeting on October 24, 2013, the Ethics Committee voted to withdraw Proposed 2011 FEO 11, Communication with Represented Party by Lawyer Who is the Opposing Party. No opinion will be issued in response to the inquiries addressed in the proposed opinion. The committee also voted to send Proposed 2013 FEO 8, Responding to the Mental Impairment of Firm Lawyer, to the staff for revisions to be considered by the committee at its meeting in January 2014. Consideration of Proposed 2013 FEO 11, Duty to Obtain Foreign Language Interpreters for Client with Limited English Proficiency, was deferred until resolution of an underlying legal issue. The Ethics Committee also voted to publish a revised proposed opinion (Proposed 2013 FEO 2) and four new proposed opinions. The comments of readers are welcomed.
Proposed 2013 Formal Ethics Opinion 2
Providing Defendant with Discovery During Representation
October 24, 2013
Proposed opinion rules that if, after providing a criminal client with a summary/explanation of the discovery materials in the client’s file, the client requests access to the entire file, the lawyer must afford the client the opportunity to meaningfully review all of the relevant discovery materials unless the lawyer believes it is in the best interest of the client’s legal defense not to do so.
Lawyer represents Defendant in a criminal case. The state has provided Lawyer with discovery as PDF files. The state has also provided Lawyer DVDs containing copies of the video recordings of interrogations of Defendant and a codefendant; surveillance videotapes; and audio recordings of calls made by Defendant and the codefendant from the jail.
Lawyer reviewed the discovery and provided Defendant with a summary of the evidence. Defendant demands that he be provided a copy of the entire 1,200 pages of discovery and be allowed to view/listen to the 17 hours of video and audio recordings.
Does Lawyer have an ethical duty to comply with the client’s demand?
As a matter of professional responsibility, Rule 1.4 requires a lawyer to “keep a client reasonably informed about the status of a matter” and “promptly comply with reasonable requests for information.” As stated in comment  to Rule 1.4:
The client should have sufficient information to participate intelligently in decisions concerning the objectives of the representation and the means by which they are to be pursued...The guiding principle is that the lawyer should fulfill reasonable client expectations for information consistent with the duty to act in the client's best interests, and the client's overall requirements as to the character of representation.
The duties set out in Rule 1.4 are similar to those found in ABA Standards for Criminal Justice, Defense Functions, Standard 4-3.8 (3d ed. 1993) which provides:
(a) Defense counsel should keep the client informed of the developments in the case and the progress of preparing the defense and should promptly comply with reasonable requests for information.
(b) Defense counsel should explain developments in the case to the extent reasonably necessary to permit the client to make informed decisions regarding the representation.
During the course of the representation, the lawyer complies with the requirements of Rule 1.4 by providing the client with a summary of the discovery materials and consulting with the client as to the relevance of the materials to the client’s case. However, if the lawyer has provided the client with a summary/explanation of the discovery materials and the client, nonetheless, requests copies of any of the file materials, the lawyer must afford the client the opportunity to meaningfully review all of the relevant discovery material unless the lawyer believes it is in the best interest of the client’s legal defense to deny the request. The lawyer is not required to provide the client with a physical copy of the discovery materials during the course of the representation.
In determining what discovery materials are relevant, and what disclosure is in the best interest of the client’s legal defense, the lawyer must exercise his or her independent professional judgment. As stated in comment  to Rule 1.4: “The guiding principle is that the lawyer should fulfill reasonable client expectations for information consistent with the duty to act in the client's best interests, and the client's overall requirements as to the character of representation.” However, as stated in comment  to Rule 1.4, a lawyer “may not withhold information to serve the lawyer’s own interest or convenience or the interest or convenience of another person.” Therefore, the lawyer may not deny the request due to issues of expense or inconvenience.
If Lawyer provides Defendant with a copy of, or access to, discovery materials, may Lawyer redact or otherwise remove private information of a third person, such as the address of a witness or pictures of an alleged rape victim?
The lawyer may redact or otherwise remove information that the lawyer determines, in his professional discretion, should not be disclosed to the client, including information that would endanger the safety and welfare of the client or others, violate a court rule or order, or is subject to any protective order or nondisclosure agreement. See Rule 1.4, cmt. .
