State Bar of Arizona Ethics Opinions
01-06: Conflicts of Interest; Criminal Representation; Court-Appointed
A lawyer should not enter into a criminal defense contract to provide legal services paid by a third party if the contract might induce the lawyer improperly to curtail services or to perform them in a way contrary to the client's interests because of insufficient funding and that requires authorizations from non-lawyer third parties. [ERs 1.7(b), 1.8(f), 5.4(c)]
For a number of years the inquiring attorney has contracted annually with an Arizona county to represent indigent criminal defendants. The inquiring attorney asks whether she ethically can agree to the County's proposed Adult Criminal Trial contract ("the Contract") for the upcoming year. She asks whether the Contract would cause her to violate her ethical duties to provide competent representation under ER 1.1, to avoid conflicts of interest as defined in ER 1.7, and to exercise the independent professional judgment required by ERs 1.8(f) and 5.4(c).
The Contract mainly covers representation of defendants in felony criminal cases in superior court and the justice courts. The contracting attorney ("the Contractor") can also be assigned second-chair representation in death penalty prosecutions, Sexually Violent Person civil commitments, contempt proceedings, probation violations, de novo appeals to superior court, representation of non-parties such as witnesses, and misdemeanor justice court cases.
Under the Contract, the Contractor usually receives one "credit" for each assigned felony client, regardless of the complexity of the client's case or cases. Exceptions include assignments as co-counsel in capital cases, for which the Contractor receives eight credits; Sexually Violent Person matters, for which the Contractor receives four credits in connection with the initial proceeding and one credit for each annual review hearing thereafter; and certain multiple felony cases against a single client, for which the Contractor can receive one-half or one credit for each additional case. When a Contractor takes assignment of a capital or Sexually Violent Person case, she may remove herself from the case assignment "rotation" a number of times equal to the number of "extra" credits she receives for the assignment. Otherwise the Contractor must accept every assigned case, unless the Rules of Professional Conduct would prohibit the representation.
The Contract also provides for possible additional "credits" if a case is deemed a "major felony." A "major felony" is defined as a "factually and legally complex case" that requires counsel with "extensive knowledge and experience" in defending major felonies, that exposes the client to "lengthy imprisonment or death," and/or that likely will call for counsel to devote more than 100 "billable hours." (For purposes of computing "billable time," the Contract excludes attorney efforts that do not "substantially advance the case toward conclusion" - including, for example, "non-substantive motions such as motions to continue, motions to withdraw or time spent reviewing a file prior to moving to withdraw," setting up or waiting for meetings, and leaving voice mail messages.) As an alternative to allowing a Contractor extra credits for a "major felony," the County's contract administrator may reassign the case to another attorney who has a "Major Felony" contract. In that event, the original Adult Criminal Trial contract attorney receives no credit unless she has spent more than 10 hours in furtherance of the case.
Under the Contract, the Contractor is paid $21,000 for thirty "credits," and $700 apiece for up to 20 additional credits. In death penalty and Sexually Violent Person cases, the Contractor receives an additional "trial per diem" of $250 per "full day" of trial (more than 3.5 hours) and $150 per "half day," up to a maximum of $1,000 in SVP cases and $18,000 in capital cases. Otherwise, the Contractor may negotiate for additional compensation only when an assignment "requires Contractor to expend an extraordinary amount of time." The payment of additional compensation depends on the reasonableness or adequacy of "Contractor's compensation under the entire contract" as opposed to the particular case. The "value of the contract as a whole" is determined by comparing the County's average cost per case, average cost per hour, and average attorney hours per case under the Contract, to the County's average costs for the "same services" provided by full-time public defenders and other contract attorneys.
The Contract provides for expense reimbursement on a limited basis. The contracting attorney in her discretion may retain investigators for her Contract cases, up to a limit of $1,050 for the entire contract (not per case) at a $20 hourly rate. Any additional investigative hours require advance approval as "extraordinary expenses." The attorney also must obtain advance approval for expert witness fees, out-of-county travel or process service, transcript costs, or other case expenses. The Contractor receives no reimbursement for "support services or overhead items" - including secretarial services, supplies, witness interview transcripts, copying, and long-distance telephone calls - unless approved in advance as "extraordinary."
