Ethical Implications When Acting as Local Counsel

Many litigators have either retained or served as “local counsel” in state or federal courts.  Litigators with national practices may work with local counsel more often than not.  Those with niche practices handling cases in specialized courts, such as the Delaware Chancery Court, also frequently serve as local counsel to those who are admitted to practice outside the jurisdiction.  However, when that out-of-state lawyer calls and wants you to serve as local counsel in a major case, it is important to establish the ground rules before entering your appearance for the new client.   

Typically, the out-of-state lead counsel (“lead counsel”), relies on local counsel for compliance with local rules, filing and service responsibilities, and other seemingly mundane tasks, but maintains primary authority over strategic decisions and direct contact with the client.  In fact, more often than not, lead counsel will not want local counsel to have any contact with their client.  Lead counsel will assume responsibility for all substantive matters in the case, including written discovery, drafting and responding to motions, all depositions, and trial if necessary.  Local counsel is generally responsible for reviewing pleadings to ensure that procedural requirements are satisfied, advising on the applicability of local rules or the personal policies of the assigned judge, and moving for the pro hac vice admission of lead counsel.  In a perfect world, the matter eventually concludes through settlement or a trial and the client is pleased with the result.  But what if the client is dissatisfied with the quality or result of the representation?  The short answer is that both lead and local counsel could face a legal malpractice claim, regardless of which counsel truly controlled the matter, or even committed any alleged errors.  There are steps attorneys should take to protect themselves when acting as local counsel.

There Is No “Local Counsel” Exception To The Rules Of Professional Conduct

The ABA’s Model Rules of Professional Conduct, as well as each state’s version of the Model Rules do not make a distinction between “lead counsel” and “local counsel” when it comes to the duties arising from the attorney-client relationship.  All lawyers are ethically obligated to provide “competent” and “diligent” representation to their clients (Rules 1.1 and 1.3); to “reasonably consult with the client about the means by which the client’s objectives are to be accomplished,” and to “keep the client reasonably informed about the status of the matter” (Rule 1.4); and to avoid conflicts of interest (Rules 1.7-1.9).

Merely being designated as “local counsel” does not necessarily limit the attorney’s role, nor does it serve to narrow the scope of ethical obligations to the client.  Local counsel must abide by the usual ethical requirements applicable to his or her own conduct in the representation.  If local counsel engages in unethical conduct, it is generally no defense to a violation that the conduct was suggested, initiated, or directed by lead counsel.  Therefore, when in doubt, the safest option is to ensure compliance with all ethical obligations.  Otherwise, an attorney who agrees to act as local counsel may be subjected to unanticipated obligations and unintended risks. 

A common scenario is lead counsel repeatedly fails to respond to outstanding discovery requests and the court subsequently sanctions the client for lead counsel’s dilatory conduct.  In such cases, local counsel may try to no avail to press lead counsel to respond to the discovery and local counsel is unable to answer the discovery due to the lack of a relationship with the client contact, and have been instructed by lead counsel not to communicate directly with the client.  Since the Rules of Professional Conduct and most court rules make no distinction between local counsel’s versus lead counsel’s obligations to the client or to the court, unless local counsel has taken the proper steps beforehand, they may share responsibility for lead counsel’s dilatory conduct.

To illustrate, in Alpha Pro Tech, Inc. v. VWR Int’l, LLC, 2018 WL 1693347 (E.D. Pa. March 14, 2018), Judge Gene E.K. Pratter addressed a situation where lead counsel for Plaintiff had “consistently flouted the Court’s deadlines,” and was repeatedly admonished for its disregard of court orders and procedures.  After the grant of summary judgment against and the imposition of an unopposed award of attorney’s fees, Alpha Pro through local counsel sought reconsideration of the fee award.  The court denied reconsideration, concluding that the client’s remedy for the law firm’s failure to oppose the fee motion and its failure to timely inform the client of the grant of summary judgment was an action for legal malpractice.  The court also explained that the order granting pro hac vice status to lead counsel stated that local counsel “shall continue to have responsibility for this matter during its pendency before the Court.”  As a result, both the lead and local law firms were placed at risk.

In a recent opinion the Professional Guidance Committee of the Philadelphia Bar Association (Opinion 2019-1: “Responsibilities of Local Counsel”) noted that although “[t]he scope of [local] counsel’s professional services can be limited with client consent, fiduciary duties such as loyalty and communication are not narrowed.”  The opinion highlighted the decision in Curb Records v. Adams & Reese L.L.P., 203 F.3d 828 (5th Cir. 1999), where the court held that in some circumstances, local counsel must bypass lead counsel and report to the client directly.  In Curb Records, lead counsel chose a strategy of ignoring all court orders for discovery.  Local counsel was aware of the strategy, but did not inform the client.  The court held that “local counsel [may not] turn a blind eye toward the willful disregard of court orders by lead counsel when it should be evident to him that such conduct will seriously prejudice the client’s interests.  Id. at *6.  The court concluded that local counsel must “report directly to its clients any known instances of malfeasance or misfeasance on the part of lead counsel that an objectively reasonable lawyer in the locality would conclude are seriously prejudicial to the client’s interests.”  Id.

