Opinion ID: 853748
Heading Depth: 3
Heading Rank: 3

Heading: The Scope of Authorization for House Counsel

Text: Under the rules promulgated by this Court and accepted forms of practice, members of the Indiana bar are authorized to practice, individually or with other attorneys, in private law firms, in the legal departments of corporations or other public or private organizations, and in group legal service plans. See Prof. Cond. R. Preamble; Prof. Cond. R. 1.13; Ind. Admission and Discipline Rule 26. In addition to practicing in partnerships, corporate legal departments, and group legal service plans, attorneys are also authorized to practice in other organizational contexts: professional corporations, limited liability companies, and limited partnerships. See IND.CODE § 23-1.5-1; IND.CODE § 23-18-1; IND.CODE § 23-4-1; Admis. Disc. R. 27. Nevertheless, all members of the Indiana bar, regardless of the nature or context of their practices, are subject to the same ethical and legal obligations under the professional rules. When attorneys practice in organizational contexts, certain limitations apply to the organizations themselves. For instance, with professional corporations, limited liability companies, and limited partnerships, statutory law and court rules place specific requirements on these organizations in terms of organizational purpose, activities, control, and liability. See IND.CODE § 23-1.5-1; IND.CODE § 23-18-1; IND.CODE § 23-4-1; Admis. Disc. R. 27. In the case of professional corporations, our statutes have authorized attorneys to form professional corporations to render services that may legally be performed only by an attorney. IND.CODE § 23-1.5-2-3(3). However, these professional corporations may render professional services only through individuals permitted to render such services in Indiana. IND.CODE § 23-1.5-2-5(a). And, [a] licensed individual acting in his individual capacity may render professional services, even though the individual may be a shareholder, director, officer, employee, or agent of a professional corporation. IND.CODE § 23-1.5-2-5(b). Also, with group legal service plans, our professional rules require the group plans to meet certain conditions before an attorney may render services pursuant to the plan and to file an initial disclosure statement, annual reports, and a final report upon the discontinuation of operation; included in these mandated filings are the names of the attorneys rendering services under the plan. See Admis. Disc. R. 26. The majority correctly notes that the Preamble to our Rules of Professional Conduct defines firm and law firm to include lawyers employed in the legal department of a corporation or other organization. Prof. Cond. R. Preamble. The majority also correctly recognizes that attorneys may be retained or employed by corporations and may work in their legal departments and that Rule 1.13 applies to attorneys employed or retained by a corporation or other organization. Indeed, members of the Indiana bar who serve as house counsel are subject to the professional rules and the obligations arising therefrom, like all other attorneys in Indiana. However, none of these statutory or rule provisions constitutes authorization for insurance companies to employ house counsel to represent their insureds. As already noted, corporate and other organizational entities often employ house counsel in their legal departments to represent the entities in their legal matters and transactions. Indeed, when it comes to an entity's own legal matters and transactions, there is no real difference between an entity employing attorneys as house counsel or as outside counsel. In both cases, the entity-client hires an attorney to provide legal services. Like any other person, an organization may secure counsel to represent the company in its own affairs-whether that attorney is a salaried attorney-employee or outside counsel is unimportant. Indiana Professional Conduct Rule 1.13 states that [a] lawyer employed or retained by an organization represents the organization acting through its duly authorized constituents. Thus, Rule 1.13 contemplates that an attorney retained or employed by an organization represents the organization. Implicit in this rule is the idea that an attorney employed in the legal department of an organizational entity represents the organization in those transactions in which the organization has a primary interest. This was the understanding at common law that provides the background and context for our statute and our professional rules.