An ethics opinion from the Coinhusker state

Answering the question that was undoubtedly on the minds of every lawyer practicing in that state, the Lawyer’s Advisory Committee of the Nebraska Supreme Court issued Ethics Advisory Opinion for Lawyers No. 17-03 making clear that, yes, lawyers can accept payment from clients in the form of Bitcoin or other similar digital currencies.

I don’t exactly know what to make of this opinion.  I’m not normally a list maker, but here’s a quick pros and cons lists to label my feelings.

Pros:

  1.  It offers a pretty good explanation of what Bitcoin is and how it works.
  2. If you are a Nebraska lawyer interested in the answer to the question it definitely gives you a definitive answer.
  3. It is well written.
  4. It demonstrates how adaptable ethics rules for lawyers are that they don’t have to be changed simply because new technology arises that didn’t exist when the rule was first created.  (But see con #3.)

Cons:

  1.  I don’t know who this opinion is really for in terms of usefulness.
  2. Nebraska? Surely that wasn’t the state with a pressing need to be the first to issue an opinion on this topic.
  3. It incorrectly treats using property to pay an attorney fee differently than when the property involved isn’t Bitcoin.
  4. It entirely overlooks the most important aspect of lack of confidentiality in terms of impact on such a payment arrangement.

Since expanding on the “cons” is always a bit more fun as a writer, let me do that.

Who is the opinion for?  Why would any lawyer today be willing to accept Bitcoin as a form of payment?  Most answers to that question that I can come up with require the lawyer to be something of a believer in its use as a financial system.  If the lawyer in question happens to practice in Nebraska, that seems a pretty solid bet.  If that is true, then to some extent the opinion gives with one hand but takes away with the other by saying that a lawyer can accept payment in Bitcoin but then has to immediately convert the payment back into dollars.  If a lawyer is willing to put his or her faith into the Bitcoin currency system (and obviously the client must already have faith in that system), then why require them to immediately convert that client’s payment to dollars?

The answer to that – according to the opinion — is that Bitcoin is classified as property under the law and not as a currency and has the potential for rapid fluctuation in value.  But… shifting to the third con on the list… why should accepting this kind of property with fluctuating value as payment for services be treated so differently than other forms of property?

While we likely wouldn’t need a regulatory body to issue an ethics opinion on whether lawyers can accept payment in the form of gold or silver (of course they can), would we be comfortable with such an opinion declaring the lawyer has to immediately sell that property to turn it into cash?  If gold and silver seem too unwieldy for the thought exercise, then how about shares of stock or stock options.  (Let’s assume those would be otherwise done in compliance with restrictions such as Model Rule 1.8(a) and (i).)  Stocks can certainly fluctuate significantly in value and always have the potential to do so very rapidly.

Would you agree with an opinion that says a lawyer would have to immediately trade shares of stock for dollars because of the risk of rapid increase in value or decrease in value?  Why can’t two or more grown-ups negotiate an agreement for compensation in the form of property with a fluctuating value just because one or more of them is an attorney?  Why wouldn’t the lawyer taking on the risk of decrease in value play a role in evaluating reasonableness of the fee?

And, finally, the opinion talks a bit about confidentiality issues involved in payment via Bitcoin from a third party rather than the client, but completely overlooks the fundamental risk to client confidentiality created by accepting payment in Bitcoin from a client.  Such a transaction — necessarily because of the very architecture upon which Bitcoin is founded as the opinion does explain — is an open transaction for which confidentiality cannot be reasonably expected much less guaranteed.

Somehow the opinion  doesn’t manage to advise lawyers to make sure the client understands that – unlike cash or checks or wire transfers or even credit card payments — the fact of the client’s payment of money to a particular lawyer and all of the implications that payment entails is available to anyone sophisticated enough to understand how to delve into the Bitcoin ledger system.

So, in the end, sure the opinion says that a lawyer can accept payment in Bitcoin, but under this framework why would anyone ever do so?

A patchwork post for your Friday

Today’s content will be an original recipe of (1) part shameless self-promotion; (2) two parts serious recommendations to read the writings of others; and (3) pop culture recommendations for your downtime this weekend.

First, the shameless.  I am pleased to announce the plan for this year’s Ethics Roadshow.  Here’s the promotional piece you will soon see making the rounds to explain this year’s endeavor.

This is the 13th year that Brian Faughnan is performing the Ethics Roadshow for the TBA, but that is NOT actually the reason for the “13 Reasons Why” title.  This year’s program “Ethics Roadshow 2017 The Mixtape:  Thirteen Reasons Why Ethics Issues are More Complicated Than Ever.” is so-titled because of the presenter’s slavish devotion to being influenced by pop culture.

