LEGAL ETHICS OPINION 1712          TEMPORARY LAWYERS WORKING
                                   THROUGH A TEMPORARY PLACEMENT
                                   SERVICE

You have presented a hypothetical situation in which a staffing
agency recruits, screens and interviews lawyers ("Lawyer Temps"),
then places them with law firms or corporate law departments to
practice law on short-term projects.  The staffing agency places
Lawyer Temps on its payroll and pays them an hourly rate
(deducting all appropriate taxes and paying all required payroll
taxes) during their work on the temporary assignments.  The
staffing agency then bills the law firm and/or law department for
that rate, plus a mark-up that covers the staffing agency's
overhead and profit.  The staffing agency is careful to match the
lawyer's skill and experience to the practice needs of the law
firm or corporate law department requesting a Lawyer Temp.  The
staffing agency does not, however, assert any control over the
Lawyer Temp's exercise of his/her professional and legal judgment
while he/she is working on the assignment.  Moreover, the
staffing agency's contract with the law firm or the corporate law
department requires that the Lawyer Temp be supervised by a
lawyer associated with the firm or the corporate law department.

Initially, you inquired whether it is ethically permissible for a
lawyer to enter into an agreement with a staffing agency under
which the agency places the lawyer with law firms or corporate
legal departments to practice law on short-term assignments.  You
have also made some specific inquiries concerning the ethical
duties of the staffing agency, the Lawyer Temp, and the hiring
law firm or corporate law department.

The Committee recognizes the increasing utilization of Lawyer
Temps by law firms and corporate law departments to meet
temporary or unusual staffing needs or to provide special
expertise not possessed by other lawyers associated with the firm
or corporate law department.  May a lawyer enter into an
agreement with a staffing agency that places him/her with a law
firm or a corporate law department, and may the law firm or
corporate entity hire such a temporary lawyer?  The Committee
believes that such an arrangement is ethically permissible
subject to compliance with applicable disciplinary rules.  Though
not entirely in agreement on all ethical issues and duties
arising out of the relationship, all legal authorities found by
the Committee have approved a law firm's use of a Lawyer Temp. 
Alaska Bar Ass'n Ethics Op. 96-1 (1996); Supreme Court of Texas
Professional Ethics Committee Op. 515 (1996); California State
Bar Ethics Op. 1992-126 (1992); Supreme Court of Ohio, Bd. Of
Commissioners of Grievances & Discipline Op. 90-23 (1990); New
Jersey Supreme Court Advisory Committee on Professional Ethics
Op. 632 (1989); Oliver v. Bd. Of Governors, Kentucky Bar Ass'n.,
779 S.W.2d 212 (Ky. 1989); City of New York Bar Ass'n Formal Op.
1989-2 (1989); Florida State Bar Ass'n Op. 88-12 (1988); ABA
Formal Op. 88-356 (1988).

This Committee has previously opined that there is no prohibition
against a lawyer having dual separate law practices.  Legal
Ethics Opinion 1659.  A lawyer licensed in Virginia may be an
associate of two or more firms for the practice of law.  Legal
Ethics Opinion 802.  Therefore, it would be ethical for a
licensed Virginia lawyer to serve as a Lawyer Temp for more than
one law firm or corporate law department.  However, the parties
to such an arrangement have a number of ethical issues to
address, many of which are raised in your inquiry.

Based on the facts you have presented, you have asked the
Committee to opine as to the following:

     1.   What are the obligations of the staffing agency, the Lawyer
     Temp, and/or the law firm to avoid conflicts of interest in
     accordance with DR 5-105?

A Lawyer Temp placed by a staffing agency with a law firm to work
on particular matters for clients of that firm "represents" the
firm's clients for purposes of DR 5-105.  ABA Formal Op. 88-356. 
DR 5-105 addresses the representation of multiple clients with
conflicting interests and the representation of a client in a
matter substantially related to the representation of a former
client.  A Lawyer Temp may work on a single matter for a law firm
or may work generally for the firm for a limited period on a
number of different matters.  A Lawyer Temp assigned by a
staffing agency to a law firm may simultaneously perform work for
clients of other law firms to which the Legal Temp is assigned.
In each instance, the Lawyer Temp may face situations where
he/she is assigned to matters in which clients of the law firms
have conflicting interests.  DR 5-105(A), (B).  Moreover, even if
the Lawyer Temp has no assignments with other law firms pending,
he or she must avoid accepting assignments with a law firm that
are "substantially related" to any matters handled for clients of
his/her former law firm if the interests of the current client
conflict with those of the former client, unless the former
client consents after full disclosure.  DR 5-105(D).  The
personal conflicts of Lawyer Temps are treated as if they are
conflicts of the law firm's regular professional staff.

