Supreme Court Summarizes Noteworthy Amendments to Hawaii Rules of Professional Conduct
(Effective January 1, 2014)
HRPC Rule 1.0 contains new definitions of the terms “confirmed in writing,” “screened,” “tribunal,” and “writing” or “written,” and amended definitions of “firm” and “partner.”
Scope of the Representation
HRPC Rule 1.2(c) clarifies an attorney may only place reasonable limits on the scope of the representation, even if the client consents to the suggested limitation.
Communication with the Client
HRPC Rule 1.4(a) is markedly more detailed concerning the duties of an attorney to communicate effectively with a client.
HRPC Rule 1.5(a)(9) and (10) currently set forth two factors – the relative sophistication of the attorney and the client, and the fact the client has consented to the fee after consultation – as factors to be used to assess whether a fee is reasonable or not. Those two factors are stricken from the new HRPC Rule 1.5.
HRPC Rule 1.5(b) has been amended to add three additional duties: (1) the duty to communicate the scope of the representation to the client, in addition to the basis or rate of the fee, before or within a reasonable time after the representation has commenced, (2) the duty to inform the client of any changes to the fee or expenses contemplated by the attorney once the representation has commenced, and (3) the clarification that fee payments made up-front at the beginning of a representation are presumed to be unearned and, hence, the duty to maintain those funds in a client trust account until they are earned.
HRPC Rule 1.5(c) now requires contingency fee agreements to be signed by the client, and requires the written agreement to notify the client of any expenses for which the client will be liable whether or not the client is the prevailing party.
Confidentiality of Information
HRPC Rule 1.6(c)(3) provides a new exception to the General prohibition against revealing confidential client information. Pursuant to the new HRPC Rule 1.6(c)(3), an attorney may reveal such confidential information “to secure legal advice about the lawyer’s compliance with these Rules.”
Conflicts of Interest
HRPC Rule 1.7(a) prohibits a new representation if a current conflict of interest will arise, and Rule 1.7(a)(1) and (2) define what a conflict of interest is.
HRPC Rule 1.7(b) allows for a new representation, despite the existence of a conflict of interest, but only if the conditions of HRPC Rule 1.7(b)(1) through (4) are all fulfilled.
HRPC Rule 1.7(c) imposes a new duty, requiring the attorney to take a proactive approach when representing multiple clients in a single matter, to explain the advantages and the risks of such a representation.
HRPC Rule 1.8(a)(2) now requires the client to be advised in writing of the advisability of seeking independent counsel before engaging in a business transaction with the attorney.
HRPC Rule 1.8(a)(3) requires the client to expressly consent in writing to the essential terms of the transaction, including the lawyer’s role in it and whether the lawyer is representing the client in the transaction.
HRPC Rule 1.8(c) currently prohibits an attorney from “prepar[ing] an instrument giving the lawyer . . . any substantial gift from a client.” New Rule 1.8(c) prohibits an attorney from “solicit[ing] any substantial gift,” to the attorney or an individual “related” to the attorney, regardless of the method of transfer. It also provides a more detailed definition of those individuals “related” to the attorney.
HRPC Rule 1.8(g) requires the attorney to obtain consent of all clients in an aggregate representation to any aggregate settlement. New Rule 1.8(g) requires that consent be in writing.
HRPC Rule 1.8(h) has been reorganized into subparagraphs, and amended to read “[a] lawyer . . . shall not settle a claim or potential claim for [malpractice] liability . . . .” without first providing the client with written notice of the desirability of seeking independent counsel.
HRPC Rule 1.8(i) currently prohibits a lawyer from representing a client if another lawyer who is related to the first lawyer represents a client “in a representation directly adverse” to the prospective client’s interests. The Rule is now located at Rule 1.8(k), and is expanded to include domestic partners. Under new Rule 1.8(l), however, this conflict of interest is not imputed to other lawyers in a law firm.
HRPC Rule 1.8(j) prohibits a lawyer from entering into a sexual relationship with a client unless the relationship predates the commencement of the representation.
HRPC Rules 1.9(a) and (b) require an attorney who wishes to proceed with a new representation which represents a conflict of interest, either directly or by imputation, with a former client’s matter to obtain the consent of the former client. New Rules 1.9(a) and (b) now require that consent to be in writing.
HRPC Rule 1.10(a) sets forth the doctrine of general imputation of a conflict of interest to other attorneys associated in a firm with that attorney. New Rule 1.10(a), however, states the general imputation does not apply if “the prohibition is based on a personal interest of the prohibited lawyer and does not present a significant risk of materially limiting the representation of the client by the remaining lawyers in the firm.”
HRPC Rule 1.10(b) is substantively the same as current Rule 1.10(b), governing conflicts of interest at a departed attorney’s former firm. It has been re-written in an attempt to make it easier to understand.
