Panzerotti ≠ calzone : NY confidentiality ≠ TN confidentiality

It’s been a while. I know. But I saw a blurb about a story that caught my attention in the before-times and then a second story about the same case more recently that hooked me enough to write about.

Primarily, it hooked me because it provides a compelling opportunity to discuss two important points about legal ethics at the same time. First, the ethical obligations lawyers owe to former clients go beyond simply restricting certain future representations and include restrictions on using the client’s information. Second, even a clear violation of the ethics rules does not automatically translate to a viable cause of action against an attorney.

As we’ll see at the end, it is a story that because it happened in New York might just be a bad look for the lawyer involved when it would be a lot more damning if it had happened here in Tennessee.

The initial story that caught my eye was this one in Law360 where the proprietors of a panzerotti restaurant in Brooklyn sued an attorney saying he had stolen their idea for such a restaurant and the logo they used. The more recent story that lured me, also from Law360, is that the lawyer has now filed a motion to dismiss that suit, in part, arguing that the USPTO had rejected the restaurant’s trademark claims.

You can go read the amended complaint in the lawsuit in question for yourself:

But from the “former client” side of the story, this is how they tell it. Its principals retained the lawyer, Cea, to help with documents to be filed in connection with the seeking on E-2 visa application and that, as part of that process, they had to turn over their confidential business plan for the proposed restaurant. After they did that, they say they also retained Cea to represent the business regarding lease negotiations and obtaining a liquor license for their restaurant.

The lawsuit then claims that after their restaurant opened, Cea and a partner opened a competing restaurant, but in Manhattan, using the improperly obtained confidential business plan information of the former client. The lawsuit also claims that the competing restaurant’s logo infringes upon their logo in violation of The Lanham Act.

Now, I’m no trademark lawyer but my unsophisticated eyeball comparison of the two logos doesn’t impress me at all. The rest of the complaint, though, when it focuses upon the strong similarities on how the insides of the restaurants are laid out, and the kinds of equipment used, and even approaches to menu items is a bit more compelling. The complaint also alleges that the lawyer even hired the same architect that the former client used for its restaurant for the competing restaurant. Notably, the complaint also alleges that when first contacted after the opening of the competing restaurant, the lawyer claimed that his only involvement was in helping the second restaurant with its lease.

When first digging into this story, I was overwhelmed by the audacity of any lawyer thinking they could ever do something like this without running afoul of RPC 1.9(c)’s restrictions on adversely using information related to the representation of a former client.

In Tennessee, that rule reads as follows:

A lawyer who has formerly represented a client in a matter … shall not thereafter reveal information relating to the representation or use such information to the disadvantage of the former client unless (1) the former client gives consent, confirmed in writing, or (2) these Rules would permit or require the lawyer to do so with respect to a client; or (3) the information has become generally known.

While proving a successful cause of action would be a different kettle of fish for reasons discussed below, because Tennessee (like most jurisdictions) treats all information related to the representation as confidential, under Tennessee’s rules, someone doing what Cea was alleged to have done would have real problems defending a disciplinary complaint. Perhaps, as to some of the allegations, Cea could engineer a defense based on all of the public facing aspects of the former client’s restaurant became “generally known” once they opened for business.

Even in Tennessee though, violations of RPC 1.9(c) wouldn’t automatically translate to a viable civil cause of action. (The actual lawsuit asserts a breach of fiduciary duty claim and that would likely be what someone would hazard as a claim in Tennessee.) That is because we, like most states, clarify in the Scope section of our rules that while ethics rules exist as a framework for imposing discipline, they are not intended or designed to provide a basis for an independent cause of action.

[21] Violation of a Rule should not itself give rise to a cause of action against a lawyer nor should it create any presumption in such a case that a legal duty has been breached. In addition, violation of a Rule does not necessarily warrant any other nondisciplinary remedy, such as disqualification of a lawyer in pending litigation. The Rules are designed to provide guidance to lawyers and to provide a structure for regulating conduct through disciplinary agencies. They are not designed to be a basis for civil liability….

We also have a final sentence in that part of the Scope that tries to clarify that there are some situations in which the violation of a rule can be relevant to determining whether a breach of the standard of care also occurred but since New York doesn’t I’ll leave that for another day.

New York’s approach to client confidentiality though is different and, as a result, even though its RPC 1.9(c) reads largely similar to Tennessee’s on adverse use of information its reduced scope of confidentiality under RPC 1.6 really changes the landscape.

New York’s RPC 1.6 limits confidential treatment to “information gained during or relating to the representation of a client, whatever its source, that is (a) protected by the attorney-client privilege, (b) likely to be embarrassing or detrimental to the client if disclosed, or (c) information that the client has requested be kept confidential.”

