Extensive updates to Montana Rules of Professional Conduct adopted effective Jan. 1, 2020
Saturday, December 21, 2019
By Betsy Brandborg
The Montana Supreme Court has approved the State Bar of Montana's petition to revise 18 rules of the Montana Rules of Professional Conduct, and a portion of the MRPC's Preamble.
The court adopted the new rules, effective Jan. 1, 2020, in an Oct. 29, 2019, order. The order followed a 90-day public comment period after the State Bar's petition in March 2019 to change the rules.
Most significant within the 18 revisions are amendments to the confidentiality rule and to the rule addressing an organization as the client. Also notable is the modification of the Preamble creating a discipline safe harbor for attorneys who advise cannabis industry businesses.
The State Bar’s Ethics Committee
began work on Montana’s rules in April 2017, using the ABA’s Ethics 20/20 Commission recommendations as their basis. Rather than duplicate ABA efforts, the Ethics Committee reviewed the departures between the two sets of rules. The resulting amendments are distinctly Montanan, while absorbing vetted ABA recommendations.
Before this revision, Montana’s Rules of Professional Conduct contained 29 rules not identical to the ABA’s Model Rules. Under the revisions approved by the court, 10 unique Montana rules remain unchanged, 11 were amended to directly (or with minimal adjustment) correspond to the ABA Model Rules, seven were amended slightly and one ABA model rule was rejected entirely.
Montana’s last comprehensive rules review was 2002-2004. While certain rules had been amended in the interim, the court concluded that these changes in the regulation of the profession were needed in light of 21st century developments in technology, business and law.
Following is an overview of the changes.
The court adopted the ABA’s additional exceptions to the client confidentiality rule. The exceptions permit (not require) disclosure of information where necessary to “prevent, mitigate, or rectify substantial injury to the financial interests or property of another” reasonably certain to result from client crimes or fraud “in furtherance of which the client has used the lawyer’s services….”. Bluntly, the additional exceptions allow lawyers to protect Montana’s citizens from unlawful client behavior.
Montana’s old rule was more restrictive than those of most states, a source of confusion for the nearly one-quarter of bar members admitted here but practicing from out-of-state. While most states have not adopted the ABA’s Model Rule verbatim, that is because many allow more disclosures and qualify the disclosures differently than provided in the Model Rule.
When the State Bar and the Court considered the confidentiality rule in the 2002-2004 review, the ABA Model Rule included the disclosure exceptions for crime or fraud. At that time, many on the Ethics Committee wanted to include the additional exceptions, but a majority (by a narrow margin) recommended that Montana continue with its more restrictive rule.
Developments on the national stage, particularly the corporate malfeasance leading to the recession of 2008, showcase the damage that might have been prevented or mitigated had the Rules afforded lawyers an applicable exception to the duty of confidentiality. Fidelity to the legal system must trump fidelity to a client intent on violating the law.
An additional exception in (7) simply recognizes that lawyers change jobs regularly and provides structure for identifying and resolving conflicts that arise from that practical reality.
The revised rule, with new language underlined, reads:
Rule 1.6: Confidentiality of Information
(a) A lawyer shall not reveal information relating to the representation of a client unless the client gives informed consent, the disclosure is impliedly authorized in order to carry out the representation or the disclosure is permitted by paragraph (b).
(b) A lawyer may reveal information relating to the representation of a client to the extent the lawyer reasonably believes necessary:
(1) to prevent reasonably certain death or substantial bodily harm;
(2) to prevent the client from committing a crime or fraud that is reasonably certain to result in substantial injury to the financial interests or property of another and in furtherance of which the client has used or is using the lawyer's services;
(3) to prevent, mitigate or rectify substantial injury to the financial interests or property of another that is reasonably certain to result, or has resulted, from the client's commission of a crime or fraud in furtherance of which the client has used the lawyer's services;
(4) to secure legal advice about the lawyer's compliance with these Rules;
(5) to establish a claim or defense on behalf of the lawyer in a controversy between the lawyer and the client, to establish a defense to a criminal charge or civil claim against the lawyer based upon conduct in which the client was involved, or to respond to allegations in any proceeding concerning the lawyer's representation of the client;
(6) to comply with other law or a court order; or
(7) to detect and resolve conflicts of interest arising from the lawyer’s change of employment or from changes in the composition or ownership of a firm, but only if the revealed information would not compromise the attorney-client privilege or otherwise prejudice the client.