HRPC Rule 1.10(c) now governs an attorney arriving at a new firm, who may bring with him or her a conflict of interest with a client of the new firm because the attorney’s former firm represented a client with interests materially adverse to the client at the new firm. New Rule 1.10(c) allows the attorney’s new firm to represent the client at the new firm, if three conditions are met: (1) the newly arrived attorney did not, while at the former firm, in fact participate in the matter giving rise to the conflict of interest and has no confidential information regarding the matter, (2) the newly-arrived lawyer is screened from the matter at the new firm, and (3) the client at the former firm is promptly given written notice, to enable the client to ascertain whether the new firm is complying with the Rule.
HRPC Rule 1.10(d) now makes it clear that Rule 1.11 governs imputation of knowledge and disqualification for government attorneys.
Conflicts of Interest Involving Former or Current Government Attorneys
HRPC Rule 1.11 now expressly applies the provisions of Rule 1.9(c) (governing duties to former clients) to lawyers who have left government practice, and expressly applies the provisions of Rules 1.7 and 1.9 to current government attorneys formerly in private practice.
HRPC Rule 1.11(a)(2) now allows a former government attorney currently in private practice to represent a client in a matter in which the lawyer participated personally and substantially while a government attorney, if the appropriate government agency is informed and consents in writing after consultation.
HRPC Rule 1.11(d)(2)(A) now makes it clear that, if a current government attorney is prohibited from working on a matter due to a conflict of interest arising from previous private practice in the same matter, and another attorney in the agency in the matter is available to work on the matter, the conflict is not imputed to other attorneys in the agency, as long as the conflicted lawyer is screened and written notice of the conflict, and the screening, is provided the previous client from private practice.
Conflicts of Interest of Former Neutral Arbiters
HRPC Rule 1.12(a) prohibits former judges, arbitrators, and other individuals serving as neutral participants in a matter from thereafter representing any party in the matter, unless consent is obtained from all the parties. New Rule 1.12(a) requires that consent to be in writing.
HRPC Rule 1.12(c) imputes any conflict of interest in Rule 1.12(a) to other attorneys associated with the former neutral fact-finder who is now with their firm, unless the disqualified lawyer is screened, is apportioned no part of the fee, and written notice is given to the appropriate tribunal to enable it to ascertain compliance. New Rule 1.12(c) now requires written notice also be provided to all parties to the matter giving rise to the conflict of interest.
An Attorney’s Duties to an Organization as Client
HRPC Rule 1.13 sets forth an attorney’s duties to protect the interests of an organization the attorney represents against the actions of individuals in the organization that threaten the interests of the organization. New Rule 1.13(b) requires the attorney, “[u]nless the lawyer reasonably believes that it is not necessary in the best interest of the organization to do so,” to report such matters to higher authorities, perhaps the highest authority, in the organization. That duty is not expressly stated in current Rule 1.13.
HRPC Rule 1.13(c) provides more options to an attorney if, after submitting a report concerning threats of substantial injury to the organization, the highest authorities in the organization refuse to act or if they equivocate. Under current Rule 1.13(c), the attorney may resign. Under new Rule 1.13(c), the attorney may reveal information relating to the matter, regardless of whether such information is normally protected by the confidentiality provisions of HRPC Rule 1.6. Such disclosure is allowed, however, “only if and to the extent the lawyer reasonably believes necessary to prevent substantial injury to the organization,” and, under new Rule 1.13(d), the provision does not apply to attorneys retained to investigate unlawful activity at the organization or retained to represent the organization or a constituent of the organization against claims arising from an alleged violation of law.
HRPC Rule 1.13(e): If the attorney is discharged or forced to resign and reasonably believes the termination was in retaliation for reporting the matter, new Rule 1.13(e) now authorizes the attorney to take whatever action “the lawyer reasonably believes necessary to assure that the organization’s highest authority is informed of the lawyer’s discharge or withdrawal.”
Client Under a Disability
HRPC Rule 1.14(b) now offers greater discretion to the attorney as to how best to protect clients whom he or she has concluded cannot protect their own interests.
HRPC Rule 1.14(c) authorizes the attorney responding to the need perceived under Rule 1.14(b) to disclose confidential client information to other necessary individuals, but “only to the extent reasonably necessary to protect the client’s interests.”
Client Trust Accounts
HRPC Rule 1.15 remains unchanged in the July 1, 2013 promulgation of the HRPC. The court is weighing amendments to this Rule, along with accompanying amendments to the Rules Governing Trust Accounting and Rules 11 and 17 of the Rules of the Supreme Court, and hopes to promulgate the new Rules sometime in the Autumn, with an effective date of January 1, 2014, concurrent with the July 1, 2013 promulgation. The court concluded it did not wish to delay promulgation of the rest of the HRPC while it weighed the proposed amendments to HRPC Rule 1.15.
