Members Present Judge Michael Sturdevant, Chair Kara Johnson Petra Mandigo Hulm Michael McGinniss Alex Reichert Justice Dale Sandstrom Dan Ulmer Jason Vendsel
Members Absent George Ackre Judge Dann Greenwood Sandra Keller Dianna Kindseth Nikki Schmaltz
Also Present Paul Myerchin, ND Association of Criminal
Defense Lawyers Al Austad, ND Association for Justice
Staff Jim Ganje Tony Weiler Pat Ward
Chair Sturdevant called the meeting to order at 10:00 a.m. and drew Committee members’
attention to Attachment B (September 6, 2013) - minutes of the June 12, 2013, meeting.
It was moved by Alex Reichert, seconded by Dan Ulmer, and carried that the minutes
Special Fee Agreements - Criminal Cases - Cont’d Discussion
Chair Sturdevant welcomed Paul Myerchin, ND Association of Criminal Defense Lawyers,
for further comments regarding possible amendments to Rule 1.5, Rules of Professional Conduct,
regarding fee agreements.
Mr. Myerchin drew attention to a letter to the Committee from Tatum Lindbo, Association
President, which was previously distributed to Committee members (See - Appendix). The letter, he
said, reflects the Association Board’s conclusion after having reviewed the Supreme Court’s recent
opinion in Disciplinary Board v. Hoffman. He said the opinion is regarded as instructive on the
permissible contours of fee agreements and provides useful guidance to defense attorneys about how
to appropriately structure agreements in criminal cases. Based on it’s review of the opinion, he said,
the Board recommends that the Committee discontinue consideration of possible amendments to
Mr. Myerchin noted that Tom Dickson, Bismarck attorney, was unable to attend the meeting
but offered the following observations as part of a presentation to the Association: there are different
practices around the state regarding fee agreements (hourly rate plus costs, flat fee plus costs, a
“nonrefundable” retainer or minimum fee) and flat fee agreements provide simplicity and clarity for
the client and lawyer. He related an earlier experience Mr. Dickson had with a defendant who was
acquitted and, having been acquitted, refused to pay the fee for Mr. Dickson’s representation. The
defendant reasoned, he said, that since he was acquitted he was innocent and could not be recharged
or punished, and therefore paying attorney fees would be a form of punishment. Mr. Dickson, he
said, had not obtained any fees in advance when agreeing to represent the defendant.
Justice Sandstrom noted problem situations in which a defense attorney, having been
retained, is simply unavailable to the client but has obtained an advance payment from the client.
Mr. Myerchin observed that in some instances it is unlikely that a rule, however cast, will cure
situations like that. He noted that in the most notorious example involving a recently deceased
lawyer, members of the area criminal defense bar volunteered to take on many of the clients left
With respect to the draft amendments included in Attachment C (September 6, 2013) - pp.
1-7 - Mr. Myerchin noted that there is real concern about the requirement that a fee that exceeds a
to-be-determined amount must be deposited in the lawyer’s trust account. He said the requirement
would impose a perhaps unworkable business model on lawyers who are sole practitioners.
Petra Hulm observed that there is no suggestion that the fee amount be left in the trust
account until representation ends, but only until certain benchmarks or levels of service have been
met. She wondered how a lawyer who receives, for example, a fee of $50,000 can be said to have
earned the fee when it is received. She said the consideration must begin with whether the agreement
is considered “reasonable” at the outset.
Mr. Myerchin observed that there are complex, demanding cases in which a lawyer may
receive $50,000 or $75,000 when representation begins. He emphasized that the lawyer, in agreeing
to take the case, is foregoing availability for other clients and other cases.
Judge Sturdevant noted the Association’s recommendation that the Committee not consider
amendments to Rule 1.5. He suggested that, at a minimum, there should be a requirement that fee
agreements be in writing.
In response to a question from Dan Ulmer regarding whether Hoffman established a new
standard for fee agreements, Justice Sandstrom said the opinion interpreted and applied the current
rule governing fee agreements. He said even if an agreement is considered “reasonable”, there may
be other factors that affect how the fee should be handled.
