Ethics opinion about a business conflict goes wrong.

It is very tempting to stay on the topic of bar examinations today, given recent absurdist developments. Arkansas has declared it simply has to have its in-person bar exam in July 2020 because things are likely to get worse as the year goes on. Oklahoma has attempted to reassure everyone about the safety of their in-person planned exam in a message that simultaneously demands that all test takers self-quarantine for 14 days before the exam. Virginia, trying to take the cake apparently, is insisting on a courtroom attire dress code for their in-person exam but is doing away with having to wear a tie as a concession to COVID-19. It is tempting, but it’s all too frustrating, so…

Instead, let’s go back to some of our roots and discuss a recent ethics opinion. It comes out of Ohio and it addresses a conflict issue, but is noteworthy for at least two reasons: (1) it addresses a conflict of interest issue involving representation of a government entity and (2) it sort of addresses something that is more a business conflict issue rather than a true ethical conflict. If you’d rather just read the opinion, you can access it here.

Ohio Board of Professional Conduct Adv. Op. 2020-04 weighs in on whether a firm has a problem representing a group of landowners who are opposing a zoning variance sought by an agency seeking to establish a shelter for domestic violence victims. The agency is not a client of the firm in other matters, but the firm does represent a community mental health board that contracts with the agency. The firm has a one-year contract to perform legal services on an “as needed” basis to the board but has not been asked to do any work related to the zoning variance matter. The firm does know though that the board supports the agency’s effort to obtain the variance and wants the agency to succeed.

Now, most lawyers would hear that scenario and see a likely “business” conflict but no ethical conflict. By business conflict, I simply mean that the firm might not have wanted to take on the landowners because it might displease the institutional client – which might be a better source of ongoing and continued business to the firm.

The Ohio opinion, however, finds a way to treat the situation as an ethical conflict but, at its heart, it does so only by turning the business conflict into a material limitation conflict using the idea of “personal interest” of the lawyer as something that could be expanded to be the firm’s “personal” financial interests.

I am far from convinced that such an analysis actually works.

The opinion spends only a paragraph explaining something that should be obvious – this is not a representation involving direct adversity between firm clients. After that, the opinion lays out its argument for the existence of a “material limitation” problem for the firm. The opinion begins on the right foot by explaining how there does not appear at first to be any conflict because “the law firm’s provision of legal services to the board and its representation of the landowners are wholly separate and unrelated.” The opinion though pivots to a required “closer examination” leading it to the idea that “it would be reasonable to conclude that the board’s overall interest in supporting the agency’s zoning variance may compromise the firm’s
representation of the landowners opposing the variance.”

Delving into more explanation, the opinion speculates that the firm might be limited in pursuing legal alternatives for the landowners because of the overall interests of the other firm client. All of that is well and good, as it is true that sometimes material limitation conflicts require some digging to understand, but the opinion then moves fully into rhetoric that sounds as an analysis of a business conflict.

Specifically, the opinion points to the firm’s “inherent financial interest in maintaining its standing client-lawyer relationship with the board” as one of the factors leading to a conclusion that there is a material limitation conflict requiring waivers from both the landowners and the board in order for the firm to continue both representations.

The opinion further undercuts any claim to be purely addressing an ethical conflict question by explaining that, if the clients won’t provide consent, then the firm only has to withdraw from one of the two engagements. That remedy is most assuredly the stuff of business conflicts. Traditionally, a firm that needs to extract itself from conflicting representations that run afoul of the ethics rules cannot simply drop one of the two clients like a “hot potato,” but have to withdraw from both client representations. There are exceptions, but none of those exceptions are identified in this opinion.

The opinion also suffers from at least one more flaw. Even under its own premise, it does not follow that both the board and the landowners would need to provide consent. The only representation that the opinion discusses as being potentially harmed by the conflict is the representation of the landowners. Thus, the landowners can be said to be the only clients “affected” by the material limitation conflict. Notably, the opinion never actually quotes the language of the rule it is purporting to apply and never reminds the reader that RPC 1.7(b) only requires informed consent from “each affected client.” Thus, as long as the landowners in the zoning variance proceeding were willing to provide informed consent to the firm’s representation despite the fact that the firm’s relationship with the board could limit available options and approaches, then the rule would still be satisfied.

