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.)

Coming to praise rather than bury – Colorado Formal Op. 129

It is almost three months old now, but I wanted to right a word or two about a really well-constructed ethics opinion issued in Colorado, not just because it is an opinion that deserves to be read, but also because it raises a not-quite-academic question about the phenomenon of captive law firms.

The opinion put out by the Colorado Bar Association Ethics Committee, Colorado Bar Formal Op. 129, is titled “Ethical Duties of Lawyer Paid by One Other Than the Client.”

Because questions of insurance defense representation raising similar issues were previously addressed by the Committee in Formal Opinion 91, this new opinion focuses on “ethical questions that can arise in third-party payer situations that do not involve insurance as a source of payment.”  (My not-quite-academic question is importantly a variation on that theme and the different approach often allowed for the tripartite relationship….)

The opinion helpfully catalogs quite a few such scenarios, like

  • friend or family paying for someone’s defense against criminal charges
  • parents paying for representation of children
  • corporations paying for attorney fees of an employee or officer
  • contractual indemnitor paying legal fees of an indemnitee

Those last two are ones, I suspect, that lawyers don’t think about as often in terms of making sure they know what is necessary for compliance with all of the pertinent ethics rules in their jurisdictions, which if the jurisdiction tracks the approaches under the ABA Model Rules as Colorado mostly does are RPCs 1.0(e), RPC 1.6, 1.7, 1.8(f), and 5.4(c).

The opinion does a good job at addressing in detail the various ethical questions, particularly on the dynamics that can arise where, for example, the person that will be paying the freight for the representation also happens to be a client of the attorney in some other matter and how compliance with just RPC 1.8(f) and 5.4(c) alone may not be enough because of the conflict issues raised by RPC 1.7.

The opinion merits a full read, but, if you only have 1 or 2 minutes to spare, then the best part is — II.  Practical Considerations – Discussions with the Third-Party Payer — which provides insightful, detailed, and potentially uncomfortable guidance about what really ought to happen in terms of communicating to the person who will be holding the checkbook who the client actually is and to whom the lawyer’s professional duties are owed, the limitations on the rights of the person making the payments, and the consequences of non-payment.

All of this then leads to my promised question, if these same principles are the ones that would have to be adhered to by a lawyer who represents insurance policyholders for an insurance company through a model in which the lawyer’s firm is a “captive” firm of that company, would there be any realistic way to comply?  Wouldn’t the process of obtaining the informed consent of that client always require having to make crystal-clear the significant financial interest that the lawyer has in keeping his/her only source of business happy?

I say that my question along these lines is not-quite-academic, because it is actually answered in Colorado by that earlier opinion, Formal Opinion 91 which was issued in 1993 but was updated with an addendum in 2013.  For readers in Colorado, I’m pretty sure the answer is that a lot of disclosure would have to be made, but that acquiring informed consent is feasible.

But, for readers not in Colorado, there may or may not be guidance quite as clear on the question.

An inside-baseball view of judicial ethics and the media

For today, an interesting (at least I think it is interesting) story about a judicial ethics scenario and the ability of media to “shape” a story and how that ability can transform a question of judicial ethics.

About three weeks ago, I spoke with a print reporter with The Nashville Scene about questions he had on a story he was working on about a part-time judge of the General Sessions environmental court in Nashville.  This particular court, among the cases it hears, are ones over using property for purposes of short-term rentals (think Airbnb) without obtaining the required permit to do so.

The reporter’s issue involved the fact that this court would adjudicate the question of whether a property owner was pursuing this endeavor without being properly permitted and that the part-time judge in question owned several properties that were properly permitted.  The reporter was interested in my view on whether this created a disqualifying conflict for the judge under Tennessee’s judicial ethics rules.

We talked for a good bit and, ultimately, I explained my view that — based on my understanding of what the court could (and could not) decide — that the answer was “no, not a disqualifying conflict.

You can read The Nashville Scene story, which contains a fair representation of what I had to say, here.  A few days later, as the public attention on this story continued to grow, I got a call from a reporter with a TV station in Nashville who wanted to know if I’d be willing to do an on-camera interview for a story they were doing on this situation.  He said he saw The Nashville Scene story, knew my view, and wanted me to elaborate on that for the story they were doing.

We worked out a set-up so that we could do a Skype-video interview for his use and managed to talk on camera for maybe 15 minutes or so.  And I again laid out these points in significant detail about why, in my view, this simply wasn’t a conflict.  (I’m biased, but I recall giving a really good explanation of how different the scenario would be if this particular court had the power to hear challenges to the permitting system itself on constitutional or other grounds, for example.)