Mr. Myerchin reiterated that the Association views Hoffman as providing the necessary
guidance and instruction to the criminal defense bar regarding how to manage fee agreements in a
Justice Sandstrom said he has no necessary objection to the flat fee concept, but there should
be a fee reserve to protect the interests of the client. He said the rules recognize a basic duty to
protect clients and the public.
Chair Sturdevant asked for a Committee response to the recommendation that consideration
of possible amendments to Rule 1.5 be discontinued.
After discussion, it was moved by Petra Hulm, seconded by Mike McGinniss, and
carried that the Committee continue discussion of possible rule amendments. (Dan Ulmer - no).
Staff drew attention to the alternative amendments to Rule 1.5(g) included in Attachment C
(September 6, 2013) - p.8. He said the alternative amendments would permit a lawyer to retain and
deposit in the lawyer’s operating account fees up to $10,000. Fees in excess of $10,000 would be
deposited in the trust account and could later be deposited in the operating account when certain
benchmarks identified in the written fee agreement are met.
Kara Johnson explained that the alternative amendments were devised after the June meeting
as possible compromise language. However, she said, after the Hoffman opinion there is a general
sense that rule changes may not be needed. She said incorporation of benchmark requirements in a
rule may create more problems than they solve. She said the basic requirement of “reasonableness”
may be more adequate in analyzing a particular fee agreement in a given case. There is, she said, a
risk of over-regulating lawyer practice in only one part of the bar.
Alex Reichert observed that the Client Protection Fund exists to protect clients from
unscrupulous lawyers. He said if rules governing that process are an issue, then perhaps amendments
to those rules should be considered.
Petra Hulm asked whether there is agreement that nonrefundable fee agreements should be
impermissible. Jason Vendsel asked whether the Hoffman opinion addresses the question. Ms. Hulm
observed that the opinion does not specifically direct that “nonrefundable” fees are necessarily
Mike McGinniss observed that there is a longstanding concern that nonrefundable fee
agreements have a chilling effect on the client’s willingness to exercise the right to terminate a
Judge Sturdevant suggested there should be discussion of whether fees can, in fact, be
described as “nonrefundable”. Additionally, he suggested some attention should be given to the
usefulness of guidance about how much of an initial payment to a lawyer can be deposited in the
Justice Sandstrom left the meeting due to a prior commitment.
Dan Ulmer said that a general percentage designation, rather than a specific dollar amount,
may be the better approach if some part of the initial fee is available to be deposited in the operating
On the question of whether nonrefundable fees should be permissible, Committee members
reviewed draft paragraph (f) of the rule amendments previously discussed by the Committee -
Attachment C (September 6, 2013) - p.2 [lines 23-25]. Paragraph (f) would provide that
nonrefundable fees and retainers are prohibited and also would prohibit any agreement purporting
to restrict a client’s right to terminate representation or restrict the right to obtain a refund of
unearned or unreasonable fees. Staff said the draft language is patterned after a Colorado rule
It was moved by Mike McGinniss and seconded by Petra Hulm that draft paragraph(f)
be tentatively approved as written.
Alex Reichert noted that the Hoffman opinion observed that “nonrefundable ‘minimum fee’
agreements may be permissible, in that such agreements are not per se unreasonable” under the rule.
Attachment C (September 6, 2013) - p. 19.
Paul Myerchin expressed concern that the draft rule language may extend beyond what the
Supreme Court said about nonrefundable fee agreements in the opinion.
Kara Johnson wondered whether it would be preferable to provide guidance in the rule’s
comment about particular fee arrangements.
After further discussion, the motion failed (3-yes, 4-no).
Dan Ulmer wondered whether the 2nd line of draft paragraph (f) would be useful in protecting
the client. The language would instruct that an agreement cannot restrict the right to terminate
representation or restrict the client’s right to a refund of unearned or unreasonable fees.
In response to a question from Jason Vendsel, Paul Myerchin said neither he nor Tom
Dickson has particular concern about the 2nd sentence in draft paragraph (f). However, he suggested
that, in light of Hoffman, the language may be better placed in Rule 1.16(e).
Alex Reichert observed that in his experience the vast majority of clients who hire criminal
defense lawyers are satisfied with and protected by the current process.
