Federal court releases crackin’ sanctions ruling

I will not seek pardon for the pun. I will also try not to prolong the nature of this post because the opinion that is the subject matter for today is a very good read, worthy of the limelight.

I have written on several occasions about the problematic efforts of two particular members of my profession who so thoroughly hitched their wagons to the idea that the former guy was somehow robbed of a second term in office that it would seem un-thorough of me not to make the time to write about the most significant ruling against them to date.

So, here it is.

Judge Parker, a Michigan federal district judge, has issued today a 110-page order sanctioning Lin Wood, Sidney Powell, and others for their filing, and continued pursuit, of a particular federal lawsuit that was part of the overall effort of lawyers on behalf of the former guy to gaslight the nation. You can read the full opinion here.

For you “bottom line” types, most of the lawyers most egregiously involved in this gaslighting litigation will have to pay the attorney fees of the defendants, will have to get 12 hours of additional CLE (6 of which will be focused on pleading standards and 6 of which will be focused on election law – good luck finding classes that focus on “pleading standards” that is the stuff of law school courses), and are being referred to various state bars for potential disciplinary proceedings.

Until such time as it is reviewed by the Sixth Circuit, which inevitably will happen, this opinion from the Michigan district court could serve as something of a “short-form treatise” on the concept of sanctions and the filing, and continued pursuit, of bogus litigation. In fact, if there were ever to be a Fourth Edition of the book I’ve been honored to co-author over the last decade, this case would likely be a real frontrunner for new content in Chapter 1, the chapter on the investigation necessary to pursue a case to begin with.

We could have a lot of fun pulling quotes from the opinion that demonstrate how irreparably round-the-bend these “Kraken” lawyers were and how they managed to step on rake-after-rake by continuing to say incredibly stupid things online while their case was being decided, but that’s not really all that interesting.

What strikes me as an interesting exercise though (and maybe it only strikes me that way) is if it were possible to boil down the most instructive pieces of wisdom in the 110-page opinion to give a short talk that might be educational to brand new lawyers about how to avoid filing a lawsuit that could get you sanctioned.

So, here goes nothing. (And so that this effort is perfectly clear, everything that follows this sentence shall be excerpts verbatim from the opinion combined into one excerpt – snips and reshuffles are omitted. Reproduction of this excerpt is something for which you could seek the express permission of Major League Baseball, but they will look at you funny when you do.)

[A]ttorneys have an obligation to the judiciary, their profession, and the public (i) to conduct some degree of due diligence before presenting allegations as truth; (ii) to advance only tenable claims; and (iii) to proceed with a lawsuit in good faith and based on a proper purpose. Attorneys also have an obligation to dismiss a lawsuit when it becomes clear that the requested relief is unavailable.

For purposes of Rule 11, an attorney who is knowingly listed as counsel on a
pleading, written motion, or other paper “expressly authorize[d] the signing, filing,
submitting or later advocating of the offending paper” and “shares responsibility
with the signer, filer, submitter, or advocate.” In this age of electronic filing, it is frivolous to argue that an electronic signature on a pleading or motion is insufficient to subject the attorney to the court’s jurisdiction if the attorney violates the jurisdiction’s rules of professional conduct or a federal rule or statute establishing the standards of practice.

Even if there are sanctions available under statutes or specific federal rules of procedure, . . . the ‘inherent authority’ of the court is an independent basis for sanctioning bad faith conduct in litigation. To award attorneys’ fees under this “bad faith exception,” a district court must find that (i) “the claims advanced were meritless”; (ii) “counsel knew or should have known this”; and (iii) “the motive for filing the suit was for an improper purpose such as harassment.” When invoking its inherent authority to sanction, “[a] court must, of course, . . . comply with the mandates of due process, both in determining that the requisite bad faith exists and in assessing fees.”

[L]itigants and attorneys cannot come to federal court asserting that certain acts violate the law based only upon an opportunity for—or counsel and the litigant’s suspicions of—a violation. The rule[s] continues to require litigants to ‘stop-and-think’ before initially making legal or factual contentions.

[A]n “empty-head” but “pure-heart” does not justify lodging patently unsupported factual assertions. And the good or bad faith nature of actions or submissions is not what determines whether sanctions are warranted under Rule 11(b)(3). Inferences must be reasonable and come from facts proven, not speculation or conjecture. Pursuant to their duties as officers of the court, attorneys typically do not offer factual allegations that have no hope of passing as evidentiary support at any stage of the litigation. Substituting another lawyer’s judgment for one’s own does not constitute reasonable inquiry.”

As an initial matter, an affiant’s subjective belief that an event occurred does not constitute evidence that the event in fact occurred. Plaintiffs are not entitled to rely on the discovery process to mine for evidence that never existed in the first instance. Attorneys are not journalists. It is not acceptable to support a lawsuit with opinions, which counsel herself claims no reasonable person would accept as fact and which were “inexact,” “exaggerate[ed],” and “hyperbole.” Nor is it acceptable to use the federal judiciary as a political forum to satisfy one’s political agenda. Such behavior by an attorney in a court of law has consequences.

An attorney’s right to free speech while litigating an action “is extremely circumscribed.” Something does not become plausible simply because it is repeated many times by many people. An attorney who willingly continues to assert claims doomed to fail . . . must be deemed to be acting with an improper motive.

