ASSOCIATION OF THE BAR OF THE CITY
OF NEW YORK COMMITTEE ON PROFESSIONAL AND JUDICIAL ETHICS
Year 1994 Ethics Opinions
THE ASSOCIATION OF THE BAR OF THE CITY OF NEW YORK
FORMAL OPINION 1994-4
PROFESSIONAL AND JUDICIAL ETHICS
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May 5, 1994
ACTION: FORMAL OPINION
TOPIC: Foreign law firm; holding out as partnership; firm
name; letterhead and professional cards
DIGEST: Use by New York affiliated
firm of firm name almost identical to that of a German firm,
without actual partnership or sharing of responsibility, is
misleading; similarly, cannot list name of German firm as if it
were a partner in the New York firm, or describe German office as
the "head office."
CODE: DRs 2-102(A), 2-102(B),
2-102(C), 2-102(D); EC 2-11.
May a German law firm open an
office for the practice of law in New York by the formation of a
separate law partnership that uses a name almost identical to
that of the German firm?
"X. & Partner
Rechtsanwaelt," a German law firm, has decided to open an
office in New York City for the purpose of providing information
on German law and obtaining business for its various offices in
Germany. In conjunction with the opening of that office, it is
planned that another firm calling itself "X. & Partners,
Attorneys at Law" (hereinafter "X. &
Partners"), will be organized for the practice of law in the
State of New York. Several ethical problems are presented by the
firm names, letterhead and professional cards the inquirer
proposes to use.
The Name of the Firm
EC 2-11 of the Code of
Professional Responsibility provides, in pertinent part, that:
[A] lawyer in private practice
should practice only under a designation containing the lawyer's
own name, the name of an employing lawyer, the name of one or
more of the lawyers practicing in a partnership, or, if permitted
by law, in the name of a professional corporation for the
practice of law, which should be clearly designated as such.
There are two exceptions to the
foregoing rule. The first is contained in DR 2-102(B), which
permits a firm to use, or continue to use, the name or names of
one or more deceased or retired members of the firm or a
predecessor firm in a continuing line of succession. See
generally N.Y. State 622 (1991). The second is set forth in New
York Criminal & Civil Courts Bar Assn. v. Jacoby, 61 N.Y.2d
A multistate law firm (consisting
of partners admitted to practice in different States) may
practice law in New York State if at least one of its active
partners is admitted to practice in this State, and it may
conduct such practice under a firm name comprised of a
combination of surnames, although none of them is the surname of
a partner licensed to practice in New York.
The name X. & Partners does
not fit into either of these exceptions. Moreover, even if the
rule applicable to multistate law firms were to apply to
multinational law firms, the name X. & Partners may still be
misleading for the reasons set forth below.
The inquirer indicated that the
name X. & Partners is not intended to designate one law firm
that practices in several jurisdictions, but was chosen rather to
specifically distinguish the inquirer's firm from the firm of X.
& Partner. The reason for this is that the firm of X. &
Partner does not want to assume the obligations that would
normally occur in a partnership with the other members of X.
& Partners. As a rule, a multistate law firm practicing in
New York may use the same name it uses in other states, provided
that the circumstances are not such as to cause local use of the
name to be misleading. But if there is no true partnership
relationship with the local lawyer, as indicated by real sharing
of profits, liabilities and professional responsibility, use of
an out-of-state lawyer's name in the firm would be misleading.
N.Y. State 175 (1970). In our opinion, therefore, the use of a
name almost identical to that of the German firm, without the
sharing of responsibility, which a layman might reasonably expect
from the similarity of names, would be misleading. See DR
Letterhead and Professional Cards
Under DR 2-102(A):
A lawyer or law firm may use
professional cards, professional announcement cards, office
signs, letterheads or similar professional notices or devices,
provided the same do not violate any statute or court rule, and
are in accordance with DR 2-101, including the following:
1. A professional card of a lawyer
identifying the lawyer by name and as a lawyer, and giving
addresses, telephone numbers, the name of the law firm and any
information permitted under DR 2-105. A professional card of a
law firm may also give the names of members and associates.
* * *
4. A letterhead identifying the
lawyer by name and as a lawyer, and giving addresses, telephone
numbers, the name of the law firm, associates and any information
permitted under DR 2-105. A letterhead of a law firm may also
give the names and dates relating to deceased and retired
members. . . .
Our review of the letterhead and
business card submitted by the inquirer reveals the following
A. The name "X. &
Partner" is listed on the proposed letterhead. However, the
persons listed on the letterhead should be natural persons or
professional corporations only. The name X. & Partner does
not identify individuals rendering legal services, but merely
refers to a firm whose members are undisclosed. In addition, by
including X. & Partner in the listing of attorneys, there is,
at the very least, a possibility that potential clients of the
New York firm may expect to be serviced by the attorneys employed
worldwide by X. & Partner, as well as by the attorneys
actually working in the New York office.
