MATTER OF SUPREME COURT RULES OF PROF. CONDUCT, ADKT 370 (Nev. 4-7-2006)

IN THE MATTER OF AMENDMENTS TO THE SUPREME COURT RULES OF PROFESSIONAL CONDUCT. SCR 150-203.5.

ADKT 370.Supreme Court of Nevada.
April 7, 2006.

ORDER AMENDING RULES 1.17, 5.4 AND 6.1 OF THE NEVADA RULES OF PROFESSIONAL CONDUCT
ROBERT ROSE, Chief Justice.

WHEREAS, on February 6, 2006, this court repealed Rules 150 through 203.5 of the Supreme Court Rules and adopted the Nevada Rules of Professional Conduct effective May 1, 2006 and

WHEREAS, this court reserved Rule 1.17 of the Rules of Professional Conduct and deferred for further consideration the Board of Governors’ recommendation that the court adopt Model Rule of Professional Conduct 1.17; and

WHEREAS, on February 21, 2006, this court held a public hearing on the recommendation to adopt Model Rule 1.17 and proposed amendments to Rule 6.1 of the Nevada Rules of Professional Conduct; and

WHEREAS, this court has concluded that amendment of Rules 1.17, 5.4 and 6.1 of the Nevada Rules of Professional Conduct is warranted, accordingly,

IT IS HEREBY ORDERED:

1. That Rules 1.17 (Sale of Law Practice) and 5.4 (Professional Independence of a Lawyer) of the Nevada Rules of Professional Conduct shall be amended and shall read as set forth in Exhibit A;

2. That Rule 6.1 (Pro Bono Publico Service) of the Nevada Rules of Professional Conduct shall be amended and shall read as set forth in Exhibit B;

3. That these rule amendments shall become effective May 1, 2006; and

4. That the clerk of this court shall cause a notice of entry of this order to be published in the official publication of the State Bar of Nevada. Publication of this order shall be accomplished by the clerk disseminating copies of this order to all subscribers of the advance sheets of the Nevada Reports and all persons and agencies listed in NRS 2.345, and to the executive director of the State Bar of Nevada. The certificate of the clerk of this court as to the accomplishment of the above-described publication of notice of entry and dissemination of this order shall be conclusive evidence of the adoption and publication of the foregoing rule amendments.

EXHIBIT A AMENDMENTS TO RULES 1.17 AND 5.4 OF THE NEVADA RULES OF PROFESSIONAL CONDUCT Rule 1.17. [Reserved]Sale of law practice. A lawyer or a law firm may sell or purchase a law practice, or an area of law practice, including good will, if the following conditions are satisfied:
(a) The seller ceases to engage in the private practice of law, or in the area of practice that has been sold, in the geographic area or jurisdiction in which the practice has been conducted for a reasonable period of time, in no case less than 6 months, to be set forth in the written agreement for the sale of the practice. In the event a specific term is not set forth in writing, a term of 6 months shall apply for the purposes of this Rule;
(b) The entire practice, or the entire area of practice, is sold to one or more lawyers or law firms;
(c) The seller gives written notice to each of the seller’s clients regarding:
(1) The proposed sale;

(2) The client’s right to retain other counsel or to take possession of the file; and
(3) The fact that the client’s consent to the transfer of the client’s files will be presumed if the client does not take any action or does not otherwise object within 90 days of receipt of the notice.

If a client cannot be given notice, the representation of that client may be transferred to the purchaser only upon entry of an order so authorizing by a court having jurisdiction. The seller may disclose to the court in camera information relating to the representation only to the extent necessary to obtain an order authorizing the transfer of a file.
(d) The fees charged clients shall not be increased by reason of the sale.
Model Rule Comparison — 2006
[Nevada has not adopted ABA Model Rule 1.17, which providesfor the sale of a law practice. The Rule is reserved to maintainconsistency with the Model Rules format.] Rule 1.17 is a new rule. It is the same as ABA Model Rule 1.17 except for the language added to the end of paragraph (a) of the Nevada Rule regarding the 6-month time period.

* * * Rule 5.4. Professional Independence of a Lawyer.

(a) A lawyer or law firm shall not share legal fees with a nonlawyer, except that:

(1) An agreement by a lawyer with the lawyer’s firm, partner, or associate may provide for the payment of money, over a reasonable period of time after the lawyer’s death, to the lawyer’s estate or to one or more specified persons;
(2) [A, lawyer who undertakes to complete unfinished legal business of a deceased lawyer may pay to the estate of the deceased lawyer that proportion of the total compensation that fairly represents the services rendered by the deceased lawyer] A lawyer who purchases the practice of a deceased, disabled, or disappeared lawyer may, pursuant to the provisions of Rule 1.17, pay to the estate or other representative of that lawyer the agreed-upon purchase price;
(3) A lawyer or law firm may include nonlawyer employees in a compensation or retirement plan, even though the plan is based in whole or in part on a profit-sharing arrangement; [and] (4) A lawyer may share court-awarded legal fees with a nonprofit organization that employed, retained or recommended employment of the lawyer in the matter; and
(5) A lawyer who undertakes to complete unfinished legal business of a deceased lawyer may pay to the estate of the deceased lawyer that proportion of the total compensation that fairly represents the services rendered by the deceased lawyer.

