The Ethics and Risk Management of Casual Contacts, Cold Calls, and Preliminary Consultations
Del O’Roark, Loss Prevention Consultant, Lawyers Mutual Insurance Company of Kentucky
One of the anomalies of law practice is that prospective clients don‘t owe you a dime, but you owe them quite a bit œ specifically confidentiality and competence. A new ABA Model Rule of Professional Conduct defines prospective client as a person who discusses with a lawyer the possibility of forming an attorney-client relationship with respect to a matter. More than one lawyer has faced a conflict of interest disqualification motion because of a long ago casual contact, a quick telephone call, or brief office consultation with a prospective client in which representation was declined. Others have paid large malpractice claims because of careless advice when discussing with prospective clients whether they had a viable claim.
The purpose of this article is to provide an overview of the professional responsibility and malpractice issues dealing with nonclients in that in-between category of not yet a client, but seeking legal advice. Talking to them could be a waste of time, or lead to the gold mine case we all dream about. How does a lawyer reasonably learn enough information to determine whether to enter an attorney-client relationship without risking allegations by former prospective clients of conflicts of interest or malpractice? In attempting to answer this question my goal is to leave you with a working lawyer‘s appreciation of the issues and some useful prospective client risk management guidelines.
Professional conduct rules do not cover the formation of the attorney-client relationship because it is a matter of substantive law. Probably for this reason the version of the ABA Model Rules of Professional Conduct on which Kentucky‘s rules are based did not include a rule on prospective clients. The only reference to prospective clients in the Model Rules then in effect was in the introductory Scope section which provided that prospective clients are owed certain duties including confidentiality. When the Kentucky Supreme Court implemented our version of the Model Rules in 1990, however, the Scope section was not included. Thus, Kentucky‘s Rules of Professional Conduct are silent on prospective clients.
What Kentucky does have in the way of ethics guidance is a 1987 KBA ethics opinion that adopted the majority view that prospective clients are owed professional duties. In KBA E-316 the Ethics Committee was asked whether a firm could represent the party adverse to a former prospective client if no confidences and secrets were obtained that could be used to the advantage of the adverse party. In answering yes to the inquiry the Committee cautioned:
"… a lawyer may be precluded from accepting employment adverse to a prospective client who did not retain the lawyer, if the prospective client revealed to the lawyer confidences and secrets about a matter in a good faith effort to secure legal counsel."
As early as 1931 Kentucky case law recognized that prospective client communications are protected by the attorney-client privilege.1 In 1997 the Kentucky Supreme Court in Lovell v. Winchester2 again considered the responsibilities of a lawyer dealing with a person seeking legal advice with a view to obtaining legal services. The case concerned a motion to disqualify an attorney for a conflict of interest. He had had an initial consultation with the moving party about the matter, but declined representation. He later accepted the other side of the matter. When a motion was made to disqualify him for a conflict of interest, he argued that he recalled nothing about the consultation. In rejecting this argument the Court relied on the Kentucky Rules of Evidence establishing when the attorney-client privilege applies. The Court held:
Having considered the arguments of both parties, we grant the writ of mandamus. KRE 503 (a)(1) defines a client as —a person … who is rendered professional legal services by a lawyer, or who consults a lawyer with a view to obtaining professional legal services from the lawyer.“ (emphasis added). This definition makes it clear that an individual who consults a lawyer is entitled to the privilege even though representation does not subsequently occur. In this case, it is uncontradicted that Appellants consulted King with the intention of employing him to represent them in their suit against Kidd.
Unquestionably, once the initial consultation transpired, Appellants became —clients‘ under the definition in KRE 503(a)(1) and the attorney-client privilege attached. After King retained the documents pertaining to the case for a month, the presumption arises that he became knowledgeable of their contents and that he learned confidential information relevant to the case. This gives rise to a conflict of interest.3
The Court embellished its decision with these observations on how initial consultations can lead to the formation of attorney-client relationships:
Consultation with a lawyer may ripen into a lawyer/client relationship that precludes the lawyer from later undertaking a representation adverse to the individual who consulted him. The lawyer/client relationship can arise not only by contract but also from the conduct of the parties. Courts have found that the relationship is created as a result of the client's reasonable belief or expectation that the lawyer is undertaking the representation. Such a belief is based on the conduct of the parties. The key element in making such a determination is whether confidential information has been disclosed to the lawyer.4
The Court then applied the principles of the former client conflict of interest rule5 to the case, added an appearance of impropriety test, and concluded the appearance of impropriety in this case warranted disqualification to protect the reasonable expectations of former clients and present clients.
