The Bench & Bar magazine is published to provide members of the KBA with information that will increase their knowledge of the law, improve the practice of law, and assist in improving the quality of legal services for the citizenry.
Issue link: https://kentuckybenchandbar.epubxp.com/i/245872
PRESIDENT'S MESSAGE ANATOMY OF A RULE CHANGE By: Thomas L. Rouse The mission and purpose of the Kentucky Bar Association, set forth in Supreme Court Rule 3.025, includes this language: ". . .to maintain a proper discipline of the members of the bar in accordance with these rules and with the principles of the legal profession as a public calling . . ." In keeping with this mission, the KBA Board of Governors studies the Court's rules, enforces the rules and, from time to time, criticizes the rules and recommends changes. The Board established a 'Rules Committee' years ago for this very purpose. It and the executive committee are always among the busiest groups serving the Board of Governors. Working with the Court's Rules is one of the more important things the board does. The Court considers proposed Supreme Court Rule changes every other year and, occasionally, as soon as change is submitted depending on the urgency of the situation. In 2000, the Court established a commission to examine the entire body of rules in light of changes that had been made on a national level since our version was adopted in 1990. This was the Ethics 2000 Commission and all Kentucky attorneys are, or should be, aware of the sweeping modifications that the Court adopted following the painstaking process of commission review, Board of Governor review, Supreme Court Rules committee review and, finally, Court review. From time to time a particular rule is brought to the attention of a governor because of the effect it is having on the practicing bar. One such rule is Rule SCR 3.130 (1.15) (hereafter referred to as 1.15) – Safekeeping Property. The version that was revised on July 15, 2009, concerns how a lawyer holds property of clients or "third persons." Particularly troublesome is paragraph (b) which requires a lawyer holding property in which a client, a third person, or both have an interest to do certain things: notify them that the lawyer has the property and promptly deliver to the client or third person what they are entitled to receive. While this sounds simple enough, if both the client and the third person claim the same property, the lawyer is placed squarely in the middle of a dispute between the client and third person, creating a conflict of interest. As a consequence of confusion about this rule, many lawyers have been disciplined, and legal education seminars have been developed and conducted to attempt to instruct practicing attorneys how to navigate this minefield. 2 During my KBA Ethics Hotline years, I wrote opinion after opinion on all variations of problems arising from 1.15. During my board years, I encountered several Inquiry Commission charges in violation of 1.15 and the resulting discipline activities. All the while, I was thinking that it was odd, and inappropriate, that a set of rules designed to establish standards of conduct between attorneys and the courts in which they work, and between attorneys and their clients, would carve out an exception and authorize discipline for actions toward some third person to which the attorney otherwise owes no professional duties. When the subject arose recently, I was heartened to learn that I was not the only person thus offended. If my memory is correct, a governor mentioned in a meeting that he would like to review 1.15 in light of some discipline cases that had been announced by the Court, so it was referred to the board's Rules Committee. At the next rules meeting, the perceptions of how the rule was working on Main Street and the problems attorB&B; • 1.14 neys were having with it were discussed, and a consensus was obtained to re-examine Kentucky attorneys' duties to these third persons. Assisted by the Office of Bar Counsel, which attends the meetings and provides staff support for the committee, a revision that removed an attorney's ethical duties to third persons was proposed. The full board approved the revision, and it was delivered to the Court. The Court has its own Supreme Court Rules Committee, which examined this and several other proposed changes. This examination took place in early 2013, and the Court included it in the list of proposed changes that was the subject of the rules hearing on Wednesday morning, June 19, at the 2013 convention in Louisville. The Court then accepted written comment from the bar as a whole through July. Then, the Court deliberated. While we were waiting, my conviction that this rule change was justified was highlighted by a case that came to the board at the September 2013 meeting. A lawsuit lender cut a deal with a plaintiff to provide some funding while a suit progressed. The attorney involved when the deal was cut was aware of the situation, but withdrew from the case. New counsel was not aware of the contract the client had entered and when the case was settled, did not disburse funds to the lender. The lender did not sue the client nor attempt to use any remedies under civil law available to it – it simply filed a bar complaint against the attorney. A charge was issued by the Inquiry Commission and the attorney defended the charge vigorously. After a hearing was held, the trial commissioner dismissed the claim. Upon appeal to the Board of Governors, the commissioner's ruling was affirmed and the case was over. Through this process, the board saw firsthand how the rule was being used by nonlawyers to obtain leverage against lawyers and, ultimately, penalize them. The Court announced a series of Supreme Court Rule changes through an order issued Oct. 7, 2013, and the changes became effective Jan. 1, 2014. The revised Rule 1.15(b) is: Upon receiving funds or other property in which a client has an interest, a lawyer shall promptly notify the client. Except as stated in this Rule or otherwise permitted by law or agreement with the client a lawyer shall promptly deliver to the client and funds or other property which the client is entitled to receive and, upon request by the client, shall render a full accounting regarding such property. Third parties retain all the rights available under law to obtain what they believe they are entitled to. They can no longer use a lawyer's license as an enforcement mechanism and leverage. In my book, this is a significant change for the Kentucky lawyer. I offer this column as one example of the hard work the Board of Governors is involved with. It is an example of how the attorneys you send to the board to represent you do just that – they work hard to make our jobs easier and our duties clearer. I am proud to be a Kentucky lawyer.