That distinction and what it means for a lawyer appears to be salient to Cea’s situation. Cea’s motion to dismiss, while primarily focused on an attempt to enforce an alleged settlement agreement as well as other procedural arguments, does poke at the margins of whether he was ever asked to treat any of the information he learned from any client as confidential. He also appears to take issue even with the idea that he ever had any fiduciary relationship with anyone who is a party to this litigation. You can look at the memorandum of law supporting that motion to dismiss if you are so inclined.

There will be content.

So, it is March 20, 2020. We don’t know much about much in terms of what comes next. Stress and anxiety are most folks constant companions at the moment I’m certain. (And I bet a lot of you weren’t expecting the need to tech competence under the ethics rules to come at you quite this fast.) Whether or not there will be things to read here probably matters almost not at all to most people. Nevertheless, for better or worse, as long as I’ve got access to the internet I will plan to continue to post contents on the same weird and unsettling sort of “schedule.” Today’s another one of those days.

Today’s post is an opportunity to talk a bit about the dark side of litigation funding. Now, do not get me wrong, I’m generally “pro” when it comes to the topic of litigation funding. In fact, I had the opportunity to be a lawyer for one of the early litigation funding companies that operated in a niche, high-end space. Even then, one of the consistent issues for a company doing things the right way was the stigma of litigation funders as being companies that would take financial advantage of people in need.

Today’s story isn’t exactly about taking advantage of the kind of person in financial need you might think of, but it certainly is a story that sheds some light on unsavory aspects of an industry that speculates on the outcome of litigation.

Today’s story though also is something of a revisiting of the travails of a prominent California law firm that I’ve written about a few times in the past. Those posts had focused on a very contentious set of litigation matters between the firm and one of its former partners that effectively boiled down to a “he said, it said” sort of situation where the “he” was saying that the “it” was engaged in financial fraud and fired him when he raised questions about it and the “it” said that “he” was a sexual harasser. (If you aren’t familiar with that post, you can catch up here.)

It’s been a very bad couple of weeks for just about everyone in the United States. It’s been an even worse couple of weeks for John Pierce, the founder of the Pierce Bainbridge law firm. It has been such a bad couple of weeks that it is hard for an objective viewer not to think that the previously-referenced “he” seems to have a leg-up in proving his side of events against the “it” in the “he said, it said” landscape.

Before elaborating on the litigation funding issue, just a short recap of the recent chronology of events for the founder of this particular law firm.

And, about that deal, that is the deal with Parvati Capital that was front and center in the allegations in the “he said, it said” litigation. As a result of the Philadelphia suit, the details of that arrangement have come out and involve a highly -unusual approach to litigation funding where the law firm was given the sole responsibility for placing a value on their cases as part of agreeing to a 50-50 split with the litigation funder on the fees obtained in such future cases.

If you have access to Law360, you can read a pretty good article about that piece of the puzzle, one in which a former law partner of mine (who I practiced with back when I had the chance to represent a good litigation funding company many years ago) speaks on the ethical problems with the Parvati Capital deal. (Spoiler: pretty squarely an RPC 5.4 problem since it quacks very much like a fee-sharing duck.)

There are lots of aspects to dealing with litigation funding arrangements that can raise difficult ethics issues. But there are a variety of ways to obtain litigation funding within the ethics rules. Interestingly enough, while the Parvati arrangement seems very problematic as to some issues, and while having the lawyer assign a value to cases is bad news for a variety of reasons, such an approach does avoid altogether problems with navigating how to share documents and other details with a litigation funder for purposes of evaluating a case while doing what can be done to comply with RPC 1.6 and seek to protect privilege and work product.

Lawyers continue to struggle with tackling online negative reviews.

Today’s topic come up again for two different reasons. First, because the North Carolina State Bar has put out a new proposed ethics opinion seeking public comment about the topic. Second, because it was also discussed at one of the presentations made at the APRL mid-year meeting a week or so ago.

As the title of the post indicates, the topic is the ethical constraints on lawyers when faced with trying to respond to an online negative review posted by a client where they feel hard done and feel like, if allowed, they could demonstrate that the client’s negative allegations are unfair.

Proposed 2020 Formal Ethics Opinion 1 in North Carolina reaches roughly the same conclusion as the other ethics opinions issued on this topic: tread carefully because none of the confidentiality exceptions offered by RPC 1.6(b) are satisfied merely by the posting of an online review. Attempting to offer some practical advice, the proposed opinion says that the attorney can “post a proportional and restrained response that does not reveal any confidential information.” Given the broad scope of confidentiality under the ethics rules, this outcome offers little room for lawyers to offer much of a response. Perhaps recognizing that a bit, the opinion tries to find ways to authorize a lawyer to contest the negative review with denials while walking a fine line of not disclosing actual information by referencing some “generic” or limited denials that other ethics committees have proffered.

