What are ethical obligations for an organization’s counsel when giving legal advice to constituents?
When an organization’s in-house counsel or outside counsel communicates legal advice to its constituents, it should be clear that the lawyer represents the organization, not the individuals, according to a new ABA ethics opinion. (Image from Shutterstock)
When an organization’s in-house counsel or outside counsel communicates legal advice to its constituents, it should be clear that the lawyer represents the organization, not the individuals, according to a new ABA ethics opinion.
However, as Formal Opinion 514 from the ABA’s Standing Committee on Ethics and Professional Responsibility explains, these constituents may assume or think that the lawyer is advising them. Thus, the lawyer has ethical obligations to explain that the advice is for the organization, not these individuals, which can include board members, officers and employees.
“An organization’s lawyer would be well advised to instruct organization constituents about the lawyer’s role early and often during the relationship, not only at times when constituents might rely to their detriment on a misunderstanding of the lawyers’ role,” according to the opinion.
Published Wednesday, the opinion acknowledges that this type of situation is “unique and challenging.” There can be a “divergence of interests” between the organization and these constituents, such as when the lawyer’s advice to the organization could expose the constituents to legal risk.
The lawyer must provide competent representation under Model Rule 1.1 of the ABA Model Rules of Professional Conduct, necessary communication under Model Rule 1.4(b) and candid advice under Model Rule 2.1. Often, these communications are made to the organization’s constituents, according to the opinion, and the communications may include legal risks to nonclient constituents.
Also implicated are Model Rules 4.1, 4.3 and 1.13(f). Model Rule 4.1 requires lawyers to be truthful when communicating with nonclients. Model Rule 4.3 prohibits lawyers from giving legal advice to nonclients other than securing independent counsel. Model Rule 1.13(f) explains that when the interests of the organization and the organization’s constituents differ, the lawyer should advise the constituent of the conflict or the potential conflict of interest.
Exactly what a lawyer must tell or explain to the organization’s constituents varies depending on the specific factual situation, according to the opinion. It warns that an organization’s lawyers should be careful about ambiguities in their advice-giving role and approach each situation in a manner that avoids confusion.
“Individual constituents’ misunderstandings may be harmful to them because, when the interests of the organization and individual constituents diverge, the constituents cannot rely on the organization’s lawyer’s advice to protect their interests,” according to the opinion.
A Jan. 8 press release from the ABA is here.
