While the “new normal” may be a cliché, it does highlight the fact that Covid-19 has dramatically affected the legal profession and that many of these effects are likely to be long lasting. In particular, virtual or remote working is almost certain to be one of the changes that is permanent. Law firms of all sizes will need to address a range of ethical, financial, and interpersonal issues flowing from remote working.
In Formal Opinion 495, the ABA Committee on Ethics recently provided some useful guidance on ethical issues flowing from remote working and the unauthorized practice of law.
Historically, authorization to practice law has been a matter of geographic boundaries, as is the case with many other professions. If lawyers are practicing within the geographic boundaries of their states of licensure, then they are authorized to practice regardless of the content of the laws used to carry out their work. See Restatement (Third) of the Law Governing Lawyers (2000) § 3, Comment E. Of course, lawyers must always provide competent representation. See ABA Model Rule 1.1. Determining authorization to practice has become more complicated through the years due to the increased interconnectedness of the world, including technological advancements and lawyer mobility.
Opinion 495 exemplifies professionalism by suggesting a practical interpretation of the applicable rules that does not strictly adhere to the traditional, “butt-in-the-seat” concept of authorization to practice law. This opinion encourages states to weigh the physical location of the lawyer less, instead focusing on where the impact of the lawyer’s work would occur. Lawyers should take care not to hold themselves out as being licensed in the jurisdiction if that is not the case, and they should avoid providing services in the jurisdiction where they are physically located but not licensed unless the multijurisdictional practice rules allow it.
As an example, assume a Boston-based, Massachusetts-licensed lawyer regularly represents clients in that state and communicates with her clients via telephone, email, and video conference. She rarely meets with clients or even fellow attorneys in person. If this lawyer then moves to Georgia and continues her work from her home in that jurisdiction, then the ABA opinion would encourage an interpretation of the rules that would allow her to continue to represent her Boston clients, even though she is no longer physically located in Massachusetts. She should avoid using a Georgia address on any communications about her law practice, not represent that she is licensed in Georgia, and generally avoid representing clients located in Georgia—including her Massachusetts clients who might wish to meet with her in Georgia—unless the state’s multijurisdictional practice rules allow it on a temporary (e.g., interviewing a witness for a Massachusetts case) or full-time (e.g., federal immigration law) basis.
ABA Opinion 495 and similar state opinions are either unclear or do not support out-of-state lawyers who would like to open a local office and hire local employees, as opposed to working alone from home. While the opinion is a welcome advancement of lawyers’ freedom to practice regardless of their physical location, it should have gone further: Because lawyers physically within their own jurisdictions are free to practice regardless of the content of the laws used in their work, even using laws of states where not admitted (See Restatement (Third) of the Law Governing Lawyers (2000) § 3, Comment E, ABA Formal Opinion 248, and NYSBA Opinion 375), then accordingly, lawyers who are practicing remotely should be afforded the same authorization provided they are not representing clients in the jurisdiction where they are not admitted and meet the other requirements of Opinion 495.
Other states—New Hampshire, North Carolina, Minnesota, and Arizona—have taken further steps to allow lawyers to practice while physically present in these jurisdictions. For example, an out-of-state lawyer can “provide legal services in Arizona that exclusively involve federal law, the law of another jurisdiction, or tribal law.” Arizona Rule 42, ER 5.5(d). It is hoped that the ABA might soon amend Rule 5.5to focus more on competence rather than on the physical location of lawyers or their clients.
Other laws have already come under increased scrutiny as a result of the pandemic. For example, New York’s Judiciary Law Section 470 (on the books for over 100 years), requiring NY-licensed lawyers to maintain a physical office in New York in order to represent clients there, might soon be repealed as a result of increased pressure brought on by the pandemic.
Supervision
One of the most important aspects of virtual practice is supervision. ABA Model Rules 5.1(a) and 5.3(a) provide that lawyers who have “managerial authority in a law firm” or other legal organization have an obligation to make reasonable efforts to ensure “that the firm has in effect measures that give reasonable assurance” that lawyers and nonlawyers will conform to the Rules of Professional Conduct.
