The ethics of putting together an unenforceable contract.

It is still astounding (as well as deeply dispiriting) that the context of the discussion I’m about to launch is the work of White House Counsel but this is the world we currently occupy.  You may very well have read this fascinating The Washington Post article by now released in connection with the ongoing news story of a former White House staffer who repeatedly secretly taped conversations – including her own firing in The Situation Room — inside The White House and what those recordings may reveal about whether that person says even more outrageous things in private than the outrageous things he says in public, as well as whether that person is suffering from a decline in his mental faculties.

Because tackling the notion of the ethics of representing a client with diminished capacity if that client happens to be – at least theoretically – the most powerful politician on the planet – is too depressing to tackle, I’m not writing about that today.  If you want to delve into those issues, your starting point is ABA Model Rule 1.14.

Instead I want to talk about [as the title of the post telegraphed] what can be a thorny ethics issue even in much more pedestrian contexts: is it ethical for a lawyer to draft and create a contract for a client’s use that the lawyer knows to be unenforceable?

As the topic du jour the context of the question is requiring staff at The White House – public employees — to sign non-disclosure agreements including provisions that would prohibit them from disparaging the 45th President of the United States.  Seemingly everyone acknowledges that given the nature of public employment, democracy, the at-least-still-for-the-time-being cherished concept of transparency in government, and numerous other federal laws such an agreement is obviously and undisputedly unenforceable.  The article describes what the media has been told about the events:

A number of White House aides were urged to sign NDAs in early 2017 by White House Counsel Donald McGahn, according to current and former aides, who requested anonymity to discuss internal West Wing deliberations. Trump was obsessed with leaks to the news media and repeatedly demanded that McGahn draft the agreement, the aides said.

Initially, McGahn told Trump he would not draft or give aides the NDAs because they were not enforceable, White House officials said. But in the end, McGahn created a document that said aides would not divulge any confidential or nonpublic information to any person outside the building at any time, according to three people who signed it.

Other media outlets have reported that McGahn may have convinced people to actually sign the document by reassuring them that it was unenforceable.  One of the reasons the question is important ethically is that if you create a contract for a client that you know is unenforceable, they will likely still try to use that contract in the future against people and cause them harm (at the very least economic harm and inconvenience associated with defending a lawsuit seeking to claim a breach of the unenforceable contract).  Media reports today indicate that something like this is now being undertaken – although admittedly apparently based on an NDA that was required by the campaign and not the actual government.

My opinion about the answer to the question of whether any such conduct by a lawyer is unethical is, unfortunately, less than equivocal.  At heart, it will have to turn on a situation-by-situation analysis.  Using the Model Rules to explain, this is because there is not exactly a specific rule outside of the litigation context that flatly prohibits a lawyer from assisting a client in pursuing a frivolous position in negotiation of a document in the same way that there is such a rule prohibiting the pursuit of frivolous claims in litigation.

What is available is a collection of rules that would need to be sifted through and applied to the circumstances to reach a conclusion about the lawyer’s role in assisting a client in getting someone to agree to a provision in a contract (or an entire contract) that is known to be unenforceable.  Those rules are:

RPC 1.2(d):  A lawyer shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal or fraudulent, but a lawyer may discuss the legal consequences of any proposed course of conduct with a client and may counsel or assist a client to make a good faith effort to determine the validity, scope, meaning or application of the law.

RPC 1.16(a):  … a lawyer shall not represent a client or, where representation has commenced, shall withdraw from the representation of a client if: (1) the representation will result in violation of the Rules of Professional Conduct or other law ….

RPC 4.1:  In the course of representing a client a lawyer shall not knowingly: (a) make a false statement of material fact or law to a third person; or (b) fail to disclose a material fact when disclosure is necessary to avoid assisting a criminal or fraudulent act by a client, unless disclosure is prohibited by Rule 1.6.

RPC 4.3:  In dealing on behalf of a client with a person who is not represented by counsel, a lawyer shall not state or imply that the lawyer is disinterested. . . . The lawyer shall not give legal advice to an unrepresented person, other than the advice to secure counsel, if the lawyer knows or reasonably should know that the interests of such a person are or have a reasonable possibility of being in conflict with the interests of the client.

