Digital assets and ethical issues – good news from the Tennessee legislature

Last week the Chattanooga Estate Planning Council was kind enough to have me come to speak to them about ethical issues arising from the uncertain world of the law regarding digital assets.  They were gracious hosts and, to the extent there were important ethics issues to really discuss, we managed to cover that most, if not all, such isssues stemmed from the fact that it is incredibly difficult for those working in estate planning to try to accomplish client objectives as to digital assets in Tennessee because we lack legislation to address it.  For that reason, it seemed to me that the two most prominent ethical concerns for lawyers working in that arena are the duty of competence under RPC 1.1 and the duty under RPC 1.4(b) to communicate about what their clients need to know to make fully informed decisions about the representation.

What’s necessary to address the duty of competence is difficult to pare down beyond recognizing that you have to be as fully up to speed on what Tennessee law does, and does not, address to understand the uncertainty and about how federal law (including the Computer Fraud and Abuse Act and the Stored Communications Act) permits service providers to deny requests for access to online information after users and subscribers have passed away.

The most difficult part about the duty of communication under RPC 1.4 is figuring out how to warn a client that no matter how well thought out their estate plan might be on the subject of distribution of digital assets, the client could, by accepting online terms and conditions for use (or updated and revised terms and conditions of use), thwart the plan by ceding ownership of digital assets or authorize service providers or online entities to refuse to honor the contents of such plans.

This week the Tennessee legislature passed legislation so that the time period of such uncertainty now has an end date — July 1, 2016.  Effective at that time, Tennessee attorneys will be able to count on a version of the Revised Uniform Fiduciary Access to Digital Assets Act that solves many problems intrinsic to this area of the law.  You can access the version that will go into effect by downloading the PDFs from this post at the TBA Law Blog here.  It will be codified as Tenn. Code Ann.  35-51-101 et seq.  And if you are interested in seeing all of the areas where it differs from the Revised Uniform Act, you can see the full Revised Uniform Act here.

For those that don’t have the time (or the inclination) to go study the Tennessee Act, among the many important and helpful things it accomplishes, there are three I want to highlight.

First, the term “digital asset” will have a clear definition.

[A]n electronic record in which an individual has a right or interest.  ‘Digital asset’ does not include an underlying asset or liability unless the asset or liability is itself an electronic record.

Thus, for example, my URL and this blog should be recognized as a digital asset of mine under state law.  If you have gone green and only receive your bank statements in digital form, then those statements would be a digital asset even though the money in your bank account that they document would not.  If you’re invested in Bitcoin on the other hand, then the value of your holdings in Bitcoin would be digital assets under the Tennessee Act.

Second, the Tennessee Act generally establishes a hierarchy that puts something called an “online tool” at the top, estate planning documents next, and general terms of service agreements last when it comes to directions to online service providers/custodians about post-death disclosure of digital assets.  Section 5 of the Tennessee Act explains:

(a)  A user may use an online tool to direct the custodian to disclose or not to disclose some or all of the user’s digital assets, including the content of electronic communications.  If the online tool allows the user to modify or delete a direction at all times, a direction regarding disclosure using an online tool overrides a contrary direction by the user in a will, trust, power of attorney, or other dispositive or nominative instrument.

(b)  If a user has not used an online tool to give direction under subsection (a) or if the custodian has not provided an online tool, the user may allow or prohibit in a will, trust, power of attorney, or other dispositive or nominative instrument, disclosure to a fiduciary of some or all of the user’s digital assets, including the content of electronic communications sent or received by the user.

(c)  A user’s direction under subsection (a) or (b) overrides a contrary provision in a terms-of-service agreement that does not require the user to act affirmatively and distinctly from the user’s assent to the terms of service.

Online tool, is also a defined term under the Tennessee Act.  “An electronic service provided by a custodian that allows the user, in an agreement distinct from the terms-of-service agreement between the custodian and user, to provide directions for disclosure or nondisclosure of digital assets to a third person.”  I’m not sure, as a frequent user of the Internet, that I have encountered one of these items yet.