It’s a fine proposed ethics opinion in so far as it goes. (It’s also a good round-up of the opinions issued to date on this issue by other groups.) But it fails to fully wrestle with one ethical question it acknowledges is relevant and fails to address at all at least one interesting ethical question that ought to be the most relevant one of all.

It does address, in part, the meaning of certain language in Comment [11] to RPC 1.6 about a lawyer not being required to “await the commencement” of an action or proceeding to rely upon the self-defense exception. But it only focuses on it in one direction. Looking only to whether the disenchanted (or disingenuous if you believe the lawyer targeted) client is likely to pursue a proceeding, the opinion brushes aside that language as any justification for a lawyer on the basis that the client’s willingness to post a negative review does not alone demonstrate that the client is contemplating pursuing any formal proceeding against the lawyer.

But the opinion does not spend any time talking about the flipside, which was actually raised by an audience member at the APRL mid-year meeting I referenced above: What if the lawyer is the one contemplating pursuing a proceeding?

For example, some lawyers — lawyers who rely very heavily for work on their online presence and can be very badly damaged by a false review — may view the inability to respond to an online negative review as meaning that actually filing a suit for defamation against the client/former client is their only viable option. If they actually filed the suit, they’d be able to disclose information about the representation to make the case. So the logic goes, could they not begin to exercise that right of self-defense before they have commenced that proceeding?

Under that line of thinking, couldn’t they respond to the online review to contest the allegations, and indicate to the client that they will file suit for defamation if the client doesn’t retract the statements? I don’t think that works primarily because any such communication to the client about the review making that kind of demand before filing suit would have no need to occur publicly. In fact, it would seem reasonable to read the language in the Comment to RPC 1.6 exhorting lawyers to take certain steps, including seeking protective orders or filing matters under seal, even when pursuing litigation so as to keep reasonable disclosures of client information from unnecessary public dissemination as fundamentally contrary to such a course of public action prior to commencing such a suit.

The relevant ethical question that the opinion does not address at all is what a lawyer can do with respect to crafting a path for being able to respond through RPC 1.6(a) rather than RPC 1.6(b). As a practical matter, having written frequently about The Streisand Effect here in the past, I still believe that most of the time the best course for a lawyer is not to do anything to risk amplifying the megaphone the client has already obtained. Usually, engaging in a public skirmish with the person is only going to result in more people learning about the criticism, but I recognize that there are some lawyers who simply cannot afford the damage that can be caused to their business pipeline from negative online reviews.

For those lawyers, I think the only ethical path to get beyond offering platitudes and perfunctory denials would be to secure a client’s agreement, in advance, as part of an engagement contract that the lawyer may respond to any future online negative review that the client chooses to make.

Given that RPC 1.6(a) clearly allows lawyers to disclose information about their representation of a client if they have the client’s informed consent to do so. It seems to me that if the issue is described sufficiently on the front end, and the client agrees in advance that the price of going online to complain is that the lawyer can use information about the representation to respond to the complaint, then the requirement of informed consent can be satisfied. While it could feel very much like a truly awful first foot to put forward with a client by raising the issue, if the lawyer’s practice is such that the issue is that important, there also is a benefit to being up front with the person about it at the time that they are prospective client.

But maybe you all can tell me if I’m missing something in that respect?

For attorney’s eyes only.

Okay. It helps to get into my mindset while writing this if you hear the title in the voice of the musical snippet “For British Eyes Only” from Arrested Development. If you can’t make the frame of reference, then so be it. We’ll have to work to find common ground all the same. (Actually, for the briefest of moments I forgot that we live in 2019 when everything is but a link away, so here is what you want the title of the post to sound like: clip.)

Ethics opinions are interesting creatures. They provide a group (usually) of people with law degrees with an opportunity to elaborate on otherwise potentially unsettled (or even unsettling) questions of application of the ethics rules. As a result, they can be used to set a trend in one direction or another toward either expanding or limiting the scope of a rule.

Usually, they are most influential when they involve an interpretation of the standard version of a particular ethics rule. In Tennessee, as I’ve written about a few times now, formal ethics opinions are being used (for better or worse) to severely expand the scope of what RPC 5.6 means in terms of when an agreement entered into in connection with the settlement of client’s matter will be deemed to involve an improper restriction on the attorney’s right to practice. Those opinions are potentially of particular moment because they are interpreting language that is pretty widespread in its uniformity: “A lawyer shall not participate in offering or making … (b) an agreement in which a restriction on the lawyer’s right to practice is part of the settlement of a client controversy.” Over the course of a few opinions now, the Tennessee Board of Professional Responsibility has added layer upon layer of kinds of provisions that could be in a settlement agreement for a number of potentially legitimate reasons but that are being ruled out because they are being treated as an improper restriction under RPC 5.6.

A recent ethics opinion in Ohio addressing another variation of same seems to be rowing in the same direction as it concluded that a plaintiff’s lawyer could not be asked to commit to the fact that they did not actually have any other clients at the moment of settlement with similar claims against the settling defendant. You can read that one here.

