Foundations of a … misunderstanding about what an ethics opinion is supposed to be?

So, I will admit from the jump that I am seriously torn about this post. I am a strident believer that the best ethics opinions are practical in a number of respects and that they have to be to be realistic in terms of helpfulness. An ethics opinion that does little more than offer a technical and limited answer to a complicated question of ethics can often be less helpful than silence on the issue involved.

But, at the same time, an ethics opinion really ought to be an opinion that focuses on answering an actual question posed by a lawyer about a situation in which navigating the bounds of what to do, or not do, is circumscribed by the ethics rules of a particular jurisdiction.

An ethics opinion issued by a state bar, or similar group, shouldn’t try to be a law school case book nor should it try to be an exercise in giving comprehensive legal advice to lawyers that goes well beyond discussion of the ethics rules and into the realm of pure law, including contract law.

But, torn as I am about it, I can’t manage to not turn my attention to “Foundations of a Fee Agreement” which the Colorado Bar Association Ethics Committee put out as CBA Ethics Opinion 143. This 26-page treatise, accompanied by 6 pages of appendices with checklists and resources, is not an ethics opinion in any realistic sense of those words.

It doesn’t even pretend to answer a question posed by anyone. Instead, in its “Introduction and Scope” section, it simply starts things off by saying:

This opinion examines a lawyer’s ethical obligations and best practices for fee agreements.
For purposes of this opinion, best practices are those practices which may be beneficial to the lawyer and client, and which the Committee encourages lawyers to consider, but are not ethical obligations pursuant to the Colorado Rules of Professional Conduct, nor are these best practices intended to establish the standard of care. This opinion addresses the foundational components of a fee agreement. Depending on the lawyer’s practice area and facts of the legal matter, additional provisions in a fee agreement may be beneficial, but are beyond the scope of the foundational focus of this opinion.

This kind of opening should prompt an editor with a good red pen to make a margin note along the lines of “Really, then why are we doing this? What are we doing this for?”

The opinion then includes a “Syllabus” section. Literally. That word is traditionally defined to mean “an outline of the subjects in a course of study or teaching,” It then proceeds to not exactly offer that in the section in question. Instead, this section further undermines the notion that the guidance being offered should be coming in the form of an ethics opinion at all:

The Colorado Rules of Professional Conduct (Colo. RPCs or the Rules) “are rules of
reason.” While some Rules are cast as imperatives, others are permissive and define areas where the lawyer has discretion. Fee agreements are one area where a lawyer has discretion because the Rules only require a written communication under certain circumstances, but do not specifically require a fee agreement. The Committee encourages lawyers to use a written fee agreement, however, because such a document is an opportunity for a lawyer to establish client expectations regarding the representation, including: client identity, the scope of the representation, communication, other professionals who may work on the case, file maintenance and return, issues unique to the representation, termination of the lawyer-client relationship, and of course, the terms of the fee arrangement.

I mean, rev up that red pen again, right? Now, in fairness, where this document discusses what Colorado’s rules require, it certainly provides a bucket load of accurate information.

It points out that Colorado 1.5(b) requires a lawyer who hasn’t regularly represented a client previously to communicate the basis or rate of the fees and expenses to the client in writing within a reasonable time of the commencement of the representation. It also accurately explains what 1.5(c) requires for contingent fee agreements and what Colorado’s RPC 1.5(h) requires of flat fee agreements. It even remembers to emphasize that all fee agreements still have to comply with the reasonableness requirement of RPC 1.5(a). It accurately explains that RPC 1.2(c) allows a lawyer to limit the scope of the representation and mentions what a fee agreement can say to comply with one aspect of RPC 1.15’s requirements for depositing unearned fees into trust. It also discusses ways an engagement letter can be used to be helpful in potential compliance with several other rules.

But, in the end, the Conclusion of the document once more undercuts the idea that what this thing is is an ethics opinion.