Two more ethics opinions explore restrictions on lawyers’ ability to enter (or even offer) certain contracts.

First, this is not being titled as a “Friday Follow Up” post because, like the rest of you, I have no idea what day of the week it is at this point.

Second, there is way much more important events afoot in the world and if you want to know my thoughts about those you can go find me on Twitter. Given the complete lack of even a fig leaf to connect to legal ethics on that front, I’m sticking to sports here.

Third, two ethics opinions from two different states came out late last year addressing two different variations on ways that the ethics rules makes lawyers “special” when it comes to the right to contract. Because states like mine have been engaged in the issuance of ethics opinions really pushing the boundaries of this concept (at least as to the scope of RPC 5.6), it seems worth mentioning these two opinions albeit each for slightly different reasons.

The first of the two is almost entirely straightforward in addressing something that I certainly think is undoubtedly clear from the Comment to the ABA Model Rule — whether the scope of RPC 5.6 is somehow different for in-house counsel. Nevada, in Formal Op. 56, has made plain that the scope is not different, explaining that an in-house counsel cannot accept a stock award agreement that is made contingent upon agreeing to a one-year covenant not to compete. It somewhat helps to understand why Nevada would have to issue an ethics opinion on this question to know that Nevada has no Comments adopted along with its rules. Instead, Nevada’s Supreme Court has offered that both the preamble and the comments to the ABA Model Rules are something that “may be consulted for guidance in interpreting and applying the Nevada Rules of Professional Conduct.”

Here in Tennessee, we actually have our own Comment identical to the ABA Model Rule version so an ethics opinion wouldn’t really be necessary to cover the fact that the Comment specifically says it applies to organizational employers as well as private firms. One nuance that the opinion introduces but does not explore in any real depth is that an in-house counsel could agree to a non-compete that would only apply to the performance of business functions, rather than legal services, at a competitor. Thus, an in-house lawyer serving as both General Counsel and Executive Vice President at one corporate employer could be required to agree as part of a stock bonus not to take any similar employment with a competing company in the future by focusing only on the executive portion of the existing job.

The Nevada opinion also delves a bit into a way that a confidentiality agreement as part of such a stock award could also run afoul of RPC 5.6 by extending beyond the requirements of RPC 1.6 and RPC 1.9 under the ethics rules.

The other opinion I wanted to touch on comes from Los Angeles. LA County Bar Op. 532 tackles a question that does not require application of RPC 5.6 to resolve but that is not entirely unrelated to that rule — whether a lawyer can agree to indemnify the adverse party as a condition of a settlement. The LA County opinion correctly reaches the conclusion that the lawyer cannot do so because of the conflict that creates between the personal interests of the attorney and the client’s interests. It is an uncontroversial conclusion as the opinion admits because there are some 20+ other jurisdictions, including here in Tennessee, that have likewise made such a settlement provision improper.

Two other aspects of the opinion are much more interesting, however. One is that the primary ground on which the opinion nixes the possibility is that doing so would be the lawyer improperly paying the client’s business or personal expenses in violation of California’s RPC 1.8(b)(5). The other is that the opinion also involves RPC 8.4(a) to create the same dynamic that is in play when RPC 5.6 is triggered – it is unethical for a lawyer to propose such an agreement to the plaintiff’s lawyer because it would be unethical for the plaintiff’s lawyer to agree to it. While RPC 5.6 states plainly that it is an unethical for a lawyer to “participate in offering or making” the kind of agreement addressed by Nevada as discussed above, the potential reach of RPC 8.4(a) when it comes to negotiating contracts is often overlooked. California’s rule, like the ABA Model, makes it a disciplinary violation for a lawyer to “knowingly … induce another” lawyer to violate the ethics rules.

For attorney’s eyes only.

