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Thompson Hine LLP, a full-service business law firm with approximately 400 lawyers in 11 offices, was ranked number 1 in the category “Most innovative North American law firms: New working models” by The Financial Times and was 1 of 7 firms shortlisted for The American Lawyer’s inaugural Legal Services Innovation Award. The firm has been recognized by the National Law Journal as a Legal Technology Trailblazer and featured by Bloomberg for its innovative service delivery models, which drive accuracy and predictability. The firm’s commitment to innovation is embodied in Thompson Hine SmartPaTHTM – a smarter way to work – predictable, efficient and aligned with client goals. For more information, please visit ThompsonHine.com and ThompsonHine.com/SmartPaTH.

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<img style="max-width: 100%;height: auto;max-width: 100%;height: auto" loading="lazy" class="alignright size-medium wp-image-1790" src="https://www.thelawforlawyerstoday.com/wp-content/uploads/sites/754/2015/07/scales-of-justice-2-200x300.jpg" alt="" width="200" height="300">You probably know about the ethics rule that prohibits lawyers from trying to prospectively limit their liability to clients (or at least I hope you do!).&nbsp; You can find it in your state&rsquo;s version of <a href="https://www.americanbar.org/groups/professional_responsibility/publications/model_rules_of_professional_conduct/rule_1_8_current_clients_specific_rules/">Model Rule 1.8(h)</a>.
In an interesting twist, the Utah Ethics Advisory Committee recently&nbsp;<a href="http://www.utahbar.org/wp-content/uploads/2018/09/18-04.pdf">opined</a> that it&rsquo;s permissible to include a provision in a retainer agreement&nbsp;requiring the client to indemnify the lawyer against third party claims against the lawyer arising from the client&rsquo;s own&nbsp;&ldquo;behavior or negligence.&rdquo;
Narrow reading &mdash; but not alone
The Utah committee said that an indemnification provision against liability, loss and expense to the lawyer caused by third-party claims&nbsp;arising from&nbsp;client&rsquo;s conduct &ldquo;is not specifically prohibited by the rules.&rdquo;
While Utah&rsquo;s Rule 1.8(h) (identical to the Model Rule) bars prospective limitation of liability&nbsp;to a client for malpractice, the committee said, &ldquo;it does not address the specific question of whether an attorney may include an indemnification provision for claims brought by third parties.&rdquo;&nbsp; Therefore, such a provision &ldquo;is not prohibited on its face.&rdquo;
Third-party indemnification provisions might be helpful in representations involving opinion letters &mdash; for example, providing a legal opinion on behalf of a lessor, which is to be given to&nbsp;and relied on by the lessee.&nbsp; The lawyer would be benefitted by being able to seek indemnification from the&nbsp;lessor client against later claims by the lessee.
Few state ethics committees seem to have addressed the issue of third-party indemnification.&nbsp; But the New York State Bar Association, in a 2013 <a href="https://nysba.org/ethics-opinion-969/" target="_blank" rel="noopener">opinion</a>,&nbsp;has approved the concept in the context of opinion letters.&nbsp; And a 2005 Oregon <a href="https://www.osbar.org/_docs/ethics/2005-165.pdf">opinion</a> advised that a lawyer asked to investigate a client&rsquo;s&nbsp;employee could seek indemnity from the client against subsequent claims by the employee against the lawyer.
Insurance deductible?&nbsp; Not so fast
What about using such an indemnification provision to hold a client responsible for the lawyer&rsquo;s malpractice insurance deductible if the client unsuccessfully sues the lawyer for malpractice?
The Utah committee also considered that question, and concluded that Rule 1.8(h) doesn&rsquo;t expressly bar that scenario, because &ldquo;requiring payment for an unsuccessful malpractice claim, on its face, does not limit liability for malpractice.&rdquo;&nbsp; But trying to use indemnification to extract payment from the client for your malpractice insurance deductible may be misconduct under other rules, said the committee.&nbsp; <a href="https://www.americanbar.org/groups/professional_responsibility/publications/model_rules_of_professional_conduct/rule_8_4_misconduct/">Rule 8.4(d</a>) bars engaging in conduct that is &ldquo;prejudicial to the administration of justice.&rdquo;&nbsp; An agreement that would make a client (or, by then, presumably a former client)&nbsp;responsible for paying your deductible after the client loses a malpractice case against you, could &ldquo;have a chilling effect on a client&rsquo;s pursuit of a malpractice claim and would thus be prejudicial to the administration of justice,&rdquo; the committee advised.
Client communication
In any event, client communication is key.&nbsp; To say the least, &ldquo;the average client may not understand what indemnification is or in what specific circumstances it could be applied.&rdquo;&nbsp; Sophisticated clients might, but your best bet is clear explanation and understanding.&nbsp; <a href="https://www.americanbar.org/groups/professional_responsibility/publications/model_rules_of_professional_conduct/rule_1_4_communications/">Model Rule 1.4(b)</a> (&ldquo;Communication&rdquo;) requires you to&nbsp;&ldquo;explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation.&rdquo;
That would seem to apply to the client&rsquo;s decision to agree to indemnify you for anything.
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Note:&nbsp; My co-editors and I are thrilled that the ABA Journal has again honored The Law for Lawyers Today as one of its &ldquo;Web 100,&rdquo; putting us among the 35 best legal blogs in the U.S.&nbsp; Read the magazine&rsquo;s announcement <a href="http://www.abajournal.com/magazine/article/best_legal_web_100_2018">here</a>.&nbsp; We&rsquo;re very proud, and we promise to keep bringing you fresh and lively news and comment from &ldquo;Legal Ethics World.&rdquo;&nbsp; Thanks for reading!

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Ethics

Legal Ethics, Professional Responsibility and the Business of Law

Client can be asked to indemnify lawyer against third-party claims, says ethics opinion