The nation’s courts . . . are reserved for hearing legitimate causes of action. Individuals may have a right (within certain bounds) to disseminate allegations of fraud unsupported by law or fact in the public sphere. But attorneys cannot exploit their privilege and access to the judicial process to do the same. And when an attorney has done so, sanctions are in order. Here’s why. America’s civil litigation system affords individuals the privilege to file a lawsuit to allege a violation of law. Individuals, however, must litigate within the established parameters for filing a claim. Such parameters are set forth in statutes, rules of civil procedure, local court rules, and professional rules of responsibility and ethics. Every attorney who files a claim on behalf of a client is charged with the obligation to know these statutes and rules, as well as the law allegedly violated.

A cautionary tale of sorts for solos

It was many, many years ago (almost exactly 5 years ago) that I wrote a bit about how important it can be for lawyers who have solo practices to have contingency plans in place in case something suddenly happens to them in order to provide a way for their clients to be protected.

As we are in the middle of a pandemic that seems like it may never end (though I guess it may not even be accurate to say “middle” when the duration seems unknowable), it seems as good a time as any to remind folks about the need for this kind of planning.

And because it is often easier to learn from actual stories that happened, and because this is a story that seems to have occurred before the pandemic and is one I can indirectly make “personal” because of a common surname, I’ll offer this one.

(Obviously, when you go look at the documents, you will see when I say “common” surname I do not mean that the surname is a common one. It is very uncommon, but it is one that I have in common with the former Florida lawyer. Given that fact, it is highly likely that we are related in some degree.)

This story, which unfortunately will double as a story of how disciplinary proceedings can go from bad to worse if not handled appropriately, involves a Florida lawyer who became seriously ill, quite suddenly in January 2018, and left Florida to move to New York to be cared for by family. This former lawyer also was plagued by additional health issues including cancer further contributing to the inability to work.

She entered into a consent judgment in Florida which was accepted by the Florida Supreme Court in January 2020 to be suspended from practice for 90 days. Because of her sudden illness, having become bedridden and unable to talk, she abandoned a litigation matter she was handling for a pro bono client. The consent judgment lays out a more complicated story — a story in which readers could conclude that the pro bono client in question had already been failed prior to any health issues as the client’s case had apparently languished with no activity for nearly two years prior to January 2018.

Nevertheless, and despite the fact that the consent judgment included the lawyer acknowledging she was likely never going to be able to resume practice, the suspension order did not become effective for 30 days in order to give her time to do what she had failed to do originally, notify clients and make arrangements, etc. That order even went so far as to say: “If Respondent notifies this Court in writing that she is no longer practicing and does not need the thirty days to protect existing clients, this Court will enter an order making the suspension effective immediately.”

Unfortunately, the lawyer either did not do that or, if she had no other clients to notify, did not make arrangements to file the necessary paperwork to notify Florida and, thus, she was subsequently found in contempt and suspended for 91 days in August 2020. Again, even in that order, the lawyer was given 30 days until it would take effect. That order also again stated: “If Respondent notifies this Court in writing that she is no longer practicing and does not need the thirty days to protect existing clients, this Court will enter an order making the suspension effective immediately.”

Unfortunately, the lawyer again did not do any of those things. As a result, last month, the Florida Supreme Court entered an order disbarring them on July 22, 2021. That order, unlike the ones that preceded it, was made immediately effective.

If you practice law in a firm of sufficient size, you can get away with procrastination when it comes to thinking about your own morbidity or mortality because someone else at your firm will likely step in to save your, and the firm’s clients’, bacon. If you practice law by yourself, the risk of failing to plan is much more severe.

If you are a solo practitioner in Tennessee, and you have not already put a plan together for what will happen to your clients should something suddenly prevent you from continuing to practice law, do make the time to go familiarize yourself with the provisions in Section 29 of Tenn. Sup. Ct. R. 9 that allow for the appointment of receiver attorneys. While many lawyers have heard of this concept, many only know that affords courts with the ability to appoint someone to step in when a lawyer has become unable to practice. What is even more important though is that the rule blesses, in Section 29.9, advanced planning efforts to accomplish the same purpose:

29.9.  Advance Designation of a Receiver or Successor Attorney.  An attorney may designate in advance another attorney by contract, appointment, or other arrangement to handle or assist in the continued operation, sale, or closing of the attorney’s law practice in the event of such attorney’s death, incapacity or unavailability. In the event an attorney to whom this rule applies has made adequate provision for the protection of his or her clients, such provision shall govern to the extent consistent with this Rule unless the trial court or the Court determines, upon a showing of good cause, that the provisions for the appointment of a receiver attorney under this Rule should be invoked.  

Such contracts need not be unwieldy or overly complicated, and they can not only serve the public good by protecting your clients, but also having one might just play a big role in having your story (should something happen to you from which you can recover) be one of temporary troubles rather than a downward spiral to disbarment.

Update on racial insensitivity within the practice of law.

It still exists, of course. No real surprises there.

In just the last two weeks, there have been multiple stories that drive that point home. One such story, while admittedly actually involving a sitting judge rather than a practicing lawyer, is this one out of Colorado. Another such story involves a New York lawyer who was serving both as General Counsel to her employer and as an adjunct law school professor and has now lost her GC position over multiple uses of the same racial epithet the Colorado judge explored during a lecture in her professor position. There are other examples just occurring over the last few months that are readily found through searching online.

While both the Colorado judge, and the New York lawyer, have found themselves on the outs with respect to their employment status, the resolution of the individual judge’s situation and how it came about through judicial ethics proceedings including a public censure and agreement to resign, is also a reminder that the judicial ethics rules already have broad enough language to address and resolve certain kinds of conduct involving sustained racial insensitivity in a way that the current lawyer ethics rules in many locales do not.

