Ethics in the workers' comp world: when a workers' comp lawyer faces an ethical challenge, the right course may be as clear as day - or as clear as mud. Do you know how to apply the rules? Test yourself with this series of hypotheticals.

Virtually all difficult ethical problems arise from conflict between a lawyer s responsibilities to clients, to the legal system, and to the lawyer's own interest in remaining an ethical person while earning a satisfactory living." (1)

In revising the Model Rules of Professional Conduct, the American Bar Association's (ABA) Ethics 2000 Commission focused on a lawyer's obligation to each client, requiring a lawyer to have more contact with the client as the means to accomplish representation, and ensuring the client's informed consent at all stages of the case. This heightened consumer orientation of law practice poses many challenges for busy workers' compensation lawyers.

As the preamble to the model rules notes, "[N] o worthwhile human activity can he completely defined by legal rules." The rules do, however, provide a framework for the ethical practice of law, and the comments to them provide illustrations and guides for the practitioner. Don't forget, though, that "the text of each rule is authoritative." Thus, "failure to comply with an obligation or prohibition imposed by a rule is a basis for invoking the disciplinary process." (2) Simply put, the rules trump the comments.

The dilemma facing workers' comp lawyers, who generally handle a substantial case load, is how to meet the rules' requirements for competence, diligence, and regular and timely communication. A general practitioner who enters the complex world of workers' comp law must have a keen awareness of his or her obligations to the client.

The following scenarios illustrate some of the common trouble-prone situations that come up in the day-to-day practice of workers' compensation law.

The solicitation 

Will is a general practice lawyer. He occasionally attends Moose Lodge meetings, also attended by Ralph, a construction worker. One evening, Will observes that Ralph is unable to stand up straight. Will approaches Ralph after the meeting and asks him about the nature of his apparent injury. Will tells Ralph that he is a lawyer and indicates that he can represent Ralph in his workers' comp claim. Is Will's contact with Ralph appropriate?

Probably not. Rule 7.3 (Direct Contact with Prospective Clients) states: "A lawyer shall not by in-person, live telephone, or real-time electronic contact solicit professional employment from a prospective client when a significant motive for the lawyer's doing so is the lawyer's pecuniary gain."

Since Will intends to charge a fee (his pecuniary gain), his solicitation runs afoul of the rule.

The retainer 

Ralph calls Will from his home, 100 miles away from Will's office. Ralph's workers' comp claim has been denied following an adverse medical exam. He can't drive because he has recently had spinal surgery. Ralph is a union worker, and his union has been paying his medical bills and weekly disability. Will sends Ralph his standard retainer agreement, which Ralph signs and returns, and Will begins work on the case. OK ethically?

Probably not. Under new Rule 1.0(e), Ralph must give "informed consent" to representation, which is defined as: "[A]greement by a person to a proposed course of conduct after the lawyer has communicated adequate information and explanation about the material risks of and reasonably available alternatives to the proposed course of conduct."

How much initial information is required for consent to be informed? In the example, Will has not explained to Ralph that the union has a lien on any workers' comp benefits he receives and that he'll have to pay the union back. If Will gets a good offer to settle, but the union imposes its medical expense and weekly disability lien, the informed consent issue arises.

The specialist

Will tells Ralph that workers' comp is one of his specialty areas. Is this appropriate? Not unless Will has been certified as a workers' comp specialist in his state by an ABA-accredited organization or appropriate state authority, as required by Rule 7.4 (Communication of Fields of Practice and Specialization).

The referral gift Will knows the Moose Lodge chief well, and the chief recommends that Ralph seek Will's services. Ralph does so, and in return, Will sends the chief a dozen golf balls. Is there anything wrong with giving this gift?

Although some would jest that it depends on whether the golf balls are Titleist ProV's or merely X-Outs, Rule 7.2 (b) prohibits giving gifts in return for a referral: "A lawyer shall not give anything of value to a person for recommending the lawyer's services."

(In)competence

In his 10 years of practice, Will has represented three workers' comp applicants--his sister-in-law, his dry cleaner, and a misdirected Yellow Pages caller. Each of these cases involved only a few weeks of disability and minor medical bills, and he settled each quickly.