(c) A lawyer shall make reasonable efforts to prevent the inadvertent or unauthorized disclosure of, or unauthorized access to, information relating to the representation of a client.
Organization as a Client, Rule 1.13
The court also adopted the ABA’s Model Rule 1.13. The new language eliminates the Hobson’s choice of Montana’s former rule requiring resignation in the face of inappropriate client or organization behavior.
The new rule, with new language underlined, reads:
Rule 1.13 Organization as Client
(a) A lawyer employed or retained by an organization represents the organization acting through its duly authorized 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 that reasonably might be imputed to the organization, and that is likely to result in substantial injury to the organization, then the lawyer shall proceed as is reasonably necessary in the best interest of the organization. Unless the lawyer reasonably believes that it is not necessary in the best interest of the organization to do so, the lawyer shall refer the matter to higher authority in the organization, including, if warranted by the circumstances to the highest authority that can act on behalf of the organization as determined by applicable law.
(c) Except as provided in paragraph (d), if
(1) despite the lawyer's efforts in accordance with paragraph (b) the highest authority that can act on behalf of the organization insists upon or fails to address in a timely and appropriate manner an action, or a refusal to act, that is clearly a violation of law, and
(2) the lawyer reasonably believes that the violation is reasonably certain to result in substantial injury to the organization, then the lawyer may reveal information relating to the representation whether or not Rule 1.6 permits such disclosure, but only if and to the extent the lawyer reasonably believes necessary to prevent substantial injury to the organization.
(d) Paragraph (c) shall not apply with respect to information relating to a lawyer's representation of an organization to investigate an alleged violation of law, or to defend the organization or an officer, employee or other constituent associated with the organization against a claim arising out of an alleged violation of law.
(e) A lawyer who reasonably believes that he or she has been discharged because of the lawyer's actions taken pursuant to paragraphs (b) or (c), or who withdraws under circumstances that require or permit the lawyer to take action under either of those paragraphs, shall proceed as the lawyer reasonably believes necessary to assure that the organization's highest authority is informed of the lawyer's discharge or withdrawal.
(f) 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 knows or reasonably should know that the organization's interests are adverse to those of the constituents with whom the lawyer is dealing.
(g) 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.
Preamble and Cannabis
A bar member, aware of the Committee’s comprehensive review of the Rules of Professional Conduct, submitted a request that Rule 1.2(d) be amended to allow representation of clients engaged in Montana’s emerging cannabis industry, explaining:
“Most Montana attorneys are reluctant to assist or engage individuals and businesses involved in the Cannabis Industry not only because of possible exposure to federal criminal laws, but also because they could face prosecution from Montana’s Office of Disciplinary Counsel.”
Montana’s former Rule 1.2(d) appeared to disallow Montana attorneys from representing clients engaged in the emerging cannabis industry because of the uncertainty resulting from the conflict between state and federal law.
The court adopted the bar's recommendation to create a safe harbor but to put the language in the Preamble rather than within Rule 1.2 until the state and federal law disparities are more aligned. To that end, paragraph 6 of the Preamble is amended to read:
(6) A lawyer’s conduct should conform to the requirements of the law, both in professional service to clients and in the lawyer’s business and personal affairs. A lawyer should use the lawyer’s procedures only for legitimate purposes and not to harass or intimidate others. A lawyer should demonstrate respect for the legal system and for those who serve it, including judges, other lawyers and public officials. While it is a lawyer’s duty, when necessary, to challenge the rectitude of official action, it is also a lawyer’s duty to uphold legal process. For example, a lawyer may counsel and assist a client regarding Montana’s cannabis-related laws. In the event Montana law conflicts with federal or tribal law, the lawyer shall also advise the client regarding related federal and tribal law and policy.”
