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Duties to Prospective Clients Following Preliminary Meetings: A New York City Bar Association Formal Ethics Opinion

The New York City Bar Association’s Committee on Professional Ethics has issued an opinion explaining the duties owed by lawyers to prospective clients under Rule 1.18 of the New York Rules of Professional Conduct (Formal Opinion 2013-1).  Rule 1.18, adopted by the courts in April 2009, establishes several duties for lawyers that did not previously appear in the governing lawyer ethics rules and could only be gleaned from the case law.  Formal Opinion 2013-1 explains the nature of those duties in a comprehensive and easy-to-understand fashion.

Rule 1.18’s duties are determined by the nature of the information received from the prospective client and may restrict the lawyer’s ability to use or reveal the information or to represent adverse parties in the same or a substantially related matter. However, while significant, these duties are less restrictive than the comparable duties owed to former and current clients and permit the use of ethical screens to take on adverse representations.

According to the City Bar’s opinion, Rule 1.18:

  • protects information learned from a prospective client in that “a lawyer is restricted from using or revealing information learned in the consultation to the same extent that a lawyer would be restricted with regard to information of a former client.”
  • prohibits a lawyer from representing a client with interests materially adverse to those of the prospective client in the same or a substantially related matter if the information received from the prospective client “could be significantly harmful” to the prospective client in the matter. This “significantly harmful” test is less restrictive than the corresponding restriction on representations that are “materially adverse” to a former client.

The opinion discusses the two important exceptions to the Rule 1.18 ban on representation: “First, the lawyer and the firm may take on an otherwise prohibited representation if both the prospective client and the affected client have given informed consent, confirmed in writing. Second, a disqualified lawyer’s firm (but not the disqualified lawyer) may take on the representation if the disqualified lawyer took reasonable steps to limit his or her exposure to disqualifying information in discussions with the prospective client and the firm takes specified steps to implement an effective ethical screen and notifies the prospective client of the representation and the screening measures taken. Neither exception is available, however, unless a reasonable lawyer would conclude that the firm would be able to provide competent and diligent representation in the matter.”

The opinion includes several hypothetical scenarios involving “beauty contests” in both the litigation and transactional context to illustrate the application of Rule 1.18.

This opinion supersedes a previous City Bar opinion (2006-2) on the duties of lawyers to prospective clients. At that time, the New York Code of Professional Responsibility (the predecessor to the New York Rules of Professional Conduct) did not include a rule specifically addressing those duties. Thereafter, in April 2009, Rule 1.18 (Duties to Prospective Clients) was adopted as part of the New York Rules of Professional Conduct, and the City Bar issued the current opinion to update No. 2006-2 in light of Rule 1.18.

The opinion can be read here: http://bit.ly/Xexasr

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