A former lawyer of Donald Trump speaks … but shouldn’t have

A long while ago I wrote about a lawyer’s public interview that should never have happened.  Here is a lawyer’s op-ed piece that should never happened, you can read the op-ed if you haven’t already at  this link at The Huffington Post.  Now, because such a disclaimer seems to be in order and beneficial to some extent, I say this as someone who contributed to Senator Sanders campaign during the primary and who has contributed to Secretary of State Clinton’s campaign more recently, but here is a lawyer publicly saying everything people who think Trump’s candidacy represents an existential threat to democracy  should want to hear injected into our current political discourse — but the introductory portions of it, the things that the author attempts to use to give it credence and relevance as someone with real insight into the person being criticized, demonstrate that, at least in this version, the piece should never have been written at all.

Taken at face value, the writer is a former lawyer of Trump’s and he appears to be licensed in a jurisdiction, New Jersey, that (like most jurisdictions) provides for a continuing obligation of confidentiality owed to former clients.  New Jersey’s RPC 1.9(c) provides:

(c) A lawyer who has formerly represented a client in a matter or whose present or former firm has formerly represented a client in a matter shall not thereafter: (1) use information relating to the representation to the disadvantage of the former client except as these Rules would permit or require with respect to a client, or when the information has become generally known; or (2) reveal information relating to the representation except as these Rules would permit or require with respect to a client.

Thus, the first few paragraphs of the piece set this lawyer up for trouble in terms of allegations that what he is doing — and to some extent what he clearly does (the limo conversation and one or two other conversations) — is breaching his duty of confidentiality to a former client.  The statements about things his former client said to him are certain being used to the former client’s disadvantage and certainly are not generally known pieces of information.

This lawyer needed both a good editor and a good legal adviser who could have told him that with some massaging and editing at the outset he could have still written the lengthy 4,000 words or so about the 20 problems with a lead in that acknowledged that he was obligated by ethics rules not to disclose anything he learned during the representation and that everything he is writing about is information he worked hard to track down through publicly-available sources but ….

Actually, once you remove that piece of it – there is no more need for this gentleman’s voice in the public discourse (other than the stakes involved in the electoral process).  It particularly seems unwise for this lawyer to have taken on this risk, particularly given the well-known litigious nature of the target of the column — who actually, for example, had a lawyer send a letter to Trump’s co-author of The Art of the Deal demanding a return of all royalties now that the co-author is speaking out negatively about Trump despite the fact that book came out almost 30 years ago.

California (where this gentleman is not licensed) just put out a formal ethics opinion driving home the point that its confidentiality requirements adhere even to information that has been publicly disclosed.  Worth noting is even under that opinion, California would appear to signal that the rest of this piece, the just-one-more-voice detailing criticisms from publicly-available sources would not be a violation of duties to the former client, as the California opinion explains about the lawyer’s perhaps unnecessary and unwise but not unethical disclosures about a former client’s arrest for DUI at a time after the representation had ceased.  The New Jersey Supreme Court, earlier this month, refrained from disciplining a NJ lawyer over the disclosure of confidential facts of a current client representation that were already public, so maybe this guy will get a pass?

More on that Persuader Rule decision out of Texas

I’ve written a good bit here about the problems that the Department of Labor’s proposed new Persuader Rule interpretations present and, most recently, wrote a little bit about a Texas federal judge’s ruling issuing a preliminary injunction about the rule going into effect.

My discussion of that ruling back at the end of June 2016 pales in comparison to the wonderful, and wonderfully thorough, piece that the fine folks at the ABA/BNA Lawyers’ Manual on Professional Conduct have put out today.  I’m going to start sounding like a broken record but the reporter who produced this treatment of the case, Joan Rogers, did a wonderful job with the subject-matter.  She really dug into the ruling, the history, and the implications and competing positions.  She was also kind enough to include a little bit of my thoughts into her piece as well, for which I’m truly grateful.

Bloomberg/BNA has made the story available outside of their subscription paywall, so you can go read the whole thing at this link.

Astonished and admonished.

So, on days like today, it is very difficult to have a forum (even one as small as this one) and not talk about truly important problems plaguing society, but no one comes here for my thoughts on those things so I’ll refrain.

Staying in my lane, here is another example of a problem lawyers are still having trouble grasping.  The exceptions to client confidentiality under RPC 1.6 (which can also be looked to as a way of justifying disclosure of information about representation of a former client under RPC 1.9) are not likely to give you permission to debate a dissatisfied client publicly, online.  This latest example of the problems arising for a lawyer who does so comes via the fine folks at the Legal Profession Blog who first wrote about it yesterday.