So, I was briefly intrigued when I saw a tweet about a proposed ethics opinion in North Carolina that was concluding that a lawyer could ethically agree to an “attorney’s eyes only” restriction on the production of certain documents in a case without first getting their client’s consent to such an arrangement. That seemed like a very difficult position to justify and it seemed like it was something of a polar opposite of what is going on in the thread of Tennessee ethics opinions about RPC 5.6. The 5.6 series of opinions is almost going out of its way to find conflicts between an attorney’s interest and their client’s interest in order to shoehorn the situations into RPC 5.6. Yet, here was a nearby state proclaiming that something that seemed squarely like a real conflict for the lawyer would be kosher even in the absence of seeking client consent.

(Admittedly, my initial reaction also was to be skeptical about the conclusion. I’ve certainly encountered my fair share of AEO provisions in protective orders but I’ve never signed off on one without running it by the client so that they can decide in advance if they are going to have a problem with the arrangement. Seems like a pretty clear creation of a conflict of real importance to the attorney-client relationship where the client should be signing off on accepting such a situation before it transpires.)

But, in reading the proposed opinion, which you can access here,what I learned is that it leans heavily upon non-standard language in North Carolina’s rules that provides strong justification for the conclusion. Specifically, it relies upon the fact that North Carolina has divided its RPC 1.2 into a number of subparts, including an (a)(3) that gives the lawyer the ability to “exercise his or her professional judgment to waive or fail to assert a right or position of the client.”

On its face, the existence of such a rule could provide grounds to think this is a correct conclusion, but, if you really think about it, that provision if it is without limit is … I believe the technical, legal term would be BANANAS!

Surely, it was never intended to impact things that are vital to the representation and for which the client should have final say. Right? I mean, on its face, it would allow a lawyer to exercise professional judgment to waive the client in a criminal case’s right to choose not to testify.

To the extent the comments provide us with any insight about what was intended it seems pretty important to note that paragraph [1] of the Comment provides only one elaboration on the concept: “For example, a lawyer may consent to an extension of time for the opposing party to file pleadings or discovery without obtaining the client’s consent.” That is both an innocuous example of the use of the rule and one that seems pretty redundant for RPC 1.2(a)(3) given that North Carolina’s RPC 1.2(a)(2) also addresses that kind of situation by saying: “A lawyer does not violate this rule by acceding to reasonable requests of opposing counsel that do not prejudice the rights of a client, by being punctual in fulfilling all professional commitments, by avoiding offensive tactics, or by treating with courtesy and consideration all persons involved in the legal process.”

Fettered is almost always better for lawyers.

Fettered is a fun word on a number of levels. It is a word lawyers are usually familiar with when it has a prefix attached to it and gets used when we talk about disclosures or access as being “unfettered.” But, it is also a word that literally means “to be restrained with chains,” so it would not be an entirely incorrect usage of “fettered” to describe being physically handcuffed … although it usually involves chains or manacles around the ankles rather than handcuffs.

The connection created by that word and its meanings is truly the only thing that prompted me to link the following two stories of interest for lawyers.

One involves a very thoughtful court ruling that provides a road map for the way lawyers should go about avoiding unfettered disclosure of client confidences even when they have the right to defend themselves.

The other involves a lawyer who so flagrantly went about things the wrong way that her lateral move ended with her in actual handcuffs for a couple of days, not to mention likely financial handcuffs for many years to come.

I’ve often spoken with lawyers about how the right to disclose confidential client information to defend your conduct is clearly acknowledged by the ethics rules, but also still an endeavor not entirely free of risk given the limits imposed under those same ethics rules. Model Rule 1.6(b) and its accompanying paragraphs of Comment actually combine to do a very good job of explaining to lawyers how they still have to go to some pains to try to protect information, even in the face of unreasonable conduct by clients (or former clients) behaving incredibly unfairly.

The two biggest components of those “pains” are: (1) that you cannot simply unleash and disclose everything you know that might be damaging to your former client but have to make measured disclosures that are only what is reasonably necessary to defeat the allegations against you, and (2) that you likely also must make some effort to see if the Court will allow you to file what you have to say under seal or under some other form of protective order to prevent far and wide dissemination of the information you are disclosing. But, what happens a fair percentage of the time is that lawyers read the rule but not necessarily the explanatory comments.

In connection with a criminal case in federal court in West Virginia involving accusations of ineffective assistance, a U.S. Magistrate Judge issued a very well structured and thoughtful opinion that essentially follows the guidance of the rule and its comment in a way that provides a good model for letting a lawyer defend their conduct while properly imposing safeguards to avoid unfettered disclosures. Thus, the full opinion is now another place to point lawyers to beyond just the Comments where they can read the preferred way this needs to work. As a bonus, it also provides an excellent gloss on a now-decade-old ABA Formal Ethics Opinion that some folks believed went a bit too far.