Cut to the story that actually aired, which you can watch here.  I’m not in it.  Normally, I’m extremely cool with situations, even where I’ve given of my time to a media outlet, where I end up on the cutting room floor.  That’s just life.  But, when you know in advance what I am going to say and I go out of my way to make things happen on your time frame, it is a little more personally frustrating.  But, I swear, I’m not writing this to vent my personal frustration or make this about me.

Instead, the reason I think any of this is interesting at all is the impact that the kind of one-sided TV segment had on what happened next… which is that the judge in question ended up resigning the position citing the fact not that there was originally a disqualifying conflict but because:

“because I believe that the public has an absolute right to feel that their court system is fair and impartial and that recent misleading media reports could call the Court’s fairness into question.”

Now, was that all there was to the story?  No.  I’ve now come to learn in the process of writing about this that there was an intervening news story regarding whether or not the judge was also violating a provision of the ordinance his court was enforcing.  You can watch a story about that here.  I’ll admit I haven’t even tried to dive deep enough into an understanding of the ordinance involved to know whether that is the equivalent of a traffic court judge who happens to get caught speeding or something more serious.  Also, my opinion is, of course, only my opinion and is not dispositive of what the right answer to the question should have been… but as a “participant” in this process, I thought it would still make for an interesting word to the wise about how stories on ethical questions can manage to be “framed” for public consumption in ways that ultimately can heavily impact the outcome.

Bad ethics opinion or the worst ethics opinion? Rhode Island 2017-02

I have perused a lot of ethics opinions over the years.  Whether a kind of scenario presents a conflict is a frequent subject of ethics opinions.  I don’t think I’ve read many that address whether a particular conflict of interest is fairly treated as a consentable conflict, however.  Having now read Rhode Island Ethics Advisory Panel Op. 2017-02, which does address that topic, I wish it hadn’t.

It is an extremely short opinion, but it gets a remarkable amount wrong in a limited amount of space.

The short version of the question it tackles is:

ISSUE PRESENTED

The inquiring attorney asks whether the law firm may represent the buyer and the seller, two current clients of the firm, in the sale of a division of the seller’s business to the buyer.

The additional factual details that you need, at minimum, to begin to wrap your head around the astoundingly bad conclusion reached in the opinion are:

  • The buyer is a manager of a division of the seller’s business.
  • The buyer will now be purchasing assets of that division from the seller.
  • The buyer will then also have to work out a lease arrangement with the seller for the premises where the division currently operates.
  • The buyer has been represented by one attorney in the firm on a number of matters unrelated to this business – that attorney has no relationship with the seller or any knowledge of work done for the seller by his/her firm.
  • The seller has been represented by a different attorney in the firm on a number of matters, including matters related to the operation of the seller’s business  – that attorney has no relationship with the buyer or any knowledge of work done for the buyer by his/her firm.
  • Both the buyer and the seller want the firm to represent them as to negotiations and drafting of necessary documents.
  • The firm, if it moves forward, intends to erect an ethics wall/screen (i.e. locked drawers for hard copy materials and limits on electronic access to files) as to the two matters so that there would be no flow of confidential information between the two sides of the proposed representation.

On those facts, the Rhode Island opinion reaches a conclusion that the conflict is so severe that the clients cannot be allowed to give their consent to it.  Now, maybe I have left out the facts that the ethics opinion treats as apparently the most important of all – the distinction between the experience level of the seller and the buyer:

The inquiring attorney states that the seller is experienced in business, including the ownership, purchase, and sale of businesses.  He/she states that the buyer is sophisticated in the industry of the division, but has never owned, purchased, or sold a business.

Well, there you go.  The seller is super sophisticated whereas the buyer is just merely sophisticated.  Seriously.

And, no there is nothing unique or unusual about Rhode Island’s version of RPC 1.7 that would explain the conclusion that this conflict is not consentable.  Rhode Island’s RPC 1.7(b) looks just like the ABA Model version, as it reads:

(b) Notwithstanding the existence of a concurrent conflict of interest under paragraph (a), a lawyer may represent a client if:

(1) the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client;

(2) the representation is not prohibited by law;

(3)  the representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation or other proceeding before a tribunal; and

(4) each affected client gives informed consent, confirmed in writing.

On the facts set out above, the Rhode Island opinion concludes that there is no way that each lawyer could “reasonably believe that they will be able to provide competent and diligent representation to the buyer and to the seller in this business transaction.”