Many clients have never worked with a lawyer before. The written fee agreement can be
an integral part of establishing a strong lawyer-client relationship. Best practices are to go beyond addressing the basic fee arrangement with the client and to include the foundational elements discussed in this opinion.

There is quite literally nothing to disagree with in the three sentences just quoted above. But I don’t think I’m only being pedantic in saying this document should be called something else and issued by some other committee or section of the Colorado Bar Association. Just not its ethics committee. A short-ish review of the CBA website tells me there are an array of bodies that could have put this treatise out as a “white paper” or other practice resource, like the CBA Lawyer’s Professional Liability committee, or the CBA Modern Law Practice Initiative, or the CBA Solo and Small Firm Practice section.

In fact, if it’s not too late and you are reading this with any influence at the Colorado Bar Association, give this some second thought and rescind it as an ethics opinion and, instead, have it put up as a member resource promulgated by one of those other more appropriate bodies of the CBA.

Brooding about ethics.

So, it’s been a minute or so since my last content. You’ve probably moved on and found a new favorite ethics blog. It’s probably Michael Kennedy’s actually, he’s been relentless with content in March 2021.

You might be wondering what has happened to keep me from writing over these last 20 or so days. First, it’s definitely not workload or client issues. Second, it’s definitely not a lack of things out there worth commenting on these last three weeks. Third, it’s definitely not the guy who’s been attacking my site trying to hack it. That just results in mildly annoying little emails telling me the person is hopelessly trying. (I know with about 99% certainty exactly who it is, but he’ll have to keep trying a bit more so that I can have exactly what I need to help his friendly local law enforcement officers confirm it’s him.)

No, it’s because of the cicadas. You might have read something about how, over the next few weeks, billions of Brood X cicadas will emerge after 17 years of hiding away. It’s always weird to see yourself talked about in the media – that’s been going on over the last few weeks as well in some other settings – but it’s really weird when an article refuses to acknowledge you by name. The Vox article linked above, and a few others, speak in terms of these billions of cicadas hearing “the call of Spring” and deciding to wake up.

I think this is the first time I’ve ever been called “the call of Spring.” If you think that billions of cicadas just all decide to wake up at roughly the same time on their own, you are pretty gullible. Somebody has to travel around and wake them up. And, let me tell you, it’s exhausting.

But anyway… it’s done now. So, for the sounds you are about to experience and cherish, you are welcome. Along the way, I’ve also managed to get two doses of Pfizer vaccine in me, so we should be well on our way to resuming normal, intermittent posting.

For today, let’s ease our way into it and offer some content about a topic that (of course) that Kennedy fellow has already managed to write about. A new proposed ethics opinion in Florida (a place I fortunately did not have to go to for any Brood X cicada wake-up calls) addressing the ethics of accepting client payments through various popular digital platforms like Venmo and others.

The proposed opinion issued by the Florida State Bar’s Professional Ethics Committee appears to be a largely commonsense approach to an inevitable development as such apps have arisen and that focuses, for the most part, on the same kinds of ethical issues that were looked at and resolved in the days when lawyers were “struggling” to figure out whether they could ethically accept payment of fees using credit cards — confidentiality issues and Rule 1.15 safeguarding of funds/trust accounting/commingling issues.

The confidentiality issues are certainly more complex than was true about credit cards because of some of the more social media style angles of certain payment apps, which is another point that Kennedy makes well in his post today that focused on the confidentiality issues in the opinion.

The opinion also addresses in detail what lawyers will have to do to ensure that payments received through such an app that are earned when received go to one type of account and payments to be held in trust go to another kind of account. Likewise, the opinion addresses the need to make sure that any “costs” of using the service – like transaction fees – do not get paid out of any trust funds being held by the lawyer.

