You take the good, you take the bad…

You take them both and there you have … the news about Tenn. Formal Ethics Opinion 2019-F-167 (draft).

First, the good. I cannot give sincere and strong enough kudos to the Tennessee BPR for implementing a new policy to release draft Formal Ethics Opinions to the public for comment before deciding to actually adopt and issue them. That is a wonderful development for Tennessee lawyers and should ultimately lead to Tennessee having some of the best and most helpful ethics opinions of any state in the nation.

Now, the bad. 2019-F-167 in draft form ain’t one. This proposed FEO is yet another one seeking to weigh in on the topic of what kinds of provisions in settlement agreements might run afoul of a lawyer’s obligations under RPC 5.6 not to agree to restrictions on their practice as part of resolving a client matter. This time the underlying question is a provision in the settlement of an automobile products liability case that would require destruction of the allegedly defective vehicle.

The summary of the BPR’s conclusion is: “It is improper for an attorney to propose or accept a provision in a settlement agreement, in a products liability case, that requires destruction of the subject vehicle alleged to be defective if that action will restrict the attorney’s representation of other clients.”

Working from high-level problems first all the way down to problems at the level of details, here (for what it is worth) is what is wrong with this draft opinion:

  • The original intention of the rule, RPC 5.6, is to prevent an attorney from being put in a position where they have to agree that they will never again be adverse to someone as a condition for settling a particular client’s case. That is a policy decision made to try to protect the public’s general right to counsel despite the fact that the ethics rules (RPC 1.2) expressly provide that whether or not to settle a case is, and has to be, the ultimate decision of the client and not the lawyer. Every step down paths that are more remote from the original purpose of the restriction is one more step to making the rule tilt in the wrong direction of putting the lawyer’s future interests ahead of the current client’s right to settle their case.
  • Opinions that interpret a rule that says ” don’t do X” but that offer a conclusion of this other thing Y is wrong if Y also manages to “do X” aren’t all that helpful unless you provide really insightful guidance about when something would or would not also manage to “do X.” If you cannot articulate what things would or would not in a way that is, as a practical matter, helpful, then maybe you shouldn’t be issuing an opinion on the question.
  • The opinion goes to great lengths to explain how important the future possession of an arguably defective automobile is for the lawyer/firm making the inquiry and, in so doing, makes the following assertion as if it was the gospel truth: “The most compelling evidence when establishing the existence of a defect in a vehicle is the existence of other similar incidents.” But, it’s not. I’m not an expert in products liability litigation, though I have handled some cases over the years (admittedly, always on the defense side). If I need to prove that a particular vehicle that caused some particular person harm, then I need to prove that particular vehicle was defective. I don’t have to prove that any other vehicle at any other time was defective. Just that one. But also… that one. If I prove that other vehicles in other situations were defective and caused harm to other people, that isn’t actually going to correlate in any direct fashion to whether this particular vehicle that caused this particular harm was defective.
  • After doing that, the opinion explains a lot about the ways that the firm goes about purchasing the vehicle to have possession of it and talks about how “[i]t is the firm’s practice at the end of the case to request from the client that the firm be allowed to retain ownership and possession of the vehicle.” It does not, at any point in the opinion, provide any guidance on whether the firm has to comply with RPC 1.8(a) – business transaction with a client – in doing so; nor does it discuss whether such a policy on that firm’s part is a problem under RPC 1.8(i) – not acquiring a proprietary interest in a cause of action or subject matter of litigation that the lawyer is handling for a client.
  • The opinion does contain a discussion of RPC 3.4(a) and concerns of spoliation but makes another statement as if it were gospel truth that is actually simply not even close to 100% correct: “Clearly, in the context of a product liability case, the alleged defective product is key evidence in other current or subsequent cases of a similar defect.” It is bordering on irresponsible to put the imprimatur of the BPR on a position that the destruction of a particular physical piece of evidence at the conclusion of a particular piece of litigation would clearly put a lawyer at risk of being accused of spoliation of evidence in some future piece of litigation that does not yet even exist.
  • The opinion includes a discussion about the firm’s right to retain file materials and how that is important in terms of the ability to defend themselves in a subsequent legal malpractice action. That is a good issue to address. However, the sentence: “Without the ability to review the most important piece of evidence in the underlying products liability suit, the law firm would be left essentially defenseless if a former client brought a professional malpractice claim.” is another one of those bridge-too-far moments. The firm will have and retain copies of its expert reports from inspections of the vehicle and can even have and retain copious photographic and video evidence of the vehicle. There are many ways that it can satisfy its need to protect itself without having to have possession of the actual vehicle.
  • The opinion then ends with the BPR taking it upon itself to declare that the “ability for plaintiffs’ firms to act as industry watchdogs is both good public policy and was specifically addressed as a vested responsibility during Congress’s enactment of the Federal Motor Vehicle Safety Standards. It doesn’t seem wise to me for the BPR to be in the business of taking positions on public policy issues that are not absolutely necessary in order to provide guidance under the ethics rules. This doesn’t seem like that kind of situation, but, as the opinion cross-references, the BPR already did that with this exact same language in Formal Ethics Op. 2018-F-166, so the horse is already out of that particular barn.

