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.

Following up on that follow up

I probably should have taken the opportunity to say so in my last post – by way of contrast if not context — but one very obvious reason that the Ohio Supreme Court was able to move so quickly to adopt a revision to its RPC 1.2(d) to address its medical marijuana situation for lawyers is that it isn’t the first U.S. jurisdiction to opt to tinker with the some aspect of that rule in response to the issue.

Vermont recently, but after a much longer period of contemplation, chose to address the issue not by changing the black letter of its rule, but by adding a new paragraph to its comment to RPC 1.2.  After the revision, which happened in August 2016, Vermont’s Comment to RPC 1.2 provides the following explanation:

[14]  With respect to paragraph (d), a lawyer may counsel a client regarding the validity, scope, and meaning of Title 18, chapters 84, 84A, and 86 of the Vermont Statutes Annotated, and may assist a client in conduct that the lawyer reasonably believes is permitted by these statutes and the rules, regulations, orders, and other state and local provisions implementing the statutes.  In these circumstances, the lawyer shall also advise the client regarding the potential consequences of the client’s conduct under related federal law and policy.

The structure of that paragraph ought to sound familiar because — other than the references being to the Vermont statute instead of the Ohio law — it reads pretty much the same as the language that Ohio grabbed for use in its new RPC 1.2(d)(2).

Ohio’s other change, the move from using the word “criminal” to the word “illegal” in RPC 1.2(d) is still puzzling.  I still haven’t stumbled upon a good answer to my question why the Ohio court did that and what it thinks the distinction there would be.

Vermont’s approach to this issue though raises a question of a different variety altogether: how close does a change like this come to running afoul of the principles in the rules themselves about the purpose of Comments to the black-letter rules?

In Vermont, as in most states that have a version patterned after the ABA Model rule, the explanation as to the role of comments appears in the “Scope” section of the Rules and is as follows:

The Comment accompanying each Rule explains and illustrates the meaning and purpose of the Rule…. The Comments are intended as guides to interpretation, but the text of each Rule is authoritative.

Given that the black-letter of the rule being modified in Vermont reads “”[a] lawyer shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal or fraudulent, but a lawyer may discuss the legal consequences of any proposed course of conduct with a client and may counsel or assist a client to make a good faith effort to determine the validity, scope, meaning or application of the law,” I do think Vermont’s addition of [14] to the Comment is an appropriate exercise in explaining and interpreting the black-letter of the rule rather than using the comment to change the meaning of the rule but can admit reasonable minds might disagree.

What I don’t think really anyone reasonable can disagree with is the sentiment offered in the “notes” offered in Vermont about this amendment:

Given the conflict between state and federal law, and DOJ’s current enforcement policy, this is an area in which advice from an attorney is critical and into which clients should not be forced to enter without counsel.  Similarly, lawyers should not face professional discipline for providing legal advice and legal assistance on such an important issue, especially when the alternative is to leave clients to proceed at their own peril.

Friday follow-up: Puff, puff, PA’s overreach

Couple of quick hits (pun wasn’t really intended but just sort of happened) for this Friday.

A little more than a month ago, I wrote about an ethics opinion out of Ohio that created a real dilemma for lawyers looking to advise businesses related to the medical marijuana industry that was going to become legal in Ohio on September 8, 2016.  Under the analysis in the ethics opinion, Ohio’s RPC 1.2(d) prohibited lawyers from assisting people with such business endeavors.

Moving with what seemed like an unusual amount of speed when it comes to rule-making endeavors (and entirely contrary to the conventional wisdom that pot slows things down), the Ohio Supreme Court has adopted a revision to its RPC 1.2(d) to specifically address the situation and permit Ohio attorneys to assist clients in this industry.  The new rule language reads:

(d)(1)  A lawyer shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is illegal or fraudulent.  A lawyer may discuss the legal consequences of any proposed course of conduct with a client and may counsel or assist a client in making a good faith effort to determine the validity, scope, meaning, or application of the law.