You can get the full Proposed Advisory Opinion 21-2 here. Among the most valuable pieces of advice offered in the opinion though comes at the end in the form of something of a disclaimer:

Note: The discussion about specific applications in this opinion is based on the technology as it exists when this opinion is authored and does not purport to address all such available technology. Web-based applications and technology are constantly changing and evolving. A lawyer must make reasonable efforts to become familiar with and stay abreast of the characteristics unique to any application or service that the lawyer is using.

Truer words and all of that, right? For example, the UI I had to deal with on the Cicada app? Don’t get me started.

More seriously, the forthcoming nature of this opinion was already on my radar screen, and the radar screen of all who attended the APRL mid-year meeting because we were fortunate enough to hear a “Fred” talk” from the Chair of the Florida Bar Professional Ethics Committee, Culver “Skip” Smith.

Interspersing our meeting with these “focused, rapid, ethics discussions” was something new APRL is trying. Skip’s “Fred” talk has been eclipsed by the release of the actual proposed opinion but let me end my return from a long slumber by offering you a link to another “Fred” talk that was given at our APRL mid-year meeting that I thought was excellent and that demonstrated some of the possible cool approaches these kinds of short talks can offer.

Give yourself 10 minutes or so this weekend and watch Joanna Storey of Hinshaw talk to you about whether miscommunication is inevitable.

Is Miscommunication Inevitable? Lessons Learned from Misunderstandings in Literature and Sitcoms – YouTube

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.

Not all who wear capes are heroes.

This really is just too absurd not to write about.  The absurd story commanding my fingers to tap these keys today involves a lawyer who managed to blow some significant aspects of the fundamentals of being an ethical lawyer.  You may have seen the ABA Journal online story about the now-disbarred lawyer whose absurd story is commanding my fingers to type entitled: “Former lawyer who portrayed Excuseman pleads guilty to client theft.”  If not, you can take a quick look at it (and even watch the bizarre montage video of his cosplay/hacky stand-up/performance art in a really, really bad costume) at that link immediately above.

(*Adult subject matter warning, some of the “comedy” in the video is pretty blue, but it’s the stuff that is weirdly done by some other person who is included in the video for no obviously discernible reason and she seems to be reading from printed pages?)

What the ABA Journal article doesn’t exactly do for you is make absolutely plain the timing of the events.  Several years before this gentleman ended up getting disbarred, he was doing . . . whatever this thing was . . . some combination of bad stand-up comedy or bad performance art . . . that involved portraying this, “Excuseman,” character who …. I give up.  I watched the video at the link and I can’t make heads or tails of the point.  I mean it was obviously a cry for help, but I can’t figure out what he thought the point of doing it was.  He did spend some real money on pursuing his cosplay dreams and, as it turns out, given the timing of the events it is quite likely he funded the folly with some of the money that he stole from clients. 

After first being temporarily suspended, he was disbarred in Illinois in 2015 as a result of his conduct in settling cases of his clients without their consent and pocketing the settlement proceeds.  He is back in the news now because he has pled guilty to felony theft arising out of that same conduct.

And, yet, remarkably, the thing about the current version of the story that hits me hardest in terms of dramatic, nigh poetic, irony is it now feels like the person who truly needs to offer a good excuse for their conduct is the prosecutor who ended up agreeing to the plea deal this guy obtained: 

As a Chicago Tribune article linked in the ABA Journal story explains:

Margolis was initially charged with 36 felony counts of theft, theft by deception, misappropriation of financial institution property, continuing a financial crimes enterprise and forgery.  But in a plea agreement with prosecutors, he pleaded guilty to a single theft count.
He faces up to three years in prison and a maximum fine of $25,000 at his sentencing next June.

Apparently, the total amount swindled from clients was as much as $1.1 million.  The various articles also indicate that, in the disciplinary proceedings, he was hit with a large restitution order and was separately hit with a large judgment in a legal malpractice case, but the existence of those judgments and awards doesn’t necessarily translate to those dollars ever making it into the hands of those wronged clients.

