The intersection of the First Amendment and the Ethics Rules

So, I don’t know if any of you have ever played HQ Trivia.  In any session, they have between 500,000 and almost 2 million players, so statistically speaking, I guess there is a chance you have.  While it has nothing to do with legal ethics, in order to understand the context of what follows, let me give you a quick primer.

It is something that would have been 5 years ago the stuff of science fiction or an even an episode of Black Mirror.  It is an app on your phone through which you can play trivia in real-time answering questions read by a human being host.  Each question is presented with three multiple-choice answers and you have 10 seconds from when the host starts reading the question to click your answer.  If you answer correctly, you get to move on to the next question.  If you don’t, you are eliminated.  In the standard format, the quiz consists of 12 questions and, if you answer all the questions correctly, you win or split the pot with any other players who have done so.  (When the largest pots are offered they increase the number of questions to 15 or, quite recently, they have experimented with as many questions as is necessary to narrow down to just winner in a winner-take-all format.)

The dollar amount of the prize varies.  It is typically $2,500 but, as it appears they are closer to whatever plan they have in place for monetizing the app approaches, they have recently offered a pot as large as $100,0o0.  Reportedly, tonight they will be offering a $250,000 pot.  I have won the game on one occasion and, of course, when I did there were so many other winners that my share came to just shy of $2.  (I also know there are other companies doing similar games and some of those are competing against HQ on the basis of how awful one particular financial backer of HQ reportedly is, so I’m not going to link or provide publicity to the game, but it is the one I play [for better or worse] so if you decide to sign up for it and put in my user name – bsfaughnan- as a referral code then I will get some extra lives.)

Now all that is background for today’s topic – which is the intersection and overlap of the ethics rules and what they prohibit members of our profession from doing and the First Amendment.  This topic is frequently one I spend time thinking about because for many years my practice has also involved representing clients on First Amendment issues and, in fact, though I continue to not be listed in Best Lawyerfor Legal Ethics and Professional Responsibility, in addition to being listed for Appellate Law, I am listed for Litigation-First Amendment.  It is also a topic that I have been thinkng about frequently because of various events that have worked their way into my line of sight either directly or indirectly.  Those three events are: (1) the outpouring of comments from particular portions of the bar in Tennessee arguing that the proposed RPC 8.4(g) in Tennessee is an assault on their First Amendment rights; (2) the latest post from Avvo’s GC criticizing ABA Formal Op. 480; and (3) the head of a prominent law firm speaking out publicly to indicate that a star lawyer of his firm turned down the opportunity to represent the current occupant of The White House.

So, here’s the HQ-style question and, remember, there is only one correct answer.  You won’t be limited to 10 seconds to answer from the time you start reading the question however:

Which of these presents the most compelling case for finding that discipline against a lawyer would violate the lawyer’s First Amendment rights?

  • A lawyer tweets – without client permission – about a jury verdict she obtained in order to advertise the successful outcome.
  • A lawyer, during a CLE or bar association social event, decides to lecture everyone in the room about why he considers marriage between two persons of the same gender to be an abomination.
  • A lawyer, consulted by a politician who she finds to be vile, or have views she finds to be vile, holds a press conference or tweets that she refused to represent that politician because she disagrees with everything he stands for.

 

 

An object lesson about “staying in your lane.”

Prominent technology blogger, Robert Ambrogi, has taken to Above the Law to criticize the latest ABA Formal Ethics Opinion.  In addition to attempting to savage it over being somehow untimely since lawyers have been blogging for almost 20 years, his primary substantive criticism of the opinion is that it makes no sense for an ethics rule to prohibit a lawyer from speaking or writing (or blogging or Tweeting) publicly about information that is already in the public record.

Ambrogi’s criticism is a bland (and perhaps satisfying at a surface level) kind of thing to say, but it reveals that the author is not someone who has spent a bunch of time working with, or thinking about, the ethics rules.

In the nature and spirit of “open letters to people who are unlikely to read them,” I offer this primer to Mr. Ambrogi on why our profession has crafted an ethics rule that does, in fact, err on the side of prohibiting lawyers from further discussing things even that are public record without our client’s consent or the need to do so to further the representation.

Dear Mr. Ambrogi:

Let’s pretend that I was currently representing a prominent legal technology blogger in a divorce proceeding.  This is, admittedly, a hard thing to pretend as I don’t do family law, but we’ll push on nonetheless.

