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.

 

The intersection of the ethics rules and the GDPR “right to be forgotten”

Although today is Halloween in my part of the world, I am not offering any spooky content.  I thought about trying to replace all mentions of Maryland in this post with Scaryland, but that just seemed like I was trying too hard.

In fact, I’m a bit torn about even writing about this particular topic because I’m really of two minds in all respects about what to say about Maryland becoming the first U.S. jurisdiction to issue an ethics opinion attempting to wrestle with any aspect of the EU’s General Data Protection Regulation (“GDPR”).

On the one hand, it seems like Maryland ought to be applauded for trying to be on the leading edge of issues of concern and many lawyers (and their firms) are struggling with exactly what GDPR might require of them.

On the other hand, the core premise of the inquiry being addressed involves an assumption about a legal question — not an ethics issue — and is the kind of thing ethics-opinion-writing bodies likely ought to stay away from.

Lots of commentators will give ethics-opinion-writing bodies grief for not, for example, striving to apply Constitutional issues when issuing opinions about the ethics rules.  I’ve probably done that myself in the past.  But, on the whole, more trouble for lawyers can likely come from ethics opinions straying outside the lines and getting a legal issue altogether wrong.

That might or might not have been how it would have shaken out if the Maryland State Bar Association Committee on Ethics had fully committed to trying to figure out whether the premise of the question posed to it in Opinion No. 2018-06 was even how the GDPR would work in the circumstances.

Instead, the committee flagged for the reader the possibility that the GDPR would not require the lawyer to respect the request to be forgotten at all but offered up what is, on the whole, pretty sound guidance that lawyers can bear in mind as to this and similar questions as other jurisdictions start adopting new privacy laws and regulations that may hit closer to home than the GDPR.

The question posed relied on the premise that a former client, if a citizen of the EU, could exercise the “right to be forgotten” by demanding the lawyer delete data about the person and, thereby, cause the lawyer to delete information that would otherwise protect the lawyer in terms of conflict checking in the future to avoid taking on a new client or matter that would involve an unethical conflict of interest as to the former client representation.

The core of the guidance ultimately given – again explicitly premised on assuming that it might ever be necessary – is this:

If a former client asks an attorney to delete the information needed to manage conflicts of interest, and the GDPR requires the attorney do so, we believe that the client’s request can act as a waiver of conflicts that could have been discovered had the data been retained if: (1) the firm provides written advice to the former client that fully informs the former client that deleting the information could result in a conflict and that by requiring such deletion the client consents to the firm’s potential future representation of other clients with conflicts that might have otherwise have been discovered, and (2) none of the attorneys who handle the matter for the firm have any retained knowledge of the former client’s information.

That’s pretty good guidance, actually.

It probably would have been better though if they hadn’t imposed quite so large a burden of communication and advice to the firm in response to the former client.  I think that simply saying that any such request from a former client can be treated by the firm as equivalent to a waiver on the basis that a former client cannot demand that s/he be forgotten and then try to later claim the “forgotten” relationship presents a conflict.

You can read the full Maryland opinion here.

And, if you are interested in more opportunities to hear me try to talk intelligently about what the GDPR does actually mean for U.S. lawyers, I’ll be participating in a panel discussion in Washington, D.C. on November 9 as part of a joint program presented by APRL and the Law Society of England and Wales.  If you’re interested, you can register at this link.

Can’t stop, won’t stop. Now … full stop.

I’m really, truly not trying to fall into the habit of only managing one post a week.  As proof, here’s a post about a Tennessee lawyer who couldn’t/wouldn’t follow the rules.

It is a fascinating case study for at least two reasons.  One is that discipline for conflicts of interest is, all things considered, relatively rare and, yet, this lawyer’s failure to recognize and avoid a conflict of interest has now led to disbarment.  Second is that it really wasn’t the conflict of interest that got punished with disbarment it was the lawyer’s violation of another rule I’ve mentioned before: The First Rule of Holes.  “When you are in one, stop digging.”

When you violate that rule, you end up in a hole from which you cannot climb out.  That is the end of the story for Homer Cody.

Cody has now been disbarred by the Tennessee Supreme Court in an opinion released earlier this week.  How did he get there?  Well, here’s the short version: he took on a representation that created a conflict from day one and then, despite the imposition of escalating discipline, refused to comply with court orders saying that he had to withdraw from the representation and then kept representing the clients involved even while suspended.