The articles also indicate that the disbarred lawyer now lives in California and is pursuing a career as a screenwriter.  Somehow I don’t imagine Excuseman will be showing up as a character in the fourth Avengers film….so I’m guessing that if those judgments haven’t already been satisfied, they won’t be getting paid in full any time soon.

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

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

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

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

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

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

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

Model Rule 4.4(b) reads:

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

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

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

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

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

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

Nebraska demonstrating less patience than Tennessee

Although I live in SEC country, I am a Chelsea FC fan rather than a follower of college football.  So this is not a sly college football reference in my title.  (I am aware that apparently UT lost its first game of the season but have literally no idea whether the Cornhuskers have even played yet in 2018.)  This post title is actually a very short description of the difference in how quickly the Nebraska Supreme Court managed to disbar an attorney who was obviously flouting the rules than did the Tennessee Supreme Court in the last matter about which I wrote.  The less patient approach on display in Nebraska was entirely understandable because the underlying rule being flouted was related to trust accounts and not conflicts.

The now-former lawyer in question – John Nimmer – went from one prior instance of having received a public censure to being disbarred for his next offense in 2018 because he repeatedly commingled funds and used money in client trust accounts to pay an array of personal expenses.  He also managed to get disbarred because his only defense to the charges – which were first pursued in 2016 but covered his banking for more than a decade – was something of an attempt to plead ignorance.  (He also managed a too-cute-by-half variation of something I’ve written about before as apparently having worked for one particular Wisconsin lawyer – failing to also keep records sufficient to fully prove what you did.)

Interestingly, before I tell you all that I will tell you about why the outcome seems so justifiable, it is worth noting that the initial decision against him was not disbarment, it was merely a 1-year suspension followed by 2-years of probation.  Nimmer objected to/appealed that proposal and, ultimately, got disbarment.  (It likely would come as no surprise to anyone who does disciplinary defense to hear that Nimmer was pro se on appeal.)

Also interestingly, unlike your normal trust account violation disciplinary proceeding, this one began when the SEC (no, not that one I referenced earlier, the Securities and Exchange Commission) made a referral in March 2016 to Nebraska bar regulators after gaining access by subpoena to Nimmer’s trust account records and finding much questionable activity.

The SEC’s “review of Nimmer’s trust account transactions revealed that he wrote numerous checks for personal expenses, ranging from rent and child support to
dog boarding and landscaping fees.”

Nebraska bar counsel first asked Nimmer to explain a number of the checks and he declined to do so.  They then issued their own subpoena for his trust account records covering a time period going back more than 10 years to January 1, 2006.  Thereafter, they pursued a formal petition for discipline against him alleging that:

between January 2006 and February 2016, Nimmer wrote personal checks on
his client trust account to 29 different businesses, individuals, and organizations. Additionally, it alleged that on December 20, 2007, Nimmer deposited a $10,000 check from his mother issued to him with the notation “loan” into his client trust
account.

As often happens in pro se disciplinary proceedings, Nimmer first challenged (unsuccessfully) the notion that there was any jurisdiction since bar counsel worked for the Supreme Court and also sought out a requirement that bar counsel should have to be disqualified because Nimmer was going to call him as a witness.  He ultimately got a special counsel assigned to his case, but the dismissal motions were unsuccessful.  Nimmer also tried a number of other procedural “Hail Marys,” including trying to have his trust account records barred from evidence because he was only actually required to keep records going back 5 years.

You can read the 31-page opinion here (N00006179PUB) and the array of transactions that were involved and that Nimmer admitted happened.  But, I’ll end with a quick elaboration on that “ignorance of the law” defense, paired as it was with an attempt to argue that he was acting at all times in good faith.

Essentially, the record was undeniably clear that Nimmer used his trust account like a personal checking account — he repeatedly wrote checks to pay the power company, his internet service provider, to pay for his daughter’s camps and health insurance, to pay for his cell phone service, and even one to pay his Nebraska State Bar dues out of his trust account.

