Monday, November 23, 2009

No Disqualification Where Employer Pays For Counsel

The New Jersey Supreme Court affirmed a trial court decision denying the state's disqualification motion against attorneys retained and paid by a corporate contractor to represent employees who were potential adverse witnesses in a criminal investigation. The court held that:

Through the combined product of the good faith of the employer, the diligence of competent counsel and the exercise of the trial court's supervisory authority, the net result of the company's retention and payment of counsel for its employees complied with the Rules of Professional Conduct.

The court provided guidance for the ethical requirements for such situations. Third party fee payments are permissible if six conditions are met: (1) informed consent (2) the payer is prohibited from interfering, (3) lawyer does not currently represent payer, (4) no communication with payer on substance of representation, (5) payments are rendered in ordinary course of business and (6) payer must have leave of court to cease payments. No limitation should be imposed on the representation other than a reasonable limitation on fees and expenses. Future retainer agreements must spell out the lawyer's confidentiality obligations.

The court rejected the State's argument that third party payments in the context of criminal investigations were per se impermissible:

Although the State's arguments possess considerable initial appeal, in light of the modern changes in the manner in which attorney-client relationships are to be viewed, we are constrained to disagree.

(Mike Frisch)

http://lawprofessors.typepad.com/legal_profession/2009/11/no-disqualification-where-employer-pays-for-counsel.html

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