The Contract is administered on behalf of the County by the Office of Court-Appointed Counsel ("OCAC"). OCAC chooses the contractor attorneys, assigns the cases, determines whether a particular matter qualifies as a "major felony" or an "extraordinary case," and approves expense requests. Although the current OCAC Contract Administrator is a lawyer, the Contract Administrator reports to a County official who is neither a lawyer nor subject to judicial supervision. Disputes arising under the Contract - including, by the express terms of the Contract, the disallowance of any attorney's claim for payment beyond the base Contract rate - must be addressed under the County's procurement code "except as otherwise provided by law." According to the inquiring attorney, OCAC takes the position that the Contract prohibits a contracting attorney from asking the court for additional compensation or for relief from a particular assignment based on the complexity of the case. The Contract also provides that payment requests submitted more than six months after the date of appointment in a particular case must be submitted to the County Attorney's Office, Division of County Counsel, as a claim against the County.
Whether a lawyer may enter into a criminal defense contract, with specific terms limiting the lawyer's compensation and ability to withdraw from a case and whose terms may be administered by a non-lawyer.
RELEVANT ETHICAL RULES
ER 1.1. Competence
A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation.
ER 1.3. Diligence
A lawyer shall act with reasonable diligence and promptness in representing a client.
ER 1.5. Fees
(a) A lawyer's fee shall be reasonable. The factors to be considered in determining the reasonableness of a fee include the following:
(1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;
(2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;
(3) the fee customarily charged in the locality for similar legal services;
(4) the amount involved and the results obtained;
(5) the time limitations imposed by the client or by the circumstances;
(6) the nature and length of the professional relationship with the client;
(7) the experience, reputation, and ability of the lawyer or lawyers performing the services; and
(8) whether the fee is fixed or contingent.
(b) When the lawyer has not regularly represented the client, the basis or rate of the fee shall be communicated to the client, preferably in writing, before or within a reasonable time after commencing the representation.
(c) A fee may be contingent on the outcome of the matter for which the service is rendered, except in a matter in which a contingent fee is prohibited by paragraph (d) or other law. A contingent fee agreement shall be in writing and shall state the method by which the fee is to be determined, including the percentage or percentages that shall accrue to the lawyer in the event of settlement, trial or appeal, litigation and other expenses to be deducted from the recovery, and whether such expenses are to be deducted before or after the contingent fee is calculated. Upon conclusion of a contingent fee matter, the lawyer shall provide the client with a written statement stating the outcome of the matter and, if there is a recovery, showing the remittance to the client and the method of its determination.
(d) A lawyer shall not enter into an arrangement for, charge, or collect:
(1) any fee in a domestic relations matter, the payment or amount of which is contingent upon the securing of a divorce or upon the amount of alimony or support, or property settlement in lieu thereof; or
(2) a contingent fee for representing a defendant in a criminal case.
(e) A division of fee between lawyers who are not in the same firm may be made only if:
(1) the division is in proportion to the services performed by each lawyer or, by written agreement with the client, each lawyer assumes joint responsibility for the representation;
(2) the client is advised of and does not object to the participation of all the lawyers involved; and
(3) the total fee is reasonable.
ER 1.7. Conflict of Interest: General Rule
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(b) A lawyer shall not represent a client if the representation of that client may be materially limited by the lawyer's responsibilities to another client or to a third person, or by the lawyer's own interests, unless:
(1) the lawyer reasonably believes the representation will not be adversely affected; and
(2) the client consents after consultation. When representation of multiple clients in a single matter is undertaken, the consultation shall include explanation of the implications of the common representation and the advantages and risks involved.