A D.C. lawyer has been informally admonished for trying to refute allegations published on the web by a former client.  The former client was complaining about overbilling, and the lawyer’s allegedly negligent/improper handling of a mediation for her.  Even though the DC Office of Disciplinary Counsel ultimately cleared the lawyer of the alleged violations as to fees and actual handling of the matter, the informal admonishment was in order because of what the lawyer disclosed online in responding to the former client’s complaints.

As the informal admonishment letter to the lawyer explains:

We do find, however, that in including detailed information about your client and the client’s case in your responses to her website postings, you violated your obligations under Rule 1.6 to protect her confidences and secrets — obligations that continued after your attorney-client relationship ended.  See Rule 1.6(g).  The information that you included in your responses to the client’s posts included information about the client and the client’s case that were protected under Rule 1.6.  Although you did not refer to the client by name, you included the name of the client’s employer, the dates on which certain events occurred, and other detailed information that could lead back to your former client.  You did not have the client’s consent to publish or disclose this information.  Nor did your disclosures fall within any of the exceptions to Rule 1.6, including the exception under 1.6(e)(3) that permits a lawyer to use or reveal client confidences or secrets “to the extent reasonably necessary to establish a defense to a criminal charge, disciplinary charge, or civil claim, formally instituted against the lawyer . . .” (emphasis supplied).

Now, D.C.’s version of the Rule 1.6 “self-defense” exception makes the inability to do what this lawyer did more clear cut than in many other jurisdictions.  (It also didn’t help this lawyer’s cause, as the letter goes on to explain, that during the disciplinary investigation process, he went back to the online site to post information claiming he’d been exonerated — conduct the letter indicates was a violation of Rule 8.4(c) and that violation is wrapped into the admonishment as well.)  But even in jurisdictions that do not have the “formally instituted” language of D.C., lawyers face an uphill climb trying to respond to online complaints of former clients as I’ve mentioned before a time or two.

It is also worth remembering that, in most jurisdictions, unlike the “confidences and secrets” language still used in D.C., RPC 1.6 extends to any information regarding the representation of a client.  Remembering that, and the fact that a paragraph of the Comment to the rule most places alerts lawyers that the prohibition on revealing information “also applies to disclosures by a lawyer that do not in themselves reveal protected information but could reasonably lead to the discovery of such information by a third person.”

Although the Legal Profession Blog has a bad link, you can get the full letter to the D.C. lawyer here.  And, candidly, I’m a bit astonished by that.  Here, in Tennessee, this kind of informal discipline is private.  Not so in D.C.  Learn something new every day.

(Updated – it was brought to my attention that I also had provided a bad link to the letter.  I’ve corrected the link.  Apologies.)

Two updates – one persuasive, one not so much

An important development for labor lawyers that I delved into a bit recently here has now been put on hold.  I managed to point out that there would be significant efforts aimed through litigation at stopping the rule from ever going into effect.  Yesterday, a Texas federal district court has stayed the Department of Labor’s new “Persuader” rule from going into effect on July 1, 2016.  You can read the full 90-page order here or, if you’d prefer the cliffnotes, this ABA Journal online piece does a fine job as always.  Beyond the substantial concerns that exist about how the rule would impact the giving of legal advice and the seeking of legal counsel by employers in connection with union organizing efforts, the crux of things boils down to whether the Department of Labor exceeded its rule-making authority.

Speaking of people who are union members, some of you will recall that I’ve managed to write twice before, using Johnny Manziel as an example, about how much better off professional athletes can be if they would retain the services of an actual lawyer to represent them because of the benefits they would obtain from the obligations lawyers have to treat all information related to the representation of their clients as confidential.  Well, that didn’t work out so well.  We learned this week that Manziel’s lawyer handling his criminal matter managed to send a rather lengthy text to the Associated Press rather than to the prosecutor with whom he was intending to communicate.  On the upside, this time the lawyer quit rather than firing Manziel as his past agents did, but I’m starting to think that Manziel is just cursed at this point.

Unfortunately, this act of preventable negligence on the part of Manziel’s lawyer will, of course, spur some folks to argue that this is further proof that lawyers should never use text messaging to talk to a client or someone else involved in a matter about a client’s matter.  Do not count me among those folks as I think such advice is entirely unrealistic in 2016.  The only lesson to be learned is the old-fashioned, but harder to swallow, advice about being careful, cautious, and deliberate in all of your communications.

 

Radiolab does the “buried bodies” case

Over the last couple of years, like a lot of other people, I have gotten very into listening to podcasts on my way to and from work and on car trips.  Most of what I spend my time listening to is in the comedic vein (MBMBAM, Judge John Hodgman, You Talking U2 to Me), but I listen to some other shows that don’t fall into that category, one of which is Radiolab.  My 11-year old son really, really likes Radiolab, which helps a good bit too in terms of finding time to listen.