Ralph tells Will that he was receiving $400 per week from the disability carrier, but after the carrier sent him to its doctor for a medical exam he was denied further benefits. Ralph is still in pain, and his own doctor has him off work.

Will completes the application for hearing using the $400 weekly wage ($10 per hour based on a 40-hour week) that the carrier has conceded. Ralph, in fact, works 70 hours per week, triggering an enhanced weekly wage and disability rate under a provision in the administrative rule of which Will is unaware. Has Will violated an ethics rule?

Yes. Basic competency in workers' compensation requires that he know how benefits are paid. Rule 1.1 (Competence) provides: "A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness, and preparation reasonably necessary for the representation." The comment states: "In many instances, the required proficiency is that of a general practitioner. Expertise in a particular field of law may be required in some circumstances."

Since workers' compensation is the cluttered little tool room in the house of the law, its many esoteric rules and practices require that the lawyer have special expertise, either personally or through consultation.

The busy practice

Will is a busy lawyer and never gets around to obtaining a form from Ralph's doctor that is necessary for medical proof admissibility. Will receives a delinquency notice from the workers' compensation department and then an order dismissing Ralph's claim without prejudice for lack of medical evidence. Is this a violation of the rules?

Will might think dismissal without prejudice (with leave to refile) means no harm, no foul--but it doesn't. Rule 1.3 (Diligence) provides: "A lawyer shall act with reasonable diligence and promptness in representing a client."

The diligence required is explained by the comment to Rule 1.3: "A lawyer should pursue a matter on behalf of a client despite opposition, obstruction, or personal inconvenience to the lawyer, and take whatever lawful and ethical measures are required to vindicate a client's cause or endeavor. A lawyer must also act with commitment and dedication to the interests of the client and with zeal in advocacy upon the client's behalf."

The diligence dodge

Ralph gets a copy of the dismissal order and asks Will for an explanation. After receiving assurance from the workers' comp department that he can refile Ralph's claim, Will tells Ralph the dismissal was routine. Which of these statements is correct?

A. Will does not need to tell Ralph the real reason for the dismissal since he can refile and no real harm has been done to Ralph.

B. Will must tell Ralph the reason for the dismissal.

C. Will must tell Ralph the reason for the dismissal and advise him that he should see a malpractice lawyer.

C is correct. Rule 1.4 (Communication) triggers Will's obligation to inform Ralph of the real reason: "A lawyer shall keep the client reasonably informed about the status of a matter [and] promptly comply with reasonable requests for information." The rule also states that a lawyer "shall explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation."

To make an informed decision about what to do next, Ralph needs to know that he has a right to seek other counsel about his representation, and Will is required to tell him.

The phone calls

Ralph calls Will persistently, asking for updates on his case. Bothered by Ralph's many intrusions on his busy schedule, Will does not return Ralph's phone calls for a week. Problem?

Yes. Rule 1.4 also applies here. If Will cannot (or will not) return calls, one of his staff should respond timely to Ralph's requests---if not daily, at least on a regular basis.

The miscalculation 

Will's vocational expert says that Ralph is permanently and totally disabled. Will says to Larry, the insurance carrier's attorney, "My case is 100 percent permanent total disability. That comes out to $184 per week times 1,000 weeks, or $184,000. We'll take $175,000 to settle." Larry immediately realizes that the value of the case exceeds $500,000. Which of the following is true?

A. Larry must inform Will that he miscalculated the amount.

B. Larry can take the deal as an advocate for his client.

It depends. This example falls in the cracks between zealous advocacy and an omission that is so misleading it can be considered a prohibited false statement. As Rule 4.1 (Truthfulness in Statements to Others) states: "In the course of representing a client a lawyer shall not knowingly make a false statement of material fact or law to a third person."

The comment to the rule indicates that a misleading omission can be the equivalent of a false statement. Further muddying the waters, the comment also states that a lawyer "is required to be truthful when dealing with others on a client's behalf but generally has no affirmative duty to inform an opposing party of relevant facts."

The split fee

As Ralph's hearing date draws near, Will, realizing he is in over his head, seeks the advice of Elizabeth, an experienced workers' comp attorney. Will and Elizabeth agree on a split fee arrangement, and Ralph signs a retainer with her. Which statement is true?