(2)  A lawyer may counsel or assist a client regarding conduct expressly permitted under Sub. H.B. 523 of the 131st General Assembly authorizing the use of marijuana for medical purposes and any state statutes, rules, orders, or other provisions implementing the act.  In these circumstances, the lawyer shall advise the client regarding related federal law.

Now, I totally understand the addition of (d)(2), though it is the kind of hyper-specific revision to the language of a rule that makes me cringe on the inside.  But, I don’t quite understand why the Ohio court changed the language of (d)(1) to replace “criminal” with “illegal.”  Wonder what that is all about exactly and what they would articulate to be the difference in those two terms?

About a week before I wrote about the Ohio marijuana opinion, I wrote at length about a South Carolina ethics opinion that served as an exemplar of the kind of ethics opinion I anticipated a number of other states might write about the problems with  Avvo Legal Services.  Well, this month another state has added its voice with an ethics opinion pointing out ethical dilemmas for lawyers that might look to do business with that service and similar services. Pennsylvania has issued Formal Op. 2016-200: Ethical Considerations Relating to Participation in Fixed Fee Limited Scope Legal Services Referral Programs.  Ironically though, I can’t help reading the Pennsylvania opinion as being a bit more of an indictment of certain kinds of thinking in our profession than it is an indictment of the ethics problems with Avvo Legal Services.

I plan to write about this Pennsylvania opinion in more detail later — and can’t give you a link to go read it yourself because Pennsylvania still tries to keep its ethics opinions limited to members-eyes only in the online world.  (That is, in and of itself, a weird and outdated way of thinking altogether but that too would be a topic for another day.)

For today, I’ll simply preview that the fundamental problem I currently have with the Pennsylvania opinion is that it overreaches and comes across as indicative of a line of inflexible thinking that seems to be entirely out of touch with what is actually going on in the marketplace and that is mostly antithetical to innovation altogether.

Let me offer one example to hopefully pique your curiosity if not whet your appetite, it comes from Section IX of the opinion, titled “Access to Legal Services” —

Operators of FFLS programs argue that “unbundling” legal services reduces the cost to clients, thereby making legal services more accessible.  Expanding access to legal services is, of course, an important goal that all lawyers, and the organized Bar, should support.  However, the manner in which these FFLS programs currently operate raises concerns about whether they advance the goal of expanding access to legal services.  Further, compliance with the RPCs should not be considered inconsistent with the goal of facilitating greater access to legal services.  Any lawyer can offer “unbundled” or “limited scope” legal services at, or even below, the rates described by an FFLS program, provided the lawyer can do so in a manner that complies with his or her professional and ethical obligations, including the obligation of competence (see RPC 1.1) and full disclosure of and informed consent to any limitations on the scope of the legal services rendered.  If a lawyer cannot fulfill those obligations working outside the scope of an FFLS program, he or she almost certainly would not be able to do so working within such a program.

Really?

Ohio ethics opinion is concrete example of “Tis better to ask forgiveness than permission.”

“It’s easier to ask for forgiveness rather than permission.”

Those words, or words of similar effect, make up a pretty widely recognized adage.  Depending on the details of any situation, the adage can serve as a proxy for pretty decent advice for a lawyer to give a client, but often less so if the lawyer’s client is also a lawyer.  The message itself, however, can be a pretty decent mantra to offer to lawyers who might be contemplating posing a question to a regulatory body that issues advisory ethics opinions.

I’ve previously written a few words on my love/hate relationship with ethics opinions issued by entities.  A lot of the time I find myself surprised that a lawyer would ask the question that a regulatory body says has been posed to it.  Occasionally, I am very glad that some lawyer did because the result is a helpful opinion that I and others can point to as guidance when advising other lawyers or can rely upon as arguably persuasive authority in one context or another.  Some times I really wish the question had never been asked because the opinion that gets produced really screws up the answer.

From time-to-time, I read an ethics opinion and reach a conclusion that the lawyer would have been better off just doing the thing and seeking forgiveness later rather than even asking the question.  Hello Opinion 2016-6 from the Board of Professional Conduct of the Supreme Court of Ohio.  It tackles the role lawyers in Ohio can or cannot play in that state with respect to the legalization of medical marijuana which is set to take effect next month in Ohio.

