Protection From What?

“Garden Fence,” George Tan

by Jim Doppke

Since my earlier post relating to Rule 5.4 and the several new proposals that call for its modification, a new one has arisen: the October 4, 2019 report of the Arizona Task Force on the Delivery of Legal Services, which suggests (among many other things) that Rule 5.4 be eliminated entirely.

I previously focused on the question of how we have been enforcing the Rule in recent years; the Arizona report, fascinatingly, reaches back to the origins of Rule 5.4 as part of its analysis of whether the Rule should continue to exist. The report notes:

The ABA Model Rule 5.4 and its predecessor rules as far back as the 1928 Canons of Professional Ethics, “originated in legislation aimed at forbidding lawyers from being employed by corporations to provide services to members of the public.” The prohibition was not rooted in protecting the public but in economic protectionism. There was “no evidence that the corporations then supplying lawyers to clients were harming the public, and the transparent motivation behind the legislation was to protect lawyers’ businesses.”

The quotes in that passage are derived from Bruce A. Green, Lawyers’ Professional Independence: Overrated or Undervalued? 46 Akron L. Rev. 599, 618 (2013), which also posits that

[i]f in an earlier day lawyers could be counted on to withstand outside pressure in order to do what they thought was right as a matter of professional duty, the premise of Rule 5.4 is that lawyers need special protection against outside influence.

Now seems like a good time to reclaim that idea of professional independence: one in which lawyers are assumed to be able to make choices that avoid outside pressures. Sometimes, of course, lawyers make bad choices, leading them to be defrauded or, in the worst cases, to partner knowingly with people bent on fraud. But the bad act in those cases is not the idea of the partnering; it’s the fraud. We have rules against lawyers acting fraudulently, and no one is suggesting abolishing them.

But if we proceed from the assumption that lawyers are not defaulting to fraud – as Prof. Green encourages us to do – we can acknowledge that for lawyers to partner with others outside the profession is not necessarily more likely to produce harm than the status quo. Many kinds of business relationships involve pressure – pressure to act in certain ways, pressure to emphasize one concern over another, pressure to favor one party over another, pressure to make money above all else. We should not pretend that those pressures arise only, or most harmfully, in relationships between lawyers and unlicensed people. Relationships among lawyers can result in those pressures, too.

I would propose a different gloss, though, on the concept of “protectionism” as it applies here. The Arizona report and Prof. Green suggest that Rule 5.4 arose out of malign “protectionist” concerns: favoring the organized bar over a different business model. To a practitioner who has worked with Rule 5.4 – and has charged violations of it as part of disciplinary complaints – the suggestion that there is a through line from that origin to the modern-day concepts underlying enforcement of the Rule stings a bit. One doesn’t want to have been working for the clampdown.

Many times, the matters I worked on involved lawyers paying “chasers” to solicit cases for them. Of course, such conduct could be a direct violation of Rule 7.3; but it can also implicate Rule 5.4, as the payments to the chasers constitute an impermissible division of a fee. The lawyers are not paying a legitimate vendor for a permissible service; they were dividing monies derived from their fees with unlicensed people. Here, the lawyers are not in need of protection from outside influence; the lawyers were fully in control of the business relationship, exploiting it to their (sometimes great) benefit.

I always thought that the lawyers’ conduct was anti-competitive, as it gave an advantage to those able or willing to skirt the rules by employing the chasers; and that Rules 5.4 and 7.3 provided a corrective to that anti-competitive behavior. While that corrective could be termed “protectionist” – protecting the larger bar from the maneuvers of the few – that was, in that instance, a business/moral/professional good.

Now, though, other concerns and factors are in play. The “chaser” cases are at a statistical low ebb: ARDC has filed 21 complaints charging violations of Rule 7.3 since 2001, of which only 8 also charged violations of Rule 5.4. The profession may thus have a reduced need for the protectionist aspects of the Rules as enforced in those cases. Further, the pressing access-to-justice concerns highlighted by the Arizona, Utah, and California reports suggest that different priorities are in order, and that the kind of protectionism that now presents more risks is the kind that gave rise to Rule 5.4 in the first place: the stifling kind that can hamper lawyer and client freedom more than help it.

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