This past year, a highly controversial show largely about teen suicide and its consequences aired on Netflix.  “13 Reasons Why,” was based on a much less controversial book but the series was heavily criticized for – among other things – violating the “rules” in the world of television for how (and how not) suicide is to be depicted.  Questions, of course, exist about whether such rules are outdated in a day and age when it is as easy as surfing the Web for someone, even a teenager, to find such information.

Questions also exist in modern law practice about whether certain ethics rules are outdated, and we will spend some time talking about that issue and related topics.  We will also discuss the problems with substance abuse, stress, and mental health issues that plague our profession and put our members at risk of self-harm at rates much higher than the general population and other professions.)  The outdated technology of audiotape also plays a significant role in the Netflix series.  (It is also making something of a comeback in the music industry.)  We will spend time talking about the ethical obligations of lawyers when it comes to use of technology and whether some of those obligations and the risks of modern technology might create an incentive for lawyers to make use of some outdated technology in the future as a way of better protecting client information.

And, we will cover it all in a format that had its heyday when cassette tapes were king – the “mixtape.”  Your presenter will curate the order of topics for you with any eye toward your three-hour listening experience.

If you are a Tennessee lawyer (or a lawyer who practices in a nearby state) interested in attending, all of the stops will take place in December 2017 and you can find them and register for them at these links: Memphis, Nashville, Knoxville, and Chattanooga. You can also register for video broadcasts of the program in Jackson and Johnson City.

In terms of reading recommendations, go check out yesterday’s post from Karen Rubin over at The Law for Lawyers Today on a follow up to an issue I’ve written about – the problems with protecting client confidentiality in a world in which border agents are demanding access to electronic devices and their contents.  Karen writes about a lawsuit filed by an organization near and dear to me that is challenging the practice.  Also go check out the latest blogpost from Avvo’s General Counsel, Josh King, about the intersection of First Amendment issues and the issuance of ethics opinions.  While I don’t know the details of the discussion at a New York event he references, I do know some of the players that were there and I can’t help but wonder if what Josh is interpreting as a bad take on the issue of constitutional challenges and certain concepts being settled actually stems from a more fundamental disagreement about whether saying lawyers cannot pay referral fees to non-lawyers is actually a restriction on commercial speech at all.  If not, then it doesn’t require intermediate scrutiny in terms of any First Amendment challenge but is merely reviewed on a rational review basis.  And, I’m guessing the point someone was trying to make was that others have tried and readily failed to say that states don’t have a sufficient interest in regulating the practice of law to prevent letting lawyers pay non-lawyers for making referrals.

Finally, recommendations for a more pleasurable way to spend your weekend. If you happen to have Netflix, I actually do (albeit sheepishly) recommend checking out the 13 Reasons Why series.  Less sheepishly, as to the efforts to bring the mixtape concept back, I wholeheartedly recommend exploring some of the online mixtapes that Lin Manuel Miranda, the creator of Hamilton has curated.  You can grab one of them at this link.

A three-part discussion of LA County Bar Op. 528

Though news to me much more recently, the LA County Bar Ass’n Prof’l Responsibility and Ethics Committee issued an  interesting ethics opinion back in April on a wrinkle that can arise in the tripartite relationship created in insurance defense situations.  You can read the whole thing here, but its summary is pretty to-the-point:

When an attorney engaged by an insurance carrier to defend the interests of an insured obtains information that could provide a basis for the insurance carrier to deny coverage, the attorney is ethically prohibited from disclosing that information to the insurance carrier.  In such a situation, the attorney must withdraw from the representation.

In honor of it being an opinion that hinges on California’s approach to the tripartite relationship, I want to divide this post into a three-part discussion of it.

Part the first: it certainly appears to get the answer right from a California perspective.  The answers appear clear and correct given California’s approach to the question of who is/are the client(s) when an attorney is retained by an insurance company to represent an insured.  While all jurisdictions have reached agreement on using the term “tripartite relationship,” to describe insurance defense arrangements, California is a jurisdiction that treats it as truly being one in which the lawyer involved has two clients, both the insured and the insurance company, and the duties to each are “equal and potentially competing.”  Working from that premise, then the particular scenario confronted in the opinion is certainly one that causes the ultimate result — the lawyer  being prohibited from telling one client the important information learned about the other client’s situation can no longer represent either client and has to move to withdraw.  Though the specific scenario is presented in a way that raises some immediate questions given that it involves the existence of a document and its authentication through a request for admission.  For example, does the opinion just assume both authenticity and that the insured would tell the lawyer not to let the insurer know?