The Committee reviewed several opinions advising that in order to
avoid conflicts of interest, the law firm and the Lawyer Temp
should each keep records of the matters worked on during the
period of the assignment.  A recent article in ABA Litigation
News reported that one Lawyer Temp placement agency requires each
lawyer to keep a log containing the names of all the Lawyer
Temp's former clients for whom the lawyer worked either as a law
firm employee or as a Legal Temp.  The placement agency does not
review the log but makes it available to placement employers.  23
ABA Litigation News 5 (No. 3 Mar. 1998).  Prior to hiring a
Lawyer Temp, the law firm and the Lawyer Temp should meet to
determine that there will be no conflicts between the Lawyer
Temp's past placements or employment and the law firm's proffered
placement.  See California State Bar Standing Committee on
Professional Responsibility and Conduct Formal Opinion Number
1992-126, 1992-WL 166234.  In this regard, the situation is like
that of a lateral transfer interviewing or negotiating for a
position with a new law firm.  See, e.g., ABA Formal Op. 96-400
(1996).

ABA Formal Opinion 88-356 advises that a Lawyer Temp should not
be placed with a law firm that represents a party adverse to a
client of the Lawyer Temp or a former client of the Lawyer Temp
in a "substantially related" matter.  ABA Opinions 88-356 and 96-
400 impose obligations on both the hiring law firm and the lawyer
seeking placement to screen for possible conflicts.  The law firm
that is negotiating to hire the Lawyer Temp must make inquiry of
the extent to which the Lawyer Temp was involved with the
representation of an adverse party.  Otherwise, the placement of
the Lawyer Temp may result in the firm's disqualification from
representing a client adverse to a client then or formerly
represented by the Lawyer Temp.  The Lawyer Temp and the law firm
must be able to have substantive discussions about current and
former clients of the Lawyer Temp in his/her other placements. 
If the Lawyer Temp is aware that the law firm with which he/she
is seeking placement represents a client in a matter adverse to a
client for whom the Legal Temp worked or works with another law
firm, the Lawyer Temp would need to consult with his/her client
to determine whether and to what extent the Lawyer Temp could
disclose information about the client and the subject of the
representation to lawyers conducting the interview and
negotiations for the hiring firm.

Exactly how the ABA opinions expect "an appropriate inquiry" and
"screening for conflicts" to occur in all situations is unclear. 
Even the identity of clients and the subject of their legal
matters may be entitled to confidentiality under DR 4-101 as
client secrets.  Virginia Legal Ethics Op. 1300 (1989).  This
Committee has previously opined, however, that it would not be
improper to reveal the identity of a former client in order to
cure a possible conflict of interest where the former client is
the opposing counsel in a pending matter and such information
needed to be disclosed to the current client to obtain consent. 
Virginia Legal Ethics Op. 1147 (1989).  The Committee has also
opined that once the fact of representation of a client is a
matter of public record, then disclosure of the mere fact of such
representation would not violate DR 4-101 unless the client has
requested such information to remain confidential or the
disclosure of such information would be detrimental or
embarrassing to the client.  Id.  

Hence, the Lawyer Temp's disclosure of his/her current or former
clients on assignments with other law firms is tested by DR 4-
101(A)'s definition  of a "secret."  It is "information gained in
the professional relationship [which includes the fact of the
representation] that the client has requested be held inviolate
or the disclosure of which would be embarrassing or would be
likely to be detrimental to the client."  If the Lawyer Temp's
current or former client does not request him/her or the law firm
to hold the fact of representation in confidence, and if the
Lawyer Temp reasonably determines that disclosure of the fact of 
representation would not be embarrassing to the client or would
not likely be detrimental to the client's interests, then the
Lawyer Temp may include such clients in his/her client log for
disclosure to another hiring law firm without client consent. 
The committee cautions, however, that a client's request that
information gained "be held inviolate" is a function of inquiry
of the client.  The broad public perception is that information
gained by lawyers is confidential.  Indeed, lawyers foster that
perception.  Thus, the client's failure to exact an affirmation
of confidentiality, or to instruct the lawyer to hold information
inviolate, does not permit the lawyer to assume without inquiry
that the client consents to disclosure of the fact of
representation to third persons.  Client consent permits
disclosure of confidences and secrets under DR 4-101(C)(1), but
the consent contemplated is a meaningful one that entails the
lawyer's disclosure to the client of the significance and
ramifications of revealing confidences and secrets.   
There are two practical considerations for Lawyer Temps.  First,
if the Lawyer Temp concludes that client consent to disclosure is
not necessary under DR 4-101(B), the Lawyer Temp should confirm
his conclusion with the law firm with which he/she worked or
works for those clients.  It seems fair to say that the client
would have a more intimate relationship with the law firm than
with the Lawyer Temp assigned to work on the client's matter. 
The Lawyer Temp thus can be guided by the law firm's perception
or informed judgment of the client's desires as to disclosure of
the fact of the Lawyer Temp's representation.