And, if that weren’t problematic enough (it is), the opinion also does further disservice to readers with its discussion of screening, stating:

The Rules of Professional Conduct permit screening in only three situations, none of which is presented in the facts of this inquiry: screening for lateral hires under Rule 1.10, screening for former government officers and employees under Rule 1.11, and screening for former judges, arbitrators and mediators under Rule 1.12.

The omission of the modifier “nonconsensual” before screening in that quote is an important one.

It’s important because it means that the Rhode Island opinion writers either failed to understand altogether, or simply chose to ignore, the difference between aspects of the ethics rules that permit a firm to erect a “nonconsensual screen” to address a conflict even over a client’s or former client’s objection and the constant ability of a firm to erect a consensual screen if it is part of what is deemed necessary or desirable in order for one or more clients to agree to give informed consent to waive a conflict.

On the whole, this is just an astoundingly poor ethics opinion and one that reaches a result that rings contrary to the client-friendly position that I’m certain the authors thought they were taking.

As a matter of fact, yes, this potato is still hot. Why do you ask?

In October of this year, I’ll have the honor of again getting to serve as a moderator for a panel discussion at Aon’s Law Firm Symposium.  This year’s event will take place in D.C.  The topic of the panel I get to be a part of will be something of a DQ motion boot camp.  It is still months away, my guess is that we will be focusing on aspects of disqualification motion proceedings that will be harder to predict than the outcome of this case out of Mississippi should have been.

If you know a little something about conflicts, then you are probably have passing familiarity with all of the core concepts necessary to immediately predict the outcome of the scenario that was involved in McLain v. Allstate decided in the S.D. Miss.  I’ll succinctly describe the scenario for you:

Lawyer has had a long term relationship with an insurance company client.  That relationship is not as robust as it used to be as the lawyer is continuing to handle quite a few matters for them but has come to notice that no new matters have been coming from the company for quite a while.  Lawyer is contacted by a potential client who has a matter that would be adverse to this insurance company client.  Lawyer goes ahead and decides to take on the new representation but also terminate the ongoing representation of the insurance company client.  Insurance company brings motion to disqualify, and lawyer argues that insurance company client should be treated as former client and disqualification should occur only if new matter is substantially related to prior matters.

How will lawyer fare?

I have no doubt you answered this correctly.  Not well, the lawyer will not fare well.  The lawyer will get disqualified.  The court will explain that a lawyer cannot drop one client like a “hot potato” in order to transform them into a former client so that you can take on representation of a new client.

Thus, for you Dear Reader, almost all of the contents of the seven-page order disqualifying this lawyer will come as no surprise.

What might come as a surprise to you – it certainly surprised me — is that the federal judge who ordered disqualification actually included a sentence praising the lawyer involved for how he handled the situation. Specifically:

[Lawyer] undertook commendable efforts to insulate himself from a conflict of interest by declining to discuss or investigate McLain’s claims until after [Lawyer] promptly and formally terminated the firm’s relationship with Allstate.

I know people often accuse me of being stingy in terms of doling out praise, but that sentence just leaps off the page as trying too hard to find something nice to say.  Commendable seems a stretch.  Particularly so given that when you work your way back earlier in the opinion itself where it lays out the chronology of events, you will find that the lawyer in question had the new client sign a contract with his firm on October 11, 2016 and, then, on October 12, 2016 sent the letter that attempted to drop Allstate like a tuber of elevated-temperature.

If any aspect of the lawyer’s effort is commendable (and I’m still stretching the utility of the word itself), it would be the whole not-being-very-Machiavellian about it angle.  A truly Machiavellian type would have done more to attempt to manipulate the timeline of events.  Perhaps, having the new client execute an engagement letter, only after the lawyer had time to send the letter to terminate the current client relationship.  I’m not sure that not doing that qualifies as “commendable” exactly.  But it’s something.  As long as it was very close in time, the potato would still be hot and the outcome unchanged, but … like I said it would be something.

Lateral moves can be hard. One type in particular is harder than the rest.

In 2017, a lawyer moving from one law firm to another is a pretty common place occurrence.  Anyone who has been through the process knows how personally difficult and stressful the ordeal can be no matter how excited you are about your next destination.  The emotional and personal components alone can be trying, but the pressures imposed by the ethics rules are often overlooked … even though they shouldn’t be.

