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Attorney E-Newsletter

February 2007

Disciplinary Board Seeks Comments on Property Handling Revisions

The Disciplinary Board has published proposed revisions to Rule 1.15 of the Pennsylvania Rules of Professional Conduct and Rule 221 of the Pennsylvania Rules of Disciplinary Enforcement, regarding handling of the property of others. The proposed changes are published at 37 Pa.B. 394 [Saturday, January 27, 2007].

The Disciplinary Board had previously proposed a set of amendments to Rule 1.15 in June 2006, which were published at 36 Pa.B. 2801 [June 10, 2006]. That set of amendments sought to clarify the special requirements for handling funds faced by lawyers working in fiduciary matters.

The current proposal would make a few changes to the substantive requirements of the property handling rule, again primarily concerning the handling of fiduciary funds. The narrative states:

The changes to Rule of Professional Conduct 1.15 permit attorneys acting as fiduciaries to exercise appropriate fiduciary judgment, make prudent investments, and administer fiduciary assets in accordance with law and accepted practice. The definition of ''Financial Institution'' is broadened to permit deposit of IOLTA funds in various instrumentalities in addition to traditional banks and savings and loan associations to the extent that such instrumentalities chose to qualify as ''Eligible Institutions'' under Rule of Disciplinary Enforcement 221(h), as well as to permit investment of entrusted funds in or through such entities, consistent with the Prudent Investor Rule or other applicable law.

The current rulemaking is also devoted to restructuring the language of Rules to achieve greater clarity.

Comments will be accepted until March 1, 2007, and should be directed to Office of the Secretary, The Disciplinary Board of the Supreme Court of Pennsylvania, First Floor, Two Lemoyne Drive, Lemoyne, PA 17043.

Disciplinary Board Proposes Clarification of Open System Rule

The Disciplinary Board has also proposed an amendment to Rule 402 of the Pennsylvania Rules of Disciplinary Enforcement, dealing with the extent to which disciplinary proceedings are open to the public. The proposal is published at 37 Pa.B. 520 [February 3, 2007]. The narrative describes the proposed changes concisely:

The Board is considering proposing that in the case of a formal proceeding in which it is decided to impose private discipline or in which all of the charges against the respondent-attorney are dismissed, the record of the proceeding be closed.

Although the Board is proposing that a formal proceeding that becomes open to the public will subsequently be closed if it results in the imposition of private discipline or dismissal of all the charges, the closing of the proceeding cannot change the fact that the proceeding was open to the public for a period of time. Thus, the Board is also proposing to make clear that the respondent-attorney may request that the record of the proceeding remain open to demonstrate that the charges were dismissed or only private discipline was imposed.

Comments will be accepted until March 9, 2007. They should be addressed to Office of the Secretary, The Disciplinary Board of the Supreme Court of Pennsylvania, First Floor, Two Lemoyne Drive, Lemoyne, PA 17043.

Yes, but What about the Supermodel Rules?

Despite the 5,694 words in the Proposed Rulemaking on property handling proposed by the Disciplinary Board, generally the Supreme Court of Pennsylvania and the Disciplinary Board do not develop the Pennsylvania Rules of Professional Conduct entirely on their own. The Pennsylvania rules, like most states' comparable standards, are based on the Model Rules of Professional Conduct propounded by the American Bar Association.

The Model Rules are the third set of proposed ethics standards developed by the ABA for the guidance of the states. The House of Delegates of the ABA adopted the original Canons of Ethics in 1908, followed by the Model Code of Professional Responsibility in 1969. Beginning in 1977, the ABA's Commission on Evaluation of Professional Standards developed a comprehensive overhaul of lawyer ethics standards called the Model Rules of Professional Conduct, which were endorsed by the House of Delegates on August 2, 1983. These standards were subsequently adopted in whole or in part by each of the states individually. The Supreme Court of Pennsylvania adopted the Pennsylvania Rules of Professional Conduct, effective April 1, 1988. The Pennsylvania rules are based on, but are not identical to, the Model Rules.

An extensive set of updates to the Model Rules, developed under the project called Ethics 2000 and adopted by the House of Delegates on February 5, 2002, represent the latest consensus of the profession as to ethical standards. Once again, the Supreme Court of Pennsylvania adopted an extensive revision of the Pennsylvania rules based on the Ethics 2000 package. These amendments took effect January 1, 2005. It has been a major focus of this newsletter over the last 21 months to examine, rule by rule, the changes that took effect at this time.

It is important for lawyers to understand that as seminal as the Model Rules of Professional Conduct are, the actual standards that govern the profession are found not in the Model Rules, but in the versions adopted by each state. Nowhere is this more evident than in the provisions of Rule 1.15 regarding the handling of property. Model Rule 1.15 consists of only 316 words, but Pennsylvania's Rule 1.15 as currently written contains 1,346 words, and there are additional substantive money handling requirements in Rule 221 of the Pennsylvania Rules of Disciplinary Enforcement. Clearly, a lawyer familiar only with the Model Rule would be seriously unprepared to handle client property subject the requirements of the Pennsylvania rule.

Familiarity with the provisions of the Model Rules will give the practicing lawyer a rough idea of what the expectations of lawyers everywhere are, but the lawyer who ventures beyond the borders of the jurisdiction in which he or she is licensed should bear in mind that the standards of conduct in effect elsewhere may be different in important respects from those of the lawyer's home jurisdiction. Rule 8.5(b) of both the Model Rules and the Pennsylvania Rules states,

(b) Choice of Law. In any exercise of the disciplinary authority of this jurisdiction, the rules of professional conduct to be applied shall be as follows:

(1) for conduct in connection with a matter pending before a tribunal, the rules of the jurisdiction in which the tribunal sits, unless the rules of the tribunal provide otherwise; and

(2) for any other conduct, the rules of the jurisdiction in which the lawyer's conduct occurred, or, if the predominant effect of the conduct is in a different jurisdiction, the rules of that jurisdiction shall be applied to the conduct. A lawyer shall not be subject to discipline if the lawyer's conduct conforms to the rules of a jurisdiction in which the lawyer reasonably believes the predominant effect of the lawyer's conduct will occur.

So, when in Rome, the lawyer should check and make sure that he or she is aware of any significant differences between the rules of that jurisdiction (New York? Georgia?) and the standards with which the lawyer is familiar.

Next month, we will discuss some of the ethical provisions that apply when a lawyer's practice reaches beyond state lines.

Tip of the Month: Learn the Lingo!

One of the pet peeves of many Disciplinary Counsel (or at least of the Editor) is hearing lawyers, even (one might say especially) lawyers with many years in practice, who fail to properly identify the name of the ethical rules which govern the profession. They are the Rules of Professional Conduct, not the "Ethics Rules," not the "Code of Conduct," and certainly not the "Canons of Ethics," a designation discarded by Pennsylvania in 1970, when Richard Nixon was President; a first class stamp cost 6 cents; Dock Ellis pitched a no-hitter on LSD; and, we lost Jimi, Janis, the Beatles, and Simon and Garfunkel all in one year. So the lawyer who refers in 2007 to the "Canons of Ethics" is not just dating himself, he is carbon dating himself.