Rules lawyers play by

"Contractarian" law and economics literature discusses what types of rules should govern contracts, corporate governance and securities regulation. Occasionally, contractarian scholars analyze the legal profession, and recently contractarians have begun to examine specific rules of professional responsibility. This article discusses how some professional responsibility rules already contemplate contracting between lawyers and clients and how rule-making bodies could use contractarian principles to draft new rules. When should rules governing lawyers be immutable (rules that cannot be changed contractually) and when should they be defaults (rules that can be changed contractually)? When default rules are used, should they be opt-in rules or opt-out rules, and should they be majoritarian default rules or penalty default rules? When should a lawyer not be governed by clearly defined rules, but instead by more general standards against which the lawyer's conduct is measured ex-post to ascertain whether her conduct conformed to those standards? The contractarian framework reveals some general trends in professional responsibility rules, including gradual migration away from standards and toward defined rules. Many hotly debated issues in the profession, however, continue to be governed by standards, discretion laden rules and aspirational language. There has also been some migration away from immutable rules toward default rules and opt-in rules. This change, however, has for the most part not included rules governing conduct that affects third parties, even though the interests of third parties could be included in some lawyer-client contracts. Part I of this article discusses the various rule prototypes that are important in contractarian analysis (see Figure 1). Part I discusses why some rules of professional responsibility are immutable whereas others are default rules, why some rules are clearly defined whereas others embody more general standards, and how some rules would be more effective if they were default rules instead of immutable rules. Part I also recognizes that the rationality assumption of contractari-an economics is sometimes negated by systematic cognitive biases. For example, because actors can be biased in favor of the status quo, default rules sometimes become contract terms simply because they are default rules, not because they are inherently superior. Drafters of professional responsibility codes can respond by switching back to immutable rules or by taking cognitive biases into account when drafting default rules. Finally, Part I observes that reputational concerns underlie reciprocal interaction between lawyers, clients and third parties. Mutual expectations embodied in unenforced rules can thus be as powerful an influence on behavior as legally enforced rules. Part II applies the contractarian framework to rules governing several hotly debated issues: (i) conflicts of interest; (ii) lawyer use of confidential client information; (iii) contractual restrictions on practice; (iv) lawyer disclosure of client fraud; (v) remedial measures for race and sex discrimination; and (vi) pro bono obligations. In some instances, this article proposes to replace immutable rules with default rules. In other instances, this article suggests that lawyers and clients be allowed to contract around existing default rules at an earlier point in a legal representation than is now the norm. In still other areas, this paper suggests that lawyers or law firms be encouraged to opt in to -enforceable commitments to clients, third parties or the bar itself that can then be used to attract clients, recruit associates or foster good will with regulators and the community. Finally, for several of the specific subjects discussed in Part II, unenforced professional responsibility rules can be valuable tools for changing lawyer behavior. The Model Code's Ethical Considerations that were abandoned in the Model Rules, and similar aspirational rules, could thus have a more constructive role to play in professional responsibility than the ABA has acknowledged thus far. Part III discusses why law firms should be encouraged to adopt their own codes of professional responsibility to fill gaps in the contractarian framework. Law firm codes could opt out of default rules in bar association codes or opt into rules on topics not adequately addressed by the bar, such as use of client information, response to client fraud, and pro bono obligations. Law firm codes of professional responsibility could also allow firms to send a positive signal to clients, regulators, prospective associates and other third parties about a firm's professional standards. Finally, the opportunity to design self imposed rules could encourage lawyers in firms to give each other meaningful feedback on compliance with those rules as well as with the bar's rules. Some suggested provisions for a law firm code of professional responsibility appear in Appendix A.