## Facts

- A state grand jury investigated whether a corporate contractor submitted fraudulent invoices to a county government.
- The contractor, a putative target of the investigation, chose to provide and pay for counsel for several employee-witnesses subpoenaed to testify.
- Three attorneys were retained to represent three principal employees; a fourth attorney was retained to represent other current and former employees who might be subpoenaed.
- Each attorney’s retention letter stated the employee was the sole client, the corporation was not a client, and privileged communications and legal strategy would not be disclosed to the corporation.
- The employee-clients certified they understood the fee arrangement, were satisfied with counsel, and wished to continue with the representation.
- The State moved to disqualify the attorneys, asserting conflicts and loss of independence from the employer’s payment of fees.

## Issues

1. Whether attorneys may represent employee-witnesses in a grand jury investigation while being paid by an employer that is the putative target, consistent with RPC 1.8(f), RPC 1.7(a), and RPC 5.4(c).
2. Whether the record required disqualification based on a non-waivable conflict or improper third-party influence.
3. Whether court-imposed conditions adequately protected attorney independence and client confidentiality in the third-party payment arrangement.

## Decision

- The Supreme Court of New Jersey affirmed the order denying the State’s motion to disqualify the attorneys.
- The Court held that employer-funded representation of employee-witnesses is permissible if it satisfies RPC 1.8(f)’s requirements and does not create a disqualifying conflict under RPC 1.7(a) or improper control under RPC 5.4(c).
- The Court relied on the retention letters, employee informed-consent certifications, confidentiality assurances, and the trial court’s safeguards restricting information flow, fee termination, and withdrawal.

## Legal Principles

- Under RPC 1.8(f), a lawyer may accept compensation from a nonclient only if: (1) the client gives informed consent; (2) the payer does not interfere with the lawyer’s independent professional judgment or the lawyer-client relationship; and (3) client information remains protected under the RPCs.
- A third-party payment arrangement is not per se unethical; disqualification requires a showing of an actual or sufficiently serious risk of material limitation under RPC 1.7(a) on the record presented.
- RPC 5.4(c) forbids a fee payer from directing or regulating the lawyer’s professional judgment; protective conditions may be used to prevent fee payment from becoming leverage over counsel or client.

## Conclusion

The court permitted employer-paid counsel to continue representing subpoenaed employees in a grand jury investigation because the employees gave informed consent, confidentiality was protected, and safeguards ensured counsel’s independence despite the employer’s status as a putative target.


In re State Grand Jury Investigation, 983 A.2d 1097 (N.J. 2009)