B. One of the attorneys who
actually will be working out of the New York office is admitted
to practice in Pennsylvania and Germany, but not in New York. The
inquirer intends to qualify his listing with the statement
"not admitted in New York." Since DR 2-102(D) requires
that the letterhead make clear any jurisdictional limitations on
those members and associates of the firm not licensed to practice
in New York, we believe that the attorney should instead be
described as licensed to practice only in Pennsylvania and
Germany, rather than in the manner suggested by the inquirer.
C. The proposed letterhead carries
an address described as the "head office" and a listing
of other offices. This is misleading. X. & Partners has only
one office; the implication that the New York firm is an office
of the German firm is misleading given their real relationship.
See N.Y. State 538 (1981) (New York firm cannot list on its
letterhead a foreign associate or correspondent firm because such
listings might mislead a person to seek the services of the New
York firm on the basis of an incompletely described
relationship); DR 2-102(C).
The form of business card may be
also be misleading, since it implies that X. & Partners has
offices outside of New York, when in fact, the one foreign
address given is that of X. & Partner, and the cities listed
seem to be those in which X. & Partner has offices.
We note that the problems
identified above are caused by the inquirer's desire to separate
the New York partnership from the German international
partnership. If the German firm meets the requirements of the law
and rules relating to the practice of foreign law in New York
and/or the practice of New York law, as the case may be, many of
the objections raised above could be avoided by having one firm,
rather than two, carry on the activities contemplated.
For the foregoing reasons, we
answer the question presented in the negative as a matter of
ethics. We express no opinion on the legality of the proposed
arrangement under applicable law.
TOPIC: Name; use of title
"Esquire" No. 1994-5 COMMITTEE ON
PROFESSIONAL AND JUDICIAL ETHICS May 5, 1994 ACTION: FORMAL OPINION
DIGEST: Attorney may ethically use
the title "Esq." after his or her name, even when
acting in a non-legal capacity.
CODE: DRs 1-102(A)(4); 2-101(A);
2-101(C)(1); EC 2-13.
May an attorney properly append
the suffix "Esq." to his or her name when not acting in
a legal capacity?
The inquirer is counsel to a
not-for-profit organization that employs staff members and
volunteers who happen to be attorneys, but who perform non-legal
functions such as public relations, administration, or
communicating with members of the organization about the
organization's positions on particular issues. The organization
identifies these attorneys, who do not practice law on its
behalf, in its documents with the title "Esq."
following their names. The inquirer asks whether this
identification is proper and whether the attorneys may
appropriately use the title when communicating on behalf of the
organization. We answer these questions affirmatively.
The use of the title
"Esquire" has its origins in the Middle Ages. An
esquire was a candidate for knighthood, acting as attendant and
shield bearer for a knight. n1 Webster's New World Dictionary
(1980). Over time, the title became one denoting respect, rather
than a specific occupation.
n1 The word is derived from the
Latin "scutum" -- a shield, and Middle English:
"esquier" -- a shield bearer.
According to the Encyclopedia
Britannica, after the decline of the feudal system, the title of
"Esquire" was perpetuated by certain lawyers, among
them William Blackstone and Edward Coke. These lawyers drew up
lists of those they thought entitled to carry the title. The
lists included various classes of men who were sons of peers,
minor nobles, honorary knights and those who were designated with
the title "esquire" upon appointment to office. These
appointments were to both legal and non-legal offices and
included among others, "Royal Academicians." However,
it appears that the title has always been an arbitrary conferment
and never reserved exclusively to lawyers. See, e.g., Black's Law
Dictionary (6th ed. 1990) (defining "esquire" as a
title of dignity next above gentleman, and below knight; also a
title of office given to sheriffs, sergeants, and barristers at
law, justices of the peace and others; in the United States,
title commonly appended after name of attorney); Random House
Dictionary of the English Language (2nd ed. 1987) (defining
esquire as: "an unofficial title of respect having no
precise significance, sometimes placed, esp. in abbreviated form,
after a man's surname in formal written address; in the U.S.,
usually applied to lawyers, women as well as men; in Britain,
applied to a commoner considered to have gained the social
position of gentleman").
It is not clear how the title
"Esquire" came to be used so commonly (and seemingly so
exclusively) by lawyers in the United States. There is no
authority that reserves the title "Esquire" for the
exclusive use of lawyers. n2 Because neither the law nor any
established ethical rule governs the use of the title, it would
be presumptuous for any non-legislative body to purport to
regulate its use. Nonetheless, based on common usage it is fair
to state that if the title appears after a person's name, that
person may be presumed to be a lawyer.
n2 For example, New York's
Judiciary Law contains no reference to the use of the term
esquire in its provisions governing "Attorneys and
Counsellors." Indeed, it has been noted that:
an 'esquire' has no relation to
law. It is often added to the names of poets or artists; and the
term may be applied to a landed proprietor or a country squire;
that being one of courtesy. . . . Nowhere do we find that the
term 'esquire' denotes an attorney at law.
Antonelli v. Silvestri, 137 N.E.2d
146, 147-48 (Ohio App. 1955).