Following discussion, Chair Sturdevant said the Committee would reserve further
consideration of the topic for the next meeting. Petra Hulm suggested, and Committee members
agreed, that the Association be requested to consider and propose language regarding an acceptable
ABA Commission on Ethics 20/20 - Review of Amendments to Model Rules of Professional
Chair Sturdevant next drew attention to Attachment D (September 6, 2013) - a memorandum
suggesting the sequence for review of Ethics 20/20 model rule amendments and related North
Dakota rules. The background for the review consists of separately distributed material assembling
the model rule amendments, proposed model rules, ABA background reports, and the relevant North
Rule 1.0 - Terminology. Staff explained that the model rule amendments replaced a reference
to “e-mail” in the definition of “writing” or “written”with “electronic communications”. In related
fashion, the amendments replace “materials” in Comment  (North Dakota Comment ) with the
more encompassing reference “information, including information in electronic form”.
It was moved by Jason Vendsel, seconded by Petra Hulm, and carried that amendments
to North Dakota Rule 1.0 reflecting the model rule amendments be approved.
Rule 1.1 - Competence. Staff explained that the model rule amendments consist of adding
two new comments  and  which offer explanation of matters concerning retaining or
contracting with lawyer’s outside a lawyer’s own firm to assist in the provision of legal services to
a client. He noted that the model comment language suggests obtaining the client’s “informed”
consent to the arrangement. The concept of “informed consent”, he said, had been rejected in the last
revision to the Rules of Professional Conduct following the ABA’s Ethics 2000 activity. He said an
additional model rule amendment would add language to Model Comment  - renumbered from
Comment  - to explain that a lawyer should keep informed of changes in practice, including the
benefits and risks associated with relevant technology. He said the affected North Dakota comment
would be Comment.
Mike McGinniss said the added language is aimed at ensuring a certain level of competency
among lawyers outside the firm who would not be subject to normal managerial oversight within the
firm. The objective, he said, is to ensure that the client is protected. He said the added language is
intended to address something of a gap between Rule 5.1, which deals with supervisory lawyers and
managerial responsibilities, and Rule 5.3, which applies to responsibilities of nonlawyer assistants.
It was moved by Jason Vendsel, seconded by Mike McGinniss, and carried that
amendments to North Dakota Rule 1.0 reflecting the model rule amendments, except for the
deletion of “informed”, be approved.
Rule 1.4 - Communication. Staff explained that the Ethics 20/20 revision is a relatively minor
amendment to Model Comment  to clarify that a lawyer should promptly respond to or
acknowledge client communications. He said Model Comment  generally explains the obligation
of the lawyer or the lawyer’s staff to promptly comply with a client’s request for information or
explain when a response can be expected. He noted that North Dakota Rule 1.4 does not have a
direct counterpart to Model Comment , but the North Dakota rule comments do explain the
lawyer’s responsibility in ensuring that adequate information is provided to the client.
Mike McGinniss said Model Comment  may be useful in more directly identifying the role
of the lawyer’s staff in responding to information requests.
Jason Vendsel said Model Comment  and the amendments to it do not seem to add much
to the current North Dakota comment.
It was moved by Jason Vendsel, seconded by Alex Reichert, and carried that Model
Comment  and related amendments not be approved.
Rule 1.6 - Confidentiality of Information. Staff explained that the Ethics 20/20
amendments add subparagraph (b), which would authorize a lawyer to reveal, with certain
limitations, otherwise confidential information if reasonably necessary to detect or resolve a conflict
of interest resulting from the lawyer’s change of employment or a change in the firm’s structure. The
amendments also create paragraph ( c), which would require the lawyer to make “reasonable efforts”
to prevent the inadvertent disclosure of or access to information related to the representation of a
client. Related Comments ,  and , which are fairly substantial, would be added.
Judge Sturdevant said new section ( c) appears to require that a lawyer have appropriate
technical safeguards to prevent access to computers or electronically stored information.
Alex Reichert wondered what the scope of “reasonable efforts” might be. Similarly, he said
the concept of “inadvertent” disclosure or unauthorized access is troubling. He said application of
these requirements in a technological context may pose risks for lawyers.