RPC 4.4(a):  In representing a client, a lawyer shall not use means that have no substantial purpose other than to embarrass, delay, or burden a third person ….

RPC 8.4(d):  It is professional misconduct for a lawyer to … engage in conduct that is prejudicial to the administration of justice.

Assuming that, at all times in dealing with the members of staff being asked to sign the contracts, White House counsel was truthful about the situation, then the most troublesome provisions from the list above would be RPC 4.4(a) as there seems no “substantial” purpose other than to burden these people to seek to have them agree to an unenforceable contract — particularly where one of the grounds of unenforceability in this scenario is a constitutional issue.

In other circumstances, for example, where the unenforceable piece of the contract puzzle is just one part of an otherwise enforceable contract or, on the other extreme, where the contract itself is unenforceable because its purpose is inherently criminal or illegal, then the interweaving of these rules may provide a clearer outcome.

Outside counsel guidelines and term limits

While I am on something of a short streak of writing about people much more famous and influential than I am, it seems as good a time as any to offer my thoughts about the article that two very fine lawyers with Hinshaw & Culbertson wrote for The Professional Lawyer in 2017 about even more aspects of the growing problems outside counsel guidelines are creating for lawyers in private practice.  (These same two authors did an earlier article that talked about the problems with indemnity provisions in such guidelines – you can go read that here if you’d like.)  The more recent article was titled The New Battle Over Conflicts of Interest: Should Professional Regulators–or Clients–Decide What is a Conflict?

If you don’t know the article of which I speak, or it has been a while since you read it, you can go read it (again) here.

It is difficult to contest the point being made by the authors in this article, and the earlier one, that increasingly frequent provisions in OCGs are creating real problems for lawyers in private practice.  Particularly so, those pieces of OCGs that feel like they are overreaching related to who must be treated as clients for purposes of determining conflicts.

The authors summarize the nature of these issues quite well as involving clients using OCGs to “expand[] the definition of who is the client (far beyond the bounds of prevailing case law);” “limit[] the universe of other clients from whom lawyers and their firms may accept work;” and to “expand[] the definition of ‘interest’ and ‘positional’ conflicts in order to prevent lawyers and firms from undertaking or continuing to work for other clients that may take public positions on issues that the client unilaterally—and often ex post facto—deems adverse to its own interests.”

What I do disagree with, however, is the authors’ proposal for how to fix this problem.  The authors propose that states amend their versions of Model Rule 5.6 to make it unethical for lawyers to propose or agree to restrictions on their right to practice in connection with being hired by a client, just as is now the case for employment agreements or as terms for resolving a client’s matter.

Under the proposed revision, Rule 5.6 would read as follows (the bold and italicized piece being the new stuff):

A lawyer shall not participate in offering or making:

(a) a partnership, shareholders, operating, employment, or other similar type of agreement that restricts the right of a lawyer to practice after termination of the relationship, except an agreement
concerning benefits upon retirement; or

(b) an agreement in which a restriction on the lawyer’s right to practice is part of the terms of engagement of a lawyer by a client or of the settlement of a client controversy.

My immediate reaction to reading that proposal was to think of the problems I have whenever people argue for imposing term limits on their elected representatives.  You get the opportunity to vote people out every time they come up for re-election.  You shouldn’t need a law that limits the number of terms they can serve because you can always simply just vote them out of office in the regular course of things.

The solution to overreaching in outside counsel guidelines is equally simple: lawyers and firms should reject OCGs that go too far and refuse to agree to terms that unreasonably define who must be treated as the client or that become tantamount to restrictions on the right to practice.

The counterargument for that position is about the same as the counter-argument when the discussion involves term limits — the deck is typically too stacked in favor of incumbents so that the balance of power is truly off and that simply saying “you can vote them out” is naive.

The nature of present day demands on lawyers and law firms means that most firms and lawyers won’t be willing enough to turn work away to push back on outside counsel guidelines that are unreasonable and amount to overreaching.  Any firm that really wants to take a stand will have too much economic pressure on it to do so.  I hear the point, but, while that might be a pretty bad basis for enacting term limits and preventing some truly effective politicians from serving for as long as their constituents might like, it’s an extraordinarily bad basis for revising an ethics rule.

