Confidentiality and credit cards

I have written here in the past about a number of ways that a lawyer’s obligation of confidentiality imposes limits on their ability to do certain things that others can do and even as to subject matter where it seems highly unfair. Most frequently, this issue arises when talking with lawyers about what they can and cannot do when a client or former client takes to social media to criticize the lawyer’s work.

The problem for lawyers is that the attorney ethics rules do not treat a public disclosure by a client or former client as a waiver of the ethical obligation of confidentiality in the same way that other law treats such disclosures as waiving attorney-client privilege. Thus, while RPC 1.6 offers some exceptions that allow lawyers to disclose otherwise confidential information, those exceptions are cabined.

Because online dustups on social media are not “proceedings” and because even though they can be characterized as a “controversy” responding to criticism online does not involve establishing a “claim or defense” in the way the rule contemplates, most jurisdictions and ethics authorities agree that a lawyer cannot rely upon RPC 1.6(b) to disclose details about the representation of a client or former client in order to try to refute, for example, an unfair negative review online.

Another area, not as often discussed here or most other places, where this “unfairness” of RPC 1.6 can rear its head is for lawyers who accept credit card payments from clients. This unfairness also only comes to pass if the lawyer feels like they are being hard done by a dissatisfied client but can have very harsh results if the lawyer hasn’t addressed the issue in their engagement contract with the client.

If a client or former client initiates a chargeback with the credit card company to contest the lawyer’s ability to retain the funds previously paid, RPC 1.6 will also tie the lawyer’s hands in trying to provide and produce information that the credit card company will ask for in that process and can result in the lawyer getting shafted on payment and having to then decide whether to sue the client for the fees.

This will be the case because a dispute with a credit card company is also not a “proceeding” as contemplated by RPC 1.6(b) and, although certainly a controversy between the lawyer and the client, most authorities will also conclude that responding to inquiries from a credit card company does not involve establishing “a claim or defense” as the rule envisions.

So, what is a lawyer to do? Well, the ease and convenience of allowing clients to pay for attorney fees using credit cards is obviously a huge net-positive for many lawyers. So simply refusing to accept such payments is not a realistic answer. Lawyers also cannot try to get their clients to contractually agree that they will not dispute payment or never initiate a chargeback procedure. Any such provision would be likely to be viewed as draconian and unenforceable. But what lawyers can do is include a provision in any engagement contract that makes clear that in exchange for the lawyer agreeing to accept payment for services by credit card the client provides consent, in advance, that in the event of any dispute about that payment or the initiation of any chargeback efforts the lawyer may disclose to the credit card company whatever information they reasonably believe is necessary to demonstrate the validity of the services provided.

Another ethics opinion that wouldn’t be required if all lawyers were good (or at least chaotic-neutral) lawyers.

There has been A LOT of stuff going on this week in the world of legal ethics. I will refrain from dedicating an entire post to try to tie this plea I made in a post back in December 2020 to these two developments, here and here.

Instead, I want to talk a little bit about a recent ethics opinion that comes out of Washington state and that address an unfortunately recurring issue that has unfortunately been made the subject matter of multiple ethics opinions which unfortunately also conflict with each other.

The Washington State Bar Association has issued Advisory Opinion 202201 that addresses a question regarding whether a lawyer’s communication with a represented opposing party violated RPC 4.2 when the communication occurs through using “reply all” on an email thread where the opposing party’s lawyer cc’d their client on a communication to the lawyer.

The opinion gets to, what I continue to believe is the absolute correct answer, it depends. But the factors on which it depends help demonstrate why this is not something lawyers should be doing unless they have reached a prior understanding with the opposing lawyer in question. The opinion offers helpful bullet points listing these kinds of factors, including the prior course of conduct of the parties and counsel and the nature and subject matter of the communication at issue.

The conclusion of the opinion essentially involves offering “best practice” guidance:

To avoid a possible incorrect assumption of implied consent, the prudent practice is for all counsel involved in a matter to establish at the outset a procedure for determining under what circumstances the lawyers involved may “reply all” when a represented party is copied on an electronic communication.

What the opinion does not address is the flip side of the situation – does the first lawyer who decides to loop his client directly into a conversation by cc’ing them on an email to opposing counsel run the risk of an ethical violation in doing so. Given the trend in various ethics opinions addressing the obligations of the receiving lawyer, there seems to be a good measure of safety for the sending lawyer, but I continue to believe that there is almost never a good reason outside of very limited circumstances for proceeding in this fashion. Of course, not all jurisdictions take the same view as Washington. Last year, New Jersey issued an ethics opinion on the topic that concludes that implied consent is always present when the sending lawyer includes their client as a cc in the communication with the other lawyer.

