Insights

In-House Counsel Ethically Dealing with Represented Parties, Unrepresented Parties, and How to Tell the Difference (in Texas and Model Rule States)

May 1, 2013

By: John M. Tanner

Corporate Counsel Section, State Bar of Texas - Spring-II Edition 2013 Newsletter

One set of issues that regularly arises for in-house counsel involves dealing with represented parties, and a different set of issues arise when dealing with unrepresented parties.  Sometimes an issue arises just trying to figure out which rule applies.  The Texas Disciplinary Rules of Professional Conduct (“Rules”) differ from the ABA Model Rules (“Model Rules”) in material ways in this area.  The differences highlight areas of disciplinary emphasis that Texas lawyers should be aware of at all times, and especially when dealing with attorneys from other states.

Rule 4.02—dealing with a represented party.

Rule 4.02(a) generally provides that, in representing a client, a lawyer shall neither communicate nor “cause or encourage” another to communicate about the subject of the representation with a person or entity the lawyer “knows to be represented by another lawyer” without consent of the other lawyer.

The phrase “cause or encourage” is not found in the Model Rules, and can make a significant difference when the client or Texas lawyer thinks the other lawyer is the problem (as is so often the case).  Under the Texas Rules, a lawyer cannot “encourage” another (which would include the client) to contact the other party without violating Rule 4.02(a).  Note that Official Comment [2] to Texas Rule 4.02 does state the lawyer is not required to “discourage” such communication. 

In other states, however, a lawyer is free to “encourage” another not under the lawyer’s control to contact the opposing client directly.  Thus a lawyer in another state cannot direct a paralegal or secretary to contact a represented party about the subject of the representation, but can encourage a client do so.  This is because the client is the principal and the lawyer is the agent, thus as a matter of law the lawyer cannot direct the client to do anything.

The inability to direct another to do what the lawyer cannot was discussed in Texas State Bar Ethics Committee Opinion 600 (August 2010), which stated that a government attorney must not only limit his or her own communication with represented parties, but also communication of non-attorneys whom the lawyer directly supervised:  “[A] lawyer for a Texas governmental agency is not required to limit communications by the agency’s enforcement officers who are not subject to the lawyer’s direct supervisory authority with regulated persons who are represented by lawyers.  However, a lawyer for a governmental agency is not permitted to communicate directly with a regulated person that is represented in the matter by a lawyer who has not consented to the communications and is not permitted to cause or encourage such communications by other agency employees, and the agency lawyer is obligated to prevent such communications by employees over whom the lawyer has direct supervisory authority”.

Subparagraphs (b)–(d) to Rule 4.02 are not found in the Model Rules at all.  Subparagraph (b) prohibits a lawyer from contacting “a person . . . the lawyer knows to be employed . . . for the purpose of conferring with or advising another lawyer . . . .”  The purpose of this rule is to prevent lawyers from trying to hire another party’s expert, and was relied on in Aguilar v. Morales.[1]  Aguilar held that an attorney’s contact with an expert retained by opposing counsel (whom the attorney actually hired to serve as his own expert witness, effectively depriving the opposition of its expert) not only violated Rule 4.02(b), but also that it constituted sanctionable discovery abuse under Texas Rule of Civil Procedure 215.3.

Rule 4.02(c) defines who the client is when the lawyer is representing an organization, and covers material similar to that found in Official Comments to the Model Rules.  There is again a material difference, however.  Texas Rule 4.02(c) prohibits contact with employees with “managerial responsibility” regarding the matter of representation and employees whose acts or omissions would make the company vicariously liable.  Under the Model Rule 4.2, Official Comment [7] does not use the term “managerial authority,” but rather prohibits communications with one “who supervises, directs or regularly consults with the organization’s lawyer concerning the matter”.  Thus, a relatively low-level employee who regularly consults with the lawyer on the matter would be within the representation under the Model Rule, but not the Texas Rule.  See Texas State Bar Ethics Committee Opinion 528 (April 1999) (determining Texas Rule 4.02 did not apply because the person the opposing attorney contacted was “not involved in management decisions related to the litigation and will not be a witness who could make the organization vicariously liable because of his statements, acts, or omissions”.).