Mike McGinniss said the model rule amendments are a response, in part, to ethics opinions
emphasizing that limits on disclosure of confidential information also include methods for
preventing unauthorized access to confidential information. He noted that Rule 5.3 also requires
“reasonable efforts” by the lawyer to ensure that the conduct of nonlawyer staff is compatible with
the lawyer’s professional obligations. He said Rule 5.1 likewise requires “reasonable efforts” to
ensure lawyers in a firm conform to professional conduct rules. He said “reasonable efforts” is not
the equivalent of strict liability and the objective is that workable procedures be in place to protect
Staff noted that new Comment  is added which sets out factors to be considered in
determining whether a lawyer’s efforts in protecting information were reasonable.
After discussion, it was moved by Petra Hulm and seconded by Mike McGinniss that
amendments to North Dakota Rule 1.6 reflecting the black-letter model rule amendments
[adding subparagraph (b)(7) and paragraph ( c)] be approved.
Kara Johnson observed that what may be considered “reasonable efforts” for her may not be
reasonable efforts for an older member of the bar.
Committee members discussed what might be considered “reasonable efforts” in the context
of firm practices, the activity support staff, and technological requirements.
Petra Hulm observed that technology in law firms has changed substantially since rule
amendments resulting from Ethics 2000. She said there is a need for rule provisions that emphasize
the importance of protecting information in light of current technology.
After further discussion, it was moved by Jason Vendsel, seconded by Mike McGinniss,
and carried that the motion be amended to include approval of the model comment revisions,
with the exception of replacing “informed consent”, wherever present, with “consent”. (Alex
Reichert - no).
Rule 4.4 - Respect for Rights of Third Persons. Staff explained that the Ethics 20/20
amendments are with respect to model rule paragraph (b), which principally addresses a lawyer’s
receipt of inadvertently transmitted information related to the lawyer’s client. He noted that the
previous revision of the ND Rules of Professional Conduct resulted in current Rule 4.5, which
specifically addresses receipt of inadvertently transmitted information and incorporates model rule
paragraph (b) as Rule 4.5(a).
Committee members agreed consideration of Model Rule 4.4 would be taken up at the next
Rule 5.3 - Responsibilities Regarding Nonlawyer Assistance. Staff explained that aside from
a minor amendment to the rule title, the Ethics 20/20 amendments to Comment , renumbered as
Comment , address the responsibility to make reasonable efforts to ensure nonlawyers in the firm
and nonlawyers outside the firm working on firm matters act in a manner consistent with the
lawyer’s professional obligations. The amendments add new Comments  and , which further
explain expectations regarding the use nonlawyers outside the firm to assist in providing legal
services to a client.
Mike McGinniss said the amendments reflected in Comment  are generally intended to
track amendments to Rule 1.1 regarding use of lawyers outside the firm but in the context under
Rule5.3 of the use of nonlawyers outside the firm. He said new Comments  and  more fully
addresses circumstances in which a lawyer uses nonlawyers outside the firm to provide services.
After further discussion, it was moved by Jason Vendsel, seconded by Kara Johnson, and
carried that amendments to North Dakota Rule 5.3 reflecting the model rule amendments be
approved. (Alex Reichert - no).
Rule 5.5 - Unauthorized Practice of Law; Multijurisdictional Practice. Staff noted that the
Ethics 20/20 amendments to Model Rule 5.5 diverge significantly from current North Dakota
Rule5.5 as current Rule 5.5 itself is quite different from the model rule. He said current Rule 5.5
resulted in large part from the work several years ago of the SBAND Multijurisdictional Practice
Task Force. Mike McGinniss agreed to provide an report regarding the Ethics 20/20 amendments
and the impact on current Rule 5.5.
Chair Sturdevant said the Committee would continue review of the Ethics 20/20 rule
amendments and proposals at the next meeting.
In response to a question from Chair Sturdevant regarding the work of the SBAND
Mentoring Taskforce, Kara Johnson said Taskforce work concerning how a mentoring program
might be implemented has been delayed pending a discussion with the CLE Commission on
education requirements for mentoring participants. There being no further discussion, the meeting was adjourned at 1:35 p.m.