DC Ethics Opinion 370 – Y’all knew I wouldn’t be able to resist

So, the D.C. Bar has come out with a far-reaching, sort of two-part ethics opinion addressing lawyers and social media usage.  Opinion 370 (Part 1) can be grabbed here.  Opinion 371 (Part 2) from here.  Opinion 370 has lots of really good parts, but much of the publicity it has received to date revolves around something it throws out for lawyers to bear in mind and be wary of that hasn’t really been said by opinion-writing entities before.

Here’s how the ABA Journal online headline treated it – “beware” of “social media statements on legal issues.”  Other aspects of the reporting I have seen described it as warning lawyers who offer opinions online of the potential for creating an “issue” conflict.  There’s a reason, I think, this topic hasn’t been explored much by other opinion-writing bodies:  it is a relatively silly and irresponsible take.  Regardless, given the minimal treatment of the issue that the opinion offers, even if you think there were merit to flagging the issue for consideration, the portion of Opinion 370 that “addresses” it still would be better left on the cutting room floor.

Here, in its entirety, is the analysis of this issue as a risk for lawyers from the DC Opinion:

Caution should be exercised when stating positions on issues, as those stated positions could be adverse to an interest of a client, thus inadvertently creating a conflict. Rule 1.7(b)(4) states that an attorney shall not represent a client with respect to a matter if “the lawyer’s professional judgment on behalf of the client will be or reasonably may be adversely affected by . . . the lawyer’s own financial, business, property or personal interests,” unless the conflict is resolved in accordance with Rule 1.7(c). Content of social media posts made by attorneys may contain evidence of such conflicts.

Now, to help get your bearings straight if you aren’t a D.C. lawyer, D.C.’s Rule 1.7(b)(4) is different from what is set out in the ABA Model Rules and, thus, different from what we have here in Tennessee (for example) in the closest equivalent rule, RPC 1.7(a)(2).  Our RPC 1.7(a)(2), just like the ABA Model, establishes a conflict of interest — albeit a potentially consentable one — where “there is a significant risk that the representation of one or more clients will be materially limited by the lawyer’s responsibilities to another client, a former client or a third person or by a personal interest of the lawyer.”

In a (stop-me-if-you-heard-this-one-before) well-done story by Samson Habte with the ABA/BNA Lawyers’ Manual on Professional Conduct, some quotes are gathered from folks pointing out that the concept of an “issue” or “positional” conflict of interest necessarily involves or requires taking contrasting positions in front of one or more tribunals and, thus, a lawyer’s public statements of opinion about a legal question couldn’t create a positional or issue conflict.

In Tennessee, for example, we address issue/positional conflicts of interests in Paragraph [24] of our Comment to RPC 1.7.  While incapable of being that kind of conflict, supporters of the D.C. Opinion warning might argue that it is still a risky endeavor to express opinions about a legal issue because the lawyer might then have a “personal interest” in how something is resolved that would materially limit the ability to represent a client.

To me, that kind of approach to the topic not only misunderstands what it means to be a lawyer representing a client but also what the rules say in a variety of places it means to be a lawyer at all.  I’ll stick for now to just the Tennessee rules though I’d venture a guess that similar principals are laid out in D.C.’s rules.

In the Preamble to our Rules, in the second paragraph, we lay out a list of things that a “lawyer” is and, included among them, is “a public citizen having special responsibility for the quality of justice.”  In the seventh paragraph of the Preamble to the Rules we say:

As a public citizen, a lawyer should seek improvement of the law, access to the legal system, the administration of justice, and the quality of service rendered by the legal profession.  As a member of a learned profession, a lawyer should cultivate knowledge of the law beyond its use for clients, employ that knowledge in reform of the law; and work to strengthen legal education.

Further, we have a rule, RPC 6.4, patterned after ABA Model Rule 6.4, that specifically makes the point that lawyers can ethically undertake service in connection with entities that seek to reform the law or its administration even though such efforts could detrimentally affect the interests of a client of the lawyer.  If a Tennessee lawyer can engage in organized efforts to reform the law even though those efforts, if successful, might detrimentally affect the interests of one of the lawyer’s clients, then absolutely they can make public statements about what the law should be without violating the ethics rules.

Now, might a client decide not to hire a lawyer who has already indicated a personal belief contrary to the client’s position.  Sure, and they’d have every right to make that decision.  But they might also make a different decision and think that, if the lawyer is willing to take on and argue their position despite past public statements to the contrary, it would make their arguments stronger.

To my knowledge. opinion-writing entities have never warned lawyers about writing learned treatises or books on legal subjects or discouraged lawyers from speaking at Continuing Legal Education events or seminars (which are these days often videotaped and archived) because of some notion that expressing an opinion about a legal issue could create an ethical conflict for the lawyer.  Seems to me that the same “logic” that drove the almost offhand reference by the DC Bar in the Ethics Opinion could be applied to tell lawyers to “beware” of such other activities as well.