The only ethical question posed by
the use of the title "esquire" by lawyers acting in a
non-legal capacity is whether such use if misleading. See DR
1-102(A)(4) (providing that a lawyer shall not engage in conduct
involving dishonesty, fraud, deceit, or misrepresentation); DR
2-101(A). We do not believe it is. DR 2-101(C)(1) permits a
lawyer to use, in connection with his or her name, a designation
indicating training in the law, such as "J.D." See ABA
Formal Op. 321 (1969); N.Y. State 105(a) (1969); Maryland 85-21
(1984). Accord D.C. Op. 183 (1987); Iowa Op. 85-14 (1986). But
see Philadelphia Op. 86-98 (1986). The title "esquire"
does not legally designate an individual as a lawyer because it
is not conferred in this country as an academic degree or
license. It has, however, been adopted by lawyers by convention
as a form of designation. Thus, one using the title in the United
States is identifying himself or herself as a lawyer. But, just
as a lawyer may identify his or her professional affiliation in a
social context, see N.Y. State 105(a) (1969), and that a
non-admitted law school graduate may use the title
"J.D." on business cards and letterhead, see Maryland
85-21 (1984), the use of the title "esquire" by a
lawyer in a non-legal context does not constitute an ethical
We would be more concerned if the
non-practicing attorneys were signing correspondence or otherwise
identifying themselves as, for example, "J. Doe,
Attorney-at-Law," as opposed to "J. Doe, Esq." A
recipient of such a communication could well conclude,
incorrectly, that the lawyer was acting in a legal capacity. EC
2-13 states in this regard that "[i]n order to avoid the
possibility of misleading persons with whom a lawyer deals, a
lawyer should be scrupulous in the representation of professional
status." If a member of the organization used the title
"attorney" in correspondence while acting in a
non-legal capacity, this might convey the impression that a legal
position is being taken on behalf of the organization or that a
legal opinion is being rendered. Similarly, if one were so
identified in meeting minutes it might convey the impression that
a member is counsel to the committee or the organization. These
concerns, however, do not affect our conclusion that the simple
use of the title "Esq." after an attorney's name is
For the foregoing reasons, the
question presented is answered in the affirmative.
TOPIC: In-house attorney; fees to third parties;
multiple roles. No. 1994-6 COMMITTEE ON PROFESSIONAL AND JUDICIAL
ETHICS May 5, 1994 ACTION: FORMAL OPINION
DIGEST: Attorney may be employed
in-house by bank that charges borrowers a fixed fee for the
attorney's services so long as the fee represents the actual cost
of these services; attorney may properly serve as shareholder,
officer, and/or director of employer or client.
CODE: DRs 1-102(A)(4); 3-101(A);
3-102(A); 5-101(A); 5-109; 7-102(A)(7); ECs 4-2; 4-4; 5-1; 5-18.
1. May an attorney be employed as
in-house counsel by a bank that intends to charge borrowers a
fixed fee for the attorney's services?
2. May an attorney become a
shareholder, officer, and/or director of an employer or of a
An attorney renders legal services
as an independent contractor to a mortgage banking institution,
but is considering an offer to become in-house counsel to the
bank. The attorney is also considering the possibility of
becoming a shareholder, officer and/or director of the
As in-house counsel, the attorney
would supervise a loan closing department which would be staffed
by the attorney, one or more paralegals, and a secretary. Under
the direction of the attorney, the department would prepare and
review all documents required for each loan transaction, and
would provide legal representation to the bank at all closings.
The bank would charge each borrower a flat fee for these
services, which would be paid by the borrower directly to the
bank. The fee will be disclosed to each borrower prior to closing
and would be used to defray the bank's cost of maintaining the
The attorney would be paid a fixed
annual salary based on the full range of legal services to be
rendered to the bank, regardless of the number of closings
performed or the aggregate value of the closing fees generated
each year. Thus, the salary received by the attorney would have
no direct relation to the fees received by the bank.
A lending institution may properly
require a borrower to pay the reasonable legal fees incurred by
the bank in connection with a loan transaction. N.Y. City 695
(1946); N.Y. State 438 (1976); ABA Informal Op. 837 (1965). Such
fees may include a charge for the lawyer's office overhead. N.Y.
County 670 (1989).
Consistent with this principle, it
is not improper for a bank to charge borrowers for legal services
rendered by in-house counsel, provided that the amount charged
does not exceed the actual cost to the bank of employing in-house
counsel to provide those services, including the allocable
portion of the attorney's annual salary and the bank's reasonable
overhead expenses. E.g., N.Y. State 618 (1991); N.Y. County 670
(1989); ABA Informal Op. 1451 (1980). A separate fee may be
charged by the mortgage bank to its customers for the legal
services rendered by the attorney on behalf of the bank in
connection with the closing of a loan transaction provided it is
not excessive in light of market conditions.
It would be improper, however, for
a bank to profit from any fee charged for the services of
in-house counsel, i.e., to charge, collect and retain a fee that
exceeds the actual cost of those services. Moreover, an in-house
lawyer cannot ethically participate in any such arrangement
because: (i) it constitutes sharing a legal fee with a lay person
in violation of DR 3-102(A); (ii) it constitutes aiding a lay
person in the unauthorized practice of law in violation of DR
3-101(A); and (iii) it constitutes a misrepresentation in
violation of DR 1-102(A)(4) to label as "attorneys'
fees" an amount which has no necessary relationship to the
compensation of the attorneys involved. See N.Y. State 618
(1991). Accord N.Y. County 670 (1989); Iowa Op. 92-1 (1992); Fla.
