Conn. R. Prof'l Conduct 1.13

History

(P.B. 1978-1997, Rule 1.13.) (Amended June 26, 2006, to take effect Jan. 1, 2007.) COMMENTARY: The Entity as the Client. An organiza- tional client is a legal entity, but it cannot act except through its officers, directors, employees, shareholders and other con- stituents. Officers, directors, employees and shareholders are the constituents of the corporate organizational client. The duties defined in this Commentary apply equally to unincorpo- rated associations. ‘‘Other constituents’’ as used in this Com- mentary means the positions equivalent to officers, directors, employees and shareholders held by persons acting for orga- nizational clients that are not corporations. When one of the constituents of an organizational client communicates with the organization’s lawyer in that person’s organizational capacity, the communication is protected by Rule 1.6. Thus, by way of example, if an organizational client requests its lawyer to investigate allegations of wrongdoing, interviews made in the course of that investigation between the lawyer and the client’s employees or other constituents are covered by Rule 1.6. This does not mean, however, that constituents of an organizational client are the clients of the lawyer. The lawyer may not disclose to such constituents infor- mation relating to the representation except for disclosures explicitly or impliedly authorized by the organizational client in order to carry out the representation or as otherwise permit- ted by Rule 1.6. When constituents of the organization make decisions for it, the decisions ordinarily must be accepted by the lawyer even if their utility or prudence is doubtful. Decisions concern- ing policy and operations, including ones entailing serious risk, are not as such in the lawyer’s province. Subsection (b) makes clear, however, that when the lawyer knows that the organiza- tion is likely to be substantially injured by action of an officer or other constituent that violates a legal obligation to the organi- zation or is in violation of law that might be imputed to the organization, the lawyer must proceed as is reasonably neces- sary in the best interest of the organization. As defined in Rule 1.0 (g), knowledge can be inferred from circumstances, and a lawyer cannot ignore the obvious. In determining how to proceed under subsection (b), the lawyer should give due consideration to the seriousness of the violation and its consequences, the responsibility in the organization and the apparent motivation of the persons involved, the policies of the organization concerning such mat- ters, and any other relevant considerations. Ordinarily, referral to a higher authority would be necessary. In some circum - stances, however, it may be appropriate for the lawyer to ask the constituent to reconsider the matter; for example, if the circumstances involve a constituent’s innocent misunder- standing of law and subsequent acceptance of the lawyer’s advice, the lawyer may reasonably believe conclude that the best interest of the organization does not require that the matter be referred to higher authority. If a constituent persists in conduct contrary to the lawyer’s advice, it will be necessary for the lawyer to take steps to have the matter reviewed by a higher authority in the organization. If the matter is of sufficient seriousness and importance or urgency to the organization, referral to higher authority in the organization may be neces- sary even if the lawyer has not communicated with the constit- uent. Any measures taken should, to the extent practicable, minimize the risk of revealing information relating to the repre- sentation to persons outside the organization. Even in circum- stances where a lawyer is not obligated by Rule 1.13 to proceed, a lawyer may bring to the attention of an organiza- tional client, including its highest authority, matters that the lawyer reasonably believes to be of sufficient importance to warrant doing so in the best interest of the organization. Subsection (b) also makes clear that when it is reasonably necessary to enable the organization to address the matter in a timely and appropriate manner, the lawyer must refer the matter to higher authority, including, if warranted by the circumstances, the highest authority that can act on behalf of the organization under applicable law. The organization’s highest authority to whom a matter may be referred ordinarily will be the board of directors or similar governing body. How- ever, applicable law may prescribe that under certain condi- tions the highest authority reposes elsewhere; for example, in the independent directors of a corporation. Relation to Other Rules. The authority and responsibility provided in this Rule are concurrent with the authority and responsibility provided in other Rules. In particular, this Rule does not limit or expand the lawyer’s responsibility under Rules 1.8, 1.16, 3.3 and 4.1. Subsection (c) of this Rule supplements Rule 1.6 (b) by providing an additional basis upon which the lawyer may reveal information relating to the representation, but does not modify, restrict, or limit the provisions of Rule 1.6 (b) (1) through (6). Under subsection (c) the lawyer may reveal such information only when the