In order to secure the desired divorce for the blogger, and because of the truly toxic nature of the blogger’s relationship with their significant other, I end up having to share a lot of deeply personal, highly intimate, and potentially quite embarrassing information in the complaint for divorce not only about the blogger but about the blogger’s significant other and that person’s various other romantic partners.

Now that happens in a state where it is very difficult to establish the need for court filings to be sealed, thus the complaint for divorce is a public record upon filing.  It also occurs in a state where, while it is true that court records are public records, they are not well-organized online and are not all that easy to locate.

Thus, my client knows that what is in the complaint is a matter of public record, but they are certainly hopeful that the information will not be widely disseminated and that these intimate and embarrassing items are only ever learned and read by people directly associated with the court process.

Now, if your approach to the ethics rule on confidentiality were what our profession had adopted, then I’d be free at a cocktail party, or on a blog, or in a Tweet to share the wild information about my client’s personal life because it was a matter of public record, and I could do so simply to entertain those around me.

I would hope at this point we would both agree that would be a bad approach for the ethics rules governing our profession to take.

Thus, to protect against that kind of ability to disclose information, the rules are crafted to start from the premise that lawyers ought not to talk publicly about their client’s matters unless they have the client’s consent or some legitimate reason to do so.  (This includes not only further communications impliedly authorized to carry out the representation but situations where it becomes necessary to make disclosures, for example, for the lawyer to defend themselves in other proceedings.  If the blogger’s significant other turned around and filed a defamation lawsuit against me over the publication in the complaint about the intimate details of that person’s life, the ethics rules would allow me to disclose information reasonably necessary to defend myself.)

So, as that ends my rant, I will conclude by saying that I still stand by (another writing that you are unlikely to read) my prior take that Formal Opinion 480 is a good one.

 

Another good opinion from the ABA SCEPR

This was not what I originally planned to write about today, but … here we are all the same.

Today, the ABA Standing Committee on Ethics and Professional Responsibility released a new opinion and, because it relates to social media, it is generating a good deal of discussion online.  It is being rolled out and discussed as being of interest to lawyers who blog or tweet or otherwise participate in social media, but it actually is yet another opinion sending a message that all lawyers need to remember.  That is because it is another opinion from this body – in a relatively short period of time – emphasizing how broad the scope of client confidentiality is under Model Rule 1.6.

The key piece of the opinion worth knowing (mostly because it applies to lawyer communications in just about any forum or medium of any sort ranging from cocktail parties, to CLEs, to social media) is this:

The salient point is that when a lawyer participates in public commentary that includes client information, if the lawyer has not secured the client’s informed consent or the disclosure is not otherwise impliedly authorized to carry out the representation, then the lawyer violates Rule 1.6(a). Rule 1.6 does not provide an exception for information that is “generally known” or
contained in a “public record.” Accordingly, if a lawyer wants to publicly reveal client information, the lawyer must comply with Rule 1.6(a).

From my experience, this is a point about which lawyers cannot be reminded nearly enough.  And, it most certainly is not just a social media issue.  Though I have, in the past and far-too-snarkily written about the problem as it crops up on social media.

Interestingly, I spent most of my day today sitting through CLE programming and, perhaps coincidentally, it was the first time in a long time that I actually heard a presenter acknowledge before telling a story about a case that they had actually obtained their client’s permission to talk about the case.

Far too often, I hear lawyer presenters relate information about something they are working on at a CLE by providing so much detail about a situation that it would not take much effort at all to immediately figure out who they are actually talking about.  This latest ABA Formal Opinion also offers a helpful refresher on the problem with doing that:

A violation of Rule 1.6(a) is not avoided by describing public commentary as a“hypothetical” if there is a reasonable likelihood that a third party may ascertain the identity or situation of the client from the facts set forth in the hypothetical. Hence, if a lawyer uses a hypothetical when offering public commentary, the hypothetical should be constructed so that there is no such likelihood.

An incredibly unhelpful ethics opinion from Colorado

Were you looking for something that is very well-written but entirely unhelpful to your needs as a lawyer?  Well, you’ve come to the right place today.

Wait, I now see how that paragraph could be misconstrued in an entirely unflattering way and as an inadvertent passing of judgment on this whole blog.  Obviously, I didn’t mean that.  After all, I said “well-written.”

