Whose Duty is it Anyway?: Discussing the Changes to ABA Model Rule 1.16
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Introduction
The American Bar Association (ABA) recently promulgated a change to Rule 1.16 of their Model Rules of Professional Conduct. The change charges lawyers with a duty to make certain clients retaining them are not doing so to help them commit continuing illegal activities. This is a change from previous versions of the rule that required no such action.
A short background on the ABA Model Rules
So, what are the ABA’s model rules and what force do they have over lawyers? Lawyers, like doctors, are somewhat self-governing when it comes to rules applied to the profession. State disciplinary authorities, supervised by the state high court, promulgate rules that define the duties lawyers have to their clients, the court, and 3rd parties. These are not the only sources of rules for lawyers, as despite the best efforts of the profession, some laws regulate the practice of law as well. The ABA has produced these model rules as an example of what a good set of state rules ought to look like. States have the option of adopting the model rules, entirely or with edits, or making their own rules. Most states have adopted the model rules for the most part, although when the model rules are amended, it can take some time for states to consider if they want to adopt the amendments. These rules can be used to discipline a lawyer who breaks them. This discipline can range from censure of the lawyer to suspension or revocation of their license to practice law.
Rule 1.16 and its Amendment
This amendment process is where we are now. On August 8th, 2023, the ABA adopted Resolution 100, revising the language to rule 1.16. Rule 1.16 is labeled “Declining or Terminating Representation” and discusses both when a lawyer may withdraw from representation (leaving one’s client in the middle of a complex litigation without counsel is frowned upon) and under what circumstances they must withdraw from representation.
It is that second category that matters for this discussion. It has always been the case that the model rules don’t allow a lawyer to assist in their client’s illegal acts. Lawyers can defend you regarding prior bad behavior, but they can’t help you commit additional bad acts. As an aside, lawyers are also criminally liable if they help their client commit a crime, just like anyone else, but that is beyond the scope of this article. The previous version of Rule 1.16 stated that:
“a lawyer may withdraw from representing a client if withdrawal can be accomplished without material adverse effect on the interests of the client, or if:
(1) the client persists in a course of action involving the lawyer’s services that the lawyer reasonably believes is illegal or unjust;
(2) the client has used the lawyer’s services to perpetrate a crime or fraud”
Reasonable belief is a difficult bar to clear legally. A disciplinary authority would have to show either that the lawyer knew that the client was using their services to do something illegal, or that it was so obvious that the lawyer cannot plausibly deny that they didn’t know about the illegal activity. Note also that the language is permissive, lawyers only got the option to withdraw from representation; it was not mandated.
What the rule didn’t say, though, is more interesting in this case than what it did say. Rule 1.16 said nothing about making sure the client wasn’t doing anything illegal. The lawyer had no duty to investigate if they had a suspicion that the client was using their services to do something illegal.
The policy behind the rule was the one that backs up most of the model rules: the policy of letting agents be agents. Lawyers are agents of their clients; they act on behalf of their clients in legal matters. However, unlike normal agents, lawyers cannot always act entirely at the behest of their clients. Lawyers have duties to the courts and the law in general that cannot be overcome by an agent/principal relationship. Despite these external duties, it is desirable to have clients put their trust in lawyers. If clients believed their lawyers were simply going to quit if they thought the client was acting illegally, they wouldn’t confide in them thoroughly enough to get effective legal assistance. So, the rules encouraged withdrawing only in the case of blatant illegal activity.
But the model rule changed last August. The new version of the rule reads as follows:
“A lawyer shall inquire into and assess the facts and circumstances of each representation to determine whether the lawyer may accept or continue the representation. Except as stated in paragraph (c), a lawyer shall not represent a client or, where representation has commenced, shall withdraw from the representation of a client if:… (4) the client or prospective client seeks to use or persists in using the lawyer’s services to commit or further a crime or fraud, despite the lawyer’s discussion under Rules 1.2(d) and 1.4(a)(5) regarding the limitations on the lawyer assisting with the proposed conduct.”
This is a big change. Now a sort of willful ignorance of the possibility the client is acting illegally won’t cut it. Instead, the lawyer must investigate. This isn’t permissive either, this is a mandate.
How much of a duty? The comments on the rule explain that it depends on the circumstances. The factors to consider are:
“(i) the identity of the client, such as whether the client is a natural person or an entity and, if an entity, the beneficial owners of that entity, (ii) the lawyer’s experience and familiarity with the client, (iii) the nature of the requested legal services, (iv) the relevant jurisdictions involved in the representation (for example, whether a jurisdiction is considered at high risk for money laundering or terrorist financing), and (v) the identities of those depositing into or receiving funds from the lawyer’s client trust account, or any other accounts in which client funds are held.”