Radiolab is predominantly geared toward exploring scientific issues, but the latest episode of the podcast takes on the famous “Buried Bodies” case.  That case serves often, especially, in legal ethics courses taught in law school as the starkest example of what lawyers have to be prepared to do in order to fulfill their ethical obligation of confidentiality to clients.  It is certainly the height of absurdity for me to think I can drive any traffic to Radiolab, but if you don’t otherwise know how to get to it, you can download the episode from this link.

For those of us who have a law practice that involves representing and advising lawyers, or those who follow legal ethics issues generally, the only truly new aspect of the story in the podcast is getting to hear from the mother of one of the missing girls.  I will not explicitly spoil that for anyone, but you probably don’t need many guesses to answer the question of what she thinks of the duty of confidentiality.

Tennessee,like many other jurisdictions, casts the net of lawyer-client confidentiality broadly to cover all “information relating to the representation of a client.”  We differ from a number of other jurisdictions, however, in that we require lawyers to disclose confidential information “to prevent reasonably certain death or substantial bodily harm,” rather than merely permit a lawyer to make a disclosure for that purpose as the ABA Model Rules do.  But, as Radiolab covers well, that kind of provision does not offer a lawyer a way out when the information relates not only to the representation of the client but to people who are already dead.

RPC 1.6 confidentiality is a concept that is difficult enough for some lawyers to grasp given how broadly the net is cast, and that it makes no explicit exception for information that has already been made public, so it is no surprise when regular people do not understand its full scope.

Yet, it doesn’t help when, in many respects, the duty is so frequently cast aside on mundane matters in that lawyers talk publicly and post publicly about aspects of their representation of clients undoubtedly without having gotten their client’s consent to do so.  I think how confidentiality continues or changes over the next decade or so ought to be fascinating to watch given the differences that already exist between generations with respect to social media and how that impacts whether you do or do not share everything about your life online.

Three short technology stories for a Tuesday

Throwback Thursday is definitely a thing all over the World Wide Web it seems, but maybe Tech Tuesday ought to be a thing?  Though, I guess, for lawyers focusing on technology has to be an every day affair.

Like multitudes of others, I wrote a little bit recently about the Panama Papers and the Mossack Fonseca data breach fiasco.  Fortune now has an article online about a Wired U.K. story that casts a harsh light on the electronic security measures that the Panamanian firm had in place.  Blurbs like these

Mosseck Fonseca’s client portal, according to Wired, runs on a version of Drupal last updated in 2013, and vulnerable to an array of attacks, including one that would allow attackers to execute commands on the site. Another weakness allows access to the site’s back end just by guessing the right web address.

Just as bad is the firm’s webmail portal, which runs Microsoft Outlook Web Access, and hasn’t been updated since 2009. The firm also did not encrypt its emails. As one expert speaking to Wired put it, “They seem to have been caught in a time warp.”

sound very bad when you are talking about a firm that trafficked almost exclusively in “highly sensitive financial information.”  I suspect though that there are lots of other lawyers out there that are hopeful that their technology arrangements will never be subjected to even half as much scrutiny.

One lawyer who is in the middle of a highly public examination of their choices in technology is the lawyer at the heart of this story yesterday.  The lawyer has been sued by her former clients over a theft from them of $1.9 million resulting from hacking of the lawyer’s email account.  The couple had hired the attorney to represent them in the purchase of a nearly $20 million co-op apartment.  Luckily, it appears that the clients figured out what was going on even before the lawyer did and were able to recover almost all of the $1.9 million that was to be the down payment but was wired to the fraudsters.  The lawyer — and you ought to brace yourself here (though I admittedly know lawyers who still use this service) — was using an AOL email account for her real estate law practice.

The lawsuit contends that AOL accounts are particularly vulnerable to hacking and that the hacking was what let the cybercriminals know when certain transactions were going to take place, but as the article makes clear there were other opportunities for the lawyer to realize something was amiss:

It accuses Doran of forwarding bogus emails from the hackers — who were impersonating the seller of the apartment’s attorney — about payments from the Millards without confirming their authenticity last December. The name of the seller’s attorney was misspelled in the email which should have been a tip off that something was amiss.

Finally, the usually on-point Karen Rubin has a well-done post over at The Law For Lawyers Today about a relatively fortunate Oklahoma lawyer who managed to avoid full reciprocal discipline over his inability to figure out how to e-file in bankruptcy court.

The Oklahoma lawyer was permanently suspended by the Western District of Oklahoma bankruptcy court from ever practicing before it again, but the Oklahoma Supreme Court hit him only with a public censure.  Given the current rhetoric surrounding the practice of law and the demands everyone appears to assume lawyers absolutely must satisfy when it comes to using technology, it is pretty startling to read a state supreme court, in that case Oklahoma’s, issue an opinion in a lawyer discipline case that can be read to seem to minimize the obligation to be technologically competent.  But, in fairness, unless the Oklahoma Supreme Court was going to be willing to disbar the lawyer in question — which would seem supremely harsh — then any discipline imposed through reciprocal channels was going to be less than that meted out by the federal bankruptcy court and a public censure sounds about right to me.

