Chapter 1
Ethics and Real Property Practice
Chapter Outline
I. Basic Ethical Principles
A. Regulations that govern professional ethics
1. These regulations take into account interests of:
a. the general public,
b. clients,
c. lawyers,
d. non-lawyers working in legal environment, and
e. the legal system as a whole.
2. They come from:
a. state statutory law,
b. state case law,
c. rules of court,
d. codes of ethical conduct of bar associations, and
e. codes of ethical conduct of paralegal associations
B. American Bar Association (ABA)
1.
2.
3.
4.
Initial ethics code: Model Code of Professional Responsibility
Revised code: Model Rules of Professional Conduct
The above two codes are referred to as ABA Standards.
Most states adopt one or the other of these codes, or both.
C. Paralegal organizations
1. National Association of Legal Assistants (NALA): adopted Model
Standards and Guidelines for Utilization of Legal Assistants
2. National Federation of Paralegal Associations (NFPA): adopted
Model Code of Ethics and Professional Responsibility
D. Main focus of ethical codes
1. They prohibit the unauthorized practice of law.
2. They require that paralegal work is performed under the direction and
supervision of an attorney.
3. They require that paralegal status is properly indicated.
4. They require attorneys and paralegals to act competently (with the
necessary legal skill to perform a given task and with input of requisite time to
do a thorough job for the client)
5. They require diligence (attentiveness and care); respecting all
deadlines
a. Tickler system (a method of keeping track of priorities
and deadlines) are crucial for proper diligence.
6. They require good communication with clients
7. They require preservation of confidentiality (an ethical concept
prohibiting a lawyer and others in a law firm from voluntarily disclosing
information about a client matter). Confidentiality
a. is broader than attorney–client privilege
(a rule of evidence law that prevents a court from
compelling the revelation of communications between
lawyer and client);
b. must preserve both confidentiality and attorney-client
privilege; and
c. must preserve confidentiality of current clients, former clients, and
potential clients.
8. They require guarding against conflict of interest (a situation in
which a lawyer’s professional judgment might be affected because of business or
personal interests).
II. Initial Meeting with the Client
A. Initial tasks
1.
2.
3.
4.
Check calendar for attorney availability.
Obtain certain basic information by telephone.
Inform client of information/documents to bring to meeting.
Perform conflicts check.
a. Remember doctrine of imputed disqualification (a doctrine
that provides that the entire body of lawyers in a firm
are treated as one for conflict of interest purposes).
b. If potential or real conflict, see if implementation of Chinese Wall is
possible (a situation in which an attorney or paralegal
is isolated from a client case for conflict of interest reasons).
c. Check fictitious names (a name other than one’s legal name under which
one operates a business).
5. Open new file.
a. Include new client data sheet.
b. Obtain client number and matter number.
c. Include retainer agreement.
d. Include information worksheet.
B. Fee arrangements: Possible arrangements include
1. Flat fee (an attorney’s fee set forth as a sum certain for the
performance of a specified task). Can be used in real estate transactions; also
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known as a fixed fee.
2. Hourly fee (an attorney’s fee based upon the amount of time
the attorney spends on a client matter). Can be used in real estate transactions.
3. Contingency fee (an attorney’s fee that is contingent upon the
client reaching settlement or winning in court; the payment that the attorney
receives is set forth as a percentage of the settlement or court award.) Not used
in real estate transactions.
C. Client trust fund account
1. This account is separate from firm’s regular business account.
2. Things kept in this account are
a. retainer,
d. deposit money,
e. closing proceeds, and
f. escrowed funds.
D. After initial client interview
1. The client provides the attorney a reminder letter of information.
2. The attorney must sign a letter regarding declined representation, if applicable.
III. Potential Ethical Problems
A. Conflict of interest/dual representation
1. Dual representation is allowed if parties are informed of potential
conflict and agree to dual representation.
2. Best practice: Buyer and seller seek independent counsel.
3. Potential conflict arises in many contexts, especially with title examination and
title insurance.
a. The attorney who is the title agent must disclose his/her interest
in the title company.
4. Unrepresented parties must disclose representation of adverse interest to an
unrepresented party but also must explain all material terms of closing
documents and effect of signing them.
B. Use of experts
1. Not all transactions are routine, and some require special
expertise—hiring additional counsel or non-legal experts.
2. Client must be informed and agree to this additional
representation and associated costs.
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