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

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

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

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

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

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

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

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

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

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

Why can’t we (both) be friends (of the Court)?

So within the last few days the New York State Bar Association has issued an interesting new ethics opinion addressing a variation of an issue that is straightforward nearly everywhere.

Lawyers tend to know that conflicts questions can often be complicated but that there is at least one that is pretty straightforward: different lawyers in the same law firm cannot represent different clients who are on opposite sides of the “v” in the same lawsuit.

Can’t do it; can’t ask a client for consent; just a non-starter. (In Texas, your mileage may vary. But, otherwise pretty universal across the nation.)  NYSBA Ethics Op. 1174 evaluates a somewhat esoteric question that revolves around whether participation in litigation as counsel for an amicus curiae works the same way. Namely, whether amici on opposite sides of the same litigation matter can be represented by lawyers in the same firm.

I think that the NYSBA has gotten the answer on this correct though I’m not as certain about whether the escape valve they offered the inquiring firm is entirely correct. To get to bottom of both of those points, it strikes me as easiest to first analyze something that the NYSBA did not discuss because it should ease folks into the correct answer (if you aren’t there already).

If you were representing the plaintiff in a case, could another lawyer in your firm take on the representation of an amicus curiae seeking to persuade the Court to rule in favor of the defendant’s position in that case?  I think we’d all agree that the answer to that would be “no.” Maybe we’d argue over whether that was because that second matter would be “directly adverse” to the plaintiff client or whether it would just be a “material limitation” conflict. (FWIW, seems pretty directly adverse to my eyes.)

So, concluding that two different amici on opposite sides of the same litigation matter is a conflict seems like an entirely appropriate conclusion. It also seems fair to conclude, given the traditional language used in rules like Model Rule 1.7 (as does New York’s RPC 1.7(b)(3)) that it amounts to representing clients on both sides of the same litigation and, therefore, cannot be undertaken even with client consent. Those were the conclusions reached in Opinion 1174.

Because of the nature of the scenario that was presented to it, the NYSBA went a bit further to put together something of a “but you could do this” sweetener. The inquiring firm had surveyed its associates about interest in taking on an amicus matter on a pro bono basis and gotten mixed feedback because there were some folks who believed in the correctness of the opposite sides of the issue. The NYSBA indicated that lawyers in the same firm could appear for amici on opposite sides — if the lawyers were not representing a client but were acting pro se.

While that presents a potentially messy practical question for the firm, it seems like the correct result under the ethics rules if each side’s involvement is pro se. What is not clear to me is whether the NYSBA is intended to also address whether a firm lawyer could file a pro se amicus brief to take the adverse position to another amicus who is actually a client being represented by the law firm.

Certainly seems to me like some kind of additional conflict analysis would be required to evaluate that question because of the potential that the personal interest of one more lawyers that the firm could create a significant risk of materially limiting the firm’s ability to represent its client.
The opinion also does not address a much harder issue to both evaluate and to even “catch” in the first place … representing amici in different litigation matters who are on opposite sides of the same issue and advocating for outcomes that are markedly different on the same legal issue.

If a firm is fortunate enough to have built a conflicts system that would allow them to catch it, or if they otherwise figure it out ahead of time, that issue is one that should be run through the ringer as a “positional” or “issue” conflict and likely will turn on the relationship of the courts involved and whether one of the courts would be binding on the other when it decided the issue. At the very least, unlike the “same litigation” matter scenarios, that kind of conflict might be subject to waiver by the affected clients.

Two For Tuesday For Tennessee

From time to time I feel a real obligation to write about things that are primarily (if not exclusively) only of interest to Tennessee lawyers. Today is one of those days so apologies in advance if this is not your cup of tea. (On the upside for you, this will be relatively short so you might be able to justify still reading it.)

There have been two significant developments this week in Tennessee involving rule changes (not ethics rule changes) but rule changes important to the practice of law in Tennessee. One is the adoption of a new Tennessee Supreme Court Rule authorizing collaborative law family law practice. The other is a further structural and substantive set of changes to the rule that governs the admission of lawyers in Tennessee – Tenn. Sup. Ct. R. 7.