The second practical consideration is that whether the Lawyer
Temp is permitted to disclose the fact of representation of a
client should be addressed at the outset of the placement with
the law firm.  The risk of wrongful disclosure could be minimized
if each of the Lawyer Temp's hiring law firms made a disclosure
to clients for whom he/she would work, explained that the nature
of transitory placement with law firms required the Legal Temp to
maintain a client log, and requested consent to inclusion of the
client's name in the Lawyer Temp's log.  If a client objects to
disclosure of the fact of the Lawyer Temp's representation, the
Lawyer Temp acts at his/her peril under DR 4-101 in disclosing
the fact of the client's representation.  Likewise, the hiring
law firm acts at its peril under DR 5-105 if it fails to assess
the possibility of conflicts of interests between clients.

In those situations where an exchange of information between the
Lawyer Temp and the hiring firm is not permitted with respect to
identification of current or former clients of the Lawyer Temp,
the Lawyer Temp must be cognizant of conflicts of interest and
decline employment when required to do so under the applicable
rules.  In effect, the personal conflicts of a Lawyer Temp are to
be analyzed and resolved in the same manner as the personal
conflicts of any lawyer switching firms.  LEOs 1419, 1428, 1430
and 1629.  Both the Lawyer Temp and the lawyers hiring the Lawyer
Temp would be barred from representing any party adverse to any
client in whose legal matter the Lawyer Temp has "actively
participated," or from whom the Lawyer Temp gained confidences
and secrets, unless the clients consent after full disclosure. 
DR 5-105; Legal Ethics Opinion 1428.

     2.   Is the Lawyer Temp considered "associated with" the firm for
     the purposes of the imputed disqualification provision of DR
     5-105(E)?  What steps can be taken so that a temporary
     attorney is not deemed "associated with" the firm?

The most difficult conflict of interest issues involving Lawyer
Temps turn on whether the Lawyer Temp is considered "associated
with" the hiring firm for purposes of the "imputed
disqualification" rule under DR 5-105(E), which states:

     If a lawyer is required to decline employment or to
     withdraw from employment under DR 5-105, no partner or
     associate of his or her firm may accept or continue
     such employment.
     
For example, suppose a Lawyer Temp is working on a legal matter
for Firm X which represents Client A, and the staffing agency
assigns the Lawyer Temp to work for Firm Y which represents A's
adversary, B.  Must the Lawyer Temp withdraw from representing A
unless A consents to Firm Y's employment of the Lawyer Temp?  If
Client A objects, can Firm Y still continue its representation of
B?  Can Firm Y effectively "screen" the Lawyer Temp from its
representation of B so that the conflict is curable?  If the
Lawyer Temp did not work on any matters for Client A while
employed at Firm X, may firm Y hire the Lawyer Temp and continue
to represent Client B?

Categorical answers cannot be given to those questions.  DR 5-
105(E) must be applied on a case-by-case basis after
consideration of the particular circumstances and facts.  A key
factor in the consideration consists of the extent to which
confidentiality is protected, which implicates the Lawyer Temp's
access to client confidences and secrets as defined in DR 4-
101(A).

For guidance, the Committee turns to some of its prior opinions
involving lawyers moving laterally from one firm to another since
those opinions analyze similar issues regarding protection of
client confidences and secrets and imputed conflicts.  In Legal
Ethics Opinion 993, the Committee addressed a situation in which
a lawyer left a law firm to establish his own practice and
desired to represent a plaintiff in an existing case in which the
defendant was represented by a partner in his old law firm. 
Since the lawyer was not involved in the case while at his old
law firm, the Committee concluded the lawyer had rebutted any
presumption that he had acquired confidential information from or
about the client while employed at his old firm.