Anyway, what I’m actually intending to refer to is Colorado Formal Ethics Opinion 134 which was enacted in January 2018 but which was brought to my attention by a loyal reader of this space.  It likely came into his path because of some treatment in the ABA/BNA Lawyers’ Manual which I admittedly have not read beyond their headline and lead sentence, which is as follows:

Advance Agreements on Joint Settlement OK, Colorado Bar Says

A lawyer who represents multiple clients in a case can prepare for them, with informed consent, an agreement stating that a majority vote controls for settlement offers, a recent Colorado bar ethics opinion says.

That is one way to spin the Colorado opinion and draw peoples attention, but studying the opinon itself reveals that the picture being painted is far too rosy because a more fair introduction to the opinion would be:

Advance Agreements on Joint Settlement OK to Memorialize But Lawyer Can’t Enforce It in the Future, Colorado Bar Says

A lawyer who represents multiple clients in a case can prepare for them, with informed consent, an agreement stating that a majority vote controls for settlement offers, a recent Colorado bar ethics opinion says, but what would be the point?  The same opinion explains that if any of the clients later rejects the settlement and refuses to abide by the majority vote then the lawyer doesn’t have settlement authority and can’t continue to represent everybody.

I’m not kidding.  That is the TL/DR version of Colorado Formal Opinion 134.  Don’t believe me, go read it for yourself.

Now, Colorado may feel like it has given a helpful opinion because it distinguishes its opinion from some others by saying it is perfectly ethical for a lawyer to participate in preparing an agreement along these lines for jointly represented clients and explaining how Rule 1.8(g) is not triggered until some future point when a settlement is on the table for consideration.  But . . . geez.  From a practical perspective, it’s an exercise in navel-gazing because of this paragraph of the opinion:

If multiple clients agree in advance on a majority-decision rule for how they will respond to an aggregate settlement proposal, but one client in the future refuses to follow the majority’s decision, the dissenting client might be in breach of that agreement.  The other clients might have claims against the dissenting client.  This circumstance creates an unwaivable conflict for their joint lawyer due to the dispute between in the dissenting client and the other clients.  The lawyer may not take sides in the dispute, and may not seek to enforce the agreement againts the dissenting client, on behalf of the majority clients, by compelling the dissenting client to settle.  The lawyer might need to withdraw from the joint representation entirely.

Because of that, it seems hard to understand how any good Colorado lawyer armed with this opinion could ever respond to an inquiry by joint clients about putting together a majority-rule agreement with any advice other than:

Yeah, you don’t want me to go through all of that.  If anyone changes their mind later, I can’t enforce it and you probably just end up in additional litigation maybe over breaching the contract and you all just end up having to hire more and different lawyers.  So, let’s just wait until we have something in front of us to think about on settlement some day and then work it out if and when that day ever comes around.

 

 

 

Where are we when even ABA Ethics Opinions are marketed with a “clickbait” approach?

So, as promised (and even though there have been even further developments down in Florida), today I am writing about the latest ABA Ethics Opinion and whether it might provide any solace and protection for a lawyer who is being dragged by a former client online and wanting to defend herself by responding online to try to set the “record” straight.

The ABA Ethics Opinion in question is Formal Op. 479, and the answer is “no, no it doesn’t.”

Before I elaborate on that, I really do want to vent a bit (hopefully without sounding too much like Andy Rooney because I’m only 44) about the way people rolled out the release of this ethics opinion.

The ABA Journal online gave it a headline reading: “Can news on social media be ‘generally known’?  ABA Opinion considers confidentiality exception”

This then was, of course, picked up in other places, Law360 went with “Social Media Can Create Confidentiality Exception, ABA Says.”

Then I saw some lawyers on social media (lawyers who certainly should know better since they were actually involved in the opinion itself) teasing the opinion in a similar fashion.

If you actually read the opinion, you wonder what in the world anyone was even talking about.  The term “social media” does appear in the opinion.  Once.  On p. 5, in this sentence, “Information may become widely recognized and thus generally known as a result of publicity through traditional media sources, such as newspapers, magazines, radio, or television; through publication on internet web sites; or through social media.”

That is not a groundbreaking statement of any sort.  It’s common sense.  It also is nowhere near the actual, helpful or relevant, takeaway of the opinion.