It has been more than a year ago now, but I wrote one time in the past about the thorny issues that can arise for lawyers from the growing trend at the state and local level of moving toward the legalization of marijuana while it continues to be illegal to grow, distribute, or use under federal law.  Thus, I can’t really take too much issue with the opinion writers who issued the Ohio opinion because I recognize the constraints they consider themselves to be laboring under to some extent, but the work product they have spun out is still unfortunate… if for no other reason than that it is counterproductive.

People trying to operate in this new business sphere in Ohio will have many land mines to navigate and desperately need lawyers to help.  They are going to do a whole lot better at avoiding unexpected difficulties or legal missteps if they have lawyers assisting them along the way.  By telling Ohio lawyers that this kind of work is off-limits, other people who are not constrained by lawyer regulatory issues will likely step in to fill the void.  Though I learned this morning from Karen Rubin over at her firm’s top-notch blog that the Ohio Supreme Court has already announced an effort to revise RPC 1.2 to address this issue, so maybe there will never be a gap created.

But the real problem here is that this is exactly the kind of question that should never have been posed this to the Board of Professional Conduct.  Perhaps there is no better way of showing why this is true than in highlighting how the Ohio Board addressed the fact that the Ohio legislature passed a statute immunizing professionals from liability for undertaking actions in compliance with Ohio state law on medical marijuana.  The Ohio Board offers no solace on that front:

The law immunizes professional license holders, including lawyers, from any professional disciplinary action for engaging in professional or occupational activities related to medical marijuana.  Notwithstanding this provision, this advisory opinion analyzes the questions presented in light of rules promulgated by the Supreme Court pursuant to Oh. Const. Art. IV, Section 2(B)(1)(g).

The Board dropped a footnote from that second sentence to quote the relevant provision — “The supreme court shall have original jurisdiction in * * * [a]dmission to the practice of law, the discipline of persons so admitted, and all other matters related to the practice of law.” — and raise the specter for a lawyer interested in helping a medical marijuana business of an intercine war between government branches with his/her license trapped in the middle.

The clearest lesson here for Ohio lawyers ought to be that when you really want helpful, practical, legal and ethical advice about a tough question, you ought to hire someone in Ohio — someone like Karen or like many of the other very good lawyers licensed in Ohio who are members of APRL for example.  Those folks could give them candid advice about the risks of their proposed endeavor and offer advice informed by comprehensive knowledge of the Ohio ethics rules but also advice informed by knowledge of other aspects of the law as well.    I suspect good Ohio ethics lawyers would have told them some version of the following — yes, you might get in trouble if someone ever makes an issue out of it, but not entirely clear that you would get punished given the lay of the land, if you did it would probably be relatively minor, but it isn’t an area that anyone can give you a clear blessing in advance.

That kind of practical advice is something that a body like the Ohio Board simply isn’t in a position to give.  As a result, you get Ohio Opinion 2016-6.  And, the analysis in Ohio Opinion 2016-6 seems all the more frustrating when just a few days later a federal appeals court ruled that the Department of Justice could never actually prosecute someone who was fully complying with a state’s medical marijuana laws because of a funding bill restriction passed by Congress.  You can read about that opinion here.

Airing the profession’s dirty laundry

Ok, let’s talk about the 60 Minutes piece that aired this past Sunday.  If you haven’t watched it, by all means you should — it is worth the 20-30 minutes of your time.  You can watch it here.  As always, I’ll wait until you get done and come back.

Now, it seems beyond dispute that the 60 Minutes broadcast plays as a story likely to blacken the eye of the profession.  It’s also the kind of piece that, as it gets legs, tends to lead inexorably to vigorous discussions about the need for new and better regulations to crack down on using lawyers for such transactions.  Further, the story is a bad look for all of the lawyers involved in terms of publicity (with the exception of the lawyer who said no and should be well primed to do a Diet Snapple commercial or two) and that the ABA comes out at the end looking particularly bad.  Not just because of the level of enthusiasm that its former president showed for pursuing assisting the arrangement on a going forward basis (and, call me cynical, but the written statement about what the cameras would have shown if they’d kept rolling after the meeting ended rings hollow in my ears) but also for the juxtaposition of the ABA’s constant position in opposition to the Senate legislation which Senator Levin was given camera time to speak about having pursued on many occasions without success.  In the interest of being fair though, here is the link to the statement the ABA has put out in response to the 60 Minutes piece and that does rightly focus on the fact that the ABA’s perspective in terms of opposing legislation has been driven by seeking to protect the attorney-client privilege.