Part the second:  While that is the correct result given California’s approach to the “who is the client?” issue, the outcome is more revealing for serving to demonstrate the folly of the approach California follows.  In Tennessee, for example, the tripartite situation exists but the lawyer only has one client, the insured.  The insurance company hiring the lawyer to defend the insured is not a client of the lawyer.  There are, of course, still thorny ethical issues that can arise (see below) but at least in the scenario in question, the lawyer’s path forward is both clear and one that permits continued representation of the lawyer’s only client and a focused effort to try to use the document to establish the statute of limitations defense.

Part the third:  On the California side of things, what in the world happens next in the scenario to keep things from just playing out the same way all over again?  Because the withdrawing lawyer will not be in a position to tell the insurance company the reason for the withdrawal, the whole scenario is likely to simply repeat itself when the insurance company retains a new lawyer to represent the insured.  That lawyer will eventually learn of the same information – be prohibited from disclosing to the insurance company — and then lather, rinse, and repeat.  Or, at least, that’s how it will go unless either the lawyer shirks the duty of disclosure to the insurance company or the insurance company figures out what is going on that is causing the withdrawals and goes ahead and makes a definitive coverage decision.  Either way, it is a particular example that paints a much more favorable picture of approaches to this relationship structure in which the lawyer’s only client is the insured.

(In fairness, the particular scenario examined in the opinion could be pretty readily spun out just a bit further to demonstrate how no system for this would be perfect by exploring what would happen if the the insured was trying to demand that the lawyer attempt to settle the case for the insured without disclosing to the insurer that the reason for seeking settlement prior to having to respond to the request for admission was to avoid defeating coverage.)

A kind note from a satisfied client

Since I’m seeing quite a few of these notes from satisfied clients on LinkedIn, Facebook, and other places in various formats, it seems like a good time to share a touching one I received recently.

Brian,

Thank you very much for the really great work and the successful outcome.  I really appreciate you and all that you do.  I’m sure I don’t even need to say this, but I’m certainly hopeful that you have the common sense not to try to publicly share my kind, private remarks to you about my case on any social media or anywhere else.  I figure you probably know not to do this without my consent because … well, you have that obligation of client confidentiality under RPC 1.6 and posting this as some sort of “atta-boy pat-on-the-back” which is really just a kind-of-but-not-really-all-that-subtle effort at marketing and touting your excellent work and client satisfaction certainly isn’t something that would be impliedly authorized in order to carry out the representation.

Plus, if you did that, it would be just kind of … I don’t know … crass (gauche?).  The mere act of sharing it to crow is one thing I guess, but then the way social media works you’re just crying out for people to comment and say, yeah you’re great and your clients are lucky to have you, or to “like” it and provide you further validation which certainly wasn’t why I sent you this kind note.   And even if the reason I’m so excited and grateful about your work is that the matter is over and now I’m just a former client, you still have confidentiality obligations to me under RPC 1.9 and if this had become generally known as would be necessary at that point, then you probably don’t need to do this because if you are going to get accolades they would come more naturally (right?), so, I mean, again.  How about you just not with the sharing this?

I mean I guess you could try to strip down any information anyone might use from my message to you to be able to figure out who I am or what the matter was, (because remember the Comment to RPC 1.6 talks about how even disclosures that don’t directly disclose confidential information are prohibited if the disclosures “could reasonably lead to the discovery of such information by a thid person”) but once you’ve done that it truly becomes so impersonal that it doesn’t really have the impact you were hoping for, and depending on the format you use, it might even look like you’ve maybe just made the whole thing up.

And, if you don’t do something like that, then you really are placing my confidentiality rights at risk because maybe you did remove everything you needed to in order to protect anyone in your network or circle of connections from being able to figure out who it was that would have sent this, but maybe you didn’t.  If you didn’t, I’m potentially not going to be very happy about that.  Plus, you might in your introductory paragraph of your social meda “update” say something about time and place or circumstances that actually does — combined with this note — let the cat out of the bag.

So, anyway, thanks for getting me that extension of time.  Sorry for being such a scold.

[name redacted]

These are the kind of messages that make being a lawyer worth it all.

Happy Friday!

It’s been a while.

Today I’m going to splice together two short discussions about topics that I haven’t mentioned in a while.  (And, for any fans of the podcast U Talking U2 to Me that are out there, you do have to read the title of this post to sound like the first words of this remake right here.)

I have not written in a while of an instance of a lawyer getting into disciplinary trouble over saying too much in the process of withdrawing from a client representation.  But it’s happened again, so it’s worth reminding people not to do that.

A week ago, the Ohio Supreme Court issued its opinion affirming a recommended one-year suspension (but with all of the suspension stayed) for a divorce lawyer who paired an affidavit with his motion to withdraw from a client’s matter.  The Ohio court succinctly laid out the problematic contents of the affidavit:

In the affidavit, he recounted communications he had had with
[the client] about the scope of his representation and his compensation, accused her of refusing to pay his agreed-upon fees “without cause,” and disclosed legal advice that he had given her. He also described [the client]’s discharge of him as “retaliatory” and alleged that it had “occurred because of [his] advice to her
concerning her objectionable and potentially illegal actions” relating to her ex-husband, which he characterized as “a problem similar to the one [he] experienced in [his] previous representation of her.”

