Aba Model Indemnification Agreement
The models come when criminals use increasingly sophisticated frauds, including imitating customers and ordering irreversible transfers. “In addition to working through law enforcement or a long chain of correspondents, banks needed a fast and efficient method to thwart wire fraud theft,” said Samantha Pelosi, vice president of the BAFT. “These agreements negotiated in advance will be a decisive instrument for a bank that will try to encourage its counterpart to act when time is of the essence.” The Utah Commission also considered this issue and concluded that Rule 1.8(h) did not explicitly exclude this scenario, as “payment for unsuccessful abuse does not on its face limit liability for fault.” But trying to use the compensation to get the customer to pay your deductible for liability insurance can be a fault under other rules, the commission said. Rule 8.4(d) prohibits conduct “prejudicial to the administration of justice”. An agreement that would make a client (or, in the meantime, probably a former client) responsible for paying your deductible after the client has lost a misconduct proceeding against you, “could have a deterrent effect on a client`s pursuit of a request for abuse and would therefore harm the administration of justice,” the Committee advised. Our review focused on these acquisition agreements (i) with indemnification clauses and (ii) in which the indemnification party can normally control claims that we call “Seller Control Deals”. We found that 78% of Seller Control agreements involved a split in seller control for claims that have non-monetary relief. In any case, customer communication is key. At the very least: “The average customer may not understand what compensation is or under what specific circumstances it might be applied.” Demanding customers might do this, but your best bet is a clear explanation and understanding. Model Rule 1.4(b) (“Communication”) requires that “explain a matter to you to the extent reasonably necessary to enable the client to make informed decisions regarding representation.” Few state ethics committees appear to have addressed the issue of third-party compensation.
But the New York State Bar Association endorsed the concept in a 2013 opinion letter. And a 2005 Oregon statement recommended that a lawyer invited to investigate a client`s employee could seek compensation from the client for the employee`s subsequent claims against the lawyer. . . .