Nimmer attempted to argue that “maybe” he was actually using earned fees he had deposited into the trust account to make these payments but he didn’t exactly offer documentation to support the possibility.  He also argued that the commingling rules were less than clear so he didn’t understand that he couldn’t, for example: receive a loan from his mother for $10,000, deposit that into his trust account, and then use that $10,000 to pay a whole series of personal debts.

Nebraska grabbed language from our nation’s capital to quickly dispatch of such an argument in this situation:

The District of Columbia Court of Appeals explained it well: “If a failure to understand
the most central Rules of Professional Conduct could be an acceptable defense for a charged violation, even in cases of good faith mistake, the public’s confidence in the bar and, more importantly, the public’s protection against lawyer overreaching
would diminish considerably.”  In re Smith, 817 A.2d 196, 202 (D.C. 2003).

Idaho why lawyers are so often tripped up on this.

I’m writing from Boise where tomorrow I’m delighted to have the chance to speak on legal ethics for the Idaho Prosecuting Attorneys Association.  (I’m also delighted that the weather is unseasonably warm at the moment.)  Last year I had the chance to do a similar presentation for the Tennessee District Attorneys General Conference.  Prosecuting attorneys throughout the country are finding themselves more frequently in the cross-hairs of disciplinary proceedings.

But today’s post isn’t really about that, but it does help explain the selection process.  As I find myself drawn to write about a recent instance of discipline imposed on a private attorney in Idaho that involves behavior that I’ve counseled lawyers about so I know it happens to be relevant beyond just the Idaho Bar.

The case involves the issuance of a suspension order against Attorney Beckett issued at the end of January 2018, but for which the 28-day active suspension period will run during the month of February.  You can read the press release put out by Idaho State Bar Counsel here.

The underlying case was a personal injury lawsuit, and Beckett was able to get the case successfully settled for his client.  His client, though, wanted immediate access to parts of what would be forthcoming from the settlement.  Perhaps simply motivated by an effort to be accommodating, or more likely because of a failure to properly communicate with the client and manage expectations regarding how long such things take, Beckett agreed to provide two advances of the forthcoming settlement funds to the client out of his own money and from money belonging to a separate company Beckett owned.

As the press release explains, he didn’t do that in a way that was at all proper because she didn’t manage to keep the funds properly segregated to avoid commingling them with money in other accounts and also didn’t communicate to the client the available alternatives.  Despite the fact that, as the press release makes clear, Beckett didn’t charge any interest or fees for the transaction and that no other clients were harmed in any way, the conduct violated Rule 1.15 and 1.4 of the Idaho Rules and merited a 60-day suspension, with 28 days of active suspension, and a six-month probationary period.

What is interesting is that the press release makes no mention of Rule 1.8(a) governing business transactions with clients.  When I have had to counsel lawyers about inquiries from clients along these lines, that is the Rule most pertinent to the discussion for a path to actually doing what the client wants if the lawyer is insistent on providing an accommodation.

Idaho, like Tennessee, has a Rule 1.8(a) patterned after the ABA Model Rule.  Tennessee’s, for example, provides that a business transaction with a client – which is what a loan like what Beckett did would be — cannot happen unless

(1) the transaction and terms on which the lawyer acquires the interest are fair and reasonable to the client and are fully disclosed and transmitted in writing in a manner that can be reasonably understood by the client;

(2) the client is advised in writing of the desirability of seeking and is given a reasonable opportunity to seek the advice of independent legal counsel on the transaction; and

(3) the client gives informed consent, in a writing signed by the client, to the essential terms of the transaction and the lawyer’s role in the transaction, including whether the lawyer is representing the client in the transaction.

Now, working through that rule is not 100% of the battle altogether, because the risk still exists that a bar counsel would argue that other provisions in the same rule, RPC 1.8(e) and (i) in Tennessee for example, would still work to prohibit such a business transaction altogether if the case has been settled but no order of dismissal ending the litigation has been entered.