Third, while this legislation goes a long way toward reducing uncertainty for estate planning lawyers in Tennessee, it does not change the fact that lawyers will still have to have cogent discussions with their clients when the topic of providing for distribution of digital assets in their estate planning documents arises.  This is in no small part because blithe acceptance of online terms of service agreements will still have consequences in Tennessee as Section 6 of the Tennessee Act makes clear that the underlying rights of users are still going to be limited to whatever is created in a terms-of-service agreement in the first place.  Thus, there will still be lots of confusion on the part of clients who may think, for example, that they actually own and can leave behind that digital library of e-books they possess, yet the terms-of-service they may have agreed to without reading could indicate that they do not actually own any of those items but possess only a lifetime license to use.

Coming to praise rather than to bury – West Virginia edition

Some, including possibly me, will argue that the greatest thing to come out of West Virginia is the My Brother, My Brother, and Me podcast.  But today, I write about another very positive contribution out of West Virginia, a very good, very thorough ethics opinion that overflows with common-sense with respect to social media issues for lawyers.  West Virginia L.E.O. No 2015-02 provides advice to attorneys that is as good as the McElroy brothers’ “advice” on MBMBAM is funny.

Now, this ethics opinion was actually issued a full month ago but news of it only came to me when it was picked up in other places, like the ABA/BNA Lawyers’ Manual on Professional Conduct.  If all you ever read of No. 2015-02 is the 12 numbered answers the West Virginia committee provides to the questions it poses, you’d know almost all you needed to about how practical, smart, and on-point its opinion is:

  1. Attorneys may advise clients about the content of the clients’ social networking websites, including removing or adding information;
  2. Attorneys may connect with a client or former client on a social networking website;
  3. Attorneys may not contact a represented person through a social networking website;
  4. Although attorneys may contact an unrepresented person through a social networking website, they may not use a pretextual basis for viewing information on a social networking site that would otherwise be private/unavailable to the public;
  5. Attorneys may use information on a social networking website in client-related matters;
  6. Attorneys may accept client reviews but must monitor those reviews for accuracy;
  7. Attorneys may generally comment on or respond to reviews or endorsements;
  8. Attorneys may generally endorse other attorneys on a social networking website;
  9. Attorneys may review a juror’s Internet presence;
  10. Attorneys may connect with judges on a social networking website provided the purpose is not to influence the judge in performing his or her official duties;
  11. Attorneys may advertise on a social networking website provided such advertisement complies with the requirements of the Rules of Professional Conduct; and
  12. A prospective attorney-client relationship may be formed on a social networking website.

In a way, those could be the 12 Commandments of Social Media for Lawyers.  [I’m claiming that title – that’s mine; ©; don’t anyone try to do a seminar with that title before I do; I’ve printed this blogpost out and mailed it to myself in a sealed envelope.]

The rest of the opinion (which spans 24 pages) addressing the details and nuances of these 12 answers is infused with the same kind of practical guidance and wisdom the numbered answers would lead you to expect.  It strikes all the correct notes in terms of understanding issues like: the line between advising clients on how to change privacy settings and engaging in what could be spoliation; the fact that public portions of a person’s online presence (whether they are a represented party, an unrepresented party, or a juror) are fair game; and the fact that judges and lawyers can be friends and interact socially in real life and in just the same way could be friends and interact on social media.

Even better, it highlights a few other nuances not often discussed which is the need for lawyers to remember the potential implications for trial publicity, and compliance with RPC 3.6, when they post content to social media platforms, and that there are some ways that interactions through social media platforms (like, for example, comments on Facebook posts and replies to comments) could amount to real-time electronic communication treated more like a phone call than an email under RPC 7.3.

I think the West Virginia committee managed its task so well, in large part, for two reasons.  First, the opinion makes clear that it starts from the premise that social media and social media websites are just another means of communication.  Second, it was written as a byproduct of a mindset that recognized that the very first of the general ground rules the opinion should address is the role that a lawyer’s ethical duty of competence under RPC 1.1 plays with respect to the social media landscape:

[I]n order to comply with [RPC 1.1], attorneys should both have an understanding of how social media and social networking websites function, as well as be equipt [sic] to advise their clients about various issues they may encounter as a result of their use of social media and social networking websites.