One area where the requirements of the ethics rules can make a potential lateral move nearly impossible is if a lawyer is looking to join a firm that is on the other side of an ongoing legal matter.  A well-done, quite succinct ethics opinion out of North Carolina issued near the end of January 2017 explains what the ethics rules actually require in order for such a move to be possible.   (And, important note to add, we’re only talking about if the lawyer looking to lateral is looking at moving from one private practice position to another private practice position.  Moves into and out of government employment are different and governed by different rules.) North Carolina Formal Ethics Op. 2016-3, titled “Negotiating Private Employment With Opposing Counsel,” lays out the sticking point that make this kind of lateral move more difficult than others — there comes a point in time when any such discussions have become serious enough — even though there is not yet any done deal — that both sets of clients have to give their informed consent for the negotiations/discussions to continue.

The ethics risk that mandates this result is the “material limitation” conflict that arises from the personal interests of the lawyers involved requiring consent under Rule 1.7(a)(2).  In laying this out, the North Carolina opinion echoes sentiments previously expressed in (1) an ABA Formal Opinion from 1996, (2) The Restatement (Third) of the Law Governing Lawyers, and (3) a Kentucky ethics opinion issued in 1998.

The North Carolina opinion also provides a similar description as did those other authorities of the moment in time that matters in terms of triggering the need to obtain the client’s consent: when the discussions become “substantive.”  The opinion also describes, in practical terms, what is necessary for each side of the potential lateral discussion to seek out and obtain consent from its respective client:

To obtain the client’s informed consent, the job-seeking lawyer must explain to the client the current posture of the case, including what, if any, additional legal work is required, and whether another firm lawyer is available to take over the representation should the lawyer seek to withdraw.  If the client declines to consent, the job-seeking lawyer must either cease the employment negotiations until the client’s matter is resolved or withdraw from the representation but only if the withdrawal can be accomplished without material adverse effect on the interests of the client.  Rule 1.16(b)(1).  Because personal conflicts of interests are not imputed to other lawyers in the firm, another lawyer in the firm may continue to represent the client.  Rule 1.10(a).

Similarly, the hiring law firm must not engage in substantive employment negotiations with opposing counsel unless its own client consents.  If the client does not consent, the firm must cease the employment negotiations or withdraw from the representation.  The firm may only withdraw if the withdrawal can be accomplished without material adverse effect on the interests of the client.  Rule 1.16(b)(1).

Most lawyers like to think of themselves as being risk averse as a general matter.  Interestingly enough, when the depths of the details are fully mined, the notion of doing what the North Carolina opinion indicates is required might seem riskier than not saying anything at all.  The situation gets more difficult for some lawyers to work through because it can be viewed as something of a modified prisoner’s dilemma situation — each side of the potential employment discussion may be making its own independent decisions about whether the situation has escalated to a point of seriousness where client notification and consent is required, and each side has its own thoughts about what is the right answer for each side (stop talking or withdraw) if the affected clients won’t consent.  While the two parties to the discussions might seemingly be in harmony about the potential move otherwise, they may very well have starkly different views in terms of balancing how important they value the business of the affected client versus the business that could be gained from the lateral move.

As a result, I have long suspected that most such moves that actually come to fruition are the products of one side or the other not strictly complying with their ethical requirements.  No, that is probably too cynical a thing to say and certainly a bit of an exaggeration of my view.

Some percentage of the moves that actually work out are the product of something less than strict compliance.  Probably not the majority, however.

The majority of them likely either involved matters for clients who are so incredibly important to the economics of the deal that there is a need to know sooner rather than later whether the impacted clients will consent or matters for clients who are of such little economic significance that all of the lawyers involved would be happy to jettison their matter if consent is not forthcoming.

An even more important factor in play that likely can be dispositive about whether such a move can be made is whether the jurisdiction involved permits the use of nonconsensual screening to avoid imputation of a disqualifying conflict.  No mention is made of this topic in the North Carolina opinion because North Carolina does not have any language in its version of Rule 1.10 to permit such screening.

In Tennessee, scenarios involving lawyers who aren’t litigators are potentially much more viable lateral moves because of our weirdish rule that treats “side switching” situations in litigation differently than in other contexts.  In Tennessee, whether a nonconsensual ethics wall can be erected to avoid disqualification from a lateral move can have a different answer depending on whether the matter is a litigation matter or not.