A. The lawyers do not have to tell Ralph about their fee agreement.

B. The lawyers have to tell Ralph the split fee details and whether the agreement will affect his net recovery.

This one is straightforward--B is correct. Rule 1.5 (e) (Fees) provides that the lawyers must tell Ralph in writing the split fee details, explain the effect on his net recovery, and obtain his approval.

The limited retainer

Elizabeth knows that Ralph's case may involve areas of law other than workers' compensation, such as disability and age discrimination, labor relations, occupational safety, and Social Security disability. Her retainer agreement specifically limits her representation of Ralph to workers' comp matters. Appropriate?

Probably, but the limited retainer does not trump the competency requirement, which may trigger a requirement of familiarity with the various laws that surround a workers' compensation claim, especially third-party claims. (3) Rule 1.2(c) (Scope of Representation) provides: "A lawyer may limit the scope of the representation if the limitation is reasonable under the circumstances and the client gives informed consent."

Note also that the comment states: "Although an agreement for a limited representation does not exempt a lawyer from the duty to provide competent representation, the limitation is a factor to be considered when determining the legal knowledge, skill, thoroughness, and preparation reasonably necessary for the representation."

The misdirected e-mail

Elizabeth receives an e-mail from opposing counsel, Larry, that was obviously sent in error and intended for Larry's client, the insurance carrier. The e-mail outlines the carrier's case strategy, complete with dollar amounts. What should Elizabeth do?

A. Contact Larry to tell him she received the e-mail.

B. Abide by Larry's wishes as to how to dispose of the confidential material.

C. Print the e-mail and use the information to her client's advantage.

D. Tell Larry she will delete the e-mail (but print and keep a copy anyway).

The correct answer is A. The old rules provided that Elizabeth had a duty to try to return the information unopened without revealing its contents and abide by Larry's wish as to how to treat the material, but the new rules dramatically change Elizabeth's obligations.

New Rule 4.4 (Respect for Rights of Third Persons) simply indicates that the lawyer receiving the erroneous information should "promptly notify the sender." The comment suggests a non-binding noblesse oblige: "Some lawyers may choose to return a document unread.... [T]he decision to voluntarily return such a document is a matter of professional judgment ordinarily reserved to the lawyer."

Because of his error, Larry also faces some issues. Larry's options: A. He can insist that Elizabeth not reveal the contents of the e-mail to his client, the carrier.

B. He can refrain from telling his client about the erroneous transmission.

C. He must tell the carrier about his mistake.

A is not an option, and Larry probably must tell his own client under the client communication rule (Rule 1.4).

The coworker contact

Ralph tells Elizabeth that his supervisor admitted to him that the supervisor forgot to tighten a bolt on the machine Ralph was operating when he was hurt--an oversight that caused Ralph's injury. The supervisor is now retired. Can Elizabeth, or Ralph at Elizabeth's request, contact the supervisor without permission from opposing counsel?

Yes. Although contact with a current supervisor is prohibited, contact with a retiree is allowed. New Rule 4.2 (Communication with Person Represented by Counsel) applies only to parties whom "the lawyer knows to be represented by another lawyer in the matter." Since the supervisor no longer works for Ralph's employer, he is not represented by Larry, and Elizabeth may get in touch with him.

The omission

Ralph tells Elizabeth he has been working for his brother for cash paid under the table. Elizabeth, realizing these earnings are a dollar-for-dollar offset from the workers' comp carrier's liability, omits this fact when making her settlement demand to Larry. Can she do that?

It depends. If Larry has asked Elizabeth whether Ralph is working, she cannot hide it. But if Larry does not ask directly, zealous advocacy might allow the omission. This is a difficult judgment call that Elizabeth (and others in similar situations) will have to make, remembering Rule 4.1, which provides: "In the course of representing a client, a lawyer shall not knowingly ... make a false statement of material fact or law to a third person."

She will also have to carefully consider the comment's admonition that "misrepresentations can also occur by partially true but misleading statements or omissions that are the equivalent of affirmative false statements."

The client loan

Elizabeth cannot get a crucial medical report from Ralph's treating physician, Dr. George, because a bill for past treatment remains unpaid. Ralph also needs bus money to get to the doctor's office. Which is true?