In particular, it is a bad basis for revising an ethics rule when there are already one or more ethics rules that lawyers can point to as being breached by aspects of the very OCGs being complained about.  For example, the authors point out that OCGs, in order to enforce their expansive requirements about what is a conflict, also impose obligations on the lawyer to tell the client about matters they are contemplating undertaking.  In so doing, these OCGs are demanding that lawyers agree to disclose information that they are obligated to treat as confidential under RPC 1.18 (assuming they have that provision in their state).

A lawyer who wants to refuse to agree to outside counsel guidelines of that type would have a strong, persuasive argument to offer not only about that violation but the potential risk that an in-house lawyer would have – if insisting that it remain in the agreement – of being considered to have violated their state’s version of Model Rule 8.4(a) which, in most places, makes it a disciplinary violation for a lawyer to “knowingly … induce” another lawyer to violate the ethics rules.

It also seems to me be a bridge too far for lawyers and firm to be able to demand that clients be permitted to agree to advance conflict waivers and similar contractual provisions which would serve to narrow the scope of conflicts but also demand that clients should not be able to propose that the lawyer agree to treat requirements of conflicts even more broadly.

The authors also offer an alternative to their own proposed revised language – perhaps to avoid issues associated with when a restriction would be made a term of engagement or not, by suggesting that Rule 5.6 could otherwise be revised simply in (b) to prohibit “an agreement containing a restriction on the lawyer’s right to practice.”  There would be significant problems — perhaps in the nature of unintended consequences – that would come from that alternate revised Rule 5.6 proposal.

If someone is being hired as an in-house lawyer, their corporate employer should be permitted to require that they restrict their practice to only representing the corporate employer and not represent any other clients while employed in-house.  Technically speaking, the second version of the revised Rule 5.6 wouldn’t permit that.  And, even if you are a private practice lawyer and one client wants to provide you with enough work that they also want to have you agree that you won’t work on any other matters for any other clients, why shouldn’t that be okay?

There are examples out there of such lawyers other than just Tom Hagen, the lawyer in The Godfather.

And, coincidentally, Hagen’s also a pretty good example of a lawyer who should have simply turned down a proposed client engagement rather than allowing economic benefits to sway his decision.

 

Friday follow up. Good news and bad news.

I seem to be trending toward this model of one new/fresh substantive post early in the week and one of these “FFU” posts at the end of the week, but I’m not sure if this is a rut or my script going forward.  A very intelligent and thoughtful lawyer asked me while I was in Vancouver what my publishing schedule was, and I had to embarrassingly admit that a fixed schedule was not something I had.  I told him what I’d tell you – if you asked — I try my best to at least post twice a week, but the days varies and some weeks I am better at this than I am other weeks.  Not the kind of consistent excellence that builds a readership, I readily admit.

So, oh year.  The follow ups.  Good news and bad news.

First, the good news.  The Oregon Supreme Court has approved the revision to RPC 7.3 in that state that I wrote a bit about recently.  You can read the Oregon court’s order . . . eventually (I can’t find it yet online) [updated 2/10/18 – Thanks to Amber Hollister, you can now see the order hereAmended SCO 18-005 Amending RPC 7-3 and 8-3 signed 2-7-18], but you can get your confirmation that I’m not lying to you here.

Second (also last), the bad news.  D.C. has now officially issued a 60-day suspension (with potential for it to be much longer) for the former G.E. in-house counsel that I wrote some about quite a few moons ago.  One of the panel presentations I had the chance to sit through in Vancouver touched on issues of lawyer whistleblowers.  You can reach your own conclusions about whether we currently live in a world in which lawyers should be encouraged to be whistleblowers (particularly, for example, in-house lawyers in Washington, D.C. these days), but the only conclusion that can be drawn from this D.C. outcome is that anyone who learns about the punishment that was sanctioned will be a whole lot less willing to do so than they would otherwise be.