Interestingly, the Court began its opinion by finding that the appellant qualified to claim the attorney-client privilege because the appellant had consulted the lawyer with a view to obtaining the lawyer‘s legal services and to that extent was a client œ never using the term prospective client.6 The case could have been decided on that holding alone, but the opinion went on to cover the formation of the attorney-client relationship, former client conflicts, and protecting former clients and present clients from the appearance of impropriety. I leave to your judgment what the essential holdings of the Court in Lovell were. What is clear for the purposes of this article is that the Court recognized that a lawyer has a duty of confidentiality when a person consults the lawyer with a view to obtaining legal services even though the lawyer is ultimately not retained to represent that person, i.e., the person becomes a former prospective client. This duty of confidentiality can create a disqualifying conflict of interest when the lawyer represents other clients.
Neither Lovell nor KBA E-316 delineates the kind or amount of confidential information that reasonably can be obtained from prospective clients without creating a disqualifying conflict of interest. The most helpful guidance I found for this purpose was ABA Formal Ethics Opinion 90-358 (1990) in which the Ethics Committee suggested this four-step approach in avoiding conflicts of interest issues with prospective clients:
Recognizing the gap in ethics guidance on prospective clients, the ABA in 2002 adopted Model Rule 1.18 Duties To Prospective Client. It neatly encapsulates the principles evolving from case law on prospective client conflict disqualification motions8 and closely parallels §15, A Lawyer‘s Duties to a Prospective Client, of the American Law Institute‘s Restatement of the Law Governing Lawyers (2000). Model Rule 1.18 provides:
The key points to note are:
Model Rule 1.18 would work well in Kentucky, but it is academic unless and until the Supreme Court makes it part of our rules. Even so, I think it is useful as general guidance considering the ambiguous status of prospective clients under our current professional conduct rules. Particularly helpful is the —significantly harmful“ standard for gauging when too much confidential information is obtained in a preliminary consultation. The Supreme Court proved prescient in Lovell by analyzing the case in part in terms of former client conflicts, because the real problem is with former prospective clients. This is some indication that the Court might be open to a prospective client rule of professional conduct.
The malpractice risk in a prospective client relationship is described succinctly in Legal Malpractice as follows:
The [prospective client] relationship arises when a person provides information to a lawyer in the reasonable belief that the information is confidential and will be used only for evaluating the legal merits of the person‘s claim, defense or needs. The attorney may also assume a duty of care. Thus, liability can be incurred for negligently advising a client not to proceed with the case or action or for the manner in which the [prospective] client is referred to another attorney. (footnotes omitted)9
The Restatement of the Law Governing Lawyers describes the duty of care owed to prospective clients more fully:
When a prospective client and a lawyer discuss the possibility of representation, the lawyer might comment on such matters as whether the person has a promising claim or defense, whether the lawyer is appropriate for the matter in question, whether conflicts of interest exist and if so how they might be dealt with, the time within which action must be taken and, if the representation does not proceed, what other lawyer might represent the prospective client. Prospective clients might rely on such advice, and lawyers therefore must use reasonable care in rendering it. The lawyer must also not harm a prospective client through unreasonable delay after indicating that the lawyer might undertake the representation. What care is reasonable depends on the circumstances, including the lawyer‘s expertise and the time available for consideration ….
If a lawyer provides advice that is intended to be only tentative or preliminary, the lawyer should so inform the prospective clients. Depending on the circumstances, the burden of removing ambiguities rests with the lawyer, particularly as to disclaiming conclusions that the client reasonably assumed from their discussion, for example whether the client has a good claim.10
The key to appreciating the malpractice risk in any situation is to be clear about the status of the person with whom you are communicating. Are they a nonclient, prospective client, or client? The key to managing the risk is to know the duties owed to persons in each status. Because of the ambiguous position of prospective clients, it is important to keep foremost in mind that confidentiality and competence is owed them and to have a prospective client loss prevention strategy.
The bane of a lawyer‘s existence is the casual contact with a person looking for free legal advice -- —I have this friend who…“ or —Just one quick question.“ This can happen on a street corner, at a party, or in your front yard. I especially like the technique of the lawyer who told me at a CLE that he responds to legal questions at a party by saying, —I‘d like to answer your question, but I‘m drunk at the moment. Why don‘t you come into the office tomorrow?“ He added, they never do.