Our RPC 1.10 reads in relevant part:

(c) Except with respect to paragraph (d) below, if a lawyer is personally disqualified from representing a person with interests adverse to a client of a law firm with which the lawyer was formerly associated, other lawyers currently associated in a firm with the personally disqualified lawyer may represent the person, notwithstanding paragraph (a) above, if both the personally disqualified lawyer and the lawyers who will represent the person on behalf of the firm act reasonably to:

(1) identify that the personally disqualified lawyer is prohibited from participating in the representation of the current client; and

(2) determine that no lawyer representing the current client has acquired any information from the personally disqualified lawyer that is material to the current matter and is protected by RPC 1.9(c);

(3) promptly implement screening procedures to effectively prevent the flow of information about the matter between the personally disqualified lawyer and the other lawyers in the firm; and

(4) advise the former client in writing of the circumstances that warranted the implementation of the screening procedures required by this Rule and of the actions that have been taken to comply with this Rule.

(d) The procedures set forth in paragraph (c) may not be used to avoid imputed disqualification of the firm, if:

(1) the disqualified lawyer was substantially involved in the representation of a former client; and

(2) the lawyer’s representation of the former client was in connection with an adjudicative proceeding that is directly adverse to the interests of a current client of the firm; and

(3) the proceeding between the firm’s current client and the lawyer’s former client is still pending at the time the lawyer changes firms.

Thus, a Tennessee lawyer could make a move from one side of the table to the other in the middle of a $50 million real estate deal but could not make the same move if it involved moving from one side of the “v” to the other in a $10,000 automobile accident lawsuit.

The need for speed is always in conflict with the need to run conflicts. Choose speed and you might pay the price.

Even the largest and the most prominent of law firms can get themselves crosswise with clients over conflicts.  In fact, at some level, it is the largest and most prominent law firms that are most at risk of the negative ramifications that can come from conflicts of interest.

Last week, the world’s largest law firm — Dentons — which has had some past public issues associated with the conscious positions it takes on whether it has a conflict or not, found itself on the end of some further bad publicity over conflicts, but not as the result of a conscious evaluation of a conflict.  Rather, it came about in a way that can happen to almost any but the smallest of law firms — one or more lawyers in the firm moved too fast and took action before ever completing the process of checking conflicts.

The fact that the circumstances involved some extremely high-profile work — it involved a letter to threaten a prominent media outlet with a potential defamation claim on behalf of a member of Congress who is trying to be confirmed to a cabinet position in the Trump administration is a wrinkle I find intriguing for a number of reasons – even setting aside the inherent irony – because earlier in my career I frequently represented media entities on such questions.

Stories written about the letter that demanded a retraction and threatened potential action in the nature of defamation shed light on how the substance of the letter actually just served to confirm the basic accuracy of the reporting, but that wasn’t really the problem for Dentons.  Dentons’ problem was that the media outlet in question, CNN, is a firm client on other ongoing matters.  That is the kind of conflict that a basic conflicts check would easily find and avoid.

Thankfully, as soon as the left hand and right hand at Dentons figured out the situation, Dentons did exactly the right thing, sending a letter apologizing for the error and withdrawing the letter.

Media entities can tend to be pretty gracious clients, particularly when it comes to recognizing human frailty and mistakes that can come from trying to move too quickly, so my guess is that in the long run Dentons will continue to be able to have a good relationship with CNN.

Time will tell whether the public officials they aligned with to rattle a defamation saber about a story where the allegedly wrongfully excluded details would only make things worse for the official will be as gracious about the situation.  Given that one of the immediate responses of the administration advocating for the member of Congress to be confirmed was to issue a statement ambiguously saying that the letter from Dentons was “not authentic,” I wouldn’t be too optimistic.

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

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

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

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

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

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

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

 

California offers opportunity for a word (or 1,000) on the topic of sex with clients.

So, many moons ago I wrote a post about the fact that California was working through the process of trying to overhaul its ethics rules.  I said I’d get back to that topic, but never really did.  So, today, I am.  Kind of.  But not really.

In the news within the last 24-36 hours are articles about a split of opinion on whether California’s proposed revised rules should follow the ABA Model Rules to impose a ban on lawyers having sex with clients.  You can check out the short ABA Journal online snippet here.  You can read the original article referenced here.

Here is how the ABA Model Rule, Rule 1.8(j) reads:

A lawyer shall not have sexual relations with a client unless a consensual sexual relationship existed between them when the client-lawyer relationship commenced.

Pretty simple and straightforward admittedly.   At present, the articles explain that California rules only prohibit lawyers from coercing sex with a client or demanding sex in exchange for legal representation.  (That’s not really much to prohibit when you think about the fact that both such acts would already be prohibited under other ABA Model Rules.  For example, the latter essentially being prostitution and thus likely a violation of Model Rule 8.4(b).)