The slightly longer version?  Well, here goes:

A lawsuit was filed all the way back in 2002 that sought judicial dissolution of a childcare entity and its executive director over alleged self-dealing transactions between the executive director and the entity.  In 2003, that executive director was indicted by a grand jury, and then pled guilty to, two counts of theft from the childcare entity.  Near the end of 2004, Cody entered an appearance in the civil lawsuit as an attorney representing both the childcare entity and its executive director.  Joint clients with an obvious conflict between their interests.  That case ended in a ruling that the executive director had failed in her fiduciary duties to the childcare entity and a judgment entered against her in favor of the receiver  – overseeing the entity now in dissolution – for almost $300,000.  Cody filed a notice of appeal from that ruling again as an attorney for both the entity and the executive director.  Who continued to be two clients with glaringly obvious conflicts between them.

In 2007, counsel for the receiver moved to disqualify Cody and, ultimately, in 2008, our state’s Court of Appeals, ruled that Cody was disqualified from representing either of the clients.  Cody, however, continued to undertake actions representing both clients, a contempt action was pursued, and another Court of Appeals ruling was issued emphasizing that Cody had a conflict and was to refrain from representing the entity or the executive director and sent its ruling to our Board of Professional Responsibility.  The BPR filed a petition for discipline in 2011 and that proceeding ended in a public censure being issued against Cody in March 2012.

Despite that fact, Cody (shovel in hand) continued to file pleadings in court as an attorney for both clients.  This resulted in a second disciplinary petition.  In response to that second disciplinary petition, Cody filed a RICO case in federal court, as attorney for the same two clients, claiming that pretty much everyone involved in the court proceedings against his clients were using the Tennessee judicial system “to steal, embezzle, defraud, and to carry out other illegal activities.”  The pending disciplinary case was amended to bring more charges over the representation in the new federal court case.  That disciplinary case resulted in the imposition of an 180-day suspension of Cody’s license in 2015.

I’m guessing at this point, Dear Reader, you can guess what happens next (if for no other reason than that I sort of told you a few paragraphs up in the short version).  During his 180-day suspension, Cody drafted appellate briefs for the same clients, after their RICO case had been dismissed, and had them sign and file them as if he was not involved.  That resulted in a new disciplinary proceeding and culminated in a new one-year suspension in 2016.  Thereafter, Cody prepared three more appellate briefs for those clients — including a petition for cert with the U.S. Supreme Court (!) during his one-year suspension and, in 2017, was hit with a new two-year suspension.  During the one-year suspension but before the two-year suspension began, Cody went back to the state level trial court where it all started and filed an “Open Refusal to Obey Judicial Orders,” along with one or two other filings (including a challenge to the receiver’s fees and expenses), and then, during the two-year suspension period, he filed a “Motion for Determination of Proper Venue.”

Those acts resulted in Cody being found in criminal contempt and actually sentenced to 30 days in jail earlier this year.  Those acts also brought about yet another disciplinary proceeding against him, which he defended by denying the legitimacy of the orders of the Court suspending him, and that resulted in August 2018 in an order disbarring him from the practice of law.

All in all, his saga is a remarkable story that demonstrates at least three things:

(1) you can dig a pretty deep hole over the course of 14 years;

(2) there has to have been something else going on to explain the public meltdown that this lawyer managed to have after apparently practicing for more than 25 years without receiving any public discipline; and

(3) the BPR can truly be dedicated to the concept of incremental discipline when it wants to be as it is almost as hard to believe that Cody was given 180, 1-year, and then 2-year suspensions in these circumstances before ever being disbarred as it is to believe that he kept going out and getting new shovels.

RPC 5.6 and settlement agreements: The TN BPR messes up another ethics opinion.

This is not truly a development that merits the “Bad Ethics Opinion or the Worst Ethics Opinion” treatment, but it is a development that deserves commentary.

Last week while my wife and I were getting some short R&R, the Tennessee Board of Professional Responsibility issued Formal Ethics Opinion 2018-F-166.  If all you read of it were the first two paragraphs, it would sound like a reasonable (albeit somewhat circular) ethics opinion to have issued:

The Board of Professional Responsibility has been requested to issue a Formal Ethics Opinion on the ethical propriety of a settlement agreement which contains a confidentiality provision that prohibits any discussion of any facet of the settlement agreement with any other person or entity, regardless of the circumstances, and which prohibits the requesting attorney from referencing the incident central to the plaintiff’s case, the year, make, and model of the subject vehicle or the identity of the Defendants.