As to the lawyer who likely thought she was seeking greener pastures but ended up in handcuffs, the easiest place to succinctly describe Chelsea Merta’s conduct is a paragraph or two of the Confession of Judgment and Consent Permanent Injunction Ms. Merta entered in state court in St. Louis, Missouri around 10 days ago:

3. On or about February 2, 2018, seven days prior to her resignation, Merta transferred approximately 22,000 data files from SLF [her then firm] onto a portable USB flash drive without authorization from SLF. The data files that were transferred to the portable USB flash drive included files from SLF’s clients and SLF. Merta took the flash drive containing these files and, upon her resignation (despite representations to the contrary during her exit interview with SLF), retained the files. Many of those files were later found to be contained on [her and her new firm’s] MacBook Pro computers and cloud storage accounts.

4. Prior to her resignation and without authorization from SLF, Merta tampered with, deleted, and wiped her SLF computer, her SLF-issued smart phone, and other storage locations of all data, including data related to SLF’s clients and SLF, and also informed three clients of her imminent departure from SLF. Thereafter, following the submission of her notice of resignation, but prior to it becoming effective, Merta contacted a number of clients to inform them of her resignation and inform them that they could transfer their file to her new law firm.

In that confession of judgment, Merta agreed that the damages caused to her former firm were in excess of $550,000. The consent judgment also references the Court having already awarded damages against her for more than $200,000 over conduct involving contempt of court.

It was the contemptuous conduct – which itself at heart was continued refusal to relinquish the improperly taken files and continued misrepresentations to the Court about those facts – that also resulted in her spending two nights in jail until she purged the contempt. You can read all about the contemptuous conduct in this earlier order here.

Merta’s behavior when leaving to start a new firm, I sadly believe, happens a lot more often than you might think. It usually does not come to light for a variety of reasons, such as the dynamic associated with the pros and cons for the firm that has been wronged of ever pursuing the wrongdoing because of potential adverse effects for the firm and for continued discomfort on the part of its current and former clients. The reason that lawyers can tend to get away with this kind of conduct though is not that the departing conduct can’t be proven as the order lays bare. Technology these days makes it very difficult to not leave behind the kind of digital trail that Merta left.

Nevertheless, the tendency to engage in the conduct on the way out the door is fundamentally puzzling because it is antithetical to what lawyers usually are — risk adverse. It will likely come as no surprise to hear that this particular lawyer also has been pursuing bankruptcy proceedings. Thus, this case demonstrates just how significant the financial and professional risk of doing this can be in those cases where the firm that is wronged does make the decision to plow forward with proving it.


Shimkonicity (shim-ko-nis-a-tee)

When I first read some reporting about this decision from Ohio involving the indefinite suspension of a lawyer, I expected it to come across very much as an obvious case of a lawyer’s third strike leading to a steep punishment. But, the coming together of so many things with respect to this lawyer’s situation actually offers quite a story from which a lot of lawyers can learn a few things (or at least be reminded of some things they already knew). Thus, showing my age again, I’ve gone with The Police album rip-off title for this post.

So, yes, at the straightforward level, if you read this opinion, you will digest the story of a lawyer getting hit with his third strike. About nine years ago, Mr. Shimko engaged in some financial chicanery with some clients leading to a public censure in Ohio that was imposed as reciprocal discipline after Arizona had first done the same. Three years or so after that, he received a one-year suspension (but it was all stayed so he continued to practice) for disparaging a judge. Now, he’s received an indefinite suspension after he appealed a recommended two-year suspension for charging an excessive fee to a client and then unnecessarily disclosing confidential information about the client in connection with suing the client for the excessive fee amount (along with a bit of unsavory threatening to disclose the information in order to try to get the client to settle).

Most of his story is routine stuff that all lawyers know (or should know) they should not do. The last seven-or-so-pages of the opinion also offer a tangible example of why trying to throw every potential appellate argument into a mix — particularly in a disciplinary case — is not a very good strategy. But along the way, there are two real teachable nuggets here of things that a surprising number of lawyers sometimes don’t know, and there is also one big topic that the Court simply fails to mention which also is pretty important (and which it could have used to further skewer the lawyer’s scattershot allegations of error on appeal.)

Much the way my son tackles fast food; first we will tackle the nuggets:

Nugget #1: You just can’t bill your clients for time you spend drafting what amounts to your engagement letter. If it is a good engagement letter, you are substantially creating it for your own benefit and protection. At most, it is documentation that is partially being created for the client’s benefit. Don’t try to charge the client for that time.

