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.

Friday follow up: DC Bar counsel’s weird priorities

So (finally) I’ve made myself read a bit more into the DC situation — that for many people is now ancient history but was news to me — about what seems like something that definitely got some play in the news but ought to be a more nationally discussed scandal.  The weird penchant that DC Bar Counsel has displayed in recent years of going after not just lawyer whistleblowers but lawyers who provide advice and counsel to such lawyers.

When I started down this path originally, it was in connection with noting the discipline that was imposed against Adrianna Koeck over her sharing of certain documents she took with her upon leaving her position as in-house counsel for GE and sharing them with the media.  I’ve now had the chance to track down and read the admonition issued against Koeck’s former professor – Robert Blakey — and the recommended findings/charges against Koeck’s lawyer – Lynne Bernabei.  Having done so, I’m still left shaking my head and thinking the priorities demonstrated are bananas.

The Report and Recommendation of the Ad Hoc Hearing Committee contains information that can be referenced to succinctly distill the underlying scenario:

In her position with GE, Koeck served “as the interface between legal issues happening in Latin America, Brazil, Argentina, Chile…and the broader businesses spread across the globe….

[snip]

When Koeck joined [GE] in 2006, Koeck’s supervisor … brief her about [an investigation involving questions regarding value added tax issues in Brazil] and gave her the file concerning the matter.  Resolving these discrepancies [the VAT issues] became one of the “big issues” on Koeck’s plate….

In mid-November 2006, after eleven months of her working for GE… Human Resources advised Koeck that [her supervisor] did not want her to either stay with the company or move to another GE business.

Koeck was to be discharged at a November 29, 2006 meeting scheduled with a GE Human Resource employee, but immediately before that meeting, Koeck emailed the GE corporate Ombudsman… claiming, among other things, that she was being retaliated against “for participating in and reporting illegal activity engaged in by [GE] personnel.”  She alleged that, in the course of her compliance investigations, she had discovered tax fraud that GE had been perpetrating in Brazil.  She claimed that she was being terminated for raising concerns about the fraud to her supervisors.

[snip]

In late August 2007, Koeck sought the legal advice of her former Notre Dame Law School professor, G. Robert Blakey.  Koeck provided Blakey with some of the confidential documents that she had copied from her GE computer.  Blakey advised Koeck, “that the documents and information she had were not covered by the attorney-client relationship, because they fell within the crime/fraud exception.”

[snip]

Blakey confined his advice to Koeck to disclosures she would make to protect herself against potential criminal liability, and he recommended that she retain an additional attorney with expertise in employment law and whistleblower complaints.  Blakely gave Koeck the names of two firms, one of which was Bernabei & Wachtel, PLLC.

[snip]

On November 27, 2007, Koeck formally retained Bernabei’s firm to handle the SOX matter before the Department of Labor.

[snip]

After Koeck retained Bernabei on November 27, 2007, she and Blakey met and agreed that Koeck should inform the press about GE’s activities in Brazil.  Beginning in December 2007, Bernabei spoke with Koeck about having a press strategy and talking to the press.

[snip]

At some point in the fall of 2007, David Cay Johnston, a New York Times reporter at the time, received a telephone call from Blakey who asked if Johnson “might be interested in material about a long-running series of felonies committed by General Electric in another country.”  Thereafter, Johnson received “hundreds of pages of documents” from Blakey or Koeck.  Subsequently in January 2008, Johnston interviewed Koeck about the alleged tax fraud in Brazil and she provided additional documents in her possession regarding GE’s activities there.

Now as to Koeck and Bernabei, an interesting wrinkle learned from reading the source documents is that because the SOX proceedings were before the Department of Labor, the disciplinary body looked to the ABA Model Rules to apply to some extent, but entirely ignored any evaluation of Model Rule 3.6 on trial publicity that would appear, arguably, to permit disclosure of aspects of the proceedings to the media.  In my earlier post, I had noted that DC does not have a trial publicity rule that extends as far as the Model Rule, but this wrinkle, to me, further undermines the outcome in these matters.