OPINION

It is improper for an attorney to propose or accept a provision in a settlement agreement that requires the attorney to be bound by a confidentiality clause that prohibits a lawyer from future use of information learned during the representation or disclosure of information that is publicly available or that would be available through discovery in other cases as part of the settlement, if that action will restrict the attorney’s representation of other clients.

So, again, that sounds reasonable in a vacuum (and it’s that last clause that makes it relatively circular as an application of RPC 5.6.  As the opinion makes clear that the rule on which it is premised and hinges is RPC 5.6(b), which provides:  “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.”

But, this opinion isn’t issued in a vacuum.  It manages over the course of 4 pages to barely acknowledge the existence of an earlier-issued ethics opinion — Formal Ethics Opinion 98-F-141.  It also doesn’t even mention the existence of a more recent Formal Ethics Opinion 2010-F-154.  Those oversights are extremely unfortunate because the existence of those two FEOs should have made the issuance of this new FEO entirely unnecessary.

FEO 98-F-141 explained that a plaintiff’s attorney should not be required to, and should not agree to, be a party to a release and settlement agreement of their client unless the attorney is specifically releasing a claim for attorney fees.  Otherwise, being a party to the release creates conflict of interest issues between the client and the lawyer.  FEO 2010-F-154 repeated this guidance as part of explaining why – despite the problems associated with Medicare super liens — settlement agreements could not require the lawyer for the plaintiff to agree to indemnify the defendants for such liens.  Thus, the second paragraph of FEO 2018-F-166 (if it was ever issued at all) could have read:

We have already opined in FEO 98-F-141 and FEO 2010-F-154 that it is unethical for a plaintiff’s attorney to be required to, or to agree to, be a party to a client’s release and settlement agreement.  For any such provisions to be enforceable against plaintiff’s counsel, (s)he would have to be a party to the settlement agreement, which we’ve already explained is a no-no.  As long as the lawyer is not an actual party to the agreement, then any such provisions are only binding upon the client – not the lawyer — and whether or not the client wishes to agree to them is up to the client given that RPC 1.2(a) declares that the client’s decision to settle a case is something that a lawyer has to abide.  Thus, if a client wants to agree to terms of settlement that are lawful and the lawyer cannot be held to those terms as a party, then the client gets to do as the client wishes in that respect.

And then, FEO 2018-F-166 could have stopped right there.

Since it didn’t go down that way, this new opinion is, at best, unhelpful to the extent that it implies that a client doesn’t have the right to agree to things that they obviously would have the right to agree to or that it implies that if a client does it is somehow binding on the client’s lawyer going forward in future situations even if the lawyer is not a party to the release and settlement agreement and not bound thereby.

Outside counsel guidelines and term limits

While I am on something of a short streak of writing about people much more famous and influential than I am, it seems as good a time as any to offer my thoughts about the article that two very fine lawyers with Hinshaw & Culbertson wrote for The Professional Lawyer in 2017 about even more aspects of the growing problems outside counsel guidelines are creating for lawyers in private practice.  (These same two authors did an earlier article that talked about the problems with indemnity provisions in such guidelines – you can go read that here if you’d like.)  The more recent article was titled The New Battle Over Conflicts of Interest: Should Professional Regulators–or Clients–Decide What is a Conflict?

If you don’t know the article of which I speak, or it has been a while since you read it, you can go read it (again) here.

It is difficult to contest the point being made by the authors in this article, and the earlier one, that increasingly frequent provisions in OCGs are creating real problems for lawyers in private practice.  Particularly so, those pieces of OCGs that feel like they are overreaching related to who must be treated as clients for purposes of determining conflicts.

The authors summarize the nature of these issues quite well as involving clients using OCGs to “expand[] the definition of who is the client (far beyond the bounds of prevailing case law);” “limit[] the universe of other clients from whom lawyers and their firms may accept work;” and to “expand[] the definition of ‘interest’ and ‘positional’ conflicts in order to prevent lawyers and firms from undertaking or continuing to work for other clients that may take public positions on issues that the client unilaterally—and often ex post facto—deems adverse to its own interests.”