One thing I hope everyone could agree upon though is: if you are going to go to the trouble of injecting this issue into what is otherwise an extremely lengthy ethics opinion, then you should have done a better job of tackling the issue comprehensively rather than simply throwing out a half-baked statement that could serve to dissuade lawyers from speaking out.

Yet another decision coming out of Washington that complicates life.

Nope.  This too is not a post having anything to do with the recent election.  The Washington in the title is the State of Washington, and the decision is the controversial 5-4 decision issued by the Washington Supreme Court in Newman v. Highland Sch. Dist. back on October 20, 2016.  The Washington court, over a strenuous dissent, ruled that the attorney-client privilege did not apply to protect a lawyer’s communications with a former employee of the lawyer’s corporate client.

You can read the entirety of the opinion, if you’d like, here.  But, I’d suggest that you’d do just as well to read the wonderful treatment of the opinion, and the interviews obtained from prominent folks about it, in this piece put out by Joan Rogers with the ABA/BNA Lawyers’ Manual on Professional Conduct.  Joan, as always, does a great job with a pretty deep dive into the issues raised.  [And, see, this is proof that I don’t only praise the ABA/BNA reporters when they quote me in a story.  ; ) ]

I find myself in agreement with the dissent and those interviewed by Joan that are critical of the opinion, but not only for the way that the ruling takes a crabbed view of the privilege in the corporate context and seems to fail (or be unwilling) to grasp that people who have certain important information belonging to the corporation that the attorney needs to know may very well have moved on to a different place of employment by the time the corporation’s lawyer needs to speak with them.

The other concern I have about this sort of outcome on privilege is that it can serve to drive lawyers, as a workaround, to decide to take on representation of the former corporate employee in what becomes a joint representation with the corporation in the matter in order to be able to secure application of the privilege to communications.

There is nothing inherently wrong with such an approach, but it does create real potential for claims to be raised by adversary counsel that the undertaking is intended solely to restrict them under the relevant analog to Model Rule 4.2 from being able to communicate with the former employee.  (Of course, depending on the particular language of the jurisdictions RPC 4.2 and accompanying comments, there hopefully already exists an argument for the lawyer involved that the person was treated as off-limits under RPC 4.2, but I digress a bit.)

From my experience, the more fundamental problem is that lawyers pursuing such a course — often with a blindered focus on privilege issues — do not always take the time to think through all of the other angles that can come into play by taking on this second client in the matter.

The concept of an “accommodation” client is one that some prominent minds in the legal ethics community consider to be at least highly controversial if not altogether antithetical to the premise of an attorney-client relationship.  Nevertheless, it is a recognized concept and a lawyer can lay out the concept in an engagement letter with this former employee to indicate that if something goes wrong and the interests of the lawyer’s primary client and the former employee’s interest diverge that the lawyer will be permitted to simply withdraw from representing the former employee while continuing to represent the corporation.  There is also the available structure of a limited scope representation under RPC 1.2(c), to make clear that the added representation will be limited in scope and duration so as to decrease the likelihood that the interests of the original client and this former employee will become cross-wise during the time period in which both clients are being represented.

Another for the annals of ethics opinions of questionable origin

I want to quickly discuss an ethics opinion out of New York state.  No, not that one.  I’m not going to delve into the brouhaha over the one from March 2016 that only got publicity in August 2016 that involves saying it is ethical for a firm to charge clients for work performed by unpaid interns as long as it is all disclosed to the client.

Not going to delve into it to discuss it because of course it is ethical as long as the amount that is being charged isn’t so high as to be unreasonable under RPC 1.5.  After all, say a firm fires an associate for cause and doesn’t ever end up paying the associate any of the last month of their salary.  Does that mean the firm can’t bill the clients for which that associate worked at the agreed upon hourly rates for that same time period?  Of course not.

Whether it is moral or right to take on unpaid interns and then bill clients for the time those unpaid interns spend on client matters is another question altogether, and it is also an interesting federal labor law question but., in my opinion, it isn’t a very difficult legal ethics question.  It is an ethics question that I can understand why someone would ask for guidance because doing it might make a lawyer feel queasy, but it isn’t all that difficult an ethics question in the end.

That is not at all true about the New York state ethics opinion I do want to discuss, NYSBA Op. 1103 from July 2016 that answered the following inquiry:

May a lawyer undertake to represent a client, Corporation B, in litigation with Corporation X, where it is in the economic interest of a former client, Corporation A, for Corporation B to lose the litigation?