But it is the details of Professor Blakey’s situation though that are laid out in his admonition letter – that bar counsel was aware of and took into account and yet still thought discipline was warranted that most astound me and leave me sticking to my guns about this all being bananas:

Ms. Koeck told you that she was concerned that GE had not and was not taking any action to stop the alleged ongoing fraud and that she was afraid that she might be personally liable for the activity because Brazilian law holds individuals, and not corporations, liable for tax fraud and criminal activity.  Ms. Koeck also said that she knew of money-laundering activities and described instances in which GE employees in South America had been murdered.  Based on your conversations with her, you were under the mistaken impression that Ms. Koeck was residing in Brazil.  You believed that she faced possible criminal liability if she did not report the alleged illegal and fraudulent activity.  You also believed that her physical safety was in danger.

[snip]

In advising Ms. Koeck to provide information and copies of GE’s documents to Mr. Johnston, you had in mind the evidentiary crime-fraud exception to the attorney-client privilege, but you did not give adequate consideration to the terms of Rule 1.6 of the Rules of Professional Conduct.

Now setting aside the fact that D.C.’s Rule 1.6(d) does provide a lawyer with an exception to permit disclosure that would at least have been arguably available to cover Koeck’s circumstances, they are managing to discipline a very distinguished lawyer on a basis of saying he assisted another lawyer in violating her ethical obligations rather than attempt to prove that the lawyer’s allegedly “bad advice” rose to a level of incompetence to justify discipline under Rule 1.1.

As a lawyer who represents lawyers, I find that to be a really quite scary turn of events.

My view on the whole situation isn’t exactly made any better after tooling around a bit on the Web regarding the disciplinary counsel involved in pursuing this matter, Hamilton P. Fox, III.  Mr. Fox appears to be the same gentleman who was on the wrong side of the exercise of abusive and over-the-top enforcement powers recently as well.  You can read about the saga involved in his arrest and his wife’s detention stemming from Mr. Fox being parked in a place he shouldn’t have been parked in. and the D.C. police appearing to significantly overreact to the situation presented here.  Assuming he is the same person, and I admit it is possible that there are two separate Hamilton P. Fox, III in D.C., but assuming he’s the same person and I think I’m on solid ground about that as other people have laid out before, you’d think the experience he went through would make him more sympathetic to wielding power irresponsibly and trying to only target those who deserve punishment, but apparently not.

As a lawyer who represents lawyers, I’ll try for now just to look on the bright side of things that I don’t practice in the District of Columbia instead of dwelling on just how chilling the actions of D.C. Bar Counsel might be on lawyers who do.

Whistling about where you work.

We appear to be living now in an era in which whistle blowers are going to be in the news (and perhaps be the news) more than ever.

Many who know me, know that I hold a pretty controversial opinion — Arrested Development is potentially the greatest television show in history.  For many years when I needed a fictional lawyer for my hypos at seminars, Barry Zuckerkorn, Bob Loblaw, and Wayne Jarvis were my go-to choices.  I could drop this blog and write a blog just about the genius of that show but (perhaps) even fewer people would read that, much like it never got its fair share of viewers.  One example of the simple brilliance of its writing though was its treatment of the issue of whistle blowers from the 20th episode of the first season, “Whistler’s Mother”:

Mr. Jordan: Listen, you’ve got the money now and you know my price. You don’t need a whistle blower around here.

Michael: Interesting choice of words, Mr. Jordan. He’s right, we don’t need a whistle blower. We need a building full of whistle blowers. Okay? Whistles. I want this place to be honest. That’s exactly why I had these made up for us. When you see something wrong…

[Whistle blows]

Michael: There you go. I want you to report it. I want you to…

[Whistle blows]

Michael: Exactly. Just like that. I want us to police ourselves vigilantly… Let’s wait till something’s actually happens, though.

[Whistles blowing]

Michael: All right… Good fun… Enough!

[twenty minutes later…]

Michael: 45, 46, 47…

Michael: Okay, there’s still three whistles left out there. Who’s got the whistles?

