Rule 1.13.Organization as Client 
 (a)A lawyer employed or retained by an organization represents 
 the organization which acts through its duly authorized constituents, 
 and the lawyer owes allegiance to the organization itself, and not its 
 individual stockholders, directors, officers, employees, representatives 
 or other persons connected with the entity. 
  
 (b)If a lawyer for an organization knows that an officer, 
 employee or other person associated with the organization is engaged in 
 action, intends to act or refuses to act in a matter related to the 
 representation that is a violation of a legal obligation to the 
 organization, or a violation of law which reasonably might be imputed to 
 the organization, and is likely to result in substantial injury to the 
 organization, the lawyer shall proceed as is reasonably necessary in the 
 best interest of the organization.  In determining how to proceed, the 
 lawyer shall give due consideration to the seriousness of the violation 
 and its consequences, the scope and nature of the lawyer's 
 representation,  the responsibility in the organization and the apparent 
 motivation of the person involved, the policies of the organization 
 concerning such matters and any other relevant consideration.  Any 
 measures taken shall be designed to minimize disruption of the 
 organization and the risk of revealing information relating to the 
 representation to persons outside the organization.  Such measures may 
 include among others: 
  
 (1)asking reconsideration of the matter; 
  
 (2)advising that a separate legal opinion on the matter be 
 sought for presentation to appropriate authority in the organization; 
 and 
  
 (3)referring the matter to higher authority in the 
 organization, including, if warranted by the seriousness of the matter, 
 referral to the highest authority that can act on behalf of the 
 organization as determined by applicable law. 
  
 (c)If, despite the lawyer's efforts in accordance with 
 paragraph (b), the highest authority that can act on behalf of the 
 organization insists upon action, or a refusal to act, that is clearly a 
 violation of law and is likely to result in substantial injury to the 
 organization, the lawyer may resign in accordance with Rule 1.16. 
  
 (d)In dealing with an organization's directors, officers, 
 employees, members, shareholders and other constituents, a lawyer shall 
 explain the identity of the client when it is apparent that the 
 organization's interests are adverse to those of the constituents with 
 whom the lawyer is dealing. 
  
 (e)A lawyer representing an organization may also represent any 
 of its directors, officers, employees, members, shareholders or other 
 constituents, but only in those instances in which such representation 
 will not affect the lawyer's allegiance to the entity itself, and also 
 subject to the provisions of Rule 1.7.  If the organization's consent to 
 the dual representation is required by Rule 1.7, the consent shall be 
 given by an appropriate official of the organization other than the 
 individual who is to be represented, or by the shareholders. 
  
 

                                                                
ANNOTATIONSCOMMENT 
 The Entity as the Client 
 An organizational client is a legal entity, but it cannot act 
 except through its officers, directors, employees, shareholders and 
 other constituents. 
  
 Officers, directors, employees and shareholders are the 
 constituents of the corporate organizational client.  The duties defined 
 in this Comment apply equally to unincorporated associations.  "Other 
 constituents" as used in this Comment means the positions equivalent to 
 officers, directors, employees and shareholders held by persons acting 
 for organizational clients that are not corporations. 
  
 When one of the constituents of an organizational client 
 communicates with the organization's lawyer in that person's 
 organizational capacity, the communication is protected by Rule 1.6. 
 Thus, by way of example, if an organizational client requests its lawyer 
 to investigate allegations of wrongdoing, interviews made in the course 
 of that investigation between the lawyer and the client's employees or 
 other constituents are covered by Rule 1.6.  This does not mean, 
 however, that constituents or an organizational client are the clients 
 of the lawyer.  The lawyer may not disclose to such constituents 
 information relating to the representation except for disclosures 
 explicitly or impliedly authorized by the organization client in order 
 to carry out the representation or as otherwise permitted by Rule 1.6. 
  
 When constituents of the organization make decisions for it, the 
 decisions ordinarily must be accepted by the lawyer even if their 
 utility or prudence is doubtful.  Decisions concerning policy and 
 operations, including ones entailing serious risk, are not as such in 
 the lawyer's province.  However, different considerations arise when the 
 lawyer knows that the organization may be substantially injured by 
 action of a constituent that is in violation of law.  In such 
 circumstances, it may be reasonably necessary for the lawyer to ask the 
 constituent to reconsider the matter.  If that fails, or if the matter 
 is of sufficient seriousness and importance to the organization, it may 
 be reasonably necessary for the lawyer to take steps to have the matter 
 reviewed by a higher authority in the organization.  Clear justification 
 should exist for seeking review over the head of the constituent 
 normally responsible for it.  The stated policy of the organization may 
 define circumstances and prescribe channels for such review, and a 
 lawyer should encourage the formulation of such policy.  Even in the 
 absence of organization policy, however, the lawyer may have an 
 obligation to refer a matter to higher authority, depending on the 
 seriousness of the matter and whether the constituent in question has 
 apparent motives to act at variance with the organization's interest. Review by 
 the chief executive officer or by the board of directors may be required when 
 the matter is of importance commensurate with their authority.  At some point 
 it may be useful or essential to obtain an independent legal opinion. 
  
