MRPC Rule 1.13

(a) A lawyer employed or retained to represent an organization represents the organization as

distinct from its directors, officers, employees, members, shareholders, or other constituents.

(b) If a lawyer for an organization knows that an officer, employee, or other person associated

with the organization is engaged in action, intends to act, or refuses to act in a matter related

to the representation that is a violation of a legal obligation to the organization, or a violation

of law which reasonably might be imputed to the organization, and that is likely to result in

substantial injury to the organization, the lawyer shall proceed as is reasonably necessary in

the best interest of the organization. In determining how to proceed, the lawyer shall give

due consideration to the seriousness of the violation and its consequences, the scope and

nature of the lawyer’s representation, the responsibility in the organization, and the apparent

motivation of the person involved, the policies of the organization concerning such matters,

and any other relevant considerations. Any measures taken shall be designed to minimize

disruption of the organization and the risk of revealing information relating to the

representation to persons outside the organization. Such measures may include among

others:

(1) asking reconsideration of the matter;

(2) advising that a separate legal opinion on the matter be sought for presentation to

appropriate authority in the organization; and

(3) referring the matter to higher authority in the organization, including, if warranted by

the seriousness of the matter, referral to the highest authority that can act in behalf of

the organization as determined by applicable law.

(c) When the organization’s highest authority insists upon action, or refuses to take action, that

is clearly a violation of a legal obligation to the organization or a violation of law which

reasonably might be imputed to the organization, and that is likely to result in substantial

injury to the organization, the lawyer may take further remedial action that the lawyer

reasonably believes to be in the best interest of the organization. Such action may include

revealing information otherwise protected by Rule 1.6 only if the lawyer reasonably believes

that

(1) the highest authority in the organization has acted to further the personal or financial

interests of members of that authority which are in conflict with the interests of the

organization; and

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(2) revealing the information is necessary in the best interest of the organization.

(d) In dealing with an organization’ s directors, officers, employees, members, shareholders, or

other constituents, a lawyer shall explain the identity of the client when the lawyer believes

that such explanation is necessary to avoid misunderstandings on their part.

(e) A lawyer representing an organization may also represent any of its directors, officers,

employees, members, shareholders, or other constituents, subject to the provisions of Rule

1.7. If the organization’s consent to the dual representation is required by Rule 1.7, the

consent shall be given by an appropriate official of the organization other than the individual

who is to be represented, or by the shareholders.

The Entity as the Client.

In transactions with their lawyers, clients who are individuals can speak and decide for

themselves, finally and authoritatively. In transactions between an organization and its lawyer,

however, the organization can speak and decide only through agents, such as its officers or

employees. In effect, the client-lawyer relationship is maintained through an intermediary

between the client and the lawyer. This fact requires the lawyer under certain conditions to be

concerned whether the intermediary legitimately represents the client.

When officers or employees 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

concerning policy and operations, including ones entailing serious risk, are not as such in the

lawyer’s province. However, different considerations arise when the lawyer knows that the

organization may be substantially injured by action of an officer or employee that is in violation

of law. In such a circumstance, it may be reasonably necessary for the lawyer to ask the officer,

employee, or other agent to reconsider the matter. If that fails, or if the matter is of sufficient

seriousness and importance to the organization, it may be reasonably necessary for the lawyer to

take steps to have the matter reviewed by a higher authority in the organization. Clear

justification should exist for seeking review over the head of the officer or employee normally

responsible for it. The stated policy of the organization may define circumstances and prescribe

channels for such review, and a lawyer should encourage formulation of such a policy. Even in

the absence of organization policy, however, the lawyer may have an obligation to refer a matter

to higher authority, depending on the seriousness of the matter and whether the officer in

question has apparent motives to act at variance with the organization’ s interest. Review by the

chief executive officer or by the board of directors may be required when the matter is of

importance commensurate with their authority. At some point it may be useful or essential to

obtain an independent legal opinion.

In an extreme case, it may be reasonably necessary for the lawyer to refer the matter to the

organization’s highest authority. Ordinarily, that is the board of directors or similar governing

body. However, applicable law may prescribe that under certain conditions highest authority

reposes elsewhere, for example, in the independent directors of a corporation. The ultimately

difficult question is whether the lawyer should be permitted to circumvent the organization’s

highest authority when it persists in a course of action that is clearly violative of law or a legal

obligation to the organization and that is likely to result in substantial injury to the organization.

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In such a situation, if the lawyer can take remedial action without a disclosure of information that

might adversely affect the organization, the lawyer as a matter of professional discretion may

take such actions as the lawyer reasonably believes to be in the best interest of the organization.

For example, a lawyer for a close corporation may find it reasonably necessary to disclose

misconduct by the board to the shareholders. However, taking such action could entail

disclosure of information relating to the representation with consequent risk of injury to the

client. When such is the case, the organization is threatened by alternative injuries: the injury

that may result from the governing board’ s action or refusal to act, and the injury that may result

if the lawyer’s remedial efforts entail disclosure of confidential information. The lawyer may

pursue remedial efforts even at the risk of disclosure in the circumstances stated in

subparagraphs (c)(1) and (c)(2).

Relation to Other Rules.

The authority and responsibility provided in Rules 1.13(b) and (c) are concurrent with the

authority and responsibility provided in other rules. In particular, this rule does not limit the

lawyer’s authority under Rule 1.6, the responsibilities to the client under Rules 1.8 and 1.16 and

the responsibilities of the lawyer under Rule 3.3 or 4.1. If the lawyer’s services are being used

by an organization to further an illegal act or fraud by the organization, Rule 1.2(c) can be

applicable. In connection with complying with Rule 1.2(c), 3.3 or 4.1, or exercising the

discretion conferred by Rule 1.6(c), a lawyer for an organization may be in doubt whether the

conduct will actually be carried out by the organization. To guide conduct in such

circumstances, the lawyer ordinarily should make inquiry within the organization as indicated in