In a remote working environment, supervision is especially challenging. In our view, here are some of the key components for proper supervision:
The supervisor’s attitude. Avoid the “Big Brother” approach: “We are always checking on you and reviewing your work.” This approach destroys motivation, undermines autonomy and individual responsibility, and ultimately leads to less rather than more productivity. Instead, the effective supervisor focuses on the subordinate’s needs by asking: “What are your needs and what difficulties do you face in achieving your performance goals, both on individual projects and longer term?”
Put data in its place. Law firms, especially large firms, are often time driven. Supervisors should certainly review their subordinates’ time, but focus should be more on identifying specific projects, agreeing on reasonable deadlines for projects, and periodic review to determine progress in completing the project.
Delegate well. If you are a team leader, at the beginning and as the project develops, identify specific tasks and consider for each task: who is the best person (or group) to perform the task; what is the deliverable that the supervisor expects (memorandum of law, opinion letter, trial brief); when will the deliverable be due; how will the deliverable be sent (email, shared file, meeting); and why (explain how the task fits in with overall project so the subordinate has a sense of both importance and participation in a joint effort). Correspondingly, subordinate lawyers should make sure they understand these components of their work to avoid disappointing the supervisor’s expectations and wasting time.
Virtual meetings. Have regularly scheduled virtual meetings. The supervisor should distribute a clear agenda in advance of the meeting, particularly if participants need to come prepared with material. The agenda should state the purpose or purposes of the meeting. If necessary, the agenda should include follow up from the previous meeting. Meetings should be kept short—typically 15-30 minutes—and the supervisor should begin and end the meeting on time to avoid generating bad meeting habits. The meeting should end with “action items” delegated to specific team members.
Regularly update team members. In between meetings, inform team members of progress and significant developments. The standard setting for team e-mail communications should be “reply to all,” recognizing that this setting has dangers for external communications, to keep everyone informed and maintain team unity, unless there is a specific substantial reason for limited distribution, for example client confidentiality concerns in a particularly sensitive matter. Provide praise and constructive support. If a team member’s performance is deficient, private virtual and perhaps even in-person meetings are appropriate.
Use the best channel for communication. For issues that require a quick, short response, text or chat may be the best channel. For complex issues that require discussion, a virtual meeting is likely the best option. Team updates and requests for information can be handled by email. The main point is that the supervisor should be conscious of the importance choosing the appropriate communication channel.
Treat supervision as a client. Recognize that supervision and leadership requires time. Make adequate time in your schedule for your supervisory responsibilities. To the extent that supervisory time cannot ethically be billed to a client, it should be allocated to a specific file for the supervisor.
Ethical compliance. Make sure that team members are aware of and adhere to the firm’s remote working policies, with particular emphasis on the ethical component thereof.
Dealing with problems. Be positive, optimistic, and confident when problems arise. The supervisor’s attitude is a powerful force.
Increased Risk of Liability
Supervision is particularly important because the pandemic has increased the risk of violating the duty of competency by lawyers and law firms, resulting in greater malpractice exposure. As was expected since the inception of the pandemic and as confirmed by data, the pandemic and post-pandemic worlds mean an increase in malpractice claims because economic crises translate into greater scrutiny of lawyers. In fact, lawyers (and their insurers) are deep pockets, and when many transactions are suddenly disrupted (as has been true with the Covid crisis), clients are more likely to try and pass the cost on to the lawyers. See ABA CLE Program, Emerging Lawyer Risk Management and Professional Liability Coverage Issues.
Lawyers can also face claims from non-clients, for example a bankruptcy trustee or a receiver. That is why it is paramount to define clearly the scope of the representation and to document the advice given. Also, consider fraud-based claims in investor lawsuits in which the lawyer could be sued for aiding and abetting the fraud by advising the issuer (or indenture trustee) and drafting the documents. Lawyers should think carefully about these possible grounds for malpractice or disciplinary liability: The practice of law during economic and post-economic crises is a high-risk activity.
Awareness of the problem is the first step to dealing with it. What steps can lawyers and law firms take to reduce the risk of competency violations and malpractice exposure? Consider your areas of practice. Some areas are more prone to malpractice than others. An ABA study identifies personal injury, real estate, family law, bankruptcy, and estate practice as the most critical areas for malpractice.