As readers of this space are well aware, there have been a variety of efforts in a variety of places over the last 5 years or so to try to remedy that. A few very recent noteworthy developments in the now long-running saga of the effort to enact better language into the ethics rules of various jurisdictions to tackle the problem of lawyers engaging in harassment and discriminatory conduct are worth mention.

My guess is the one that has the most potential for significant impact is a proposal out of New York. But, given the rapid state of overall developments, I need to be clear about which proposal out of New York. Not this proposal put out for public comment in March 2021 that would suggest replacing New York’s existing RPC 8.4(g) with the ABA Model Rule version. No, I’m talking about this one:

That proposal for a revised RPC 8.4(g) in New York was put out late last week for public comment by the New York State Bar Committee on Standards of Attorney Conduct. It has a comment deadline of May 28, 2021. The Chair of that Committee, Roy Simon, was kind enough to send me a copy of the proposal last weekend.

This one appears – from the backstory of which I have been made aware and despite the fact that it does not show all of its work as certain kinds of reports often do — to have been the product of a significant amount of time and effort, including efforts at trying to consensus-build. Early reactions I have seen involve some long-time vocal opponents of both the ABA Model Rule and some other states attempts at implementation seeming to take something of a shine to this proposal. Now, admittedly some of the reactions I’ve seen also involve the vocal opponents to other versions trying to argue that this version won’t actually mean what it purports to mean as to the scope of “conduct in the practice of law.” Specifically, it has already been argued that teaching of a CLE could not be conduct in the practice of law despite the fact that the rule itself would define “conduct in the practice of law” to include “participating in bar association, business, or professional activities or events in connection with the practice of law.”

For whatever reason, almost always the various “parade of horribles” hypotheticals offered about how these rules will curtail free speech by lawyers always involve the teaching of a CLE somewhere. It would seem to me that if you cannot manage to speak at a CLE without managing to violate at least this version of the rule (given the further bells and whistles described below), you should probably stick to being an audience member and not a presenter. But, whatever on that, I guess.

It appears that the most significant ways this proposed anti-discrimination and anti-harassment rule deviates from the ABA Model Rule are: (1) in using that turn of phrase regulating “conduct in the practice of law” rather than “conduct related to the practice of law;” (2) defining “harassment” for purposes of the rule to require something that is both “severe” or “pervasive” and that is directed at an “individual or specific individuals;” and (3) trying to go even further with respect to clarifying that definition of harassment in a comment that would explain:

[5C] Petty slights, minor indignities and discourteous conduct without more do not constitute harassment. Severe or pervasive derogatory or demeaning conduct refers to degrading, repulsive, abusive, and disdainful conduct. Verbal conduct includes written as well as oral communication.

I have long believed that we need to bolster the rules on this subject matter and if the NY proposal becomes something that can gain traction, then consider me to be all for it. (I would suggest, however, that the second sentence of proposed Comment [5C] would be better off with a disjunctive connector rather than a conjunctive connector so that it would say “degrading, repulsive, abusive, or disdainful conduct.” Surely something would not have to check all of those boxes to be prohibited.)

There also is another very recent proposal that appears to head down a path that is somewhat similar to the New York proposal, at least in terms of trying to address arguments made time and again by those who have voiced steadfast opposition to ABA Model Rule 8.4(g), by making clear that prohibited discrimination or harassment has to actually target some other specific person. The D.C. Bar Rules of Professional Conduct Review Committee has put out this lengthy report proposing that D.C. adopt a new RPC 8.4(h) that would also differ from Model Rule 8.4(g) in that it would specifically state that conduct to be prohibited must be directed at another person and that also attempts to offer more clarity about what is or is not within the scope of covered circumstances. harassment. The DC proposal rather than using either the “related to” language of the ABA Model Rule or an “conduct in the practice of law” language now proposed in New York, uses the language “with respect to the practice of law.” Unlike New York’s latest proposal, however, the D.C. report does not propose requiring something be “severe” or “pervasive” in order to amount to harassment. You can access the full D.C. report at the link below:

It’s always easy to get distracted by the cat.

So, if you’re involved in the legal profession, one thing was guaranteed to make it into your email inbox or social media feed or both. And, no, it wasn’t even the atrocious lawyering that was on display in the defense in Washington, D.C. of a former social media influencer. It was undoubtedly the 34 second video from a Zoom hearing of a lawyer who was stuck using a cat filter and didn’t know how to disable it.

I am extremely confident that you’ve seen the video. I probably watched it at least 5 times yesterday and laughed pretty raucously each time. Everything about it is pretty seriously funny. Except for one part. That’s the part that I think needs to be discussed seriously and, so far, hasn’t been.

Now I’m not going to weigh in on the “tech competence for lawyers and ethics” piece, others have already rapidly covered that ground. You can read three of the better quick pieces here, here, and here.

No, I want to focus on a slightly larger issue for lawyering and a much larger issue for the public at large.

While all the humor was occurring in the bottom right square of the video, the upper left square had text of warning. (Now, admittedly, the warning may have been disregarded in order for all of us to have seen the video, but it was still there and presumably appears ubiquitously in proceedings in that particular court.)

The language of warning read:

394th Judicial District Court

Recording of this hearing or live stream is prohibited.

Violation may constitute contempt of court and result in a fine of up to $500 and a jail term of up to 180 days.