The revisions to Rule 7 address a number of non-substantive changes including architectural reworking of the structure and ordering of portions of the rule but also address some substantive issues as well. You can read the entirety of the order implementing the revisions (which includes both a clean and a red-lined copy of the revised Rule 7) here.

Perhaps the most important substantive change to Rule 7 is the expansion of a registration procedure (currently available to in-house counsel admitted in another U.S. jurisdiction but working in Tennessee) to foreign legal counsel employed as a lawyer by an organization as well. In connection with that development, a 180-day amnesty period for foreign legal counsel presently practicing in Tennessee is on offer (as occurred in the past with the in-house counsel provisions).

Second, while the provisions addressing the right to practice pending admission have been explicitly tweaked to make clear that someone can apply and obtain that authority whether seeking admission by comity or by sitting for the bar exam (or, now that TN has embraced the UBE, submitting a score on the UBE from another jurisdiction), the rule has also been amended to make plain that a disciplinary complaint filed against someone practicing pursuant to the practice pending admission rule is also a disciplinary complaint against the attorney who is on record as being their supervising attorney (as is also the case with qualified law students permitted to engage in limited practice in compliance with the rules.

The adoption of a new rule permitting collaborative family law practice in Tennessee has been in the works since 2017 but was finally implemented this week and takes effect immediately. You can read the entirety of new Tenn. Sup. Ct. R. 53 here.

For those unfamiliar with the concept of collaborative family law practice (and I suspect there are many of you), a review of the rule is worth your time to get a flavor for the dynamic. One of the most important pieces is the notion that lawyers engaged in this kind of representation are prohibited in almost all circumstances from engaging in any litigation proceedings on behalf of the party they are representing related to the issue for which the collaboration is focused. (Which is a bit of weird end around on what would otherwise likely be viewed as a restriction on the right to practice in violation of our RPC 5.6.) In terms of impact on lawyer ethics, the other piece of the rule that has a direct impact is the piece that provides relief from the imputation of a collaborative lawyer’s conflicts to other lawyers in their firm in instances where the representation involves a person of “low income.” Specifically:

Section 10. Exception from Disqualification for Representation of Low-Income Parties.

After a collaborative family law proceeding concludes, another lawyer in a law firm with which a collaborative lawyer disqualified under Section 9, Subsection (a), is associated may represent a party without a fee in the collaborative family law matter or a matter related to the collaborative family law matter if:

(a) the party has an annual income that qualifies the party for free legal representation under the criteria established by the law firm for free legal representation;

(b) the collaborative family law participation agreement authorizes that representation; and

(c) the collaborative lawyer is isolated from any participation in the collaborative family law matter through procedures with the law firm that are reasonably calculated to isolate the collaborative lawyer from such participation as set out in Tenn. Sup. Ct. Rule 8, RPC 1.10.

A teachable moment to make your eyes water.

When you spend a lot of time consulting with and advising lawyers, finding teachable moments from examples of things that happen in real life are extremely helpful.

The world can be filled with teachable moments. On a non-ethics front, here is one: If you don’t pay attention to when a credit card has a new expiration date and update accordingly, you could end up having your domain briefly expire leaving you vulnerable to someone else potentially buying it.

On an ethics front, the importance of making sure you do what you can to make clear in an engagement letter who is and who is not your client, as well as what you are being hired to do versus other things someone might later try to claim were your responsibility is pretty high. As a result, paying attention to outside counsel guidelines or other documents that may come into your firm from a client that address those issues is extremely important.

A February 2019 case from the Federal Circuit stands as a very good teachable moment about how not paying attention to such things can lead to disqualification. If you practice in a law firm of any significant size, the full opinion is worth reading because it addresses not only the topics mentioned but also involves a fact pattern involving lateral movement that, ultimately, resulted in the disqualification proceedings coming to pass in the first place. Specifically, the lawyers who moved from another firm to Katten Muchin and brought with them their representation of a party adverse to a corporate parent of Bausch & Lomb in the first place were only ever informed that Katten Muchin was representing Bausch & Lomb.

