Ky. Sup. Ct. Order 2022-11 XIII

Responsibilities regarding law-related services

New Rule SCR 3.130(5.8) and the Supreme Court Commentary to SCR

3.130(5.8) shall read:

1) A lawyer shall be subject to the Rules of Professional Conduct with

respect to the provision of law-related services, as defined in

subsection (2), if the law-related services are provided:

a) by the lawyer in circumstances that are not distinct from

the lawyer's provision of legal services to clients; or

b) in other circumstances by an entity controlled by the

lawyer individually or with others if the lawyer fails to

take reasonable measures to assure that a person

obtaining the law-related services knows that the services

are not legal services and that the protections of the

client-lawyer relationship do not exist.

2) The term "law-related services" denotes services that might reasonably

be performed in conjunction with and in substance are related to the

provision of legal services, and that are not prohibited as

unauthorized practice of law when provided by a nonlawyer.

Supreme Court Commentary:

1) A broad range of economic and other interests of clients may be

served by lawyers engaging in the delivery of law-related services.

Examples of law-related services include providing title insurance,

financial planning, accounting, trust services, real estate counseling,

mediation, legislative lobbying, economic analysis, social work,

psychological counseling, tax preparation, and patent, medical or

environmental consulting.

2) When a lawyer performs law-related services or controls an

organization that does so, there exists the potential for ethical

problems. Principal among these is the possibility that the person for

whom the law-related services are performed fails to understand that

the services may not carry with them the protections normally

afforded as part of the client-lawyer relationship. The recipient of the

law-related services may expect, for example, that the protection of

client confidences, prohibitions against representation of persons with

conflicting interests, and obligations of a lawyer to maintain

professional independence apply to the provision of law-related

services when that may not be the case.

3) Rule 5.8 applies to the provision of law-related services by a lawyer

even when the lawyer does not provide any legal services to the person

for whom the law-related services are performed and whether the law-related services are performed through a law firm or a separate entity.

The Rule identifies the circumstances in which all of the Rules of

Professional Conduct apply to the provision of law-related services.

Even when those circumstances do not exist, however, the conduct of

a lawyer involved in the provision of law-related services is subject to

those Rules that apply generally to lawyer conduct, regardless of

whether the conduct involves the provision of legal services. See, e.g.,

Rule 8.4.

4) When law-related services are provided by a lawyer under

circumstances that are not distinct from the lawyer's provision of legal

services to clients, the lawyer in providing the law-related services

must adhere to the requirements of the Rules of Professional Conduct

as provided in paragraph (1)(a). Even when the law-related and legal

services are provided in circumstances that are distinct from each

other, for example through separate entities or different support staff

within the law firm, the Rules of Professional Conduct apply to the

lawyer as provided in paragraph (1)(b) unless the lawyer takes

reasonable measures to assure that the recipient of the law-related

services knows that the services are not legal services and that the

protections of the client-lawyer relationship do not apply.

5) Law-related services also may be provided through an entity that is

distinct from that through which the lawyer provides legal services. If

the lawyer individually or with others has control of such an entity's

operations, the Rule requires the lawyer to take reasonable measures

to assure that each person using the services of the entity knows that

the services provided by the entity are not legal services and that the

Rules of Professional Conduct that relate to the client-lawyer

relationship do not apply. A lawyer's control of an entity extends to

the ability to direct its operation. Whether a lawyer has such control

will depend upon the circumstances of the particular case.

6) When a client-lawyer relationship exists with a person who is referred

by a lawyer to a separate law-related service entity controlled by the

lawyer, individually or with others, the lawyer must comply with Rule

1.8(a).

7) In taking the reasonable measures referred to in paragraph (1)(b) to

assure that a person using law-related services understands the

practical effect or significance of the inapplicability of the Rules of

Professional Conduct, the lawyer should communicate to the person

receiving the law-related services, in a manner sufficient to assure

that the person understands the significance of the fact, that the

relationship of the person to the business entity will not be a client-lawyer relationship. The communication should be made before

entering into an agreement for provision of or providing law-related

services, and preferably should be in writing.

8) The burden is upon the lawyer to show that the lawyer has taken

reasonable measures under the circumstances to communicate the

desired understanding. For instance, a sophisticated user of law-related services, such as a publicly held corporation, may require a

lesser explanation than someone unaccustomed to making

distinctions between legal services and law-related services, such as

an individual seeking tax advice from a lawyer-accountant or

investigative services in connection with a lawsuit.

9) Regardless of the sophistication of potential recipients of law-related

services, a lawyer should take special care to keep separate the

provision of law-related and legal services in order to minimize the

risk that the recipient will assume that the law-related services are

legal services. The risk of such confusion is especially acute when the

lawyer renders both types of services with respect to the same matter.

Under some circumstances the legal and law-related services may be

so closely entwined that they cannot be distinguished from each

other, and the requirement of disclosure and consultation imposed by

paragraph (1)(b) of the Rule cannot be met. In such a case a lawyer

will be responsible for assuring that both the lawyer's conduct and, to

the extent required by Rule 5.3, that of nonlawyer employees in the

distinct entity that the lawyer controls complies in all respects with

the Rules of Professional Conduct.

10) When a lawyer is obliged to accord the recipients of such services

the protections of those Rules that apply to the client-lawyer

relationship, the lawyer must take special care to heed the

proscriptions of the Rules addressing conflict of interest (Rules 1.7

through 1.11, especially Rules 1.7(a)(2) and 1.8(a), (b) and (f)), and to

scrupulously adhere to the requirements of Rule 1.6 relating to

disclosure of confidential information. The promotion of the law-related services must also in all respects comply with the Rules

dealing with advertising and solicitation. In that regard, lawyers

should take special care to identify the obligations that may be

imposed as a result of a jurisdiction's decisional law.

11) When the full protections of all of the Rules of Professional

Conduct do not apply to the provision of law-related services,

principles of law external to the Rules, for example, the law of

principal and agent, govern the legal duties owed to those receiving

the services. Those other legal principles may establish a different

degree of protection for the recipient with respect to confidentiality of

information, conflicts of interest and permissible business

relationships with clients. See also Rule 8.4 (Misconduct).