Now transactional lawyers may be screaming at me here for my naivete, but, unless you are truly trying to mimic a situation where lawyers and clients are all sitting around the table and having a discussion, I don’t think including all of those parties on an email thread makes sense. (And, it’s 2022, if that’s what you are trying to do then use some other communications platform at this point whether that be Zoom or WebEx or Teams or something else.)

Otherwise, whatever you want your client to see, just forward the email thread to them separately. Doing anything else, absent a clear agreement among the counsel involved about whether communication is permitted is simply an unnecessary risk to take.

And, in reference to the title of this post, the unfortunate reasons opinions like this continue to be necessary in no small part comes from the fact that there are lawyers out there that will purposefully cc a client on a communication in hopes of trapping the other lawyer into allegedly unethical conduct by replying without removing the client from the thread and, likewise, there are lawyers out there that will take advantage of a reply all with the other lawyer’s client to talk about subject matter other than what the thread involves.

Don’t be those lawyers.

An ethics opinion for Valentine’s Day?

Roses are red.

Violets are blue.

California has a new ethics opinion about what to do when your client no longer remembers you.

I’m no Langston Hughes or Emily Dickinson. I’m not even at the level of say … Spike Milligan. And since it isn’t dated from what I can tell, I cannot be certain that this ethics opinion was actually issued on February 14, 2022, but it’s close enough to make it a little more fun to write about.

California is a large state. It has many, many, many lawyers. It has many aspects of its rules regulating the practice of law that are if not entirely bespoke, then certainly unusual to lawyers in other jurisdictions that hew more closely to ABA Model Rules. In some ways, that situation has changed a bit given that California adopted new ethics rules as of November 1, 2018, that attempt to, at least, track the numbering and format of the ABA Model Rules and, in many instances, the substance of those rules.

One rule that California did not adopt, however, was a version of ABA Model Rule 1.14 that addresses a lawyer’s obligations when dealing with a client with diminished capacity. Given the problems that can arise in such circumstances, having an actual rule to govern the lawyer’s obligations is critically important. The text of the Model Rule is not unwieldy and spans only three relatively svelte paragraphs. At its core, it stresses three things — (1) the lawyer’s duty is to “as far as reasonably possible” try to “maintain a normal client-lawyer relationship;” (2) when the lawyer has such a client and believes that the client is facing substantial risk of harm, physical, financial or otherwise, or can’t act in their own interest, then the lawyer is empowered to take certain steps to try to protect that client; and (3) if doing what is authorized to protect the client requires disclosing Rule 1.6 confidential information, then the lawyer can do so “but only to the extent reasonably necessary to protect the client’s interests.”

Even with that sort of streamlined guidance, navigating situations with clients when capacity questions exist, particularly when the client’s capacity appears to have declined since the beginning of the representation, can be very, very difficult.

One reason that California may have found it unpalatable to adopt Model Rule 1.14 (or something like it) might have been California’s historical willingness to go so far to protect client confidentiality and privilege that it can be difficult for lawyers sometimes to even confidently defend themselves against allegations that might easily be parried away if only they could disclose what they know about their client’s matter. I have not undertaken a “deep dive” of any sort into the deliberations in California over Model Rule 1.14, so I presume there are a variety of other reasons in play.

Nevertheless, because California didn’t adopt such a rule, the ethics opinion it has now issued to try to provide helpful, and definitive, guidance to California attorneys on this issue spans 20 pages and includes 31 footnotes. You can read the full opinion here.

For those who don’t mind being spoiled about the opinion, the short version of the guidance is nearly identical to what you would get out of Model Rule 1.14 except that instead of authorizing lawyers to disclose confidential information if necessary to help the client, the opinion appears to only let that happen if the lawyer has obtained advanced, informed consent from the client at a time the client still had the capacity to give consent.

The scams evolve. So too must lawyers.

I mentioned in a prior post that I was going to be fortunate enough to preside over the first in-person meeting of APRL in many, many moons last week.

I’ve also written in the past about APRL has begun working into its programming items we call “Fred Talks.” These are Focused. Rapid. Ethics. Discussions. Shorter and snappier presentations focused on an ethics issue or topic that is of interest but that might not justify a longer presentation than 10-12 minutes of time.

I think APRL’s program in Chicago went pretty well, and we avoided most technological glitches that might come from something of a hybridized program. It wasn’t a true hybrid as large parts of the program were simply available as a live stream to online attendees. But, I think it went fairly well.