The takeaway of the opinion is clearly the following (forceful) reminder about how stark the obligation of lawyers to protect confidential information about even a former client is:

Unless information has become widely recognized by the public (for example by having achieved public notoriety), or within the former client’s industry, profession, or trade, the fact that the information may have been discussed in open court, or may be available in court records, in public libraries, or in other public repositories does not, standing alone, mean that the information is generally known for Model Rule 1.9(c)(1) purposes.  Information that is publicly available is not necessarily generally known.  Certainly, if information is publicly available but requires specialized knowledge or expertise to locate, it is not generally known within the meaning of Model Rule 1.9(c)(1).

Don’t get me wrong.  It is actually a really good ethics opinion, and it gives timely advice that lawyers need to take to heart to make sure they stay in compliance with their obligations.  It’s just a shame it was rolled out with a “click-bait and switch” message.  We’d all have been better off if it had been rolled out with the headline:  “ABA Opinion reminds lawyers that just because information about a former client has been publicized doesn’t mean it is ‘generally known.'”

And, to actually deliver on my promised topic, here’s why nothing about this opinion is going to help any lawyer who finds herself in a situation where a former client has posted something, somewhere disparaging the lawyer in a way that the lawyer thinks is unfair and she wants to respond to clear up the record by disclosing other information about the representation that puts it in context: the details that the lawyer wants to reveal to provide context won’t have been disclosed by the former client and, thus, even if the lawyer could try to claim that what the former client has said is now “generally known,” the bits he hasn’t said most certainly are not.

Thus, unless and until some exception is created in the ethics rules to allow responses to online criticism under Rule 1.6 (which I’m not necessarily advocating for), lawyers who opt to get into it with former clients (or even clients) online will need to be very careful about what they say.  Otherwise, they will find themselves in trouble – as did this South Carolina lawyer who was brought to my attention by the always wonderful Roy Simon  (Admittedly, the SC lawyer had more problems than loose lips online, but that was one of the problems all the same.)

(And, so as not to be accused of my own “bait and switch” situation, I will take a stab at juxtaposing this opinion with Opinion 478 which also came out recently.  If the treatment of the two opinions was consistent, 478 would have been rolled out by the ABA Journal with the headline:  “ABA Ethics Opinion tells judges not to go online.”

An open letter to Avvo

Dear Mark or Josh or Dan (or others at Avvo):

I am a lawyer of little relative influence but I know you are likely familiar with me because I have, time and time again here on my small platform written about the travails your business model is enduring as state after state issues ethics opinions warning lawyers who do business with you that they are acting unethically.  (And Josh has been kind enough to post comments here from time to time as well.)

It, of course, has happened again with the latest Virginia ethics opinion that has just been put out.  I won’t belabor anyone reading this with the breakdown of that opinion other than to say that it hits on many of the same problems that have been hit on by other states over the last couple of years (and a couple that come up less frequently as well).  I also know that you were actively engaged in trying to convince the powers-that-be in Virginia to not issue that opinion.  I’ve even read Dan’s oral remarks published online.

I also won’t do as I normally do and break down the analysis offered in this latest ethics opinion other than to say that this one – yet again – is correct in its interpretation and application of Virginia’s rules.  (At least it is correct as to the big, universally applicable rules impacting your current business model related to fee-sharing, payments for referrals, and the like.)  Of course it is.  These opinions keep coming out because the existing rules are pretty clear about the problems and why lawyers are prohibited from participating.

I’m also writing this as an open letter to urge Avvo – if it really is interested at heart in doing the things for the profession and consumers that it says it is interested in doing – to change its focus from trying to fight the issuance of ethics opinions in states or to then engage in criticism of those opinions as somehow incorrect or “part of the problem.”  Instead, your time and money should be shifted — if those are your real goals — to pursuing efforts to have the rules that currently prohibit lawyers from being involved with your business model changed.

You are fighting a losing battle in trying to change the outcomes of ethics opinions.  You could, however, be fighting a winning battle if you made active efforts to file petitions with the appropriate bodies in various states to propose revisions to the ethics rules that would permit participation with your service and other companies doing similar things.

For example, just about anyone who wants to in my state could file a Petition with the Tennessee Supreme Court and propose changes to the ethics rules which here are housed in Supreme Court Rule 8.  There are pretty similar processes in many jurisdictions.  (I would have thought y’all might have worked this notion out by now given how differently you’ve watched things appear to go in North Carolina where you’ve been participating in efforts to change the rules rather than efforts to try to get someone to issue an opinion that would pretend the rules don’ say what they say.)

I can’t guarantee how successful you would be in obtaining satisfactory rule revisions in jurisdictions but I’d bet a shiny quarter or two that your batting average will be greatly improved upon how you are doing in terms of favorable ethics opinions versus unfavorable ethics opinions.