I remain particularly skeptical of the treatment afforded Ms. Koeck by the D.C. bar given the fact – as discussed way back when (which was itself a FFU almost a year ago so…) – that they also decided to punish the lawyers who gave Ms. Koeck advice and guidance along the way.  Which is, as far as these things go, even a more chilling wrinkle.  You can read a National Law Journal piece on the news out of D.C. here.

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

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

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

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

The opinion helpfully catalogs quite a few such scenarios, like

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

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

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

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

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

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

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

Another Tennessee-centric offering.

Using the term “Tennesentric” would probably be more efficient, but two items involving potential rule revisions relating to ethics and lawyering in Tennessee are worth briefly discussing.  One of the two has gone out for public comment and has a deadline, while the other has just been filed with the Court and does not.

I’ve written at length in the past about Tennessee’s effort at cleaning up some problems with comity admission standards and the extended amnesty period for certain folks in need of getting properly registered as in-house counsel.

Our Board of Law Examiners has recently filed a petition, which the Court has put out for public comment, to further extend the dates and deadlines for folks to have gotten into compliance in these areas.  Interestingly, the Petition seeks to extend the time period but not all the way up until the petition itself was filed, but rather has sought a cut-off period that would be December 31, 2016.  If enacted, the impact of this rule change would appear to be to make amnesty available to in-house counsel who did not get into compliance by July 2016 but who would have if the deadline for compliance was December 31, 2016 and to afford the Board with the same flexibility in making rulings on comity applications that were filed as late as December 31, 2016 but for which the Board didn’t rule – for obvious reasons – before the end of the year.  The deadline for public comments on that proposal is April 14, 2017.

The other proposal – which has not yet been put out for public comment —  is a filing by our Board of Professional Responsibility to clarify in our Rule 9 itself that the hearing in a disciplinary proceeding is public, unless a protective order is obtained.  This has long been the practice, but the rules presently do not exactly say that.  If this petition is granted, the result would be that the rules would bless the traditional practice.  But one even better benefit of this revision, if adopted, is important for cases of potential public and media interest, because this would make clear that the Tenn. Sup. Ct. R. 30 Media Guidelines ought to govern media coverage of such proceedings.  Such a clarification would be important so that hearing panels in Tennessee understand that the attorneys of record in a case are entitled to know of a request for media coverage so that counsel can then proceed to make a timely motion to seek to prohibit such coverage under the terms of Rule 30.

Suffice it to say, this does not always happen.

You can read the BPR Petition Filed to Amend Tenn Sup Ct R 9 § 32 at the link.

Friday follow up: DC Bar counsel’s weird priorities

So (finally) I’ve made myself read a bit more into the DC situation — that for many people is now ancient history but was news to me — about what seems like something that definitely got some play in the news but ought to be a more nationally discussed scandal.  The weird penchant that DC Bar Counsel has displayed in recent years of going after not just lawyer whistleblowers but lawyers who provide advice and counsel to such lawyers.

When I started down this path originally, it was in connection with noting the discipline that was imposed against Adrianna Koeck over her sharing of certain documents she took with her upon leaving her position as in-house counsel for GE and sharing them with the media.  I’ve now had the chance to track down and read the admonition issued against Koeck’s former professor – Robert Blakey — and the recommended findings/charges against Koeck’s lawyer – Lynne Bernabei.  Having done so, I’m still left shaking my head and thinking the priorities demonstrated are bananas.

The Report and Recommendation of the Ad Hoc Hearing Committee contains information that can be referenced to succinctly distill the underlying scenario:

In her position with GE, Koeck served “as the interface between legal issues happening in Latin America, Brazil, Argentina, Chile…and the broader businesses spread across the globe….

[snip]

When Koeck joined [GE] in 2006, Koeck’s supervisor … brief her about [an investigation involving questions regarding value added tax issues in Brazil] and gave her the file concerning the matter.  Resolving these discrepancies [the VAT issues] became one of the “big issues” on Koeck’s plate….

In mid-November 2006, after eleven months of her working for GE… Human Resources advised Koeck that [her supervisor] did not want her to either stay with the company or move to another GE business.