So, I would say that this one needs to go back into the shop for some much needed repairs if not taken off the street altogether.

Speaking of which, the opinion’s reference to the firm’s willingness to assure the settling defendant that the vehicle will not be placed back on the road is actually the key point of all of this. The only real reason – to my knowledge – that a defendant ever seeks to include a destruction provision in settlement is a matter of safety in terms of making certain that the same vehicle does not go back in use to put anyone else at risk of harm and, of course, to put the defendant at risk of not having to get sued again over the same defective item injuring a different person. If the assurance that is offered to be provided by the firm can be done in a manner that is actually enforceable, then that should always likely suffice to resolve the situation. An re-drafted opinion that puts more emphasis on that and that spots other issues that could create problems with an eye toward getting to the right practical result would certainly seem more like helpful guidance than this draft.

The deadline for submitting public comments to the BPR on this opinion, should you be so inclined, is April 10, 2019. The document immediately below provides instructions on how you can do that.

Crowdfunding for attorney fees? Yes, but no.

So, since about early December of last year I’ve been trying to find a way to write about a really good, quite practical (albeit practical about a very niche situation) D.C. ethics from November 2018. The D.C. Opinion, Ethics Opinion 375, addresses the idea of using crowdfunding platforms as an ethical way for a client to afford otherwise unaffordable attorney fees.

It is easy to get in the right mindset to elaborate on why an ethics opinion is bad. I have had a hard time getting into writing about Opinion 375 because, truth be told, it is hard to write something that feels useful and interesting about a well-done ethics opinion.

But I’m writing about it today because, thankfully, along came a West Virginia disciplinary case with a development that makes this so much easier to discuss.

First, let’s get you up to speed on the D.C. opinion — “Ethical Considerations of Crowdfunding.” Now, of the various mechanisms that exist online for crowdfunding, the D.C. opinion focuses only on donation-based crowdfunding platforms — things like Go Fund Me rather than other kinds of platforms that bring large groups together to fund things in exchange for an equity stake or something similar.

The summary that starts out the opinion is largely all you really need to know about it:

Lawyers are generally free to represent clients who pay for legal services through crowdfunding. The ethical implications of crowdfunding a legal representation vary depending on the lawyer’s level of involvement in the crowdfunding. When the client directs the crowdfunding and the lawyer is merely aware of it, the lawyer incurs no specific ethical obligations although the lawyer should consider the potential risks associated with receipt of such funds and may counsel the client on the wisdom of publicly sharing confidential information. When the lawyer directs the crowdfunding, the lawyer must comply with the Rules governing a lawyer’s receipt of money from third parties. Further, a lawyer who directs the crowdfunding should be cognizant of ethical obligations regarding fee agreements, communications with donors, and the management of the funds raised.

Now, if you want to troll the depths (the D.C. Bar managed to list off 11 different ethical rules that were applicable to the situation), there is more than five pages of analysis to be had in the full opinion.

All in all, it’s well done and practical advice to address what is a particularly modern variation on the question of third parties paying a client’s fees.

So, crowdfunding is a viable option for clients to pay a lawyer … but … there are certain ways it can’t. be. used. For one thing, it can’t be used by a lawyer to get clients in the first place.

And that point brings us to West Virginia. Were I more of a delusional sort, I’d think this story was fabricated into existence Truman Show style just for my benefit. In terms of trying to appeal to me, this story has everything … (and you have to say this next part in the voice of Bill Hader’s “Stefon” character from SNL): it has a lawyer with the same name as a lawyer at a prominent firm in Memphis; the West Virginia lawyer started practicing law essentially exactly when I did [1999]; the West Virginia lawyer was serving as a treasurer [I’m the treasurer for two organizations at the moment] for a local soccer organization [ask me about soccer, I dare you, I won’t stop talking], and West Virginia’s Chief Disciplinary Counsel actually recused from the case because they are a soccer official.

Now, this West Virginia lawyer’s story isn’t really a story about Go Fund Me. Where the lawyer really went afoul of his ethical obligations was something he did long before he tried to use Go Fund Me in exactly the wrong sort of way, but that piece was the headline grabber for at least one West Virginia media outlet that wrote: “Charleston attorney suspended for 3.5 years after offering legal advice for Go Fund Me money.”

