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Permissive Rules of Professional Conduct

By Bruce A. Green & Fred C. Zacharias. Full text here.

In the wake of Enron’s collapse and other corporate scandals, the Securities and Exchange Commission considered adopting a regulation requiring lawyers in certain circumstances to publicly report corporate misconduct. The American Bar Association countered by expanding model disciplinary rules that allow, but do not require, lawyers to disclose client confidences to avert harm to third parties. The ABA argued that the SEC should defer to the normative judgment underlying its permissive approach to disclosure. The SEC evidently agreed, declining thus far to promulgate its proposed mandatory disclosure rule. This Article calls into question whether such deference was, and is ever, warranted.

The Article examines the body of legal ethics rules providing that lawyers “may” engage in particular conduct. It explores the relationship between these permissive rules and other law governing lawyers. In particular, the Article considers what the permissive rules mean in context, their possible rationales, and the extent to which other lawmakers should take the rules into account in regulating lawyer behavior. Upon close examination, it appears that there is a myriad of ways to explain the content of permissive ethics code provisions. This revelation casts doubt on the proposition that the SEC and other lawmakers should automatically refrain from imposing mandatory legal obligations in deference to the normative judgments said to underlie the codes. The professional rules arguably restrict lawyer discretion more than initially appears and, even when the codes do embrace discretion, that characteristic does not necessarily reflect a conclusion that external law should honor that discretion in all contexts. The Article concludes by exploring what these insights mean for ethics code drafters, courts, legislatures, and other lawmakers.