Seriously?  There are some truly difficult conflicts questions that lawyers have to navigate, but this one ought not make it into a top 50 list.  And, the reason the answer is easy isn’t at all counter-intuitive, so why ask?  If this kind of thing were even a close call, then there would be no difference in treatment under the ethics rules between clients and former clients.

The more fleshed out facts that the opinion leads off with are as follows:

Corporation A and Corporation B are competitors.  They are engaged in the same industry, in the same geographic area, providing similar services to the same customer base.  The inquirer previously represented Corporation A in a matter than has been concluded (“Matter 1”).  The inquirer now proposes to represent Corporation B in litigation with Corporation X (“Matter 2”).  The inquirer states, and we assume for purposes of this opinion, that Matter 1 and Matter 2 are not factually related.  However, if Corporation B is unsuccessful in this suit, it might be forced to cease operations, which would benefit Corporation A.

In case the point passes by in quick reading, here is a less generic version of the same inquiry with a fun, familiar fictional scenario.  (At least fun for me.)

Mr. Plow and Plow King both provide snow removal services to the town of Springfield.  Lionel Hutz represented Mr. Plow in the past in connection with a piece of employment litigation.   (Maybe a former employee, Bart, sued Mr. Plow for failing to pay him overtime and Mr. Plow defended by explaining that you can’t employ children and, therefore, it would be illegal to pay him.)  That matter concluded and Hutz no longer represents Mr. Plow.  Now Hutz is being asked to represent Plow King in connection with litigation being brought by Moe’s Tavern.  Moe’s Tavern contends that Plow King failed to properly remove snow from their parking lot and the result was that Nick Riviera crashed his car into the building wiping out the taps at Moe’s Tavern for a month and is suing Plow King for $2 million dollars.  If Plow King loses the suit, it likely will go bankrupt and go out of business.

So the question would be whether, since Mr. Plow would love it for Plow King to go out of business,  does that mean that it would be unethical for Hutz to represent Plow King?  This again falls into that category for me of — how did anyone decide that this was a question that needed to be asked?

Of course it wouldn’t be unethical for Hutz to take on the Plow King representation.  Mr. Plow is just a former client.  It wouldn’t even truly be ethically prohibited if Mr. Plow were still a current client.  Might be a representation his firm wouldn’t undertake for business reasons, but it wouldn’t be an ethical issue in terms of an RPC 1.7 conflict.  So when Mr. Plow is but a former client, this isn’t something that ought to take more than five seconds of analysis in terms of working through RPC 1.9 to get to the right result.

Thankfully the opinion gets the analysis on this issue absolutely correct.  It makes the point that — perhaps in other circumstances would be crucial to get right, that “market rivalry” doesn’t rise to the level of causing a matter for a new client to be considered materially adverse to a former client.  But it also drives home the other overriding point – when we’re talking about a former client after all — that makes this such an unnecessarily posed question in the first place.  The scenario being inquired about isn’t one where the two matters are at all the same or substantially related, so it wouldn’t be precluded by RPC 1.9 even if it did involve doing something “materially adverse” to the former client.

So, in the end, it is a fine opinion as far as the analysis goes, it is just a bit silly that this kind of question was posed at all.  But, it did give me the chance to write a little Simpsons fan fiction so… a festive Labor Day to all.

Proposal to adopt Ethics 20/20 Revisions in Tennessee Put Out For Public Comment

Back in August 2012, the ABA House of Delegates approved revisions to the ABA Model Rules proposed by the ABA Ethics 20/20 Commission.  Very few of the proposed revisions included in the ABA Ethics 20/20 package are earth-shaking revisions, as many of them only involve change to language in the Comment accompanying certain rules.

The overall bent of the revisions, however, are to address aspects of the impact that technology has on modern law practice, highlight for lawyers their duty to, at the very least, keep abreast of and be competent regarding the types of technologies they use in their practice, and address a few other issues with good guidance regarding how aspects of globalization and the increased use of outsourcing interact with our ethical obligations.

More than twenty-five states have now adopted all or significant parts of the Ethics 20/20 package of changes.  Most recently Washington state has done this, with its revisions to become effective September 1, 2016.  Here in Tennessee, the TBA has filed a petition proposing adoption of almost all of those rule changes, and our Court has now put the TBA petition out for public comment with a November 17, 2016 comment deadline.  (There is also an Errata that the TBA put out to fix a redlining error made by the stupid Chair of the TBA Standing Committee on Ethics and Professional Responsibility when it was pointed out that we’d forgotten to pick up some changes to our RPC 5.5 that went into effect back in January 1, 2016.)

In my opinion, the most important, and most helpful, part of the Ethics 20/20 revisions takes place in RPC 1.6 by explicitly acknowledging the need to reconcile the duty of confidentiality with the duty to avoid conflicts of interest and the fact that, in reality, this means that lawyers need to be able to disclose some otherwise confidential information when looking at moving law firms or when firms are looking at proposed mergers in order to make sure to identify and address potential conflicts of interest under RPC 1.7.