Proposed 2013 Formal Ethics Opinion 12
Disclosure of Settlement Terms to Former Lawyer Asserting a Claim for Fee Division
October 24, 2013
Proposed opinion rules that, when a client terminates representation, the subsequently hired lawyer may disclose the settlement terms to the former lawyer to resolve a pre-litigation claim for fee division only with the consent of the client or pursuant to an applicable exception to the duty of confidentiality.
Client hired Lawyer A to represent Client in a workers’ compensation matter. A year later, Client discharged Lawyer A and subsequently hired Lawyer B. Lawyer A filed a motion to withdraw as counsel while reserving her right to a legal fee. Lawyer B settled Client’s workers’ compensation case and the Industrial Commission entered an order approving the settlement and the legal fee to be paid from the proceeds of the settlement. Lawyer A asked Lawyer B for a copy of the Industrial Commission’s order. Client instructed Lawyer B to keep the settlement information confidential. Lawyer B therefore refused to provide Lawyer A with a copy of the Industrial Commission’s order and also refused to disclose the settlement amount. However, Lawyer B asked Lawyer A to submit an accounting of Lawyer A’s hours in the case and Lawyer A’s hourly rate. Lawyer A refused to provide an accounting of her time without more information about the settlement. Lawyer A insists that she needs to know the settlement amount to determine the amount of the fee that is to be divided between the two lawyers. Lawyer A further asserts that before she can determine the amount of her fee, she must know which injury claims are subject to the settlement.
May Lawyer B share the settlement details with Lawyer A?
No. 2003 FEO 11, which examines ethical issues relative to the division of fees between a law firm and a lawyer who has departed from the firm, does not apply to this inquiry. In 2003 FEO 11, a lawyer took an unfinished workers’ compensation case with her when she left one firm to join another. The workers’ compensation case was resolved after the lawyer’s departure and the Industrial Commission entered an order releasing the lawyer’s former firm from further representation and acknowledging the firm’s entitlement to a portion of the legal fee. In holding that the departed lawyer must inform her former firm of the amount of the legal fee awarded by the commission, the opinion addresses the duty of lawyers who have practiced together, and who have interrelated claims to a legal fee, to deal honestly with each other and to comply with court orders.
In the current inquiry, Lawyer B was hired by Client after the termination of Lawyer A’s services. Lawyers A and B were never members of the same firm. The lawyers’ claims to the legal fee arise from their separate representations of Client. Although they have a duty to deal honestly with each other, this duty does not permit Lawyer B to disclose information that Client has requested be held in confidence. Keeping a client’s information confidential is paramount among the duties a lawyer owes to the client. Unless Client consents to the disclosure or one of the exceptions set out in Rule 1.6(b) applies, Lawyer B may not reveal the details of the settlement to Lawyer A.
A client has the right to discharge his lawyer at any time. Where a lawyer with a contingency fee contract is terminated before the matter is concluded, the discharged lawyer has a claim for quantum meruit recovery from the proceeds of the matter. Covington v. Rhodes, 38 NC App. 61, 247 S.E.2d 305 (1978), disc. rev. denied, 296 NC 410, 251 S.E.2d 468 (1979). The discharged lawyer may file his claim for quantum meruit against the client or against the subsequent lawyer. Guess v. Parrott, 160 NC App. 325, 585 S.E.2d 464 (2003).
Rule 1.6(b)(6) permits a lawyer to disclose confidential client information, without the client’s consent, “to respond to allegations in any proceeding concerning the lawyer's representation of the client.” If Lawyer A brings an action against Lawyer B claiming a part of the legal fee, Lawyer B may reveal the details of the settlement to the extent necessary to respond to the allegations in the complaint. However, until the action is filed, Lawyer B may not disclose the information without Client’s consent.
Rather than wait for Lawyer A to file suit, however, the better practice is to attempt to resolve a dispute before litigation. To this end, at the beginning of the representation, Lawyer B may obtain Client’s consent to disclose the terms of the settlement to Lawyer A. To assist Client to make an informed decision about whether to disclose information to Lawyer A, Lawyer B should counsel Client about the law pertaining to Lawyer A’s claim for a legal fee based on quantum meruit. Lawyer B also should explain to Client the risks and benefits of disclosure. See Rule 1.4(a) and (b). If Client consents to the disclosure, Lawyer B may want to memorialize that consent by including it a written representation agreement with Client. Even if Client consents to disclosure, only that information relevant to the valuation of Lawyer A’s legal services may be disclosed.
