A lawyer can provide legal advice to an organization without representing the organizations employees and other representatives. That is, a lawyer generally does not have a direct attorney-client relationship with that organization’s individual employees unless such a relationship is specifically undertaken. But, misunderstandings can arise, in part, because an organization necessarily acts through its individual employees and, thus, the lawyer’s advice is generally provided to the corporation’s individual employees.

So what happens if the legal advice of counsel to the organization also could impact that organization’s employees? Does the lawyer have an obligation to speak up? The ABA recently addressed this issue in Formal Opinion 514 and reviewed what a lawyer’s obligations are when (1) a lawyer is giving advice to an organization about future action, (2) the lawyer knows or reasonably should know that the constituents may have their own legal interests at stake, and (3) the lawyer does not intend to create a direct relationship with the individual employees.

Specifically, the opinion considers two questions regarding the scope of the attorney’s obligations when working with an organization in this scenario. Considering those issues can help corporate lawyers ensure that they are complying with their ethical obligations when working directly with organizations.

Is There a Duty to Advise the Organization?

The first question addressed by Formal Opinion 514 is whether the lawyer’s duty to competently advise the organization includes a duty to advise about the potential legal implications of the recommended course of action on individual constituents. The answer is, it depends.

The ABA Opinion does not draw a sharp line requiring lawyers to always provide such advice. But the opinion does rely on Model Rule of Professional Conduct 1.4(b), which requires lawyers to explain matters to their clients in a way that allows them to make informed decisions. And Model Rule 2.1 calls on lawyers to exercise independent professional judgment regarding a number of different factors—beyond just the literal requirements of the law—that may be relevant to a client’s situation, such as “moral, economic, social and political factors.” Taken together, these rules suggest that lawyers should give appropriate context to clients to help them make decisions based on legal advice.

Thus, the ABA opinion suggests that whether the recommended course of future conduct for the company creates risks for individual employees may be another factor that could be relevant to the corporation client. The decision-makers at the company may decide to proceed with the recommended course of conduct anyway, but the opinion suggests that lawyers may have an obligation to explain to the organization how the proposed future action could create legal risks for the constituents themselves.

Does the Lawyer Have to Instruct Individual Employees as to the Lawyer’s Role?

It is very common for lawyers to represent organizations and to inform individual employees that the lawyer represents the organization’s interests and not the individuals’. For example, this situation might arise in the context of an Upjohn warning when the lawyer is conducting an internal investigation at the company. In those situations, the lawyer may interview individual employees to explore or investigate allegations of wrongdoing and can explain at that time that the lawyer is there for the benefit of the company and not for the benefit of the individual employee.

In the context of Formal Opinion 514, the committee also considered whether a lawyer providing advice to an organization through its individual constituents is required to take measures to correct or inform the individual constituents’ understanding of the lawyer’s role. That is because “[w]hen an organization’s lawyer provides advice to the organization about proposed conduct that may have legal implications for individual constituents, the constituents through whom the lawyer conveys advice may misperceive the lawyer’s role.” For example, the individuals could assume that the lawyer, in providing advice meant for the corporation, would necessarily advise the individuals of their own risk as well.

The opinion recognizes that there may be varying levels of sophistication among employees within the organization that may govern what the lawyer’s obligations are. However, the Model Rules of Professional Conduct do require that an organization’s lawyer must take reasonable measures to avoid misunderstandings about the lawyer’s role. Importantly, there is no “particular formula” for when this explanation is necessary, although the Opinion notes that it can be helpful for the lawyer to clarify their role “early and often.”

Critically, the opinion recognizes that the lawyer does not have an attorney-client relationship with the individual employee just because the lawyer’s advice to the organization could impact the individual employee: “The objective is not to advise constituents about how to act in light of personal legal risks but simply to give them information to prevent them from erroneously relying on misunderstandings of the lawyer’s role.”

Thus, it may be sufficient for the lawyer to simply confirm that although the organization’s acts could impact its individual constituents’ interests, the lawyer represents the organization only. The lawyer could also advise the individual employee that they may need to consult separate counsel if they have questions about their own individual risks (given Model Rule 4.3, which does not permit a lawyer to give legal advice to nonclients other than to advise them to secure independent counsel). The corporate lawyer may need to be “sensitive to ambiguities in their advice-giving role and to approach each situation, in light of the particular circumstances, in a manner that appropriately avoids any obvious or likely confusion on the part of the constituents who receive the lawyers’ advice.”

By being aware of some of these complications that can arise in the context of a corporate relationship, lawyers can ensure that they stay on the right side of the Rules of Professional Conduct.