The Tennessee proposed revisions would pick that change up.  Thus, if adopted, like the ABA Model, our RPC 1.6(b)(6) would now provide an exception to RPC 1.6(a) confidentilaity:

(6) to detect and resolve conflicts of interest arising from the lawyer’s change of employment or from changes in the composition or ownership of a firm, but only if the revealed information would not compromise the attorney-client privilege or otherwise prejudice the client.

If adopted, the TBA’s proposed revisions would also move the language about duties of safeguarding confidential information from the Comment to RPC 1.6 up into the black-letter of the rule itself.  Although our version of that rule would be place into a new RPC 1.6(d), instead of Rule 1.6(c) as in the ABA Model Rules because we already have a RPC 1.6(c) that deviates from the ABA Model Rules approach by imposing certain duties of mandatory disclosure of confidential information.

What we do not propose to pick up, however, are certain aspects of the Ethics 20/20 changes that were made to ABA Model Rule 4.4.  This is because, in Tennessee, we have a more robustly detailed version of  the rule that specifically addresses the duties of lawyers when they receive confidential information that they know or should reasonably know was inadvertently transmitted to them or that they know or should reasonably know was provided to them by someone not authorized to have the information in the first place.

Based on the November 2016 comment deadline, there is reason to be hopeful that these proposed revisions might become effective in Tennessee as early as January 1, 2017.  But, stay tuned.

I know I said I wouldn’t write any more about it but…

Here I am, because it is hard not to write something about the news last week that Brendan Dassey’s conviction was overturned.  Dassey, for those of who you did not watch Netflix documentary Making a Murderer and are willing to take me at my word as to what you would have concluded if you did watch the show, is the only one of the two criminal defendants featured in the documentary who you could walk away from the show just absolutely certain that he did not do what he was convicted of doing.  Dassey will be released from prison in a little less than three months if there is no appeal by the State.

Articles since Friday that I’ve seen discussing the development in Dassey’s case manage to work into the headline that the court (quite rightly of course) called out the conduct of Dassey’s former lawyer, the now infamous Len Kachinsky, as inexcusable.  But, Kachinsky’s epic failings as a lawyer were not actually the justification for overturning the conviction — mostly it appears because Dassey’s current lawyers managed to miss the correct argument to make on that front.

Instead, it was the even more stomach-churning conduct of the police officers in obtaining the “confession” from Dassey that justified the federal court’s action.  You can read the entirety of the 91 page order here if you’d like – though it is infuriating to relive the interrogation even in textual form.

But because Kachinsky really cannot get publicly lambasted enough for his conduct – after all he so very clearly wanted this case to make him famous and he’s gotten his wish though more in the manner that you see in dirty jokes involving genies in lamps with quite mischievous minds — I’ m doing my part by pasting below the pertinent parts of the opinion relating to discussion of just how far off the rails Kachinsky was in his handling of the matter (skipping a part that is really more about the equally vile Michael O’Kelley and his role).  I’ve also edited out the internal citations to cut the length a bit.

C. Leonard Kachinsky, Pre-Trial Counsel for Brendan Dassey

1. Media Interviews

On March 7, 2006, attorney Leonard Kachinsky was appointed to represent Dassey. Kachinsky was excited to be involved in Dassey’s case because by then it had garnered significant local and national attention.  Essentially immediately after his appointment Kachinsky began giving media interviews in which he discussed the case.

Kachinsky first met with Dassey on March 10, 2006. Dassey told Kachinsky that what was in the criminal complaint was not true and that he wanted to take a polygraph test to prove his innocence. After this initial meeting, local media reported Kachinsky as having described Dassey as sad, remorseful, and overwhelmed.  The media reported that Kachinsky blamed Avery for “leading [Dassey] down the criminal path” and said that he had not ruled out a plea deal.  Kachinsky later said that one of his reasons for speaking to the media was to communicate to both Dassey and to his family so that he could get them “accustomed to the idea that Brendan might take a legal option that they don’t like ….”

Over the next few days nearly all of Kachinsky’s work on Dassey’s case involved communicating with local and national media outlets.  On March 17 Kachinsky appeared on Nancy Grace’s national television show.  During that appearance Kachinsky said that, if the recording of Dassey’s statement was accurate and admissible, “there is, quite frankly, no defense.”  Kachinsky later said that he was merely “stating the obvious.”  However, Kachinsky had not yet watched the March 1 recorded interview. All he had seen was the criminal complaint.