The Ohio opinion not only cogently walks through why the lawyer’s attempted arguments that such disclosures were permitted to be made under exceptions set out in Ohio’s Rule 1.6(b) weren’t triggered, but also stresses another point too often overlooked by lawyers even when they might have justification to make certain disclosures:

Finally, even if [the lawyer] had reasonably believed that Prof.Cond.R. 1.6(b) permitted him to disclose [the client]’s allegedly fraudulent conduct, the means by which he chose to do so were improper. The comments to Prof.Cond.R. 1.6 clarify that when a lawyer believes that disclosure of client information is
necessary, the lawyer should first seek to persuade the client to take suitable action to obviate the need for the attorney’s disclosure and that a disclosure adverse to the client’s interest should be no greater than necessary to accomplish the purpose. Prof.Cond.R. 1.6, Comment 16. And “[i]f the disclosure will be made in connection with a judicial proceeding, the disclosure should be made in a manner that limits access to the information to the tribunal or other persons having a need to know it and appropriate protective orders or other arrangements should be sought by the lawyer to the fullest extent possible.” Id. Here, [the lawyer] failed to notify or communicate with [the client] about the allegations in his affidavit prior to filing it, and he did not attempt to limit public access to the document.

Another topic I haven’t mentioned in a while is ABA Model Rule 8.4(g) and how it’s playing in various states.  You will recall on at least one occasion when I did write about it, I mentioned how one of the ABA’s talking points was that somewhere north of 20 states already had black-letter rules in one form or fashion making acts of discrimination unethical.

About three weeks ago, one of those states, Vermont, just decided to scrap its version of such a rule and replace it with a Rule 8.4(g) that is substantially equivalent to the ABA Model Rule.  You can read the order of the Vermont Supreme Court adopting such a rule which will become effective on September 18, 2017 here.

Practicing law like it’s espionage. NYC Bar Formal Op. 2017-5

This week the New York City Bar has put out a very important, and I think very helpful, ethics opinion to address a real, practical concern for lawyers: what, if anything, can be done to protect confidential client information when traveling and crossing the border into the U.S.?

NY City Bar Formal Op. 2017-5 lays out the issue as follows:

An attorney traveling abroad with an electronic device (such as a smartphone, portable hard drive, USB “thumb drive,” or laptop) that contains clients’ confidential information plans to travel through a U.S. customs checkpoint or border crossing. During the crossing, a U.S. Customs and Border Protection (“CBP”) agent claiming lawful authority demands that the attorney “unlock” the
device and hand it to the agent so that it may be searched. The attorney has not obtained informed consent from each client whose information may be disclosed in this situation.

The opinion makes the point that with the change of administration such searches of travelers and their data has increased exponentially:

In recent years, searches of cell phones, laptop computers, and other electronic devices at border crossings into the U.S. have become increasingly frequent. According to the Department of Homeland Security, more than 5,000 devices were searched by
CBP agents in February 2017 alone. By way of comparison, that is about as many U.S. border searches of electronic devices as were undertaken in all of 2015, and just under a quarter of the
approximately 23,877 U.S. border searches of such devices undertaken in 2016.

The entirety of the opinion is worth a read to see how it offers its guidance about things a lawyer might do at the time of demanded search to protect client confidential information, and to hear its additional important message that lawyers have an obligation under RPC 1.4 to contact all affected clients after such a search takes place.

The aspect of it that I want to focus on, however, is to expand on some of the practical advice it offers as to things a lawyer could do before going through customs at the border to lower risk of disclosure.  Particularly, this passage:

The simplest option with the lowest risk is not to carry any confidential information across the border. One method of avoiding the electronic transportation of clients’ confidences involves using a blank “burner” phone or laptop, or otherwise removing confidential information from one’s carried device by deleting confidential files using software designed to securely delete information, turning off syncing of cloud services, signing out of web-based services, and/or uninstalling applications that provide local or remote access to confidential information prior
crossing to the border.  This is not to say that attorneys traveling with electronic devices must remove all electronically stored information. Some electronic information, including many
work-related emails, may contain no confidential information protected by Rule 1.6(a). Even when emails contain confidential information, the obligation to remove these emails from the
portable device before crossing the border depends on what is reasonable. As previously discussed, this turns on the ease or inconvenience of avoiding possession of confidential
information; the need to maintain access to the particular information and its sensitivity; the risk of a border inspection; and any other relevant considerations.