In Legal Ethics Opinion 1428, a lawyer in a medical malpractice
defense law firm made a lateral transfer to join a law firm that
prosecuted plaintiffs' claims of medical malpractice.  The
Committee opined that absent client consent, both the lawyer and
his new firm would be barred from representing any plaintiffs in
matters in which the lawyer was "actively participating" while
employed at the defense firm.  In that situation, a screening
device ("Chinese Wall") would not cure the conflict absent client
consent.  The lawyer and others in the plaintiff's law firm could
represent clients whose interests were adverse to clients of the
defense firm if the lawyer switching firms did not work on those
cases and did not acquire any former client confidences and
secrets.  See also Legal Ethics Opinion 1629.  Therefore, if a
lawyer while with one firm acquired no confidential information
relating to a particular client of the firm and did not
participate in the firm's representation of the client, neither
the lawyer individually nor any member of the second firm is
disqualified from representing a client in the same or a related
matter even if the interests of the two clients conflict.

If a Lawyer Temp was directly involved in work on a matter for a
client of one law firm, thereby acquiring confidences and secrets
relating to the representation of that client, a second law firm
representing an adverse client in the same or a substantially
related matter should not hire that Lawyer Temp, at least until
the pending matter is concluded, without consent from the former
client of the Lawyer Temp.  In that situation, even if the Lawyer
Temp was assigned to the second law firm to work on matters
unrelated to his work at the former firm, absent the consent of
the clients whose interests conflict, DR 5-105(E) would
disqualify the second law firm from continuing its representation
of a client whose interests were adverse to the client of the
first law firm.  

The risk of imputed disqualification for the hiring firm also
depends on the Lawyer Temp's access to confidences and secrets of
clients represented by other law firms even if the Lawyer Temp
did not perform work for those clients.  

If the Lawyer Temp works for a law firm, in its office, on a
number of matters for different clients and has general access to
the law firm's files and to office discussions of client matters,
there will likely be a presumption that the Lawyer Temp acquired
confidences and secrets.  Such a presumption is not likely, or is
more readily rebutted, where the Lawyer Temp worked on a single
matter outside the law firm's office, or under such close
supervision that it can be demonstrated the Lawyer Temp did not
have access to confidential information about other law firm
clients.  Law firms hiring Lawyer Temps should maintain adequate
records and documentation demonstrating restricted access to
client files and confidential information.  Even so, the second
law firm's "screening" of a Lawyer Temp who "actively
participated" in the representation of one client adverse to a
client of the law firm will not cure the conflict and is not a
substitute for client consent.  Legal Ethics Opinion 1428, supra.

The Standing Committee on Legal Ethics for the American Bar
Association takes the position that Lawyer Temps should not
necessarily be treated as "associated" with the law firm that
hires them for purposes of imputed disqualification.  Applying a
"functional analysis" test, the ABA committee focused on a direct
connection between the Lawyer Temp and the work he/she performed
for clients with conflicting interests.  ABA Formal Op. 88-356. 
Applying the Model Rules of Professional Conduct and the Code of
Professional Responsibility, the ABA committee concluded that
ordinarily screening is permissible for Lawyer Temps moving from
firm to firm:

          In order to minimize the risk of disqualification,
     firms should, to the extent practicable, screen each
     Lawyer Temp from all information relating to clients
     for which the Lawyer Temp does not work.  All law firms
     employing Lawyer Temps also should maintain a complete
     and accurate record of all matters on which each Lawyer
     Temp works.  A Lawyer Temp working with several firms
     should make every effort to avoid exposure within those
     firms to any information relating to clients on whose
     matters the Lawyer Temp is not working.  Since a Lawyer
     Temp has an equal interest in avoiding future imputed
     disqualification, the Lawyer Temp should also maintain
     a record of clients and matters worked on.

The committee concurs with the precautions suggested in ABA
Formal Op. 88-356 to avoid a disqualifying conflict of interest. 
The committee observes that authorities in other jurisdictions
have done likewise.  Oliver v. Board of Governors, 779 S. W. 2d
212, 216 (Ky. 1989); New Jersey Op. 632. (1989); and South
Carolina Op. 91-09 (1991).  The Committee cautions, however, that
the screening measures recommended in ABA Formal Op. 88-356 will
not always be practical or possible, and that the efficacy of
screening (the "Chinese Wall") cannot be guaranteed in the light
of the Virginia Supreme Court's disapproval of Legal Ethics
Opinion #1302.  See Building Chinese Walls in Virginia, etc., 26
U. Rich. L. R. 391 (1992).  The burden rests with the Lawyer Temp
to recognize direct conflicts and avoid placement in law firms
that the Lawyer Temp knows to represent clients adverse to
current clients of the Lawyer Temp or to former clients in
"substantially related" matters, unless an informed consent is
received from the clients.

     3.   What are the obligations of the staffing agency, the Lawyer
     Temp, and/or the law firm to preserve the confidences and
     secrets of the clients in accordance with DR 4-101?