The ability to make the client vicariously liable was crucial to Texas State Bar Ethics Committee Opinion 492 (June 1992).  There, a labor organization employed an attorney to negotiate and resolve workplace issues.  The city attorney told the labor attorney to cease communicating with city employees “whose act or omission make the city liable” without the city attorney’s consent.  Opinion 492 agreed with the city attorney’s position:  “[D]espite the fact that litigation is neither in progress nor contemplated, the prohibitions of Rule 4.02 apply”. 

This is consistent with Texas State Bar Ethics Committee Opinion 474 (June 1991), where city council, through the city attorney’s office, had made a settlement offer for an existing dispute.  The claimant considered the offer too low, and the claimant’s lawyer directly contacted a council member to try to get a better deal.  This violated Rule 4.02, even though the “party” was a municipality.  (Rule 4.02 “prohibit[s] communications by a lawyer for one party concerning the subject of the representation with persons having a managerial responsibility on behalf of the organization that relates to the subject matter of the representation”.).

Subparagraph (d) of Rule 4.02 makes it clear that a lawyer can discuss a matter with a represented party when the party is essentially seeking a second opinion.  This is the same material found in Official Comment [4] to Model Rule 4.2.

What is the “matter”?

Significant in all analyses of Rules 4.02 and 4.03 are the limitations that the lawyer “knows” the other party to be represented in the “subject of the representation,” i.e., the “matter”.  “Knows” is defined in Texas Rules as “denot[ing] actual knowledge of the fact in question.  A person’s knowledge may be inferred from circumstances”.  Having a lawyer for one purpose (or “matter”) does not mean one has a lawyer for all purposes—indeed, when a new matter arises, a party is unrepresented until it makes the deliberate and conscious decision to hire a lawyer.

To illustrate, suppose you are in-house counsel working on a contract with a company that has in-house counsel, but you are dealing with someone in the Procurement Department who is not a lawyer.  Without more, this conduct does not violate Rule 4.02 because you do not “know” the company is represented in this matter.  If the procurement officer says, “You know, we are getting close to being done on this contract, but before we can finalize it I am going to have to run it past legal,” then that company remains unrepresented on that matter so far as you know.  On the other hand, if the procurement officer says, “I was talking about this with a colleague in legal yesterday and she said . . . .” then you know the other party is represented in that matter.  At that point, you need to cut off the conversation immediately until you get the lawyer’s permission to speak directly to the other party.

Similarly, Texas State Bar Ethics Committee Opinion 488 (December 1992) involved a dispute (but not litigation) between a client and a finance company.  The lawyer advised the client to get a statement of his account from the finance company so the attorney could review it.  After discussing Rules 4.02 and 4.03, the Ethics Committee concluded:  “No Disciplinary Rule was violated if the attorney advised the client only to request a statement as to his account balance and a written statement of his account, and bring it to him for review, regardless of whether the finance company had in-house or outside counsel, or no attorney”.

A handful of other points: 

• Rule 4.02 prohibits speaking with a represented party regardless of who initiates the contact—even if the represented party calls you, you cannot have a substantive discussion without permission of the other lawyer.  E.g., In re News America Pub., Inc.[2]
• The Rule precludes direct communication, not just secret communication.  Thus, sending an email or letter directly to the party and copying the lawyer is still an ethical violation.  E.g. Texas State Bar Ethics Committee Opinion 613 (December 2011) (under Rule 4.02, an attorney cannot send an offer to settle to the opposing party’s counsel and the opposing party).
• Per Official Comment 2 to Texas Rule 4.02, “consent” to direct contact may be implied from the circumstances.
• ABA Formal Ethics Opinion 06-443 (August 5, 2006) concludes that it is ethically proper for a lawyer to go around outside counsel to get to in-house counsel.  The ABA’s analysis is that the rule is to protect laymen, and in-house counsel needs no such protection.  There is no material difference between Texas Rule 4.02 and Model Rule 4.2 that would affect this ABA analysis, so ABA 06-443 could be persuasive authority in Texas.