What I do disagree with, however, is the authors’ proposal for how to fix this problem.  The authors propose that states amend their versions of Model Rule 5.6 to make it unethical for lawyers to propose or agree to restrictions on their right to practice in connection with being hired by a client, just as is now the case for employment agreements or as terms for resolving a client’s matter.

Under the proposed revision, Rule 5.6 would read as follows (the bold and italicized piece being the new stuff):

A lawyer shall not participate in offering or making:

(a) a partnership, shareholders, operating, employment, or other similar type of agreement that restricts the right of a lawyer to practice after termination of the relationship, except an agreement
concerning benefits upon retirement; or

(b) an agreement in which a restriction on the lawyer’s right to practice is part of the terms of engagement of a lawyer by a client or of the settlement of a client controversy.

My immediate reaction to reading that proposal was to think of the problems I have whenever people argue for imposing term limits on their elected representatives.  You get the opportunity to vote people out every time they come up for re-election.  You shouldn’t need a law that limits the number of terms they can serve because you can always simply just vote them out of office in the regular course of things.

The solution to overreaching in outside counsel guidelines is equally simple: lawyers and firms should reject OCGs that go too far and refuse to agree to terms that unreasonably define who must be treated as the client or that become tantamount to restrictions on the right to practice.

The counterargument for that position is about the same as the counter-argument when the discussion involves term limits — the deck is typically too stacked in favor of incumbents so that the balance of power is truly off and that simply saying “you can vote them out” is naive.

The nature of present day demands on lawyers and law firms means that most firms and lawyers won’t be willing enough to turn work away to push back on outside counsel guidelines that are unreasonable and amount to overreaching.  Any firm that really wants to take a stand will have too much economic pressure on it to do so.  I hear the point, but, while that might be a pretty bad basis for enacting term limits and preventing some truly effective politicians from serving for as long as their constituents might like, it’s an extraordinarily bad basis for revising an ethics rule.

In particular, it is a bad basis for revising an ethics rule when there are already one or more ethics rules that lawyers can point to as being breached by aspects of the very OCGs being complained about.  For example, the authors point out that OCGs, in order to enforce their expansive requirements about what is a conflict, also impose obligations on the lawyer to tell the client about matters they are contemplating undertaking.  In so doing, these OCGs are demanding that lawyers agree to disclose information that they are obligated to treat as confidential under RPC 1.18 (assuming they have that provision in their state).

A lawyer who wants to refuse to agree to outside counsel guidelines of that type would have a strong, persuasive argument to offer not only about that violation but the potential risk that an in-house lawyer would have – if insisting that it remain in the agreement – of being considered to have violated their state’s version of Model Rule 8.4(a) which, in most places, makes it a disciplinary violation for a lawyer to “knowingly … induce” another lawyer to violate the ethics rules.

It also seems to me be a bridge too far for lawyers and firm to be able to demand that clients be permitted to agree to advance conflict waivers and similar contractual provisions which would serve to narrow the scope of conflicts but also demand that clients should not be able to propose that the lawyer agree to treat requirements of conflicts even more broadly.

The authors also offer an alternative to their own proposed revised language – perhaps to avoid issues associated with when a restriction would be made a term of engagement or not, by suggesting that Rule 5.6 could otherwise be revised simply in (b) to prohibit “an agreement containing a restriction on the lawyer’s right to practice.”  There would be significant problems — perhaps in the nature of unintended consequences – that would come from that alternate revised Rule 5.6 proposal.

If someone is being hired as an in-house lawyer, their corporate employer should be permitted to require that they restrict their practice to only representing the corporate employer and not represent any other clients while employed in-house.  Technically speaking, the second version of the revised Rule 5.6 wouldn’t permit that.  And, even if you are a private practice lawyer and one client wants to provide you with enough work that they also want to have you agree that you won’t work on any other matters for any other clients, why shouldn’t that be okay?

There are examples out there of such lawyers other than just Tom Hagen, the lawyer in The Godfather.

And, coincidentally, Hagen’s also a pretty good example of a lawyer who should have simply turned down a proposed client engagement rather than allowing economic benefits to sway his decision.