This lawyer’s original – and much more significant — transgression was that the lawyer embezzled about $12,000 from the soccer organization’s account by transferring those funds to his personal checking account. After he was confronted about his theft, he resigned from the treasurer position and repaid the money in three installment payments.

He self-reported his violation [which would have been, at minimum, a violation of West Virginia’s RPC 8.4(c) and probably (b)) and then was fired from his employment when his employer learned about the theft from the soccer organization.

After that, he tried setting up a Go Fund Me page to raise money to help him transition from being a lawyer employed at a firm to being a sole practitioner. What he offered, however, was that those who donated to the Go Fund Me would receive free legal services in exchange.

The West Virginia bar cited that conduct as being a violation of the rules against soliciting clients. The lawyer denied ever receiving any funds as a result of the Go Fund Me account in question and contended that he did not realize he had actually made it publicly-viewable.

An article in The ABA Journal online also emphasizes some of the aspects in which the Go Fund Me appeal itself was supported with false and misleading statements:

The fundraising appeal said the move was based on a decision to help children.
“After nearly 20 years of practicing law, I have finally found what I was meant to be doing,” the appeal said. “I have transitioned from an insurance defense practice to becoming a sole practitioner representing individuals and families. My primary focus is helping children who have been abused and/or neglected.”
Glover went on to say that his employer asked him to leave immediately after learning of his plans to go solo. “Given the short notice, I was not able to build up my savings, and I am now struggling to meet my personal expenses,” he wrote.
“It is my intention to return any gifts once my income become steady, and I will be happy to offer free legal advice (if I can) to my benefactors as well.”

That piece of this story is a very good reminder that, no matter the platform, rules patterned after ABA Model Rule 7.1 make it a disciplinary infraction for a lawyer to make statements about themselves or their services that are false or misleading.

Friday follow up: Yesterday’s post

Well, this may be the most rapid Friday follow up in this blog’s history.

A wise and well-connected reader has been in touch to let me know why my analysis yesterday of NYSBA Op. 1160 was all wet. He was, of course, right as I somehow managed to blow past a very important piece of the puzzle regarding the situation NYSBA Op. 1160 was addressing. The inquiring lawyer was actually willing to put together an arrangement that would have made the out-of-state lawyer a part of his “firm.”

I wrote that was not the case prior to discussing the part of the opinion that sought to distinguish prior guidance from about 8 years earlier. Specifically, where I went awry was here:


New York’s 1.5(g) only lets lawyers not in the same law firm (and to be clear the inquirer’s desire to affiliate did not apparently involve actually forming a law firm together) share legal fees if, among other bells and whistles regarding consent and the existence of a writing, the amount of the division of the fee is either proportional to the service performed or (if it is going to be disproportionate in that respect) if both lawyers assume joint responsibility for the work.

The “facts” section of the opinion, however, makes clear that I got that wrong.

The inquirer, an attorney recently admitted to practice in New York, is acquainted with another lawyer. The other lawyer, like the inquirer, resides in New York, but the other attorney is admitted only in another state, not New York, though the latter is admitted to practice in federal courts located in New York. According to the inquirer, the other lawyer is capable of generating business, and the inquirer would like to affiliate with this other lawyer, listing the other lawyer as a partner, associate, counsel, or otherwise, on letterhead showing that the other lawyer is admitted solely in the other state and not New York. The inquirer anticipates that the other lawyer would attend initial meetings with the clients being produced by the other lawyer, but then would not deal with any of the legal work being performed.

I certainly regret my error.

I particularly regret my error because it was part of my thinking when I said at the outset of yesterday’s post that NYSBA Op. 1160 still got the answer right. Now that I actually am paying better attention to the facts, I realize that the opinion absolutely did not get to the correct answer. Instead it was flat wrong.

Rule 1.5(g) wouldn’t be in the mix since that is sharing of fees among lawyers not in the same firm. Likewise, the stated concerns in the opinion about Rule 7.2(a) are irrelevant because that rule surely is not intended to apply to arrangements among lawyers within the same law firm.

There are multi-state law firms all over this nation that have partners who do absolutely nothing on a particular client matter beyond what is described as the role the out-of-state lawyer would have had under the inquiry. Those lawyers most definitely share in the fees of the client when they make rain through something often called “origination credit” by law firms.

Some of those firms most certainly have offices in New York and I just about guarantee that no one would think twice about such internal compensation arrangements in terms of questioning whether they are ethical because all of those lawyers are in the same firm and the decisions they make about how to divide fees are treated as pure business questions of compensation.

The rules in that regard shouldn’t be any different for a firm of two lawyers than for a firm of 2,000.

In a New York (out-of) state of mind…

It has been a minute or two since I’ve stumbled upon an ethics opinion that provides a quick and easy example of how to take an issue, makes it overly complex and in so doing highlight several ongoing problem areas in the regulation of the profession, but ultimately still get to the correct result as to the “yes” or “no” answer to the question addressed.