 

Three updates for the Thursday before Tax Day

Back in September, I wrote a bit about some different perspectives on the purpose of lawyer regulation and commented on a story that discussed a proposal that Colorado had in the works.  On April 7, 2016, The Colorado Supreme Court took action to adopt a new “Preamble” that serves as the introduction to its rules governing admission of lawyers to the bar, its attorney ethics rules, and its disciplinary procedural rules.  You can read the language of what was adopted by the Colorado Supreme Court here.  It should come as no surprise that the list of objectives does not including anything that could be construed as obviously anti-competitive, but it also creates a framework for interesting conversation about whether there are particular ethics rules in Colorado that can actually be viewed as unnecessarily standing in the way of furtherance of one or more of the Colorado objectives.

A second shoe has now fallen with respect to the Dentons’ disqualification situation in the proceedings before the U.S. International Trade Commission that prompted my two part piece on Swiss Vereins back in July 2015 (here and here).  RevoLaze – the client from which Denton was disqualified from continuing by the ALJ’s ruling, has filed a legal malpractice suit against Dentons earlier this month over that conflict and the damages it says it has suffered as a result of its law firm getting disqualified.  The suit seeks in excess of $50 million from Dentons.  After Dentons was disqualified, The Gap, another client of Dentons but that was being represented by other lawyers in the ITC matter, ended up settling its patent suit back in August 2015.  RevoLaze is claiming that it ended up having to settle for far less than the case was worth after Dentons was disqualified and it had to get new counsel involved.  If you are a Law360 subscriber you can read a bit about the suit (and actually get access to a copy of the complaint) here.

Last, and saddest, Johnny Manziel is back in the news in a big way mostly because he has been fired by another agent.  Back when Manziel’s prior agent issued a press release about firing Manziel in February, I wrote this piece about how baffled I get when athletes opt not to hire agents who are also lawyers.  Because Manziel still doesn’t have an agent who is a lawyer, his latest agent issued a public statement about how he’d dropped Manziel but given him 5 days to take action and enter a treatment facility:

“I have informed him that if he takes the immediate steps I have outlined for him that I will rescind the termination and continue to represent him,” Rosenhaus said. “Otherwise the termination will become permanent. There is a five-day window for me to rescind the termination. I’m hoping he takes the necessary steps to get his life back on track.”

Had Manziel secured a lawyer-agent, there is no way the lawyer-agent would have been able to make that kind of public ultimatum without violating client confidentiality under RPC 1.6.  And, it seems like the Rosenhaus ultimatum news managed to also break the news that LA police were investigating Manziel’s involvement as a passenger in a hit and run, which is now serving a further platform of negative publicity for a guy that sure doesn’t seem to need any help generating negative publicity on his own.

Panama Papers – a worst case scenario for the development of cyber liability law for law firms?

It’s an old adage that bad facts make bad law.

In the last few weeks, a good number of pieces were written focusing heightened attention on an issue that many lawyers were already stewing about . . . technological vulnerabilities arising from how lawyers and law firms use (and don’t use) technology.  Most of these stories, like this one and this one, used the news of hackers targeting particular large law firms as the jumping off point for the discussion.

I happen to think that the question of how law firms should address the topic of cyber security is actually a fairly complex one.  Given the vast amount of sensitive information that law firms handle and store, there are obvious strong arguments to make that law firms should have to have the highest level of cyber security in measures in place in all respects.  Yet, I think there are also legitimate arguments that certain aspects of data privacy and data breach laws should not apply in the same fashion to law firms as they do to other businesses.  In the event of a breach of a law firm’s electronic records, the mere act of publicly communicating about it to more than those whose information was known to be compromised, for example, could actually result in certain circumstances in additional harm to clients in the form of breaches of attorney-client confidentiality or privilege.

The last thing lawyers and law firms needed as something that might drive the needle in one direction or another was for the absolute wrong kind of high-profile situation involving a law firm hack to be the focus of attention and in the forefront of any discussion about what the standard of care ought to require of lawyers and law firms in terms of cyber security.  Yet, the last thing lawyers needed arrived: the Mossack Fonseca data breach in Panama, now known as the Panama Papers.

This obscure but remarkably large and incredibly well-connected (or shady depending on your perspective) law firm founded in Panama has been victimized by a hack of some sort resulting in  some 2.6 terabytes of documents to have been improperly accessed and then leaked to the International Consortium of Investigative Journalists.  The vast amount of otherwise confidential information (if you want to visualize how much 2.6 terabytes, imagine you had 1 terabyte sitting on your desk … now think what that would look like if you had another one and then like 60% of another one.  😉 ) that has come out has led to a deluge of news stories about the maneuverings of the global rich to hide their money offshore to avoid taxes or scrutiny or both.