Now, as to that sentence about some work-related emails may not contain confidential information protected by RPC 1.6(a), it is worth remembering that New York has a different RPC 1.6(a) than most jurisdictions as it comes closer to retaining the old “confidences and secrets” regime.  In most other jurisdictions, where RPC 1.6(a) covers any information related to representation of a client, then it is difficult to imagine any work-related email involving client matters that wouldn’t be protected as confidential under RPC 1.6(a).

And, for that reason, when I’ve had to help people try to work through this question, my advice has been consistent with what the New York City opinion is saying albeit perhaps stated more succinctly – delete the mail application from your smart phone until you get through the border.  Then reinstall it.  As long as your work email is stored on a server somewhere, then you should have no loss of data at all.

The only inconvenience caused is that for the time between deleting it and crossing through the border, you will have no access to email. Using the balancing factors compared to the risk of the violation of client confidences, this seems like a small inconvenience.  Simply deleting the mail application for a period of time also has the benefit of not placing the lawyer in the position of trying to “reason” with customs officials and argue with them over whether they need to be doing what they are doing.

As to other kinds of electronic data, the solutions are not as simple as with email.  Text messages are particularly concerning as deleting those or removing access to those from your device for even a short period of time would result in the loss of that data.  Generally speaking, the New York City opinion does a good job at explaining some of a lawyer’s options.  One option that the opinion doesn’t exactly spend a lot of time discussing is obtaining the consent of clients in advance.  One potential way of doing so could be standardizing provisions into engagement letters with clients to address this topic.

This unfortunately appears to be a topic that will only become more difficult to deal with for lawyers who travel frequently.  As an example, within the last month there have been stories in the media that Homeland Security is contemplating requiring all reading material be removed from carry on and put in bins for the purpose of potential review by TSA agents.  Travel is already a stressful endeavor, but as a lawyer if that were to come to pass there would be almost no way to take anything on a flight to have or review without running a real risk of loss of client confidentiality.

Here’s something you don’t see every day: Brave Law Firm sues a competitor.

I’ve written here pretty frequently about issues of lawyer advertising.  I am too lazy today to try and go find links to other posts of mine in which I have stated that the overwhelming majority of disciplinary complaints filed over lawyer advertisements are filed by other lawyers.  Not always competitors, sometimes lawyers on the other side of the v, but just about always by lawyers.

While that remains true, it is rare that you ever see one lawyer or law firm sue another lawyer or law firm over advertising.  Earlier this month, one such lawsuit was filed.  That lawsuit is captioned Brave Law Firm, LLC v. Truck Accident Lawyers Group, Inc. et al. and was filed in federal court in Kansas. Here is link to the lawsuit (07914726612 brave law firm) if you desire to go read the whole thing.

There are lots of reasons why such lawsuit filings are infrequent.  The fact that in order to come up with a claim for damages a firm is likely going to have to demonstrate losing some clients to the other firm that can be traced to the advertisements in question is usually a pretty solid reason not to do it.  Instead, it is much simpler for a firm or lawyer who wants to complaint to file a disciplinary complaint because any rules infractions won’t turn on whether or not your firm was actually harmed by what the other lawyer was doing.

This suit though provides the basis for the roadmap that you’d see in terms of causes of action for such a lawsuit, including a Lanham Act claim and the relevant state law claim for tortious interference with a business relationship.

What makes the lawsuit a particularly interesting read, however, is that it levels its attacks against advertisements that defendant lawyer’s firms have made about past successes but it does not involve exactly the kind of complaints you often expect hear made about such things.  It does not undertake an assault on the advertisements as being misleading because advertising that you obtained a multi-million dollar recovery for a litigant might arguable mislead a potential client into thinking that such outcomes are achievable in their case as well.

Instead, it challenges the very veracity of the advertised outcomes themselves. The core allegations from the Complaint in this regard are as follows:

29. As one recent example, Defendants Brad Pistotnik and Brad Pistotnik Law, P.A. ran a series of advertisements touting their alleged results [NB: you can see an actual screenshot in the complaint itself but I have not included it]

30. The disclaimer at the bottom of the screen is consistent with the content of the entire ad and explicitly states that the “Amounts are gross recovery before fees and expenses.”

31. Instead, the actual “gross recovery” before fees and expenses was $387,018.00, or 16% of what was advertised.

32. This advertisement is literally false because there was no “gross recovery” of $2,400,000 by any person(s) in the case referenced in the advertisement, either before or after legal fees and expenses.

33. In addition, this advertisement is literally false as it advises the viewer that “Our past performances are no guarantee of future results” when, in fact, the “past performance” referenced in the advertisement never happened at all.

[snip]

35. As another example, all of the Defendants widely disseminated advertisements claiming that they obtained a jury verdict of $4,100,000 in a personal injury case.