 

“Boies will be boys was never a good response” or “Advance waivers are still better than unwanted advances”

(I’ve apologized once before for a Bullwinkle-style title and here I am doing it again.  The underlying societal issues are not funny in the least but it’s been a hard week for many folks and a little bit of levity can help you make it through.)

If you are inclined to read this blog from time to time, then you likely already have read or heard something about the mess David Boies has found himself in related to his firm’s simultaneous representation of The New York Times and his efforts to assist another client Harvey Weinstein in working with a black-ops style investigation outfit to try to stop an NYT story about Weinstein.

If you haven’t read anything about it, there is a wave of reporting to catch up on.  You can start with this ABA Journal article which gives easy jumping off points to this article in The Atlantic, and this The New York Times article, and this further ABA Journal article addressing additional issues after the NYT fired Boies’s firm.

The whole situation weaves a tale more than worthy of a law school essay exam question.  I could likely manage to spend the full three hours of the Ethics Roadshow talking about the ethics issues raised in the scenario.  (I probably won’t, but you’ll never know for sure unless you attend in one of the six cities where it will be taking place.)

While there are quite a few angles ripe for discussion, I just want to talk a bit today about the advanced waiver angle involved.  As most of the articles discuss, in addition to minimizing his role in assisting Weinstein, Boies pointed to language in his firm’s engagement letter with the NYT as authorizing certain conflicts in advance.

The topic of whether and when a lawyer can obtain an advanced waiver from a client to a future conflict is still a surprisingly controversial one in ethics and lawyering circles.  There are some who ardently fight for the position that no conflict can be waived in advance, even by sophisticated clients.  I don’t count myself among their number and, instead, believe that the availability of advance conflicts waivers is an important part of modern law practice from an ethics standpoint.  Along those lines, I believe that Tennessee, and other states that have language in a Comment to RPC 1.7 patterned after the Model Rules get the ethical guidance on the situation correct.

Tennessee’s Comment [22] to RPC 1.7, for example, explains how things generally should work when a lawyer requests a client to waive conflicts that might arise in the future:

The effectiveness of such waivers is generally determined by the extent to which the client reasonably understands the material risks that the waiver entails.  The more comprehensive the explanation provided to the client of the types of future representations that might arise and the actual and reasonably foreseeable adverse consequences of those representations, the greater the likelihood that the client will have the requisite understanding.  Thus, if the client agrees to consent to a particular type of conflict with which the client is already familiar, then the consent ordinarily will be effective with regard to that type of conflict.  If the consent is general and open-ended, then the consent ordinarily will be ineffective, because it is not reasonably likely that the client will have understood the material risks involved.  Nevertheless, if the client is an experienced user of the legal services involved and is reasonably informed regarding the risk that a conflict may arise, such consent to a future conflict is more likely to be effective, particularly if, e.g., the client is independently represented by other counsel in giving consent and the consent is limited to future conflicts unrelated to the subject matter of the representation.

This Boies/Weinstein/NYT saga, however, isn’t particularly all that helpful in terms of providing guidance into the question of whether any advance conflict waiver obtained by Boies complied with New York’s ethics rules, but it is extremely helpful in reminding that whether or not an advance conflict waiver passes muster under the ethics rules is just one aspect of the situation that lawyers and law firms need to keep in mind (and though it is a bit sacrilegious to say it might not always be the most weighty aspect of the situation).

The Boies/Weinstein/NYT saga is extremely helpful as a reminder that whether to take on a representation that can only be justified to another client on the basis of an advance waiver is extremely tricky as a business decision.

Boies’s firm included an advance waiver in its engagement letter with the NYT undoubtedly to try to maximize the number of clients it could have has now managed to lose both the NYT and Weinstein as clients.

The loss of Weinstein under all the circumstances might be a net positive, but the loss of the NYT likely stings and would have stung even if it hadn’t ended up managing to say this publicly in the process of cutting ties with Boies:

We consider this intolerable conduct, a grave betrayal of trust, and a breach of the basic professional standards that all lawyers are required to observe. It is inexcusable and we will be pursuing appropriate remedies.

Whether or not an advance waiver is consistent with the ethics rules, an offended client can always still decide to drop the lawyer or his firm and what that mess might looks like if or when that comes to pass might be the most practical way for lawyers to think through these issues.

