Coming to praise rather than to bury (Part 1 of 2)

For a change of pace, I write today about a very well constructed ethics opinion out of New York.  (To keep this positivity train chugging along for at least one more day, my plan for tomorrow is to discuss a federal court decision out of Florida impacting attorney ethics that is also praiseworthy and that should be fodder for challenging a similar prohibition on how lawyers can market themselves in my state.)

Last month, the New York City Bar released Formal Opinion 2015-6, addressing several unpleasant issues relating to duties to clients that a lawyer must wrestle with in already difficult circumstances, where an accident or disaster has destroyed a client’s file or where an accident or disaster has compromised the security of the client’s confidential information.  The opinion makes reference to a particular relatively recent event as an example of how this could happen – a February 2015 fire in a Brooklyn warehouse (presumably this one), that destroyed some attorney files among other private materials.  The committee also offers other examples where the loss of client files seems more like an afterthought compared to human tragedy involved, such as hurricanes and terrorist attacks.  In addition to offering guidance for (1) when a lawyer has to notify a current or former client about files being destroyed and (2) what a lawyer has to do after it has happened in terms of attempting reconstruction of a file, Formal Opinion 2015-6 also discusses the lawyer’s duty to notify about potential compromise of confidential information in such circumstances.

In a 2010 opinion, this same NYC Bar committee addressed when a lawyer could ethically destroy file materials after a case ended.  That opinion divided the world of a lawyer’s client file into 3 categories of documents: (1) documents having “intrinsic value” or that “directly affect property rights;” (2) documents the lawyer “knows or should know may still be necessary or useful to the client, perhaps in the assertion of a defense in a matter for which the applicable limitations period has not expired;” and (3)  documents that “furnish no useful purpose in serving the client’s present needs for legal advice.”

Echoing the treatment of the answer to “when can you destroy?” provided in the 2010 opinion, Formal Opinion 2015-6 says that as to Category 1 documents, absent a contrary earlier agreement between lawyer and client, the lawyer will have an affirmative obligation to notify the client about the destruction of such documents.  As to Category 3, the answer is as simple, albeit flipped – unless prior agreement to the contrary, no duty to notify.  Recognizing that most of the analysis about duty to notify flows one way or another from RPC 1.4 on a lawyer’s obligations to communicate with clients, the committee reminds that, if a client asks about their file in the wake of such an event, the lawyer’s ethical duty to respond to reasonable requests for information would entail promptly responding to the client to let them know of the inadvertent destruction even of such documents of “relatively little importance” as Category 3 materials.

As to Category 2 documents, Formal Opinion 2015-6 rightly recognizes that the blueprint provided in the 2010 opinion about post-representation destruction cannot be readily applied to a situation where such materials are destroyed during an ongoing client engagement.  Thus, if the client’s matter is still active, then the lawyer is going to have a duty to notify the client about destruction of Category 2 documents.  If the accident or disaster only has hit files for a closed matter, then the rubric from the 2010 opinion works and the lawyer has to undertake a determination about whether the “client foreseeably may need” the documents to decide what to do.  The committee, smartly, also makes the practical and prudent point that the safest route on Category 2 documents will always be to go ahead and notify the client of the inadvertent destruction.

Turning to any duty to reconstruct the file, the committee explains that the lawyer will have to first assess whether any of the files destroyed are still “needed to continue providing competent and diligent representation on open matters” and, if the answer is yes, then “the lawyer must make reasonable efforts to reconstruct the destroyed file.”  By, for example, trying to get copies of documents that would have been in the file from the court, co-counsel, opposing counsel, or the client herself, or some combination of those or similar sources.  Formal Opinion 2015-6 then indicates that when the duty to attempt to reconstruct has been triggered, a lawyer who is unable to do so sufficiently to be able to continue to provide competent and diligent representation would be obligated to notify the client of that inability.

If I can quibble with the committee in just one respect it would be that this would have been a good place to expand upon the relationship between notifying about the destruction and performing the reconstruction and the timing of those events.  For example, if the lawyer reasonably believes that they can almost fully reconstruct the file, can they get that accomplished first, quickly, and then provide notice to the client simultaneously of the prior destruction and the believed-to-be-successful reconstruction?  Or does the committee mean to say truly that the timing is such that the lawyer must inform of the destruction before the lawyer will know of any chance of success in reconstructing to be able to continue the representation appropriately?