36. This same advertisement also advised that the jury awarded a punitive damage award of $2,500,000 to the alleged client.

37. These advertisements were, and are, literally false as the “gross recovery” in that case was approximately $850,000.00 and the jury did not award any punitive damages to the plaintiffs.

38. Other advertisements ran by the Defendants featured other literally false “gross recoveries” via alleged verdicts including ones for $1,100,000, $845,000, and $401,000.00.

39. In addition to advertising alleged “gross recoveries” via jury verdicts that never actually happened, the Defendants also advertised purported settlements that never happened.

40. As one example, all of the Defendants advertised that they had settled a case for $9,000,000 on behalf of a former client.

41. This settlement did not happen as advertised because Defendant Bradley A. Pistotnik and the AAPLO had been terminated by the client prior to the settlement occurring and the settlement was actually obtained by another lawyer, apparently
in another state, but at various times each of the Defendants has claimed it as their own.

Obviously, if such facts could be proven, then disciplinary exposure for the lawyer responsible for such advertisements would be in the mix as well and, might I add, would be within the ambit of the kind of more limited, and more focused, ethics rules on lawyer advertising that are being advocated for adoption as a revision to the ABA Model Rules.

Given that the complaint reads like someone has provided the Brave Law Firm with some significant behind-the-scenes knowledge, it appears possible that there could be more interesting developments arising if this suit moves forward.  For example, I’d be interested to know if someone previously employed by one of the defendants now works for the plaintiff.  Unless the Brave firm got all of this information from people free to share it, then one would think potential counterclaims could get thrown into the mix in the future.

Coming to praise rather than bury – Colorado Formal Op. 129

It is almost three months old now, but I wanted to right a word or two about a really well-constructed ethics opinion issued in Colorado, not just because it is an opinion that deserves to be read, but also because it raises a not-quite-academic question about the phenomenon of captive law firms.

The opinion put out by the Colorado Bar Association Ethics Committee, Colorado Bar Formal Op. 129, is titled “Ethical Duties of Lawyer Paid by One Other Than the Client.”

Because questions of insurance defense representation raising similar issues were previously addressed by the Committee in Formal Opinion 91, this new opinion focuses on “ethical questions that can arise in third-party payer situations that do not involve insurance as a source of payment.”  (My not-quite-academic question is importantly a variation on that theme and the different approach often allowed for the tripartite relationship….)

The opinion helpfully catalogs quite a few such scenarios, like

  • friend or family paying for someone’s defense against criminal charges
  • parents paying for representation of children
  • corporations paying for attorney fees of an employee or officer
  • contractual indemnitor paying legal fees of an indemnitee

Those last two are ones, I suspect, that lawyers don’t think about as often in terms of making sure they know what is necessary for compliance with all of the pertinent ethics rules in their jurisdictions, which if the jurisdiction tracks the approaches under the ABA Model Rules as Colorado mostly does are RPCs 1.0(e), RPC 1.6, 1.7, 1.8(f), and 5.4(c).

The opinion does a good job at addressing in detail the various ethical questions, particularly on the dynamics that can arise where, for example, the person that will be paying the freight for the representation also happens to be a client of the attorney in some other matter and how compliance with just RPC 1.8(f) and 5.4(c) alone may not be enough because of the conflict issues raised by RPC 1.7.

The opinion merits a full read, but, if you only have 1 or 2 minutes to spare, then the best part is — II.  Practical Considerations – Discussions with the Third-Party Payer — which provides insightful, detailed, and potentially uncomfortable guidance about what really ought to happen in terms of communicating to the person who will be holding the checkbook who the client actually is and to whom the lawyer’s professional duties are owed, the limitations on the rights of the person making the payments, and the consequences of non-payment.

All of this then leads to my promised question, if these same principles are the ones that would have to be adhered to by a lawyer who represents insurance policyholders for an insurance company through a model in which the lawyer’s firm is a “captive” firm of that company, would there be any realistic way to comply?  Wouldn’t the process of obtaining the informed consent of that client always require having to make crystal-clear the significant financial interest that the lawyer has in keeping his/her only source of business happy?

I say that my question along these lines is not-quite-academic, because it is actually answered in Colorado by that earlier opinion, Formal Opinion 91 which was issued in 1993 but was updated with an addendum in 2013.  For readers in Colorado, I’m pretty sure the answer is that a lot of disclosure would have to be made, but that acquiring informed consent is feasible.

But, for readers not in Colorado, there may or may not be guidance quite as clear on the question.

Wisconsin rightly says no to name dropping without consent.