ER 1.8. Conflict of Interest: Prohibited Transactions
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(f) A lawyer shall not accept compensation for representing a client from one other than the client unless:
(1) the client consents after consultation;
(2) there is no interference with the lawyer's independence of professional judgment or with the client-lawyer relationship; and
(3) information relating to representation of a client is protected as required by ER 1.6.
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ER 5.4. Professional Independence of a Lawyer
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(c) A lawyer shall not permit a person who recommends, employs, or pays the lawyer to render legal services for another to direct or regulate the lawyer's professional judgment in rendering such legal services.
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RELEVANT ARIZONA ETHICS OPINIONS
Ariz. Ops. 87-13, 90-10, 99-08
This Opinion first will outline the broad ethical framework within which appointed criminal defense lawyers must operate. It then will discuss how those principles apply to the Contract described above.
Ethical Rules 1.1 and 1.3 require a criminal defense attorney, appointed or retained, to take the basic steps necessary for competent representation. In re Wolfram, 174 Ariz. 49, 55-56, 847 P.2d 94, 100-101 (1993). "Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation." ER 1.1. In many if not most cases, it is not enough to read the police reports and interview the client. The lawyer must investigate the facts to determine the appropriate strategy. In re Wolfram, 174 Ariz. at 55, 847 P.2d at 100. She must examine the physical evidence. Id. She must read the grand jury transcript. Id. She must interview the prosecution's witnesses. Id. She must file appropriate motions, such as motions to suppress evidence obtained in violation of the Constitution. Kimmelman v. Morrison, 477 U.S. 365, 106 S.Ct. 2574 (1986).
Importantly, the lawyer's obligation to undertake these tasks does not depend on whether the client is "guilty." The government bears the burden of proving the defendant's guilt beyond a reasonable doubt. The Ethical Rules permit the lawyer to put the government to its proof no matter what the strength of the case. ER 3.1. If the defendant chooses to have his lawyer do that, the lawyer "shall" abide by her client's decision. ER 1.2(a). Moreover, the defense attorney must address the question whether the evidence would support lesser-included offenses. In re Wolfram, 174 Ariz. at 55, 847 P.2d at 100. If the client is inclined to plead guilty, the attorney must give accurate advice about the guilty plea. State v. Ysea, 956 P.2d 499, 503 (Ariz. 1998). Then, when a client is convicted, the attorney must provide diligent, competent representation at sentencing. State v. Padilla, 176 Ariz. 81, 859 P.2d 191, 194-95 (App. 1993). This requires the development of legal and factual arguments to mitigate the sentence.
Several Ethical Rules stand for the proposition that an attorney should not accept appointed defense work under conditions that make diligent, competent representation impractical. One relevant Ethical Rule, ER 1.5, requires "reasonable" fees. A fee may be "unreasonable" if it is so low as to encourage substandard representation:
An agreement may not be made whose terms might induce the lawyer improperly to curtail services for the client or perform them in a way contrary to the client's interest. For example, a lawyer should not enter into an agreement whereby services are to be provided only up to a stated amount when it is foreseeable that more extensive services probably will be required, unless the situation is adequately explained to the client.
ER 1.5, Comment; see also ER 1.2, Comment ("the client may not be asked to agree to representation so limited in scope as to violate ER 1.1 . . . "); ER 6.2, Comment ("A lawyer may also seek to decline an appointment if acceptance would be unreasonably burdensome, for example, when it would impose a financial sacrifice so great as to be unjust.").
The general conflict of interest Rule embodies similar principles, "[a] lawyer shall not represent a client if the representation of that client may be materially limited by the lawyer's responsibilities to another client or to a third person, or by the lawyer's own interests, unless . . . the lawyer reasonably believes the representation will not be adversely affected . . . " ER 1.7(b). With respect to the lawyer's own economic interests, the Comment elaborates, "a lawyer's need for income should not lead the lawyer to undertake matters that cannot be handled competently and at a reasonable fee. See ER 1.1 and 1.5." ER 1.7, Comment. If an indigent defense contract requires the lawyer to accept too many clients, or provides too little remuneration for each representation, the lawyer may end up shortchanging some clients in order to meet her responsibilities to others. Such tradeoffs are ethically unacceptable. Counsel has an ethical obligation to manage her professional responsibilities so as to ensure competent, diligent representation of every client. See State v. Smith, 140 Ariz. 355, 363, 681 P.2d 1374, 1382 (1984) (citing the conflict of interest provision of the Code of Professional Responsibility, DR 5-101). If the circumstances are likely to prevent the lawyer from competently representing every defendant client, the lawyer must decline the representation. Id.