Excuse me?

Earlier in my career, along with normal litigation and legal ethics work, I represented a few media entities from time-to-time including work on access to courts issues so I can still remember many of the better quotations by heart, including this one:

What transpires in the courtroom is public property.

Now I remember the quote off the top of the dome, but have to look it up to be able to tell you the name of the U.S. Supreme Court case it comes from, which is Richmond Newspapers, Inc. v. Virginia, 448 U.S. 555 (1980) and, actually, is quoting an even older U.S. Supreme Court case, Craig v. Harney, 331 U.S. 367 (1947).

The pandemic has sown much chaos and disruption into our judicial system. This has been particularly difficult for people facing criminal charges as many have had to languish in prison for inability to take their case to trial in states where in-person judicial proceedings have continued to be prohibited because of the risk of transmission of the virus.

The ability to allow the business of the courts to continue through remote virtual proceedings has been a positive, but the cavalier nature in which courts are disregarding the issues associated with finding ways for the public to still have access to proceedings is not at all a positive for our system of justice.

While the restrictions on physical access to court proceedings where such in-person proceedings still take place can be justified on emergency grounds of being necessary for the protection of the actual, physical health of the public, presumptive restrictions on members of the public being able to monitor and watch judicial proceedings that are able to happen online are very unlikely to be justifiable as necessary at all. Such restrictions also are harmful to the health of our judicial system.

As another of the most important cases serving as the foundations of public access to judicial proceedings fleshes out, allowing for people to see and scrutinize trials and court proceedings “enhances the quality and safeguards the integrity of the fact finding process” and “fosters an appearance of fairness, thereby heightening public respect for the judicial process.” Globe Newspaper Co. v. Superior Court, 457 U.S. 596, 606 (1982).

The fact that our profession, 11 months into a pandemic, is being pretty blithe about the idea that the contents of public court hearings in February 2021 come with a broadcast threat that you could go to jail for recording them or sharing the contents of a live stream of them is not at all a good look for attorneys, judges, and the system.

The ethics rules in most jurisdictions (patterned after ABA Model Rule 6.4) make clear that lawyers are allowed to participate in judicial and legal reform efforts even if doing so might get you crosswise with the interests of clients you represent, I’d like to encourage lawyers out there to be more willing to do so to make certain that the increasing trend toward making what happens in court proceedings essentially private comes to an end.

Everything is arbitrable in New Jersey. (Sort of)

Lawyers and law firms have long struggled – at least during the length of my career – with whether they can, or should, include a provision in their contracts with clients that would require arbitration of some, or all, kinds of disputes.

In situations where a local or state bar association offers a free, voluntary fee dispute arbitration forum, the decision to put something into an engagement letter requiring participation in such a tribunal upon demand tends to be an easier call.

Seeking to have clients agree to arbitrate fee disputes and only fee disputes also tends to be an easier call even in the absence of bar association provided venues.

Whether a lawyer can, or should, seek to have a client agree to arbitrate all claims or disputes, is much trickier stuff. Many jurisdictions do not offer much in the way of formal ethics guidance beyond making clear that you cannot avoid having to take a trip through your state’s disciplinary process by trying to claim that an agreement to arbitrate disputes would include preventing a client from pursuing a grievance against the lawyer’s license. (In fact, in some places, simply trying to do that could get you into disciplinary trouble.) Another issue that exists in this realm but is often not fully focused upon is any impact that federal law, and specifically the Federal Arbitration Act, would have on enforceability in that it can be difficult for a client to try to argue that the nature of a legal matter does not affect interstate commerce. If the FAA is recognized as applying, then obstacles to enforcing an arbitration agreement with a client should be significantly reduced.

In advising lawyers on the topic, I have tried to be practical about the risk associated with such provisions and the need to be exceedingly clear and transparent about how any such provision is explained to a client. (I also make an effort to strongly suggest that the lawyer communicate with their professional liability insurance carrier as those folks tend to have strong opinions about whether arbitration is a good forum for resolving a legal malpractice claim or whether it is more likely to result in a “split-the-baby” outcome.) I have not actually written anything about this topic here in more than five years though.

Recently, the New Jersey Supreme Court has issued a thorough, and pretty good, opinion navigating the waters of how an attorney may balance their ethical duties of communication with obtaining an enforceable arbitration agreement from a client. Unfortunately, for the law firm in question that was involved in the litigation, the decision is only applicable on a going-forward basis. In that regard, it is helpful to know that the nature of the dispute in question was an engagement agreement between a lawyer and a sophisticated business client, a fee dispute was being arbitrated and the client then brought a lawsuit for legal malpractice. The engagement agreement established arbitration through JAMS and included a hyperlink in the engagement agreement where the 33-pages of JAMS rules were available, but the lawyer did not provide the actual JAMS rules to the client at that time.

One can certainly quibble with the New Jersey court’s analysis of application of the FAA given that it still clearly treats a contract between a lawyer and a client differently from other commercial contracts. The New Jersey court doesn’t actually confront the fact that it is treating an arbitration provision in an attorney-client contract differently from one in another type of contract. Instead, it compares arbitration provisions in an attorney-client contract with all other provisions in an attorney-client contract and says:

“When viewed through the lens of the RPCs, arbitration provisions are not treated differently from other provisions in a retainer agreement. Requiring attorneys to explain to a client the advantages and disadvantages of arbitration so that the client can make an informed decision whether to arbitrate a future fee dispute or legal malpractice claim against the firm does not single out a retainer agreement’s arbitration provision for disparate treatment and therefore does not run afoul of the FAA or NJAA. See Snow, 176 A.3d at 739; see also Hodges, 103 So. 3d at 1077.”

