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We hate to begin a blog directed to financial institution issues with a slightly off-message rant, but have law schools been teaching their lawyers-to-be the rules of professional conduct, in particular Rule 4.2? Recently, we've had more than one in-house counsel on the other side of contract negotiations engage in discussions directly with our client without the client's prior knowledge that opposing counsel would be involved in those discussions and without our, or our client's general counsel's, knowledge or permission. In both instances, opposing counsel was aware that we represented our client and, in fact, the attorneys had exchanged drafts of the contract. In one instance, our client had requested that only business people be present at the meeting and that only business issues be discussed, but the opposing side showed up with counsel and stated at the meeting that they did not want to discuss any matters without their legal counsel being present. Not wishing to appear inhospitable, our clients negotiated the business points with their counterparts but either refused to discuss the legal points with the opposing counsel when he or she broached them, or qualified any tentative agreement reached with the caveat "I'll have to leave that up our legal counsel." The fact that our client was not harmed by this unethical conduct does not excuse it.
Ethical Rule 4.2 is clear. An attorney may not communicate with an opposing party to a matter in controversy that the attorney knows is represented by counsel, about the subject matter of the controversy, without the permission of opposing counsel. The opposing party cannot waive this restriction. This applies to contract negotiations as much as it does to litigation. Ignore it and, when the negotiations are over, you may find yourself facing a grievance.