The appropriate and controlling Disciplinary Rule is DR 4-101,
which requires a lawyer to preserve the confidences and secrets
of a client except as disclosure is expressly authorized under
the Rule.  The Committee has previously opined regarding the
ethical duties of a law firm and a lawyer serving as "of counsel"
to the firm, and an associate of two firms or one firm with a
separate practice, to avoid conflicts and protect client
confidences and secrets.  Virginia Legal Ethics Opinions 1293 and
1659.  The lawyer serving as "of counsel" and the associate must
adhere to the requirements of DR 4-101 for safeguarding
confidences and secrets of the clients of each law firm.

It is the responsibility of the Lawyer Temp, therefore, to comply
with the requirements of DR 4-101 by observing strict
confidentiality regarding any confidences or secrets gained in
the course of temporary employment.  As stated above, if a Lawyer
Temp works in a firm's office on matters for many of the firm's
clients and generally has access to information concerning other
clients on whose matters the Lawyer Temp is not working, the
Lawyer temp will be deemed "associated" with the firm as defined
in Model Rule 1.10 or regarded as an "associate" for purposes of
imputed disqualification under DR 5-105(E).

The staffing agency must be mindful that it is not permitted to
cause the Lawyer Temp to breach his/her duty to preserve client
confidences and secrets.  Consistent with DR 4-101 the Lawyer
Temp may not discuss or otherwise reveal to the staffing agency
or third parties any client confidences or secrets.  In the
absence of client consent, the subject matter and content of the
services being provided to clients of the hiring firm should not
be revealed to the staffing agency, and care should be taken not
to reveal such information in any time records provided the
staffing agency.  City of New York Bar Op. 1988-3(1988).

It is the ethical responsibility of any lawyer using Lawyer Temps
to "exercise reasonable care to prevent his employees,
associates, and others whose services are utilized by him from
disclosing or using confidences or secrets of a client, except
that a lawyer may reveal the information allowed by DR 4-101(C)
through an employee."  DR 4-101(E).

     4.   Is the payment of the fee to the staffing agency (the hourly
     rate for the Lawyer Temp) deemed "dividing legal fees with a
     non-lawyer" in violation of DR 3-102(A)?

The appropriate and controlling Disciplinary Rule is DR 3-102(A),
providing that a lawyer may not pay a portion of legal fees to a
non-lawyer.  Financial arrangements used by staffing or placement
agencies differ.  In the facts you present, the agency places the
Lawyer Temps on its payroll and pays him/her an hourly rate
(deducting all appropriate withholdings) while the Lawyer Temp
works on the temporary assignments.  The staffing agency then
bills the law firm/law department at that rate, plus a mark-up
for the staffing agency's overhead and profit.

On the facts presented, the Lawyer Temp clearly is not sharing or
splitting legal fees with a non-lawyer, but instead receives full
compensation for his/her services from the non-lawyer staffing
agency.  It is ethically permissible for a lawyer to be
compensated by a non-lawyer who is not the lawyer's client,
provided that such an arrangement does not interfere with the
lawyer's ability to exercise independent professional judgment on
behalf of the client.  DR 5-106.  Although the staffing agency
bills the law firm to recoup the compensation paid to the Lawyer
Temp, the staffing agency is not billing to collect "legal fees"
as that term is commonly understood.  A "legal fee" is a sum of
money paid by a client to a lawyer, or to a law firm, for legal
services provided by a lawyer or law firm to that client.  The
staffing agency is billing the law firm and seeking compensation
for locating, recruiting, screening and providing the Lawyer Temp
to the law firm.  The agency is not "practicing law" and its
customer, the law firm, is not a "client."  The law firm, in
turn, bills its client and is paid a "legal fee" for services
rendered by the law firm to the client.  The legal fee charged by
the law firm to the client may include charges for the Lawyer
Temp, and, as discussed in depth, infra, such charges may include
overhead and profit if certain conditions are present.  The
client pays the legal fee to the law firm, not to the staffing
agency or the Lawyer Temp.

A different procedure was suggested in Formal Opinion Number
1989-2 of the Association of the Bar of the City of New York. 
The opinion concluded that the temporary agency did provide a
service, and that the compensation paid by the law firm was not a
legal fee within the meaning of DR 3-102(A).  The Committee
suggested, however, that the law firm pay the Lawyer Temp
directly for the work performed and pay the temporary agency a
separate fee.  Moreover, the agreement and invoices generated by
the agency, it was said, should state separately the fee charged
by the agency and should identify that fee as compensation for
the agency's services in locating, recruiting, screening and
placing the Lawyer Temp.  In addition, the Committee stated that
the agency's fee, however calculated, may not be included in the
legal fee charged by the law firm to its client.  If the firm
wished to pass through the agency's fee to its client, as opposed
to absorbing the fee in firm overhead, then the agency fee should
be separately billed to the client as a "disbursement" (cost
advance) like any other disbursements for non-legal services.