[Whistle blows]

Board Member #1: He kept one.

Michael: There’s a good example of whistle blowing, okay, but you’ve kept yours, so it’s hurting your case.

Board Member #1: I was in the bathroom when you asked for it back.

[Whistle blows]

Board Member #2: No, he wasn’t.

When lawyers (or those that work closely with lawyers) claim to be whistle blowers, the stakes tend to be even higher and the ethical issues for those lawyers and even for the lawyers that represent those lawyers are almost always complicated.  Even when answers seem straightforward, the tensions that exist between the public interest in preventing wrongdoing and the private interest in protecting confidentiality can lead to second-guessing as to where the right lines should be drawn.  When the traditional right of a client to fire their attorney for any reason or even no reason at all is wound into the mix, sometimes that readily clarifies how the tension is resolved  but not always.  It is a pretty good explanation for why there aren’t really many instances of outside counsel to companies or government entities serving as whistle blowers.  When the lawyer seeking to blow the whistle though is an in-house counsel, that absolute right to fire your attorney can be made to yield to public policy since the client is also the lawyer’s employer.

In the last couple of weeks, there have been three stories of interest making the rounds involving three high-profile cases – two of them in California and one in D.C. — where the classic tensions are playing out in differing ways.  The D.C. case is the longest running of the three and was actually pretty much believed to be over back in 2008 when the a former in-house counsel for GE’s Sarbanes-Oxley suit — which she supported using her former client’s confidential information — was dismissed as untimely filed.  The matter got renewed attention with a recent development of a disciplinary suspension recommendation against her.  One of the California matters is part of a roiling and unseemly dispute between the State Bar of California and the Chief Disciplinary Counsel that it fired within the last year.  The other California matter is currently in the middle of trial proceedings and involves the former General Counsel of Bio-Rad, Sanford Wadler, who filed suit back in 2015 alleging he was fired because he blew the whistle on his former employer’s violations of the Foreign Corrupt Practices Act.

The weird mess involving the California State Bar has been back in the news twice in succession.  First, there was a story that the former assistant to the former Executive Director, Joe Dunn, would not be permitted to use information she took with her on her laptop to pursue her claim that she too was fired in retaliation because of her knowledge of the same kinds of violations for which her boss has said he was terminated.  Then, even more recently, word came down that Dunn’s suit, which had previously been forced into arbitration, has been dismissed by the arbitrator.  The  former Bio-Rad General Counsel recently received a favorable ruling about his ability to use confidential client information to seek to prove his case despite what would otherwise be his ethical obligations of confidentiality.

At a primary level, the developments in the three cases underscore a few points.  One, none of them involve outside counsel.  Two, lawyers who claim to be terminated for whistleblowing are almost always going to be met with counter-allegations that that they just simply were bad at their job and were terminated for poor performance.  Three, the obligations lawyers owe to clients in terms of confidentiality not only complicate matters and raise the stakes but almost always create satellite disputes within the litigation about use of information that will make or break the case.

Rather than try to re-tread all of the details of the three matters (because you might care about all, none, or just some of them), I’m pretty sure through the links I have provided and a little Googling, you can immerse yourself as much as you want in available information about any of the three.

One piece of one of the matters though really piqued my interest and deserves a brief separate discussion — the detail of why the former GE attorney, Adriana Koeck, appears headed for a 30-day suspension and a lawyer representing her is also getting punished — going beyond the use of the confidential client information to support allegations in the complaint but providing some of that same information to the press.   One of the reasons the matter piqued my interest originally was that, here in TN, we have a version of RPC 3.6 on trial publicity that allows communications about the media regarding the contents of a complaint, for example.  D.C. has a much different version of that rule.