In subsequent media interviews Kachinsky referred to the techniques the investigators used in questioning Dassey as “pretty standard” and “quite legitimate.”  One local news broadcast included Kachinsky’s response to statements Avery had made to the media. Avery had said that he knew that Dassey’s confession must have been coerced because there was no physical evidence to support what Dassey had said.  Kachinsky responded that he had reviewed the recorded statement and it did not appear that the investigators were putting words in Dassey’s mouth.  Kachinsky also publicly refuted Avery’s statement that Dassey was not very smart and that it would be easy for law enforcement to coerce him.

In another interview Kachinsky said that, although he believed Dassey had some intellectual deficits, he also believed Dassey had a reasonably good ability to recall the events he participated in. Over the roughly three weeks  following his appointment Kachinsky spent about one hour with Dassey and at least 10 hours communicating with the press.

Kachinsky met with Dassey again on April 3, at which time Dassey again professed his innocence and asked to take a polygraph examination.  Kachinsky hired Michael O’Kelly, with whom he was not familiar, to conduct a polygraph exam.  O’Kelly held himself out as a private investigator and polygraph examiner. Kachinsky informed Dassey of the upcoming polygraph examination in a letter, stating, “the videotape is pretty convincing that you were being truthful on March 1,” and encouraging Dassey not to cover up for Avery.  Shortly before the polygraph examination, the prosecutor sent an email to Kachinsky expressing concern about the pretrial publicity that Kachinsky was engaging in and referring him to the relevant rule of attorney ethics governing such publicity.

2. Defense Investigator Michael O’Kelly

O’Kelly conducted a polygraph examination of Dassey, the results of which were inconclusive. Nonetheless, O’Kelly described Dassey to Kachinsky as “a kid without a conscience” or something similar.  Notwithstanding O’Kelly’s opinion of Dassey, Kachinsky hired him as the defense investigator in the case.

Despite Dassey’s claims of innocence, both O’Kelly and Kachinsky proceeded on the assumption that Dassey would cooperate with the prosecution and become the key witness against Avery. O’Kelly’s primary goal was to uncover information that would bolster the prosecution’s case.  To this end he purportedly developed information as to the possible location of certain evidence.  Kachinsky provided this information to the prosecutor and a lead investigator and informed them that they may wish to speak to O’Kelly.  Although the information led to a search warrant being issued, the search warrant did not yield any additional evidence against Dassey.

Kachinsky decided that he wanted O’Kelly to re-interview Dassey to get him once again to admit to his involvement in the rape, murder, and mutilation of Halbach. Kachinsky wanted to make it clear to Dassey that, based upon the evidence, a jury was going to find him guilty.  Toward that end, he chose May 12 as the date for O’Kelly to interview Dassey—the date a decision on Dassey’s motion to suppress his March 1 confession was scheduled to be rendered.  Kachinsky expected to lose the motion to suppress and believed that the effect of losing such a crucial motion would leave Dassey vulnerable.

Shortly before meeting with Dassey, in an email to Kachinsky O’Kelly expressed contempt for the Avery family. He referred to the Avery family as “criminals” and asserted that family members engaged in incestuous sexual conduct and had a history of stalking women.  He continued, “This is truly where the devil resides in comfort. I can find no good in any member. These people are pure evil.” O’Kelly quoted a friend as having said, “This is a one branch family tree. Cut this tree down. We need to end the gene pool here.”  O’Kelly thought that Dassey’s denial of his confession was an “unrealistic” “fantasy” that was influenced by his family.  On O’Kelly’s recommendation, Kachinsky canceled a planned visit with Dassey because Dassey “needs to be alone.”  O’Kelly said, “He needs to trust me and the direction that I steer him into.”

[snip]

After the interview was concluded, Kachinsky understood from O’Kelly that Dassey was now “on board with cooperating in the Avery prosecution and, ultimately, entering a plea agreement.” However, Kachinsky had not watched O’Kelly’s interview of Dassey.  Nevertheless, he approved of O’Kelly communicating the substance of his taped interview of Dassey to the prosecution’s investigating agents.

3. May 13, 2006 Interrogation

Following the O’Kelly interview, Kachinsky arranged for the state’s investigators to interrogate Dassey again.  Kachinsky did not attend the interrogation. The state had not made any offer of immunity or prosecutorial consideration.  Kachinsky did not prepare Dassey for the interrogation, trusting O’Kelly to do so.  The plan was to have O’Kelly watch Dassey’s interrogation from a separate monitoring room. Kachinsky instructed O’Kelly not to interrupt unless Dassey asked to speak with Kachinsky or otherwise asked to stop.

[snip]

Although it probably does not need to be stated, it will be: Kachinsky’s conduct was inexcusable both tactically and ethically. It is one thing for an attorney to point out to a client how deep of a hole the client is in. But to assist the prosecution in digging that hole deeper is an affront to the principles of justice that underlie a defense attorney’s vital role in the adversarial system. That said, Dassey’s attempt to characterize Kachinsky’s misconduct as a conflict of interest under Sullivan is misplaced.

