Joint Committee on Attorney Standards December 1, 2008, Minutes

Joint Committee on Attorney Standards

Minutes Chief Justice's Conference Room - Conference Call December 1, 2008

Members Present Sandi Tabor, Chair Clare Carlson Jean Hannig Petra Mandigo Hulm Carol Johnson Dianna Kindseth Ryn Pitts Tim Priebe Justice Dale Sandstrom Judge Michael Sturdevant Dan Ulmer Pat Ward	Members Absent Mark Hanson Bob Udland
Staff Jim Ganje

Chair Tabor called the meeting to order at 12 noon and drew Committee members' attention to Attachment B (November 25, 2008) - minutes of the November 7, 2008, meeting.

It was moved by Clare Carlson, seconded by Carol Johnson, and carried that the minutes be approved.

Pro Bono Services by Retired or Otherwise Qualified Lawyers - Review Rule Revisions

At the request of Chair Tabor staff reviewed revisions to the rule resulting from the November 7 meeting discussion. He said the simpler revisions included adding the alternative for present licensure in Section B(2)(a), adding in Section B(2)(b) that the applicant cannot be disbarred or suspended or currently undergoing a proceeding for disbarment or suspension, incorporating in Section C(4) the discipline related statements that are required under the pro hac vice rule, and clarifying the status of the CLE exemption in Section D. He said additional revisions related to the attempt to ensure that provisions in Section B(2) were mirrored in Section C. With respect to duplicating provisions in Sections B(2) and C, he noted the alternative outlined in the staff note on p. 2 of the revised rule, which would simply provide in Section B(2) that a "Rule ___ attorney" is one who has satisfied the authorization requirements under Section C. He said all else in Section B(2) could then be deleted and addressed in Section C. He noted there is a slight variance between Section B(2)(a) [presently licensed or actively engaged in the practice of law for five of the ten years preceding application] and Section C(1) [certificate from relevant agency that applicant is presently licensed and has fulfilled bar membership requirements for at least five years preceding application].

With respect to the shortened reference in Section B(2) to satisfying authorization requirements under Section C, Jean Hannig said the approach may be a cleaner way of structuring the rule. Pat Ward agreed.

Bill Neumann noted that Section C(1) seems to indicate that the applicant must be presently licensed in order to fulfill the application requirements. Staff said Section C(1) could be modified to completely reflect the alternative structure [presently licensed or engaged in the active practice of law] set out in Section B(2)(a).

After further discussion, it was moved by Pat Ward, seconded by Petra Hulm, and carried that Section B(2) be modified to read: "A Rule ____ attorney is any person who is or was admitted to practice in the courts of any state, district, or territory of the United States, including North Dakota, and who has satisfied the authorization requirements under Section C."

Committee members then discussed modifications to Section C(1).

Petra Hulm observed that the definition of "active practice of law" in Section B(1) refers to being engaged in the practice of law, without any explicit reference to the attorney being licensed.
Staff said a possible approach may be to split Section C(1), with one part to address the certificate concerning the applicant's licensure status and the other part to include the applicant's statement concerning the active practice of law for five of the ten years preceding the application. Petra Hulm said the applicant's statement likely should be included in Section C(4) along with the other statements the applicant must provide.

Sandi Tabor suggested it would be beneficial for the certificate from the relevant agency to address, in addition to whether the applicant is presently licensed, whether the applicant has been licensed for five of the ten years preceding application. Committee members agreed. Committee members also agreed Section C(4) should be modified to require the applicant, if not presently licensed, to provide a statement that the applicant has been engaged in the active practice of law for five of the ten years immediately preceding the date of the application.

Dianna Kindseth drew attention Section C(3), which requires providing a statement from the legal services organization that the applicant "is" an unpaid volunteer under the organization's supervision. She suggested the statement should indicate whether the applicant "is or will be" an unpaid volunteer since the applicant may not yet be a volunteer at the time application is made. Committee members agreed Section C(3) should be modified as suggested.

There were no further suggested changes to the draft rule. Chair Tabor asked how Committee members would prefer to review the revised draft. She said one method would be to distribute the revised draft subject to a brief comment period. If there are no substantive comments, approval of the draft would be assumed.

It was moved by Jean Hannig, seconded by Justice Sandstrom, and carried that Sections C (1), (3), and (4) be revised as described, that the revised draft then be distributed for review subject to a 3-day comment period, and that in the absence of any substantive comment the revised draft will be deemed approved.

It was moved by Jean Hannig, seconded by Clare Carlson, and carried that if the revised draft is deemed approved, the finalized proposed rule is approved for submission to the Supreme Court for its consideration.

Attorney Serving in Dual Status - PR and Legal Counsel - Rule Proposal

Chair Tabor drew Committee members' attention to Attachment D (November 25, 2008) - an email comment from Grant Shaft, Chair of the Real Property, Probate, and Trust Law Section, indicating agreement among section members that making dual status the basis for an ethical violation would be too onerous and suggesting the alternative of some form of court approval or supervision. Attachment D also includes a draft rule proposal prepared by the subcommittee which would prohibit a lawyer serving as fiduciary of an estate, trust, or conservatorship, or the lawyer's firm, from also serving as legal counsel for the fiduciary. The prohibition would not apply if there was a particular familial relationship between the lawyer and the decedent, trustor, beneficiary, or protected person.