The underlined language parallels Oregon’s Rule 1.2(d). The State Bar chose not to follow Illinois 1.2(d)(3) broad language, providing “…may…counsel or assist a client in conduct expressly permitted by Illinois law that may violate or conflict with federal or other law, as long as the lawyer advises the client about that federal or other law and its potential consequences.” The goal is to help lawyers representing cannabis clients, not create a whole ring of exceptions for other state/federal law disparities.
Unclaimed Property in Trust Accounts
Lawyers occasionally discover unclaimed client money in their trust accounts. The former structure required lawyers to convey unclaimed property to the State of Montana’s unclaimed property division. In order to maintain the confidential nature of the attorney/client relationship, the court approved the bar's proposal that the property be conveyed to Montana’s Justice Foundation within a system enabling reimbursement of clients should they reappear.
The court adopted the following addition to Rule 1.15:
(f) Unclaimed or unidentifiable Trust Account Funds.
(1) When a lawyer, law firm, or estate of a deceased lawyer cannot, using reasonable efforts, identify or locate the owner of funds in its Montana IOLTA or non-IOLTA trust account for a period of at least two (2) years, it may pay the funds to the Montana Justice Foundation (MJF). At the time such funds are remitted, the lawyer may submit to MJF the name and last known address of each person appearing from the lawyer’s or law firm’s records to be entitled to the funds, if known; a description of the efforts undertaken to identify or locate the owner; and the amount of any unclaimed or unidentified funds.
(2) If, within two (2) years of making a payment of unclaimed or unidentified funds to MJF, the lawyer, law firm, or deceased lawyer’s estate identifies and locates the owner of funds paid, MJF shall refund the funds it received to the lawyer, law firm, or deceased lawyer’s estate. The lawyer, law firm, or deceased lawyer’s estate shall submit to MJF a verification attesting that the funds have been returned to the owner. MJF shall maintain sufficient reserves to pay all claims for such funds.
The new language precludes payment of interest upon return of unclaimed funds, hence “shall refund the funds it received” in (2). Rule 1.18, the IOLTA Rule, also requires amendment to absorb the design.
Special Responsibilities of Prosecutors, Rule 3.8
The court adopted the ABA’s 2008 amendments “to identify prosecutors' obligations when they know of new evidence establishing a reasonable likelihood that a convicted defendant did not commit the offense of which he was convicted.”
The new language reads:
Rule 3.8 Special Responsibilities of a Prosecutor
(g) When a prosecutor knows of new, credible and material evidence creating a reasonable likelihood that a convicted defendant did not commit an offense of which the defendant was convicted, the prosecutor shall:
(1) promptly disclose that evidence to an appropriate court or authority, and
(2) if the conviction was obtained in the prosecutor’s jurisdiction,
(i) promptly disclose that evidence to the defendant unless a court authorizes delay, and
(ii) undertake further investigation, or make reasonable efforts to cause an investigation, to determine whether the defendant was convicted of an offense that the defendant did not commit.
(h) When a prosecutor knows of clear and convincing evidence establishing that a defendant in the prosecutor’s jurisdiction was convicted of an offense that the defendant did not commit, the prosecutor shall seek to remedy the conviction.
Limited Scope Representation: Rules 1.2, 4.2 and 4.3
Montana’s Supreme Court was ahead of the curve in encouraging access to justice with its unique modification of the limited scope rules in 2011, (Rule 1.2 Scope of Representation, Rule 4.2 Communication with Person Represented by Counsel and Rule 4.3 Dealing with Unrepresented Person). Fast forward to 2019, where standard practice requirements absorb the additional specifics of Montana’s limited scope rules.