     5.   Does the law firm have an ethical duty to disclose to its
     client(s) that it has engaged the services of a Lawyer Temp?

The appropriate and controlling Disciplinary Rules are DR 1-
102(A)(4), prohibiting a lawyer from engaging in conduct that
involves dishonesty, fraud, deceit or misrepresentation, and DR
6-101(C), requiring a lawyer to keep the client reasonably
informed about matters in which the lawyer's services are being
rendered.  EC 2-24 is also pertinent:  "Without the informed
consent of his client, a lawyer should not associate in a
particular matter another lawyer outside his firm."

In the facts presented, the staffing agency's contract with the
hiring law firms requires that a lawyer associated with the law
firm shall supervise the Lawyer Temp. To the extent that the
Lawyer Temp reports to and is supervised by a lawyer associated
with the firm (whether partner or associate), the Lawyer Temp is
not a lawyer outside the law firm.  The Lawyer Temp's work for a
client is the work of the law firm for the client.

In the context of the law firm-provided supervision of the Lawyer
Temp's work, the situation parallels, and has the same effect as,
the law firm's assignment of lawyer resources to perform work for
its clients.  In practice, a client consults with a lawyer in the
law firm about the legal services needed.  The lawyer, in turn,
makes an informed decision about the lawyer(s) in the law firm
who are competent and available to do the work.  The work may be
assigned to any one or more of partners, senior associates or
junior associates.  Absent special circumstances, the law firm
does not make and is not required to make a disclosure of all of
its lawyers to whom some or all of the  work will be assigned
within the law firm, except possibly after-the-fact to the extent
that the billing statements reflect the names or initials of
lawyers who performed work on the matter.  The client hires the
law firm and not simply the lawyer consulted about the matter.

ABA Formal Opinion 88-356 addressed the necessity of disclosure
to the client of the utilization of a Lawyer Temp.  It concluded
that, if the Lawyer Temp will work independently, without close
supervision of a lawyer associated with the law firm, then the
client must be informed of the Lawyer Temp's participation in the
representation and the client's consent obtained.  On the other
hand, the ABA concluded, if the Lawyer Temp will work under the
direct supervision of a lawyer associated with the law firm, the
law firm ordinarily will not have to disclose to the client the
fact of the Lawyer Temp's work on the client's matter.  The ABA's
conclusions were followed in New Jersey Opinion 632 (1989).

The committee concurs with ABA Formal Opinion 88-356.  Oliver v.
Board of Governors, 779 S.W.2d 212 (Ky. 1989), reached a
different conclusion but on distinguishable facts.  In that case
the law firm occasionally hired unaffiliated solo practitioners
on an hourly basis to cover court calls and other routine
appearances. The delegation of work outside the law firm was held
to require disclosure to and consent from the client.  The law
firm's direct supervision of the unaffiliated solo practitioners
in the performance of their work was not apparent.

The committee cautions, however, that a law firm's disclosure to
and consent from a client will be necessary whenever the client
specifies the lawyer who is to handle the matter.  In that
circumstance the lawyer specified would violate the client's
instruction, and mislead the client, if another lawyer, whether
or not a Lawyer Temp, handled the matter without the client's
consent.  With that exception, however, the law firm's direct
supervision of, and consequent responsibility for, the work of
Lawyer Temps fairly comports with the client's expectation of the
quality of services sought in the engagement of the law firm and
its  resources without the client's consent to the utilization of
the Lawyer Temp.  There is, of course, also an exception that is
driven by common sense.  If a Lawyer Temp is assigned to work on
a litigation matter entailing an appearance at depositions or at
trial, no law firm would want its client to attend without having
received a disclosure of the Lawyer Temp and his/her role, just
as the law firm would do in the case of an associate or a partner
whom the client did not know.
       
         6.        Must the law firm disclose to the client the payment
                   arrangement with the staffing agency?  May the law firm
                   charge the client a fee that exceeds the amount paid to
                   the staffing agency?
       
The appropriate and controlling Disciplinary Rules are DR 1-
102(A)(4) which prohibits a lawyer from engaging in conduct
involving dishonesty, fraud, deceit, or misrepresentation that
reflects adversely on the lawyer's fitness to practice law; DR 2-
105(A) which provides that a lawyer's fee shall be reasonable and
adequately explained to the client; and DR 9-102(B)(3) which
requires a lawyer to render an appropriate accounting to the
client.