The latest story I’ve seen is this one in The Guardian that focuses a good bit on the firm itself.  It also offers a nice snapshot of the nature of the documents and information leaked after the breach:

The company’s leaked internal database gives some idea of the massive scale of these international operations, many of them perfectly legal. The 11.5m documents include shareholder registers, bank statements, emails from lawyers and accountants, passport scans and contracts. Much of it legal, if hidden.

Most of the media attention to this story has focused on the clients and the policy questions regarding the legality/illegality of what the clients were doing.  Most of the legal media attention paid to the story has, so far, focused on the questionable nature of the lawyering involved — in a way it seems a bit like the 60 Minutes story we covered here a while back but if all of the examples were real in a fashion and one firm was undertaking to represent all of the endeavors.  As Bill Freivogel elegantly put it in an online piece I saw “A U.S. lawyer skating on the edge of what Mossack Fonseca has been doing could easily slip into a federal wire fraud or other criminal prosecution.”

Inevitably, this story will ramp up the rhetoric and discussion about what lawyers and law firms “absolutely” must be doing on the technological side of their business.  For example, we now have this piece from the assistant director of the Center of Practice Management of the North Carolina Bar Association essentially insisting that lawyers must encrypt all of their data, when in use, when in transit, and when it’s in storage and insisting on restrictions on access and downloads, etc.

In an utopia where price and practicality were no option for all lawyers, the North Carolina advice would be commonsense, but many lawyers do not practice in such utopian settings.  And, importantly, the ethics rules nowhere in the United States presently insist that all lawyers adhere to such requirements.  Not in North Carolina, and not even under the post Ethics 20/20 ABA Model Rules, which North Carolina has adopted.  What they require is in Rule 1.6(c):  ” A lawyer shall make reasonable efforts to prevent the inadvertent or unauthorized disclosure of, or unauthorized access to, information relating to the representation of a client.”

And jurisdictions like North Carolina that have adopted the Ethics 20/20 version elaborate on what this means in two paragraphs of the Comment accompanying Rule 1.6:

[18] Paragraph (c) requires a lawyer to act competently to safeguard information acquired during the representation of a client against unauthorized access by third parties and against inadvertent or unauthorized disclosure by the lawyer or other persons who are participating in the representation of the client or who are subject to the lawyer’s supervision. See Rules 1.1, 5.1, and 5.3. The unauthorized access to, or the inadvertent or unauthorized disclosure of, information acquired during the professional relationship with a client does not constitute a violation of paragraph (c) if the lawyer has made reasonable efforts to prevent the access or disclosure. Factors to be considered in determining the reasonableness of the lawyer’s efforts include, but are not limited to, the sensitivity of the information, the likelihood of disclosure if additional safeguards are not employed, the cost of employing additional safeguards, the difficulty of implementing the safeguards, and the extent to which the safeguards adversely affect the lawyer’s ability to represent clients (e.g., by making a device or important piece of software excessively difficult to use). A client may require the lawyer to implement special security measures not required by this Rule, or may give informed consent to forgo security measures that would otherwise be required by this Rule. Whether a lawyer may be required to take additional steps to safeguard a client’s information to comply with other law—such as state and federal laws that govern data privacy, or that impose notification requirements upon the loss of, or unauthorized access to, electronic information—is beyond the scope of these Rules. For a lawyer’s duties when sharing information with nonlawyers outside the lawyer’s own firm, see Rule 5.3, Comments [3]-[4].

[19] When transmitting a communication that includes information acquired during the representation of a client, the lawyer must take reasonable precautions to prevent the information from coming into the hands of unintended recipients. This duty, however, does not require that the lawyer use special security measures if the method of communication affords a reasonable expectation of privacy. Special circumstances, however, may warrant special precautions. Factors to be considered in determining the reasonableness of the client’s expectation of confidentiality include the sensitivity of the information and the extent to which the privacy of the communication is protected by law or by a confidentiality agreement. A client may require the lawyer to implement special security measures not required by this Rule or may give informed consent to the use of a means of communication that would otherwise be prohibited by this Rule. Whether a lawyer may be required to take additional steps to comply with other law, such as state and federal laws that govern data privacy, is beyond the scope of these Rules.

(all emphasis has been added by me)

But bad facts make bad law.  All of the ramifications of the loss of confidentiality of the data possessed by this particular law firm are going to continue to play out in the most public of ways.  There is no question that this particular firm — given its size, including the number and location of offices, and the fact that it’s core business turned completely on the promise of secrecy — over and above even the level of secrecy people normally think of when they think of hiring a lawyer — needed to have incredibly stringent measures in place to secure its electronic data.  We’re talking about clients, as The Guardian article explains, who were paying thousands of dollars extra just to be able to correspond only through fake email accounts the firm helped create under names like Harry Potter and Isaac Asimov for goodness sake.