Proposed 2013 Formal Ethics Opinion 13
Disbursement Against Funds Credited to Trust Account by ACH and EFT
October 24, 2013
Proposed opinion rules that a lawyer may disburse immediately against funds that are credited to the lawyer’s trust account by automated clearinghouse (ACH) transfer and electronic funds transfer (EFT) despite the risk that an originator may initiate a reversal.
The originator of an automated clearinghouse (ACH) transfer1 or an electronic funds transfer (EFT) can initiate a reversal of the transaction. However, the reversal must be requested by the originating bank and approved by the receiving bank. When a bank receives a reversal request, it typically will attempt to obtain authorization from the individual whose account was credited before making a reversal.
May a lawyer disburse immediately against funds that are credited to her trust account by ACH or EFT if there is some risk that the originator may initiate a reversal?
Yes. Electronic funds transfers, whether ACH or EFT, are designed to make funds available immediately, like wired funds. While there is some risk that the originator may initiate a reversal, the risk of reversal is slight. Moreover, the lawyer should get notice from the receiving bank in time to take action to prevent the reversal or otherwise to protect other client funds on deposit in the trust account. See, e.g., 97 FEO 9 (lawyer may accept payments to a trust account by credit card although the bank is authorized to debit the trust account in the event a credit card charge is disputed).
A lawyer is not guilty of professional misconduct if that lawyer, upon learning that an ACH or EFT has been reversed, immediately acts to protect the funds of the lawyer's other clients on deposit in the trust account. This may be done by personally depositing the funds necessary to address the deficit created by the reversal or by securing or arranging payment from sources available to the lawyer other than trust account funds of other clients. See RPC 191.
1. When a paper check is converted to an automated clearinghouse (ACH) debit, the check is taken either at the point-of-sale or through the mail for payment, the account information is captured from the check, and an electronic transaction is created for payment through the ACH system. The original physical check is typically destroyed by the converting entity (although an image of the check may be stored for a certain period of time). A law firm may convert the paper checks that it receives on behalf of a client or a client matter for payment to the trust account through the ACH system.
Authorized ACH debits from the trust account that are electronic transfers of funds (in which no checks are involved) are allowed provided the lawyer maintains a record of the transaction as required by Rule 1.15-3(b)(3) and (c)(3). The record, whether consisting of the instructions or authorization to debit the account, a record or receipt from the register of deeds or a financial institution, or the lawyer's independent record of the transaction, must show the amount, date, and recipient of the transfer or disbursement, and, in the case of a general trust account, also show the name of the client or other person to whom the funds belong.
Nevertheless, checks drawn on a trust account should not be converted to ACH because the lawyer will not receive a physical check or a check image that can be retained in satisfaction of the record-keeping requirements in Rule 1.15-3. The transaction will appear on the lawyer's trust account statement as an ACH debit with limited information about the payment (e.g., dollar amount, date processed, originator of the ACH debit). For this reason, lawyers are required to use business-size checks that contain an Auxiliary-On-Us field in the MICR line of the check because these checks cannot be converted to ACH. See Rule 1.15-3(a).
See generally Rule 1.15, comments  and  .
Proposed 2013 Formal Ethics Opinion 14
Representation of Parties to a Commercial Real Estate Loan Closing
October 24, 2013
Proposed opinion rules that common representation in a real estate commercial loan closing is, in most instances, a “nonconsentable” conflict, meaning that a lawyer may not ask the borrower and the lender to consent to common representation.
In the standard closing of a commercial loan secured by real property (a “commercial loan closing”), the borrower and the lender have separate legal counsel. The borrower’s lawyer traditionally handles most aspects of the closing including the preparation of the settlement statement as well as the collection of funds, the payoffs, and the disbursements. The borrower understands that its lawyer represents its interests alone. Unlike a residential real estate closing in which the lender’s documents can rarely be modified once entered into by the borrower/buyer, it is common in a commercial loan closing for the borrower’s lawyer to be actively involved in negotiating provisions of the commitment letter that establishes the basic terms of the mortgage and to also negotiate specific revisions to the loan documents to address material matters such as default, disbursement of insurance proceeds, permitted transfers, and indemnification.