Earlier this week I criticized what I consider to be a pretty bad ethics opinion that was issued by Rhode Island.  To balance things out a bit, I want to write about an ethics opinion out of Wisconsin that gives the correct answer to its query – Wisconsin Formal Ethics Opinion EF-17-02.  That opinion correctly explains that because of the broad swath of confidentiality created by Rule 1.6, even the names of clients qualify as confidential information and, therefore, a lawyer can only disclose the name of a client if in advertisements or materials circulated for marketing or any other personal purpose if the client has given informed consent to the disclosure or some other exception within Rule 1.6 applies.

In issuing this opinion, Wisconsin had to withdraw an older opinion that provided guidance that the names of clients were not confidential information, Wisconsin Ethics Op. E-93-5.

Lots of lawyers (not just in Wisconsin) do not immediately grasp that this is the correct result — that the identity of a lawyer’s clients is itself confidential information.  A lot of times they don’t do so because doing so requires recognizing that there are a lot of things lawyers do that they really shouldn’t without getting their clients approval.   The Wisconsin opinion uses the example of talking about the fact of a representation as a cocktail party as an example, but there are less obvious ways this issue crops up.  Lawyers often don’t think twice about providing information about the details of their prior representations as part of responding to requests for proposals from insurance carriers as part of trying to become approved as panel counsel, for example.  Some lawyers will rationalize their approach on the basis that they are only disclosing information that can already be found in public records, but the Wisconsin opinion rightly makes the point that Rule 1.6 doesn’t remove the obligation of confidentiality for the lawyer merely because the information is available in a public record.

I’ve often attempted to explain the policy choice that Rule 1.6 enshrines for lawyers along these lines.  Imagine you are a family law attorney.  Now in order to file a divorce complaint for a particular client you are going to have to disclose in the filing a lot of details about your client’s life that they really hope no one finds out about.  Members of the public certainly could go down to the courthouse or go online if the court has electronic records and read all of the sordid details, but the client definitely hopes people don’t.  The ethics rules stake out a position – at least jurisdictions that have the ABA Model Rule version of Rule 1.6 do — that even though the lawyer has to put those things in the public complaint, lawyers are going to be charged with not talking about those things without the client’s consent to do so.  I then often ask lawyers to think about how a conversation would go if you called your client and asked them for permission to offer up the interesting anecdote about their situation.

The ramification of that policy choice ends up being that the rule errs on the side of confidential treatment even for things that many clients might not even expect could be confidential and that’s the reason, for example, that firms who circulate materials about representative clients, whether on their website or elsewhere, need to get client permission to do so.

While Wisconsin’s opinion is praiseworthy on its substance, Wisconsin should still get criticized for its insistence on shielding its formal ethics opinions from the public and providing access to them only for members of the Wisconsin Bar.  That’s a silly and outdated approach.

As a Tennessee lawyer, I only know about what the new Wisconsin opinion says because the fine folks at ABA/BNA reported on it.  Presumably, as they always do, they did a good job and, thus, if you go read their article here then you, like me, can know what Wisconsin had to say in construing its ABA Model Rule-based ethics rule on confidentiality.

Coming full circle, while I can’t stand the substantive outcome offered up by that Rhode Island opinion discussed earlier this week, at least Rhode Island allows for public access to the ethics opinions it issues.  For as long as there continue to be jurisdictions like Wisconsin that shield theirs from view, then offering public access will continue to deserve praise in Rhode Island and elsewhere.

Traps for the Unwary – Employer email systems

I like to think I am “warier” than the average attorney.  But a recent attorney-client privilege opinion out of New York was a good reminder that being “wary” can be much like being “woke.”  Even if you think you are, you probably aren’t as much as you think you are, and you can always be a bit more.

I’ve spoken and written in the past about the risk for lawyers’ clients to using an email system provided by an employer to communicate with them but my focus in doing so has largely involved assumptions about ways in which the nature of the representation could be one in which the client wouldn’t actually want to the employer to be able to access the communications.  For example, where the client and the employer would actually have contrary interests.

That type of scenario was the focus of the kind of warning ABA Formal Ethics Opinion 11-459 provided to lawyers who handle employment law matters:

This opinion addresses this question in the following hypothetical situation.
An employee has a computer assigned for her exclusive use in the course of her employment. The company’s written internal policy provides that the company has a right of access to all employees’ computers and e-mail files, including those relating to employees’ personal matters. Notwithstanding this policy, employees sometimes make personal use of their computers, including for the purpose of sending personal e-mail messages from their personal or office e-mail accounts. Recently, the employee retained a lawyer to give advice about a potential claim against her employer. When the lawyer knows or reasonably should know that the employee may use a workplace device or system to communicate with the lawyer, does the lawyer have an ethical duty to warn the employee about the risks this practice entails?