Every practice area has its own critical issues. For example, if you practice estate law, you are more likely to have an issue of a non-client’s lawsuit (e.g., beneficiary), while if you practice real estate law, you are more likely to be sued by the other side that claims that you also represented that party at the closing. But some of competency risks will be largely the same across various areas of practice, such as failure to keep abreast of technological developments. Similarly, issues regarding attorney-client privilege and work product will tend to cut across all areas of practice.
What can a firm do to reduce risk of competency violations and resulting malpractice liability? One possibility for firm management is to consider appointing a special committee or committees charged with keeping all teams informed of current developments in an area that tends to affect all areas of practice, like attorney-client privilege and work product. The committee should draw members from several teams, both litigation and transactional; such a diverse committee is useful because the perspective of each can help educate the other (the litigator can educate the transactional lawyer on burden of proof and waiver of privilege while the transactional attorney can explain the significance of certain clauses). Another example of a firm-wide topic is developments in technology. See ABA Opinion 496 issued this year on responding to social media criticism.
All of the above is true for large firms, but what about smaller firms that do not have the resources of large firms? Outsourcing is a viable option. Retaining a law firm that provides risk management advice can be a cost-effective way for a small firm to deal with these issues. Sequencing (i.e., dealing with priorities one at a time, recognizing that there are some risks with this approach, but also realizing that you cannot do everything immediately) is another possibility. Sequencing is a process approach: identify risks or vulnerabilities, rank them in importance, develop approaches to reduce risk, and implement. This is an approach recommended in the cybersecurity field, but it applies to competency issues generally. When employing the process approach, firms should try to identify “low hanging fruit” (i.e., risks that are easy to correct); as for technology, these include: (1) inadequate passwords; (2) BYOD; (3) lack of dual authentication; (4) typical fraud communications with downloads; and (5) inadequate procedures for wire transfers.
With regard to the duty of competency generally, consider the following risks: (1) accepting cases outside a lawyer’s area of practice without a plan and time to acquire competency in the area; (2) accepting cases outside the jurisdiction in which the lawyer is admitted to practice without consideration of compliance with the jurisdiction’s restrictions on unauthorized practice (see ABA Model Rule 5.5), including hiring local co-counsel; (3) accepting cases without having a limited engagement agreement (see ABA Model Rule 1.2(c)) and without specifying the scope of the engagement. Firm management should provide clear policy directives for dealing with these issues.
While identifying risks and adopting solutions is challenging, ignoring the issues and being paralyzed into inaction because of their complexity is much worse: Don’t let the best be an enemy of the good.
For more information about important issues that have arisen in law practice as a result of the pandemic, check out the authors’ Professionalism in a Pandemic: Examples and Issues program, available from PLI Programs On Demand.
Nathan M. Crystal is a scholar and co-founder of Crystal & Giannoni-Crystal LLC. Professor Crystal concentrates in the areas of professional responsibility and contract law. He has advised individuals and entities, including major law firms, on matters of contract law and professional ethics and has lectured throughout the world on these subjects. Professor Crystal frequently serves as expert witness or consultant in multimillion-dollar cases. He is the author or coauthor of four books, three on legal ethics, and one on contract law.
Francesca Giannoni-Crystal is a dually qualified U.S. and Italian attorney. Her practice has focused on transactional work and contractual issues (commercial law, banking law, Internet law, business law, international transactions, mergers and acquisitions, constitution and reorganization of companies, financing, and property development). She is also a “lawyer for lawyers,” supporting other lawyers in international litigation (including international privileges), issues of cross border ethics, and international transactions.
Craig Dobson provides ethics advice to lawyers, represents lawyers in disciplinary matters, and practices immigration and nationality law at Dobson Law LLC. He is a member AILA’s National Ethics Committee (Chair from 2018 to 2021), Vice Chair of AILA’s Lawyer Well-Being Committee, Co-chair AILA New York’s Ethics Committee, and a member of the Association of Professional Responsibility’s (APRL) Cross-Border Practice Subcommittee, which is working on proposed amendments to current ABA multi-jurisdictional practice rules.
PLI Chronicle: Insights and Perspectives for the Legal Community (July 2021)
Long-Lasting Covid Changes – Virtual Practice is Here to Stay
Date: Jul 20, 2021
PLI Item #: 332581