Remember our recent, brief discussion about falsely comparing standard baseball business practices with ethics [Ethics Or Merely Business Of Baseball?]? Yeah…you probably skipped over that one. Well today, I would like to focus on one instance where ethics may actually be enforced in the sports business world.
Believe it or not, attorneys now make up more than 50% of all sports agents that have an active client list. Maybe you want to reconsider law school (warning: I can personally attest for the fact that law school is a pain, and I am not even done with my first semester). With this being said, I know someone who loved attending Law school. This was because they knew that this would lead them to their dream career. Of course there are many other lawyers out there who work in a number of fields, so you just need to find what works for you. Whether you’re studying the legality of bail bonds or sports law, if this where you want to go down in terms of your career, you may want to stick with it.
With an influx of attorneys into the realm of sports agentry, what exactly are the consequences? For one, athletes will expect more out of their agents. If an athlete is looking for an agent, he may go with a licensed attorney over the no-longer-standard Joe Shmo, with an undergraduate degree in Marketing. But there is another side of the coin. If you decide to get a law degree and pass the bar, you may have more restrictions than Mr. Marketing degree. You may be bound by the Model Rules of Professional Conduct.
The Model Rules of Professional Conduct (MRPC) are a bunch of rules that the ABA (American Bar Association) put together in order to mandate what is permissible and non-permissible for a lawyer to do. The latest update to the MRPC was announced in 2007. The last thing a sports agent wants to be bound by is the MRPC. The good thing is that there definitely is a possibility that an agent can argue that she is operating outside of the realm of “attorney”. But all she has to do is offer some legal advice, and she may be bound by the ethical requirements promulgated by the MRPC.
Let’s say that you are this agent who runs a semi-large agency with about fifty clients. One of your clients just happens to “make it rain“, he gets into a scuffle with a bouncer, and gets charged with the intentional tort of battery (purely hypothetical). The client comes to you asking what he should do in order to remedy the situation. You are offering him legal advice, as slight as it may be. Welcome yourself to the world bound by the MRPC.
Assume that as a member of the bar of whatever state that might be, you are bound by the MRPC. But then you are bound by some pretty restrictive measures. Take for instance, Rule 1.7, Conflict of Interest: Current Clients. Here is the rule:
(a) Except as provided in paragraph (b), a lawyer shall not represent a client if the representation involves a concurrent conflict of interest. A concurrent conflict of interest exists if:
(1) the representation of one client will be directly adverse to another client; or(2) there is a significant risk that the representation of one or more clients will be materially limited by the lawyer’s responsibilities to another client, a former client or a third person or by a personal interest of the lawyer.
(b) Notwithstanding the existence of a concurrent conflict of interest under paragraph (a), a lawyer may represent a client if:
(1) the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client;(2) the representation is not prohibited by law;(3) the representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation or other proceeding before a tribunal; and
(4) each affected client gives informed consent, confirmed in writing.
So put yourself in an agent’s shoes (or if you are an agent, don’t take your shoes off). You represent 3 athletes on the same team and these athletes are playing a sport other than baseball (the league is bound by a salary cap). A conflict of interest can clearly be established by someone bringing suit. By getting one client a certain amount of money, you are restricting the amount that the team has for your other players. The team may even have to cut those other players based on the contract you sign for said player.
But look to part B. There is a way to get around this conflict. Of course, you believe (reasonably!) that you will be able to provide competent and diligent representation to each client. What if you represent a coach and an athlete on the same team? It may get a little more unreasonable to believe that you can represent both entities to your full ability.
Look at the last word in part B(3). See the word and? That means that you must also have informed consent, confirmed in writing from all affected clients. When is the last time you ever heard a sports agent getting such a form in writing? How about even verbally affording conflicted clients about their situation?
If you are bound by the MRPC and you violate any rules (there are many others that may be applicable for sports agents), you run the risk of being disciplined by the bar. Discipline may include:
o Disbarment – not permanent in most states. Re-apply usually in 5 yrs.
o Suspension – ABA recommends between 6 months & 3 yrs.
o Public reprimand – aka censure or public censure.
o Private reprimand – aka admonition. When lawyer is negligent, small injury to others, and small likelihood of repetition.
o Probation – can be stand-alone sanction, with #2-4, or as a condition of reinstatement.