(b) A lawyer shall not form a partnership with a nonlawyer if any of the activities of the partnership consist of the practice of law.

(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.

(d) A lawyer shall not practice with or in the form of a professional corporation or association authorized to practice law for a profit, if:

(1) A nonlawyer owns any interest therein, except that a fiduciary representative of the estate of the lawyer may hold the stock or interest of the lawyer for a reasonable time during administration;
(2) A nonlawyer is a corporate director or officer thereof or occupies the position of similar responsibility in any form of association other than a corporation; or
(3) A nonlawyer has the right to direct or control the professional judgment of a lawyer.

Model Rule Comparison — 2006

Rule 5.4 (formerly Supreme Court Rule 188) is the same as ABA Model Rule 5.4 with one exception. [Paragraph (a)(2) covers thesame subject matter as paragraph (a)(2) of the Model Rule, butthe text of the Nevada provision is different from the ModelRule. Because Nevada has not adopted Rule 1.17, which providesfor the sale of a law practice, Nevada also has not adopted ModelRule 5.4(a)(2). Instead, paragraph (a)(2) of the Nevada Ruleretains language from former Supreme Court Rule 188(1)(b) thatpermits a lawyer who “undertakes to complete unfinished legalbusiness of a deceased lawyer” to share legal fees with thedeceased lawyer’s estate.] Paragraph (a)(5) of the Rule is Nevada specific and is retained from former Supreme Court Rule 188(1)(b).

EXHIBIT B AMENDMENTS TO RULE 6.1 OF THE NEVADA RULES OF PROFESSIONAL CONDUCT Rule 6.1. Pro Bono Publico Service.
(a) Professional responsibility. [A lawyer should renderpublic interest legal service. A lawyer may discharge thisresponsibility by any of the following:

(1) Providing a minimum of 20 hours yearly of professional services at no fee to:

(i) persons of limited means;

(ii) public service, charitable group or organization providing pro bono services;
(iii) by service in activities for improving the law, the legal system or profession; or
(iv) by service in connection with law-related education sponsored by the State Bar of Nevada or the Nevada Bar Foundation;
(2) Providing a minimum of 60 hours yearly of professional services at reduced fee levels to persons of limited means; or
(3) Contributing a minimum of $500 yearly to an organization or group providing pro bono services.
(4) When pro bono service is performed for an individual without a fee or at a substantially reduced fee, the fee shall be agreed to in writing at the inception of the representation and refer to this Rule. Legal services written off as bad debts do not qualify as pro bono service.] Every lawyer has a professional responsibility to provide legal services to those unable to pay. A lawyer should aspire to render at least 20 hours of pro bono publico legal services per year. In fulfilling this responsibility, the lawyer should:
(1) Provide a substantial majority of the 20 hours of legal services with-out compensation or expectation of compensation to:

(i) Persons of limited means; or

(ii) A public service, charitable group, or organization in matters that are designed primarily to address the needs of persons of limited means; and

(2) Provide any additional services through:

(i) Delivery of legal services at no fee or substantially reduced fee to individuals, groups or organizations seeking to secure or protect civil rights civil liberties or public rights, or charitable, civic, community, governmental and educational organizations in matters in furtherance of their organizational purposes, where the payment of standard legal fees would significantly deplete the organization’s economic resources or would be otherwise inappropriate:
(ii) Participation in activities for improving the law, the legal system, or the legal profession; or
(iii) Delivery of services in connection with law-related education sponsored by the State Bar of Nevada, the Nevada Bar Foundation, a county bar association, or a court located in Nevada.
(3) As an alternative to rendering at least 20 hours of pro bono publico legal services per year as provided in subparagraphs (1) and (2), a lawyer may discharge the professional responsibility to provide legal services to those unable to pay by:
(i) Providing at least 60 hours of professional services per year at a substantially reduced fee to persons of limited means; or
(ii) Contributing at least $500 per year to an organization or group that provides pro bono legal services to persons of limited means.
(4) When pro bono legal service is performed for an individual without compensation or at a substantially reduced fee, the fee shall be agreed to in writing at the inception of the representation and refer to this Rule.
(5) The following do not qualify as pro bono legal service under this Rule:

(i) Legal services written off as bad debts;

(ii) Legal services performed for family members; and
(iii) Activities that do not involve the provision of legal services, such as serving on the board of a charitable organization.

(b) Reporting; discharge of professional responsibility.