And, of course, Kachinsky has now weighed in with the media about his thoughts on the reversal.  Unbelievably, he’s going with trying to take a little credit for it and claim it vindicates his efforts:

 “In the sense that [the confession] was an instance that I preserved for appeal, before I was off the case, I was in sense gratified because the fact that that was the basis for magistrate judge Duffin’s decision, it shows that I did my job,” Kachinsky said. “Without a confession, the state didn’t really have anything of a case. It was an issue that was clearly available to appeal.”

And, in excellent news for residents of Appleton, Wisconsin – he’s still licensed and in good standing.

You either die a hero or live long enough to be the villain

So this intrepid blogger is on vacation and this post and perhaps one other this week will have been pre-written and scheduled for publication.  So here’s hoping nothing has transpired in the world to make this seem tone-deaf.

Samson Habte, an excellent reporter with the ABA/BNA Lawyers’ Manual on Professional Conduct, was kind enough to speak with me and use a few quotes of mine in a well-done piece he wrote last week on the latest appellate court ruling evaluating the validity of the in-firm privilege.  This ruling is particularly important because it comes out of the New York, which was where the original case that created the fiduciary duty exception to the privilege (outside of the context of law firms) arose which then influenced that In re Sunrise case.

You can read the full article here at this link.  (The fine folks over at The Law for Lawyers Today have also written a good blogpost recently on the NY ruling here.)

I have been following this issue for many years, including dating back to when I was fortunate enough to be one of the original co-chairs of the ABA Firm Counsel Project.  One of the very first roundtable sessions that now-defunct group organized focused on the state of play of the privilege for designated in-house counsel in law firms.  Back then, in the late years of the first decade of the 2000s, we were still in the midst of a trend of bad rulings on the issue.

One of the topics of discussion that the reporter and I covered and that didn’t quite make it into the article is what we discussed right after my “wrongheaded” quote.  I am, generally speaking, a huge fan of the Association of Corporate Counsel.  That organization, the ACC, has played a very significant role in protecting the attorney-client privilege from erosion in the context of government investigations and the minefield that has been created over the years by the Department of Justice and a series of memoranda over the years that would be used as an attack on the privilege in the corporate context by laying the groundwork for a position that corporate entities in investigations needed to roll over and agree to waive the attorney-client privilege if they wanted to get any credit for cooperation.

So, to a large extent that is the context of my remarks both as to “wrongheaded”-ness and the statement about how “disappointing” it would be for the ACC to start pushing for its in-house counsel to demand in engagement agreements that law firms agree in advance to waive their right to an in-firm privilege if they want to be retained.

If the ACC follows through with that course of action, we will find ourselves in a world where one of the biggest champions of the attorney-client privilege and a stalwart defender against the powerful Justice Department over the years has now become that what it used to fight against — a powerful entity applying coercive pressure for a purpose that would only undermine the privilege.

Ironic, yes, but also a truly disappointing turn of events.

ABA Formal Opinion 16-474: half (or more) of a pretty good opinion

Last week, the ABA Standing Committee on Ethics and Professional Responsibility issued its latest formal opinion – Opinion No. 16-474 addressing the topic of “referral” fees under the ABA Model Rules and, specifically, the intersection of Model Rule 1.5(e) and conflicts requirements under Model Rule 1.7.   Along the way, the opinion also stakes out a position on timing in terms of when the necessary written agreement required under Rule 1.5(e) must be created.

In its evaluation of the intersection of the conflicts rules and 1.5(e)’s requirements, the ABA opinion does a spot-on job of explaining why a lawyer who is going to share a fee, even under the assumption-of-joint-responsibility prong (i.e. something that without the assumption of responsibility would be pure referral fee prohibited under the ethics rules), has to recognize that they are representing the client and, therefore, can’t be involved in the arrangement without also being in compliance with the conflicts rules.

Though really just nitpicking, I do wish the opinion had taken the opportunity to explicitly address a relevant, related topic that I hear lawyers ask about from time-to-time (and that I think, and am happy to be corrected if wrong, the ABA has not previously addressed in a formal opinion) — if you have a conflict preventing taking on a prospective client, is it somehow unethical to give that person a referral to other competent counsel.  Absent truly extraordinary circumstances, if all the lawyer is doing is making a referral to another lawyer of the matter – without any component of fee sharing — then the answer should be that no conflict problem is created at all, and Formal Opinion 474 would have offered a nice opportunity to drive that point home through juxtaposition with any one of the three variations on The Flower Shoppe hypo offered up.

The logic that the opinion offers as to the “timing” question regarding when a writing must be created appears to have two parts to it.