But, further digging is what further made me curious because D.C. really is a weird place, I guess.  Admittedly, at this point I have only read the Law360 article, but it seems bananas that a D.C. lawyer who assisted, Koeck, in providing documents referenced in her complaint to news reporters is being disciplined for doing so.  Koeck’s 30-day suspension seems to be explainable by the fact that she didn’t participate in the proceedings having already agreed to be suspended from practice by consent.  But punishing a lawyer for that lawyer seems Draconian.  Yet, and somehow I missed reading about this back in 2015, but even the prominent law professor who gave Koeck advice that the crime-fraud exception would apply to the documents also received disciplinary punishment for doing so — that seems even more Draconian.

In fairness, I’ll have to dig a bit further to educate myself on those proceedings to see if I can better explain all of that.

In the meantime, it does appear like Season 5 of Arrested Development is going to happen.  So yay for that.

 

Bad blogger doubles up on topics.

I had every intention of posting twice this week, but events, including being under the weather with general ick much of the week, undermined my intent.  So, this mediocre post will briefly hit two items.  And, with any luck, tie the two together in a way that makes this seem, in hindsight, the correct way to approach these topics.

The first, which is a potentially really big deal with respect to lawyer ethics rules and confidentiality, is a California decision expressly concluding that Sarbanes-Oxley preempts California’s ethics rule on confidentiality to the extent that California’s rule would prohibit an in-house counsel from disclosing confidential client information to pursue a wrongful discharge/retaliation claim.  California’s ethics rule on confidentiality is admittedly something of an odd duck as it is much more stringent than other jurisdictions and often appears to make it seem like California lawyers have to deal with disputes with their clients while having both hands tied behind their back.

The Bio-Rad Laboratories decision has fortunately been written about extensively already by a more prominent blogger who focuses on privilege issues.  You can read the discussion of Bio-Rad put together at Presnell on Privileges here.

Given all of the ways in which the corporate client had already waived privilege and confidentiality as discussed in the first 30 or so pages of the Bio-Rad opinion, the California court really didn’t need to weigh in on the preemption question, but the SEC filed an amicus to make clear its position and, being a district court decision, it isn’t surprising that the judge would offer up all the grounds to support its ruling.

The second is an Ohio advisory ethics opinion from early December 2016 that addressed issues associated with interpretation of RPC 5.5 and correctly explains why a lawyer not admitted in Ohio is not engaged in UPL, even if they are officed in Ohio, if pursuing an exclusively federal practice.  You can read Ohio Advisory Opinion 2016-9 here.  The Ohio opinion recognizes that the application of supremacy principles requires this conclusion.  There are, of course, a limited number of areas of law that a lawyer can practice that are exclusively federal, but they do exist.

The way these two items go together?  I’m not going to hold my breath, but Congress could address, through federal legislation, the problems associated with many aspects of the antiquated way in which various state bar or state regulatory entities address temporary practice in, or handling of matters touching on other state laws, under RPC 5.5 by treating things as unethical that really shouldn’t be in modern law practice — remember, for example, the silliness of the reprimand issued against a Colorado attorney by the Minnesota Supreme Court.

Two smart, practical ABA Ethics Opinions in a row. (And a bonus “beg to differ”.)

So, this week the ABA Standing Committee on Ethics and Professional Responsibility issued Formal Op. 476 addressing the need to protect client confidentiality when a lawyer seeks to withdraw for reasons involving the client’s failure to pay.  As explained below, it is a solid, practical opinion touching on a subject often overlooked by lawyers who are just trying to get out of a case with as little additional wasted time and expense.

It comes on the heels of an opinion from earlier this month about a lawyer’s obligation to hold fees to be shared with a lawyer from another firm separate from the lawyer’s own funds, ABA Formal Op. 475, which — despite what this solo and small-firm centric blogger wrote recently — is also a practical, well-constructed, and correct opinion.  I have to beg to differ with the My Shingle piece because it misses the boat on the primary type of situation the ABA Formal Op. 475 is vital to addressing — where lawyers in different firms are sharing fees in a contingency case.  When you come at the question from that perspective as a starting point, the answer offered in the opinion is clearly the only answer that can be correctly offered.  The My Shingle complaints are readily resolved by simply working out a better front-end arrangement with a client about payment to multiple lawyers.