[snip]

The situation in the above hypothetical is a clear example of where failing to warn the client about the risks of e-mailing communications on the employer’s device can harm the client, because the employment dispute would give the employer a significant incentive to access the employee’s workplace e-mail and the employer’s internal policy would provide a justification for doing so. The obligation arises once the lawyer has reason to believe that there is a significant risk that the client will conduct e-mail communications with the lawyer using a workplace computer or other business device or via the employer’s e-mail account. This possibility ordinarily would be known, or reasonably should be known, at the outset of the representation. Given the nature of the representation–an employment dispute–the lawyer is on notice that the employer may search the client’s electronic correspondence. Therefore, the lawyer must ascertain, unless the answer is already obvious, whether there is a significant risk that the client will use a business e-mail address for personal communications or whether the employee’s position entails using an employer’s device.

With hindsight it certainly seems an obvious extension of the same point to be worried that the privilege is in jeopardy even when the underlying matter is not one in which client and the employer are adverse, yet I’ll admit that I was initially surprised to hear about through this (as always) quite good write up in the ABA/BNA Lawyers’ Manual on Professional Conduct and then dig in and read the Peerenboom v. Marvel Entertainment opinion itself (which is remarkable for its brevity) which found that Marvel’s CEO’s emails to his personal attorney on Marvel’s email system could not be shielded from discovery by a third party pursuing litigation against Marvel based on attorney-client privilege.  (Simultaneously also saying that no marital privilege existed either.)

The New York court explained that Marvel’s email policy provided that it “‘owned’ all emails on its system, and that the emails were ‘subject to all Company rules, policies, and conduct statements.’ Marvel ‘reserve[d] the right to audit networks and systems on a periodic basis to ensure [employees’] compliance’ with its email policies. It also ‘reserve[d] the right to access, review, copy and delete any messages or content,’ and ‘to disclose such messages to any party (inside or outside the Company).'”  Based on that, the court considered it easy to conclude that the CEO had no reasonable expectation of privacy in email communications to others using his Marvel email address.

Interestingly, but not surprisingly, the opinion does not reference or discuss in any fashion whether the CEO’s lawyer would still be obligated to treat all of the communications as confidential under the relevant ethics rules in New York(spoiler alert: he would).

Since I’ve got your webcam turned on remotely, show of hands if you’ve 100% of the time been making sure your clients’ email communications with you are only happening on a platform provided by someone other than their employer – like gmail, Yahoo, Bellsouth, or Comcast, or some other personal source of email access.

Yeah, me neither.

It certainly feels like a harsh result — particularly when you stop and think about how much email traffic takes place on email platforms that are company provided to all involved — but it can be a difficult outcome to argue against given the traditional strict construction of the privilege and how readily it can be waived as a result of exposure to anyone who is a stranger to the relationship.

The Peerenboom opinion also serves, however, as a good reminder of just how different the attorney-client privilege and the attorney work-product doctrine are and how differently they are waived.

Given the lack of evidence that Marvel viewed any of Perlmutter’s personal emails, and the lack of evidence of any other actual disclosure to a third party, Perlmutter’s use of Marvel’s email for personal purposes does not, standing alone, constitute a waiver of attorney work product protections (see People v Kozlowski . . .898 N.E.2d 891 . . . .

That point is one I’ve always found easiest to explain to lawyers with reference to another New York case (albeit one in federal court) involving a different very famous brand, Martha Stewart, United States v. Stewart, 287 F. Supp. 2d 461 (S.D.N.Y. 2003).  That was the case in which a New York federal court explained the different ramifications as to privilege waiver versus work product waiver flowing from Martha Stewart sharing her lawyer’s communications with her daughter.  While, because she was a stranger to the attorney-client relationship Stewart had with her lawyer and thus eviscerated the attorney-client privilege, as to work product:

By forwarding the e-mail to a family member, Stewart did not substantially increase the risk that the Government would gain access to materials prepared in anticipation of litigation. Martha Stewart stated in her affidavit that “Alexis is the closest person in the world to me. She is a valued confidante and counselor to me. In sharing the e-mail with her, I knew that she would keep its content strictly confidential.” Martha Stewart Aff. ¶ 6. Alexis Stewart stated that while she did not recall receiving the June 24 e-mail, she “never would have disclosed its contents.” Alexis Stewart Aff. ¶ 2. The disclosure affected neither side’s interests in this litigation: it did not evince an intent on Stewart’s part to relinquish work product immunity for the document, and it did not prejudice the Government by offering Stewart some litigation-based advantage. Accordingly, I hold that Stewart did not waive work product protection over the June 23 and 24 e-mails.

And, it seems fair to say that the more robust ability of the work-product doctrine to withstand waiver in a world in which people use their work email for a lot of things, allow me to echo Ms. Stewart to say.

That’s a good thing.