Nugget #2: There is a second-level of consideration when a lawyer is proceeding under a self-defense exception to restrictions on the disclosure of confidential information. Not only do you have to be able to demonstrate that one of the specific exceptions under RPC 1.6(b) can be satisfied, which you can do if you are trying to pursue payment from the client as an example. But you also have to remember that the disclosures you make need to be no more than is reasonably necessary AND in a lot of circumstances you still have to make efforts to try to limit the number of people to whom the disclosure is made. The comments to RPC 1.6 lay out guidance about this in most jurisdictions in a very clear and helpful fashion. If you are litigating a fee dispute with a client, even though you can disclose confidential information to the Court in order to prevail on your claim or defeat the claim of your client/former client, you may very well have to also seek the entry of a protective order to try to prevent the information you are disclosing from becoming fully available to the public.

And the thing that was missing? Any discussion by the Court of why this Ohio lawyer’s arguments about how he was entitled to do what he did because the client was committing insurance fraud using his services are very hard to reconcile with one or two other ethics rules in Ohio (and elsewhere) – RPC 3.3 and RPC 4.1.

If the lawyer’s version of events regarding what the client had told him in advance of the examination under oath was to be believed, then under RPC 4.1 what the lawyer was required to do, at minimum, was to withdraw from the representation so as not to assist with the fraud. If representing someone in a pending insurance dispute during an examination under oath is somehow treated as a representation to a tribunal under Ohio law (which I would suspect is not the case), then RPC 3.3 in Ohio — patterned after the Model Rule — would have required the lawyer to speak up during the EUO about what was happening not after the fact.

The Court likely didn’t address those issues because it did not need to since the earlier rulings had found the lawyer’s assertions not to be credible, but even a footnote highlighting this issue for lawyers might have been a worthwhile piece of dicta.

Asking in South Carolina and definitely not receiving.

This development in South Carolina happened last month and I saw some folks getting a little worked up about it but am only getting around to writing a little about it now. (In fairness, last month only became last month around 80 hours or so ago.) But for some people getting worked up about it, it wouldn’t actually be all that noteworthy given that all South Carolina did was adopt a comment that made plain what the rule already truly required.

Nevertheless, it makes for an interesting subject not only because of the reaction it garnered but how it came about… in response to a petition seeking to change South Carolina’s Rule 1.6 in an entirely different direction.

But, I’ve managed to get way ahead of myself with the textual throat-clearing and have started in on all of this like you know what I am talking about.

In June 2019, the South Carolina Supreme Court entered an order that rejected an attempt by the South Carolina Bar to seek to have RPC 1.6 revised to permit lawyers to make reference to published court decisions in their advertising without having to get their client’s informed consent. And, to be clear, what the bar was asking for was a very incremental level of permission. They were seeking to have the rule allow a lawyer to make reference to the citation of a published case, not the details of it, just the citation.

Now I suspect many lawyers would assume that no such revision was even necessary on the basis that they simply think that public information is public information and can be used in whatever fashion is desired. In fact, this Bloomberg article quotes someone from a law firm I used to work for saying something along those lines. That might well be a common sense approach but it is simply an entirely incorrect statement when it comes to how the ethics rule on confidentiality works.

As I’ve written about in the past (probably more times than you care to remember but most recently in August 2018), RPC 1.6 continues to impose confidentiality obligations on lawyers as to information related to representation of a client even as to the most public of events. And, what that means is, when you work through the rule and its various provisions authorizing disclosure of such information . . . there simply isn’t a provision that justifies use of the information in commercial advertising endeavors without the consent of the client.

The South Carolina Supreme Court was not interested in what the Bar was seeking. Instead, it opted to adopt a new comment to RPC 1.6 to drive the point home about what the text of RPC 1.6 already requires.

Specifically, the Court added the following new Comment [7] to its RPC 1.6:

[7] Disclosure of information related to the representation of a client for the purpose of marketing or advertising the lawyer’s services is not impliedly authorized because the disclosure is being made to promote the lawyer or law firm rather than to carry out the representation of a client. Although other Rules govern whether and how lawyers may communicate the availability of their services, paragraph (a) requires that a lawyer obtain informed consent from a current or former client if an advertisement reveals information relating to the representation. This restriction applies regardless of whether the information is contained in court filings or has become generally known. See Comment [3]. It is important the client understand any material risks related to the lawyer revealing information when the lawyer seeks informed consent in accordance with Rule 1.0(g). A number of factors may affect a client’s decision to provide informed consent, including the client’s level of sophistication, the content of any lawyer advertisement and the timing of the request. General, open-ended consent is not sufficient.

Of course, the South Carolina Supreme Court is not wrong about this. And, at a practical level, requiring client consent is not truly that onerous.

However, given the connection to lawyer advertising generally that this development has, it is worth pointing out that South Carolina is still a generally bad jurisdiction when it comes to that topic. Partly, this is because it still refuses to recognize at a fundamental level what the purpose of advertising actually is by having this kind of requirement in its RPC 7.2(a):

All advertisements shall be predominately informational such that, in both quantity and quality, the communication of factual information rationally related to the need for and selection of a lawyer predominates and the communication includes only a minimal amount of content designed to attract attention to and create interest in the communication.

