Model Rule 1.13: Organization as Client

When it applies

This comes up whenever a lawyer represents a corporation, partnership, government agency, or other entity and must figure out whose instructions to follow, who holds the privilege, and what to do if an employee's conduct threatens the organization. On the MPRE, it frequently arises in fact patterns testing whether the lawyer owes duties to the CEO/employee personally or only to the entity, and what steps are required when wrongdoing is discovered.

What the rule requires

• The lawyer represents the organization as an entity, not the individual officers, directors, employees, or shareholders, even though the lawyer interacts with those people.
• If the lawyer knows a constituent is acting, intends to act, or refuses to act in a matter related to the representation in a way that either violates a legal obligation to the organization or violates law that might reasonably be imputed to the organization, and that is likely to cause substantial injury to the organization, the lawyer shall proceed as reasonably necessary in the best interest of the organization.
• Unless the lawyer reasonably believes it is not necessary in the organization's best interest, the lawyer must refer the matter to higher authority in the organization, including, if warranted by the circumstances, to the highest authority that can act for the organization (such as the board of directors).
• If, despite the lawyer's efforts, the highest authority insists on or fails to address in a timely and appropriate manner conduct that is clearly a violation of law, and the lawyer reasonably believes the violation is reasonably certain to cause substantial injury to the organization, the lawyer may reveal information relating to the representation outside the organization, whether or not Rule 1.6 would otherwise permit it, but only if and to the extent the lawyer reasonably believes necessary to prevent substantial injury to the organization.
• When the lawyer knows or reasonably should know the organization's interests are adverse to those of a constituent the lawyer is dealing with, the lawyer must explain that the client is the organization, particularly when it is apparent the constituent's interests conflict with the entity's.
• A lawyer may represent both the organization and a constituent individually, subject to Rule 1.7; if the dual representation creates a concurrent conflict, informed consent confirmed in writing is required, and the organization's consent must be given by an appropriate official other than the individual to be represented, or by the shareholders.

Exceptions

• The permissive disclosure to outsiders (reporting out) does not apply if the lawyer was hired to investigate an alleged violation or to defend the organization against a claim arising from the alleged violation.
• Government lawyers may have additional or different authority to report outside the organization based on other law.

How the MPRE tests Model Rule 1.13

• Students often assume the lawyer represents the individual who hired them or who is the lawyer's main contact (like the CEO), when actually the client is the entity itself.
• Confusing the permissive "may reveal" language for reporting out with a mandatory duty; going up the ladder is required, but reporting outside the organization is discretionary, not mandatory.
• Forgetting that this rule intersects with Rule 1.6 (confidentiality) and Rule 1.7 (conflicts of interest) when a constituent's individual interests diverge from the organization's.
• Overlooking the requirement that the lawyer must clarify the identity of the client when it becomes apparent the organization's and constituent's interests conflict, especially during internal investigations.