But along comes New York State Bar Association Committee on Professional Ethics Opinion No. 1160. This one seems to me to be just such an opinion so let’s chat about it briefly.

Op. 1160 exists to answer the following question:

May a lawyer admitted in New York affiliate and share legal fees with another lawyer, who, while a resident of this State, is not admitted here, with the affiliation intended solely for the purpose of obtaining clients referred by the non-admitted lawyer?

Now, because the question included the desire to share legal fees with the rainmaking lawyer who was living in but not licensed in New York, the opinion could have chosen to cut to the chase based on a relatively straightforward application of New York’s Rule 1.5(g) which largely tracks ABA Model Rule 1.5(e).

New York’s 1.5(g) only lets lawyers not in the same law firm (and to be clear the inquirer’s desire to affiliate did not apparently involve actually forming a law firm together) share legal fees if, among other bells and whistles regarding consent and the existence of a writing, the amount of the division of the fee is either proportional to the service performed or (if it is going to be disproportionate in that respect) if both lawyers assume joint responsibility for the work.

Given that the inquiry transparently admitted that the rainmaker would not be doing anything beyond landing the client and passing the client on to the New York lawyer for handling, it seems pretty clear that Rule 1.5(g) could only be satisfied if the lawyers would be assuming joint responsibility. Given the lack of a New York license for the rainmaker, that would seem an impossible state of affairs because while landing a client might not cross the line into the unauthorized practice of law in New York, agreeing to have joint responsibility for legal work performed in New York for a New York client would be harder to argue involves staying on the right side of the line. Thus, it feels like the NYSBA committee could have wrapped this one up with a bow in a 1 or 2 pages tops.

In fairness, they almost managed to do something like that when they attempted to explain the difference between this situation and an earlier opinion they issued in 2011:

We examined Rule 1.5(g) in N.Y. State 864 (2011), in which the inquirer wished to accept a referral from an out-of-state lawyer in a personal injury matter. The injury occurred in New York and the referring lawyer proposed that, in the particular matter at issue, the in-state lawyer would “handle” the matter and pay the referring lawyer a portion of any recovery. We endorsed the proposal subject to compliance with Rule 1.5(g)…. Although we have declined to delineate the precise contours of “joint responsibility” under this Rule …, we have made clear that the mere cultivation of client relationships does not qualify as “services performed” by the referring lawyer… Thus, the inquirer’s contemplated action would violate Rule 7.2(a) unless it could be said that the inquirer is ethically permitted to be affiliated with the out-of-state lawyer in the circumstances presented.

Where the committee goes awry is that last sentence which is pretty viciously circular.

It seems like it should have said: Thus, the inquirer’s contemplated action would violate Rule 7.2(a) unless it could be said that the out-of-state lawyer was willing to undertake “joint responsibility” for the matter and if doing so would not constitute the unauthorized practice of law.

They did not write it that way, however. And, as a result, the rest of the pieces of the opinion exist all of which for rhetorical purposes treat the rainmaker, despite being a lawyer licensed in at least one jurisdiction, as a “non lawyer.” And much of which bears the hallmarks of heavy-handedness that often arise in ethics opinions construing restrictions on (1) the ability of lawyers to offer compensation to those who refer them work, (2) the ability of lawyers to ask for work from clients; and (3) the ability of lawyers to practice law remotely.

You can read the full opinion here.

New Jersey takes a step in the right direction on advertising

With a strong tip of the metaphorical hat I never wear to Kim Ringler (a former President of APRL) who alerted many ethics lawyers to the news, I write today about a new ethics opinion from the New Jersey Committee on Attorney Advertising.

In Opinion 45, issued less than a week ago, New Jersey has softened their harsh position on whether a lawyer can hold themselves out as having “expertise” or being a “specialist” or “specializing” in an area of the law.  New Jersey’s new opinion is candid about how developments in other states involving First Amendment challenges to advertising restrictions have resulted in its new stance.  It is also fairly decent in terms of the commonsense nature of the analysis it provides.

The opinion explains that it has been prompted by a grievance filed about a law firm’s website in which the statement is made that the lawyers have “expertise” in tax law.  (I’m willing to bet the shiniest of quarters that the grievance was filed by a lawyer and not a consumer.)  The opinion provides a bit of insight into the firm and its main lawyer:

The firm concentrates its practice in tax law.  The firm’s principal lawyer has an L.L.M. in tax, is the author of numerous publications on tax law, lectures on tax law, served as an attorney for the Internal Revenue Service, and has been practicing tax law for more than 30 years.