The first is to stress the use of future tense in the text of the rule and in paragraph [7]  of the Comment.  (Rule 1.5(e)(2) – “including the share each lawyer will receive” & Cmt. [7] – “the client must agree to the arrangement, including the share that each lawyer is to receive”)  That logic only goes so far, however.  The language that the opinion stresses to make its point is a part of a rule that speaks separately about the act of the client agreeing to the arrangement and the act of the arrangement being memorialized in a writing.  Thus, placing so much emphasis on the use of “will receive” and “is to receive” isn’t a shatterproof construct beyond proving that a written memorialization that happened after the fee was paid out would be stretching it.

The second piece of the puzzle is the notion — supported by some case law citations in a footnote of the opinion –that the creation of a written agreement to indicate that the lawyer had undertaken joint representation is a meaningless act if it only happens after the representation has come to an end.  That also is a position that is not 100% true.  Given that many courts have allowed litigants to settle a case and then file suit against their lawyers for malpractice – claiming that but for a lawyer’s error, they could have gotten a better outcome — even an 11th hour written agreement to be jointly responsible for the outcome could be a quite meaningful financial commitment by a lawyer.  Further, the opinion stresses only one side of the coin – an arrangement based on assumption of joint responsibility.  If two lawyers and a client are late in papering up a fee sharing agreement based on proportional work performed, then there seems even less reason to insist that Rule 1.5(e) be read to take a later is not better than never approach.  It is also worth noting that even in the absence of such a writing, there are courts that have indicated that the lawyers involved may still be held to their agreement on sharing of fees.  See generally Daynard v. Ness Motley Loadholt Richardson & Poole, P.A., 178 F. Supp. 2d 9 (D. Mass. 2001).

Obviously, the better practice is for the written memorialization of the fee sharing arrangement to be created promptly in connection with the agreement itself, but as with many issues there ought to be some recognition that there is a difference between handling something in a way that is less than ideal and a declaration that conduct is unethical because the agreement, including the confirmation in writing of client consent, “must be completed before or within a reasonable time after the commencement of the representation.”

 

Three updates for the Thursday before Tax Day

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

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

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

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

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

Lawyering vicariously.

Lawyers in private practice work in a variety of settings ranging from solo practice to law firms with thousands of lawyers in scores of offices.  Lawyers also practice in a variety of business structures ranging from d/b/a arrangements on one end to Swiss Verein models.

My rough guess would be that the majority of United States private practice lawyers practice in connection with a business entity that provides (or at least is designed to provide) limited personal liability.  In Tennessee, we deviate from ABA Model Rule 1.8(h)’s approach to prospective limitations on liability for legal malpractice by prohibiting them entirely under RPC 1.8(h)(1).  But RPC 1.8(h)(1) does not mean that lawyers (or even a solo practitioner) cannot take advantage of Tennessee’s business organization laws to house their law practice in a professional limited liability company to manage financial risk.  This point is made clear in Tennessee in paragraph [14] of the Comment:

Nor does this paragraph limit the ability of lawyers to practice in the form of a limited-liability entity, where permitted by law, provided that each lawyer remains personally liable to the client for his or her own conduct and the firm complies with any conditions required by law, such as provisions requiring client notification or maintenance of adequate liability insurance.

Not all lawyers practice in such arrangements, however.  Some form traditional partnerships.  Others practice in an even looser fashion through things that are essentially just office-sharing arrangements but are often described, on letterhead or office signs or both, as “an association of attorneys.”  What I didn’t think lawyers would do would be to attempt to set up a version of both things (admittedly, my lack of awareness of this might just be my own ignorance of what is going on in the marketplace).

Three lawyers in middle Tennessee who may or may not be a law firm, appears to be an example of folks who have structured their law practice to do just that.  They hold themselves out to clients on letterhead as an association of attorneys while having also formed an LLC for the purpose of sharing office expenses.  Undertaking such an approach seems to offer the worst of both worlds, and an order denying summary judgment in a legal malpractice case — highlighted by the ABA/BNA Lawyers Manual on Professional Conduct — does not delve into whether the lawyers’ decision not to just become a law firm organized as a PLLC offers any tangible benefits.

What the order clearly does, however, is raise but leave unanswered, whether lawyers simply sharing office space can end up having vicarious liability for legal malpractice committed by one of their number.  The federal district court’s opinion is relatively short and can be read in full here.  Although it does not shut the door to the ability of these lawyers to demonstrate that vicarious liability should not be available, it does cite to existing Tennessee law regarding unincorporated associations to explain that Tennessee law permits such things to be sued as entities and for vicarious liability to arise among members for statutory violations and contract breaches.

