Can a corporation agree to hold its in-house lawyer harmless for malpractice committed in serving the corporation?

Plain-English summary

A corporation employed attorneys who both served outside parties (an affiliate, an unrelated organization, associate members, or individual citizens) and rendered legal services to the corporation itself. The corporation believed it could indemnify the attorneys for malpractice claims by third-party clients, treating that as transferring coverage from a malpractice carrier to the corporation's self-insurance. The narrower question was whether an in-house attorney could enter an agreement under which the employer would hold the attorney harmless for personal malpractice committed in serving the corporation, without contravening DR 6-102(A).

The committee had previously resolved the issue in LE Op. 877, and was asked to reconsider on three grounds: that LE Op. 877 gave no factual basis, that there the attorney had solicited indemnification while here it was the corporation's business decision to provide it, and that the corporation would have independent legal representation as the ABA Model Rules require. The committee concluded that, despite the availability of independent representation and the absence of solicitation, the hold-harmless agreement limiting the in-house attorney's liability for personal malpractice in serving the corporation is not proper under DR 6-102(A). It held LE Op. 877 dispositive and concluded that the Virginia Code of Professional Responsibility did not permit such an agreement.

Currency note

The Virginia State Bar's committee note states that this opinion was overruled by Rule 1.8(h), which permits such indemnity agreements if the corporation is separately represented. Treat the conclusion below as the historical position; current Rule 1.8(h) reaches the opposite result on these facts.

This opinion was issued in 1989, under Virginia's former Code of Professional Responsibility (the disciplinary rule it cites), before the Virginia State Bar's adoption of the Rules of Professional Conduct effective January 1, 2000. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Could the corporation hold its in-house lawyer harmless for malpractice committed in serving the corporation?

A: Under this 1989 opinion, no. The committee concluded the hold-harmless agreement was not proper under DR 6-102(A), even with independent representation and no solicitation. The committee note states the opinion was later overruled by Rule 1.8(h).

Q: Did it matter that the corporation, not the lawyer, proposed the indemnity?

A: No. The committee concluded that the absence of solicitation and the availability of independent representation did not change the result under DR 6-102(A); it held LE Op. 877 dispositive.

Q: Is this still the rule in Virginia?

A: No. The committee note states the opinion was overruled by Rule 1.8(h), which permits such indemnity if the corporation is separately represented, so this page is historical research rather than current guidance.

Background and rules framework

The opinion interpreted former Virginia DR 6-102(A) (a lawyer may not attempt to limit liability to a client for personal malpractice). That prohibition is now within Virginia Rule 1.8(h), which, as the committee note explains, permits a corporation to indemnify its in-house lawyer if the corporation is separately represented, overruling this opinion's result.

Citations and references

Rules of Professional Conduct:

• Former Virginia DR 6-102(A) (limiting liability for personal malpractice)
• ABA Model Rule 1.8(h) (limiting malpractice liability; settling malpractice claims)

Other opinions cited:

• Virginia LE Op. 877: a hold-harmless agreement for an in-house lawyer's malpractice is improper.

See also

• VA LEO 1364: Indemnification of In-House Counsel by the Corporate Employer
• VA LEO 1359: In-House Counsel as a Witness at a VEC Hearing
• VA LEO 1838: In-House Counsel and a Sister Corporation
• VA LEO 1457: Preparing a Board President for Deposition

Source

• Landing page: https://vsb.org/Site/about/rules-regulations/leo-opinions.aspx
• Original PDF: https://www.vsb.org/common/Uploaded%20files/LEOs/1211.pdf

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

Committee Opinion
April 19, 1989
LEGAL ETHICS OPINION 1211

ATTORNEY/CLIENT RELATIONSHIP –
IN-HOUSE COUNSEL – LIMITING
LIABILITY: CORPORATION ENTERING
INTO A HOLD HARMLESS
AGREEMENT WITH EMPLOYED
ATTORNEY.

You have earlier advised the Committee that a corporation employs attorneys who perform two functions. First, they may provide advice to or represent an affiliate organization, another unrelated organization, associate members or individual citizens in litigation or administrative hearings. Second, the same attorneys may render professional services to the corporation itself.

You indicated your belief that with respect to the first type of services, i.e., those provided to third parties, the employer can agree to indemnify the employee for any damages or costs connected with a claim made against the attorney for malpractice, since the attorney has not limited his liability to those third party clients but merely transferred the coverage from a malpractice insurance carrier to the corporation's self-insured arrangement. With regard to the second issue, the attorneys rendering legal services to the corporation itself, you inquired whether an attorney employed in-house by a corporation may enter into an agreement by which his employer shall hold the attorney harmless for personal malpractice committed in the course of his employment without contravening DR:6-102(A) of the Virginia Code of Professional Responsibility.

Your question was treated as a Legal Ethics Inquiry since the issue had previously been addressed and resolved as LE Op. 877. It was then requested that the Committee reconsider your inquiry in view of the facts that: (1) LE Op. 877 provided no factual basis for the analysis; (2) in that opinion, indemnification was solicited by the attorney, whereas in your situation it is the corporation's business decision to provide its staff attorneys with indemnification for any liability arising out the services rendered to the corporation; and (3) your organization would have independent legal representation if permitted to enter into a hold harmless agreement with its employed attorneys, as required under the ABA Model Rules.

The Committee is of the opinion that based upon the facts you presented, and despite the availability of independent legal representation and the lack of solicitation of indemnification, the hold harmless agreement limiting the in-house attorney's liability for personal malpractice committed in the course of his employment is not proper under DR:6-102(A). Thus, the Committee is still of the view that LE Op. 877 is dispositive of your inquiry and that the Virginia Code of Professional Responsibility does not permit the attorney and his employer to enter into a hold harmless agreement for personal malpractice.

Committee Opinion
April 19, 1989

Legal Ethics Committee Notes. – This LEO was overruled by Rule 1.8(h), which permits such indemnity agreements if the corporation is separately represented.

Editor’s Note. – See also L E Op. No. 1738 stating that lawyers or their agents may secretly tape record telephone conversations in which they participate, but only in situations involving criminal or housing discrimination investigations or if the lawyers are protecting themselves from possible criminal action.