A large regional bank recently changed its commercial loan closing policies to require all lawyers who close commercial loans with the bank to be employed by law firms that are “authorized” by the bank to close its loans. These lawyers are designated as “Bank’s Counsel.” Bank’s Counsel is asked by the bank to handle the entire closing including the title search, title certification, and the holding and disbursing of the closing funds.
Lawyers who traditionally represent the borrower in a commercial loan closing are concerned about this policy for a number of reasons including the following:
• Having closing funds delivered to the lender’s lawyer instead of the borrower’s lawyer subjects the borrower to responsibility for the funds without the benefit of its own legal counsel’s guidance, protection, and assistance.
• Once the loan funds are committed to the borrower by the lender, they become the responsibility of the borrower. When there is separate, independent representation of the borrower, the protections of malpractice insurance and the closing protection letter are available to the borrower.
• The borrower’s recourses may be limited if closing funds are mishandled and the borrower suffers a loss in connection with Bank’s Counsel’s preparation of the closing statement and disbursement of the loan proceeds. However, when the borrower's lawyer performs the escrow and closing functions, the lender gets an insured closing letter and a legal opinion relative to authority and enforceability from the borrower's lawyer and has protection.
• Having the lender’s lawyer perform the property and business due diligence functions may result in the disclosure of confidential information relative to the borrower’s property or its business interests that would not be disclosed if the borrower’s lawyer performed these functions.
• Unless the borrower is sophisticated and instructs its lawyer to be actively involved, the borrower’s lawyer may be placed in the role of “outsider” or passive observer, which may limit the quality and scope of the representation that the borrower receives. It will also invite, notwithstanding disclosure, the perception that the lender's lawyer is looking out for the interests of all of the parties.
May a lawyer represent both the borrower and the lender for the closing of a commercial loan secured by real property? If so, is informed consent of both the borrower and the lender required and what information must be disclosed to obtain informed consent?
In most instances, a lawyer may not represent both the borrower and the lender for the closing of a commercial loan even with consent.
Rule 1.7 prohibits the representation of a client if the representation involves a concurrent conflict of interest unless certain conditions are met. A concurrent conflict of interest exists if the representation of one client will be directly adverse to another client or the representation of one client may be materially limited by the lawyer’s responsibilities to another client. Rule 1.7(a). The closing of a commercial loan secured by real estate is an “arm’s length” business transaction in which large sums of money are at stake, the documentation is complex, and the opportunities to negotiate on behalf of each party are numerous. As observed in the comment to Rule 1.7:
Even where there is no direct adverseness, a conflict of interest exists if a lawyer's ability to consider, recommend or carry out an appropriate course of action for the client may be materially limited as a result of the lawyer's other responsibilities or interests. For example, a lawyer asked to represent a seller of commercial real estate, a real estate developer, and a commercial lender is likely to be materially limited in the lawyer's ability to recommend or advocate all possible positions that each might take because of the lawyer's duty of loyalty to the others. The conflict in effect forecloses alternatives that would otherwise be available to the client. The mere possibility of subsequent harm does not itself preclude the representation or require disclosure and consent. The critical questions are the likelihood that a difference in interests will eventuate and, if it does, whether it will materially interfere with the lawyer's independent professional judgment in considering alternatives or foreclose courses of action that reasonably should be pursued on behalf of the client.
Rule 1.7, cmt. .
Rule 1.7(b) allows a lawyer to proceed with a representation burdened with a concurrent conflict of interest, but only if the lawyer determines that the representation of all of the affected clients will be competent and diligent and each affected client gives informed consent. In other words, the lawyer must decide whether the conflict is “consentable.” Rule 1.7, cmt. . If the lawyer’s exercise of independent professional judgment on behalf of any client will be compromised, the conflict is not consentable. As noted in the comment to Rule 1.7:
[S]ome conflicts are nonconsentable, meaning that the lawyer involved cannot properly ask for such agreement or provide representation on the basis of the client's consent...Consentability is typically determined by considering whether the interests of the clients will be adequately protected if the clients are permitted to give their informed consent to representation burdened by a conflict of interest...[R]epresentation is prohibited if in the circumstances the lawyer cannot reasonably conclude that the lawyer will be able to provide competent and diligent representation.