(N.B. – it can’t just be coincidence that these two opinions appear to be the first two in which my friend, Doug Richmond, shows up as a member of the committee involved in the issuance.  Doug is an excellent lawyer – as of course are all the lawyers on the committee — but Doug also has a flair for delivering practical advice through clear, straightforward written work product that leaves the reader with an abiding sense that the conclusion reached was inescapable.)

ABA Formal Op. 476 also does a nice job in tackling and acknowledging the interplay between trial court and lawyer in these circumstances.  The opinion truly can be well summed up if you lack the time or wherewithal to read it in full by simply quoting its “Conclusion,” section:

In moving to withdraw as counsel in a civil proceeding based on a client’s failure to pay fees, a lawyer must consider the duty of confidentiality under Rule 1.6 and seek to reconcile that duty with the court’s need for sufficient information upon which to rule on the motion.  Similarly, in entertaining such a motion, a judge should consider the right of the movant’s client to confidentiality.  This requires cooperation between lawyers and judges.  If required by the court to support the motion with facts relating to the representation, a lawyer may, pursuant to Rule 1.6(b)(5), disclose only such confidential information as is reasonably necessary for the court to make an informed decision on the motion.

As it stands, I really only have one item of criticism regarding Formal Op. 476 at all.  Yet it feels almost like nitpickery … in that I would have liked to see the opinion manage more clearly to stress that the need for protecting client confidences and discretion in any disclosure to a court regarding withdrawal applies to more withdrawal situations than merely not being paid.  Far too many times than I care to count have I been sitting in a courtroom and listened to a lawyer in the context of seeking withdrawal in some matter on the docket ahead of my case say too much, unprompted about their communications (or lack thereof) with the client.  The opinion says it is limiting itself to the deadbeat client situation because in other situations other rules and principles may apply, but I think there would have been value in exploring the commonalities.

The only other thing I’d like to use ABA Formal Op. 476 as a springboard to say involves highlighting an aspect of the rule we have here in Tennessee and how it provides a very helpful, practical mechanism for doing what the ABA Opinion actually encourages when it says:  “Of course, where practicable, a lawyer should first seek to persuade the client to take suitable action to remove the need for the lawyer’s disclosure.”  In the context of the ABA Formal Op. that would appear to be either: (1) pay the lawyer; (2) hire other counsel that can substitute in lieu of withdrawal, or perhaps (3) fire the lawyer so that withdrawal becomes mandatory.

In Tennessee, we offer another option as our RPC 1.16(b) also lists as a trigger for discretionary ability to withdraw merely that the client has provided informed consent confirmed in writing to withdrawal by the lawyer.  Such a clear escape valve in the rule permits a lawyer – even in a situation in which the client has become a deadbeat – to be able to counsel the client and explain that if the client will go ahead and provide informed consent to withdrawal, and show that consent by signing the motion itself, it can go an exceedingly long way in eliminating the risk that the lawyer will have to say anything about the client’s failure to pay in response to an inquiry from the court.

ABA Ethics 20/20 revisions. New York adopts some; Tennessee proposal still pending.

Roy Simon, the Chair of the NY State Bar Association Committee on Standards on Attorney Conduct, was kind enough to include me on an email last week and, as a result, I learned that New York’s proposed adoption of certain aspects of the ABA Ethics 20/20 revisions was approved, effective January 1, 2017.  Back in 2015, New York adopted certain revisions to Comments to the Rules consistent with Ethics 20/20, but the proposal to change the rules themselves required Court action.  You can read the details of the revisions that were adopted in this PDF: order-adopting-black-letter-amendments-to-part-1200-eff-jan-1-2017.  As with many jurisdictions, New York has picked up the move to a black letter duty in Rule 1.6 to “make reasonable efforts” to safeguard confidential information but not adopted several of the other Ethics 20/20 black-letter revisions  For example, New York has not adopted the Ethics 20/20 revision to acknowledge in Rule 1.6 the need to disclose certain information in connection with lateral moves and mergers in order to comply with the concomitant duty to avoid conflicts under Rule 1.7.  The Comments adopted in 2015 in New York did pick up the Ethics 20/20 revisions to the Comment to Rule 1.6 on that topic, however.