Those provisions provide:

(e) A lawyer shall not provide financial assistance to a client in connection with pending or contemplated litigation, except that:

(1) a lawyer may advance court costs and expenses of litigation, the repayment of which may be contingent on the outcome of the matter; and

(2) a lawyer representing an indigent client may pay court costs and expenses of litigation on behalf of the client.

and

(i) A lawyer shall not acquire a proprietary interest in the cause of action or subject matter of litigation the lawyer is conducting for a client, except that the lawyer may:

(1) acquire a lien authorized by law to secure the lawyer’s fee or expenses; and

(2) contract with a client for a reasonable contingent fee in a civil case.

RPC 1.8(i) has always struck me as a prohibition that can be drafted around in the transaction documents to sever any connection between the litigation and the loan, but (e) is trickier if the litigation, despite being settled is technically still “pending” at the time of the client’s inquiry.

It doesn’t all even out in the Walsh.

Selecting just the right item to write about is not easy.  This is not going to be an instance of accomplishing it.  This is going to be an instance of writing something just because I truly find the outcome astounding (or at least I found the outcome astounding when I first read a blurb about the situation, but now having read the full Court opinion I’m less astounded).

A little less than a week ago, the Wisconsin Supreme Court released an opinion in which it accepted a lawyer’s effort at consenting to the revocation of his law license.  An outcome that is, as I understand Wisconsin procedure, technically not a disbarment, but also not quite the same thing as the surrender of a law license that we have here in Tennessee.

The headlines/blurbs I encountered as a first way of hearing about the story were of the Law360 variety — Atty’s Scanty Records Preclude Client Repayment, Court Says.   The disheartening takeaway one gets from reading that story reporting on the opinion is that a lawyer got away with trust account malfeasance by failing to keep the records that would be necessary to prove up the wrongdoing.  Knowing how tough disciplinary authorities can be on trust accounting violations, this was one where I had to find the time to read the actual opinion.

You can do so right here.  If you want to do so right now, I’ll wait until you get back.

Ok.  So now that you’ve read it too, what about the one client and his $1,500?  The second part of the complaint/investigation?

Attorney Walsh agreed to represent O.B. in attempting to have his felony convictions expunged or to seek a pardon for those convictions.  According to his fee agreement with O.B., Attorney Walsh accepted an advanced flat fee of $1,500 at or near the time of entering into the representation and deposited the advanced fee into his law firm’s business account.  Attorney Walsh claimed to the [Office of Lawyer Regulation] that he had done work on O.B.’s behalf and was able to describe some of that work.  According to the OLR’s summary Attorney Walsh promised O.B. in July 2015 that he would be following up on a lead that required research, but warned that O.B. would likely be out of luck if the research did not yield favorable results.  Attorney Walsh, however, failed to communicate the results of his research to O.B.  He then failed to provide O.B. with any of the notices that were required when an attorney placed an advanced fee into the attorney’s business account and utilized the alternative advanced fee procedure outlined in [a particular Wisconsin rule].  Indeed, Attorney Walsh failed to provide O.B. with a final accounting that showed how he had earned the $1,500 flat fee.

For a while I thought I could manage to work through the giant, headline-grabbing angle given that none of the clients associated with any of the things involving fluctuations in the bank records contend they are out money and since there weren’t sufficient records available to truly prove what was what, the Wisconsin disciplinary counsel opted not to seek restitution.  so while not quite “no harm, no foul,” but “definitely a foul, and he’s offering to give up his license without a fight so we’ll just take it and be done with it.”  Though it does appear that the lawyer first tried an approach that would be more like Tennessee’s law license surrender approach by first filing a petition for the voluntary resignation of his license.  Like surrender here, the existence of a pending disciplinary investigation can thwart that in Wisconsin so he tacked to filing a petition for consensual revocation.

But, there was at least that one client standing right there in these proceedings saying that they were out $1,500 as a result of this character.  How could the Wisconsin disciplinary counsel not pursue getting that person their money back?  And how could the Wisconsin Supreme Court manage to shrug its shoulders at that outcome?