Frankly, this weird regional/archaic spelling of “equipped” is one of my only quibbles with the opinion at all.  The other quibble – and really the only one of substance – is that I think the opinion goes too far in terms of imposing a duty on a lawyer to “verify the accuracy of any information posted on [the lawyer’s] social networking websites,” especially given the difficulty in reconciling that with what the opinion says immediately before that (“Although attorneys are not responsible for the content others post on the attorneys’ social networking websites….”)  If the opinion had just left the obligations to “(1) should monitor their social networking websites [and] (3) must remove or correct any inaccurate endorsements,” then it would have equipt me with almost nothing to quibble with at all.

Go read it.  Then print it out and keep it handy.  It’s good.

South Carolina adopts first of its kind* rule on cognitive impairment.

My paternal grandfather succumbed to Alzheimer’s disease.  As someone who makes a living (such as it is) using his mind (and is pretty certain that he could not feed his family if forced to use his hands for a living), the loss of my mental faculties is one of my greatest fears.  In that regard, I suspect I am quite like a plethora of other lawyers throughout the United States.

Dealing with lawyers on the tail end of their career, and any declining mental acuity that inevitably accompanies the aging process for many human beings, is a troubling issue for law firms of any size, but particularly for smaller firms.  I’m moderating a panel at the AON Law Firm Risk Symposium in Phoenix in October that will be focusing on the ethics, employment, and loss prevention issues associated with the “graying” of the profession.

For all of these reasons, a development out of South Carolina this week is particularly noteworthy to me.  The South Carolina Supreme Court has adopted what, to my knowledge, is a first of its kind (and the reason for the asterisk in the title is that it is possible there is a rule out there like this somewhere but I’m entirely unaware of it) package of rules focused on the issue of lawyers and the onset of “cognitive impairment.”  The measures adopted by South Carolina in this order dated August 24 do three separate, but obviously interrelated things.

First, SC established a new rule, SCACR 428 entitled “Intervention to Protect Clients,” giving authority for the Executive Director of the South Carolina Bar — SC has a unified bar association so that person, unlike say in Tennessee, is a government actor (an important distinction as I discussed in another context here) — to be able, upon receipt of information from someone “expressing concern about cognitive impairment of another lawyer” to appoint “Attorneys to Intervene,” who would in turn have the authority to attempt to meet with the lawyer in question and potentially propose a course of conduct, including actions such as making referral to the “Commission on Lawyer Conduct.”

Second, SC revised its RPC 5.1 to add a new subsection:

(d) Partners and lawyers with comparable managerial authority who reasonably believe that a lawyer in the law firm may be suffering from a significant impairment of that lawyer’s cognitive function shall take action to address the concern with the lawyer and may seek assistance by reporting the circumstances of concern pursuant to Rule 428, SCACR.

Along with that subsection, a new Comment [9] was adopted stressing that the new rule “expresses a principle of responsibility to the clients of the law firm.”

Third, SC imposed an ethical obligation upon judges to take certain steps when they reach a conclusion that a lawyer practicing before them is suffering from this kind of measurable mental decline through adoption of a new Rule 501(G) in the Code of Judicial Conduct.

Whether this will be the start of a trend among states remains to be seen.  It is worth noting that whether specialized rules are adopted or not, in jurisdictions tracking the ABA Model Rules, there are ethical rules already implicated by the situation, not just for the lawyer whose skills are waning, but also for those lawyers who practice with him in a firm or even as co-counsel.  It is, for example, not much of a stretch to read the duties owed by lawyers under RPC 1.1, RPC 1.4, RPC 1.16(a), and RPC 5.1(b) and (c) to perhaps have obligations roughly similar to the new obligations being delineated in South Carolina’s RPC 5.1(d).

It is also well worth keeping in mind that given the economic climate — both market calamities several years ago and things that seem like current market calamities — there is no reason to think that the phenomenon of aging lawyers being reluctant to retire is likely to go away any time soon.  Thus, whether jurisdictions seek to carve out specialized requirements and rules as has South Carolina or not, I feel pretty safe saying these issues will continue to challenge lawyers and law firms for the rest of my lifetime.