I reckon that this open letter will likely have the same effect of most open letters written by human beings, but . . . at least I’ll still feel better for having said it.

Frustrations with Formal Ethics Opinion 2017-F-164

Recently (and one of the frustrations I have with this opinion I am now writing about is, that “recently” is about as specific as I can pin things down in terms of the date of issuance), the Board of Professional Responsibility in Tennessee issued a Formal Ethics Opinion giving some guidance on the ability of a Tennessee lawyer to be a part of a multi-state law firm using a trade name.

It is, on the whole, an adequate ethics opinion in that it essentially gets the answers to the questions it raises correct, but it is more frustrating than it is adequate given how it addresses the issues and, as hinted at above, how it was surfaced by the Board as having even been issued.

First, here are my frustrations with the substance.  Here are the questions FEO 2017-F-164 tackles:

I. Do the Tennessee Rules of Professional Conduct allow a partnership between a Tennessee Professional Services Corporation and a Florida Professional Services Corporation?

II. Can the partnership ethically use a trade name?

III. Can the Florida office of the partnership ethically lease space from SETCO Services, a title company?

Admittedly, the Board gets the answers to each of these questions correct.  Those answers are, of course, “yes,” “yes,” and “yes.”  But the opinion does not do the best job of showing its work as to some of the answers, completely ignores the fact that the questions being answered also can’t be addressed without taking a look at Florida’s analogous ethics rules, and, as to the third question, misrepresents to an extent how RPC 5.7 actually works in Tennessee, appears to assume more facts beyond the facts indicated in the opinion.

As further background to understand my griping, here is the entirety of the facts provided by the Board about the request that has been directed to them:

The requesting lawyer proposes a 50%-50% partnership between a Tennessee Professional Services Corporation (PA) and a Florida Professional Services Corporation (PA) that will operate under a trade name, SETCO Law. The Florida PA will lease space from SETCO Services, a title company, for which the requesting lawyer is in-house counsel, in Destin, Florida. The Tennessee PA will lease space from another law firm, Brannon Law, located in Memphis, TN.

The proposed Firm will have a separate computer system, including secure email system, apart from SETCO Services and can only be accessed by employees of the Firm. The Firm will have its own logo which will be conspicuous within the building. All clients, before engagement with the Firm, will be provided with a written engagement letter that provides in detail that SETCO Law is an entity separate and apart from SETCO Services and Brannon Law and that engagement with the Firm is in no way tied to any affiliation with SETCO services or any services provided therefrom.

The first two questions are readily capable of dispatch under Tennessee’s rules given that we are very reasonable on questions of trade names and, of course, do not present any unreasonable barriers to lawyers being part of a multi-state law firm.  However, it is exceedingly unhelpful for this opinion to be issued and make no reference to the fact that a lawyer seeking guidance about the second question needs to take a look at Florida’s ethics rules as well and that makes no reference at all to the fact the lawyer ought to also be educated about RPC 8.5 and how that rule provides for choice of law determinations when more than one jurisdiction’s ethics rules may be applicable to the conduct of a lawyer.

The method of addressing the third question though presents the most frustrating piece from a substantive standpoint.  This is because the third question only asks whether or not the law firm’s Florida office can lease space from a title company.  The answer to that question is: of course they can.  The first paragraph of that part of the opinion gets the answer exactly right:

No ethical rules restrict the location of the office of a lawyer. Nothing prevents a lawyer from entering into a landlord-tenant relationship and having an office in the same building as a land title company.

Unfortunately, it doesn’t stop with those two sentences but instead offers further advice and guidance about RPC 5.7 with respect to law related services.  That advice and guidance is fine – in a vacuum but this opinion isn’t in a vacuum – but the opinion reads as certain things being mandatory in order to be able to lease the space, rather than being explained as being important in evaluating whether or not acts undertaken by a lawyer affiliated with the title company can be treated as providing services that are separately distinct from the delivery of legal services so that only some, but not all, of the Tennessee ethics rules apply to that conduct.  Nothing about RPC 5.7 requires a lawyer to do any of those things simply to be able to lease office space from someone.

And that would be bad enough but, again, the opinion completely overlooks or ignores that the office space lease question involves the office in Florida and so there is no compelling analysis given why it would be Tennessee’s RPC 5.7 that would govern at all, rather than Florida’s version of any such rule.