Op. 87-8 (1987); Mass. Op. 84-1 (1984).
Thus, participation in the
proposed arrangement would not be improper provided that the fee
collected by the bank does not exceed the portion of the
attorney's salary allocable to each loan transaction, plus the
allocable overhead of the loan closing department, including the
cost of paralegals, secretaries, utilities and similar expenses.
Moreover, it is important that the bank make appropriate
disclosure to each borrower concerning the nature and calculation
of the fee. See DR 1-102(A)(4) (prohibiting lawyer from engaging
in conduct "involving dishonesty, fraud, deceit or
misrepresentation"); DR 7-102(A)(7) (prohibiting lawyer from
assisting the client in conduct that the lawyer knows to be
Whether the bank's receipt and
retention of a fee for legal services constitutes the
unauthorized practice of law in violation of N.Y. Judiciary Law
§ 495 is a question of law. See Thompson v. Chemical Bank, 84
Misc. 2d 721 (Civ. Ct. N.Y. Co. 1975). Accordingly, this
Committee expresses no view concerning the applicability of this
statute. We do note, however, that if the proposed arrangement
were deemed to constitute the unauthorized practice of law, the
attorney would be prohibited by DR 3-101(A) from rendering any
assistance to the bank in connection with such conduct.
There is no per se rule of
professional ethics that prohibits a lawyer for a corporation
from owning stock in, or serving as an officer or a director of,
the client company. Such multiple roles are permissible
regardless of whether the lawyer is employed as an in-house
attorney or retained as outside counsel. N.Y. State 589 (1987);
Oregon Op. 91-91 (1991); Phila. Op. 87-14 (1987).
Nevertheless, counsel to a
corporation "owes his [or her] allegiance to the
entity" and must exercise independent professional judgment
solely for its benefit. N.Y. State 589 (1987); EC 5-1; EC 5-18.
Moreover, the attorney must discharge this ethical responsibility
to the corporation without regard to the interests of any other
person, including the lawyer's own interests as shareholder,
director or officer of the company. Id. See also DR 5-109. If
those interests diverge from the lawyer's duties as counsel, the
lawyer may be precluded from providing legal representation to
the corporation with respect to the matter that gives rise to the
actual or potential conflict of interest.
A related concern is that, absent
client consent following full disclosure, a lawyer is prohibited
from accepting or continuing employment if the lawyer's exercise
of professional judgment on behalf of the client will, or
reasonably may, be affected by the lawyer's own financial or
business interests. DR 5-101(A). This general
"conflict-of-interest" rule could operate, for example,
to prohibit a lawyer/director or lawyer/officer from rendering
legal advice to the corporation when both the company and its
officers or directors are named as defendants in a lawsuit. N.Y.
State 589 (1987). But whatever the particular circumstances
presented, a lawyer must carefully consider the potential for
conflict and refrain from acting as counsel (absent client
consent) whenever there exists a risk that his or her
professional judgment may be compromised.
Even in the absence of an actual
or potential conflict of interest, a lawyer must disclose to a
client corporation the potentially adverse consequences of his or
her multiple roles within the organization. For example, a lawyer
who also serves as an officer or director of a corporate client
must disclose the risk that certain communications with the
corporation may not be protected by the attorney-client
privilege. N.Y. State 589 (1987). The client should be aware that
the lawyer's conversations with corporate personnel subsequently
may be held to have been in the role of director or officer
rather than counsel, thereby invalidating any assertion of the
attorney-client privilege that the corporation may attempt to
make. See SEC v. Gulf & Western Industries, 518 F. Supp. 675,
683 (D.D.C. 1981). See also EC 4-2 (obligation to protect client
confidences and secrets); EC 4-4 (lawyer should act in a manner
which preserves privilege).
Subject to the caveats discussed
above: (1) an attorney may be employed in-house by a bank that
proposes to charge borrowers a fixed fee to cover the cost of the
services rendered by the attorney; and (2) an attorney may become
an officer, director or shareholder of the bank regardless of
whether the attorney accepts employment as in-house counsel or
continues to render legal services as an independent contractor.
referral services. NO. 1994-3 COMMITTEE ON PROFESSIONAL AND JUDICIAL
ETHICS April 13, 1994 ACTION: FORMAL OPINION
DIGEST: Attorney may not
participate in a for-profit private legal referral service unless
authorized under DR 2-103(D).
CODE: DRs 2-103(B), 2-103(C);
2-103(D); EC 2-15.
May an attorney participate in a
legal referral service that is operated for profit and not
sponsored or approved by any bar organizations?
A law firm has been approached by
a representative of a referral service, who has asked if the law
firm would be interested in participating. The service has been
organized to provide referrals for doctors, lawyers and
accountants. It will advertise in print and on radio and will
refer clients who call an "800" number to member
attorneys. The referral service intends to screen each of its
listed attorneys to verify that they are members in good standing
of the bar. Participants in the referral service will be charged
either (1) a flat monthly listing fee plus additional fees for
any clients referred to that attorney, or (2) a fee for each
referral made to the attorney during the month (up to a fixed
maximum amount). The referral service is not operated, sponsored
or approved by any bar association.