Rule 4.03—dealing with an unrepresented party.

Rule 4.03 provides that when dealing with an unrepresented person, a lawyer “shall not state or imply that the lawyer is disinterested”.  If the other person appears to misunderstand the lawyer’s role, the lawyer shall try to correct the misunderstanding.  Model Rule 4.3 expressly prohibits the lawyer from giving legal advice to an unrepresented person (other than the advice to get a lawyer).  This same admonition is found in the one and only Official Comment to Texas Rule 4.03.

The significance of not giving legal advice is that the unrepresented party may claim an attorney-client relationship was created by the giving of such advice.  Of course, to an attorney this would be ridiculous because an attorney cannot be on both sides of a matter.  Viewed after the fact, however, inferences tend to be in favor the layman.  A determination that an attorney-client relationship was created could be devastating both to the in-house lawyer (for ethical and malpractice reasons) and to the client (per Rule 1.09 and the definition of “Firm,” if the lawyer has a conflict of interest and is disqualified, then the entire in-house department is disqualified).

“Oh, I fired my lawyer” and other lies frustrated laymen tell.

Another aspect of the problem arises when a party claims that it no longer has a lawyer in a matter.  In this regard, the authorities have been somewhat inconsistent.  In In re News America Pub., Inc., supra, the defendant wrote a letter claiming he was “no longer represented by any attorney in this matter” and asked for a meeting with plaintiff’s counsel.  The meeting was held.  In fact, defendant had not terminated his representation at the time of the letter, and defendant’s counsel was not notified of the meeting until months later when the letter was produced in response to a subpoena.  The trial court denied defense counsel’s motion to disqualify plaintiff’s counsel, but the Texas Court of Appeals reversed (relying on ABA Formal Ethics Opinion 95-396) and held that “if retained counsel has entered an appearance in a matter, whether civil or criminal, and remains counsel of record, with corresponding responsibilities, the communicating lawyer may not communicate with the person until the lawyer has withdrawn her appearance”.  This reasoning relies heavily on the fact that the client did not have advice of counsel in deciding to fire his lawyer.

In In re Users System Services, Inc.,[3] however, several plaintiffs were represented by the same counsel and one plaintiff wrote similar letter to defense counsel asking for a meeting to discuss the case.  Even though plaintiff’s counsel had not officially withdrawn from representing this plaintiff in the matter, the Texas Supreme Court determined that it was acceptable for defense counsel to meet directly with the plaintiff in part because the plaintiff may have had good reason not to notify his counsel, who was also representing other plaintiffs.  The court noted that Rule 4.02 is not determinative of whether counsel should be disqualified for trial, and that under other circumstances, some confirmation of termination (such as a copy of the letter of termination or confirmation from prior counsel) would be appropriate.  As noted in the concurrence, this decision was influenced by the fact that the motion to disqualify was not made for several months after the plaintiffs learned of the communication.

Conclusion

While it can be quite frustrating to have to deal with lawyers (of all things), this is the profession we have chosen and sometimes we just have to do it (even after going in-house).  When dealing with a represented party, care should be taken to respect a party’s relationship with its attorney.  When dealing with an unrepresented party, care should be taken not to give legal advice, as a layman may later claim that the giving of such advice established an attorney-client relationship.

This Article is published for general information, not to provide specific legal advice. The application of any matter discussed in this article to anyone's particular situation requires knowledge and analysis of the specific facts involved.

Copyright © 2013 Fairfield and Woods, P.C., ALL RIGHTS RESERVED.

Comments or inquiries may be directed to:
John M. Tanner