At least it did up until it was time for me to present by own Fred Talk. That’s when things melted down. So, as promised to attendees, here is my Fred Talk on a new iteration of a potentially very devastating (and pretty sophisticated) scam that is targeting lawyers.

An ode (of sorts) to RPC 1.18 (but only as an example)

Today’s entry is something of a dodge in a way (I sort of wanted to pile on about this and make the point that it is a much sounder development than this was) and something of knocking down a hastily-created strawman in another respect. But what it mostly amounts to is pursuing a not-yet-fully-formed thesis that has been kicking around my brain for a bit.

The quick and dirty description of the thesis is: Ethics rules are tools; having the right one for the right situation saves a lot of time and effort, but it also protects lawyers and clients alike by providing certainty.

I keep coming back to this thesis of late because of a few instances of things arising in my practice (about which I can’t elaborate of course) as well as discussions I’ve been privy to at ethics conferences and presentations that have particularly focused on issues of civility in the practice of law and whether more should be done to establish rules to punish lawyers for conduct many (perhaps most) but certainly not all lawyers would view as uncivil.

In the discussions of civility, I keep returning to the notion that we already have certain specific rules that prohibit conduct of an uncivil nature and ought to focus on enforcing those rather than layering on other proposed solutions outside of the rules. Those rules are Model Rule 4.4(a) and Model Rule 8.4(d). Admittedly, 4.4(a) is much more supportive of my thesis as it is very clear about what it prohibits: a lawyer, who is representing a client, cannot “use means that have no substantial purpose other than to embarrass, delay, or burden a third person.” I am usually hard-pressed to hear of a situation that a lawyer is complaining of under the category of “incivility” that is both clearly deserving of punishment and not already prohibited by 4.4(a).

Offering even stronger support for exploring my thesis though is this recent ethics opinion from the Texas Center for Legal Ethics. Opinion 691 addresses this question: “Under the Texas Disciplinary Rules of Professional Conduct, when may a lawyer represent a client adverse to a former prospective client of the lawyer or another lawyer in the lawyer’s firm.” Examining that question, the opinion spends almost 5 pages to get to its four-paragraph conclusion.

Many of you reading this, likely are asking yourselves the same question I did when I saw news about the issuance of the opinion: Why is this a live question in Texas and why does it take so many pages to answer?

Because Texas has not adopted Model Rule 1.18, or any other specific rule, addressing a lawyer’s duties owed to prospective clients.

Fascinatingly, this Texas opinion ultimately offers an analysis that can still be distilled down to look a good bit like Model Rule 1.18 with really only one important difference: no non-consensual screening to avoid imputed disqualification. If this opinion is correct about how things should work in Texas, then Texas could just have adopted (and now could adopt) a rule that if I understand their fun numbering would be 1.17:

Duties to Prospective Client.

(a) A person who consults with a lawyer about the possibility of forming a client-lawyer relationship with respect to a matter is a prospective client.

(b) Even when no client-lawyer relationship ensues, a lawyer who has learned information from a prospective client shall not use or reveal that information except as Rule 1.05 would permit.

(c) A lawyer subject to paragraph (b) shall not represent a client with interests materially adverse to those of a prospective client in the same or a substantially related matter if the lawyer received information from the prospective client that could be significantly harmful to that person in the matter. If a lawyer is disqualified from representation under this paragraph, no lawyer in a firm with which that lawyer is associated may knowingly undertake or continue representation in such a matter.

And if Texas had just done that, then lawyers and prospective clients would be able to know clearly what is to be expected. Instead, lawyers and prospective clients (and others) will be left to wonder whether this opinion accurately describes what the other rules mean.

Terror in Tennessee.

So somehow, given the time of year and the absolute flood of horrific news we all get exposed to on a daily basis, you might not have heard the news that a suicide bomber detonated a large bomb in the middle of downtown Nashville, Tennessee on Christmas morning.

The bomb detonated from the inside of an RV killing the suicide bomber, hurting 3 others, and doing significant property and infrastructure damage. My firm’s Nashville office was located several blocks away but was fortunate to sustain no damage.

As the story has developed, there is now an interesting legal ethics angle (or 2) to the events. Here’s a link to The USA Today article should you want to read it first: Nashville police were warned of Christmas bomber in 2019, report shows (usatoday.com)

As this latest story indicates, the suicide bomber’s girlfriend provided some information to the Nashville police more than a year before the incident that can be viewed as cause for concern. According to the media report, and apparently the accompanying police report, present and involved in that conversation was a Nashville attorney who held himself out to law enforcement as being a lawyer for both the girlfriend and the man about whom she was making a report to law enforcement.