With certain limited exceptions,
DR 2-103 prohibits an attorney from paying a fee or giving
"anything of value to a person or organization to recommend
or obtain employment by a client, or as a reward for having made
a recommendation resulting in employment by a client." DR
2-103(B). DR 2-103(D) lists the type of referral services that
are excepted from this prohibition: legal aid offices or public
defender offices, military legal assistance offices, lawyer
referral services "operated, sponsored or approved by a bar
association," or a "bona fide organization which
recommends, furnishes or pays for legal services to its members
or beneficiaries" provided specific conditions are
The Code of Professional
Responsibility encourages the use of referral services because
they can assist clients in selecting qualified counsel. EC 2-15.
However, DR 2-103(D) limits the type of referral services to
which attorneys can make a payment in exchange for a reference.
Thus, if a referral service is a for-profit, private corporation
the purpose of which is to advertise and solicit clients in
exchange for referral fees from lawyers and other professionals,
and if that organization does not fall within any of the
categories listed in DR 2-103(D), it is not a referral
organization from which an attorney may properly accept a
referral in exchange for the payment of a fee. See generally Ad
Hoc Committee on Private Legal Referral Services,
"Regulation of Private Legal Services - A
Recommendation," 44 Record Assn. Bar City N.Y. 3, 7-9
Another concern is DR 2-103(C),
A lawyer shall not request a
person or organization to recommend or promote the use of the
lawyer's services . . . other than by advertising or publicity
not proscribed by DR 2-101. . . .
(The approved bar association
referral services and other organizations enumerated in DR
2-103(D) are exempt from this rule.) Unless the attorney knows
the nature, extent and content of the advertisements a for-profit
referral service will place, the attorney cannot ensure that the
service will comply with the advertising requirements of DR 2-101
as required. See N.Y. State 597 (1989) (an attorney may not enter
into an advertising contract in which the advertiser, without
including the name, office address and telephone number of the
lawyer, suggests in generic ads that viewers call an
"800" number, and for a monthly fee, refers all calls
from a designated geographical area to that lawyer, as the
service arrangement both violates the requirement that all
advertising made by an agent of the lawyer conform to court rules
on advertising and constitutes a prohibited referral). *
* Accord Iowa 91-18 (1991) (lawyer
may not pay membership dues to an organization whose purpose is
to secure mutual referrals among members in exchange for the
payment of dues); Kentucky E-344 (1991) (lawyer may not
participate in a for-profit lawyer referral service); South
Carolina 86-13(B) (1986) (lawyer may not participate in a lawyer
referral service which is operated by private corporation for
profit). Compare Alabama 86-78 (1986) (lawyer may participate in
lawyer referral service operated by not-for-profit agency created
by state legislature) and Nebraska 87-2 (1987) (lawyer may accept
cases from not-for-profit referral services if lawyer does not
give anything of value for services).
The question is answered in the
TOPIC: Part-time administrative law judge; conflict of interest. NO. 1994-2 COMMITTEE ON
PROFESSIONAL AND JUDICIAL ETHICS April 13, 1994 ACTION: FORMAL OPINION
DIGEST: Part-time administrative
law judge for Parking Violations Bureau may not receive a
referral fee for a potential lawsuit against the Office of the
Sheriff, which aids in the enforcement of the judge's rulings.
CODE: DRs 2-107(A), 2-107(A)(2);
CJC Canon 2.
May a part-time administrative law
judge make a referral and receive a referral fee for a potential
lawsuit against an arm of the government that aids in the
enforcement of the judge's rulings?
The inquirer is a per diem
administrative law judge, employed by the Parking Violations
Bureau of the City of New York ("PVB"). This employment
constitutes one-third of the inquirer's professional time. In
this capacity, the inquirer adjudicates parking tickets issued by
the PVB. In the event the inquirer upholds a ticket, the
respondent has the right to appeal only after the fine ordered in
the judgment is paid. If the fine is not paid, the Office of the
Sheriff of the City of New York attempts to collect on the
judgment. Under certain circumstances, the Sheriff is authorized
to impound a car registered to a party with outstanding parking
The inquirer has been consulted by
a potential client who claims to have been assaulted and injured
by persons acting under the direction of the Office of the
Sheriff while they were seizing a car registered to him. The car,
which was towed because there were unpaid parking judgments
against the client, has never been recovered. The potential
client has asked the inquirer to refer the matter to litigation
counsel in order to bring a civil action against the Office of
the Sheriff and the City of New York. The inquirer has conducted
a preliminary investigation of the matter and now wishes to refer
this matter to another attorney from whom the inquirer would
expect to receive a referral fee.
The inquirer asks whether it would
be proper to refer this matter to litigation counsel and receive
a fee for the referral and/or for the work already performed.