Koeck was to be discharged at a November 29, 2006 meeting scheduled with a GE Human Resource employee, but immediately before that meeting, Koeck emailed the GE corporate Ombudsman… claiming, among other things, that she was being retaliated against “for participating in and reporting illegal activity engaged in by [GE] personnel.”  She alleged that, in the course of her compliance investigations, she had discovered tax fraud that GE had been perpetrating in Brazil.  She claimed that she was being terminated for raising concerns about the fraud to her supervisors.

[snip]

In late August 2007, Koeck sought the legal advice of her former Notre Dame Law School professor, G. Robert Blakey.  Koeck provided Blakey with some of the confidential documents that she had copied from her GE computer.  Blakey advised Koeck, “that the documents and information she had were not covered by the attorney-client relationship, because they fell within the crime/fraud exception.”

[snip]

Blakey confined his advice to Koeck to disclosures she would make to protect herself against potential criminal liability, and he recommended that she retain an additional attorney with expertise in employment law and whistleblower complaints.  Blakely gave Koeck the names of two firms, one of which was Bernabei & Wachtel, PLLC.

[snip]

On November 27, 2007, Koeck formally retained Bernabei’s firm to handle the SOX matter before the Department of Labor.

[snip]

After Koeck retained Bernabei on November 27, 2007, she and Blakey met and agreed that Koeck should inform the press about GE’s activities in Brazil.  Beginning in December 2007, Bernabei spoke with Koeck about having a press strategy and talking to the press.

[snip]

At some point in the fall of 2007, David Cay Johnston, a New York Times reporter at the time, received a telephone call from Blakey who asked if Johnson “might be interested in material about a long-running series of felonies committed by General Electric in another country.”  Thereafter, Johnson received “hundreds of pages of documents” from Blakey or Koeck.  Subsequently in January 2008, Johnston interviewed Koeck about the alleged tax fraud in Brazil and she provided additional documents in her possession regarding GE’s activities there.

Now as to Koeck and Bernabei, an interesting wrinkle learned from reading the source documents is that because the SOX proceedings were before the Department of Labor, the disciplinary body looked to the ABA Model Rules to apply to some extent, but entirely ignored any evaluation of Model Rule 3.6 on trial publicity that would appear, arguably, to permit disclosure of aspects of the proceedings to the media.  In my earlier post, I had noted that DC does not have a trial publicity rule that extends as far as the Model Rule, but this wrinkle, to me, further undermines the outcome in these matters.

But it is the details of Professor Blakey’s situation though that are laid out in his admonition letter – that bar counsel was aware of and took into account and yet still thought discipline was warranted that most astound me and leave me sticking to my guns about this all being bananas:

Ms. Koeck told you that she was concerned that GE had not and was not taking any action to stop the alleged ongoing fraud and that she was afraid that she might be personally liable for the activity because Brazilian law holds individuals, and not corporations, liable for tax fraud and criminal activity.  Ms. Koeck also said that she knew of money-laundering activities and described instances in which GE employees in South America had been murdered.  Based on your conversations with her, you were under the mistaken impression that Ms. Koeck was residing in Brazil.  You believed that she faced possible criminal liability if she did not report the alleged illegal and fraudulent activity.  You also believed that her physical safety was in danger.

[snip]

In advising Ms. Koeck to provide information and copies of GE’s documents to Mr. Johnston, you had in mind the evidentiary crime-fraud exception to the attorney-client privilege, but you did not give adequate consideration to the terms of Rule 1.6 of the Rules of Professional Conduct.

Now setting aside the fact that D.C.’s Rule 1.6(d) does provide a lawyer with an exception to permit disclosure that would at least have been arguably available to cover Koeck’s circumstances, they are managing to discipline a very distinguished lawyer on a basis of saying he assisted another lawyer in violating her ethical obligations rather than attempt to prove that the lawyer’s allegedly “bad advice” rose to a level of incompetence to justify discipline under Rule 1.1.

As a lawyer who represents lawyers, I find that to be a really quite scary turn of events.