In the end, I think with better constructed arguments, the firm in question ought to be able to muster stronger substantive arguments in opposition to vicarious liability than the one rejected by the court.  After all the concept of vicarious liability derives fundamentally from agency principles and one would hope the uninvolved lawyers could demonstrate lack of control or input into handling of the matter, as well as lack of interactions with those involved that would justify any apparent agency basis to justify vicarious liability.  But given the sole argument that the court indicates was teed up – we’re not a partnership and only partnerships can bring about vicarious liability —  the denial of summary judgment certainly appears to be the correct result.

What I’m still struggling to figure out is the reason one would go to the trouble of creating an LLC for office expense sharing, but attempt for that entity to have no relationship to your law practice and, instead, have your law practice be part of an “association of attorneys.”  I am certain that everyone involved is highly intelligent so there has to be a good reason to do so.  The only explanation I can conjure up is that it must be driven by a desire to avoid imputation of conflicts of interest among the lawyers sharing office space.

In Tennessee, our RPC 1.0(c) defines a “firm,” in part, as “a lawyer or lawyers in a law partnership, professional corporation, sole proprietorship or other association authorized to practice law.”  We dedicate a paragraph of the Comment accompanying this rule to giving guidance to lawyers about how the specific facts of their practice setting can impact whether or not they get treated as a “firm” for purposes of the ethics rules:

Whether two or more lawyers constitute a firm within paragraph (c) can depend on the specific facts.  For example, two practitioners who share office space and occasionally consult or assist each other ordinarily would not be regarded as constituting a firm.  However, if they present themselves to the public in a way that suggests that they are a firm or conduct themselves as a firm, they should be regarded as a firm for purposes of the Rules.  The terms of any formal agreement between associated lawyers are relevant in determining whether they are a firm, as is the fact that they have mutual access to information concerning the clients they serve….

Because RPC 1.10 imputes conflicts among lawyers in a firm, if these lawyers had organized themselves as a PLLC, then the conflicts of one would extend to all.  Typically, when handled correctly, a mere “association of attorneys” will not be treated as a firm for RPC 1.10 purposes.  If there’s another explanation out there, I’m missing it.  But, I’m also wondering how much added risk of still being treated as a firm comes from the information sharing necessary on the LLC side to work out expense arrangements.

Some lawyers fail to see conflicts of interest, but they aren’t the only ones.

Conflicts are a big issue for lawyers, and a significant issue in the world of legal ethics.  (If you are a lawyer and do not already have his site bookmarked, you really need to add Bill Freivogel’s website to your list of bookmarks.)

Relatively speaking, however, conflicts of interest (other than ones involving inappropriate sexual relationships) tend to be aired out through disqualification motions or as components of legal malpractice or breach of fiduciary duty lawsuits against lawyers and law firms much more often than in disciplinary proceedings.

To some extent, this phenomenon can be explained because lawyers tend to see the obvious conflicts and avoid them and only the more nuanced ones tend to be really problematic.   For example, sometimes it can be difficult to explain the intricacies of what makes up a “substantially related” matter for purposes of evaluating a former client conflict situation under RPC 1.9.  There are a number of other factors, of course, that lead to conflicts matters being a small percentage of disciplinary proceedings.

Sometimes, though lawyers do get disciplined for undertaking representations in violation of the conflict of interest rules.  Earlier this year, the Tennessee Supreme Court suspended a lawyer for six months (after previously giving the lawyer a public censure involving the same conflict of interest) for stubbornly persisting with a representation that was prohibited by a conflict of interest.

Yesterday, the Ohio Supreme Court issued a public reprimand against a lawyer who took on a conflict that should have been really, really hard to miss.  The lawyer represented a bank in a foreclosure action against a husband and wife and obtained a default judgment for the bank.  Within nine months of doing so, the lawyer then undertook to represent the same husband and wife in seeking to vacate the same default judgment he helped the bank obtain.  The lawyer had not obtained consent from the bank to do this.  Fortunately for the lawyer, he had no prior disciplinary history and did the right thing in the disciplinary proceedings by admitting the wrongful nature of the conduct.  As a result, he managed to get out of the disciplinary venue with only a public reprimand.

Lawyers though are not the only people that should see a conflict of interest but simply plow ahead with doing what they want to do.  Although the ethics lawyer component of my law practice is overwhelmingly focused on legal ethics, I have had some experience in matters involving conflicts of interest of government officials/public employees.  Here are links to a couple of news stories broadcast this week in Memphis about what appeared to be a pretty straightforward conflict problem that the government official should have recognized.  The first broadcast can be viewed here.  Fortunately, as the second broadcast indicates, the investigative journalism of the reporter appears to have brought an end to the conflict and, hopefully, will bring some much needed assistance to the economically-challenged residents that were being adversely affected by its repercussions.

(As a bonus, if you manage to  watch either of the two broadcast segments, you’ll have a voice in your head (for better or worse) you can tie to the text on this blog.)