Sale of a Law Practice
HRPC Rule 1.17 currently allows for the sale of a law practice if certain conditions are met. New Rule 1.17 allows for the sale of a law practice or an area of practice, under generally the same conditions as current Rule 1.17. New Rule 1.17, by striking current Rule 1.17(c)(2), makes it clear that fees cannot be changed as a result of the sale, unless the client consents in writing.
Duties Towards Former Prospective Clients
HRPC Rule 1.18 is new. It sets out the duties an attorney has toward a past prospective client, defined in Rule 1.8(a) as a “person who discusses with a lawyer the possibility of forming a client-lawyer relationship with respect to a matter . . . .” Rule 1.18(b) makes it clear information gathered in the initial interview with the prospective client is treated the same as any information in the lawyer’s possession from former clients, regardless of whether a client-lawyer relationship results from the interview.
Rule 1.18(c) sets out a general prohibition against accepting future representations from other clients whose interests are materially adverse to the prospective client, and imputes that conflict to other attorneys in the firm.
Rule 1.18(d), however, establishes two important exceptions to the general imputed conflict of interest. Under Rule 1.18(d)(1), if the attorney can obtain written consent from both the affected client and the past prospective client after consultation, the representation of the new client can be undertaken, despite the previous interview with the prospective client. Alternately, under Rule 1.18(d)(2), if the lawyer who conducted the interview with the prospective client limited the information gathered to information reasonably necessary to determine whether representation would be agreed to, and is then timely screened from participation in the new matter with the new, conflicted client and is apportioned no part of that client’s fee, and, finally, written notification of the new representation is given to the former prospective client, the representation may be accepted by the lawyer’s partners or associates.
Attorney as Neutral Mediator
HRPC Rule 2.4 is new. It addresses the attorney’s role as a neutral mediator or arbitrator in assisting two or more people to resolve a dispute. Under Rule 2.4(b), the attorney undertaking such a role has the duty to inform all unrepresented parties involved that the attorney is not representing them and, if a party is unclear on the attorney’s role, to further explain the difference between the attorney’s role as a third party neutral mediator and the more traditional role of an attorney in representing one party’s interests.
Special Duties of a Prosecutor
HRPC Rule 3.8(c) imposes a new duty upon prosecutors. Under the new Rule, prosecutors who know “of new, credible evidence creating a reasonable likelihood that a convicted defendant did not commit an offense of which the defendant was convicted” must (1) promptly disclose the evidence to an appropriate court or authority, and (2) if the conviction was obtained in Hawai`i, “promptly disclose that evidence to the defendant and the office of the public defender, unless a court orders otherwise.” Rule 3.8(d), however, provides a safe harbor provision for prosecutors who, in their independent judgment, make a good faith determination that the new evidence “is not of such nature as to trigger the obligations of section (c),” even if subsequent developments demonstrate that determination was erroneous.
Duties Upon Inadvertent Receipt of Confidential Information
HRPC Rule 4.4(b) is new, drafted using language suggested by the HSBA in its submitted comments to the court. Rule 4.4(b) sets forth the duties of an attorney in receipt of confidential information belonging to an opposing party or their counsel.
Professional Independence of a Lawyer
HRPC Rule 5.4(a) has two new exceptions to the general prohibition on lawyers or law firms sharing legal fees with non-lawyers. Under new Rule 5.4(a)(2), a lawyer who purchases the practice of a deceased, disabled, or disappeared lawyer may, in accordance with HRPC Rule 1.17 (governing the sale of a law practice), pay the agreed-upon purchase price to the estate or other representative of the absent lawyer. Under new Rule 5.4(a)(4), a lawyer may share court-awarded legal fees with a nonprofit organization that retained or recommended the lawyer in the matter from which the fees are derived.
Advertising, Solicitation, and Firm Names
HRPC Rule 7.2 has been amended to modernize the media referred to in Rule 7.2(a)and to remove the requirement in current Rule 7.2(b) that an attorney keep copies of all written and recorded advertisements for two years after the last date of dissemination.
HRPC Rule 7.3 has been re-written but substantively remains similar to current Rule 7.3. References to methods of communication have been updated to reflect advancements such as e-mail and social media. The new Rule also abandons (1) the requirement under current Rule 7.3(c) to supply the Office of Disciplinary Counsel with a sample copy of any written or recorded communication intended as an advertisement, and (2) the detailed requirements governing advertising material set out in current Rule 7.3(f).
HRPC Rule 7.5 has been re-written but remains substantively the same, except that the provision of current Rule 7.5(c), requiring inclusion of the corporate form of the law firm in the name of the firm, has been abandoned.
HRPC Rule 8.4(a) has been amended to remove the current wording making it a separate violation to violate the HRPC, as the use of the Rule in this manner was unnecessarily duplicative. The new Rule 8.4(a), without the initial “violate,” now makes it a violation of the HRPC to attempt to violate the HRPC or to knowingly assist or induce others to do so, or to violate the HRPC through the acts of another.
Attorneys should review the Hawai`i Rules of Professional Conduct for all of the changes.