The amendments eliminate the extra Montana writing and consent requirements tacked to Model Rules 1.2, 4.2 and 4.3. Why the change? Montana’s former rules potentially created disciplinary traps, the ABA rules are simpler (and most states have adopted them), and removing the specific, structured parameters of Montana’s rules does not harm Montana clients. (For example, while Rule 1.5 on fees already required a writing for most fee agreements, new language addresses limitations to the scope of representation). The eliminated language is in the footnote, leaving the new rules to read:
Rule 1.2 Scope of Representation and Allocation of Authority Between Client and Lawyer
(a) Subject to paragraphs (c) and (d), a lawyer shall abide by a client's decisions concerning the objectives of representation and, as required by Rule 1.4, shall consult with the client as to the means by which they are to be pursued. A lawyer may take such action on behalf of the client as is impliedly authorized to carry out the representation. A lawyer shall abide by a client's decision whether to settle a matter. In a criminal case, the lawyer shall abide by the client's decision, after consultation with the lawyer, as to a plea to be entered, whether to waive jury trial and whether the client will testify.
(b) A lawyer's representation of a client, including representation by appointment, does not constitute an endorsement of the client's political, economic, social or moral views or activities.
(c) A lawyer may limit the scope of the representation if the limitation is reasonable under the circumstances and the client gives informed consent.
(d) A lawyer shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal or fraudulent, but a lawyer may discuss the legal consequences of any proposed course of conduct with a client and may counsel or assist a client to make a good faith effort to determine the validity, scope, meaning or application of the law.
Rule 4.2 Communication with Person Represented by Counsel
In representing a client, a lawyer shall not communicate about the subject of the representation with a person the lawyer knows to be represented by another lawyer in the matter, unless the lawyer has the consent of the other lawyer or is authorized to do so by law or a court order.
Rule 4.3 Dealing with Unrepresented Person
In dealing on behalf of a client with a person who is not represented by counsel, a lawyer shall not state or imply that the lawyer is disinterested. When the lawyer knows or reasonably should know that the unrepresented person misunderstands the lawyer’s role in the matter, the lawyer shall make reasonable efforts to correct the misunderstanding. The lawyer shall not give legal advice to an unrepresented person, other than the advice to secure counsel, if the lawyer knows or reasonably should know that the interests of such a person are or have a reasonable possibility of being in conflict with the interests of the client.
Rule 5.5 Unauthorized Practice of Law; Rule 8.5 Multijurisdictional Practice of Law
Rules 5.5 and 8.5 were referred to a special subcommittee of the Ethics Committee that included committee chair Peter Habein, committee member and former Disciplinary Counsel Tim Strauch, Deputy Disciplinary Counsel Jon Moog, Board of Bar Examiners Chair Gary Bjelland, and Office of Consumer Protection counsel Anne Yates. This special subcommittee agreed that the ABA’s Model Rule 5.5 was an improvement from Montana’s current rule.
Model Rule 5.5 addresses many of the “where’s the line?” on unauthorized practice of law issues, including pro hac vice, administrative law, arbitration, mediation, contract work and other services. It also addresses the foreign lawyer boundaries.
The new Rule 5.5 reads:
Rule 5.5 Unauthorized Practice of Law; Multijurisdictional Practice of Law
(a) A lawyer shall not practice law in a jurisdiction in violation of the regulation of the legal profession in that jurisdiction, or assist another in doing so.
(b) A lawyer who is not admitted to practice in this jurisdiction shall not:
(1) except as authorized by these Rules or other law, establish an office or other systematic and continuous presence in this jurisdiction for the practice of law; or
(2) hold out to the public or otherwise represent that the lawyer is admitted to practice law in this jurisdiction.
