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.

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.

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.

“Damn near never…”

I mentioned back near the end of July 2015 that I would be participating on a panel at the Association of Professional Responsibility Lawyers’ Annual Meeting in Chicago.  It is always an honor to get to speak at an APRL meeting, and it was particularly an honor to share the stage with Eliza Rodrigues of Sedgwick, Gabe Miller of Advocates United, and Charles Mokriski of Proskauer Rose.

Fortunately, if you are interested in reading a pretty extensive write-up of some of the ground we covered during our session exploring the role of internal ethics counsel in law firms, the ABA/BNA Lawyers’ Manual on Professional Conduct has it and it is available without subscription here.

With such turns of phrase by me as a “messed up” rule and “Damn near never…” I managed to sound a lot more Southern then I tend to think I am . . . so lesson learned.

We never did manage to get into much of a discussion of the varying, and seemingly contradictory, approaches courts across the nation are taking to disqualification motions involving advance waiver language and other waiver issues.

C’est la vie.  Y’all.

A verein-teresting thought experiment? Part 2

So, if you missed Part 1 you can get up to speed here.  Now I indicated I’d get the underlying documents (plural) this weekend and finish this little thought experiment today, but I don’t actually practice in the International Trade Commission (shocking to hear I bet) so beyond getting to the order of disqualification itself, I’ve had no luck.  But, I’m okay with that, because just being able to read the full ruling itself has given me a better, fuller perspective on this situation.  Which, of course, is the reason you usually ought not write about things based solely on media reports of what a legal decision was all about.

The end result, for me, though is that I still do think it entirely fair, when applying RPC 1.0’s definition of a firm, to hold even the largest of law firms to how they brand and market themselves to the public.  Yet, given what else was going on in this particular decision, I don’t think this moment amounts to the kind of potentially earth-shaking ruling that the media reports focus on as a possibility.  That’s because while the decision about whether Dentons was one firm, or more than one firm (specifically, whether Dentons Canada, LLP and Dentons US, LLP would be treated as two different law firms), was integral to the ultimate decision to disqualify but I don’t happen to think it was the most important factor in the outcome.

First, a quick primer on the underlying factual situation.  Dentons US has been representing the complainants in this ITC investigation against The Gap.  The Gap has a problem with that because for over twenty years Dentons and a predecessor firm, Salans, have represented The Gap in other matters, including a contemporaneous engagement in Canada regarding customs compliance issues.  Dentons says the dual representation is not a problem because Dentons US and Dentons Canada should be treated as separate firms for purposes of conflicts and, even if not, The Gap’s engagement letter with Dentons Canada contains a waiver of potential future conflicts.  (On this point, the court really doesn’t spend any time addressing what the specific language said or why it was not sufficient.  The court appears to claim that Dentons US walked away from that argument in its briefing:  “Indeed, Dentons US asserts that ti does not rely on an advance waiver for establishing that a conflict does not exist.”

Nevertheless, what’s missing from the focus of the media reports is that Dentons had apparently acknowledged in writing to at least one of the clients in the ITC matter, RevoLaze, that it had an “existing conflict” because of Dentons Canada’s representation of The Gap.  This disclosure was made in connection with a funding agreement involving Dentons US, RevoLaze, and a third-party litigation funding company.  It is hard for me to read the opinion without thinking that this fact was the key tipping point for the court.

The rest of the opinion reads very much like the kind of piece in which, after weighing all of the competing factors, the court could have reached a conclusion not to disqualify despite concluding that there was a violation of RPC 1.7 but for the fact — weighed heavily by the court in favor of disqualification — that prior to the issue ever being raised by the court or by the Gap — Dentons had been concerned enough about it to raise it itself with the clients on one side but not the other.

Thus, I do still think that we’re likely headed down a path in which the efforts to find structures that would allow seemingly unlimited growth of the size and scope of modern law firms are going to put real pressure on the way conflicts of interest are regulated.  If the pressure brought to bear by such firms on the existing regulatory structure is not successful in changing the rules of the road, I do ultimately think firms will have to break into smaller pieces.

But I have a harder time seeing the ruling in this case as any sort of watershed moment because had Dentons managed to be 100% consistent in the position it ultimately took about whether there was a conflict or not, then they quite  likely could have avoided disqualification.  And, speaking generally, the ramifications of disqualification from lucrative engagements tend to have more impact on strategic thinking — and willingness to stake out aggressive positions on taking on conflicting engagements — in the large law firm domain then the risk that one or more individual lawyers may be at risk for exposure to disciplinary proceedings involving a conflict of interest matter.

A verein-teresting thought experiment? Part 1.

In preparation for a panel presentation coming up at the end of this month, I have been delving back into the complicated and contradictory world of disqualification rulings from around the country.  While the lay of the land is highly inconsistent to a large degree, there are some common themes that can be teased out of how courts deal with such issues.   I hope to find some way to help articulate that at that conference at the end of the month and, if the end product sounds like something that makes sense, will try to elaborate here as well.

For today though I wanted to touch on what might be the most important current one bubbling through the system – the ruling of an ALJ for the U.S Int’l Trade Commission disqualifying Dentons in a patent infringement suit and that, commensurate with its potential import for the mega-firms that proliferate in modern law practice, is generating some real publicity.

Several months ago now, I mentioned something in passing about a consultant who was talking about seeing 10,000 lawyer law firms in the future and the stress and strain conflicts of interest analysis can put on the outer limits of just how big a firm can get.  The vehicle it seems that the mega-firms have been counting on to make such things possible is the Swiss verein.  If you want to immerse yourself with the details and history of that structure, you can go here for a start.  Suffice it to say for the purposes of this post, I’ll stick with the shorthand description the ABA Journal uses in its article today:

 “[A] decentralized structure which allows independent legal entities to share marketing and branding while keeping finances separate.”

My immediate reaction every time I read something like that description, with conflicts of interest in mind, is that it certainly sounds fine in theory but, at base level, something either is one law firm or it is not one law firm.  So, in the back of my head, my thinking has been this: given how imputation of conflicts works under RPC 1.10 and the definition of a “firm” under RPC 1.0, either how a conflict of interest is defined for lawyers and imputed within a firm will have to be fundamentally changed or, at the end of the day, the Swiss verein concept will yield under the weight of problems of conflicts.

Normally, I like to thoroughly read the subject matter I write about before putting up a post, and I have not yet done that with the ruling of the USITC nor Dentons’ motion for reconsideration.  But I have a reason for that, and here comes my thought experiment.  My immediate reaction having only read the media pieces this week (including the quote from Karen Rubin who runs a wonderful blog you should check out here) is that it is absolutely fair to look at how a firm markets and brands itself for purposes of evaluating conflicts of interest.  Tennessee, for example, like many other states has built the concept into the Comment that accompanies RPC 1.0:  “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.”  RPC 1.0, cmt.[2].  We’ve had no problem using that paradigm to evaluate things on much smaller scales like whether a person being held out as “of counsel” to a law firm results in sharing of conflicts and all sorts of situations in which a group of lawyers share office space.

So, here’s the question I’m pondering, is there anything I can possibly read in those materials that would manage a good explanation for why that principle shouldn’t carry over to this situation and damn the consequences?  My plan is to work on tracking down the underlying documents and studying them this weekend and then following up with a post on Monday to “complete” this thought experiment.