If the end result of this story is going to be a call for mandatory encryption, that is not going to be great for the profession at all.  And, frankly, could create a stratification between haves and have nots that could ironically look a lot like the one that already exists between the truly, extraordinarily rich who were hiring a firm like Mossack Fonseca and the rest of the world.  Such a result will only further drive up the cost of legal services and make it even harder for those engaged in the traditional delivery of legal services to compete in a marketplace increasingly under pressure from alternative providers of legal services.

(Edited to fix a few errors caught by a loyal reader.)

The Department of Labor’s Final “Persuader” Rule – Part 2 of 2

So, yesterday, I started writing about the potential ramifications for lawyers of the adoption by the Department of Labor of its final “persuader” rule which will become effective on April 25, 2016, but will only be applicable to agreements entered into on and after July 1, 2016.  You can catch up on part 1 here.

I promised that I’d lay out my thoughts based on a full dive into the actual final rule itself to try to address whether, despite the DOL’s rhetoric, the rule really will require disclosure of information that ought to be protected by the attorney-client privilege  — so, here I go.

Having read through all (or least almost all) of the final “Persuader” rule, my “executive summary” takeaway is that the DOL sure seems to be willing to go to the wall on the idea that trying to help an employer make a more persuasive argument against the formation of an union is not “legal services.”  I happen to think that’s wrong but, I guess for the most part, that’s a policy call to be made by people who win elections.  I also think it is a position that is fundamentally in contrast to lots of other areas where conclusions are drawn that when a lawyer does certain things that aren’t the practice of law when done by nonlawyers, the lawyer is still engaged in the practice of law when doing those things.  I also think, though, as wrong as it may be, it seems to be a manageable situation and that lawyers and law firms can protect against the adverse consequences through building better (or at least more redactable agreements).  What seems to be a much worse possible outcome is the issue the DOL dodges by saying it isn’t at issue in the present rulemaking — the kinds of information that would now have to be reported on Form LM-21 that the ABA warned about a a good bit in its 2011 public comment.

There are many places in the Final Rule itself (page references below are to the Federal Register Vol 81. No. 57) that leave little room for a conclusion other than that the Department adamantly contends that “persuader activities” simply aren’t legal services and, as a result, communications about “persuader activities” aren’t entitled to be treated as advice or as privileged communications.  Stated another way, it seems the Department’s view that the only thing that a lawyer exists to do in this aspect of the labor law arena is provide advice to ensure the legality of her clients’ conduct.

In fact, the Department appears to be make this interpretative position abundantly clear in multiple places:

Agreements under which a consultant exclusively provides legal services or representation in court or in collective bargaining negotiations are not to be reported.  “Advice” does not include persuader activities, i.e. actions, conduct, or communications by a consultant on behalf of an employer that are undertaken with an object, directly or indirectly, to persuade employees concerning their rights to organize or bargain collectively.  If the consultant engages in both advice and persuader activities, however, the entire agreement or arrangement must be reported. (p. 15937)

While a lawyer who exclusively counsel an employer-client may provide examples or descriptions of statements found by the National Labor Relations Board (NLRB) to be lawful, this differs from the attorney or other consultant affirmatively drafting or otherwise providing to the employer a communication tailored to the employer’s employees and intended for distribution to them.  The latter is reportable, the former is not. (p. 15938)

A lawyer or other consultant who exclusively counsels employer representatives on what they may lawfully say to employees, ensures a client’s compliance with the law, offers guidance on employer personnel policies and best practices, or provides guidance on NLRB or National Mediation Board (NMB) practice or precedent is providing “advice.” (p. 15939)

Indeed, this rule exempts from reporting agreements involving exclusively the following activities: . . . legal services (as distinct from persuader activities undertaken by a lawyer). (p. 15952)

The reporting requirements in Form LM-20 . . . are designed to identify the specific persuader activities undertaken, not the legal advice provided.  In other words, if an employer retains a law firm with the purpose to persuade, directly or indirectly, its employees not to unionize, that retention is not privileged because it is not done with a purpose of obtaining a legal opinion, legal services, or assistance in a legal proceeding. (p. 15996)

Now, at just a common sense level, it seems implausible for anyone at all familiar with what lawyers do to say that anything other than advice isn’t legal services.   If an attorney communicating to a client about how to use more persuasive language to advance its legal rights isn’t the provision of legal services, why?  It certainly seems like legal services to me.  The conversation also presents for me another reminder about the fact that RPC 2.1 is almost never discussed when it ought to be with respect to the role lawyers play, and are supposed to play, in going beyond just giving legal advice.