One can also argue about the fact that the opinion makes no effort to address the notion that a person who hasn’t yet signed an engagement agreement isn’t a client of the lawyer and so all of the arguments about fiduciary duties attorneys owe to clients and ethical obligations to clients are not actually on point unless you assume and agree that the law should treat a potential client as a client during the process of negotiating a fee agreement.

For lawyers generally though, even if you are not in New Jersey, the opinion provides pretty safe guidance to look to follow if you want to head down the path of pursuing such a provision.

You can access and read the full opinion here, but I’ll close by offering what I think are the two best excerpts:

We now hold that, for an arbitration provision in a retainer agreement to be enforceable, an attorney must generally explain to a client the benefits and disadvantages of arbitrating a prospective dispute between the attorney and client. Such an explanation is necessary because, to make an informed decision, the client must have a basic understanding of the fundamental differences between an arbitral forum and a judicial forum in resolving a future fee dispute or malpractice action. See RPC 1.4(c).
An arbitration provision in a retainer agreement is an acknowledgement that the lawyer and client may be future adversaries. That the retainer agreement envisions a potential future adverse relationship between the attorney and client — and seeks to control the dispute-resolution forum and its procedures — raises the specter of conflicting interests. An arbitral forum and judicial forum, and their accompanying procedures, are significantly different.
We do not make any value judgment about whether an arbitral or a
judicial forum would be more beneficial to a client if the client and attorney part as adversaries. We conclude, however, that an attorney’s fiduciary obligation mandates the disclosure of the essential pros and cons of the arbitration provision so that the client can make an informed decision whether arbitration is to the client’s advantage. See RPC 1.4(c). That obligation is in keeping with an attorney’s basic responsibility to explain provisions of a retainer agreement that may not be clear on their face. Accordingly, the disclosures required of an attorney in explaining an arbitration provision in a retainer agreement stand on an equal footing with the disclosures required in explaining other material provisions in the agreement. Such comparable treatment does not offend the Federal Arbitration Act (FAA), 9 U.S.C. §§ 1 to 16, or the New Jersey Arbitration Act (NJAA), N.J.S.A. 2A:23B-1 to -36.

and

Consistent with ABA Formal Opinion 02-425, the weight of authority as
expressed in professional advisory opinions and judicial case law in other jurisdictions, and this Court’s interpretation of its own RPCs, we hold that attorneys who insert provisions in their retainer agreements to arbitrate future fee disputes or legal malpractice claims must explain the advantages and disadvantages of the arbitral and judicial forums. Attorneys can fulfill that requirement in writing or orally — or by both means.
Attorneys may explain, for example, that in arbitration the client will not have a trial before a jury in a courtroom open to the public; the outcome of the arbitration will not be appealable and will remain confidential; the client may be responsible, in part, for the costs of the arbitration proceedings, including payments to the arbitrator; and the discovery available in arbitration may be
more limited than in a judicial forum.
Additionally, a lawyer who drafts a retainer agreement that channels any future legal malpractice action into an arbitral forum must say so directly in the written agreement. The client should not be left to discern the meaning of language that is clothed in ambiguity.

The New Jersey Supreme Court also referred the topic to the state bar’s Advisory Committee on Ethics for the issuance of any further ethical guidance deemed appropriate about the obligations of disclosure for New Jersey attorneys.

Two ethics opinions: one good, one bad, but both reveal systemic problems.

So, New York and Florida. Interestingly, those states have been bookends of our nation’s problems with COVID-19 and with fighting it. New York got hit very badly early, given the concentrated nature of its population centers, but then engaged in a very serious effort of taking the virus very seriously and managed to significantly flatten its curve. Florida’s government ignored and downplayed the situation, and now is experiencing horrible daily numbers and now has overall numbers of cases and deaths that are worse than New York’s. The two states contrasting efforts though still combine to tell a large part of the problem plaguing the United States when it comes to the pandemic — the lack of a coordinated national strategy because we have an incompetent and dysfunctional federal executive.

Two recent developments in ethics opinions from each state also offer contrasting approaches to issuing ethics opinions, contrasting results, and combine to tell part of the larger story of issues plaguing the profession as a whole.

First, let’s start with New York State Bar Association Op. 1200 which is good on procedure but bad on outcome. This opinion addresses application of New York’s RPC 5.7 and the combination of legal services and wealth management services. It was issued after what would appear to be the traditional, efficient, process of receiving a written request for an opinion, having a committee meet and deliberate, and then issuing a written opinion.

The answer it gives to the question whether the same lawyer can render legal services to a client and, through another entity, provide wealth management services to the same person is baffling. Despite the clear rationale for a why a rule like RPC 5.7 exists and, despite the fact that RPC 1.7 should provide for the ability for a waiver of such a conflict, the answer provided is that the conflict is so severe as to be unwaivable. And the only real explanation that is proffered for why is that the lawyer is simply going to be making too much more money from the provision of the wealth management services than from the provision of legal services. Maddening because of all that implies about not only evaluating the conflict rules but how it can justify other assumptions raising questions about a number of other ethics rules that operate under the assumption that lawyers can do the right thing in terms of representing their clients ethically even when it is in conflict with their own financial interests.