A lawsuit about a lawsuit that touches on everything about 2019?

If time capsules were still a thing (are they still a thing?), and someone wanted to capture issues facing the legal profession in 2019 for a time capsule to be buried… what sort of topics would you choose to include?

Outside of the legal dynamics at play in the political landscape of the nation (which I’m excluding for today just for purposes of sanity), a quick effort to sketch things out on scratch paper might find you listing:

  • Risks of the flow of information involving modern technology
  • Financial pressures placed on lawyers and law firms
  • Continuing difficulties in achieving and maintaining diversity in law firms
  • How #metoo and problems of power and sexual misconduct in the workplace play out in law firms.
  • The role of businesses other than law firms in the delivery of legal services and what that means for the profession.

I’m probably leaving something out, but those bullet points comprise a pretty good overview of the legal landscape, right? Surely, you couldn’t find one document that would touch all of that to throw into the time capsule?

Well, thanks to a new lawsuit filed in California in May about another lawsuit filed in New York in May, you can now fill your time capsule with just one complaint plus its Exhibit A.

You may already have read any of the stories about this lawsuit that have run at the ABA Journal or in Bloomberg Law or even this Harvard Law School and snark-centric one at Above the Law.

If you want to read the entirety of what would go in the time capsule, you can read the lawsuit filed by Pierce Bainbridge against Donald Lewis (which attaches the suit Lewis filed against Pierce Bainbridge as an exhibit) by downloading the PDF below.

The two documents combined span more than 110 pages, so here’s a summary.

Lewis joined Pierce Bainbridge as a partner in June of 2018 but ended up working there for only 4 or 5 months. He was terminated by the firm in November 2018. Both sides agree that during the five months he was there A LOT happened. They disagree pretty vehemently on exactly what though.

Lewis filed a lawsuit in New York on May 15, 2019 alleging that he was wrongly terminated as a retaliatory matter because Lewis had become aware of financial wrongdoing by Pierce Bainbridge involving misrepresentations about the value of cases to a third-party litigation funding company. Lewis’s lawsuit sought $65 million in total damages with $50 million of those being claimed punitive damages.

In support of his allegations against the firm and his claims that it is a toxic environment for those who work there, Lewis’s lawsuit publicly discloses a litany of internal Pierce Bainbridge communications including what would appear to be not just emails and text messages but some that are indicated as being from the firm’s use of the Slack messaging platform.

That same day, May 15, 2019, Pierce Bainbridge filed a lawsuit against Lewis in California alleging that pre-suit sharing of a draft of the lawsuit with certain people was actionable defamation by Lewis and that by seeking a multi-million settlement to avoid filing the lawsuit, Lewis was engaged in extortion. The firm’s lawsuit also pursues claims of negligent and intentional interference with contractual relations and prospective economic advantage on the theory that Lewis’s effort to spread false information about the firm and its partners is an effort to damage the firm’s relationship with the third-party funding company and its clients and potential future clients.

Pierce Bainbridge contends that Lewis was the subject of credible allegations of sexual assault, harassment, and retaliation leveled against him by an employee of the law firm and that he attempted to obstruct the firm’s internal investigation of those allegations and was terminated on that basis. The firm’s lawsuit paints a portrait of a lateral hire alleged to have “immediately bec[ome] a corrosive presence” at the firm.

The firm alleges that on the same day Lewis was appointed to be an “assigning partner” a legal assistant made a report about an alleged event that would have occurred in June, fewer than 2 months after Lewis arrived, and that involves Lewis doing his best impression of what might happen if Louis C.K. and Matt Lauer were collaborators on a workplace project. In response to the allegations, the firm put Lewis on administrative leave and hired an outside law firm to investigate. While on leave, the firm alleges that Lewis sent an email to many at the firm airing his allegations (many of which apparently ended up the subject of his lawsuit). For that, the firm says they terminated his employment. The firm contends that their outside counsel concluded that the allegations against Lewis were credible.

Lewis, for his part in his lawsuit which spans 486 numbered paragraphs and was not filed pro se, takes issue with the propriety of that investigation as well and alleges that another partner at the firm was terminated after voicing an opinion that Lewis had gotten “a raw deal” from the firm

Using history as a guide, I’m prepared to declare that neither side will win this lawsuit. As a teaching tool, this lawsuit of course is an easy opportunity to repeat a point I’ve made many times before (here and elsewhere) about why so many law firm disputes and lawyer departures ultimately shouldn’t end up in litigation if there is any way to avoid it. The likelihood almost always is that no one “wins.” Everyone loses. And most prominently among the losers are the clients of the law firms/lawyers who don’t want to directly or even indirectly be harmed by the battle and, if they are at all risk averse, have to find themselves wondering whether they want anything to do with any of the players.