The opinion explains that New Jersey had previously imposed severe restrictions on the use of such terms unless a lawyer had been certified by the New Jersey Supreme Court or by an ABA-approved organization.  (My own state has a somewhat similar black-letter rule in RPC 7.4 [though it does not seek to regulate the term “expert” or “expertise” and it only relies upon ABA-accredited groups.)

But, going forward… well … I’ll just let New Jersey speak for itself:

After revisiting the issue in light of recent out-of-state First Amendment decisions in attorney advertising, the Committee has now determined that lawyers may use the terms “expertise,” “specialize,” and “specialist” in advertising provided the terms are accurate and the lawyers can demonstrate the necessary education, training, and experience to substantiate the claim.

So, kudos where kudos are due, but the reason I say “a step” in the right direction rather than any sort of “leap” is that New Jersey couldn’t quite bring itself to commit fully to the common-sense outcome on this topic because it still is clinging to its prohibition on the use of the word “expert.”  It does so by ending its opinion with the following sentence:

Only lawyers who are certified by the Supreme Court or an organization approved by the American Bar Association may call themselves “experts.”

 

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

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

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

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

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

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

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

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

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

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

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

That’s pretty good guidance, actually.

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

You can read the full Maryland opinion here.

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

ABA Confirms that Model Rule 1.15 Should Solve What Model Rule 4.4 Doesn’t

So, I am certain you have heard by now that a little under a week ago the ABA issued a new Formal Ethics Opinion to address the ethical obligations of lawyers in the aftermath of a cyber-attack or an electronic data breach.  ABA Opinion 483 makes for a good read and provides good guidance about how the ethics rules work on the subject.

There are lots of decent summaries out there already of this ethics opinion if you want to try the tl:dr approach and just read secondary sources.  I am not going to repeat those summaries here.  Instead, I want to focus on what is, to me and perhaps only me, the most important development that ought to come from this opinion — the recognition by the ABA that “property” in Model Rule 1.15 has to also include digital property.

In the latest ABA Opinion, this issue is addressed with an eye toward thinking about electronic copies of client files, specifically as follows:

An open question exists whether Model Rule 1.15’s reference to “property” includes information stored in electronic form.  Comment [1] uses as examples “securities” and “property” that should be kept separate from the lawyer’s “business and personal property.”  That language suggests Rule 1.15 is limited to tangible property which can be physically segregated.  On the other hand, many courts have moved to electronic filing and law firms routinely use email and electronic document formats to image or transfer information.  Reading Rule 1.15’s safeguarding obligation to apply to hard copy client files but not electronic client files is not a reasonable reading of the Rule.

Now, why is this such an important takeaway to me?  Well, myopia often flows from the egocentric nature of people and I am no exception.  This is an important takeaway to me because I’ve been trying to make this point in an entirely different context – and to little avail — since 2010 when I co-authored an article entitled: “Model Rule 1.15: The Elegant Solution to the Problem of Purloined Documents” published in the ABA/BNA Lawyers’ Manual on Professional Conduct.  Now that article – which you can still find here — was itself an excerpt of part of a chapter of a book I was also fortunate enough to co-author with Doug Richmond that came out in 2011.  The “Elegant Solution” article explained that the lack of guidance offered by Model Rule 4.4(b) on what a lawyer must do if they receive stolen documents (whether on paper or electronically) should be resolved by application of Model Rule 1.15 and the obligations lawyers have under subsections (d) and (e) of that rule.

There are likely lots of reasons why that article has been largely ignored – and when not ignored treated as offering a controversial view to be shunned — but the primary one is that Model Rule 4.4(b) becomes a bit unnecessary as a rule if such questions could have been resolved under Model Rule 1.15.

Model Rule 4.4(b) reads:

A lawyer who receives a document or electronically stored information relating to the representation of the lawyer’s client and knows or reasonably should know that the document or electronically stored information was inadvertently sent shall promptly notify the sender.

Model Rule 4.4(b) only addresses information that a lawyer receives that is known to have been inadvertently sent and only requires the receiving lawyer to give notice to the sending lawyer of what has happened.  It does not address information sent purposely but without authorization, and it punts on what comes next.

In the “Elegant Solution” article, we explained why Rule 1.15 provided answers to the questions Model Rule 4.4(b) won’t address and, particularly in light of this latest ethics opinion recognizing the need for Model Rule 1.15 to apply to digital information, I think our explanation is worth repeating to close out this post:

The Model Rules do, in fact, appear to offer an elegant answer for lawyers who question
their professional responsibilities when they receive documents that may have been purloined or otherwise improperly obtained from another. The answer lies in Model Rule 1.15 and its provisions establishing lawyers’ obligations with respect to ‘‘safekeeping property.’’ See Model Rules of Prof’l Conduct R. 1.15 (2010).  Although lawyers are generally familiar with Rule 1.15 in the trust account context, the scope of the rule is clearly not so limited, as amply evidenced by its repeated references not just to funds or fees or expenses, but also to ‘‘property.’’