I will admit that, at first blush, it was difficult for me to figure out how the Department, in requiring this Section 203(c) reporting, could just disregard the fact that Section 204 indicates that “attorney-client communications” are exempt from reporting where such communications are defined as “information which was lawfully communicated to [an] attorney by any of his clients in the course of a legitimate attorney-client relationship.”  But, having digested the whole rule, I understand that there is some mixture of interpretive history and judicial decisions lurking behind the scenes on which the Department of Labor rests its positions:

[T]he Department notes that — consistent with the interpretation that section 204 has received from the courts — it always has construed section 204 as roughly equivalent to the limited attorney-client privilege under the common law.  The Department has never embraced the view that section 204 creates a broad, separate exemption for attorneys that supplants 203(c). p. 15953

The Department’s interpretation in that respect does find support in a Sixth Circuit case, Humphreys, Hutcheson and Moseley v. Donovan, 755 F.2d 1211 (6th Cir. 1985).  Humphreys determined that Section 204 was intended to provide the same scope of protection against disclosure of information as is provided for under federal common law attorney-client privilege.  That case, and another even older case from the Fourth Circuit (Douglas v. Wirtz, 353 F.2d 30 (4th Cir. 1965)), are things the Department points to for their claim that “Congress recognized that the ordinary practice of labor law does not encompass persuader activities.” (p. 15996)

What I’m also very troubled by, and not just intellectually, but practically, is the DOL’s position that language in an attorney-client engagement agreement about the scope and nature of services provided is not protected by the attorney-client privilege.  The Department uses this position to brush aside concerns expressed in a variety of the comments it received during the public comment period about requiring the law firm’s engagement agreement with the employer client to be made public and to have to provide information through checking boxes about what activities were performed.   The Department maintains that the same Humphreys decision out of my circuit, the Sixth Circuit, supports that conclusion as well.  I’m not entirely certain that the Department isn’t stretching the language of Humphreys too far especially when it also is willing to contend, with respect to an engagement agreement that: “information that may reveal client motives regarding exclusively legal advice or representation sought would generally be redactable, but information concerning client motives related to the persuasion of employees is not privileged and would remain reportable.”  (p. 15995)

The one aspect of attorney-client confidential communications that the DOL does seem to get right is the non-absolute nature of confidentiality protection under the ethics rules where states have adopted rules similar to ABA Model Rule 1.6.  So, if the “persuader” rule adopted by the DOL ends up being treated as within its powers so as to be recognized as “other law,” then nothing about RPC 1.6 will serve to prevent reporting of the required items.  The privilege dilemma, however, will remain.

Thus, the practical takeaway for law firms worried about this issue — i.e. practicing in this sphere — would seem to be to get accustomed to either entering into two separate engagement agreements with their clients, one that would be bare-bones to cover anything that would be done that might stray into “persuader activities,” so that one is the only one that has to be attached to the Form LM-20 or (2) get very accustomed to crafting engagement letters that can be readily redacted to protect privileged communications within the text.  The final “persuader” rule, for its flaws, at least does acknowledge the ability of lawyers and law firms to redact the agreements it submits; though even on that front, there is troubling language in the rule that would appear to set up points of skirmish over the details of when that is done as well.

Given the effective dates of this, there is certainly time between now and July 1 to figure out how to do so.

Of course,  given the fact that it would appear litigation to challenge the rule is in the offing, who knows if it will ever come to pass.

“Other law” is always changing – the DOL’s new Final “Persuader” Rule – Part 1 of 2

The scope of confidentiality lawyers owe to their clients has long been a subject that I find fascinating.  Over the last few years, I’ve mulled how its broad scope will continue to play out with current and future generations of both lawyers and clients who routinely, almost even instinctively, share seemingly every detail of their lives on one online platform or another.  That general topic though of what confidentiality under the ethics rules might look like in 10 years is a discussion for another day, if ever.  The fact remains, though, that in jurisdictions pattered after the ABA Model Rules, there exists a version of Model Rule 1.6 — like Tennessee’s RPC 1.6 — that establishes an obligation of confidential treatment as to all information related to representation of a client.

The rule contemplates that anything can be disclosed provided you have the client’s express consent to do so or, alternatively, if disclosure is impliedly authorized to carry out the representation.  Beyond that, jurisdictions that hew to the ABA approach, then offer a list of circumstances in which a lawyer has discretion to make a disclosure, but isn’t obligated to do so.  Among those circumstances are instances where the lawyer reasonably believes the disclosure is necessary “to comply with other law.”  Model Rule 1.6(b)(6).

In Tennessee, we have carved out a further category of topics where a lawyer is obligated to disclose information, despite it otherwise being confidential.  For Tennessee lawyers, the comply with “other law,” exception to the duty of confidentiality is housed in that provision and, thus, is a mandatory duty of disclosure.  RPC 1.6(c)(3).