A. Elizabeth can pay the bill as a payment for a report needed to advance Ralph's claim.

B. Elizabeth cannot pay the bill under any circumstances.

C. Elizabeth can loan Ralph the money for the bus ride to the doctor.

Both B and C are right. Elizabeth can advance Ralph bus money as a cost of litigation to obtain a medical exam, but she cannot pay Ralph's past-due medical expenses. Dr. George, incidentally, may run into trouble if his state's disciplinary code prohibits him from refusing to provide a medical report until the patient's past-due treatment bill is paid. (4)

Rule 1.8 (Conflict of Interest: Current Clients: Specific Rules) provides that a lawyer "shall not provide financial assistance to a client in connection with pending or contemplated litigation, except that ... a lawyer may advance court costs and expenses of litigation, the repayment of which may be contingent on the outcome of the matter." (5)

The rat rule

Elizabeth wins Ralph's case. As they leave the courtroom, Ralph tells Elizabeth he now remembers that he knows opposing counsel. Ralph saw Larry at his office about a work injury he had a year before the injury involved in the current case, but after discussing the injury, Larry did not represent Ralph. Larry did not mention this prior meeting with Ralph at any time during the current case, in which preexisting injuries were at issue. What should Elizabeth do?

A. Nothing.

B. Report Larry to the appropriate professional authority.

Elizabeth's response depends initially on whether Ralph is Larry's former client. The new Rule 1.18 (Duties to Prospective Client) suggests that Ralph, as a prospective client of Larry, is due the same conflict and confidentiality consideration as a regular client.

A crucial consideration is Elizabeth's assessment of whether Larry remembered the prior contact and whether a resulting conflict with Ralph existed. If Elizabeth is convinced that it did, she should report Larry's misconduct, as detailed by Rule 8.3 (Reporting Professional Misconduct): "A lawyer who knows that another lawyer has committed a violation of the Rules of Professional Conduct that raises a substantial question as to the lawyer's honesty, trustworthiness, or fitness as a lawyer in other respects, shall inform the appropriate professional authority."

The new rules place a premium on the information a lawyer must convey to a client to validly obtain the client's consent to an increasing number of decisions involved in the representation. These include the areas of conflicts of interest, retainer and fee arrangements, and, especially, authority for settlement. The old standard of "consent after consultation" is replaced by the more stringent "informed consent."

This requirement will no doubt compel lawyers to invest more time communicating with clients than they have in the past, but that's an investment that's well worth the effort. An informed client can make better decisions in consultation with the attorney, and better decisions usually lead to better results.

AAJ Resources

Program lets members take cases to focus groups

AAJ Education's "Case Workshop Program" allows AAJ members to bring an active case of their own and present it to two focus groups before it goes to trial. The faculty includes experienced trial attorneys and trial consultants who facilitate the focus groups and debrief and analyze the results.

The next "Case Workshop Program" is September 11-14 in Charlotte, North Carolina.

For more information and to register, visit www.justice.org/ education/caseworkshop.

Notes

(1.) Model R. Prof. Conduct preamble 9 (ABA 2002).

(2.) Id. at 19, 21.

(3.) See e.g. Nichols v. Keller, 19 Cal. Rptr. 2d 601, 608 (App. 1993).

(4.) "It is unethical for you to withhold patient records because of an unpaid professional fee for patient care. It is appropriate for a lawyer to agree with you that your fees will be protected if money is received because of a settlement or decision." Atty. & Phys. Interprofessional Code (St. Bar Wis. 1990).

(5.) In an interesting twist on the maxim that no good deed goes unpunished, lawyers have been reprimanded and disbarred for advancing living expenses to clients. See e.g. In re Olson, 577 N.W.2d 218, 220-21 (Minn. 1998) (disbarred for "multiple disciplinary violations"); Matter of Farmer, 950 P.2d 713, 718 (Kan. 1997) (repeated evidence of misconduct); Fla Bar v. Rue, 643 So. 2d 1080, 1081 (Fla. 1994) (suspension for improper conduct including "improper monetary advances to clients").

Thomas M. Domer practices law in Milwaukee. He can be reached at [e-mail]