A recipe for ethical lawyering?

Now that the Ethics Roadshow is complete in all of the cities where it was staged, I want to repackage the main idea from this year into a post and make a similar ask of my readers that I made of the attendees as to feedback on the point.

The title of the Roadshow this past year was “Back to Basics: Sailing the Five Cs of Ethical Lawyering,” but the main ultimate question or conceit when boiled down was whether the 5 Cs I had identified could provide not only a basic road map for being an ethical lawyer no matter the nature or setting of your practice but could also provide the ingredients of a recipe that can be used to justify the existence of those pieces of the ethics rules that are absolutely worth keeping moving forward in discussions about the future of legal ethics and lawyer regulation. 

The 5 Cs as put forth as the ingredients of the recipe were:

  • Be COMPETENT at what you do
  • Recognize and respect your obligations of CONFIDENTIALITY
  • COMMUNICATE appropriately with your clients (and others) both as to content and frequency
  • Employ CANDOR in all situations in your practice [If you absolutely cannot be 100% truthful, and can’t simply stay silent, then don’t be false.]
  • Avoid CONFLICTS for which you don’t have, or cannot get, consent.

Recognizing that some people might immediately think of another important “C,” avoiding commingling I then offered thoughts about how quite clearly rules about trust accounting could be readily reverse-engineered by combining ingredients.  I initially suggested that Competence + Candor + Communication could do the trick; some others suggested that particularly the requirement to avoid commingling could be described as Candor + Communication + Conflicts.

There are a number of different groups at work on trying to make progress on what the modern regulation of the practice of law should look like.  One of those is APRL’s Future of Lawyering Committee.

I’m fortunate to be a member of that committee and our mission is this:

[T]o explore the evolving nature of technology and its impact on the delivery of legal services and access to justice.  Our goal is to develop specific proposals for amending the legal ethics rules and reforming the lawyer regulatory process.

And so my ask of you is the same as my ask of attendees: Unless a rule is truly, and absolutely, required in order to protect consumers of legal services, shouldn’t the rules worth revisiting be the ones that are hard, if not impossible, to describe using a combination of ingredients from this recipe?

“Let’s put our heads together and start a new country up.”

Serial, perhaps the best known podcast of all podcasts, has recently launched its third season and like one of the REM songs off of Life’s Rich Pageant it focuses on Cuyahoga – but not the river but the County in Ohio – more particularly, it focuses on what goes on inside the Justice Center in Cuyahoga County.  Yet, much like the song was according to Peter Buck, the podcast also may just really be about America and its lost promises too.

So far the first three episodes have dropped, and they are particularly good.  Good, of course, in a troubling way for what they show with respect to the inner workings of the justice system.  Admittedly, all this season of Serial can truly do is show problems in just one particular courthouse in one particular location, but we all know there are universal themes that recur in many other similar venues in the nation.

The first three episodes alone have also given fodder for discussions of legal ethics for those so inclined.  The first episode follows an unfortunate and unfair bar fight through the court system.  The host, Sara Koenig, is given extensive access to the criminal defense lawyer involved.  (The series so far reveals that she was given nearly free rein in the building altogether.)  Even though there is one spot in which Koenig explains that had to be excluded from a meeting between the lawyer and his client in order to protect the attorney-client relationship while they talked, those familiar with the duty of client confidentiality still know that given how incredibly much is actually revealed by the lawyer about the case he is handling, how he is handling it, what he and his client have discussed, that surely there must have been a thorough and clear consent provided by the client for there to be no breach of the lawyer’s duty under Ohio’s version of RPC 1.6.

The second of the first three episodes introduces you to a judge who almost certainly needs to be made the subject of multiple judicial ethics complaints and who seems to have no business sitting in judgment of other people.  But the judge it introduces you to is likely a character-type that will sound very familiar to you in many respects no matter whether you’ve ever been in Cuyahoga County, Ohio or not.

The third episode tackles the very relevant topic of police brutality, the intricacies that can arise when one situation results in intertwining civil and criminal matters, and, for true ethics nerds, raises (at least indirectly) issues associated with a lawyer who swaps places in the system later in their career as well as problematic issues regarding where the line is in court proceedings between advocacy and assisting someone with manipulating evidence and testimony to assure an end result that may be believed to be just.

Anyway, your mileage may vary, but I find myself hooked.  I also find myself really wishing that Karen Rubin over at The Law For Lawyers Today might be able to weigh in at some point on her take on how the show portrays things, but, because she practices in Cleveland, I’m guessing that she is likely too close to the courts and the lawyers involved to be able to comfortably weigh in.

The fourth episode should be out tomorrow.  You should check it out.  (And, yes, I’m a guy with a pretty decent sense of humor and I see the hilarity in me encouraging the few hundred or so people who read this blog to go check out something that has millions upon millions of downloads.)