That doesn’t seem at all like the kind of joint representation that the lawyer could have believed — at that point — was a conflict that could still be waivable/consentable. If the news report is to be believed, the purpose of the interaction with law enforcement was to get the police to take several firearms away from the residence because the girlfriend was afraid of her boyfriend having access to them. The reporting indicates that the attorney also said of the boyfriend, Warner, that he “knows what he is doing and is capable of making a bomb.” That disclosure is itself problematic unless the lawyer either had Warner’s consent or could otherwise justify it under RPC 1.6 (about which more later) but, if nothing else, it seems pretty clearly to signify a very strong divergence of interests between the two common clients.

The story goes on to then reveal that the lawyer declined a request from law enforcement to allow a search of Warner’s RV indicating his client would not consent and doesn’t explain at all whether law enforcement tried to get a warrant for such a search.

The other ethics issue that this story prompts for discussion to one degree or another is the role of lawyers in circumstances where they are legitimately worried that their client may be about to harm themselves or others. I have no idea if, at the time of the events in the story (back in August 2019), the lawyer could be held to a standard of having a sufficient degree of knowledge of such an outcome, but it could turn out to be an interesting angle on this story if the only justification for feeling like that kind of disclosure could be made in the first place about the client was a concern for safety.

For those of you who are lawyers reading this in states that have an ABA Model Rule version of RPC 1.6, it is worth your while to know that Tennessee deviates and goes further. Our rules require a lawyer to reveal information – despite the ethical duty of confidentiality – “to the extent the lawyer reasonably believes disclosure is necessary: (1) to prevent reasonably certain death or substantial bodily harm.” Tenn. Sup. Ct. R. 8, RPC 1.6(c).

That’s all from me in the absolute horror show of the year that was 2020. I hope to see you all in 2021, and I hope that we all end up together in a better place during the coming year.

Three short burst updates

In case you haven’t yet “checked out” for the week to have what I hope is a makeshift, stay-at-home Thanksgiving banquet to kick-off your holiday weekend, here are four very short but, mostly timely, updates on topics of prior posts.

First, the Tennessee Supreme Court has put the TBA advertising rule revisions proposal out for public comment. You can access the order here. The deadline for public comments is March 12, 2021, so you can anticipate that if these revisions are adopted, they likely will not be going into effect prior to May or, more likely, June 2021 at the earliest.

Second, despite the fact that most if not all of the “battleground” states have certified their results, the outgoing, impeached, one-term President’s lawyers do not seem to be relenting on their insistence on court filings and out-of-court false statements. The ongoing behavior has spurred quite a few prominent voices in legal ethics to speak out on the issues, but that there appear to be clear violations and also the reasons that there will quite likely never be any discipline imposed. You can read a couple of different articles surveying the landscape here, and here. Also, as a slightly more direct follow up to my post from late last week, you can read this article from Reuters that includes some interactions with yours truly.

Third, and technically not what would typically qualify as an “update,” nor possibly even a “short burst,” lawyers continue to have difficulty navigating protecting client confidences when seeking to withdraw from representations. I haven’t written about any instances of lawyers getting disciplined for such missteps in a long time, but there now is an extremely recent example of a lawyer being publicly censured for exactly that, and it arises from my home state. You can read the press release about the public censure here.

The press release, unsurprisingly, does not contain much in the way of details beyond indicating that the problematic conduct was “negligently disclosing confidential client information in an affidavit filed with [a] Motion to Withdraw from representation.” In fact, it would be horrible if too many details were included in such a press release when the underlying problem was the lawyer disclosing too much information in connection with seeking withdrawal.

What is a little surprising is that this discipline came about only have a full trial before a hearing panel. If you’d really like to know more of the full story, you can read the Hearing Panel judgment after the trial at the link below. (Bad link replaced with PDF download.)

For those readers who may be thinking to themselves, sure but I would never make that kind of error, the lawyer in question has been licensed in Tennessee for nearly 50 years. So maybe you shouldn’t be so confident?

But, for the benefit of those same readers, the lawyer in question also made clear in his efforts to defend himself in the proceedings (a fact that likely explains the need for the trial) that he did not comprehend (even after 50 years of practice) that the ethics rules impose an obligation of confidentiality that is much broader than the attorney-client privilege.

So, maybe you can be confident?

Panzerotti ≠ calzone : NY confidentiality ≠ TN confidentiality

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

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

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

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

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

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

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

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

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

In Tennessee, that rule reads as follows:

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

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

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

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

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

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

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

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

There will be content.

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

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

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

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

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

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

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

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

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

Lawyers continue to struggle with tackling online negative reviews.

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

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

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

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

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

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

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

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

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

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

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

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