My view on the whole situation isn’t exactly made any better after tooling around a bit on the Web regarding the disciplinary counsel involved in pursuing this matter, Hamilton P. Fox, III.  Mr. Fox appears to be the same gentleman who was on the wrong side of the exercise of abusive and over-the-top enforcement powers recently as well.  You can read about the saga involved in his arrest and his wife’s detention stemming from Mr. Fox being parked in a place he shouldn’t have been parked in. and the D.C. police appearing to significantly overreact to the situation presented here.  Assuming he is the same person, and I admit it is possible that there are two separate Hamilton P. Fox, III in D.C., but assuming he’s the same person and I think I’m on solid ground about that as other people have laid out before, you’d think the experience he went through would make him more sympathetic to wielding power irresponsibly and trying to only target those who deserve punishment, but apparently not.

As a lawyer who represents lawyers, I’ll try for now just to look on the bright side of things that I don’t practice in the District of Columbia instead of dwelling on just how chilling the actions of D.C. Bar Counsel might be on lawyers who do.

Harmonizing practice pending and pro hac vice provisions in Tennessee

The Tennessee Supreme Court issued an order last week implementing a helpful change to our rules on pro hac vice admission so that lawyers who are taking advantage of recent rule changes in Tennessee to permit practice pending admission can also be admitted pro hac vice in a lawsuit on behalf of a client.  You can read the order here.

The gist of the issue is that effective January 1, 2016, our Court adopted a rule (located at Section 5.01(g) of Tenn. Sup. Ct. R. 7) to permit a lawyer licensed elsewhere who has moved to Tennessee and has applied for comity admission to be able to practice in Tennessee for up to 365 days while awaiting action on their application for admission.  Until the adoption of this latest order, however, the way our rule on pro hac vice admission (Tenn. Sup. Ct. R. 19) was written, someone who was a resident of Tennessee simply could not seek pro hac vice admission in our state courts.

This order fixes that situation for folks operating under practice pending admission by expressly mentioning that rule as an exception to the residency restriction.  This change certainly seems like the appropriate thing to do.

The next related questions though might be whether the same rule might need to be further tweaked to permit those in Tennessee who are practicing law as registered in-house counsel under Section 10.01 of Rule 7 or under the new rule as to temporary licenses permitted for spouses of those in military service to seek pro hac vice admission in litigation matters.

My initial instinct was that there might not be a very good argument for treating either of those categories differently than those blessed only by practice pending admission.  But with a bit more reflection, the fact that pro hac vice admission by its very nature is supposed to be a short-term, limited repetition event might be enough of a justification for a distinction as to in-house counsel.  Practice pending status can only go on for the 365 days whereas an in-house counsel can rely upon a registration license in lieu of a full license for their entire career.  As to the military spouse rule, I’m unable to come up with a distinction of note.

(At certain times, world events make it feel a bit silly to write about legal ethics matters.  This is one of those times.  Like most grown adult human beings, I have strong opinions on a lot of topics, but I try my best not write about things unless I can at least find some plausible way to tie them back to core questions of legal ethics and lawyering.  So, in this superfluous paragraph, I will only say that I happen to be the Treasurer of the Tennessee branch of a non-profit organization much in the news of late, and if you believe in the work it does — and particularly if you live in Tennessee — feel free to donate what you can afford.)

Whistling about where you work.

We appear to be living now in an era in which whistle blowers are going to be in the news (and perhaps be the news) more than ever.

Many who know me, know that I hold a pretty controversial opinion — Arrested Development is potentially the greatest television show in history.  For many years when I needed a fictional lawyer for my hypos at seminars, Barry Zuckerkorn, Bob Loblaw, and Wayne Jarvis were my go-to choices.  I could drop this blog and write a blog just about the genius of that show but (perhaps) even fewer people would read that, much like it never got its fair share of viewers.  One example of the simple brilliance of its writing though was its treatment of the issue of whistle blowers from the 20th episode of the first season, “Whistler’s Mother”:

Mr. Jordan: Listen, you’ve got the money now and you know my price. You don’t need a whistle blower around here.

Michael: Interesting choice of words, Mr. Jordan. He’s right, we don’t need a whistle blower. We need a building full of whistle blowers. Okay? Whistles. I want this place to be honest. That’s exactly why I had these made up for us. When you see something wrong…

[Whistle blows]

Michael: There you go. I want you to report it. I want you to…

[Whistle blows]

Michael: Exactly. Just like that. I want us to police ourselves vigilantly… Let’s wait till something’s actually happens, though.