The news articles grab quotes and thoughts from lawyers on either side of the argument in California which mostly boil down to — the relationship between attorney and client is so close that the injection of sex into the mix will always result in imbalance v. consenting adults should be permitted to do as they please even if one of them is the other’s attorney.

There is little I can say on this subject definitively, but I do feel pretty strongly that the term “a blanket sex ban” used in the article is the wrong one as it can be read to be far too narrow a restriction (as opposed to “a blanket ban on sex”), and it is one where I read it and can’t help but hear Sterling Archer, in my head, immediately say: “Phrasing.”

My reason for writing though is not just to be able to make that Archer reference, I swear.  My reason for writing is to advocate for my belief that the Tennessee approach to this issue in the ethics rules really gets it right and ought to be emulated by California and anywhere else that is in need of a rules fix on this front.

In Tennessee, we did not adopt Model Rule 1.8(j) but in large part because it is too narrow rather than because it is too broad.

The Model Rule, for example, doesn’t cover a lot of ground that is problematic.  Imagine the context of a divorce case in which the lawyer for the wife is having sex with the husband.  Or imagine a criminal defense lawyer who is representing a jailed husband but having sex with the husband’s wife.  Or imagine an even less conventional arrangement where there are three people in a room and sexual relationships are present but at no point does the attorney in the room engage in sexual conduct with the person in the room who happens to be the attorney’s client.

Those are all real conflict of interest problems for the lawyers in question but the approach taken by the ABA Model Rules wouldn’t prohibit any of them.   (They also each have really happened and been the subject of publicity but I’m not going to dig up and provide links so as not to open any old wounds for anybody involved.)

In Tennessee, we recognized (and in so doing we largely followed the lead of D.C. if memory serves) that the only approach to the issue of conflicts created for lawyers by sexual relationships that goes as far as it needs to but that also still provides for the ability, in rare circumstances, for a lawyer and a client to have a mutually-consented-to sexual relationship (perhaps say if they were married) is an approach that treats the issue as just one variety of “personal interest” conflict of a lawyer that can result in a material limitation conflict under RPC 1.7(a)(2).

Thus, our rules address the topic through three paragraphs of Comment to RPC 1.7 as follows:

[12]  The relationship between lawyer and client is  fiduciary one in which the lawyer occupies the highest position of trust and confidence.  Because of this fiduciary duty to clients, combing a professional relationship with any intimate personal relationship may raise concerns about conflict of interest, impairment of judgment of both lawyer and client, and preservation of attorney-client privilege.  These concerns may be particularly acute when a lawyer has a sexual relationship with a client.  Such a relationship may create a conflict of interest under paragraph (a)(2) or violate other disciplinary rules, and it generally is imprudent even in the absence of an actual violation of these Rules.

[12a]  Especially when the client is an individual, the client’s dependence on the lawyer’s knowledge of the law is likely to make the relationship between the lawyer and client unequal.  A sexual relationship between lawyer and client can involve unfair exploitation of the lawyer’s fiduciary role and thereby violate the lawyer’s basic obligation not to use the trust of the client to the client’s disadvantage.  In addition, such a relationship presents a significant risk that the lawyer’s emotional involvement will impair the lawyer’s professional judgment.  Moreover, a blurred line between the professional and personal relationships may make it difficult to predict the extent to which communications will be protected by the privilege, because communications are protected by the privilege only when they are imparted in the context of the client-lawyer relationship.  The client’s own emotional involvement may make it impossible for the client to give informed consent to these risks.

[12b]  Sexual relationships with the representative of an organizational client may not present the same questions of inherent inequality as the relationship with an individual client.  Nonetheless, impairment of the lawyer’s independent professional judgment and protection of the attorney-client privilege are still of concern, particularly if outside counsel has a sexual relationship with a representative of the organization who supervises, directs, or regularly consults with an outside lawyer concerning the organization’s legal matters.  An in-house employee in an intimate personal relationship with outside counsel may not be able to assess and waive any conflict of interest for the organization because of the employee’s personal involvement, and another representative of the organization may be required to determine whether to give informed consent to a waiver.  The lawyer should consider not only the disciplinary rules but also the organization’s personnel policies regarding sexual relationships (for example, prohibiting such relationships between supervisors and subordinates).

I happen to think these three paragraphs cover the waterfront quite ably when it comes to running such an issue through the “material limitation” conflict spectrum as a personal interest of the lawyer that can impact the representation.

To the extent we stole this good idea from D.C., California ought to feel free to steal it from us should it wish.