Many law firms readily admit that ethics compliance can be a source of anxiety. Law firms often have to balance their day-to-day tasks inherent in running a practice with handling ethics issues in a way to reduce the likelihood of malpractice claims.

Since the Georgia Supreme Court's decision in St. Simons Waterfront v. Hunter, Maclean, Exley & Dunn, 746 S.E.2d 98 (Ga. 2013), which recognized a privilege for communications with in-house counsel and afforded work product protection for materials generated by in-house counsel, more law firms are designating an attorney as in-house counsel to resolve ethics issues or handle some malpractice claims. Indeed, there is no longer the same risk in Georgia that internal communications with a law firm's in-house counsel are not protected. Some firms have gone even further by creating ethics or risk management committees to handle or consider such matters.

Despite the protections afforded by St. Simons Waterfront, some firms nonetheless still have a need or desire to hire outside counsel to handle issues relating to rules compliance and conflict resolution. Retaining outside counsel on an ongoing basis offers many advantages for both law firms and individual attorneys. First, and most obviously, any communications with outside counsel retained for the purpose of obtaining legal advice are generally protected from disclosure to third parties. This protection is especially important for law firms in jurisdictions other than Georgia that have not expressly ruled on the applicability of privilege for communications with in-house counsel. Those firms can avoid uncertainty regarding whether internal communications or legal advice will be protected from disclosure by relying on traditional outside counsel.

Sometimes hiring outside counsel can also help firms navigate and resolve conflicts of interest. Although in-house departments may be comfortable with relatively straightforward conflict issues, some firms prefer to use outside counsel on more complex issues. In addition, attorneys themselves may sometimes be more willing to confide in outside counsel than another attorney within the firm. This is particularly so if the potential ethics issue involves a close friend or colleague at the law firm. Full and frank disclosure allows outside counsel to reach a decision based on all available information. Similarly, sometimes law firms are more willing to accept legal advice when provided by an outside source, even when the advice turns out to be disappointing for the firm or individual attorneys. Regardless of whether this assumption is an accurate one, law firms and attorneys may want the advice of someone outside the firm, who has no personal stake in the outcome and who may be viewed by some as more objective.

Law firms may be able to find more consistency and reliability in their approach to ethics issues by retaining qualified outside counsel. In addition to providing the above benefits, this approach may limit liability to the firm by helping to reduce the likelihood of a meritorious legal malpractice claim. Hiring outside counsel sometimes sends a strong message to a potential litigant against the firm that the firm is taking the matter seriously. It's no coincidence, therefore, that many malpractice insurers like the approach. Some law firms are nevertheless hesitant to retain outside counsel to advise on ethics issues due to concerns over the cost. However, many law firms whose practice focuses on ethics compliance issues are willing to work on a fixed per month retainer basis, which is often less than the cost of a dedicated in-house counsel.

Of course, the effectiveness of retaining outside counsel is determined in large part by the quality of the firm retained to act as outside counsel. Ethics issues can be extremely complex and are constantly changing as a result of advances in technology and the law itself. An outside counsel who is not up to date on the rules pertaining to attorney advertising and the internet, use of social media, multijurisdictional and multidisciplinary practices, and fee sharing may not add as much value to the law firm.

Law firms considering retaining outside counsel to assist with the firm's ethics compliance generally consider the following steps.

1. Memorialize the Relationship

As with all representations, documenting the scope and purpose of the attorney-client relationship is a vital first step. The relationship between a firm and its outside counsel may be memorialized through a formal engagement letter or fee contract. This document may include the identity of the client(s), which may include the firm, certain partners, all attorneys, or any combination of those parties; the scope of the representation, whether it is project specific or on-going; the nature and amount of the fee, including rates, frequency, and term; and the method or process for terminating the relationship.

2. Address Conflicts of Interest

Because the nature of conflicts for law firms representing law firms can be quite different, it is desirable to address these unique conflicts of interest in specific terms. For example, it is often the case that both firms will agree that the existence of the relationship will not be asserted as the basis for challenging the participation of the other firm in an unrelated representation.

To that end, both law firms may also agree to include a disclosure in their respective engagement letters to other clients noting that the firm may consult with independent professionals, including other law firms, regarding its legal, professional, and ethical obligations.

3. Implement Protocols

Finally, many firms choose to retain outside counsel to supplement or advise in-house counsel as an added resource. In this regard, law firms may wish to create and implement protocols distinguishing issues that are the sole responsibility of in-house counsel from those that are better handled by outside counsel.