Next comes Florida where there exists a proposed ethics opinion waiting on action by the Florida Supreme Court. Technically, it isn’t an ethics opinion as it comes from the Florida Bar Standing Committee on the Unauthorized Practice of Law, but given the relationship to RPC 5.5, that’s a bit of a tomato/tomahto situation.

Now, procedurally it is nightmarish. To get to the point of even issuing the opinion, they held what for all intents and purposes looks like the equivalent of a trial. Sworn witnesses and all. Even after that, it still has to be approved by someone else. Substantively, proposed Florida Advisory Op. 2019-4, would be good because it would conclude that a New Jersey-licensed lawyer who had retired from his job, moved to Florida, and then took a new job for a New Jersey company would not be engaged in UPL if he continued to reside and work in Florida (where he was not licensed) and advised the New Jersey employer about federal law issues.

Now, it is an opinion that shouldn’t be necessary at all for a few reasons, including that if all that is occurring is advising about federal law issues, then Model Rule 5.5(d)’s language should pretty straightforwardly and clearly allow that activity. Unfortunately, Florida curiously does not have that language in its rules and does not appear willing to facially admit the underpinnings of federalism and the Supremacy Clause that require that result. And, even if the question had been about general work for the New Jersey company remotely, it shouldn’t take the equivalent of a trial to figure out that the answer should be that no UPL takes place.

This may all have been less clear to the profession before the pandemic, but during (and if we ever get to a point of “post”) the pandemic it should be painfully clear that the physical presence alone of a lawyer in a particular location should not be dispositive of whether UPL is occurring.

For what it is worth, my proposal for a practical solution to the question of UPL in modern practice that would still allow for things that truly should be regulated to be regulated would be as follows:

There should be a uniformly used “totality of the circumstances/most substantial connection”-style test that evaluates:

  1. where the lawyer is located
  2. where the client is located
  3. if there is a contemplated legal proceeding (or other matter involved such as commercial transaction or closing) where that is located or expected to be located; and
  4. what state’s law would govern in such a proceeding (or other matter).

And, unless the majority of those factors involve a state where the lawyer is not licensed then it simply isn’t UPL.

If my math is correct that would mean that as long as any 2 of the factors touched the lawyer’s state of licensure, then the lawyer is free and clear (or stated differently, unless 3 of the 4 involve a state where the lawyer isn’t licensed, then the lawyer is free and clear).

And, there would still have to be a continued exception acknowledged for purely federal law situations.

Two for Thursday.

It is Thursday, right?

In a “recent” effort, I mentioned that there were recent developments I was planning to eventually write about. Today presents an effort at checking two of them off the list that have only Tennessee in common. Neither of which likely provides fodder for a full post, so they will be covered together.

The first is a recently enacted revision to Tennessee’s ethics rules regarding money held in trust accounts. Specifically, the Tennessee Supreme Court has adopted a revision to RPC 1.15 regarding trust accounts to impose requirements for dealing with “unidentified funds” held in trust.

As revised, RPC 1.15 now has a new subsection (f):

(f) A lawyer who learns of unidentified funds in an IOLTA account must make periodic
efforts to identify and return the funds to the rightful owner. If after 12 months of the discovery of the unidentified funds the lawyer determines that ascertaining the ownership or securing the return of the funds will not succeed, the lawyer must remit the funds to the Tennessee Lawyers’ Fund for Client Protection (TLFCP). No charge of ethical impropriety or other breach of professional conduct shall attend to a lawyer’s exercise of reasonable judgment under this paragraph (f).

A lawyer who either remits funds in error or later ascertains the ownership of remitted funds may make a claim to TLFCP, which after verification of the claim will return the funds to the lawyer.

I personally was opposed to this proposal because in almost all circumstances “unidentified funds” simply shouldn’t exist in a trust account in the first place and, thus, this is one of the very few places in the rules that addresses a situation which can nearly only come to pass because of lawyer misconduct. Although the rule doesn’t define “unidentified funds,” my understanding is that these are different from “unclaimed funds” because the lawyer simply has no idea to whom the funds belong at all. Comment [14] still indicates that as to “abandoned” funds those will likely have to go through the process of escheatment to the State. Thus, other than circumstances in which a lawyer purchases someone else’s law practice and then finds that the underlying records aren’t up to snuff, this rule addresses obligations of a lawyer who has already dropped the ball on a very important duty.

The Tennessee Bar Association publicly signaled support for the proposal, however. The rule revision was not accompanied by any new comment paragraphs, so perhaps a time will come in the future for the Court to give a bit more clarity about how funds might come to be “unidentified” and whether the protection for judgment extends only to whether to send funds to the TCLF or not and not also to judgments about whether funds qualify as “unidentified” or not.

The second development raises a question of judgment as well. If you’ve been following aspects of how the legal profession is trying to cope with the ongoing, and now worsening in the U.S., pandemic, you’ve likely seen a variety of approaches in various states to dealing with graduates of law school and how to provide them with an opportunity to get their law license. Some states have transitioned to having their bar exam online, some states have limited the number of people who can sit for the traditional bar exam in a socially-distanced room (and some of those states have given preference to in-state law school grads), and some states have opted instead to offer diploma privilege rights to law students and allow them to become licensed without having to sit for a bar examination.

To date, my state has gone with an approach that involves limited availability but with a twist. The traditional July bar exam would have limited spaces, but they also determined to hold an extra bar exam later in the fall.