As a part-time administrative law
judge and a practicing attorney, the inquirer's professional
conduct is governed by both the Code of Judicial Conduct
("CJC") and the Code of Professional Responsibility
(the "Code"). n1 See Compliance with the Code of
Judicial Conduct, contained in the Code of Judicial Conduct; N.Y.
City 1990-4 (citing N.Y. City 814 (1956) and N.Y. State 365
n1 Because an administrative law
judge has limited jurisdiction under certain circumstances not
applicable herein, an administrative law judge may be exempt from
certain of the prohibitions of the CJC. N.Y. State 594 (1989).
Application of the CJC and the
Code to the facts presented produces the same result whether the
inquirer decides to represent the potential client directly in a
litigation against the City or to refer the matter to a third
party with the expectation of receiving a legal fee either for
the work performed to date or work to performed in conjunction
with litigation counsel. DR 2-107(A) states:
A lawyer shall not divide a fee
for legal services with another lawyer who is not a partner in or
associate of the lawyer's law firm or law office, unless:
1. The client consents to
employment of the other lawyer after a full disclosure that a
division of fees will be made.
2. The division is in proportion
to the services performed by each lawyer or, by a writing given
to the client, each lawyer assumes joint responsibility for the
3. The total fee of the lawyers
does not exceed reasonable compensation for all legal services
they rendered the client.
It is clear that the inquirer
cannot accept a fee for a mere referral, but instead must satisfy
the conditions set forth in DR 2-107(A)(2). If the inquirer
expects to receive a fee based solely upon the value of the work
performed prior to the date of the referral, that fee must bear a
reasonable relationship to the legal services rendered in the
matter as a whole. Id.; N.Y. City 81-65 (1981). If the inquirer
expects to receive a fee based upon the amount of the recovery in
litigation, the fee must be based upon the inquirer's continuing
contribution to the action by assuming joint responsibility for
the litigation or actually rendering legal services. Thus, in
order for the inquirer to accept a fee from the litigation
counsel, the inquirer must continue some measure of participation
in the suit.
Although the inquirer might not be
confronted with a potential conflict of interest by commencing an
action against a department of the City of New York with which
the inquirer is not affiliated, because the inquirer is a
judicial officer involved in the same parking enforcement system
that led to the seizure, the facts suggest issues of potential
conflict that are not easily resolved. In N.Y. City 894, this
Committee concluded that, under certain circumstances, a private
attorney may represent the City on a pro bono basis while
simultaneously representing a private party in litigation with
interests adverse to those of the City. n2 Accord N.Y. State 447
(1976) (when a government body is organized into a number of
separate departments or agencies, such department or agency and
not the parent governmental unit should be treated as the client
for purposes of the rule which forbids the current representation
of one client against another); see also N.Y. State 655 (1993).
n2 The Committee listed certain
standards to be met to avoid the potential conflict: (i) it must
be obvious that the lawyer can adequately represent interests of
the City and private clients; (ii) informed consent of both
parties must be obtained; (iii) matters cannot be substantially
related; (iv) files and communication regarding matters must be
kept entirely separate to the extent possible; (v) no
representation by counsel to the client that legal representation
of the City might assist private party in its litigation against
The fact that the contemplated
action will not name the PVB as a party does not relieve the
inquirer of any potential conflict or appearance of conflict,
which arises out of the perceived linkage between the PVB and the
Office of the Sheriff with respect to the enforcement of parking
judgments. Had the Office of the Sheriff committed the same acts
in the enforcement of a judgment not connected to parking
judgments, the conflict that we find here might not be present.
Another bar to the proposed
arrangement is created by 22 N.Y.C.R.R. § 100.5(b), which
A part time judge may accept
private employment or public employment in Federal, State or
municipal department or agency, provided that such employment is
not incompatible with judicial office or interfere with proper
performance of the judge's duties.
Thus, a judge may not receive a
fee, directly or indirectly, in a matter which originated in his
or her court. N.Y. Advisory Committee on Judicial Ethics
("ACJE") 88-108. Nor may a part-time judge appear
before a planning or appeals board of the municipality in which
he or she sits. ACJE 90-59, 90-65. Accord, N.Y. State 632 (1991).
In these opinions, a part-time judge intended to appear before a
planning board in his capacity as a private attorney. The ACJE
and State Bar concluded that although the judge had no
jurisdiction to review decisions made by the zoning or planning
board, he could not practice before said boards. n3 In reaching
this determination, the ACJE and State Bar relied upon Canon 2 of
the CJC, which states:
A judge should respect and comply
with the law and should conduct himself at all times in a manner
that promotes public confidence in the integrity and impartiality
of the judiciary.
n3 N.Y. State 632 states:
Because the municipal judge is a
permanent member of the municipality's governmental structure . .
., and has jurisdiction over some zoning matters, we concluded
that the part-time judge must refrain from practice before the
zoning boards within the same municipality.
In addition, the State Bar noted
that zoning and planning matters are often fraught with emotion
and that the involvement of the judge in these matters may
reflect poorly on his office.