 In an extreme case, it may be reasonably necessary for the lawyer 
 to refer the matter to the organization's highest authority. 
 Ordinarily, that is the board of directors or similar governing body. 
 However, applicable law may prescribe that under certain conditions 
 highest authority reposes elsewhere, for example, in the independent 
 directors of a corporation. 
  
 Relation to Other Rules 
 The authority and responsibility provided in paragraph (b) are 
 concurrent with the authority and responsibility provided in other 
 Rules.  In particular, this Rule does not limit or expand the lawyer's 
 responsibility under Rule 1.6, 1.8, 1.16, 3.3, or 4.1.  If the lawyer's 
 services are being used by an organization to further a crime or fraud 
 by the organization, Rule 1.2(d) can be applicable. 
  
 Government Agency 
 The duty defined in this Rule applies to governmental 
 organizations.  However, when the client is a governmental organization, 
 a different balance may be appropriate between maintaining 
 confidentiality and assuring that the wrongful official act is prevented 
 or rectified, for public businesses involved.  In addition, duties of 
 lawyers employed by the government or lawyers in military service may be 
 defined by statutes and regulation.  Therefore, defining precisely the 
 identity of the client and prescribing the resulting obligations of such 
 lawyers may be more difficult in the government context.  Although in 
 some circumstances the client may be a specific agency, it is generally 
 the government as a whole.  For example, if the action or failure to act 
 involves the head of a bureau, either the department of which the bureau 
 is a part or the government as a whole may be the client for purposes of 
 this Rule.  Moreover, in a matter involving the conduct of government 
 officials, a government lawyer may have authority to question such 
 conduct more extensively than that of a lawyer for a private 
 organization in similar circumstances.  This Rule does not limit that 
 authority.  See note on Scope. 
  
 Clarifying the Lawyer's Role 
 There are times when the organization's interest may be or become 
 adverse to those of one or more of its constituents.  In such 
 circumstances the lawyer should advise any constituent, whose interest 
 the lawyer finds adverse to that of the organization, of the conflict or 
 potential conflict of interest, that the lawyer cannot represent such 
 constituent, and that such person may wish to obtain independent 
 representation.  Care must be  taken to assure that the individual 
 understands that, when there is such adversity of interest, the lawyer 
 for the organization cannot provide legal representation for the 
 constituent individual, and that discussions between the lawyer for the 
 organization and the individual may not be privileged. 
  
 Whether such a warning should be given by the lawyer for the 
 organization to any constituent individual may turn on the facts of each 
 case. 
  
 Dual Representation 
 Paragraph (e) recognizes that a lawyer for an organization may 
 also represent a principal officer or major shareholder. 
  
 Derivative Actions 
 Under generally prevailing law, the shareholders or members of a 
 corporation may bring suit to compel the directors to perform their 
 legal obligations in the supervision of the organization.  Members of 
 unincorporated associations have essentially the same right.  Such an 
 action may be brought nominally by the organization, but usually is, in 
 fact, a legal controversy over management of the organization. 
  
 The question can arise whether counsel for the organization may 
 defend such an action.  The proposition that the organization is the 
 lawyer's client does not alone resolve the issue.  Most derivative 
 actions are a normal incident of an organization's affairs, to be 
 defended by the organization's lawyer like any other suit.  However, if 
 the claim involves serious charges of wrongdoing by those in control of 
 the organization, a conflict may arise between the lawyer's duty to the 
 organization and the lawyer's relationship with the board.  In those 
 circumstances, Rule 1.7 governs who should represent the directors and 
 the organization. 
  
 COMMITTEE COMMENT 
 The proposed Rule has no direct counterpart in the Model Code and 
 is essentially modeled after ABA Rule 1.13.  The Committee has, however, 
 taken the language from EC 5-18 of the Code and added that language to 
 the "black letter" law of Rule 1.13(a) to make more explicit the focus 
 of the lawyer's professional responsibility when representing a 
 corporation.  The word "individual" modifies the terms "stockholders, 
 directors, officers, employees, representatives and other persons 
 connected with the entity" in order to clarify that ultimately the 
 shareholders or directors, collectively, frequently are the highest 
 authority which can act for the organization and are thus the ultimate 
 group to which the lawyer owes loyalty. 
  
  
  
 ANNOTATION 
  
 Annotator's note. 
 Rule 1.13 is similar to 
 DR 5-105 and DR 5-107 as they 
 existed prior to the 1992 repeal and reenactment of the Code of 
 Professional Responsibility. 
 Relevant cases construing 
 those provisions have 
 been included in the annotations to Rule 1.7.