Even with those factors given, the weight each factor should have and what level of investigation constitutes a reasonable one are not fully clear. Such reasonableness standards are regularly used in law and are intended to give lawyers bound by the rule an idea of what behaviors are expected. However, the exact shape of the duty will need to be shaped by caselaw and disciplinary actions.
The Rationale for the Change
So why was the change made? It involves the interaction between the ABA and other regulatory agencies. The ABA champions the idea that lawyers self-regulate. Occasionally, however, other regulatory bodies disagree. In the wake of the Enron collapse, the SEC proposed to regulate lawyers by requiring them to report violations of securities law. The ABA reacted by adding rule 1.6(b) to the model rules. Despite this attempt to preempt the need for regulation, the SEC promulgated its rule requiring certain disclosures anyway. Rule 1.6 is considered a success story, despite being a substantial new limitation on a lawyer’s confidentiality.
In 2021, Congress fielded a bill that attempted to curb money laundering. Part of their target was to stop the use of lawyers to facilitate money laundering. The ABA resolution indicates that lawyers could be unwittingly helping to launder money by accepting dirty money as a retainer and holding it in their trust accounts. Eventually, the client would ask for the money back, not needing the services of the lawyer any longer and the money would be legitimately transferred back to the client.
The bills in question did not pass, but Congress made it clear that if the ABA failed to act, they would. Additionally, the Treasury Department threatened regulation if the ABA failed to adopt Resolution 100. To ease congressional and agency concerns (and thereby keep a hold on being the primary regulator of the legal profession) the ABA promulgated this rule. Whether it will ease Congress’ concerns is yet to be seen.
The Effect of the New Rule
How much of an effect will this have? It is unclear. For one, the rule is brand new, and states have not had an opportunity to adopt or reject the rule in their own rules of professional conduct. It remains for now a model rule, without force of law. If a state rejects the amendment, then the rule simply doesn’t exist for the practice of law in that state.
It is also hard to say how thoroughly the rule will be enforced. State bar associations are notoriously understaffed and overworked and cannot catch every violation of the rules. Some rules, like the rule against commingling, are extremely well enforced. Other rules are rarely invoked in disciplinary actions, usually because they are difficult or too time-consuming to prove that they have been violated.
Does the change allow for lawyers to betray the trust of clients? Probably not, as the new rule is carefully placed within the rules for terminating representation. This means that, generally, you don’t have to snitch on the client, unlike the provisions in Rule 1.6. However, under rule 1.16, if a lawyer has appeared in litigation for the client, they must give cause for your withdrawal to the judge. This new rule could cause a reappearance of the old nosy withdrawal tactic, where the lawyer must imply to the judge that they need to quit to not be subject to professional discipline. This tactic had mostly been done away with after the changes to rule 1.6, discussed above. It is possible, depending on when suspicions arise, that a lawyer will be litigating by the time they realize they must withdraw and therefore must walk the line between betraying their client’s trust and continuing in a representation against the Rules of Professional Conduct. In such cases, the trust between the lawyer and their potential ex-client will certainly be strained.
Conclusion
It is too early to say what impact the changes to Rule 1.16 will have on the profession of law. Major changes in the allocation of a lawyer’s duty to the client and the state have occurred before and the profession has generally successfully adjusted. Lawyers have monopoly power in the practice of law, so any rule that impacts all lawyers in any given state is unlikely to change client’s desire to hire a lawyer when they are acting in good faith. There will be no option to hire a lawyer not bound by these rules in states that adopt them. For the part of lawyers, they will simply have a bit of additional due diligence to do when it comes to screening new clients.
Suggested Citation: Andrew Brockmeyer, Whose Duty is it Anyway?: Discussing the Changes to ABA Model Rule 1.16, Cornell J.L. & Pub. Pol’y, The Issue Spotter (March 14, 2024), https://live-journal-of-law-and-public-policy.pantheonsite.io/whose-duty-is-it-anyway-discussing-the-changes-to-aba-model-rule-116.
Andrew Brockmeyer is a second year Cornell Law student with interests in entertainment law and criminal defense. He obtained his undergraduate degree in Government and Theater from the College of William and Mary. Before coming to law school, he was an audio engineer for regional theaters across the east coast.