Whether a law firm retaining a Lawyer Temp must disclose its
payment arrangement with the staffing agency to the client
depends on the particular facts.  ABA Opinion 88-356 stated, and
California Formal Opinion 1994-138 agreed, that when the hiring 
firm does not charge the Lawyer Temp's compensation to the client
as a disbursement, there is no obligation to disclose the
compensation arrangement with the Lawyer Temp to the client.  On
the other hand, if the payment made to the staffing agency is
billed to the client as a disbursement, or a cost advanced on the
client's behalf (for example, "To-Reimbursement of costs advanced
to staffing agency for temporary lawyer"), then the hiring firm
must disclose the actual amount of the disbursement and also
disclose any mark-up of  or surcharge on the amount actually
disbursed to the staffing agency.  Any mark-up of or surcharge on
the disbursement billed to the client is tested by the principles
articulated in ABA Formal Opinion 93-379 (1993), as follows:

              When that term ["disbursements"] is used, clients
         justifiably should expect that the lawyer will be passing on
         to the client those actual payments of funds made by the
         lawyer on the client's behalf.  Thus, if a lawyer hires a
         court stenographer to transcribe a deposition, the client
         can reasonably expect to be billed as a disbursement the
         amount the lawyer pays to the court reporting service. 
         Similarly, if the lawyer flies to Los Angeles for the
         client, the client can reasonably expect to be billed as a
         disbursement the amount of the airfare, taxicabs, meals and
         hotel room. 
         
              It is the view of the Committee that, in the absence of
         disclosure to the contrary, it would be improper if the
         lawyer assessed the surcharge on these disbursements over
         and above the amount actually incurred unless the lawyer
         herself incurred additional expenses beyond the actual cost
         of the disbursement item.  In the same regard, if a lawyer
         receives a discounted rate from a third-party provider, it
         would be improper if she did not pass along the benefit of
         the discount other client rather than charge the client the
         full rate and reserve the profit to herself.  Clients quite
         properly could view these practices as an attempt to create
         profit centers when the client had been told he would be
         billed for disbursements.

DR 2-105(A) and (B) obligate the hiring firm to give the client
an adequate explanation of the legal fees, and at the client's
request, to furnish the basis of the legal fees.  A law firm's
mark-up of or surcharge on actual cost paid the staffing agency
is a fee.  In LEO #1648 (1995), the committee opined that it
would be improper and dishonest for a law firm to charge, without
disclosure to the client, additional "administrative fees,"
"processing fees" or "value billing" allocated to the originating
attorney (a fixed percentage "add-on" from 20% to 200%) when the
originating attorney did not actually work on the matter.  The
committee further stated that "any lawyer's bill which charges
fees or costs for work not actually performed is fraudulent,
unreasonable, not adequately explained to the client and breaches
the lawyer's duty to properly account to the client."  

Instead of billing the staffing agency's compensation as a
disbursement to the client with a disclosed mark-up, the hiring
law firm may simply bill the client for services rendered in an
amount reflecting its charge for the Lawyer Temp's time and
services.  See California Formal Opinion 1994-138.  Since the
charge is not represented to be the hiring law firm's actual
disbursement of funds for client-reimbursement, the hiring firm
does not thereby misrepresent as an out-of-pocket disbursement
what is actually its out-of-pocket disbursement plus a mark-up. 
By analogy, law firms bill their clients at a certain rate for
services rendered by salaried associates of the law firm without
a disclosure of the salary of the associates.  A law firm may,
for example, charge $75 per hour for an associate's time when the
associate is paid a salary of $60,000 per year and is expected to
produce 1,800 billable hours per year, which is compensation paid
the associate at the rate of $33 per hour.  That the associate is
an employee and the Lawyer Temp is an independent contractor seem
to be a distinction without a difference in terms of non-
disclosure of the spread between compensation paid and rates
charged.  In each instance the spread, or the mark-up, is a
function of the cost of doing business including fixed and
variable overhead expenses, as well as a component for profit. 
In each instance, too, DR 2-105(A)(1) mandates that a lawyer's
fees shall be reasonable.

         7.        What are the obligations of the staffing agency, the
                   Lawyer Temp, and/or the hiring law firm to ensure that
                   the Lawyer Temp exercises independent professional
                   judgment on behalf of a client?
       