Use Limited Scope Engagement Letters

Attorneys who wish to define their role as local counsel should do so through an agreement to limit the scope of representation pursuant to Rule 1.2(c) of the Rules of Professional Conduct.  Although a limited scope agreement does not absolve attorneys from complying with their ethical duties, it will narrow the universe within which those ethical obligations apply by limiting the attorney’s role in the matter and specifying the tasks they are expected to perform.  Matters worth addressing in the limited scope engagement letter include a clear delineation of tasks, both procedural and substantive; timing of the representation; and sharing or division of fees with lead counsel, including billing frequency, expenses, and issues pertaining to non-payment. 

In jurisdictions where the court’s rules require local counsel to play an ongoing role in the matter to assist the court in maintaining efficient judicial administration of the case, those continuing obligations to the court should also be specified in the limited scope engagement letter.  The obligations placed by courts on local counsel are not necessarily limited to the requirements imposed by the Rules of Professional Conduct. 

A written agreement that clearly articulates the role of local counsel can benefit all parties by managing expectations, avoiding misunderstandings about the scope of the attorney’s responsibilities, minimizing disputes over the allocation of responsibility between lead counsel and local counsel, and managing costs.  It is the attorney’s obligation to ensure that any material limitations on the scope of representation are reasonable under the circumstances. 

The Client Must Give “Informed Consent” To The Limited Scope Representation

Rule 1.2(c) requires that the client give “informed consent” to the limited scope representation.  Obtaining informed consent requires the attorney to disclose the limitations on the scope of the engagement and the material matters that will be excluded, as well as the reasonably foreseeable consequences of the limitation.

Any agreement to limit the scope of an attorney’s representation carries certain risks for the client.  For example, an agreement that limits local counsel’s role to appearing only at routine status conferences may save the client money, but also means that local counsel is probably not double-checking lead counsel’s filings to ensure they are compliant with local rules, or otherwise monitoring lead counsel’s conduct.  Although Rule 1.2(c) does not require the client’s “informed consent” to be in writing, the better practice is to obtain the consent in writing.  Securing the client’s written agreement to limit the scope of your duties in the case should successfully protect yourself in the event lead counsel does not do their job and prejudices the client’s case.  This emphasizes the central role of the engagement letter in managing expectations, and the best practice of making the retention agreement directly with the client and not with lead counsel. 

Although written communication with the client is always advisable for local counsel, in Formal Opinion 2015-4: “Duties of Local Counsel,” the Bar Association of New York City noted that, “given the long-standing, customary practice of lead counsel acting as intermediary between local counsel and the client, we believe a written agreement between local counsel and lead counsel may fulfill the requirements of Rule 1.2(c),” provided lead counsel obtains the client’s informed consent to that agreement.  The Professional Guidance Committee’s recent Opinion 2019-1: “Responsibilities of Local Counsel,” noted that, “[i]n view of the authority of lead counsel over means, ‘local counsel’ can normally rely on lead counsel’s instructions as to the manner of communication, the scope of the engagement, and the fee.  Thus, in ordinary circumstances, there is no ethical imperative that ‘local counsel’ communicate directly with the client.  After discussion and assurance of authority from lead counsel, an engagement arrangement between local and lead counsel would be ethically sufficient.  And, the arrangement could ethically specify communication solely with lead counsel.”  

Regardless, written communication with the client is always advisable for local counsel.  Direct communication reduced to writing reduces the risk of later disagreement with the client over the scope of the engagement. 

Although Rule 1.2(c) gives lawyers and clients significant flexibility in defining the scope of representation, any limitations must be “reasonable under the circumstances.”  An agreement for a limited representation does not exempt an attorney from the duty to provide competent representation.  Local counsel must also comply with any relevant court rules governing the responsibilities of counsel.  Local counsel’s responsibilities pursuant to the relevant court rules cannot be limited by agreement, although it is ethically permissible to seek advance court permission for local counsel to avoid participating in person in certain court conferences and the like in order to save the client legal fees. 

While acting as local counsel can be beneficial for clients and counsel, serving in this limited capacity is not without risk, and should only be undertaken in compliance with court rules.  Effectively managing that risk is possible through the use of limited scope engagement letters and vigilance.  If you intend to limit your role to certain tasks, or a certain phase of the matter, you should confirm that understanding at the outset of the representation and secure the client’s consent in writing.  As always, effective communication and documentation are the keys to avoiding unpleasant and potentially expensive surprises.  

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Last modified: November 17, 2020

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