 

Coming to praise rather than bury: NYC Bar Op. 2017-6

About two weeks ago, I had the opportunity to speak to the Tennessee Defense Lawyers Association for an hour on ethics issues, using a “hot topic” format.

One of the topics I covered was the many things there are beyond just being parties on opposite sides of the “v” in litigation that present conflicts to be managed, avoided, and addressed in handling lawsuits.

I mentioned the difficult situations that can arise as a case evolves and someone shows up on the radar screen as an important witness — particularly an expert witness — and the importance of running supplemental conflicts checks to make sure that a lawyer or her firm doesn’t first figure out the problem when learning during the deposition that the witness claims to be a client of the lawyer’s firm.  That is a scenario that lawyers sometimes don’t always think about in advance but for which there is little, if any, push back on the idea that it is a conflict about which to be concerned.

I pivoted from that topic to a similar topic — issuing subpoenas for documents to witnesses — that lawyers are more inclined to want to try to intellectualize as not creating a conflict situation because it can have the feel of a “routine” act and it also “feels” like an administrative hassle.

At the time of that presentation, I somehow had not yet seen a recent Formal Ethics Opinion out of the New York City Bar on that very topic – if I had seen it I certainly would have pointed to it — because it is a very well done treatment of the issue.  The question addressed in NYC 2017-6 is:

What ethical restrictions apply when a party’s lawyer in a civil lawsuit issues a subpoena to another current client or may need to do so?

Now, a word before delving into the insight that can be gleaned by all lawyers in all jurisdictions from this opinion about an important, but not dispositive, difference in the language of New York’s Rule 1.7(a).

In Tennessee, and many other jurisdictions with rules patterned after the ABA Model Rules, RPC 1.7(a) reads so as to address two types of conflicts as being “concurrent conflicts of interest.” One where the lawyer would be required to represent one client in matter directly adverse to the interests of another client, and one where the lawyer’s duties to someone else (or the lawyer’s own personal interests) will impose a “material limitation” on the lawyer’s ability to represent the client.

The NY version of Rule 1.7(a) has slightly different language on each of those two fronts.  NY’s 1.7(a) indicates that a lawyer has a conflict:

if a reasonable lawyer would conclude that either (1) the representation will involve the lawyer in representing differing interests; or (2) there is a significant risk that the lawyer’s professional judgment on behalf of a client will be adversely affected by the lawyer’s own financial, business, property or other personal interests.

And, “differing interests” is specifically defined in NY’s rules to mean “every interest that will adversely affect either the judgment or the loyalty of a lawyer to a client, whether it be a conflicting, inconsistent, diverse, or other interest.”  Now those NY variations on the language make it a bit easier and cleaner to see the issues created when a lawyer pursues a subpoena for records from one client for another client but so much of the opinion that explains the analysis is written not just well, but in a practical fashion that, in my opinion, allows it to resonate for lawyers in jurisdictions with the ABA Model Rule language on conflicts as well.

After surveying the landscape of earlier opinions on these subjects, the NYC opinion laid out a number of helpful conclusions:

First, issuing a subpoena to a current client to obtain testimony from that client will ordinarily give rise to a conflict of interest.  Obtaining testimony typically inconveniences the witness, involves probing a witness’ recollection, and at times may involve challenging and confronting the witness, any of which a current client may reasonably perceive to be disloyal.

[snip]

Second, it will ordinarily be a conflict of interest for a lawyer to seek to obtain documents via a subpoena to a current client.  The production of documents in response to a subpoena very often requires an allocation of resources (time and money) which the subpoenaed party would prefer not to expend.  This is all the more so when outside counsel needs to be retained, and the scope of production needs to be negotiated.

[snip]

The opinion then goes on to offer some further practical advice for lawyers to keep in mind because of their ethical obligations which the opinions lays out as:

(a) the necessity for lawyers to run conflict checks prior to serving a subpoena; (b) the potential need to decline or limit a representation, or to obtain informed consent, if a lawyer knows before being retained that subpoenaing a current client may be necessary; and (c) the retention of “conflicts counsel” to avoid the need to withdraw, or the risk of disqualification, when a lawyer learns during the course of a litigation of the need to subpoena another current client.

The opinion does go on to provide helpful explanatory details for each of those topics, and you can go read the opinion in full at this link.

 

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

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

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

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

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

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

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

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