The disqualification of the law firm of Katten Muchin in the lawsuit of Dr. Falk Pharma Gmbh et al. v. Generico, LLC et al. truly came about, however, because the firm did not push back on outside counsel guidelines it received that expanded the universe of what could constitute a conflict of interest (or, more realistically, didn’t pay attention at any true level that such was occurring).

The underlying moving parts of litigation are pretty detailed and intricate and involve patent litigation and trademark matters, part of which (I only mention to bring a satisfying end to the attempt at humor in my title) involved a dispute over the trademark MOISTURE EYES™.

If you want a more thorough understanding of the intellectual property issues in play in the various proceedings, you can get that over at Mike McCabe’s blog here.

For our purposes today, w/r/t the teachable moments, the following excerpts from the opinion ought to be able to drive home the importance of knowing what is in engagement letters that come from clients rather than emanate from your firm and knowing the details of any outside counsel guidelines being incorporated into any engagement letter:

The motions to disqualify stem from Katten’s representation of Bausch & Lomb Inc. … a corporate affiliate of Valeant-CA and Salix, in a trademark litigation and its concurrent representation of Mylan, adverse to movants, in the pending appeals. Specifically, Katten signed an engagement letter with Bausch & Lomb that broadly defined Katten’s client as any Valeant entity. Attorneys [Mukerjee and Soderstrom] represented Mylan during various stages of [these proceedings] first, as attorney from Alston & Bird LLP, but later, as attorneys from Katten. The parties agree that Mukerjee and Soderstrom moved to Katten as of May 3, 2018.

[snip]

In the course of representing Bausch & Lomb, Katten signed a general engagement letter “governing the overall relationship between [Katten] and Valeant Pharmaceuticals International, Inc…. This engagement letter incorporates by reference Valeant’s Outside Counsel Guidelines (“OC Guidelines…”

[snip]

The OC Guidelines also specify that “Valeant expects a significant degree of loyalty from its key external firms,” defined as “firms with 12 month billings exceeding one million dollars.” These key firms should “not represent any party in any matters where such party’s interests conflict with the interests of any Valeant entity.”

[snip]

On May 3, 2018, Mylan notified the district court that Mukerjee and Soderstrom had left Alston & Bird to join Katten. On May 25, 2018, Valeant-CA filed a motion to disqualify Katten in the district court action.

[snip]

Because the engagement letter creates an ongoing attorney-client relationship between the law firm, Katten, and its organizational clients, Valeant-CA and Salix, Katten’s representation of Mylan adverse to movants in Valeant II gives rise to a concurrent conflict of interest under Rule 1.7.

[snip]

Finally, we conclude that Katten’s erection of an ethical wall is insufficient to resolve its violation of Rule 1.7. Katten claims that this wall cordons off Mukerjee and Soderstrom from Katten attorneys who have worked for matters for Bausch & Lomb, Valeant-CA, or affiliates in the 18 months preceding May 7, 2018. But this wall does nothing to address concerns stemming from Katten’s violation because it was created after Mukerjee and Soderstrom joined Katten, it applies only partially to work conducted within 18 months before May 7, 2018, and Katten never previously informed movants of any potential conflict.

Now, in fairness, even without the engagement letter terms and the OC Guidelines, the outcome may have been the same because, as the opinion explains, the corporate entities involved here were so interrelated in terms of common infrastructure and shared legal departments, and financial interdependence as to be treated as amounting to corporate affiliates still subject to treatment as clients under conflict of interest rules. But that is another teachable moment issue for a different day.

A recipe for ethical lawyering?

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

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

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

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

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

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

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

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

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

Asking for a conflict waiver is a step that is hard to take back.

