What ethics rules constrain a company's in-house counsel who is asked to let the employer bill other entities for the lawyer's work, do personal legal work for the owner or the owner's family, or represent affiliated companies?
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This page answers the general question as of 1989. Ezel answers yours: whether it's allowed on your facts, under the current rules of professional conduct in your state, with citations.
Plain-English summary
Opinion E-89-8 set out professional-conduct guidelines for full-time house counsel across four situations: when the employer bills other legal entities for the house counsel's services, when the employer directs house counsel to provide personal legal services to the principal shareholder or family members, when the employer directs house counsel to handle all legal work for affiliated entities in which the employer or the employer's family has a financial interest, and when the employer discharges or threatens to discharge house counsel for refusing directives the lawyer reasonably believes would involve illegal conduct or professional misconduct.
On billing others, the committee concluded that because Wisconsin for-profit business entities may not practice law (citing State ex rel. State Bar v. Bonded Collections and a Wisconsin Attorney General opinion), and because a lawyer may not assist nonlawyers in practicing law (SCR 20:5.5(b)) or share legal fees with nonlawyers (SCR 20:5.4(a)), full-time house counsel may not participate in any arrangement under which the employer charges for the lawyer's services, except as permitted by SCR 11.06 (group and prepaid plans) or by other law such as a court-ordered fee award. On personal services to officers, directors, employees, or family members, the committee concluded that house counsel may represent such persons or entities only subject to SCR 20:1.7 on conflicting interests (citing SCR 20:1.13(e)), but said house counsel must exercise a high degree of caution and that house counsel and employers would be well advised to limit services to the employing entity. It noted that taking on such outside work requires full compliance with the rules (including confidentiality under SCR 20:1.6 and independent judgment under SCR 20:2.1) and could expose the employer to joint and several malpractice liability.
On dual representation of the employer and affiliated entities, the committee concluded that such representation would seem generally ill advised unless the ownership interests in the respective entities were identical, citing SCR 20:1.7, 20:1.13(d) and (e), and 20:2.2, and reasoning that because of the full-time house-counsel relationship an objective finding that "the representation will not be adversely affected" would be unlikely except in routine or financially inconsequential matters. On wrongful discharge, the committee observed that the rules of conduct applicable to lawyers generally apply to house counsel as well, listed rules that could bear on a discharge scenario (such as SCR 20:1.2(d) and (e); 20:1.6(b) and (c)(1); 20:1.13(b) and (c); 20:3.3; 20:3.4(b); and 20:8.4(c)), and stated that the committee concurred with those who argue for extending wrongful-discharge protection to lawyers who adhere to the Supreme Court's standards of conduct.
Currency note
This opinion was issued in 1989, before Wisconsin's July 1, 2007 adoption of the revised Rules of Professional Conduct for Attorneys (the state's Ethics 2000 update). Several rules the opinion relies on, including SCR 20:2.2 (intermediary, deleted from the Model Rules in 2002) and SCR 20:1.13, were later revised. 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: Can a company bill other entities for work done by its in-house lawyer?
A: No. The committee concluded that because a for-profit business may not practice law and a lawyer may not aid that or share fees with nonlawyers (SCR 20:5.5(b), 20:5.4(a)), house counsel may not take part in such a billing arrangement, except as allowed by SCR 11.06 or other law.
Q: Can in-house counsel do personal legal work for the owner or the owner's family?
A: Per the opinion, only subject to the conflict rule SCR 20:1.7 (see SCR 20:1.13(e)). The committee urged a high degree of caution and said house counsel and employers would be well advised to limit services to the employing entity.
Q: Can house counsel represent both the employer and its affiliated companies?
A: The committee concluded that such dual representation would seem generally ill advised unless the ownership interests were identical, because an objective finding that the representation would not be adversely affected would be unlikely except in routine matters.
Q: Did the opinion address firing house counsel for refusing improper directives?
A: Yes. The committee observed that the conduct rules apply to house counsel as well, and stated it concurred with those arguing to extend wrongful-discharge protection to lawyers who adhere to the Supreme Court's standards of conduct.
Background and rules framework
The opinion interpreted SCR 20:5.5 / Model Rule 5.5 (unauthorized practice and assisting it) and SCR 20:5.4 / Model Rule 5.4 (professional independence; fee sharing with nonlawyers), together with the conflict rules SCR 20:1.7 / Model Rule 1.7 and SCR 20:1.13 / Model Rule 1.13 (organization as client), and referenced SCR 20:2.1 (independent professional judgment) and SCR 11.06 (group and prepaid legal services plans).
Citations and references
Rules of Professional Conduct:
- Wis. SCR 20:5.5(b) / Model Rule 5.5 (assisting unauthorized practice)
- Wis. SCR 20:5.4(a) / Model Rule 5.4 (sharing fees with nonlawyers)
- Wis. SCR 20:1.7 / Model Rule 1.7 (conflicts of interest); SCR 20:1.13 / Model Rule 1.13 (organization as client)
- Wis. SCR 20:2.1 (independent professional judgment); SCR 11.06 (group and prepaid legal services plans)
Cases:
- State ex rel. State Bar v. Bonded Collections, 36 Wis. 2d 643, 154 N.W.2d 250 (1967), corporate practice of law
- Employers Casualty Co. v. Tilley, 496 S.W.2d 552 (Tex. 1973); Glueck v. Jonathan Logan Inc., 512 F. Supp. 223 (S.D.N.Y. 1981), aff'd 653 F.2d 746 (2d Cir. 1981)
Other opinions cited:
- Wisconsin Formal Op. E-83-5 (1983); Wisconsin OAG 39-86
See also
- WI Ethics Op. E-95-2: In-House Counsel for Others
- WI Ethics Op. EF-18-02: In-House Counsel and UPL
- WI Ethics Op. E-89-10: Representing Co-Investors
Source
- Landing page: https://www.wisbar.org/formembers/ethics/pages/formal-opinions.aspx
- Original PDF: https://www.wisbar.org/formembers/ethics/Ethics%20Opinions/E-89-8.pdf
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