Similarly, given the lack of billing records, the [Office of Lawyer Regulation] cannot determine with any reasonable certainty that [the client] should receive a refund of any particular amount of his advanced fee from Attorney Walsh.

Talk about the opposite of a “tie goes to the runner,” kind of ruling.

Which leads me back full circle to being astounded at that outcome up Wisconsin-way.  It’s an outcome that sends a really clear – but unfortunate – message to Wisconsin attorneys that are truly willing to just disregard obligations — make sure you don’t keep records as well.

Two smart, practical ABA Ethics Opinions in a row. (And a bonus “beg to differ”.)

So, this week the ABA Standing Committee on Ethics and Professional Responsibility issued Formal Op. 476 addressing the need to protect client confidentiality when a lawyer seeks to withdraw for reasons involving the client’s failure to pay.  As explained below, it is a solid, practical opinion touching on a subject often overlooked by lawyers who are just trying to get out of a case with as little additional wasted time and expense.

It comes on the heels of an opinion from earlier this month about a lawyer’s obligation to hold fees to be shared with a lawyer from another firm separate from the lawyer’s own funds, ABA Formal Op. 475, which — despite what this solo and small-firm centric blogger wrote recently — is also a practical, well-constructed, and correct opinion.  I have to beg to differ with the My Shingle piece because it misses the boat on the primary type of situation the ABA Formal Op. 475 is vital to addressing — where lawyers in different firms are sharing fees in a contingency case.  When you come at the question from that perspective as a starting point, the answer offered in the opinion is clearly the only answer that can be correctly offered.  The My Shingle complaints are readily resolved by simply working out a better front-end arrangement with a client about payment to multiple lawyers.

(N.B. – it can’t just be coincidence that these two opinions appear to be the first two in which my friend, Doug Richmond, shows up as a member of the committee involved in the issuance.  Doug is an excellent lawyer – as of course are all the lawyers on the committee — but Doug also has a flair for delivering practical advice through clear, straightforward written work product that leaves the reader with an abiding sense that the conclusion reached was inescapable.)

ABA Formal Op. 476 also does a nice job in tackling and acknowledging the interplay between trial court and lawyer in these circumstances.  The opinion truly can be well summed up if you lack the time or wherewithal to read it in full by simply quoting its “Conclusion,” section:

In moving to withdraw as counsel in a civil proceeding based on a client’s failure to pay fees, a lawyer must consider the duty of confidentiality under Rule 1.6 and seek to reconcile that duty with the court’s need for sufficient information upon which to rule on the motion.  Similarly, in entertaining such a motion, a judge should consider the right of the movant’s client to confidentiality.  This requires cooperation between lawyers and judges.  If required by the court to support the motion with facts relating to the representation, a lawyer may, pursuant to Rule 1.6(b)(5), disclose only such confidential information as is reasonably necessary for the court to make an informed decision on the motion.

As it stands, I really only have one item of criticism regarding Formal Op. 476 at all.  Yet it feels almost like nitpickery … in that I would have liked to see the opinion manage more clearly to stress that the need for protecting client confidences and discretion in any disclosure to a court regarding withdrawal applies to more withdrawal situations than merely not being paid.  Far too many times than I care to count have I been sitting in a courtroom and listened to a lawyer in the context of seeking withdrawal in some matter on the docket ahead of my case say too much, unprompted about their communications (or lack thereof) with the client.  The opinion says it is limiting itself to the deadbeat client situation because in other situations other rules and principles may apply, but I think there would have been value in exploring the commonalities.