Look, I understand too little too late
I realize there are things you say and do
You can never take back
But what would you be if you didn’t even try
You have to try
So after a lot of thought
I’d like to reconsider
Please
If it’s not too late
Make it a cheeseburger

– Lyle Lovett

Working though questions of conflicts of interest can certainly be challenging for lawyers.  The initial phases of figuring out whether a conflict exists are highly important.

From a loss prevention standpoint, you want to get it right as you certainly do not want to take something on that you shouldn’t because you had a conflict that you simply couldn’t even ask to be waived or for which you strongly suspected you’d never be able to get a waiver from those from whom a waiver would be needed.

It is also important to get right, however, so that you don’t treat something as a conflict that isn’t a conflict.  Once you start down the path of asking someone for a conflict waiver, you empower them to tell you “no” and you potentially reduce your choices about what to do in such event pretty severely.  It is not impossible to change course after unsuccessfully asking for a conflict waiver and begin to claim that the waiver wasn’t needed in the first place.  But it is certainly difficult.  Thus, it isn’t just the case that you don’t want to treat something as a conflict that isn’t a conflict; you also might want to think long and hard about treating something as a conflict if you intend to contend it isn’t a conflict.

An interesting story touching on just how difficult unwinding such a situation can be was written about by The American Lawyer earlier this week.  It involves an effort – seldom used (for reasons that ought to be a bit obvious) — to file a separate lawsuit seeking a declaratory judgment that something was not a conflict in the first place and an injunction to allow the lawyer to start working for a new firm.

You can read the full article here, but the short version is this: a Houston lawyer who was looking to change firms has been unable to do so because a corporate entity much in the news of late – USA Gymnastics — refused to provide a conflict waiver requested by the lawyer.  USA Gymnastics is a client of the lawyer’s former firm.  The firm to which the lawyer had hoped to move currently represents a number of individuals who have sued USA Gymnastics over the sordid situation involving Larry Nassar.

Typically, conflicts of interest get litigated through motions to disqualify.  Although firms and clients do not like to have to deal with those for obvious reasons, at least in those proceedings the firms and clients have the ability to argue that the party moving for disqualification has the burden of proof.  Even that procedural tool can be lost when the lawyer or firm is the one bringing the action to ask a court for a ruling that they have no conflict.

A quote from the story itself taken from the managing partner of the firm to which the lawyer wanted to go to work provides a helpful bit of transition:

The law as we understand it is that if a person worked at a law firm and doesn’t work on a case, and goes to work for another law firm that has that case and [the lawyer] is shielded from the case … there’s no conflict.

Now, if this were being governed by Tennessee law, I could readily delve into whether that statement would be correct or incorrect assertion of the state of play here, but these are events that involve other states and different rules.

But, to repeat the larger point, if that is what the relevant law or rules set out, then the lawyer and his new firm should never have sought the waiver in the first place.

Litigating your own work product – a tricky (at best) topic.

So, first things first, I am thoroughly surprised and incredibly honored to have made it into the ABA Journal’s 2018 Web 100.  If you are here for the first time because this happened, thanks for reading and feel free to look around as there is 3+ years of content you can read while you are on hold with customer support.  If you are a long-time reader here out of habit, I cherish you and you can rest easy knowing that you are still going to receive the same not-exactly-regularly-scheduled-mostly-maybe-twice-a-week-but-sometimes-only-once-a-week content you have come to expect.

Second things second:  I truly and profoundly recognize the irony that this post leads off crowing about the Web 100 honor after literally just talking about how lawyers shouldn’t blow their own horn online six days ago.  But I’m going to just blow past that irony and move on to today’s offering which comes up more than you might imagine in real-world consultations and that is on the radar screen for today because of two recent developments — a recent ethics opinion from the Texas Center for Legal Ethics and an order denying disqualification out of a Pittsburgh federal court.  If you are a Law360 subscriber you can read some about the Pennsylvania decision and even download the order now here.

Both the ethics opinion and the Pennsylvania decision grapple with what Bill Freivogel refers to on his site as the “Underlying Work” Problem. Bill has written a very good overview at that link of the problem for law firms when they decide to take on the litigation of a matter where its earlier work for the client involved will be at issue and, if history is any guide, will likely have a good summary of that case up relatively soon.