(c) A lawyer admitted in another United States jurisdiction, and not disbarred or suspended from practice in any jurisdiction, may provide legal services on a temporary basis in this jurisdiction that:
(1) are undertaken in association with a lawyer who is admitted to practice in this jurisdiction and who actively participates in the matter;
(2) are in or reasonably related to a pending or potential proceeding before a tribunal in this or another jurisdiction, if the lawyer, or a person the lawyer is assisting, is authorized by law or order to appear in such proceeding or reasonably expects to be so authorized;
(3) are in or reasonably related to a pending or potential arbitration, mediation, or other alternative resolution proceeding in this or another jurisdiction, if the services arise out of or are reasonably related to the lawyer's practice in a jurisdiction in which the lawyer is admitted to practice and are not services for which the forum requires pro hac vice admission; or
(4) are not within paragraphs (c) (2) or (c)(3) and arise out of or are reasonably related to the lawyer's practice in a jurisdiction in which the lawyer is admitted to practice.
(d) A lawyer admitted in another United States jurisdiction or in a foreign jurisdiction, and not disbarred or suspended from practice in any jurisdiction or the equivalent thereof, or a person otherwise lawfully practicing as an in-house counsel under the laws of a foreign jurisdiction, may provide legal services through an office or other systematic and continuous presence in this jurisdiction that:
(1) are provided to the lawyer's employer or its organizational affiliates, are not services for which the forum requires pro hac vice admission; and when performed by a foreign lawyer and requires advice on the law of this or another U.S. jurisdiction or of the United States, such advice shall be based upon the advice of a lawyer who is duly licensed and authorized by the jurisdiction to provide such advice; or
(2) are services that the lawyer is authorized by federal or other law or rule to provide in this jurisdiction.
(e) For purposes of paragraph (d):
(1) the foreign lawyer must be a member in good standing of a recognized legal profession in a foreign jurisdiction, the members of which are admitted to practice as lawyers or counselors at law or the equivalent, and subject to effective regulation and discipline by a duly constituted professional body or a public authority; or,
(2) the person otherwise lawfully practicing as an in-house counsel under the laws of a foreign jurisdiction must be authorized to practice under this rule by, in the exercise of its discretion, the Montana Supreme Court.
The court retained Montana’s Rule 8.5, Jurisdiction, while folding in key components of the ABA rule. The net effect is that Montana’s disciplinary structure applies to out-of-state attorneys and Montana attorneys providing representation in other jurisdictions, regardless of where the lawyer’s conduct occurs. It includes attorneys not admitted here who advertise here.
Advertising, Rules 7.2, 7.3, 7.4 and 7.5
There are substantial changes to the structure of the advertising rules, but Montana’s unique requirements in Rule 7.1 detailing false or misleading communications about a lawyer or the lawyer’s services, and Rule 7.3 addressing direct contact with prospective clients (solicitation), remain. Eliminated are Rule 7.4, addressing specialization, and 7.5, detailing firm name requirements, but components of those two rules are included in revisions to Rule 7.2. Notable is that the court rejected the ABA’s language about solicitation. Although couched in “shall not” terms, the ABA permits more solicitation than currently allowed in Montana’s rule. Montana’s rule prohibits solicitation if the lawyer reasonably should know that the person is already represented by another lawyer. Rejected is the ABA’s amendment permitting that contact.
Rule 7.2, with new language underlined, reads:
Advertising Communications Concerning a Lawyer’s Services: Specific Rules
(a) A lawyer may communicate information regarding the lawyer’s services through any media.
(b) A lawyer shall not compensate, give or promise anything of value to a person for recommending the lawyer’s services except that a lawyer may:
(1) pay the reasonable costs of advertisements or communications permitted by this Rule;
(2) pay the usual charges of a legal service plan or a not-for-profit
or qualified lawyer referral service.
(3) pay for a law practice in accordance with Rule 1.19 [ABA Rule 1.17];
(4) refer clients to another lawyer or a nonlawyer professional pursuant to an agreement not otherwise prohibited under these Rules that provides for the other person to refer clients or customers to the lawyer, if:
i. the reciprocal referral agreement is not exclusive; and
ii. the client is informed of the existence and nature of the agreement; and
(5) give nominal gifts as an expression of appreciation that are neither intended nor reasonably expected to be a form of compensation for recommending a lawyer’s services.
