Ezel / Ethics Opinions / WISBAR
WISBAR 1995

Can in-house counsel represent someone other than the employer, at the employer's direction, while still being paid by the employer?

Short answer: The opinion concluded that in-house counsel may, with safeguards, represent a third party at the employer's direction while paid by the employer, but in doing so steps outside the in-house role. The outside client holds all the usual client rights and the protections of SCR 20:1.8(f); the employer cannot direct the representation or get information beyond whether it continues. The threshold concern is conflicts, especially where the outside client is a corporate constituent, and the limitations must be explained to both before the representation begins.

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This page answers the general question as of 1995. Ezel answers yours: whether it's allowed on your facts, under the current rules of professional conduct in your state, with citations.

Currency note: this opinion is from 1995
Subsequent statutory amendments, court decisions, or later opinions or rule amendments may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.
Disclaimer: Advisory only. Not binding precedent.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official ethics opinion. The original opinion (linked on this page as a PDF) is the authoritative source for any reliance.
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Plain-English summary

Opinion E-95-2 asked whether in-house counsel may provide legal services, at the employer's direction, to persons other than the employer while still being compensated by the employer. The committee concluded that this generally is permissible, subject to safeguards, when the other person pays no compensation. In undertaking such work, in-house counsel by definition steps outside the in-house role: any lawyer-client relationship with the third party stands on its own terms, with all the responsibilities that ordinarily attach, and is impervious to interference by the corporate employer. Although the corporation may instigate and pay for the work, in-house counsel is not acting as a corporate agent in performing it; the outside client is the client.

The outside client therefore enjoys all client rights: to direct the work (SCR 20:1.2), to be informed (SCR 20:1.4), to confidentiality (SCR 20:1.6), to loyal service (SCR 20:1.7), and to the lawyer's best advice (SCR 20:2.1), plus the protections of SCR 20:1.8(f) for third-party-paid representation. The employer is not entitled to information beyond whether the representation is continuing or terminated (SCR 20:1.8(f)(3)), cannot have the matter steered to serve its interests, and cannot control the objectives or means, which remain with the lawyer and the outside client (SCR 20:1.2, 20:1.8(f)(2)).

In-house counsel still owes continuing duties to the corporate employer, particularly avoiding conflicts (SCR 20:1.7) and maintaining confidentiality (SCR 20:1.6). A substantial threshold concern, especially when the other client is a constituent of the employer, is whether a conflict of interest is present (SCR 20:1.7, 20:1.13(e), reaffirming Formal Op. E-89-8). The limitations must be communicated to both the employer and the prospective client before the representation begins (SCR 20:1.4, 20:1.8(f)). Because counsel steps outside the in-house role and the employer derives no fees, there is no violation of SCR 20:5.5(b) (the corporation is not practicing law); counsel should also evaluate the trust-account rule (SCR 20:1.15) and the possible need for malpractice insurance.

Currency note

This opinion was issued in 1995, before Wisconsin's July 1, 2007 adoption of the revised Rules of Professional Conduct (the state's Ethics 2000 update). 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 direct its in-house lawyer to represent someone else?

A: Generally yes, with safeguards. The committee concluded that in-house counsel may represent a third party at the employer's direction, without compensation from that person, if the protections discussed are observed.

Q: Who controls the representation, the company or the outside client?

A: The outside client. The committee concluded that the outside client holds all client rights and that decisions on objectives and means rest with the lawyer and that client, not the employer (SCR 20:1.2, 20:1.8(f)(2)).

Q: What can the employer be told about the matter?

A: Little. The committee concluded that the employer is not entitled to information beyond whether the representation is continuing or terminated (SCR 20:1.8(f)(3)).

Q: What is the biggest risk in this arrangement?

A: Conflicts of interest. The committee concluded that a substantial threshold concern, especially where the outside client is a corporate constituent, is whether a conflict is present under SCR 20:1.7 and 20:1.13(e).

Background and rules framework

The opinion applied the third-party-payment rule SCR 20:1.8(f) / Model Rule 1.8 (including the limits on information and direction in (f)(2)-(3)) together with the core client-duty rules SCR 20:1.2, 20:1.4, 20:1.6, 20:1.7, and 20:2.1 / Model Rules 1.2, 1.4, 1.6, 1.7. It addressed conflicts involving corporate constituents under SCR 20:1.13(e) / Model Rule 1.13, and noted SCR 20:5.5(b) (unauthorized practice) and SCR 20:1.15 (trust accounts).

Citations and references

Rules of Professional Conduct:

  • Wis. SCR 20:1.8(f), (f)(2), (f)(3) / Model Rule 1.8 (third-party payment)
  • Wis. SCR 20:1.7 / Model Rule 1.7 (conflicts); SCR 20:1.13(e) / Model Rule 1.13 (organization as client)
  • Wis. SCR 20:1.2, 20:1.4, 20:1.6, 20:2.1 / Model Rules 1.2, 1.4, 1.6 (client rights and advice)
  • Wis. SCR 20:5.5(b) (unauthorized practice); SCR 20:1.15 (trust accounts)

Other opinions cited:

  • Wisconsin Formal Op. E-89-8 (multiple representation by in-house counsel) (reaffirmed)

See also

Source

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