This OBLIC Alert brings you three important developments for several areas of practice.
Ohio Board of Professional Conduct Opinion 2024 -03 on Fee Agreements
ABA Formal Opinion 510 on Avoiding Imputation of Conflicts of Interest
On April 18, 2024, FinCEN updated its Beneficial Ownership Information Frequently Asked Questions to clarify questions regarding Reporting Companies, beneficial ownership through trusts, and access to beneficial ownership information.
Clarifications on identifying a Reporting Company include:
- An S-Corp is subject to BOI reporting requirements;
- A domestic corporation or limited liability company not created by the filing of a document with a secretary of state or similar office, is NOT a Reporting Company
- Whether Homeowners Associations are required to report depends on how each entity was created, subject to exemption(s)
Other important updates involve trusts. FinCEN has clarified that owners can own or control a reporting company through trusts. See the updated BOI FAQs for more on determining reporting requirements related to trusts, their owners, and corporate trustees.
The FinCEN update also addresses changes in company status and reporting deadlines. The updated FAQs address when a company created or registered before January 1, 2024 loses its exempt status necessitating the filing of an Initial Report. Additionally, the new guidance addresses the requirement to file an updated BOI within 30 days following the loss of the large operating company exemption.
Access to Beneficial Ownership Information is a new section. FinCEN details the phased approach to providing access to BOI information. Guidance is also listed for how authorized recipients should prepare to receive, store, and use beneficial ownership information, referencing the Beneficial Ownership Information Access and Safeguards Rule.
Please review these changes by clicking here or download the PDF BOI FAQs Q&A (fincen.gov).
OBLIC Loss Prevention Director has also recently recorded a comprehensive video walking you through CTA BOI reporting requirements. This is an exclusive resource available upon request to OBLIC policyholders. To view the video, please email [email protected].
This Opinion issued April 5, 2024, addresses whether a lawyer could use a proposed hourly fee agreement until settlement or collection of a judgment, at which time the lawyer could unilaterally opt to convert the fee agreement to contingent.
In discussing contingent fee agreements permitted pursuant to Prof.Cond.R. 1.5(c), the Opinion observes that contingent fees are normally greater than hourly fees for the same representation as the lawyer bears the risk of no recovery. Any fee a lawyer charges must be reasonable under Prof.Cond.R. 1.5. Section (a) lists eight factors to be considered to determine the reasonableness of a fee. However, a decision of which fee is imposed based on amount of the fee at the conclusion of representation is not one of those factors. This potential fee conversion could interfere with the client’s decision to settle.
The Board opined that it is improper for a lawyer to enter into a fee agreement with the client agreeing to pay an hourly rate until settlement or recovery when the lawyer can unilaterally decide whether to charge an hourly rate or a contingent fee.
ABA Formal Opinion 510 offers “general guidance to a lawyer in a law firm to minimize the risk that a meeting with a prospective client will later give rise to an imputed conflict of interest.” The Opinion suggests “reasonable measures” necessary to avoid imputation of conflicts of interest under Prof. Cond. R. 1.18(d) when the lawyer has received disqualifying information from a prospective client.
The Opinion also offers guidance to determine whether a law firm is disqualified due to its lawyer’s earlier meeting with a prospective client who did not retain that lawyer. It is important to note: the Opinion states that failing to take “reasonable measures to avoid exposure to more disqualifying information than was reasonably necessary to determine whether to represent the prospective client” is not misconduct.
The Opinion cautions, however, that if the lawyer learns disqualifying information and has failed to take reasonable measures to avoid receiving more disqualifying information than reasonably necessary for these purposes, and no representation ensues, the lawyer’s conflict will be imputed to the lawyer’s firm. That means not only the lawyer but also other lawyers in the firm will be disqualified from representing a client adverse to the prospective client in the same or a substantially related matter without the prospective client’s informed consent.
While this ABA Opinion is issued under the American Bar Association’s Model Rules of Professional Conduct, Ohio Rule 1.18 is substantively comparable to Model Rule 1.18.
We hope this update provides value to your practice. As always, contact your OBLIC Loss Prevention Team with any questions. We’re here to help!
| Gretchen K. Mote, Esq. Director of Loss Prevention Ohio Bar Liability Insurance Co. Direct: 614.572.0620 [email protected] |
Merisa K. Bowers, Esq. Loss Prevention Counsel Ohio Bar Liability Insurance Co. Direct: 614.859.2978 [email protected] |
This information is made available solely for loss prevention purposes, which may include claim prevention techniques designed to minimize the likelihood of incurring a claim for legal malpractice. This information does not establish, report, or create the standard of care for attorneys. The material is not a complete analysis of the topic and should not be construed as providing legal advice. Please conduct your own appropriate legal research in this area. If you have questions about this email’s content and are an OBLIC policyholder, please contact us using the information above.