Model Rule 1.15(a) declares that ‘‘[a] lawyer shall hold property of clients or third persons that is in the lawyer’s possession in connection with a representation separate from the lawyer’s own property.’’ Id. R. 1.15(a) (emphasis added). Model Rule 1.15(d) further requires that ‘‘[u]pon receiving funds or other property in which a client or third person has an interest, a lawyer shall promptly notify the client or third person.’’ Id. R. 1.15(d) (emphasis added). Finally, Model Rule 1.15(e) mandates that ‘‘[w]hen in the course of the representation
a lawyer is in possession of property in which two or more persons (one of whom may be the lawyer)
claim interests, the property shall be kept separate by the lawyer until the dispute is resolved.’’ Id. R. 1.15(e) (emphasis added).

Analysis of over-the-transom deliveries through the lens of Rule 1.15 establishes that a lawyer, upon receiving purloined documents (or if not clearly purloined at least clearly reflecting privileged or confidential information belonging to someone other than the person who delivered the documents), is obligated to hold those documents separate from the rest of the lawyer’s documents, promptly notify the person from whom the documents were taken, and, if the lawyer is going to refuse to return the documents to that person (and thereby claim either that the lawyer or the lawyer’s client has an interest in them), continue to keep those documents segregated from the rest of the lawyer’s property until the dispute over the documents is resolved,
presumably through a ruling by a tribunal. This approach places no meaningful burden on the receiving lawyer and respects the rights of the party to whom the materials belong.

Utahlking Ethics Opinions to Me? (Also Texas)

I’m interested in writing today about two recent ethics opinions that manage to go together quite nicely.  Utah Ethics Adv. Op. 18-04 and Texas Professional Ethics Committee Op. 679.  Both involve RPC 1.8 (or at least both should).  And, not only does neither opinion do a very good job with the subject matter it tackles but both tackle subjects where lawyers need to tread very carefully and could use really good advice.

But, as just a quick aside before doing so, I wanted to express some gratitude from last week and point you to a very important story worth reading.  As the culmination of a many-months-long project, I had the chance to share the stage last week at the ABA Forum on Franchising with two excellent lawyers – Shannon McCarthy Associate General Counsel for Chihuly, Inc. and Kevin Kennedy, General Counsel of Wiggin and Dana in Connecticut — and talk about a tricky and delicate topic – lawyers and obligations to report other lawyers with a particular emphasis on issues involving harassment and other toxic behavior.  I was really fortunate to get to work with them both.  For a story that offers something of a how-not-to manual offered by the experience of one of the world’s largest law firms, you can go read up here.

Now, back to regularly-scheduled programming…

While I missed it around the time it came out, the Utah State Bar put out an interesting ethics opinion explaining to lawyers a way they might be able ethically to mitigate their risk exposure in the event of third-party claims against the lawyer based on the client’s conduct.

The opinion declares that “[a]n attorney may include an indemnification provision in a retainer agreement at the commencement of representation that requires the client to indemnify the attorney and related entities against claims that arise from the client’s behavior or negligence.”

In explaining this outcome, the Utah opinion points out that nothing about RPC 1.8(h) directly prohibits it.  However, it doesn’t just stop there, it goes on to explain … just kidding actually.  It stops there on that issue.

As a practical matter, that is sort of a shame because lawyers ought to be cautioned a bit about the problems associated with starting the relationship with a client off with that sort of provision — particularly because if you are that concerned about that risk of liability from the client’s conduct, then maybe a rethink about whether to take them on is in order.  But, if one is going to do it, the beginning of the relationship is certainly more viable than mid-stream.

Speaking of which, that brings me to the Texas opinion, which tasked itself with answering this question:

May a lawyer renegotiate his fixed, flat fee for representing a client in litigation after the litigation is underway if the matter turns out to be greater in scope and complexity than the lawyer and client contemplated?

If Texas was interested in doing this right, it would recognize that the answer lies in application of its version of Model Rule 1.8(a) because that situation is a business transaction between lawyer and client.  Instead, Texas actually announced that its version of that rule does not apply to a mid-stream renegotiation of a fee.

Instead, the opinion points out that Texas courts have considered the issue and have said that it can occur but that there is a “presumption of unfairness.”  Rejecting the opportunity to apply Rule 1.8 to these circumstances is all the more baffling because — providing guidance to interpret ethics rules is the kind of thing ethics opinion writing bodies are supposed to do, rather than providing guidance about what court decisions mean.