Rule 1.7, cmt.-. Although deleted from the comment to Rule 1.7 when the Rules of Professional Conduct were comprehensively revised in 2003, the following is an excellent test for determining whether a conflict is “consentable”: “when a disinterested lawyer would conclude that the client should not agree to the representation under the circumstances, the lawyer involved cannot properly ask for such agreement or provide representation on the basis of the client's consent.” Rule 1.7, cmt.  (2002).
In RPC 210, the Ethics Committee held that a lawyer may represent the seller, borrower/buyer, and lender in a residential real estate closing with the informed consent of all of the parties. Even so, the opinion includes the following cautionary language:
A lawyer may reasonably believe that the common representation of multiple parties to a residential real estate closing will not be adverse to the interests of any one client if the parties have already agreed to the basic terms of the transaction and the lawyer's role is limited to rendering an opinion on title, memorializing the transaction, and disbursing the proceeds. Before reaching this conclusion, however, the lawyer must determine whether there is any obstacle to the loyal representation of both parties. The lawyer should proceed with the common representation only if the lawyer is able to reach the following conclusions: he or she will be able to act impartially; there is little likelihood that an actual conflict will arise out of the common representation; and, should a conflict arise, the potential prejudice to the parties will be minimal.
A commercial loan closing is substantially different from a residential closing in which there is little opportunity to negotiate on behalf of the borrower/buyer once the purchase contract and loan commitment letter are signed. In a commercial loan closing, there are numerous opportunities for a lawyer to negotiate on behalf of the parties, so impartiality is rarely possible. There are also numerous opportunities for an actual conflict to arise between the borrower and the lender and, if a conflict does arise, the prejudice to the parties would be substantial. Therefore, common representation in a commercial loan closing is, in most instances, a “nonconsentable” conflict, meaning that a lawyer may not ask the borrower and the lender to consent to common representation. Restatement (Third) of The Law Governing Lawyers, §122, Comment g(iv), cites decisions in which the court denied the possibility of client consent as a matter of law in certain categories of cases. These decisions include Baldasarre v. Butler, 625 A. 2d 458 (NJ 1993), in which the Supreme Court of New Jersey observed:
This case graphically demonstrates the conflicts that arise when an attorney, even with both clients’ consent, undertakes the representation of the buyer and the seller in a complex commercial real estate transaction. The disastrous consequences of [the lawyer’s] dual representation convince us that a new bright-line rule prohibiting dual representation is necessary in commercial real estate transactions where large sums of money are at stake, where contracts contain complex contingencies, or where options are numerous. The potential for conflict in that type of complex real estate transaction is too great to permit even consensual dual representation of buyer and seller. Therefore, we hold that an attorney may not represent both the buyer and seller in a complex commercial real estate transaction even if both give their informed consent.
635 A. 2d at 467. See also Fla. Bar. Prof’l Ethics Comm., Op. 97-2 (1997)(lawyer may not represent both buyer and seller in closing of sale of business where material terms of contract have not been agreed to or discussed by parties).
In summary, dual representation of the borrower and the lender for the closing of a commercial loan is a nonconsentable conflict of interest unless the following conditions can be satisfied: (1) the financial stakes are not high; (2) the contractual terms have been finally negotiated prior to the commencement of the representation; (3) there are no contingencies to be resolved; (4) the lawyer explains to both parties that his role is limited to executing the tasks necessary to close the loan and that this limitation prohibits him from advocating for the specific interests of either party; (5) the lawyer discloses that he must withdraw from the representation of both parties if a conflict arises; and (6) both parties give informed consent confirmed in writing.
The bank intends for Bank’s Counsel to represent only the bank (lender), but to handle all aspects of the closing.
May a lawyer represent only the lender, but handle all aspects of a commercial loan closing including the title search, title certification, marshalling the necessary documents, and holding and disbursing of the closing funds? If so, what information must be disclosed by Bank’s Counsel to the borrower relative to the role of Bank’s Counsel?