The Comments adopted back in 2015 also included the new paragraphs in Rule 1.1 that are touted by many as establishing a duty of technological competence for lawyers.

I wrote back in the late part of the summer about the TBA’s petition to the Tennessee Supreme Court proposing that Tennessee adopt almost all of the ABA Ethics 20/20 revisions.  The deadline for public comments expired in November 2016, but not before our disciplinary body, the Board of Professional Responsibility, filed comments proposing a number of additional amendments to be layered upon the TBA proposal.  Several of the BPR proposals, all of which you can read here (starting at page 2 of the linked PDF), are puzzling.

The TBA filed a response/reply to the BPR’s comment arguing against the majority of the BPR proposals.  The TBA’s response is not yet up at the Court’s website, but as I was one of the signers of it, I happen to have a copy, and you can read it at this link:  petition-bpr-comment-response

This situation regarding the pending proposal is one of the 12 developments I’ll be covering, including a detailed discussion of some of the puzzling pieces of the BPR proposal, during this year’s Ethics Roadshow.

The first stop is this morning in Memphis, and I’ll be doing it again tomorrow in Nashville.

 

Lawyers and client confidentiality. Death does not part us.

It has been a while since I’ve written about a good ethics opinion.  There is a Maine opinion from a few months ago that fits the bill (and interestingly was actually posed by bar counsel in Maine apparently) but before I spend a little bit of time discussing it, I want to give context behind why it interested me enough to write about at this point when it actually came out in April.

Quite recently in Memphis, a very well-known lawyer with some involvement in pretty historic litigation in Memphis passed away.  While he had lived a long and storied life, the end came quickly as it does for many folks in that a stroke was followed within weeks by his passing.  The local daily paper here in Memphis did a very nice piece about the attorney’s passing (behind a modified sort of paywall) which, unfortunately, was marred just a little bit by a piece of misinformation that was included as a result of a quote from the deceased lawyer’s son (not a lawyer).

The quote in question was this:

“Attorney-client privilege no longer exists after the client passes away,” Mr. Caywood’s son said. “So Dad was able to testify for the prosecution. He was able to admit in court that Holly feared for her life.”

A tough spot for the reporter, of course.  It’s a good quote even if the first part is not true, but it is a shame for the paper of record in our city to put that information out there.  In Tennessee, as with most U.S. jurisdictions, the attorney-client privilege does survive the death of the client.  There is assuredly another explanation for why the lawyer was able to testify in the particular matter about the client after the client’s death even though the son may not have been aware of it.

With that now as context, let’s talk about that Maine ethics opinion — Opinion #213 from the Professional Ethics Commission of the Board of Overseers of the Bar in Maine, which makes the correct point that the ethical obligation of client confidentiality also survives death – whether that is the client’s death or the lawyer’s death.  It also makes for an interesting opinion to write about it from the perspective of my state, Tennessee, because Maine has a version of RPC 1.6 that is something of a blend between the older version of the rule on client confidentiality — under the Code of Professional Responsibility — that spoke in terms of protection for “confidences” and “secrets,” and the current version of the rule under the Model Rules of Professional Conduct approach that we have in Tennessee that extends more broadly to “information related to the representation of the client.”  Specifically, unlike Tennessee’s version of RPC 1.6(a) which reads like the ABA Model Rule, the Maine version provides that:

A lawyer shall not reveal a confidence or secret of a client unless, (i) the client gives informed consent; (ii) the lawyer reasonably believes that disclosure is authorized in order to carry out the representation; or (iii) the disclosure is permitted by paragraph (b).

The Maine version of the rule on confidentiality also defines the terms “confidence” and “secret:”

As used in Rule 1.6, “confidence” refers to information protected by the attorney-client privilege under applicable law, and “secret” refers to other information relating to the representation if there is a reasonable prospect that revealing the information will adversely affect a material interest of the client or if the client has instructed the lawyer not to reveal such information.