[Whistles blowing]

Michael: All right… Good fun… Enough!

[twenty minutes later…]

Michael: 45, 46, 47…

Michael: Okay, there’s still three whistles left out there. Who’s got the whistles?

[Whistle blows]

Board Member #1: He kept one.

Michael: There’s a good example of whistle blowing, okay, but you’ve kept yours, so it’s hurting your case.

Board Member #1: I was in the bathroom when you asked for it back.

[Whistle blows]

Board Member #2: No, he wasn’t.

When lawyers (or those that work closely with lawyers) claim to be whistle blowers, the stakes tend to be even higher and the ethical issues for those lawyers and even for the lawyers that represent those lawyers are almost always complicated.  Even when answers seem straightforward, the tensions that exist between the public interest in preventing wrongdoing and the private interest in protecting confidentiality can lead to second-guessing as to where the right lines should be drawn.  When the traditional right of a client to fire their attorney for any reason or even no reason at all is wound into the mix, sometimes that readily clarifies how the tension is resolved  but not always.  It is a pretty good explanation for why there aren’t really many instances of outside counsel to companies or government entities serving as whistle blowers.  When the lawyer seeking to blow the whistle though is an in-house counsel, that absolute right to fire your attorney can be made to yield to public policy since the client is also the lawyer’s employer.

In the last couple of weeks, there have been three stories of interest making the rounds involving three high-profile cases – two of them in California and one in D.C. — where the classic tensions are playing out in differing ways.  The D.C. case is the longest running of the three and was actually pretty much believed to be over back in 2008 when the a former in-house counsel for GE’s Sarbanes-Oxley suit — which she supported using her former client’s confidential information — was dismissed as untimely filed.  The matter got renewed attention with a recent development of a disciplinary suspension recommendation against her.  One of the California matters is part of a roiling and unseemly dispute between the State Bar of California and the Chief Disciplinary Counsel that it fired within the last year.  The other California matter is currently in the middle of trial proceedings and involves the former General Counsel of Bio-Rad, Sanford Wadler, who filed suit back in 2015 alleging he was fired because he blew the whistle on his former employer’s violations of the Foreign Corrupt Practices Act.

The weird mess involving the California State Bar has been back in the news twice in succession.  First, there was a story that the former assistant to the former Executive Director, Joe Dunn, would not be permitted to use information she took with her on her laptop to pursue her claim that she too was fired in retaliation because of her knowledge of the same kinds of violations for which her boss has said he was terminated.  Then, even more recently, word came down that Dunn’s suit, which had previously been forced into arbitration, has been dismissed by the arbitrator.  The  former Bio-Rad General Counsel recently received a favorable ruling about his ability to use confidential client information to seek to prove his case despite what would otherwise be his ethical obligations of confidentiality.

At a primary level, the developments in the three cases underscore a few points.  One, none of them involve outside counsel.  Two, lawyers who claim to be terminated for whistleblowing are almost always going to be met with counter-allegations that that they just simply were bad at their job and were terminated for poor performance.  Three, the obligations lawyers owe to clients in terms of confidentiality not only complicate matters and raise the stakes but almost always create satellite disputes within the litigation about use of information that will make or break the case.

Rather than try to re-tread all of the details of the three matters (because you might care about all, none, or just some of them), I’m pretty sure through the links I have provided and a little Googling, you can immerse yourself as much as you want in available information about any of the three.

One piece of one of the matters though really piqued my interest and deserves a brief separate discussion — the detail of why the former GE attorney, Adriana Koeck, appears headed for a 30-day suspension and a lawyer representing her is also getting punished — going beyond the use of the confidential client information to support allegations in the complaint but providing some of that same information to the press.   One of the reasons the matter piqued my interest originally was that, here in TN, we have a version of RPC 3.6 on trial publicity that allows communications about the media regarding the contents of a complaint, for example.  D.C. has a much different version of that rule.