Applying the reasoning of these
opinions to the situation here, we believe that the inquirer's
involvement in this suit would be improper. Although the seizure
of a car by the Sheriff's Department is an integral part of the
enforcement scheme in which the PVB plays a major role, the acts
that constitute the basis for the proposed litigation arise
outside of the enforcement scheme. To the extent that the
litigation raises issues limited to that tortious conduct and not
issues related to the issuance of the tickets and collection of
the consequent fines, the inquirer's participation in the
litigation may not rise to a conflict of interest. Nonetheless,
the appearance of conflict and partiality may exist. See also
ACJE 91-29 (part-time judge could not act as pro bono counsel to
association of police juvenile officers because 22 NYCRR § 100.2
requires judges to avoid the appearance of impropriety.
"[S]erving as counsel to an organization of police officers
is not permissible, as there would be an appearance of partiality
for any judge to act as counsel.").
Our conclusion here in no way bars
the inquirer from maintaining a broad practice. In determining
the scope of permissible work of a part-time judge, the ACJE and
N.Y. State opinions appear to balance the need to avoid the
appearance of partiality against the need to encourage service by
part-time jurists by keeping to a minimum those areas of practice
foreclosed to the judge. In ACJE 88-96, the Committee held that
an administrative law judge may act as a town judge as the
employment is compatible with judicial office and does not
conflict or interfere with the proper performance of the judge's
duties. A justice of the peace may act as a defense counsel for a
criminal defendant in a town other than the town where he sits,
"provided there is not reasonable likelihood due to
proximity of the place of practice to the situs of his court. . .
." N.Y. State 150 (1970). But see N.Y. State 146 (1970)
(judge who hears misdemeanors part-time cannot represent a
defendant in a criminal matter in a higher court in same county);
N.Y. State 181 (1971) (criminal practice by part time judge
prohibited, but civil practice permitted); see also N.Y. State
146(a) 1970 (judges precluded from practicing criminal law, but
not justices of the peace).
Here, we must balance the hardship
imposed upon the inquirer resulting from the inability to
commence or participate in an action against the City of New York
and its agencies arising from the seizure of a car against the
goal of promoting the integrity and impartiality of the
adjudicative process. Although the likelihood of actual conflict
herein is small, as the inquirer's jurisdiction as an
administrative law judge is well defined, because the action
arises in the context of the parking violations enforcement
system, the representation will generate at the very least the
appearance of a conflict of interest which should be avoided.
We therefore conclude that the CJC
and the Code preclude the inquirer from representing a potential
plaintiff in the contemplated action or from receiving a fee
either for referring the matter to a different lawyer or for the
work done to date. n4 As the matters pertaining to the
contemplated action are sufficiently connected to the enforcement
scheme within which the inquirer serves as an administrative law
judge, participation in such litigation would not promote public
confidence in the integrity and impartiality of the inquirer's
role as an administrative law judge in violation of Canon 2 of
the CJC. We do not believe that our interpretation of the Code
and CJC materially restricts the inquirer's ability to engage in
a broad civil and criminal practice. Our opinion does not
preclude the inquirer from bringing actions against the City or
the Office of the Sheriff under other circumstances. See N.Y.
City 894. Rather, this opinion is based solely on the facts as
n4 The inquirer may, of course,
provide the prospective client with the name of an attorney
capable of representing him or her without violating the duties
discussed in this opinion. Only in extreme circumstances, not
present here, would it be impermissible for an attorney to assist
a client in finding successor counsel.
n5 We express no opinion as to
whether the proposed arrangement would also be prohibited by
applicable law, including the conflict of interest rules
governing city employees. Nor do we express any opinion
concerning the propriety of the inquirer's past conduct, i.e.,
undertaking of an investigation on behalf of the potential
plaintiff with respect to potential claims against the Office of
For the foregoing reasons, the
question presented is answered in the negative.
THE ASSOCIATION OF THE BAR
OF THE CITY OF NEW YORK No.
1994-1 COMMITTEE ON PROFESSIONAL AND JUDICIAL ETHICS March 21, 1994 ACTION: FORMAL
TOPIC: In-house attorney;
discrimination claim against former employer; confidences and
DIGEST: Former in-house attorney
may sue former employer for alleged discrimination and
participate in the preparation of a class action against the
former employer, provided the attorney does not use or reveal any
confidences or secrets of the former employer or serve as class
representative or class counsel.
CODE: DRs 4-101(A), 4-101(B).
May a former in-house attorney who
claims to have been the victim of discrimination participate in
preparations for a potential employment discrimination class
action against his former employer?
Attorney X was recently discharged
from employment as an in-house corporate lawyer after seventeen
years of service. X believes that his discharge was improperly
motivated by his activities to counter what he believed to be
evidence of racial discrimination within the corporation. X is
considering pursuing individual and class-wide employment
discrimination claims arising under the local and federal civil
rights statutes against his former client and employer, but is
concerned that his participation may violate his ethical
obligations as an attorney.
This inquiry raises a number of
legal, as well as ethical, considerations as a result of X's
desire to participate in a suit against his former client. In
this opinion, we will deal only with the ethical issues and will
not render any advice or opinions on the legal questions raised.
The inquiry is governed by the rules contained in the Code of
Professional Responsibility, which apply to in-house corporate
attorneys in relation to their employers, as well as to private
practitioners in relation to their clients. See Upjohn Co. v.