There are, of course, really weighty ethics issues raised by this rare sort of “behind closed doors” opportunity to see what happened at these consultations but before I roll up my sleeves to offer some of my own thoughts on those issues, I want to highlight one aspect of the story that the broadcast piece mentioned once but then blew right past because I think it deserves larger prominence for a positive it shows regarding the state of our profession.

Very early in the broadcast, Kroft mentions that this Global Witness outfit started out by contacting 50 law firms by telephone using their prepared script to try to set up in-person meetings to explore the potential representation.  From the brief image up on the screen, the script for the telephone portion would appear to have had the same core facts designed to make the situation raise red flags as the story told in person.  Kroft quickly then says that Global Witness was able to obtain sit-down meetings with 13 law firms and then stressing that of those 13, and of the 16 lawyers that they met with from those 13 law firms, only 1 turned them down.  (“Diet Snapple – it gives you the courage to make the right choice!” or “Diet Snapple – I drink it because my standards are higher.” – Hey, Madison Avenue, call me – I’m a veritable gold mine.)

1 out of 16 or even 1 out of 13 sounds like a very bad rate of success in terms of firms and lawyers seeing the “red flags” and declining to get involved.  But that isn’t the real ratio, the more positive takeaway is that some 37 law firms appear to have been savvy enough and focused enough on ethics (or at least loss prevention) to balk even before agreeing to an in-person meeting in the first place.  That’s a good thing and deserves to be given some media attention.  Further, the only 1 out of 13 turned them down is something of a skewed number when the story only focuses on the 13 of the 50 firms that were already inclined toward trying to pursue this business, i.e. didn’t reject the scenario outright over the telephone alone.

Now that I’ve mentioned the good, let’s dwell a bit more on the bad.  A government minister from a West African nation rich in minerals who is now rolling in dough from arranging for companies and corporations to obtain mineral rights is the potential client?!?!  Then the representative for that person indicates that they aren’t willing to tell you which one?!?!  Only 1 of the lawyers we are shown explicitly mentioned the Foreign Corrupt Practices Act by name, which is disappointing enough.  But it is equally remarkable (at least to me) that none of the lawyers appear to have spent a moment being concerned about the Specially Designated Nationals list or any of the other aspects of the fact that there is a giant list the Treasury Department keeps of certain countries, entities, and individuals with whom it is illegal for a U.S. citizen to do business in any respect.

If the potential client’s agent is telling you that the person involved is in a West African country but they won’t tell you which one and they are not inclined to want to necessarily even share the person’s name, how in the world could you or your firm ever expect to be able to run any appropriate check to make sure you aren’t dealing with someone in a country, or someone who themselves are on, the SDN list?

And speaking of things you are setting yourself up to never be able to do, whither these firms’ conflict checks?  Maybe 60 Minutes just edited out any of the conversations where these attorneys talked about how difficult it would be to run an appropriate conflict check if they won’t be told the country of residence or name of the individual whose money and assets they would be attempting to shield?

Now, as to the core legal ethics issue presented by the various consultations we are permitted to witness because of the hidden camera, where is the line between counseling a client about compliance with the law versus assisting a client on a path to accomplish fraudulent or illegal conduct? That issue is primarily addressed in Model Rule 1.2(d).  That rule provides:

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

Comment [9] of that Rule provides a bit of elaboration with its last sentence: “There is a critical distinction between presenting an analysis of legal aspects of questionable conduct and recommending the means by which a crime or fraud might be committed with impunity.”