The short version of the order denying disqualification goes like this:  A visiting senior district judge denied a motion to disqualify the lawyer representing a company sued under the Americans with Disabilities Act.  The nature of the claim is that the employee was wrongfully denied extra breaks to deal with her anxiety issues.  The genesis of the disqualification dispute was that the lawyer in question was also the lawyer who gave the company the legal advice that it could deny the employee’s request for this accommodation.

The longer version of understanding how that might not be the outcome you’d expect is best laid out by discussing the recent, really-good, Texas opinion.

In Opinion 682, the Texas Committee explains how its version of the “advocate-witness” rule works under these facts:

A Texas lawyer assisted a client in drafting and negotiating a contract with another party represented by separate counsel.  A lawsuit arose concerning the meaning of certain provisions in the contract.  The lawyer drafted and negotiated those provisions.  The lawyer’s client wants the lawyer and a trial lawyer in the same firm to represent her in the lawsuit.  Both lawyers are attempting to ascertain whether they may do so, and if so, under what conditions, if any.

The opinion does a nice job of explaining the different analysis required for the individual attorney at the firm versus other attorneys at the same firm who were not actually involved in doing the underlying work.  The fundamental difference if it has to be cliff-noted is simply that the confusion involved in the dual role of witness and advocate is severely obviated when a different lawyer is doing the advocating.  The opinion also does a decent job of emphasizing a point that judges sometimes overlook when ruling on disqualification motions — that the disqualification for the witness-lawyer generally does not actually come into play until the trial – not during discovery or even pre-trial motion practice, just at the trial.

As Texas lawyers know, the numbering of the Texas ethics rules is a bit off from the ABA Model Rules even where the substance may be roughly the same.  So, while lawyers normally think of the ethics rule addressing lawyers as witnesses as being Rule 3.7, in Texas it is housed in Rule 3.08.  Although I think the Texas opinion provides the structural narrative for getting to the correct analysis even under the language of Model Rule 3.7, I think it is worth highlighting two pieces of Texas Rule 3.08 that likely are a real improvement on the Model Rule.

First, the rule includes an exception that seems obviously correct but is not actually addressed in the text of the Model Rule.  Texas’s rule makes plain that if the lawyer happens to be a party to the lawsuit and acting pro se, then the prohibition does not arise.  (I have a long history of trying [both for altruistic and pecuniary reasons]to discourage lawyers from acting pro se but it still happens and opposing counsel should not be able to try to use Model Rule 3.7 as a cudgel in such situations.)

Second, and more universally important, the Texas rule goes further in terms of requiring disclosure in two respects that I think are positive.  Like the Model Rule, the Texas rule acknowledges that “substantial hardship” for the client involved can provide an exception to the lawyer’s disqualification if they also have to be a witness.  Unlike the Model Rule, the Texas rule requires the lawyer who will be traveling under that exception to “promptly notif[y] opposing counsel that the lawyer expects to testify in the matter and disqualification of the lawyer would work substantial hardship on the client.”  The Texas rule also requires more disclosure to the client when the lawyer’s firm intends to handle the case by taking advantage of imputation of the witness-lawyer’s conflict not working its way to other lawyers at the firm by explicitly conditioning the ability to have some other lawyer at the firm handle upon “the client’s informed consent.”  I think that is a vital piece of the puzzle from a loss prevention standpoint for any firm in such a situation as fully discussing with the client on the front end what the plan is and the risk associated with additional expense in the form of motions to disqualify goes a long way to avoiding grief.

 

 

 

One thing that lawyers and judges have in common.

People often think of lawyers and judges differently.  And, to a large extent, they should.  In almost every situation, someone cannot become a judge without having been a lawyer first.  But once a lawyer transforms into a judge, their role in the judicial system becomes radically different and they now have a new set of ethics rules to which they have to comply.

Yet, lawyers who become judges are still human beings and lawyers who become judges can be plagued by some of the same flawed aspects of being human as lawyers who never become judges.

