Discussion

DISCUSSION
7. The proposed indemnification provision is not specifically prohibited by the rules.
Although Rule 1.8 of the Utah Rules of Professional Conduct addresses an attorney’s prospective
limitations to a client for malpractice, it does not address the specific question of whether an
attorney may include an indemnification provision for claims brought by third parties. Rule 1.8(h)
provides that a lawyer shall not:
1.8(h)(1) make an agreement prospectively limiting the lawyer’s
liability to a client for malpractice unless the client is independently
represented in making the agreement; or
1.8(h)(2) settle a claim or potential claim for such liability with an
unrepresented client or former client unless that person is advised in
writing of the desirability of seeking and is given a reasonable
opportunity to seek the advice of independent legal counsel in
connection therewith.
Under this rule, an attorney may obtain advance limitation on his or her liability for
malpractice only if the client is advised in writing of the advisability of and provided the
opportunity to seek separate counsel regarding the prospective limitation. There is no rule,
however, that directly prohibits an attorney from obtaining a client’s advance agreement to
indemnify the attorney on matters that do not constitute legal malpractice. See Hazard, Hodes &
Jarvis, Law of Lawyering 5.37 (2018) (citing example of attorney writing an opinion letter for a
lessor-client that was to be provided to the lessee; attorney could require client to agree to
indemnify the attorney for any claims brought by the lessee (citing N.Y. State Ethics Op. 969
(2013)); Or. Formal Ethics Op. 2005-165 (attorney asked to investigate corporate employee may
seek indemnity from client-employer against subsequent claims by the employee against the
lawyer). Therefore, the proposed indemnification provision is not prohibited on its face under the
rules.
8. However, the Committee notes that the average client may not understand what
indemnification is or in what specific circumstances it could be applied. Specifically, with respect
to the second issue, the client may not understand that he or she may be responsible to pay an
attorney’s insurance deductible for the client’s unsuccessful malpractice suit. For the sake of
increased clarity, attorney should instead consider utilizing an attorney fees provision in the
engagement letter that clearly sets forth that client will be responsible for paying attorney’s
attorney fees in specifically enumerated types of claim against the attorney. Such a provision
would be preferable to the indemnification provision for the average client to ensure that the client
understands that he or she may potentially be liable for attorney fees.
9. Likewise, Rule 1.8(h) does not explicitly bar an attorney from seeking payment of
its malpractice insurance deductible. Requiring the payment for an unsuccessful malpractice
claim, on its face, does not limit liability for malpractice.
10. However, the Committee notes that seeking to hold a client responsible for the
attorney’s malpractice insurance deductible may be misconduct under the rules. Rule 8.4(d)
provides that it is misconduct to “engage in conduct that is prejudicial to the administration of
justice.” In this hypothetical situation, applying the provision to recover the attorney’s deductible
may have a chilling effect on a client’s pursuit of a malpractice claim and would thus be prejudicial
to the administration of justices. In light of Rule 8.4(d) and the potential for discouraging a client
from bringing a malpractice claim against the attorney, if the attorney intends to apply the
provision so that he or she will seek payment of his or her malpractice insurance deductible, the
attorney should advise the potential client in writing of the advisability of seeking outside counsel
regarding the provision and allow the client time to seek that counsel.