THE ASSOCIATION OF THE BAR OF THE CITY OF NEW YORK
FORMAL OPINION 1995-2
COMMITTEE ON PROFESSIONAL AND JUDICIAL ETHICS
February 22, 1995
ACTION: FORMAL OPINION
TOPIC: Conflict of interest; waiver; duty to report malpractice.
DIGEST: Where client has a possible malpractice claim against a legal services organization, the organization must withdraw from the representation, advise the client to get new counsel and assist the client in obtaining new counsel.
CODE: DRs 1-103(A), 2-110(A)(2), 5-102, 6-101(A)(3); ECs 2-7, 2-8, 5-9, 7-7, 7-8, 7-11.
(1) Is an attorney who oversees legal work at a legal services organization and believes that the organization may have committed malpractice required to advise a client to seek legal advice from another attorney regarding a possible malpractice action against the organization?
(2) Under these circumstances, may the legal services organization continue its representation of the client?
(3) Is the legal services organization required to assist the client in finding new representation?
The inquirer, who oversees the legal work at a legal services organization ("LSO"), has become aware of a situation that may have involved malpractice by LSO. Apparently, a favorable ruling was obtained in an action filed by LSO on behalf of a client. The court directed LSO to settle an order. LSO failed to settle the order within 60 days as required by 22 NYCRR § 202.48(b). More than two years later, when LSO attempted to cure the defect, the court advised both parties by letter that the judgment was rejected for lateness without prejudice to the client's right to make a motion to settle judgment beyond the 60-day period. LSO did not advise the client of that decision for five months, and the motion to settle the order late was not made until the following month. That motion was denied. In its opinion, the court stated that no explanation had been offered for the failure to bring that motion until six months after the court's notification. Shortly thereafter, LSO advised the client, who is indigent, that the motion had been denied. The inquirer is awaiting a recommendation from the LSO attorney handling the matter about whether that last decision should be appealed.
DR 6-101(A)(3) provides that a lawyer shall not "[n]eglect a legal matter entrusted to the lawyer." While it appears that neglect has taken place in the situation described, we express no opinion as to whether a violation of this disciplinary rule constitutes legal malpractice. Nor do we express an opinion as to whether the violation must be reported to an appropriate authority. See DR 1-103(A). We do, however, believe that it is incumbent upon LSO to take whatever action is necessary to minimize and, if possible, to reverse any prejudice this inaction has caused the client.
Where several options are available to a client, the attorney has a duty to inform the client of the possible courses of action and to give the client an honest evaluation of each. N.Y. State 425 (1975). Here, the client has different options. For example, the relief available to the client is likely to differ if the client brings a malpractice claim rather than an appeal. Moreover, it is conceivable that if the client were to have LSO prosecute the appeal, that fact might have a detrimental effect in a subsequent malpractice action. "[I]t is for the client and not the lawyer to decide what legal rights to assert or abandon," and that decision "must be an informed one, and not one imposed by the lawyer on [the] client by default or ignorance." Id.; see EC 7-7, EC 7-8.
Because of the clear-cut and irremediable potential malpractice claim, LSO has a conflict of interest. Therefore, we do not believe that LSO can properly advise this client about applicable rights and remedies, including the malpractice option, even if full disclosure of this conflict were made as required by DR 5-101(A) ("Except with the consent of the client after full disclosure, a lawyer shall not accept employment if the exercise of professional judgment on behalf of the client will be or reasonably may be affected by the lawyer's own financial, business, property or personal interests."). In addition, although the inquirer did not actually participate in the representation of the client, the inquirer is barred from giving advice to the client on this matter by virtue of being employed by LSO in an oversight capacity. In an opinion regarding a conflict in private practice, the New York State Bar Association has stated: "Even with full disclosure, client consent would be ineffective to cure the conflict if, for example, the lawyer had been personally involved in the acts of malpractice while associated with his former firm, or if the lawyer had been a partner in the firm at the time the acts were committed." N.Y. State 635 (1992). It is also possible that the inquirer might be a witness in a malpractice action against LSO. This presents another potential reason for withdrawal. DR 5-102; EC 5-9.
Because of this non-waivable conflict of interest, LSO may not represent the client on appeal and should withdraw from the representation. LSO's ethical obligations to the client are therefore governed by the rule regarding withdrawal from representation. Under DR 2-110(A)(2), LSO is required to take steps "to the extent reasonably practical to avoid foreseeable prejudice to the rights of the client." "Foreseeable prejudice" here includes the possibility that the client will never obtain the redress that a court had already determined was appropriate. A client's intelligence and experience should dictate, in part, what action the attorney takes to avoid prejudice to the rights of the client. EC 2-7.
We note that this client apparently has not taken steps to sue LSO, despite being twice informed of LSO's failures to take the steps required to further the case. This fact highlights the need for some attorney not employed by LSO to advise the client about possible options. While we do not believe the word "malpractice" must necessarily be used in directing the client to seek legal advice, the client must be advised of the need to receive such advice. Furthermore, because the client's present position appears to be wholly attributable to LSO's inaction, we believe LSO has a duty to make certain this client obtains other representation. Depending upon the client's intelligence and experience, LSO may provide assistance in locating new counsel. While the Code compels the conclusions reached in this opinion, we are mindful that most clients who require pro bono legal assistance will find it substantially difficult to obtain a lawyer on their own to pursue a malpractice claim or to follow through on the original matter. LSO should therefore make special efforts to assist such clients in locating new counsel. Selection of legal counsel is particularly difficult for persons of limited education or means. EC 2-7. Disinterested and informed advice and recommendations from other lawyers may be helpful. EC 2-8. It may be possible that another legal services organization or law clinic will be willing to undertake the representation or that a private attorney will do so on a contingent fee basis; otherwise, the client will have to obtain pro bono representation.
When a legal services organization may have committed malpractice to the detriment of its client, the organization should withdraw from the representation, advise the client to obtain legal advice from an attorney not employed by the organization, and assist the client in locating new counsel.