In the end though, I’m likely being too harsh on the Texas opinion because it, at least, summarizes pretty nicely the analysis of the dynamic from the lawyer side of things and why, in most situations, effectuating an enforceable renegotiation will be unlikely:

The fundamental nature of a flat or fixed fee is that there is risk to the lawyer that the legal work and time required may exceed what the lawyer might have earned if the lawyer instead billed by the hour.  The client knows with certain that the total fee charged, no matter how much lawyer time or effort is involved, will not exceed the fixed amount.  The client’s risk in a flat or fixed fee agreement is the possibility of paying more than the client would have paid under an hourly billing agreement if the lawyer is able to complete the representation is [sic] less time than originally expected.  Because the lawyer is better able to anticipate the time and legal work required, the lawyer should be mindful that he knowingly assumed the risk — and should not unreasonably seek to change the fee agreement simply because the lawyer agreed to a fixed fee that, in hindsight, is no longer adequate.

(emphasis added).  And, also, amen to that.

 

 

Yet another reason for change. Pretty much the most serious reason.

So there are things that can really make you feel small.  And there are things that can really lead to despair and a feeling of helplessness.  Fortunately, there are few things that do both at once.  The report from the Intergovernmental Panel on Climate Change can do both of those things pretty simply.  If you haven’t read it, or at least parts of it, you can do so at this link.  If you don’t want to read the report itself (or parts of it), then you can go read one of the many articles discussing at length its sobering warnings of what the future (the close-enough-future that we can imagine ourselves in it pretty easily) here or here or here for example.

You really ought to read as much about it as you can because, to a pretty significant extent, whether we have a habitable planet is just about all that really matters.  And, though the more you digest the news about the situation the easier it is to feel small and helpless, the reaction needs to be significantly different from that.

Why am I writing about this at a legal ethics blog?  (Beyond the cop-out sort of reason in which I would tell you it feels a bit petty to write about anything else given the stakes, of course.)  Well, it isn’t because lawyers are somehow going to save us from this outcome.  For every lawyer out there who lobbies a state legislature to impose some new regulation to try to reduce carbon emissions, there will be another lawyer who ends up representing the industry that seeks to challenge that legislation in court.  That’s the nature of our profession.

But, our profession can try to do a few things to not be part of making the problem worse.

A lot of the discussion about what the future of the practice of law is going to look like involves embracing technology and regulatory questions about ways in which the traditional approach to lawyer regulation may be stifling innovation that would ultimately benefit consumers of legal services.  In my opinion, all of that should continue as quickly as we can move the conversation forward.  But, as we try to talk about what the future of the profession should look like, we ought to be bearing in mind many of these much larger issues.

What can we do to make sure that technological solutions are used so that people in the court system do not have to make multiple, ultimately unnecessary, trips across town for court when nothing happens that couldn’t be handled over the telephone or by video conference or web stream if courts would permit that to occur?

What options should we be considering empowering so that fewer disputes go into the traditional court system at all if they could be resolved through online dispute resolution?  What can we do to try to better fashion courts into places that can themselves be resolving disputes online?

What can we do to persuade those remaining jurisdictions that have been unwilling to move to electronic filing to give up the fight and swiftly enact electronic filing?

Pursuit of these sorts of initiatives can save an incremental number of natural resources.

And, why can our profession readily get comfortable with relaxing the artificial barriers we impose on the ability of a lawyer licensed in one state to actively practice law in another state only in the aftermath of disasters?  Many states have issued ethics opinions in the wake of various weather disasters or passed court rules to permit flexibility for out-of-state lawyers to go to the disaster area and render legal assistance without fear of being accused of unauthorized practice of law.  My own state did so a few years back.

The ABA very recently just issued Formal Ethics Opinion 482 encouraging lawyers to be ready for disasters and to plan ahead to protect their own practice and protect their clients’ cases and matters from adverse impact in the wake of disasters.  The ethics opinion gives very good guidance and, perhaps, it gave that guidance far enough in advance of the devastating impact that Hurricane Michael is currently inflicting on a part of the world where my family has vacationed every summer for the last almost 20 years, Apalachicola and St. George Island, Florida, so that lawyers in that part of the world knew enough to have been prepared in advance.

The IPCC report presents a pretty clear indication of the coming disaster if radical change is not undertaken.  Overhauling the regulation of the legal system to remove artificial barriers to cross-border practice and barriers that prevent technology from making it easier for clients to find lawyers and for lawyers to practice law without unnecessarily wasting resources seem like some things that amount to the least our profession can do to not be part of making worst-case scenarios even more likely to come to pass.

 

 

Making it up as you go (but for a good cause): Texas State Bar Op. 673

There has been something of a trend of late in terms of ethics opinions focusing on variations on the breadth of the duty of client confidentiality and the inconvenience it creates for lawyers who have bought in to the modern trend of sharing and oversharing when online.  There was this opinion from the ABA and then this opinion from the ABA, for example.