Having now unburdened myself on the substantive flaws, I’d like to offer a quick word about the frustrating problem with the process.  For whatever reason, the Board of Professional Responsibility did not publicize the issuance of this opinion until they happened to insert it in a regular quarterly publication that is a much larger document.  And even then what has been published is an unsigned, undated version of the opinion.  Seems very difficult to understand why that approach was undertaken.

Should you want to go read for yourself the undated, unsigned Formal Ethics Opinion 2017-f-164, you can do so at that link.

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.

 

An ethics opinion from the Coinhusker state

Answering the question that was undoubtedly on the minds of every lawyer practicing in that state, the Lawyer’s Advisory Committee of the Nebraska Supreme Court issued Ethics Advisory Opinion for Lawyers No. 17-03 making clear that, yes, lawyers can accept payment from clients in the form of Bitcoin or other similar digital currencies.

I don’t exactly know what to make of this opinion.  I’m not normally a list maker, but here’s a quick pros and cons lists to label my feelings.

Pros:

  1.  It offers a pretty good explanation of what Bitcoin is and how it works.
  2. If you are a Nebraska lawyer interested in the answer to the question it definitely gives you a definitive answer.
  3. It is well written.
  4. It demonstrates how adaptable ethics rules for lawyers are that they don’t have to be changed simply because new technology arises that didn’t exist when the rule was first created.  (But see con #3.)

Cons:

  1.  I don’t know who this opinion is really for in terms of usefulness.
  2. Nebraska? Surely that wasn’t the state with a pressing need to be the first to issue an opinion on this topic.
  3. It incorrectly treats using property to pay an attorney fee differently than when the property involved isn’t Bitcoin.
  4. It entirely overlooks the most important aspect of lack of confidentiality in terms of impact on such a payment arrangement.

Since expanding on the “cons” is always a bit more fun as a writer, let me do that.

Who is the opinion for?  Why would any lawyer today be willing to accept Bitcoin as a form of payment?  Most answers to that question that I can come up with require the lawyer to be something of a believer in its use as a financial system.  If the lawyer in question happens to practice in Nebraska, that seems a pretty solid bet.  If that is true, then to some extent the opinion gives with one hand but takes away with the other by saying that a lawyer can accept payment in Bitcoin but then has to immediately convert the payment back into dollars.  If a lawyer is willing to put his or her faith into the Bitcoin currency system (and obviously the client must already have faith in that system), then why require them to immediately convert that client’s payment to dollars?

The answer to that – according to the opinion — is that Bitcoin is classified as property under the law and not as a currency and has the potential for rapid fluctuation in value.  But… shifting to the third con on the list… why should accepting this kind of property with fluctuating value as payment for services be treated so differently than other forms of property?

While we likely wouldn’t need a regulatory body to issue an ethics opinion on whether lawyers can accept payment in the form of gold or silver (of course they can), would we be comfortable with such an opinion declaring the lawyer has to immediately sell that property to turn it into cash?  If gold and silver seem too unwieldy for the thought exercise, then how about shares of stock or stock options.  (Let’s assume those would be otherwise done in compliance with restrictions such as Model Rule 1.8(a) and (i).)  Stocks can certainly fluctuate significantly in value and always have the potential to do so very rapidly.

Would you agree with an opinion that says a lawyer would have to immediately trade shares of stock for dollars because of the risk of rapid increase in value or decrease in value?  Why can’t two or more grown-ups negotiate an agreement for compensation in the form of property with a fluctuating value just because one or more of them is an attorney?  Why wouldn’t the lawyer taking on the risk of decrease in value play a role in evaluating reasonableness of the fee?

And, finally, the opinion talks a bit about confidentiality issues involved in payment via Bitcoin from a third party rather than the client, but completely overlooks the fundamental risk to client confidentiality created by accepting payment in Bitcoin from a client.  Such a transaction — necessarily because of the very architecture upon which Bitcoin is founded as the opinion does explain — is an open transaction for which confidentiality cannot be reasonably expected much less guaranteed.

Somehow the opinion  doesn’t manage to advise lawyers to make sure the client understands that – unlike cash or checks or wire transfers or even credit card payments — the fact of the client’s payment of money to a particular lawyer and all of the implications that payment entails is available to anyone sophisticated enough to understand how to delve into the Bitcoin ledger system.

So, in the end, sure the opinion says that a lawyer can accept payment in Bitcoin, but under this framework why would anyone ever do so?

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.)