Stephen Gillers, Regulation of Lawyers
"What is the Risk?"
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"What is the Risk?"
This problem raises the issue of whether a lawyer has a duty
to inform a client of risk that is likely too difficult to calculate with
precision. The client has requested that the lawyer assess whether the client
will have better odds of avoiding damages above $3 million at trial. While Rule
1.4 and Restatement § 20
recognize that a lawyer must provide the client with prompt information related
to the case, this request falls outside of what is “reasonably necessary” for
the client to make an informed decision on how to proceed.
Rule 1.4 acknowledges the client’s interest in participating
in the means (the strategizing) of a settlement dispute/litigation, and outlines
a lawyer’s duty to inform and consult with clients accordingly. In particular,
Rule (a)(2) says that a lawyer must reasonably consult with a client about the
means by which the client’s objectives are going to be accomplished, 3) keep
client reasonably informed about the status of the matter, 4) promptly comply
with reasonable requests for information, and 5) inform client of any relevant
limitation on the lawyer’s conduct when the lawyer knows the client expects
assistance not permitted by the Rules of Professional Conduct or other law.
Moreover, Rule 1.4(b) says that a lawyer must explain a matter to the extent
that is “reasonably necessary” to permit the client to make an informed
decision regarding the representation. As a summary, Restatement §20 states that a lawyer must not only keep a client
reasonably informed about the representation, but must also promptly comply
with a client’s reasonable requests for information.
Given these
rules, Moon must be careful not to provide information that may mislead the
client. While the Rules and Restatement do not provide explicit
provisions prohibiting lawyers from providing numerical estimates of risk, the
ability to do so is obviously outside the scope of a lawyer's ability, and
could potentially pave the way for a malpractice suit. Instead of
providing a percentage to Knott, Moon should attempt to understand his client's
goals and objectives, as Rule 1.4(a)(2) directs. For example, for some
companies, $7 million might greatly affect the business or force it into
bankruptcy, while $3 million would not. For other companies, any amount
might drastically impact its operations and thus the client would have a
different risk profile and be less inclined to settle. As long as Moon promptly
complies with reasonable requests for information and keeps Knott reasonably
informed, he will not be subject to any sanctions for violating the Rules.
In the end, Moon
will want to frame the risks of litigation in a way that is tailored to Knott's
objectives for the company. This way, Moon can avoid giving a number that
in reality, he is unable to ascertain. While Moon would ideally want to
give favorable numbers to Knott and exert confidence in the company's position,
he must only provide information for "reasonable requests" and to the
"extent reasonably necessary" under both Restatement § 20 and Rule
1.4. Providing a number he cannot support would be setting himself up for
failure in the event the case does proceed to litigation and the company
loses. Instead of giving a number, he could also try to convey the
potential merits of the claims and issues affecting the outcome in layman's
terms so that Knott better understands the reasons for uncertainty.
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