Some lawyers have a just say no policy and refuse to discuss legal questions in public. Others as a matter of good public relations will answer by providing only generic legal information, e.g., —The clerk‘s office in the courthouse is where you can find out more about filing requirements for….“ But they are careful not to say anything that could be construed as legal advice. Some lawyers take the risky approach of answering questions more specifically believing this is necessary to get new clients. In developing a risk management strategy in dealing with casual contacts consider:
Cold Telephone Calls11
A necessary, but often frustrating, aspect of providing legal service to the public is fielding numerous telephone calls throughout the day that can mean important new business or just someone looking for free legal advice There is an art to risk managing telephone calls to be sure that new business is encouraged, time is not wasted, and unintended attorney-client relationships with malpractice exposure are avoided. Michael M. Bowden in —How To Handle Phone Inquiries From Potential Clients“12 recommends office procedures that screen all incoming calls, get the caller‘s contact information, get the names of other parties involved in the matter, and establish when the inquiry becomes a consultation. Bowden makes these risk management points:
Preliminary Office Consultations
Obviously, the best environment to conduct prospective client consultations is in your law office where routine client intake and conflict check procedures can be followed. Individuals making casual contacts and telephone inquiries with matters that have potential for developing into an attorney-client relationship should be encouraged to make an office appointment rather than discussing the matter in detail in public or over the telephone.
The risk management considerations for preliminary office consultations are in principle the same as for casual contacts and telephone inquiries. Be sure that client intake procedures obtain only the minimum amount of information necessary to conduct a conflict of interest check before discussing any details with a prospective client. Then only learn the minimum information you need to decide whether to accept the matter.
Some jurisdictions permit waiver agreements with prospective clients providing that any confidential information disclosed in a preliminary consultation will not preclude representation of another party in the same or related matter. These agreements typically are not used for routine client intake, but on a case-by-case basis. They should be used when there is concern that the prospective client is actually —taint shopping,“ i.e., attempting to disqualify the firm from representing another party in the matter.13 I am unable to locate any Kentucky authority that addresses use of preliminary consultation waiver agreements. Accordingly, proceed with caution, but with informed client consent to a waiver agreement, there is no apparent reason why this procedure should not be acceptable in Kentucky.14
Always use letters of nonengagement for declined representations that are best sent by certified mail, return receipt requested. I guarantee that a former prospective client with a complaint or claim never receives nonengagement letters sent by regular mail. A typical letter:
Negligent Referral of Prospective Clients15
Many lawyers do not appreciate that declining a matter and referring a prospective client to another lawyer may result in malpractice liability. This is true even though the referring lawyer receives no fee and has no further participation in the representation. A preliminary consultation with a prospective client is sufficient to create a duty to exercise ordinary care and skill when referring that person to another lawyer. The applicable standard of care is based on the nature of the declined representation.
Often it will be enough to confirm that the recommended lawyer is licensed to practice law in Kentucky. Licensure gives rise to a presumption that the lawyer is competent and possesses the requisite character and fitness. If the declination is because the matter requires special skill or knowledge, the referring lawyer must be careful to ascertain that the suggested lawyer has the necessary competence. If the matter requires immediate action, the referring lawyer should advise that the new lawyer be consulted expeditiously. Recommending the right lawyer without cautioning that prompt action is necessary can also be a negligent referral.
Larry Bodine in —The Right Way To Refer A Case16 advises that to limit your malpractice exposure:
To avoid the problem altogether some lawyers will not make a referral recommendation or only provide a list of several lawyers. Others only refer declined prospective clients to lawyer referral services and legal aid offices. The point is to recognize the exposure and make well-considered referral recommendations.
I see more and more ethics opinions and case reports concerning prospective clients. For example, the West Virginia Supreme Court just overruled a disqualification order in a criminal case using much the same analysis as Lovell. The Oregon Supreme Court recently disciplined a lawyer for losing or inadvertently destroying papers obtained from a prospective client with whom the lawyer had never even spoken. The Court ruled that a lawyer owed the same duty to safeguard property to a prospective client that is owed to a client, comparing this extension of duty to that of extending confidentiality to prospective clients. Given the gap in guidance available to Kentucky lawyers to avoid prospective client problems such as these, perhaps it is time for our Bar to consider Model Rule 1.18 for adoption.