Judge Sturdevant said, as a member for many years of the SBAND Section, that he appreciated the section members' comments but suggested the Committee serves a different constituency. He said the suggestions concerning court approval or supervision returns the discussion to practical difficulties the Committee has discussed in the past. Additionally, he said there is a continuing question about whether there is a pressing need for lawyers to serve in both capacities. He noted the observation in the email that there are wills and trusts in existence in which the attorney is also named as PR or trustee. He said that concern could possibly be addressed by including language in the rule that indicates the rule would not apply to fiduciary designations in testamentary and trust instruments executed after a specified date. Justice Sandstrom said he would be reluctant to create an exception to the rule because it may result in a future problem. He said the attorney named in both capacities in an instrument could decline to serve in one or the other role. Judge Sturdevant agreed.

Jean Hannig said she supported the proposed prohibition as serving in both capacities risks too many problems and opportunities for wrongdoing.

Clare Carlson asked whether the limitation would pose problems in rural areas without many attorneys. Jean Hannig said if an attorney in a small town wishes to serve as a fiduciary, the attorney should be able to locate an attorney in another town to serve as legal counsel for the estate. Sandi Tabor observed that it is not uncommon for someone who is not an attorney to serve as a personal representative or trustee.

In response to a question from Ryn Pitts, Sandi Tabor said the frequency with which dual representation occurs is not clearly known, but the issue surfaces most often in disciplinary complaints.

Justice Sandstrom said the issue is simply a matter of public protection and the public's trust and confidence in the profession and the disciplinary process.

Pat Ward said the Committee should move forward with the proposed rule and the Real Property, Probate, and Trust Law Section can offer a comment at the next level.

Dianna Kindseth noted the relational references in the proposed rule [spouse, child, parent, or sibling of the lawyer] and asked whether there should be a broader focus. Staff observed that Rule 1.8 of the Rules of Professional Conduct, in paragraph ( c), prohibits a lawyer from preparing an instrument giving the lawyer a testamentary gift but has an exception if the client is related to the lawyer as a spouse, child, grandchild, parent, grandparent, or other person with whom the lawyer has a close, familial relationship.

Staff noted that a likely location for the proposed language would be Rule 1.8, which governs conflicts of interest and certain prohibited transactions. Justice Sandstrom suggested that, if the language is added to Rule 1.8, it should be added as the next available paragraph, which would be new paragraph (l).

It was moved by Pat Ward, seconded by Justice Sandstrom, and carried that the draft language included in Attachment D be modified to include references to "grandchild" and "grandparent" in the exception portion and that the language, as modified, be set out as a proposed paragraph (l) to Rule 1.8.

Sandi Tabor said if the proposed language is inserted in the Rules of Professional Conduct an accompanying comment would be needed. Committee members agreed staff should prepare a proposed comment to accompany the new rule provision.

It was moved by Pat Ward, seconded by Judge Sturdevant, and carried that the proposed amendment to Rule 1.8 and accompanying comment be distributed for review, subject to a 3-day comment period, and that in the absence of any substantive comment the proposed amendments will be deemed approved for submission to the Board of Governors for review and, in the absence of any Board comment requiring Committee action, for submission to the Supreme Court for its consideration.

Lawyer Trust Account Overdrafts - Comments on Proposed Rule Amendments

Chair Tabor explained that Marilyn Foss, General Counsel for the ND Bankers Association, had prepared amending language that would provide an exemption in N.D.C.C. §6-08.1-02 allowing banks to release information for purposes of implementing the proposed overdraft notification rule amendments. The language was distributed to Committee members by email and is attached as an Appendix. She said the association has indicated support for the statutory amendment. She noted, however, that the Independent Community Banks association has expressed concerns, which are reflected in the letter included as Attachment E (November 25, 2008). Those concerns, she said, include questions of liability in light of the privacy limitations, possible liability for noncompliance, and the cost of implementing the notification process. She said the privacy issue should be addressed by the legislation amending the relevant state law.

Bill Neumann wondered what the result might be if a bank failed to notify about a trust account overdraft and another client of the attorney is subsequently injured because the attorney has overdrawn trust accounts. He asked whether there may be liability on the part of the bank. Justice Sandstrom said that may be a possible concern but said it is worthwhile to address the known problem that exists. He noted that overdraft notification rules have been implemented in several other jurisdictions.

Sandi Tabor noted the alternative suggested by the Independent Community Banks association - that attorneys should be required to submit all their reconciled bank statements to the disciplinary authority for review. That, she said, would likely be very difficult to manage.

Jean Hannig observed that banks are already complying with rules governing interest on lawyer trust accounts.

Justice Sandstrom suggested contacting the Independent Community Banks association and advising that legislation will be introduced to address the privacy concerns. Petra Hulm said the likelihood that reports will be rare may alleviate some of the association's concerns.

In response to a question from Chair Tabor, Bill Neumann said the Board of Governors would likely seek introduction of the proposed legislation to the privacy statute.

Following further discussion, it was moved by Jean Hannig, seconded by Dan Ulmer, and carried that the previously reviewed amendments to Rule 1.15 and Rule 1.0 be approved for submission to the Supreme Court with the understanding that the SBAND Board of Governors will pursue introduction of the proposed legislation.

There being no further discussion the meeting was adjourned at 12:55 p.m.