Attorney E-Newsletter

August 2006

On My Watch: The Role of the Supervising Attorney, Rule 5.1

Rule 5.1 governs the responsibilities of lawyers who supervise the work of other lawyers. In its previous versions, the rule was limited to partners in law firms, but with the January 2005 revision, Rule 5.1(a) now applies as well to "a lawyer who individually or together with other lawyers possesses comparable managerial authority in a law firm."

Another significant change is that Rule 5.1(a), which formerly stated that the supervising attorney should take certain steps, now says that the supervising attorney shall ensure that the firm has measures in place to assure the compliance of all attorneys in the firm with the Rules of Professional Conduct. The change in language from "should" to "shall" makes this requirement mandatory, and clearly indicates a heightened level of responsibility for all partners and supervising lawyers.

Rule 5.1(b) is also made mandatory. This section requires a lawyer who has "direct" supervisory authority over another lawyer to make reasonable efforts to assure that lawyer's conduct complies with the Rules of Professional Conduct. While Rule 5.1(a) only speaks of the creation of policies, Rule 5.1(b) specifically focuses on conduct.

Rule 5.1(c) defines the circumstances under which a supervising lawyer is subject to discipline for a supervised lawyer's misconduct. As before, the supervising lawyer who orders or ratifies the conduct, or fails to take remedial action when she or he knows of the conduct in time to avoid or mitigate its consequences, will be held responsible. The only amendment to this section is that this responsibility extends not just to partners, but also to lawyers with comparable supervisory authority.

The Comments to Rule 5.1 are extensively expanded. Comment 1 makes it clear that supervisory responsibility extends to:

  1. members of a partnership;
  2. the shareholders in a law firm organized as a professional corporation;
  3. members of other associations authorized to practice law;
  4. lawyers having comparable managerial authority in a legal services organization or a law department of an enterprise or government agency; and
  5. lawyers who have intermediate managerial responsibilities in a firm.

Comments 2 and 3 expand on specific "measures . . . to assure the compliance of all attorneys in the firm," and discuss different approaches which may be warranted in firms of different sizes. Comment 3 notes, "the ethical atmosphere of a firm can influence the conduct of all its members and the partners may not assume that all lawyers associated with the firm will inevitably conform to the Rules."

Tip of the Month: Nonrefundable? Make it Clear (and in Writing)

I wouldn't say that I was raised on romance.
Let's not get stuck in the past.
I love you more than everything in the world.
I don't expect that will last.
They told me everything was guaranteed.
Somebody somewhere must've lied to me.
One of these days I'm gonna pay it back, pay it back,
one of these days. - Elvis Costello, "Pay It Back"

Many lawyers are in the habit of charging certain clients "nonrefundable retainers" - payments of fees up front which are considered earned upon engagement, or which will not be refunded if the relationship ends before the up front payment is earned.

Some states, such as New York, prohibit such fees. The rationale is that such arrangements violate Rule 1.15(d), which states that upon termination of the representation the lawyer must refund "any advance payment of fee or expense that has not been earned or incurred." The Supreme Court and Disciplinary Board of Pennsylvania have not interpreted Rule 1.15(d) to abolish nonrefundable fees where they are supported by the fee agreement, but it is the duty of the lawyer to assure that the nonrefundable nature of the fee is clear, unambiguous, and understood by the client as a term of the client-lawyer contract.

Rule 1.5(b) requires that the lawyer provide the client with written notice of the basis on which the fees are calculated. Essential terms such as nonrefundability must be clearly stated in writing. Lawyers should bear in mind that under the law of contracts, ambiguities in the contract are construed adversely to the party who drafted the contract, which in most client-lawyer relationships is the lawyer. An agreement that the fee is nonrefundable contrary to the expectation created by Rule 1.16(d) will not be inferred from the use of terms like "retainer" or "payment in advance."

Disciplinary Board News:

Registration Reminders Mailed Out

Postcard reminders to attorneys who have failed to send in their annual registration forms and pay their registration fees were mailed out August 15. If this gentle hint does not get the attention of the absentminded, the prodigal should be aware that they have until September 15 to comply before a late registration fee is assessed. Consequences after that date become increasingly dire.