The latest opinion in this vein is Professional Ethics Committee for the State Bar of Texas Op. 673.  Except, it is only partially in this vein because, while it starts out heading down the path of explaining how the duty of client confidentiality might prohibit lawyers from being able to do something useful, it swerves away from what would be the likely conclusion in most jurisdictions.

Of course, it does so essentially by making up a justification nearly out of whole cloth but, if you’ve ever participated in, and benefited from, access to any kind of online forum or listserv frequented by lawyers, it reaches a conclusion for which Texas lawyers should be grateful.

The questions addressed in Op. 673 are:

  1.  Does a lawyer violate the Texas Disciplinary Rules of Professional Conduct by seeking advice for the benefit of the lawyer’s client from other lawyers in an online discussion group?
  2. Does a lawyer violate the Texas Disciplinary Rules of Professional Conduct by seeking advice for the benefit of the lawyer’s client through informal, direct consultation with another lawyer in a different firm?

The opinion then goes on to describe arrangements that will be familiar to anyone who has spent anytime on any sort of lawyer listserv or other social media group setting or online forum but also makes the point that lawyers reaching out to pick someone’s brain about an issue or perform “lazy person’s research” can also happen in the “meat space,” offline when one lawyer seeks out another lawyer’s input in a version of informal mentoring.

The Texas opinion squarely flags that the biggest concern for the asking lawyer in such scenarios is protecting the confidentiality of client information.  (Importantly, the opinion also does a nice job of flagging for the answering lawyer the most significant risks for her – potentially creating duties to the asking lawyer’s client or wittingly or unwittingly violating duties to her own other clients by helping the lawyer.)

Nevertheless, the opinion explains that the asking lawyer can proceed even if providing some background information that is likely to identify the client or situation is necessary in order to get the advice without violating the ethics rules as to the disclosure of confidential information.

It is the opinion of the Committee that Rules 1.05(d)(1) and (d)(2) allow a lawyer to reveal a limited amount of unprivileged confidential information to lawyers outside the inquiring lawyer’s law firm, without the client’s express consent, when the inquiring lawyer reasonably believes that the revelation will further the representation by obtaining the responding lawyers’ experience or expertise for the benefit of the client, and when it is not reasonably foreseeable that revelation will prejudice the client.

This is where the Texas opinion is able to rely on two things.  One is a “creative” interpretation of the “implied authorization” aspect of the rule on client confidentiality that most jurisdictions also have.  (Texas Rule 1.05(d)(1)).  The other is a nuance in Texas’s rule that jurisdictions tracking the Model Rule don’t have at their disposal to justify this kind of lawyer-friendly (and not exactly consumer unfriendly) outcome.  (Texas Rule 1.05(d)(2)).

Starting with the second is the easy approach because it really is the most important thing to know to explain the outcome – Texas’s version of RPC 1.6 (which they have numbered as Rule 1.05) contains an exception (d)(2) that allows a lawyer to reveal information that is “confidential” but “unprivileged” when “the lawyer has reason to believe it is necessary to do so in order to ‘carry out the representation effectively.'”

For context, here is the entirety of Texas 1.05(d):

(d) A lawyer also may reveal unprivileged client information:

(1) When impliedly authorized to do so in order to carry out the representation.
(2) When the lawyer has reason to believe it is necessary to do so in order to:
(i) carry out the representation effectively;
(ii) defend the lawyer or the lawyer’s employees or associates against a claim of wrongful conduct;
(iii) respond to allegations in any proceeding concerning the lawyer’s representation of the client; or
(iv) prove the services rendered to a client, or the reasonable value thereof, or both, in an action against another person or organization responsible for the payment of the fee for services rendered to the client.

Now, I could quibble with that word “necessary” and how seeking out assistance from an online discussion forum could ever be “necessary,” but I can admit to being a fan of outcome-determinative analysis when I’m a fan of the outcome.  (To be clear, I have always tried very hard when making use of any kind of online forum to not let any cats out of any bags in terms of actual whos, whats, and wheres.)

The fact that the Texas opinion still involves a “making-it-up-as-you-go” approach though comes through loud and clear by the fact that the opinion has to provide a set of numbered considerations spanning more than a full page to guide lawyers in deciding whether and how much confidential but unprivileged information could be disclosed.  If you want to work through those factors, you can do so at pages 2-4 of the actual opinion itself here.

In any jurisdiction that does not have something like Texas’s Rule 1.05(d)(2) though, getting to this kind of result is a lot more difficult since it involves having to try to push the envelope on the “implied authorization” aspect of Model Rule 1.6(a).

Yet, again, this kind of conduct is likely not anything that a client would complain about and often results in driving down the cost of the representation by gathering the wisdom of a crowd before spending hours on research so… as good a time as any to bring back up again my thoughts on how Model Rule 1.6 ought to be revised.