The same precepts appear in the Ethical Rule that governs third-party payment of legal fees, "[a] lawyer shall not accept compensation for representing a client from one other than the client unless . . . there is no interference with the lawyer's independence of professional judgment or with the client-lawyer relationship . . . and information relating to representation of a client is protected as required by ER 1.6." ER 1.8(f). ER 1.8(f) essentially restates ER 1.7(b) in the specific context of third-party fee payments. Hazard, The Law of Lawyering (2d ed. 1998) section 1.703. Therefore, a lawyer should not undertake government-funded representation of indigent defendants on terms that would prevent her from representing each defendant diligently and competently.
Finally, and to the same effect, there is the Ethical Rule concerning a lawyer's professional independence, "[a] lawyer shall not permit a person who recommends, employs, or pays the lawyer to render legal services for another to direct or regulate the lawyer's professional judgment in rendering such legal services." ER 5.4(c). This Rule applies squarely to publicly-funded representation of criminal defendants. Ariz. Op. 87-13. Of course, some measure of "regulation" inheres in every indigent representation program that requires review of attorney compensation requests or prior approval of expenditures. Every appointed defense lawyer has had to ask a court for money or to justify her fee. The question is whether the lawyer's actions are controlled in a manner or to a degree that compromises her ability to represent her client.
The foregoing ethical principles are easier to state than they are to apply. Each indigent defense contract must be judged on its own provisions. A lawyer deciding whether to enter a contract must predict the future course of each representation under the contract. See ER 1.7, Comment ("A possible conflict does not itself preclude the representation. The critical questions are the likelihood that a conflict will eventuate and, if it does, whether it will materially interfere with the lawyer's independent professional judgment in considering alternatives or foreclose courses of action that reasonably should be pursued on behalf of the client."). Each attorney must exercise independent professional judgment, taking into account her own skill and experience, the complexity of the cases and the severity of possible punishments, her other commitments, and the court's case-processing guidelines, among other factors. Ariz. Op. 90-10 at 5.
It does not follow, however, that a contract is ethical simply because some lawyers may be willing to enter it. Honest self-assessment is difficult under the best of circumstances. Under the economic pressures of law practice, it is tempting to rationalize. An attorney must resist that temptation. Good faith does not shield a lawyer from ethical responsibility, if her representation turns out to be less than competent and diligent. In re Wolfram, 174 Ariz. at 54, 847 P.2d at 99.
The Committee recently wrestled with these considerations in the context of "compliance review and audit" procedures required by an insurance company as a condition of engagement on behalf of the company's insured. Ariz. Op. 99-08. A variety of rules and pre-approval requirements limited the legal services for which the insurer would compensate the insured's counsel. Such procedures have an "inherent tendency to create conflicts of interest between the third party auditor, the attorney's self-interest, and that of the client." Id. at 5. The Committee found these conflicts so fundamental as to be non-waivable. "Since this audit program allows the third party auditor to limit the services for which the attorney will be paid, it is hard to conceive of how an attorney could reasonably believe such limitations would not adversely affect his representation of the client." Id. at 6. The procedures also effectively allowed a third party - the insurance carrier's auditor - "to regulate or direct the lawyer's independent professional judgment on behalf of his client." Id. at 6. The Committee concluded that a lawyer participating in the audit program would violate ERs 1.7(b), 1.8(f), and 5.4(c).