The only other thing I’d like to use ABA Formal Op. 476 as a springboard to say involves highlighting an aspect of the rule we have here in Tennessee and how it provides a very helpful, practical mechanism for doing what the ABA Opinion actually encourages when it says:  “Of course, where practicable, a lawyer should first seek to persuade the client to take suitable action to remove the need for the lawyer’s disclosure.”  In the context of the ABA Formal Op. that would appear to be either: (1) pay the lawyer; (2) hire other counsel that can substitute in lieu of withdrawal, or perhaps (3) fire the lawyer so that withdrawal becomes mandatory.

In Tennessee, we offer another option as our RPC 1.16(b) also lists as a trigger for discretionary ability to withdraw merely that the client has provided informed consent confirmed in writing to withdrawal by the lawyer.  Such a clear escape valve in the rule permits a lawyer – even in a situation in which the client has become a deadbeat – to be able to counsel the client and explain that if the client will go ahead and provide informed consent to withdrawal, and show that consent by signing the motion itself, it can go an exceedingly long way in eliminating the risk that the lawyer will have to say anything about the client’s failure to pay in response to an inquiry from the court.

Texas Ethics Opinion Offers Stellar Example of Why You Ought to Have a Rule About This.

I’ve mentioned in the past the fact that Tennessee has a version of RPC 4.4(b) that directly addresses, and provides what I happen to think is the correct outcome, for what a lawyer is supposed to do about the receipt of someone else’s confidential information either inadvertently or via someone who isn’t authorized to have it in the first place.  Our RPC 4.4(b) goes further than the ABA Model Rule in two respects on this front in that: (1) it doesn’t just require notice as to inadvertently received information but makes clear that the lawyer has to either abide by any instructions as to what to do with the information or has to refrain from doing anything further with it until a court ruling can be obtained; and (2) we apply the same standard to information received unauthorizedly, e.g. a purloined document.  (Of course, I’ve also mentioned … repeatedly I admit … that the ABA Model Rules ought to be construed via Model Rule 1.15 to fill the gap on that second point, but … leading horses… and drinking water… and all that.

Earlier this month the State Bar of Texas Professional Ethics Committee issued Opinion 664 which “addresses” the following two questions:

1. Do lawyers violate the Texas Disciplinary Rules of Professional Conduct if they fail to notify an opposing party or its counsel that they are in possession of confidential information taken from the opposing party without the opposing party’s knowledge or consent?

2.  Do lawyers violate the Texas Disciplinary Rules of Professional Conduct if they fail to notify an opposing party or its counsel that they have inadvertently received confidential information of the opposing party?

In a relatively short opinion that discusses almost exclusively the first question, the Texas Committee ultimately says, “hey look, we don’t have a rule on any of this… so you are kind of on your own.”  That’s not really a quote from the opinion, of course.  The real quote from the opinion is longer but the gist is pretty much exactly the same as my fake quote.

The opinion then goes on to hold out the possibility that if you have this fact scenario plus something more than maybe one or more other rules could be violated — like Texas’s equivalents of Model Rule 1.2(d) or or Model Rule 3.3(a) or Model Rule 4.1 or Model Rule 8.4(d).  Quoting the opinion this time for real:

It is possible that under some circumstances the failure to provide notice to opposing counsel, or take other action upon receipt of an opponent’s confidential information, might violate one or more of the Texas Disciplinary Rules requiring lawyers to be truthful and to avoid assisting or condoning criminal or fraudulent acts or denigrating the justice system or subverting the litigation process.

The opinion also reminds readers that the lawyer’s course of conduct in such circumstances must be well thought through because the risk of disqualification still lurks, but in the end the opinion largely concludes with something that is mostly a restatement of the problem for Texas lawyers (and of my general inability to get horses standing so close to water to drink since Texas does have a version of ABA Model Rule 1.15  and confidential information certainly is “property”):

The Texas Disciplinary Rules of Professional Conduct do not prescribe a specific course of conduct a lawyer must follow upon the unauthorized or inadvertent receipt of another party’s confidential information outside the normal course of discovery.

The insistence on referencing discovery and, thus, making it seem like this is solely a problem for litigators rather than all lawyers is also a bit unfortunate.