New System for Issuing Formal Ethics Opinions is a Game Changer for Arizona Lawyers

A new Arizona Supreme Court rule that is far more important for Arizona’s legal profession than it may seem took effect yesterday.

As a result of new Rule 42.1, Ariz. R. Sup. Ct., the Supreme Court, which by the Arizona Constitution is in charge of regulating the practice of law, will directly control another piece of the system of governing Arizona lawyers. This, after revamping the discipline system effective in 2011 in many ways, including removing the probable-cause function from State Bar of Arizona control and relocating it to a court-appointed committee that acts like the grand jury in discipline cases.

The production of ethics opinions now is where it belongs: within the Supreme Court’s control, giving those opinions the gravitas and buy-in the legal profession deserves.

Under new Rule 42.1, another new court committee – not a State Bar committee – will draft all formal ethics opinions and the court itself will review them, thus making them binding on the discipline system. Lawyers also will be able to comment on proposed ethics opinions.

Since its first opinion issued in 1954, the State Bar’s Committee on the Rules of Professional Conduct (also known as the Ethics Committee) has issued formal, written opinions interpreting Arizona’s legal ethical rules. The State Bar promoted these advisory opinions as critical guidance for lawyers.

But as substantive as many of those opinions have been, they regretfully had no rule-based teeth. The Supreme Court has had nothing to do with the production of ethics opinions. Until several years ago, no one outside the State Bar’s committee even reviewed them before they were issued.

The opinions were not binding, of course, on the judicial decisionmakers in the lawyer-discipline system, although the Supreme Court has, in a handful of case opinions, cited or referred to them and, in one opinion dealing with fees, even described the Ethics Committee’s opinion as having “provided useful guidance” about flat fees. In re Connelly, 203 Ariz. 413, 418, ¶ 28 (2002).

Many Arizona lawyers may be surprised to learn that the State Bar’s Lawyer Regulation Office also did not have to abide by the State Bar committee-produced opinions if it didn’t want to. That’s right: one arm of the State Bar issued opinions for its member lawyers to follow but another arm of the same entity did not have to follow those opinions. As the Supreme Court task force that proposed new Rule 42.1 wrote in its report, “[I]f the State Bar’s Lawyer Regulation Office disagrees with a formal ethics opinion, it may disregard that opinion and bring charges against a State Bar member who acted based on the opinion’s analysis.”

The court appointed that task force to look at, among other things, whether the State Bar’s ethics, professionalism, and unauthorized-practice-of-law committees should be established by court rule; whether legal ethics and UPL opinions should be “subject to some type of review beyond” the committees; and whether lawyers should be “afforded some degree of immunity from discipline for actions taken consistent with formal opinions or informal ethics advice.”

The task force, chaired by former Chief Justice Rebecca Berch, answered “yes” to all of those questions and more. The Supreme Court adopted the task force’s proposed rule with only a few substantive changes.

Under the new Rule 42.1, the function of issuing formal, written opinions interpreting Arizona’s legal ethical rules for Arizona lawyers moves from the State Bar – a non-governmental entity that is a private, nonprofit corporation, albeit court-sanctioned – to a Supreme Court-appointed committee, with a process requiring public comment as well as court review. In its report, the court’s task force explained its recommendations for the court exercising “additional control and oversight”:

Additional oversight is appropriate to address concerns that might otherwise be raised regarding such opinions in light of the U.S. Supreme Court’s opinion in North Carolina State Board of Dental Examiners v. Federal Trade Commission, 574 U.S. ___, 135 S. Ct. 1101 (2015), as well as to communicate to the public the commitment of the Supreme Court and the State Bar to the oversight of professional conduct. The Task Force believes moreover that, because the Supreme Court is responsible for interpreting the state’s rules and laws and for formulating the state’s Rules of Professional Conduct, it should have control over the process – that is, its voice should not be supplanted by a group of non-judges for purposes of interpreting those particular rules.