organization’s highest authority insists upon or fails to address threatened or ongoing action that is clearly a violation of law, and then only to the extent the lawyer reasonably believes necessary to prevent reasonably certain substantial injury to the organization. It is not necessary that the lawyer’s services be used in furtherance of the violation, but it is required that the matter be related to the lawyer’s representation of the organization. If the lawyer’s services are being used by an organization to further a crime or fraud by the organization, Rules 1.6 (b) (2) and 1.6 (b) (3) may permit the lawyer to disclose confidential information. In such circumstances, Rule 1.2 (d) may also be applicable, in which event, withdrawal from the representation under Rule 1.6 (a) (1) may be required. Subsection (d) makes clear that the authority of a lawyer to disclose information relating to a representation in circum - stances described in subsection (c) does not apply with respect to information relating to a lawyer’s engagement by an organi- zation to investigate an alleged violation of law or to defend the organization or an officer, employee or other person asso- ciated with the organization against a claim arising out of an alleged violation of law. This is necessary in order to enable organizational clients to enjoy the full benefits of legal counsel in conducting an investigation or defending against a claim. A lawyer who reasonably believes that he or she has been discharged because of the lawyer’s actions taken pursuant to subsection (b) or (c), or who withdraws in circumstances that require or permit the lawyer to take action under either of these subsections, must proceed as the lawyer reasonably believes necessary to assure that the organization’s highest authority is informed of the lawyer’s discharge or withdrawal. Government Agency. The duty defined in this Rule applies to governmental organizations. Defining precisely the identity of the client and prescribing the resulting obligations of such lawyers may be more difficult in the government context and is a matter beyond the scope of these Rules. See Scope. Although in some circumstances the client may be a specific agency, it may also be a branch of government, such as the executive branch, or the government as a whole. For example, if the action or failure to act involves the head of a bureau, either the department of which the bureau is a part or the relevant branch of government may be the client for purposes of this Rule. Moreover, in a matter involving the conduct of government officials, a government lawyer may have authority under applicable law to question such conduct more exten- sively than that of a lawyer for a private organization in similar circumstances. Thus, when the client is a governmental orga- nization, a different balance may be appropriate between maintaining confidentiality and assuring that the wrongful act is prevented or rectified, for public business is involved. In addition, duties of lawyers employed by the government or lawyers in military service may be defined by statutes and regulations. This Rule does not limit that authority. See Scope. Clarifying the Lawyer’s Role. There are times when the organization’s interest may be or become adverse to those of one or more of its constituents. In such circumstances the lawyer should advise any constituent, whose interest the law- yer finds adverse to that of the organization of the conflict or potential conflict of interest, that the lawyer cannot represent such constituent, and that such person may wish to obtain independent representation. Care must be taken to assure that the individual understands that, when there is such adversity of interest, the lawyer for the organization cannot provide legal representation for that constituent individual, and that discus- sions between the lawyer for the organization and the individ- ual may not be privileged. Whether such a warning should be given by the lawyer for the organization to any constituent individual may turn on the facts of each case. Dual Representation. Subsection (e) recognizes that a lawyer for an organization may also represent a principal offi- cer or major shareholder. Derivative Actions. Under generally prevailing law, the shareholders or members of a corporation may bring suit to compel the directors to perform their legal obligations in the supervision of the organization. Members of unincorporated associations have essentially the same right. Such an action may be brought nominally by the organization, but usually is, in fact, a legal controversy over management of the organization. The question can arise whether counsel for the organization may defend such an action. The proposition that the organiza- tion is the lawyer’s client does not alone resolve the issue. Most derivative actions are a normal incident of an organization’s affairs, to be defended by the organization’s lawyer like any other suit. However, if the claim involves serious charges of wrongdoing by those in control of the organization, a conflict may arise between the lawyer’s duty to the organization and the lawyer’s relationship with the board. In those circum- stances, Rule 1.7 governs who should represent the directors and the organization.