attorney commits professional misconduct when she includes a provision that is potentially invalid. 18 When a lawyer includes a potentially invalid provision in a contract, she is likely trying to contract around some mandatory rule of law in a way that benefits her client. 19 While drafting, she should contemplate the possibility of future litigation challenging the contract and have a good faith basis for thinking the subject provision is valid. 20 Further, where there is doubt as to a provision’ s validity, a prudent course of conduct would be to disclose both to the client and to third parties that the provision might be invalid in certain jurisdictions. 21
Transactional matters implicate professional conduct concerns in contexts that are often simultaneously adversarial and collaborative. Professional values embodied in the Rules, such as truthfulness and transparency, are at the core of any transactional representation. Accordingly, attorneys should draft transactional documents against the backdrop of what the Rules require.
1 Gregory M. Duhl, The Ethics of Contract Drafting, 14 LEWIS & CLARK L. REV. 989, 995( 2010).
2
Rule 3.1 provides:“ A lawyer shall not bring or defend a proceeding, or assert or controvert an issue therein, unless there is a basis in law and fact for doing so that is not frivolous, which includes a good faith argument for an extension, modification or reversal of existing law.”
3
See Rule 3.1, cmts. 1 and 2.
4
See, e. g., Rule 1.7( a), which states that“[ a ] lawyer shall not represent a client if the lawyer’ s ability to consider, recommend, or carry out a course of action on behalf of the client will be adversely affected by the lawyer’ s responsibilities to another client or to a third person, or by the lawyer’ s own interests.” See also Rule 1.7( b)( providing that“[ a ] lawyer shall not represent a client when the lawyer’ s own interests are likely to adversely affect the representation.”).
5
Rule 2.1.
6
Duhl, supra note 1, at 995. See also Paul D. Carrington, Unconscionable Lawyers, 19 GA. ST. U. L. REV. 361, 379-84( 2002) and Christina L. Kunz, The Ethics of Invalid and“ Iffy” Contract Clauses, 40 LOY. L. A. L. REV. 487( 2006).
7
Rule 1.2( d) provides that“[ a ] lawyer shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal or fraudulent, but a lawyer may discuss the legal consequences of any proposed course of conduct with a client and may counsel or assist a client to make a good faith effort to determine the validity, scope, meaning or application of the law.”
8
Rule 4.1 provides that“[ i ] n the course of representing a client a lawyer shall not make a statement to a third person of fact or law that the lawyer knows to be false.” See also Michael S. McGinniss, Breaking Faith: Machiavelli and Moral Risks in Lawyer Negotiation, 91 N. D. L. Rev. 247, 258( 2015)( noting that Rule 4.1 does not require materiality for the proscribed conduct).
9
Rule 8.4( c) provides that“[ i ] t is professional misconduct for a lawyer to engage in conduct involving dishonesty, fraud, deceit, or misrepresentation that reflects adversely on the lawyer’ s fitness as a lawyer.”
10
Rule 1.0( e).
11
Id. cmt. 5.
12
Duhl supra note 1 at 1013.
13
N. D. Cent. Code Ann. § 9-08-06( 2015). The statute bars non-compete agreements except in the context of contracts for the sale of business or a partnership dissolution. Even then, the non-compete agreement is subject to a reasonableness test with regard to the scope of the conduct the agreement restricts. Id.
14
See Rule 1.0( e). There need not be reliance or damages, however. Id. cmt. 5.
15
That said, negligent or irresponsible use of a form may implicate Rule 1.1’ s duty to“ provide competent representation to a client.” Rule 1.1.
16
Rule 1.0( g).
17
See Rule 1.0( g)( permitting an inference of knowledge based on the circumstances); see also McGinniss, supra note 8 at 262-66( explaining why lawyers should be held to a“ higher standard of truthfulness” under Rule 4.3 when“ negotiating with unrepresented persons”).
18
Carrington, supra note 6, at 371-73.
19
Kunz, supra note 6, at 508 – 09.
20
See Rule 3.1(“ A lawyer shall not bring or defend a proceeding [ before a tribunal ], or assert or controvert an issue therein, unless there is a basis in law and fact for doing so that is not frivolous, which includes a good faith argument for an extension, modification or reversal of existing law.”).
21
Duhl, supra note 1, at 1032.
Thank You On behalf of Real Property Section & SBAND, I would like to thank the following for presenting at our 2016 Real Property Seminar:
Jannelle Combs Jeffery Dobberpuhl Kara Erickson Casey Furey
Ray German Sonja Greenwaldt Ken Hedge Chris Stoneback
The expertise of professionals like you is the key to a strong CLE program for our members. We greatly appreciate you sharing your knowledge and expertise with us.
Please join us in Bismarck on December 7 & 8 at the Kelly Inn for our 2017 RPPT Seminar.
Grant Shaft, Section Chair
WINTER 2017 11