United States, 449 U.S. 383 (1981).
DR 4-101(B) states that a lawyer
shall not knowingly:
1. Reveal a confidence or secret
of a client.
2. Use a confidence or secret of a
client to the disadvantage of the client.
3. Use a confidence or secret of a
client for the advantage of the lawyer or of a third person,
unless the client consents after full disclosure.
DR 4-101(A) defines a
"confidence" as information protected by the
attorney-client privilege under applicable law and a
"secret" as "other information gained in the
professional relationship that the client has requested be held
inviolate or the disclosure of which would be embarrassing or
would be likely to be detrimental to the client."
An attorney must not only avoid
disclosing the client's secrets but must avoid situations where
the potential for disclosure exists or where it appears such
secrets might be disclosed. Although X represents that he worked
exclusively on corporate and international matters for the last
ten years and does not have any confidential information relating
to employment discrimination matters involving the former
employer, this may be an overly simplistic view of his position
and the access he had to confidential or secret information. Such
information may have come to X as a result of his job as an
attorney, despite the fact that employment issues were not
directly involved in matters he worked on for the company.
Additionally, X should be cautious in this area because the
ethical rule against non-disclosure is broader than the
attorney-client privilege and extends to the broadly defined
"secrets" as well as to "confidences."
Nonetheless, it is our view that the Code does not, per se,
prevent X from personally initiating litigation to redress his
claims of discrimination, presuming X has an adequate basis for
asserting those claims. However, we caution again that care
should be exercised to avoid disclosing the
"confidences" and "secrets" of the former
The question of whether an
in-house counsel may sue his or her employer has been considered
by several courts with mixed results. Where the in-house counsel
was pursuing a statutory right, his or her right to pursue this
remedy against the former employer has been upheld. See Parker v.
M&T Chemicals, Inc., 236 N.J. Super. 451, 566 A.2d 215 (1989)
(upholding in-house attorney's right to sue former employer under
the New Jersey Whistleblowers Act). Similarly, an in-house
attorney may pursue a contractual claim based on a termination in
violation of the procedure set forth in the company's employment
handbook. See Nordling v. Northern State Power Co., 478 N.W.2d
498 (Minn. 1991). In contrast, where the attorney was pursuing a
common law remedy, several courts have not permitted in-house
attorneys to sue former employers for retaliatory termination,
basing their conclusion on the confidential nature of the
attorney-client relationship and the ethical requirements
relating to clients' confidences and secrets. See Eckhaus v.
Alfa-Laval, Inc., 764 F. Supp. 34 (S.D.N.Y. 1991) (granting
summary judgment dismissing former in-house counsel's complaint
of defamation on the grounds that prosecution of such action
would cause the revelation of the client's confidences and
secrets in violation of DR 4-101(B)); Balla v. Gambro, Inc., 145
Ill.2d 492, 584 N.E.2d 104, 105 (1991); Herbster v. North
American Co., 150 Ill. App. 3d 21 (1987); Willy v. Coastal Corp.,
647 F. Supp. 116 (S.D. Tex. 1986), rev'd on other grounds, 855
F.2d 1160 (5th Cir. 1988).
It is our opinion that if an
attorney may bring an action against a former employer based on a
state whistle-blowers statute or an employer's handbook, he or
she would not be ethically precluded from bringing an action
against the former employer for claimed discrimination, since
this involves a much more fundamental right, grounded in numerous
statutes. In fact, in Nordling, 478 N.W.2d at 502, the court
The attorney-client status of
in-house counsel has apparently not precluded an inside attorney
from suing her company employer for employment discrimination.
See, e.g., Bellissimo v. Westinghouse Elec. Corp., 764 F.2d 175
(3d Cir. 1985), cert. denied, 475 U.S. 1035 (1986) (sex
discrimination claim maintained by in-house counsel against her
employer, although attorney-client defense not asserted); Jones
v. Flagship Int'l, 793 F.2d 714 (5th Cir. 1986) (sex
discrimination claim; again, the attorney-client defense not
asserted), cert. denied, 479 U.S. 1067 (1987).
While X is not barred by ethical
rules from prosecuting his own rights based on statutes
prohibiting discrimination, he is precluded from serving as a
class representative by these same ethical considerations. In Doe
v. A Corp., 709 F.2d 1043 (5th Cir. 1983), the court held that an
in-house attorney responsible for rendering legal advice on
employee benefits who, following termination, asserted ERISA
claims against his former employer, could not serve as either a
representative or the attorney for the class in a proposed class
action although he was free to prosecute his own action.
To allow Doe to act as class
representative would create tension between his obligation as
representative to do all he can to vindicate the rights of the
class members and his personal ethical duty to protect A
Id. at 1048.
Finally, we further note that X
not serve as the attorney for a class or a third party in the
prospective discrimination, because that would raise serious
ethical questions under DR 5-108, as well as the rules set forth
above. See Doe v. A Corp., 709 F.2d 1043.
For the foregoing reasons, and
subject to the caveats and limitations discussed above, we answer
the question presented in the affirmative.