(c) A lawyer shall not state or imply that a lawyer is certified as a specialist in a particular field of law, unless:
(1) the lawyer has been certified as a specialist by an organization that has been approved by an appropriate authority of the state or the District of Columbia or a U.S. Territory or that has been accredited by the American Bar Association; and
(2) the name of the certifying organization is clearly identified in the communication.
(d) Any communication made under this Rule must include the name and contact information of at least one lawyer or law firm responsible for its content.
Other Notable Recommendations
The court adopted the ABA’s language adding as “signed” writings, “the electronic equivalent of a signature” in Terminology Rule 1.0(p).
Another proposal addresses duties to prospective clients, Rule 1.20, adding useful detail protecting lawyers from conflicts if they’ve taken reasonable measures to avoid exposure to disqualifying information.
Ancillary law-related services for real estate, probate and transactional lawyers are now permitted under the new Rule 5.7. The ABA adopted its Model Rule on ancillary businesses in February 1994, amending it to this form in 2002:
Rule 5.7 Responsibilities Regarding Law-Related Services
(a) A lawyer shall be subject to the Rules of Professional Conduct with respect to the provision of law-related services, as defined in paragraph (b), if the law-related services are provided:
(1) by the lawyer in circumstances that are not distinct from the lawyer's provision of legal services to clients; or
(2) 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.
(b) 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.
The specific rule on conflicts, Rule 1.8, additionally includes permissive gifting from individuals “with whom the lawyer or the client maintains a close, familial relationship.”
Montana’s Rule 1.10 includes new language creating safe harbors and screening provisions, permitting representation in light of Montana’s small-town potential for conflict of interest.
The new rule, with new language underlined and unique Montana language in italics, reads:
Rule 1.10 – Imputation of Conflicts of Interest: General Rule
(a) While lawyers are associated in a firm, none of them shall knowingly represent a client when any one of them practicing alone would be prohibited from doing so by Rules 1.7 or 1.9 unless
(1) the prohibition is based on a personal interest of the
prohibited disqualified lawyer and does not present a significant risk of materially limiting the representation of the client by the remaining lawyers in the firm; or
(2) the prohibition is based upon Rule 1.9(a) or (b) and arises out of the disqualified lawyer’s association with a prior firm, and
(i) the disqualified lawyer is timely screened from any participation in the matter and is apportioned no part of the fee therefrom;
(ii) written notice is promptly given to any affected former client to enable the former client to ascertain compliance with the provisions of this Rule, which shall include a description of the screening procedures employed; a statement of the firm's and of the screened lawyer's compliance with these Rules; a statement that review may be available before a tribunal; and an agreement by the firm to respond promptly to any written inquiries or objections by the former client about the screening procedures; and
(iii) certifications of compliance with these Rules and with the screening procedures are provided to the former client by the screened lawyer and by a partner of the firm, at reasonable intervals upon the former client's written request and upon termination of the screening procedures.
(b) When a lawyer has terminated an association with a firm, the firm is not prohibited from thereafter representing a person with interests materially adverse to those of a client represented by the formerly associated lawyer and not currently represented by the firm, unless:
(1) the matter is the same or substantially related to that in which the formerly associated lawyer represented the client; and
(2) any lawyer remaining in the firm has information protected by Rules 1.6 and 1.9(c) that is material to the matter.
(c) When a lawyer becomes associated with a firm, no lawyer associated in the firm shall knowingly represent a person in a matter in which that lawyer is disqualified under Rule 1.9 unless:
(1) the personally disqualified lawyer is timely screened from any participation in the matter and is apportioned no part of the fee therefrom; and
(2) written notice is promptly given to any affected former client to enable it to ascertain compliance with the provisions of this Rule.
(d) A disqualification prescribed by this Rule may be waived by the affected client under the conditions stated in Rule 1.7.
(e) The disqualification of lawyers associated in a firm with former or current government lawyers is governed by Rule 1.1.
Finally, given Montana’s statutory and judicial conduct rules, the State Bar rejected as unnecessary the ABA’s Model Rule 7.6 on political contributions.