Yes, a lawyer may be the lead lawyer for the closing (“the closing lawyer”) provided the lawyer represents only one party—either the lender or the borrower. Because title work and other due diligence are for the benefit of the lender, there is no prohibition on the lender’s lawyer performing these tasks. See 2004 FEO 10 (because buyer is the intended beneficiary of the deed although not a signatory, buyer’s lawyer may prepare deed without creating a lawyer-client relationship with seller). However, if the closing lawyer represents the lender, certain conditions must be satisfied.
In 2006 FEO 3, the Ethics Committee considered whether a lawyer may represent a lender on the closing of the sale to a third party of property acquired by the lender as result of foreclosure by execution of the power of sale in the deed of trust on the property. The opinion holds (among other things) that a lawyer may serve as the closing lawyer and limit his representation to the lender/seller if there is disclosure to the buyer:
Attorney A must fully disclose to Buyer that [the lender/seller] is his sole client, he does not represent the interests of Buyer, the closing documents will be prepared consistent with the specifications in the contract to purchase, and, in the absence of such specifications, he will prepare the documents in a manner that will protect the interests of his client, [the lender/seller], and, therefore, Buyer may wish to obtain his own lawyer. See, e.g., RPC 40 (disclosure must be far enough in advance of the closing that the buyer can procure his own counsel), RPC 210, 04 FEO 10, and Rule 4.3(a). Because of the strong potential for Buyer to be misled, the disclosure must be thorough and robust.
Consistent with the holding in 2006 FEO 3, in a commercial loan closing the lender’s lawyer may serve as the closing lawyer provided the borrower is informed that the closing lawyer will not represent its interests and will interpret loan documents in the light that is most favorable to the lender; the borrower is given a reasonable opportunity to retain its own counsel and is not mislead as to its right to do so; the lawyers for both parties advise their clients about the risks and benefits of a having the lender’s lawyer serve as the closing lawyer; and the borrower’s lawyer is allowed to observe and participate in the transaction to the extent necessary to protect the borrower’s interests.
This opinion cannot address all of the concerns expressed in the Background section above relative to the additional risks to the borrower if the lawyer for the closing is the lender’s lawyer. However, if the closing funds are deposited to and disbursed from the trust account of the lender’s lawyer in accordance with the requirements of the trust accounting rule, Rule 1.15, the funds should not be at risk. To the extent that there are other risks to the interests of the borrower, the borrower’s lawyer must analyze those risks and advise the borrower about steps that may be taken to minimize the risks including negotiating with the lender’s lawyer for aspects of the closing to be handled by the borrower’s lawyer.
Proposed 2013 Formal Ethics Opinion 15
Return of Electronic Records to Client upon Termination of Representation
October 24, 2013
Proposed opinion rules that electronic records relative to a client’s matter that would be helpful to subsequent legal counsel must be provided to the client upon the termination of the representation, but may be provided in an electronic format if readily accessible to the client without undue expense.
In the age of electronic records, what information must be given to a departing client when the client requests the file?
Rule 1.16(d) of the Rules of Professional Conduct requires a lawyer, upon termination of representation, to “take steps to the extent reasonably practicable to protect a client’s interests, such as...surrendering papers and property to which the client is entitled...”
Comment 10 to Rule 1.16 specifically provides that copies of “all correspondence received and generated by the withdrawing or discharged lawyer should be released; and anything in the file that would be helpful to successor counsel should be turned over.”
Competent representation includes organized record-keeping practices that safeguard the documentation and information necessary to enable the lawyer to (1) readily retrieve information required for the representation; (2) remain abreast of the status of the case; and (3) be adequately prepared to handle the client’s matter. 2002 FEO 5; Rule 1.1, cmt. . The standards for record-keeping, including record retention, for electronic communications, documents, records, and other information (“records”) are the same as the standards for paper records. As stated in 2002 FEO 5 on the retention of email in a client’s file, “[a] lawyer must exercise his or her legal judgment when deciding what documents or information to retain in a client’s file.” Whether a lawyer should retain an electronic record that relates to a client’s representation “depends upon the requirements of competent representation under the circumstances of the particular case.” Id.
A lawyer must also exercise legal judgment, subject to the duty of competent representation, when deciding which format (electronic or paper) is the most appropriate for the retention of records generated during the representation of a client. 2002 FEO 5; see also RPC 234 (paper documents in client’s file may be converted and saved in an electronic format if original documents with legal significance, such as wills, are stored in a safe place or returned to the client, and documents stored in electronic format can be reproduced in a paper format).