Keeping up with the vast array of ways that “other law” might appear to require lawyers to disclose information about their representation of clients can be a difficult enough task when your reason for interest is only about the exercise of a discretionary right of disclosure.  It can get significantly more stressful to keep up with developments in other law if the stakes are ratcheted up by a mandatory ethical obligation.

The “other law” aspect of the duty of confidentiality is why, for example, a client’s payment of your fee with $10,500 in cash is a development that would require a lawyer to fill out the appropriate paperwork to report that transaction to the IRS on Form 8300 because of federal law.  The fact that the fee was paid in cash on a particular date and in that amount is certainly information related to representation and, thus, confidential under RPC 1.6, but because other law requires the disclosure — the duty of confidentiality falls.  There are other existing examples, but I’ve already taken the scenic route to the actual point of today’s entry so one example will have to suffice.

Earlier this month, the U.S. Department of Labor published the final version of a long-discussed new “persuader” rule.  This issue was only on my radar screen because, at the end of an ethics seminar a few months ago, a lawyer approached me to ask if I was keeping up with the looming development and if I understood its potential for infringing on privilege and confidentiality for lawyers and law firms.  I wasn’t, and didn’t, at the time.  I am, but still not sure I do, now.

Admittedly, labor relations is not my native tongue, so a reader may lose a little something in my translation of the background leading to the adoption of the final persuader rule.  If you speak labor relations more fluently, or are interested in learning, you can read as much or as little as you’d like of the whole final rule in the Federal Register itself here.  You can also read the full versions of each of the other items I mention below if I have properly managed to include the links for each.

So, federal law, through the Labor Management Reporting and Disclosure Act of 1959 (LMRDA) has long required two sets of parallel reports that are supposed to be made in order to disclose expenditures that are made in connection, for example, with labor-organizing activities.  One report is required of labor organizations such as unions.  Another report has been required from employers when they hire a labor relations consultant to help it persuade employees about issues relating to bargaining and whether/how to organize.  Existing law provides that both direct persuader activities and indirect persuader activities are supposed to trigger such reports, but the law exempts employers from having to file a report when the purpose of hiring the consultant is just to get advice.  That exemption is set forth in Section 203 of the LMRDA.  Existing law also exempts from reporting attorney-client communications.  That exemption is set forth in Section 204 of the LMRDA.

According to the current U.S. Department of Labor, as explained in its Overview/Summary document, the Department has long been interpreting the law incorrectly to define “advice” in a fashion that extends to conduct that should be treated as “indirect persuasion,” and, thus, no reports are ever filed on the employer side other than for the hiring of consultants who have direct contact with employees.  The new persuader rule is clearly articulated by the Department of Labor as being about changing the interpretation of “advice” to limit its protective scope and cause reports to be filed regarding consultants that are helping employers craft messaging and other efforts at persuasion.

If you are following along still at this point, you will see the looming issue for lawyers and law firms retained by employers in situations involving labor organization issues.

Now, the Department of Labor, at least rhetorically, is going to great lengths to insist that the new rule it has enacted will not invade attorney-client privilege (confidentiality under the ethics rules isn’t really mentioned in the documents discussed below) and that reports won’t be required when an employer hires a lawyer or law firm just for the purpose of getting advice on complying with legal obligations.

The Department of Labor’s Overview/Summary states the Final Rule “exempts any agreement that involves only the provision of legal services” and also states that:

The Final Rule does not affect attorney-client privilege.  It only requires the disclosure of the identity of the client, the fee arrangement, and scope and nature of the persuader agreement in cases where the consultant has agreed to provide services other than legal services — specifically, to take action with intent to persuade employees regarding union representation or collective bargaining.

In the OLMS Fact Sheet regarding Employer-Consultant Agreements, discussing examples of exempt agreements, the Department explains:

As a general principle, no reporting is required for an agreement or arrangement to exclusively provide legal services.  For example, no report is required if a lawyer or other consultant revises persuasive materials, communications, or policies created by the employer in order to ensure their legality rather than enhancing persuasive effect.

In the Q&A materials put out by the Department of Labor, this point about not invading privilege is repeated:

Q.  Does this rule require disclosure of information protected by the principles of attorney-client privilege?

A.  No.  None of the information required to be reported (e.g., the identity of the parties, terms and conditions of the agreement, and specific persuader activities undertaken) is covered by the attorney-client privilege.  Privileged information is excluded from the reporting requirement by statute.

Yet, there seem to be a number of thorny interpretative questions lurking.  And, a dive into what the actual final rule says in the Federal Register leaves me pretty convinced that the DOL’s effort has blurred the issues of Section 203 and the issue of Section 204 and that its strong rhetoric about what it isn’t doing rings hollow.

I will do my best to describe my thoughts on that more fully in part 2.  So, stay tuned.