But, further digging is what further made me curious because D.C. really is a weird place, I guess.  Admittedly, at this point I have only read the Law360 article, but it seems bananas that a D.C. lawyer who assisted, Koeck, in providing documents referenced in her complaint to news reporters is being disciplined for doing so.  Koeck’s 30-day suspension seems to be explainable by the fact that she didn’t participate in the proceedings having already agreed to be suspended from practice by consent.  But punishing a lawyer for that lawyer seems Draconian.  Yet, and somehow I missed reading about this back in 2015, but even the prominent law professor who gave Koeck advice that the crime-fraud exception would apply to the documents also received disciplinary punishment for doing so — that seems even more Draconian.

In fairness, I’ll have to dig a bit further to educate myself on those proceedings to see if I can better explain all of that.

In the meantime, it does appear like Season 5 of Arrested Development is going to happen.  So yay for that.

 

Administrative suspensions -another far too often route to UPL problems.

I’ve long been torn about lawyers losing their license and ability to practice law through administrative suspensions.

In Tennessee, for example, this can happen to a lawyer through failing to get your required CLE hours (TN requires 15 annually), or failing to pay your registration fees, or failing to turn in the necessary forms about compliance with certain trust accounting requirements.   There are other ways, but you get the drift; they almost all involve failures that are primarily about not keeping up with paperwork or missing repeated deadlines.  Thus, at some level, it seems like a harsh result to lose the right to practice for a petty offense.

Yet, in most situations, a lawyer has to be really, really delinquent, forgetful, or careless and miss multiple opportunities to correct the oversights before an administrative suspension actually comes to pass.  So, given that you are talking about a profession in which compliance with administrative details and deadlines is a pretty fundamental skill set and can make or break a client’s case, then it can be hard to argue against administrative suspensions as being fair.

Where it really becomes unfortunate is when the lawyer subject to the administrative suspension either does not know or does not care he is suspended and continues to handle client matters and places not only himself but his clients in jeopardy.  The jeopardy for the lawyer is disciplinary charges in the nature of engaging in UPL can be heaped on top of the administrative suspension.  The jeopardy for the client can be questions about whether the actions taken by the suspended lawyer are null and void, and potential questions about whether the privilege applies to dealings or not.

An instance (though admittedly a pretty extreme one) of a lawyer ending up disciplined for UPL while administratively suspended caught my attention thanks to a write-up earlier this month by the folks at the Legal Profession Blog.  The New Jersey Supreme Court on October 7 accepted the recommended decision from the Disciplinary Review Board and issued a reprimand against a lawyer for representing a New Jersey business 8 years after having her New Jersey license administratively revoked.

The May 31, 2016 decision of the DRB, involving a lawyer named French, can be found here.  It caught my fancy not only as an example of the time delays often involved before an administrative suspension kicks in but also because it offers parallels to a recent bad Minnesota UPL decision I wrote about earlier this year.

French, also licensed in New York where she apparently has been working in house for an accounting firm for almost 20 years without incident, was licensed in New Jersey back in 1991.  It is possible she never actually paid the required annual registration/assessment fees in New Jersey, but eventually her law license in New Jersey administratively revoked in 2005 on the basis that she had failed to pay the annual assessment for seven consecutive years.

French testified she was unaware of the revocation and actually unaware of the need to pay an assessment — she says her original law firm never told her.

This disciplinary mess came about when she proceeded to do a favor for a friend in a budding unfair competition/breach of non-compete matter involving two salons.  Interestingly, she went to the trouble of creating her own separate private letterhead for purposes of sending a cease and desist letter for the company owned by her friend, and (unsurprisingly) it was counsel for the other salon that brought to French’s attention the fact that her New Jersey license had been revoked.

Ultimately, the DRB decided only a reprimand (which is a lesser sanction in NJ than a censure) should be imposed despite being “troubled that respondent made no effort, for over fourteen years, to ensure her compliance with [assessment] obligations, and no effort, for over twenty years, to verify her status as a New Jersey attorney.”  French was certainly helped by the finding that her testimony was credible on her actual mens rea of just not knowing.  And the credibility of her testimony was helped by the fact that she had always kept her New Jersey CLE obligations up to date over the years.

Interestingly, two of the members of the DRB voted to impose a three-month suspension against the lawyer, which loyal readers (or NJ lawyers) will remember is the kind of suspension you get in New Jersey for acts of violence.