The same concerns expressed in the context of in-house liability
claims against an insured, and the provision of legal services
under prepaid legal service plans, apply with equal force to
Lawyer Temp  placement services, i.e., these are arrangements in
which non-lawyer intermediaries exercise control over the
delivery of legal services and therefore may engender
interference with the lawyer's obligations to (1) exercise
independent professional judgment on behalf of a client; (2)
maintain client confidences and secrets; (3) avoid conflict of
interests; and (4) practice law competently.  See, e.g., UPL
Opinion No. 60 (1985) (liability insurer may use in-house staff
counsel to defend claims brought against insureds).  The staffing
agency must recognize that the relationship between the Lawyer
Temp and the client is not different from the traditional
attorney-client relationship.  The agency must not attempt to
limit or in any way control the amount of time a lawyer may spend
on a particular matter, nor attempt to control the types of legal
matters which the Lawyer Temp may handle.  The Lawyer Temp may
not enter into an employment agreement with the agency that
restricts his or her ability to exercise independent professional
judgment on behalf of a client or restricts his or her right to
practice law.  DR 5-106(A); DR 2-106(A).

These concerns are addressed in EC 5-23:

              A person or organization that pays or furnishes lawyers
         to represent others possesses a potential power to
         exert strong pressures against the independent judgment
         of those lawyers   Since a lawyer must always be free
         to exercise his professional judgment without regard to
         the interests or motives of a third person, the lawyer
         who is employed by one to represent another must
         constantly guard against erosion of his professional
         freedom.

Competence is a component of independent professional judgment. 
It is not ethically permissible for a Lawyer Temp to accept a
temporary assignment that requires him/her to undertake
representation in a matter in which he/she lacks the competence
and specific legal knowledge employed in acceptable practice by
lawyers undertaking similar matters.  DR 6-101(A).  Although the
burden of DR 6-101(A) rests on the Lawyer Temp, the staffing
agency should ascertain his/her practice areas of competence and
not direct assignments for temporary legal services outside those
practice areas.  Were the staffing agency to do so, the directed
assignments would not exonerate the Lawyer Temp under DR 6-101(A)
since a lawyer is not permitted to circumvent a Disciplinary Rule
through actions of another.  DR 1-102(A)(2).

                            CONCLUSION

It is ethically permissible for a law firm or a corporate law
department to retain the temporary services of a lawyer through a
lay placement/staffing agency.  Hiring a lawyer for temporary
services is treated like hiring a lawyer from another law firm. 
Hence, the hiring law firm and the lawyer retained for temporary
services have an ethical obligation to ascertain whether
conflicts of interest exist with respect to current and former
clients of each of the law firms and the lawyer.

In the absence of informed client from the clients affected, a
law firm or corporate law department is not ethically permitted
to retain a placement/staffing agency-provided lawyer who (i)
currently represents a client in a matter adverse to a client of
the law firm, or (ii) formerly participated in the representation
of a client adverse to a client of the law firm in the same or a
substantially related matter.  Whether a lawyer retained for
temporary services will be deemed "associated with the firm," and
thus trigger imputed disqualification of the law firm under DR 5-
105(E), is a fact-intensive issue.  If the lawyer had broad
access to client files and client communications in his/her
temporary assignments, even though he/she was not involved in the
representation of the client, there may be a presumption that
client confidences and secrets were gained.

On the facts presented, the financial arrangement among the
hiring law firm, the staffing agency, and the Lawyer Temp does
not constitute a sharing of legal fees with a non-lawyer under DR
3-102 or a division of legal fees between lawyers not in the same
firm under DR 2-105(D).

The law firm is not required to disclose to and get consent from
the client to whose representation the Legal Temp is assigned
that a Lawyer Temp will participate in the representation as long
as the Legal Temp reports to and is under the direct supervision
of a lawyer associated with the law firm.

If the law firm's payment to the staffing agency is billed to the
client as a disbursement, or as a cost advanced by the law firm
on behalf of the client, the disbursement shown must be the
amount actually paid to the staffing agency.  Upon disclosure to
and consent from the client, the disbursement shown may be
marked-up above the actual payment to the staffing agency.  The
law firm is not obligated, however, to bill the payment to the
client as a disbursement.  The law firm, in its statement for
services rendered, may bill for the services of a Lawyer Temp at
a rate or in the manner that it bills the time of salaried
associates for services rendered, without disclosure of the
amount paid the staffing agency.  

The staffing agency is not permitted to interfere with or
influence a Lawyer Temp's exercise of independent professional
judgment on behalf of the clients for whom he/she provides
services.  The staffing agency should ascertain Lawyer Temp's
practice areas of competence, and the Lawyer Temp should decline
assignments for temporary services in matters outside his/her
competence.

Committee Opinion
July 22, 1998