(If you don’t recall the significance of the North Carolina State Board of Dental Examiners opinion – one that sent shivers down the spines of many associated with integrated bar organizations –  here's a comprehensive analysis.)

New Rule 42.1 formally recognizes that a lawyer may raise, as a defense in any discipline proceeding, that the lawyer relied on an ethics opinion. Ethics opinions resulting from the new process, blessed by the court, therefore must be given credence in the disciplinary system, including by State Bar prosecutors.

The new rule also ensures that lawyers and non-lawyers have the opportunity to comment on what could become officially sanctioned interpretations of the ethical rules. All proposed ethics opinions, drafted by a new court committee called the Attorney Ethics Advisory Committee (AEAC), must be publicized for comment for at least 90 days. After the public comment period, the AEAC must consider all submitted comments and then either revise the proposed opinion, leave it unaltered, or withdraw it.

At that point, the AEAC must submit the proposed opinion to the Supreme Court. Within 90 days, the court may take any action it deems appropriate, including declining review, approving, ordering that the opinion not be posted or distributed, modifying the opinion, or directing the AEAC to make specified changes or reconsider certain issues.

After that, an opinion deemed final will be posted on the Supreme Court’s website, sent to the State Bar for it to include in its publications, and distributed to all interested parties.

In addition to issuing opinions on legal ethics, the AEAC also is authorized to, among other conduct, issue formal opinions at the request of any person – not just lawyers -- about whether the person’s proposed conduct would constitute the unauthorized practice of law.

As someone intimately familiar with the State Bar’s discipline and ethics functions – I’ve been both a discipline prosecutor and ethics counsel – I like the Supreme Court taking over the process of generating legal-ethics opinions in general and the new rule in particular.

First, opinions that interpret the Supreme Court-adopted ethical rules and which lawyers are expected to follow should be officially sanctioned and vetted by the court as part of its administrative duties, not adopted without public comment by a non-public entity’s volunteer committee.

As I noted above, until several years ago, no one outside the State Bar’s ethics committee and assigned staff even reviewed the formal opinions before they were issued. When that process changed, it was relatively minor: The State Bar board of governors required that the committee send draft opinions to the State Bar president and executive director, with the president able, in “exceptional circumstances,” to prevent the opinion being released for 90 days if the president believed a rule-change petition would better address the issue the opinion addressed.

The second reason I like new Rule 42.1 is that if lawyers are being advised to follow a written interpretation of the ethical rules, then the State Bar’s Lawyer Regulation Office should be required to follow those same interpretations. It frankly never made sense for the State Bar to authorize one of its arms to issue ethics opinions but not require the other arm to follow those opinions.

My third reason relates to the fact that the State Bar housed both the ethics-opinion process and the discipline process. While I served as ethics counsel and then supervised the entire ethics-advice function, I did everything possible to ensure that the advice function was walled off from the discipline office so the discipline office did not know who called for hotline advice or who wrote in requesting a formal opinion. Many lawyers nonetheless are concerned about seeking ethics advice from the same entity that prosecutes lawyers. Rule 42.1 should ameliorate this concern – at least for the ethics-opinion process – by specifically prohibiting the court clerk, who will receive requests for ethics opinions, and the AEAC members from disclosing the “identity, organization affiliation, and geographic location of persons requesting opinions.”

Finally, circulating and publishing a proposed opinion for public comment means that lawyers – at least those who pay attention – won’t be surprised by a rule interpretation. You might remember the uproar over two State Bar formal ethics opinions that told lawyers that, under the rules then in effect, they could not ethically take credit cards for advance fees nor participate in a not-for-profit lawyer referral service that required them to pay the service a percentage of the fees earned on the case. (Both of those opinions were absolutely accurate at the time but understandably were not received well.)

Rule 42.1 means that the Supreme Court has taken ownership of another piece of the legal profession. The production of ethics opinions now is where it belongs: within the court’s control, giving those opinions the gravitas and buy-in the legal profession deserves. Future ethics opinions will be, in my opinion, the most valuable explanation and interpretation of the ethical rules next to the court’s opinions in discipline cases.