Last month, however, a collection of law school graduates has filed an emergency petition with the Tennessee Supreme Court requesting that the Court take action to allow for diploma privilege in Tennessee because of, and in response to, the pandemic. You can go read the full petition here.

It is hard to try to argue that they don’t have a point.

Edit/update: About an hour after putting this up, the Tennessee Supreme Court posted an order cancelling the July 2020 bar examination in Tennessee. You can go read the order here … it doesn’t sound like the Court is seeing it along these lines … but having to cancel it rather than move it online seems to me to be more support for seriously considering the diploma privilege route.

Pennsylvania wins the race to be first with COVID-19 ethics guidance.

I’ve lived in Memphis since 5th grade at this point, but I was actually born in Pennsylvania. I’ll heed all the guidance making the rounds of social media about not sharing information that might be a security question somewhere and won’t tell you what city.

But a part of my heart will always be in Pennsylvania since part of me really grew up there. It’s also the reason why my sporting allegiances beyond the Memphis Grizzlies and Chelsea Football Club all involve Pittsburgh teams.

So, I feel somewhat proud that the Pennsylvania State Bar seems to be the first bar to put out a truly comprehensive ethics opinion attempting to give guidance to lawyers and law firms about their ongoing ethical duties during the pandemic and in dealing with the “new normal” of working remotely from home.

While typically Pennsylvania ethics opinions have been hard to get access to some times because they have historically restricted them, Bob Ambrogi seems to have gotten his hands on the full opinion in digital format, so I’m linking to it as his site here.

It is quite good and really quite thorough (and you probably have some time on your hands), so I’d encourage you to read the whole thing. It addresses a number of rules, including Pennsylvania’s version of the ethics rules on competence and supervising non-lawyer assistants.

I only want to highlight two things that it specifically addresses and one thing that it, unfortunately, does not say at all.

First, I think this is the first ethics opinion from any lawyer regulatory body that comes out so clearly to call out what happens with smart speakers and other “always on” listening devices. It links to a vox.com article to allege that Amazon’s Alexa device and the Google Home speaker actually do have people reviewing the recordings of what those devices pick up and encourages lawyers (and people who work for lawyers and law firms) to not have client conversations in rooms where those always listening devices are located. I cannot remember for certain and have run out of the mental bandwidth today to go searching but I think I’ve written before about how the epiphany is obvious once you have it that the only way such devices can recognize when you call out their name for assistance is that they have to be “listening” before their name is uttered, but your view of such items profoundly changes once you have the epiphany. For what it is worth, I’ve been doggedly adhering to this by trying to have all of my calls take place in one of two places in my house (and on my second-floor balcony) where such devices are not located. And, yet, there’s still my iPhone and Siri which presumably also is a vigilant digital assistant just waiting for me to say her name.

Second, I feel a little personally attacked by the guidance that is stressed about only going to websites that are “secure” in that they have the https: designation. You might notice that this blog is not such a site but also I don’t ask you for any information or try to sell you any products here, so please keep coming around.

And, finally, the one thing that the opinion does not say that I really wish it would have done is this: Pennsylvania’s rules, like Tennessee’s and most others, contain language in the Preamble/Scope to stress that the ethics rules are rules of reason and should be construed as such.

All of the guidance in the opinion is very good and particularly offers a very good clearinghouse of things that lawyers should be trying to do, if at all possible. At the same time though, given how difficult all of this is we should not be sending messages to the profession that we are going to make perfect the enemy of the good.

During these difficult times, my hope will be that mistakes that lawyers may make with respect to the confidentiality and safeguarding of information will be treated as fodder for disciplinary proceedings only in instances of truly reckless or grossly negligent conduct and not mere negligence caused from trying to accomplish what client’s need to get accomplished in circumstances of a prolonged emergency.

That, to me, is a highly practical but entirely timely application of what the rules mean when they say they are rules of reason. Along those lines, while not guidance from a state bar or regulatory entity itself, I also commend for your reading a piece put out by the Holland & Knight law firm that ultimately grabs the spirit of that aspect of the ethics rules to analyze some guidance that can be found in the Restatement of the Law Governing Lawyers.

Essential? It depends.

So, I have now been exclusively working from home for . . . a number of days that … who am I kidding? Just like you, I barely can keep track of time at this point. March seems to have been 3 years long so far. It’s definitely been a while. And, importantly for context of this post, I’ve been doing it now for longer than the time that my firm’s office has now been closed.

My firm’s office, the Memphis office, of our multi-office firm, closed at 6pm on I think it was Tuesday of this past week. We did this because the “safer at home” order entered by the Mayor of Memphis went into effect at 6pm that day and it indicated that lawyers delivering legal services were only “essential services” exempt from the stay-at-home restrictions when we were delivering legal services necessary to the delivery of others who were providing essential services.

Our office had to go a different route than our Nashville office because Nashville’s “safer at home” order treated the delivery of legal services as essential services without exception.

This discrepancy from municipality to municipality in our state has prompted the Tennessee Bar Association to issue a public statement lobbying for the idea that lawyers should be treated as essential services under any such orders. Discrepancies elsewhere have also caused the American Bar Association to lobby for the same outcome: that any order requiring people to stay at home should include an exception for lawyers as essential services.

But, here’s the thing. In the context of orders for public safety designed to keep people in their homes for social distancing and prevent people from commuting to common spaces for the performance of work — most of us lawyers are not performing that kind of “essential services.”

Most of us with law licenses and an internet connection can do our jobs from the safety (both our own safety and the safety of others) of our home.