If an electronic record relative to a client’s matter would be helpful to successor counsel, the electronic record is a part of the client’s file. As explained in CPR 3, a client file does not include “the lawyer’s personal notes and incomplete work product,” or “preliminary drafts of legal instruments or other preliminary things which, unexplained, could place a lawyer in a bad light without furthering the interest of his former client.” Therefore, a lawyer may omit from the records that are considered a part of the client’s file the following: (1) email containing the client’s name if the email is immaterial, represents incomplete work product, or would not be helpful to successor counsel; (2) drafting notes saved in preliminary versions of a filed pleading since these are incomplete work product; (3) notations or categorizations on documents stored in a discovery database since these are incomplete work product; and (4) other items that are associated with a particular client such as backups, voicemail recordings, and text messages unless the items would be helpful to successor counsel.
If the lawyer determines that an electronic record is a part of a client’s file, then the lawyer has a duty to provide a copy of the record to the client upon the termination of the representation. Conversely, if the lawyer, in the exercise of legal judgment, determines that the electronic record is not a part of the client’s file, then the lawyer is not required, but may, provide a copy of the electronic record to the client.
Are lawyers required to organize or store electronic records relative to a specific client matter in any particular manner?
An organized record-keeping system designed to safeguard client information must include electronic records. See Opinion #1. The electronic records must be organized in a manner that can be searched and compiled as necessary for the representation of the client and for the release of the file to the client upon the termination of the representation. A document management system to track records by client and matter is recommended.
Because of the potential for electronic records to accumulate, one important aspect of an organized record-keeping system is a procedure for regularly exercising legal judgment as to whether to retain an electronic record in the client’s virtual file. Such a procedure would, for example, require the regular identification of emails that should be retained and made a part of the client’s virtual file. Waiting until the representation has ended and the client has requested the file to identify electronic records that are a part of the client’s file may increase the likelihood that an important electronic record will not be identified properly.
When the representation terminates and the client requests the file, is the lawyer or law firm required to provide the records in the format (electronic or paper) requested by the client?
Many clients, or successor counsel, will have the technical expertise and financial ability to receive client records in an electronic format without experiencing any problem or undue expense in opening, using, or reproducing the records. These clients will probably prefer to receive the records in an electronic format. However, there are clients, such as individuals or small businesses with limited financial means or technical expertise, that cannot afford to purchase expensive software or computer equipment simply to gain access to the records in their own legal files. There must be a weighing of the interests of the lawyer or law firm in producing the client’s file in an efficient and cost-effective manner against the client’s interest in receiving the records in a format that will be useful to the client or successor counsel.
Therefore, records that are stored on paper may be copied and produced to the client in paper format if that is the most convenient or least expensive method for reproducing these records for the client. If converting paper records to an electronic format would be a more convenient or less expensive way to provide the records to the client, this is permissible if the lawyer or law firm determines that the records will be readily accessible to the client in this format without undue expense. Similarly, electronic records may be copied and provided to the client in an electronic format (they do not have to be converted to paper) if the lawyer or law firm determines that the records will be readily accessible to the client in this format without undue expense. See 2002 FEO 5 (“in light of the widespread availability of computers,” emails may be provided to a departing client in an electronic format even if the client requests paper copies).
A lawyer should in most instances bear the reasonable costs of retrieving and producing electronic records for a departing client. However, a lawyer or law firm may charge a client the expense of providing electronic records if the client asks the lawyer or law firm to do any of the following: (1) convert electronic records from a format that is already accessible using widely used or inexpensive business software applications; (2) convert electronic records to a format that is not readily accessible using widely used or inexpensive business software applications; or (3) provide electronic records in a manner that is unduly expensive or burdensome.
Nevertheless, if the usefulness of an electronic record in a client file would be undermined if the document is provided to the client or successor counsel in a paper format, the record must be provided to the client in an electronic format unless the client requests otherwise. For example, providing a spreadsheet without the underlying formulas or providing a complex discovery database printed in streams of text on reams of paper would destroy the usefulness of such data to both the client and successor counsel.
Lawyers are encouraged to discuss with a client at the beginning of a representation the records that will be retained as a part of the client’s file, and the format in which the records will be produced at the termination of the representation.
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