Finally, Formal Opinion 2015-6 correctly answers the question about a lawyer’s duty to notify clients of the potential compromise of confidential information in the wake of such an accident or disaster.  Returning again to the Brooklyn warehouse fire example, and the clear visual impression of various papers scattered about around the fire scene such a scenario provides, the committee explains that when the duty to notify of destruction would arise so too will the lawyer face a duty to notify clients that confidential information may have been compromised.  If I am permitted to quibble with just two items, this would be the second one.  The committee appears to imply that the duty to notify of compromise confidential information wouldn’t apply to Category 3 documents, but I’m dubious that any differentiation on categories would be as justifiable on the question of potential exposure of confidential information to third parties.

While addressing only accidents and disasters, it is not difficult to see how this opinion’s analysis of the duty to notify of compromise of confidentiality would be the same if the question instead was one of digital disaster — an electronic data breach at a law firm.  And, along those lines, another question that the committee leaves unaddressed as beyond the scope of its current effort — “the extent of a lawyer’s duty to take affirmative steps to protect confidential information in anticipation of a disaster” — is even more challenging to contemplate as to data breach.  Formal Opinion 2015-6 at least hints in fn 3 at possible ways to anticipate and protect against physical destruction of file through accidents or disasters – off-site storage of backup tapes and cloud storage.  The answer to what will come to be expected of lawyers and law firms in trying to anticipate and protect against data breaches will, no doubt, be addressed by this or another committee (or twelve).

Hopefully, a consensus will develop around an acknowledgment that while it is generally quite true that an ounce of prevention is worth a pound of cure, it is equally if not more correct that:

Sometimes there is nothing you can do. – Neil Gaiman, Neverwhere

 

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.

 

 

Another wrinkle from that malpractice insurance coverage opinion

Earlier this week, I wrote about the scariness that can come with understanding another way that lawyers’ fates are tied together when they practice law in the same firm: one lawyer failing to disclose a known problem on a malpractice renewal application could lead to loss of coverage for all of the other lawyers in the firm.

Another interesting aspect of the Illinois State Bar Ass’n Mutual Ins. Co. opinion is how it sheds light on the potential futility of enacting an ethics rule (or other court rule) requiring lawyers to disclose whether they have malpractice insurance.  According to the chart maintained by the ABA, 7 states mandate lawyers make a disclosure directly to the client regarding whether they have malpractice insurance.  If such a requirement is ever to be imposed, that certainly seems like the preferred option, even if it overlooks that lawyers already are required by RPC 1.4 to communicate important information to clients regarding their matters and a number of different ethics rules (RPC 7.1, RPC 8.4(c)) would be violated by a lawyer not truthfully answering a question from a client or prospective client about whether the lawyer has coverage.  The ABA chart reflects, however, another 17 states mandate that lawyers disclose whether they have coverage or not on their annual registration statement (and most of those states also require the information from the annual registration statement be made available to the public).

Illinois is one of the 17 states requiring disclosure on an annual registration statement and that makes the information available for review on a public website.  Among the concerns expressed by the dissent over permitting ISBA Mutual to rescind the Tuzzolino & Terpinas firm’s policy is that not only would the “innocent” lawyer in this situation have been acting in reliance upon the idea that he had coverage and disclosed the existence of such coverage to comply with his obligations under the rules, but the clients of his law firm could have relied upon the regulatory regime in place — and the fact that the public information would indicate he had coverage — to mean that they were dealing with a lawyer with malpractice insurance.   After the rescission of the policy based on one lawyers’ lack of disclosure, however, the clients were not dealing with lawyers who had coverage after all.

Tennessee has not, to date, ever gotten very far down a path toward serious consideration of adopting such a disclosure requirement.  Telling consumers that they can go look on a state supreme court website to know if the lawyer they are dealing with has insurance coverage provides information only about a fixed point in time, of course.  There are a number of principled grounds for opposition to such efforts.   One is that since most malpractice policies are “claims-made” policies rather than occurrence policies making the existence of a policy less important for a client then knowledge of whether a notice of claim was timely provided.  Another involves the various ethics rules a lawyer would violate if a client, who cared about the topic enough to ask, was lied to by the lawyer.  It seems to me that the ISBA Mut. Ins. Co. case demonstrates another example of a way in which rules that require disclosure of coverage on an annual registration statement and publication of that information publicly could, despite the best of intentions, end up misleading consumers of legal services.