So the question being answered by the Maine opinion is: can a law firm, in possession of really, really, really old client files with documents of arguably historical value, donate those files to a library or an educational institution?  The short answer, if you don’t want to read any further, is “no,” not without client consent.  Given that the clients are long dead, then the opinion explains likely not without the lawyer slogging through files on a document-by-document basis.

In fact, if you do want to read further, you should probably just go read the Maine opinion because it has some eloquent bits, but if you don’t then I can’t come up with a better way to end this post then with the Conclusion of the Maine opinion:

In short, absent a reasonably reliable indication of informed consent or some other exception to the requirements of Rule 1.6 or a meaningful ability to determine that the materials held by the attorney were not client “confidences” or “secrets,” the attorney may not divulge the confidential materials in that attorney’s possession despite the passage of time and the potential historical significance of the materials.

Proposal to adopt Ethics 20/20 Revisions in Tennessee Put Out For Public Comment

Back in August 2012, the ABA House of Delegates approved revisions to the ABA Model Rules proposed by the ABA Ethics 20/20 Commission.  Very few of the proposed revisions included in the ABA Ethics 20/20 package are earth-shaking revisions, as many of them only involve change to language in the Comment accompanying certain rules.

The overall bent of the revisions, however, are to address aspects of the impact that technology has on modern law practice, highlight for lawyers their duty to, at the very least, keep abreast of and be competent regarding the types of technologies they use in their practice, and address a few other issues with good guidance regarding how aspects of globalization and the increased use of outsourcing interact with our ethical obligations.

More than twenty-five states have now adopted all or significant parts of the Ethics 20/20 package of changes.  Most recently Washington state has done this, with its revisions to become effective September 1, 2016.  Here in Tennessee, the TBA has filed a petition proposing adoption of almost all of those rule changes, and our Court has now put the TBA petition out for public comment with a November 17, 2016 comment deadline.  (There is also an Errata that the TBA put out to fix a redlining error made by the stupid Chair of the TBA Standing Committee on Ethics and Professional Responsibility when it was pointed out that we’d forgotten to pick up some changes to our RPC 5.5 that went into effect back in January 1, 2016.)

In my opinion, the most important, and most helpful, part of the Ethics 20/20 revisions takes place in RPC 1.6 by explicitly acknowledging the need to reconcile the duty of confidentiality with the duty to avoid conflicts of interest and the fact that, in reality, this means that lawyers need to be able to disclose some otherwise confidential information when looking at moving law firms or when firms are looking at proposed mergers in order to make sure to identify and address potential conflicts of interest under RPC 1.7.

The Tennessee proposed revisions would pick that change up.  Thus, if adopted, like the ABA Model, our RPC 1.6(b)(6) would now provide an exception to RPC 1.6(a) confidentilaity:

(6) to detect and resolve conflicts of interest arising from the lawyer’s change of employment or from changes in the composition or ownership of a firm, but only if the revealed information would not compromise the attorney-client privilege or otherwise prejudice the client.

If adopted, the TBA’s proposed revisions would also move the language about duties of safeguarding confidential information from the Comment to RPC 1.6 up into the black-letter of the rule itself.  Although our version of that rule would be place into a new RPC 1.6(d), instead of Rule 1.6(c) as in the ABA Model Rules because we already have a RPC 1.6(c) that deviates from the ABA Model Rules approach by imposing certain duties of mandatory disclosure of confidential information.

What we do not propose to pick up, however, are certain aspects of the Ethics 20/20 changes that were made to ABA Model Rule 4.4.  This is because, in Tennessee, we have a more robustly detailed version of  the rule that specifically addresses the duties of lawyers when they receive confidential information that they know or should reasonably know was inadvertently transmitted to them or that they know or should reasonably know was provided to them by someone not authorized to have the information in the first place.

Based on the November 2016 comment deadline, there is reason to be hopeful that these proposed revisions might become effective in Tennessee as early as January 1, 2017.  But, stay tuned.