(1) All members shall complete an Annual Pro Bono Reporting Form, indicating services performed under this Rule, to be submitted to the state bar annually on a form to be provided by the state bar with the members’ fee statements. If a member fails to file the report required by this Rule, the state bar shall notify the member that a fine of $100 will be imposed unless the member files the report within a specified period of time not less than 30 days after the notice.
(2) The professional responsibility to provide pro bono services as established under this Rule is aspirational rather than mandatory in nature. Accordingly, the failure to render pro bono services will not subject a member to discipline.

(c) Voluntary pro bono plan. The purposes of the voluntary pro bono plan are to make available legal services to those Nevadans who cannot otherwise afford them and to expand the present pro bono programs. To accomplish these goals the following committees are hereby created.

(1) District Court Pro Bono Committees. In each judicial district, the Chief Judge of the District Court shall appoint a Pro Bono Committee consisting of representatives of various members of the bench and bar as well as pro bono services and community organizations of that judicial district. The responsibility of these committees is to determine and address the specific unmet legal needs of that jurisdiction by way of a plan to be submitted to the Supreme Court. Pursuant to paragraph (d) of this Rule, the Pro Bono Committee may establish a foundation. The foundations are authorized to receive funds paid in satisfaction of an order of any court entered in accordance with paragraph (e) of this Rule and to determine the allocation and use of such funds in a manner consistent with this Rule. If no foundation is established, the Pro Bono Committee is authorized to receive such funds and determine their allocation and use in a manner consistent with this Rule.
(2) Access to Justice Section. The board of governors shall have the power to establish a permanent Statewide Access to Justice Section that shall assist in the implementation of this Rule as well as facilitate and support local efforts to improve the public’s access to justice. The initial officers of the Access to Justice Section shall be the currently serving officers of the Access to Justice Committee. Thereafter, elections for officers shall be held as provided in the Access to Justice Section’s bylaws, as approved by the board of governors. The Access to Justice Section shall be composed of regular members who are licensed to practice law in Nevada and laypersons who may become auxiliary members.

(d) Foundations. A district court Pro Bono Committee may establish a local foundation to actively promote the provision of civil legal services to disadvantaged persons and households within the district. A foundation established pursuant to this Rule shall be created as a Nevada nonprofit corporation and is authorized to:

(1) Actively promote the observance of this Rule within the district;
(2) Receive donations from members of the State Bar of Nevada and monies from the courts as provided in this Rule;
(3) Distribute such funds to providers of pro bono and free or reduced fee civil legal services in the district and to public law libraries;
(4) Develop other new sources of funding and support for delivery of civil legal services;
(5) Support existing legal services and pro bono efforts and foster new projects to broaden the existing range of civil legal services; and
(6) Serve as an educational facilitator to make the community as a whole aware of the efforts being made to provide all Nevadans within the district with full access to the justice system.

(e) Payment of civil sanctions to fund pro bono programs orlibraries. Subject to the limitations of this Rule, a court may direct that sanctions or fines imposed under NRS 1.210. NRAP 38. NRCP 11, JCRCP 11, or like authority be paid to a nonprofit entity or law library specified below. The court’s discretion to direct payment of sanctions or fines to a nonprofit entity or law library, however, is limited to civil sanctions imposed against counsel, parties, witnesses or others appearing before the court and expressly excludes sanctions or fines imposed against a defendant in any criminal case. Payment may be directed only to the following:

(1) A nonprofit entity or committee designated pursuant to a voluntary pro bono plan described in paragraph (c) to serve the pro bono and access to justice needs either for the judicial district in which the judicial officer presides on if serving outside his or her judicial district, where the case is heard; or
(2) A public law library or nonprofit entity associated with a public law library located either in the judicial district in which the judicial officer presides or, if serving outside his or her judicial district, where the case is heard; or
(3) To the Nevada Law Foundation or other statewide nonprofit entity designated by the state bar to serve pro bono and access to justice needs.
(4) The supreme court may also direct payment to such nonprofit entities or public law libraries located in the judicial district in which the matter before the supreme court originated or to any other public law library in the state.

(f) Limitation on authority to specify use of funds. A judicial officer who orders payment of a sanction or fine pursuant to paragraph (e) must not participate in the specific determination of which entity will receive the sanction or fine or of how that sanction or fine will be used by the nonprofit entity or law library designated to receive the funds. The judicial officer may, however, serve on the board or as an officer of a nonprofit entity created pursuant to this Rule, or of a law library or nonprofit entity associated with a law library, provided that he or she does not participate in specific decisions regarding the use of any sanction or fine directed to the nonprofit entity or library by that judicial officer.

Model Rule Comparison — 2006

Rule 6.1 (formerly Supreme Court Rule 191) addresses the same subject matter as ABA Model Rule 6.1, but the text of the Rule is different.