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Ethics Opinion

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RI-299

December 18, 1997

SYLLABUS

    A lawyer is not disqualified from representing a client in pre-trial discovery and other pre-trial preparation, even if that lawyer might otherwise be disqualified from being trial counsel pursuant to MRPC 3.7.

    When a client in a civil action has an indemnification agreement for reimbursement of legal fees which has allegedly been breached, the lawyer representing the client in the civil action is not necessarily disqualified from acting as trial counsel in the subsequent breach of contract action, even though the lawyer may be a witness regarding the amount and reasonableness of fees incurred by the client in the original civil action.

    If the lawyer is ultimately disqualified from acting as trial counsel in the subsequent breach of contract action, associates or "office sharers" of the lawyer are not imputedly disqualified from acting as trial counsel, provided that they would not be independently disqualified from acting as trial counsel under MRPC 1.7 or MRPC 1.9.

    References: MRPC 3.7; RI-281; RI-226; RI-136; RI-96; Ayres v. Canales, 790 SW2d 554 (Tex 1990); Presnick v. Esposito, 513 A2d 165 (Conn Super Ct 1986); The Law of Lawyering, 1996 Supplement, Prentice Hall; The Annotated Model Rules of Professional Conduct, Third Edition, 1995, American Bar Association

TEXT

In the fall of 1995, a Michigan non-profit corporation held its election for officers and directors. After the election, a losing candidate for president sued the successful candidate and the elected board of directors, alleging various tortious activities during the conduct of the election. It is alleged that the board of directors of the corporation authorized the newly elected president to retain counsel, and further agreed to reimburse the newly elected president for expenses which were actually and reasonably incurred in defense of the suit.

In the fall of 1996, with the original lawsuit still pending, the corporation held another election of officers and directors. A new president was elected. The president originally elected in the fall of 1995 no longer held an officer or director position with the corporation.

The corporation thereafter ceased reimbursing the former president for legal fees and expenses incurred in defending the original lawsuit. The former president then instituted the current action against the corporation to obtain continuing reimbursement.

The corporation has moved to disqualify counsel for the former president in the second lawsuit. The corporation contends in the motion to disqualify that the lawyer will be a necessary witness regarding the issue of legal fees and expenses actually and reasonably incurred by the former president in the original civil suit. The circuit court Judge where the action is pending has requested the opinion of the committee regarding whether or not the lawyer is required to withdraw from representing the former president under these circumstances.

This matter is governed principally by MRPC 3.7. That rule provides as follows:

    Rule 3.7 Lawyer as Witness.

      "(a) A lawyer shall not act as advocate at a trial in which the lawyer is likely to be a necessary witness except where:

        "(1) the testimony relates to an uncontested issue;

        "(2) the testimony relates to the nature and value of legal services rendered in the case; or

        "(3) disqualification of the lawyer would work substantial hardship on the clien

      "(b) A lawyer may act as advocate in a trial in which another lawyer in the lawyer's firm is likely to be called as a witness unless precluded from doing so by Rule 1.7 or Rule 1.9."

MRPC 3.7 pertains only to acting as "advocate at a trial," and not the subject of client representation generally. As this Committee has previously opined, even if the lawyer might eventually be disqualified from being trial counsel pursuant to this rule, the rule does not require withdrawal or disqualify the lawyer from participating in pre-trial activities. See, RI-226; RI-281.

It is unclear from the facts presented whether the lawyer will be a "necessary" witness at the trial of the second action. While it appears that one of the issues may relate to the necessity and reasonableness of the fees which the client incurred in the original lawsuit, there obviously will be other material issues, such as whether there was an enforceable contract for reimbursement of all fees and expenses so incurred. Additionally, it may well be that the client can testify regarding the nature and amount of fees and expenses which he/she incurred in the original lawsuit. It is not clear from the facts presented that it would be "necessary" to call the lawyer as a witness, even on these issues. The Committee does not know the exact stage of the proceedings in the second lawsuit. Unless trial is imminent, it may not be possible to ascertain at this juncture whether or not the lawyer will be a "necessary" witness at the second trial.

MRPC 3.7(a)(2) provides an exception to the disqualification rule, where the testimony of the lawyer relates to the nature and value of legal services rendered in the case. Since the testimony of the lawyer would relate to the nature and value of legal services rendered in the original action by the disappointed candidate, and not the breach of contract action against the corporation, the testimony would not relate to the nature and value of legal services rendered "in the case."

On the other hand, commentators and decisions under this rule in other jurisdictions indicate that a strict, mechanical reading of the rule is not necessarily required. Commentators Hazard and Hodes note:

    "The second exception will ordinarily apply only when the issue is assessing attorney fees in the very case at hand. Even when that assessment must be made by a jury, the jury will have actually seen much of the lawyer's work and, therefore, the problem of an advocate arguing his own credibility will be minimized." The Law of Lawyering, 1996 Supplement, Prentice-Hall, p 683. Emphasis added.

The phrase "in the case" has not been narrowly construed to mean only the fees case at hand. There are other situations in which a lawyer's testimony on fees will not trigger the rule. The Annotated Model Rules of Professional Conduct notes:

    "Rule 3.7(a)(2) expressly permits a lawyer to testify about 'the nature and value of legal services rendered in the case' See e.g., Ayres v. Canales, 790 S.W.2d 554 (Tex 1990)(lawyer may represent self and act as witness in dispute over fee division); State Bar of Montana Ethics Comm., Op 930318 (1993)(lawyer who successfully defended client in civil matter may testify in client's subsequent malicious prosecution action, regarding fees client incurred in defending against civil suit)." Third Edition, 1995, American Bar Association, p 361-362.

Further, the rule's prohibition does not apply when a lawyer appears pro se, or on behalf of the law firm, in an action to collect unpaid legal fees earned by the lawyer. Presnick v. Esposito, 513 A2d 165 (Conn Super Ct 1986); Ayres v. Canales, 790 SW2d 554 (Tex 1990).

Lastly, MRPC 3.7(a)(3) provides that the disqualification would not apply if the disqualification would work "substantial hardship" on the client. Thus in any event the Court would have to make a determination as to whether or not disqualification would work such a substantial hardship, even if the Court were otherwise convinced that MRPC 3.7 would require withdrawal of the lawyer in the second action.

The remaining issue is resolved by the express language of MRPC 3.7(b). That rule expressly provides that another lawyer, even in the lawyer's firm, may act as trial advocate, even though the lawyer may be called as a necessary witness. See, also, RI-136; RI-96. Thus an associate of the lawyer, or "office sharer" of the lawyer, could act as trial advocate if the lawyer is ultimately disqualified pursuant to Rule 3.7, assuming that the associate or "office sharer" would not independently be disqualified by the provisions of Rules 1.7, 1.9 or otherwise.

In summary, the lawyer may continue to represent the former president, at least as to all pre-trial matters. As to acting as trial counsel, the Judge should decide this issue based upon the considerations set forth above, including specifically whether or not the second action is analogous to the exception set forth in MRPC 3.7(a)(2), and/or whether or not disqualification would work a substantial hardship on the client. The Court should make that determination based upon the particular facts presented at the time of the disqualification motion. Lastly, should the lawyer be disqualified from acting as trial advocate, the lawyer's associates or "office sharers" would not be disqualified from acting as trial advocate, provided that they are not independently disqualified by MRPC 1.7, 1.9, or otherwise.

 
     

 

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