This post for your Friday wants to offer up 4 very recent examples – 2 involving lawyers and 2 involving judges – of human beings all demonstrating the same variation of a common flaw:  Not knowing when to simply not say stupid things out loud (or in digital format).

On back-to-back days earlier this week, The ABA Journal online had stories about two different lawyers (who likely would have hit it off if they knew each other) getting in trouble for communications to or about clients that were roughly equally ill-advised although they involved the use of two different means of electronic communication.

The first was a New Jersey lawyer who has now been publicly censured over a text communication to a criminal defense client.  The client in question had ceased paying the lawyer and the lawyer had tried on two occasions to be granted leave to withdraw but was unsuccessful as the court denied the withdrawal motions.  Despite being stuck with having to pursue the representation (or perhaps because of it), the lawyer sent a text to his client that the ABA Journal described as follows:

In a text, Terry told the client he wouldn’t prepare in the weekend before the trial without getting paid first. Then he wrote, in all capital letters: “HAVE FUN IN PRISON.”

That text ultimately did manage to get the lawyer out of the case as the client showed it to the judge and the judge then removed the lawyer as counsel.  But it also resulted in the public censure.  At core, the ethics rule the lawyer was deemed to have violated was a conflict of interest rule by placing his own personal interest in getting paid ahead of his obligation to diligently represent the client.

The second was an Iowa lawyer who allowed himself to get too worked up on Facebook — enough to publicly disparage a client.  While, as things currently stand, the lawyer has only been the subject of negative publicity, it remains a real possibility that a disciplinary proceeding could be part of the lawyer’s future.  The ABA Journal treatment of the core of what happened is pretty succinct so I’ll just offer it up for your reading:

In the post, Frese told of a meeting to help prepare a client for trial on federal drug and gun charges. The client told Frese he would have a hard time connecting with blue-collar jurors because he hadn’t “had to work for anything in your life.”

Frese wrote that he was “flabbergasted” by the comment because anyone who knows him is aware of his modest background. Frese wrote that the man is an “idiot and a terrible criminal.”

“He needed to shut his mouth because he was the dumbest person in the conversation by 100 times,” Frese wrote. “You wonder why we need jails huh?”

The lawyer deleted the post in question after he was contacted by the Associated Press about it.  The article points out that the AP was able to piece together from what was written exactly who the lawyer was talking about even though the lawyer didn’t use the name of the client in the post.  The Iowa lawyer’s story highlights one of many reasons why lawyers shouldn’t be writing about their client’s matters without express and clear consent from their client.  Of course, technically, the lawyer made the situation even worse by what it is reported that he said to the AP when contacted:

Frese told AP that he told the client he was in jail because he was terrible at what he did, and they left the meeting on good terms. He didn’t immediately respond to a voicemail from the ABA Journal seeking comment.

On the judicial front, Law360 had two examples reported on the same day of judges demonstrating problems with communications as well.  One of the judges in question also hails from New Jersey.  That judge, as Law360 explained, was censured for inappropriately making certain when communicating to court staff about his own personal child support case to emphasize his status as a judge.  This came across as an obvious attempt to use his judicial office to achieve special treatment.  The other judge highlighted in Law360 this week ended up later engaging in actual conduct that was much worse than the original communications but still also managed to allow the ready access of text messaging to start him down the bad path.  As with most Law360 articles, you will need a subscription to read the full article, but you can get a strong sense of the Jeopardy category of wrongdoing from the opening blurb which explains the circumstances for which he was now offering an apology to a state ethics body in an attempt to avoid discipline:

An ex-Pennsylvania judge facing discipline for exchanging sexually explicit text messages and eventually sleeping with the girlfriend of a man participating in a court-mandated rehab program he oversaw ….

These are, unfortunately, not earth-shattering examples of “new” problems in the human condition.  They do though tend to highlight how much easier modern technology makes it for well-educated professionals to somehow make really poor judgment calls when technology makes it easy to do so and to do so rapidly.