The Contract at issue here raises ethical concerns similar to those discussed in Ariz. Op. 99-08. On its face the Contract does not limit the services for which the lawyer can be paid. But the presumptive contract payment is very low. The provisions for additional compensation are structured so as to make additional compensation virtually unobtainable. The Contract is administered by non-judicial personnel who answer to non-lawyers and whose decisions are reviewable only through a County procurement code. Each of these factors has an "inherent tendency to create conflicts of interest" among the County's budget concerns, the attorney's self-interest and the rights of the client defendants. See Ariz. Op. 99-08 at 5. Together they create an unacceptable risk to the interests of the clients.
The Contract provides little time for each appointed representation. To realize an effective rate of $50 per "billable hour," the Contractor must average 14 hours representing each appointed client. But the lawyer does not control her case assignments. The Contract obligates her to accept each assignment. She is expected to handle any case short of the "major felony" threshold of 100 hours per case. If an attorney happened to receive just two assigned cases requiring eighty attorney hours each (a likely prospect, especially in the event of a trial) she would have just nine hours on average to devote to her other "base rate" clients. Many of those clients face mandatory prison sentences of five, ten, fifteen years - not exceptionally "lengthy" by the standards of the criminal justice system, but obviously of the utmost seriousness to the client.
The Contract holds little hope of more compensation for a Contractor whose clients need more than "base rate" services. Nominally, the Contract provides the possibility of extra fees or "credits" for a case that requires an "extraordinary" time commitment. As described above, however, the threshold for an "extraordinary" case appears very high. Moreover, even if a matter qualifies as "extraordinary," the Contractor is entitled to additional compensation only if her compensation under the entire contract - that is, her per-case average pay - is deemed inadequate. Thus, the Contract effectively requires the attorney to spend time representing a given client at the expense of others. With the allotted hours per case so low to begin with, even the most conscientious attorney is liable to find herself shortchanging some appointed clients, in violation of ER 1.7(b).
Furthermore, the County does not judge the adequacy of the Contractor's compensation by reference to her unique allotment of cases. Instead the County uses as its reference point its average cost for the "same services" throughout its indigent criminal defense system. In the context of high public defender caseloads this Committee observed:
Aside from differences in individual skill, differences in the complexity of cases, difficulties in communication with clients, variances in factual investigation and legal research render it virtually impossible to determine some ideal basket of 160 cases that an "average" lawyer should handle in a year.
Ariz. Op. 90-10 at 7. It is even more improbable that any given set of thirty clients will precisely mirror the County's entire docket of indigent criminal defendants. But that is what the Contract assumes.
The role of OCAC exacerbates these problems. Unlike a traditional indigent defense system, in which decisions are made by a court with an independent duty to protect the rights of the defendant, the County system delegates case assignment and compensation decisions to a non-judicial agency which ultimately answers to non-lawyers. Disputes are treated as procurement matters rather than issues of defendant's rights. Non-lawyers ultimately decide how many hours the Contractor should have worked to afford a client competent representation, based not on the case but on the County's costs and its budget. This Committee characterized an analogous arrangement, involving a public defender who answered to a non-lawyer, as a "tight rope." Ariz. Op. 87-13 at 2. Here the rope is stretched to its breaking point.
The Contract's provisions, taken together, are too likely to "induce the lawyer improperly to curtail services for the client or perform them in a way contrary to the client's interest." ER 1.5, Comment. The best way for the lawyer to handle every assigned case and still make a living is to choose a few cases for special attention and plead the rest as fast as possible. Fast-moving criminal dockets and short plea deadlines make that approach especially attractive. The danger, in the end, is that the Contract's underlying assumption - that most defendants plead guilty - will become a self-fulfilling prophecy.
A lawyer should not enter a contract to provide legal services paid by a third party if the contract might induce the lawyer improperly to curtail services to a client or to perform them in a way contrary to the client's interests. The Contract's provisions, taken together, create an ethically unacceptable risk that a lawyer's representation of indigent clients will be adversely affected by the attorney's own financial interests or the interests of other clients. Accordingly, the attorney may not ethically enter the contract that the County proposes.