I intend to go through the entire MRPC and disect how each rule may be applied to sports agents that are also attorneys. Not every rule may be applied, but you would be surprised by how many of them are applicable to the profession. This post was not written to scare you or deter you from becoming a lawyer. Instead, you should be aware that consequences come along with practicing as a professional. Clients will be more likely to sign with you over someone without a law degree. They put more trust in you because of your professional status. The MRPC makes sure that you do not violate this trust by acting in a non-professional manner.
-Darren Heitner
6 replies on “Professional Responsibility And Ethics”
If you’re going to law school & are planning om being an agent, the choice is obvious: DON’T TAKE THE BAR EXAM
@ Alec
What’s wrong with taking the bar exam…that’s what I did. Being an actual lawyer is a great way to get out and make some money until your can break into the agency business. It also adds a lot of status to your person. Not that getting your J.D. isn’t great, but it takes too long to describe that to people. Just saying you’re Attorney _____ is a lot easier.
@ Darren
good luck with tackling all of the model rules. Obviously you’ll have to know all of them for class, but is a big undertaking nonetheless. I look forward to your future posts.
Not taking the bar exam is actually not preferable in my mind. In fact, why go to law school at all if you do not plan on passing the bar? If that’s the case, read up on some Contracts Law, Arbitration, Labor Law, etc. and be content with that. But if you complete law school, you may as well at least attempt to pass the bar.
As Emmett said, it adds status and it allows you to fall back on a big paying profession in case you do not end up being as successful in the sports agent industry as you may wish.
If the agent thing doesn’t work out, then passing the bar exam is the fall back position.
But as you poit out, the written consent waivers are the issue. As an agent you are basically business partners, as the more moey you make for your client, the more you make for yourself.
As your client’s lawyer, your obligations are basically a constant conflict of interest with your position as agent, requiring signed waivers all the time. If you fail to do this and it goes to court, you will lose everything you made from that client, plus damages. The law firm of Bain, Gilfillan & Byrne lost $25mm in such an occasion.
Even if you set up a chinese wall or have outside counsel, your liability exposure greatly exceeds the benefits. The bar isn’t going aywhere.
If you still want to pass the bar and try to rep players, you’ll need to work on a fixed fee plus a cheaper billable hour rate, something that may not be all that atractive to late roud picks.
As an agent, you are very far from business partners. Basic agency law (which I have not yet taken, but have read enough to understand the basics) makes the athlete the principal and the agent as…the agent. While agents represent athletes and those athletes are the agents’ clients, those clients control the relationship at all times. Agents and players are never on an equal footing, and thus, they are never “basically business partners.” In fact, there may be heavy restraints against an agent and his clients going into business with one another.
You do not need to get signed waivers all the time, though. If you look back to my post, you are not necessarily acting as a lawyer, even if you have a law degree and passed the bar. I have spoken to quite a few professionals about this stipulation.
“there definitely is a possibility that an agent can argue that she is operating outside of the realm of “attorney”. But all she has to do is offer some legal advice, and she may be bound by the ethical requirements promulgated by the MRPC.”
How often does an agent offer legal advice to its clients? Almost every athlete goes to an independent lawyer if he/she runs into any legal issues that need to be dealt with. Agents try to stay out of this area.
Does the liability exposure greatly exceed the benefits? I’d claim otherwise. I believe that top tier athletes prefer to go with an agent that has a legal background and has jumped through the hoops (passed the bar exam) in order to show that he is well versed in the law. I also think that more athletes will request agents with law backgrounds in the future.
Fixed fee and cheaper billable hours may not necessarily be the answer…but I plan to look into that as well. Interestingly enough, I just took a break from reading up on Model Rule 1.5, which concerns fees.
[…] There is a bunch of info. about potential conflicts of interest, but I have gone in depth about that topic in the past. […]