CBA Record March-April 2025

PRACTICAL ETHICS BY TRISHA RICH New ABA Ethics Opinion on Avoiding Misunderstandings while Representing Organizations A new opinion (Formal Opinion 514) from the American Bar Association examines situations

Careful lawyers will consider this poten tial conflict throughout their representa tion. Usually, the first place a lawyer can address the issue is in the engagement letter. Engagement letters should clearly identify who the client is, and sometimes just as importantly, who the client is not. It is perfectly acceptable for a lawyer to write an engagement letter that says, “We repre sent Acme Corporation, and expressly do not represent Mr. Acme in his personal capacity or any other individual.” The lawyer must then, of course, avoid inad vertently entering into an attorney-client relationship with those excluded indi viduals, but that is an issue outside of the scope of this month’s column. While Formal Opinion 514 explains that competent legal advice to an orga nization sometimes must include advice related to the personal rights and obliga tions of an organization’s constituents, the Opinion also rightly notes that law yers have an obligation to take reasonable measures to avoid or dispel a constituent’s misunderstanding if that constituent mis takenly believes that the lawyer represents him or her personally (this obligation is found in Rule 4.3). Among the best ways to do this is for the lawyer to – as often as necessary – remind constituents that the lawyer’s client is the organization, and not any particular individual within the organization. That is especially important where the individual may have a con flict with the organization’s interests. In appropriate circumstances, lawyers will want to give and perhaps even memorial ize Upjohn warnings. See, Illinois Rule of Professional Conduct 1.13(f).

tions where a lawyer (either in-house or outside counsel) is providing legal advice to an organizational client through one of its constituents; the lawyer knows or rea sonably should know that the constituent is likely to have their own legal interest(s) at stake; and the lawyer does not want to create an attorney-client relationship with that constituent or otherwise assume either contractual or fiduciary duties with that constituent. The opinion recognizes that some times legal advice given by attorneys to organizations (again, through and to their constituents) could have legal implica tions for those same constituents, who are also presumably bound to act on behalf of the organization. This presents a par ticularly tricky situation for lawyers, as usually those constituents will not be the lawyer’s clients. As the opinion notes, this situation is ripe for misunderstandings. Among the most notable misunderstand ings is that the individual constituent may misunderstand the lawyer’s role and per ceive that the lawyer’s advice is meant for the constituent to rely on personally. In short, representing an entity organization often presents a situation where a lawyer must communicate legal advice to the client (the organization) through a con stituent (who is probably not a client and thus should not be relying on the legal advice for themselves personally). Entity organization nearly always implicates this client identification issue.

in which an organization’s constituents may be implicated by legal advice and makes recommendations to ensure con stituents do not confuse the lawyer’s role. The ABA’s Standing Committee on Ethics and Professional Responsibility issued the opinion on January 8, 2025. Whenever an attorney represents an organization or entity, that lawyer must necessarily both receive information through and give advice to the organiza tion’s constituents – often the organiza tion’s general counsel or other lawyers, or the organization’s owners, managers, or board members. While the lawyer typi cally represents the organization alone, organizations act only through their con stituents. The primary ethics rule that instructs lawyers on their obligations in dealing with entity representations is Rule 1.13 (in both the ABA’s Model Rules of Professional Conduct and in the Illinois Rules of Professional Conduct). Rule 1.13 instructs lawyers on sev eral issues specific to entity organization, including what to do where the organiza tion’s interests diverge from those of one of its constituents. Formal Opinion 514 builds on those principles to provide addi tional guidance on legal matters, which includes giving legal advice that could impact constituents. Specifically, Formal Opinion 514 provides advice on situa

Trisha Rich is a commercial litigator and legal ethicist at Holland & Knight, the Secretary of the Chicago Bar Association, and a past president of the Association of Professional Responsibility Lawyers, the national bar

association for legal ethicists.

42 March/April 2025