The taking of nuanced positions is difficult in normal times. It is incredibly difficult in the middle of a pandemic, but I feel obligated to say to both the TBA and the ABA that it is fundamentally irresponsible to stake out a non-nuanced position on this topic.

In the middle of a pandemic, certain things are undeniably essential services: healthcare, food, water, things related to infrastructure… the list is admittedly longer than that… but reasonable people should be able to agree that, in such circumstances, only certain lawyers in certain situations should qualify as essential services.

Lawyers representing criminal defendants? Absolutely. Lawyers working as prosecutors? Absolutely. Lawyers who somehow actually have a trial that is actually going forward despite the circumstances? Certainly. Lawyers representing juveniles defending themselves in delinquency proceedings where the juveniles could end up in prison? Yes.

But, the rest of us? No matter how important what we are doing is – and I’m NOT trying to gainsay the importance…I’m doing quite a few things that I would defy anyone to argue are not important right now (well, not “right now,” right now I’m just writing an incredibly unimportant blogpost) — but in the context of a discussion about whether we have to go to a business location, and require other staff members to do the same, the answer has to be simply no.

Lawyers are exceedingly important. But so many of us can do the things we do on a daily basis using only technology and so much of what we do can routinely be pushed off for 30 days at a time that, if the circumstances weren’t so grave, it would be almost laughable for us to be arguing so hard to be treated as exempt from stay-at-home requirements.

One possible answer: Radical transparency in design for legal services?

So, this post isn’t exactly about legal ethics. Of course, it isn’t exactly not about legal ethics. I’ve written a bit here recently about various jurisdictions launching increasingly bolder initiatives to try to reform the regulatory landscape when it comes to the delivery of legal services.

Many critical voices of these initiatives demand evidence that any changes to the ethics rules will result in better access to justice; others wonder what it is that technology companies or others who aren’t lawyers might be able to bring to the legal services marketplace that lawyers can’t afford to or are not interested in.

I certainly can’t provide a great answer to the first question. And I’m not sure I’m the definitive authority for answers to the second question. But I do have a thought that hit me yesterday while listening to the latest episode of one of my favorite podcasts – 99% Invisible.

If you aren’t familiar with it (and you really should be), it is a design podcast. Its most recent episode is entirely about the condition of waiting and how, as technology has advanced, people have designed ways to deal with people’s expectations as to waiting and how to manipulate them to have people feel better about their experience.

The episode is entirely worth your time in its entirety, but without giving too much away it focuses on things like changes over time to how you interact with Internet websites and how where once there was just a spinning hourglass that did not tell you anything about how long you might expect to have to continue waiting to the way the travel deal website, Kayak.com, shows you in a fully transparent fashion what is being searched while you are waiting.

One of the examples of the steady change in the direction of transparency the episode discusses is one of my favorite things online — something where I never really had previously thought about the “why” of its existence – the Domino’s pizza tracker.

The episode of the podcast talked about research and other studies measuring the effect of transparency, even “radical transparency,” on customer satisfaction. Examples of situations where a customer is happier with an online experience that involves an extended wait – but with flowing information about work being done in the meantime made transparent – than with a non-transparent but “instant” result. And, not all examples involved online interactions. One example was a restaurant that changed its design so that diners could see what was going on in the kitchen to make their food and that resulted in survey responses about how much better the food tasted than before.

My mind quickly moved to the experience for clients of hiring and relying upon lawyers and ways it could be made more transparent that are somewhat similar to the pizza tracker and other situations detailed in the episode. Anthony Davis of Hinshaw once explained to an audience (which included me) about how important it was for lawyers to be more communicative as to their billing because hiring a lawyer was like riding in a taxicab but with the windows blacked out. All you could see was the meter continuing to increase but had no idea how much closer to your destination you were.

Now the analogy is still a great one, even though fewer people experience cab rides now and opt instead for shared rides with prepaid fares.

In fact, the analogy is an even better one now because we live in a world where shared ride companies are putting cab companies out of business. Not only do you know on the front end how much you are agreeing to pay for the ride, but you also, through the app, can monitor your progress toward your destination the whole time (and can even track where your driver is when they are on the way to you).

Now, lawyers could try to be as descriptive as possible in the bills they send their clients, but those still only go out once a month or so. And lawyers could try to communicate more frequently to clients about what they are, or are not, doing on their case, but in an hourly billing scenario each of those communications just drives up the price for the client.

Thus, it seems logical that someone could harness technology and understanding of the life cycle of legal matters to provide a web portal that a firm (or a lawyer) could make available to clients where they could log in at any time of day and “see” something that would tell them what is going on in the life cycle of their matter.

It could be as simple as something that would tell them what the last significant event in their matter was and what the next upcoming significant event is. Or it could be as robust as something that not only gives immediate access to the big picture but would also tell them exactly when the last time was that the lawyer had “touched” their file and what work had been done and when the lawyer has calendared to next do something on the matter. Legal ethics would play a role in restricting certain parts of what could be done because some of the “manipulation” that occurs in terms of managing expectations would be quite risky given ethical restrictions on deceptive or misleading conduct of all kinds.

After those thoughts hit me and I was done with the first level of wondering if an approach surrounding “radical transparency” would work when applied to practicing law to improve the experience for clients and perhaps make people more willing to spend their money on acquiring the assistance of legal professionals, I almost immediately, and instinctively, brushed it off as something that would require too much investment and infrastructure to ever even try it.

And, that’s the real point. Isn’t it?