Now, I have my own opinion of how close the various lawyers caught on the hidden camera footage were to crossing the line that separates the two sides of this “critical distinction,” but there isn’t much point ruminating about that given that the interactions weren’t actually “real,” and that they involved a proposed scenario that sounded shady enough that almost 75% of the law firms approached initially were able to recognize it and turn it away without agreeing to an in-person meeting.  I suspect if you asked most viewers of the 60 Minutes piece — especially those without law degrees — many of them would tell you they found those conversations to be much more along the lines of “recommending the means by which a crime or fraud might be committed with impunity.”

I do think it is worth pointing out though that Tennessee has an even stricter variation of RPC 1.2(d) as we add the words “or reasonably should know” after “knows” and before “is criminal or fraudulent.”  If the lawyers under the 60 Minutes spotlight had been Tennessee lawyers, it would be very difficult to defend the path they appeared to be pursuing as they wouldn’t be able to fall back on a claim that they didn’t “know” of criminal or fraudulent conduct; rather they would be battling over whether the criminal or fraudulent nature of the endeavor being explored was something that they reasonably should have known.

Seems a little soon for this new specialty bar association to exist, but the issues really are growing

There is no question that there continue to be rapid developments arising in the law resulting from the steady trend among states toward reevaluating the legality of marijuana use under their state’s law.  Several states have made it outright legal for recreational use under their state law, while others have legalized only medicinal uses, and some states have simply moved toward decriminalization.  Still, it seems a little early for there to be a specialty bar association specifically focused on marijuana law issues.  The fact that all three of the founding lawyers of the National Cannabis Bar Association are from the same city likely confirms that their reach might exceed their grasp at this stage.

There are though serious legal issues involved for people and businesses that want to grow and produce, or sell and distribute, or even simply provide banking services to people or businesses who do any of these things involving this product.

From a legal ethics perspective, there are two issues that seem most ripe.  The first is the purely selfish interest of lawyers in such states, should they be so inclined to use a product made legal in their state, to know if they can still get disciplined under their ethics rules for personal marijuana use because it remains illegal under federal law?  Colorado, for example, has seen an effort by lawyers to lobby for changes to the ethics rules that would go as far as permitting a lawyer to use in compliance with state law without being at risk of discipline under RPC 8.4 for violating federal law.

The second matters to lawyers and their clients alike — what lawyers can, and cannot advise, their clients with respect to use, production, growing, distribution, sale and other verbs about a product that is legal in some states for all purposes, legal in some states for some purposes, and illegal under federal law in all states for all purposes.  As this recent development in which the firing of a worker for using legal medical marijuana on personal time  was upheld in Colorado bears out, some issues of how to advise clients may be quite easy at least for now — for example, advising an employer if they can fire someone for breaking federal law.  Other issues of advice are much thornier because of the existence of rules patterned after a part of ABA Model Rule 1.2.

In Tennessee, for example, we have RPC 1.2(d) which does two things:  First, it prohibits lawyers from “counsel[ling] a client to engage, or assist a client, in conduct that the lawyer knows or reasonably should know is criminal or fraudulent.”   Second, it permits lawyers to “discuss the legal consequences of any proposed course of conduct with a client and [to] counsel or assist a client to make a good faith effort to determine the validity, scope, meaning, or application of the law.”   Of course, our state legislature does not seem inclined to even consider decriminalizing this substance, much less making its use legal for any purpose so the average Tennessee lawyer may not have to wrestle with where the line is between the two parts of RPC 1.2(d) on this issue any time soon.  (Though to be as fair as possible, Tennessee did make the use of cannabis oil legal for limited medical purposes earlier this year.)  In Oregon, for example, they’ve already amended their version of RPC 1.2 to specify the ability of Oregon lawyers to advise clients on Oregon’s laws as to marijuana.  A few other jurisdictions have added language into their Comment to elaborate specifically about this issue.  For other jurisdictions, that still only have something patterned on Comment [9] of the ABA Model Rule 1.2, like we do in Tennessee, helpful insight exists in the explanation that a lawyer is permitted to give “an honest opinion about the actual consequences that appear likely to result from a client’s conduct,” and of the “critical distinction” that exists “between presenting an analysis of legal aspects of questionable conduct and recommending the means by which a crime or fraud might be committed with impunity.”