Confidentiality and credit cards

I have written here in the past about a number of ways that a lawyer’s obligation of confidentiality imposes limits on their ability to do certain things that others can do and even as to subject matter where it seems highly unfair. Most frequently, this issue arises when talking with lawyers about what they can and cannot do when a client or former client takes to social media to criticize the lawyer’s work.

The problem for lawyers is that the attorney ethics rules do not treat a public disclosure by a client or former client as a waiver of the ethical obligation of confidentiality in the same way that other law treats such disclosures as waiving attorney-client privilege. Thus, while RPC 1.6 offers some exceptions that allow lawyers to disclose otherwise confidential information, those exceptions are cabined.

Because online dustups on social media are not “proceedings” and because even though they can be characterized as a “controversy” responding to criticism online does not involve establishing a “claim or defense” in the way the rule contemplates, most jurisdictions and ethics authorities agree that a lawyer cannot rely upon RPC 1.6(b) to disclose details about the representation of a client or former client in order to try to refute, for example, an unfair negative review online.

Another area, not as often discussed here or most other places, where this “unfairness” of RPC 1.6 can rear its head is for lawyers who accept credit card payments from clients. This unfairness also only comes to pass if the lawyer feels like they are being hard done by a dissatisfied client but can have very harsh results if the lawyer hasn’t addressed the issue in their engagement contract with the client.

If a client or former client initiates a chargeback with the credit card company to contest the lawyer’s ability to retain the funds previously paid, RPC 1.6 will also tie the lawyer’s hands in trying to provide and produce information that the credit card company will ask for in that process and can result in the lawyer getting shafted on payment and having to then decide whether to sue the client for the fees.

This will be the case because a dispute with a credit card company is also not a “proceeding” as contemplated by RPC 1.6(b) and, although certainly a controversy between the lawyer and the client, most authorities will also conclude that responding to inquiries from a credit card company does not involve establishing “a claim or defense” as the rule envisions.

So, what is a lawyer to do? Well, the ease and convenience of allowing clients to pay for attorney fees using credit cards is obviously a huge net-positive for many lawyers. So simply refusing to accept such payments is not a realistic answer. Lawyers also cannot try to get their clients to contractually agree that they will not dispute payment or never initiate a chargeback procedure. Any such provision would be likely to be viewed as draconian and unenforceable. But what lawyers can do is include a provision in any engagement contract that makes clear that in exchange for the lawyer agreeing to accept payment for services by credit card the client provides consent, in advance, that in the event of any dispute about that payment or the initiation of any chargeback efforts the lawyer may disclose to the credit card company whatever information they reasonably believe is necessary to demonstrate the validity of the services provided.

Another ethics opinion that wouldn’t be required if all lawyers were good (or at least chaotic-neutral) lawyers.

There has been A LOT of stuff going on this week in the world of legal ethics. I will refrain from dedicating an entire post to try to tie this plea I made in a post back in December 2020 to these two developments, here and here.

Instead, I want to talk a little bit about a recent ethics opinion that comes out of Washington state and that address an unfortunately recurring issue that has unfortunately been made the subject matter of multiple ethics opinions which unfortunately also conflict with each other.

The Washington State Bar Association has issued Advisory Opinion 202201 that addresses a question regarding whether a lawyer’s communication with a represented opposing party violated RPC 4.2 when the communication occurs through using “reply all” on an email thread where the opposing party’s lawyer cc’d their client on a communication to the lawyer.

The opinion gets to, what I continue to believe is the absolute correct answer, it depends. But the factors on which it depends help demonstrate why this is not something lawyers should be doing unless they have reached a prior understanding with the opposing lawyer in question. The opinion offers helpful bullet points listing these kinds of factors, including the prior course of conduct of the parties and counsel and the nature and subject matter of the communication at issue.

The conclusion of the opinion essentially involves offering “best practice” guidance:

To avoid a possible incorrect assumption of implied consent, the prudent practice is for all counsel involved in a matter to establish at the outset a procedure for determining under what circumstances the lawyers involved may “reply all” when a represented party is copied on an electronic communication.

What the opinion does not address is the flip side of the situation – does the first lawyer who decides to loop his client directly into a conversation by cc’ing them on an email to opposing counsel run the risk of an ethical violation in doing so. Given the trend in various ethics opinions addressing the obligations of the receiving lawyer, there seems to be a good measure of safety for the sending lawyer, but I continue to believe that there is almost never a good reason outside of very limited circumstances for proceeding in this fashion. Of course, not all jurisdictions take the same view as Washington. Last year, New Jersey issued an ethics opinion on the topic that concludes that implied consent is always present when the sending lawyer includes their client as a cc in the communication with the other lawyer.

Now transactional lawyers may be screaming at me here for my naivete, but, unless you are truly trying to mimic a situation where lawyers and clients are all sitting around the table and having a discussion, I don’t think including all of those parties on an email thread makes sense. (And, it’s 2022, if that’s what you are trying to do then use some other communications platform at this point whether that be Zoom or WebEx or Teams or something else.)

Otherwise, whatever you want your client to see, just forward the email thread to them separately. Doing anything else, absent a clear agreement among the counsel involved about whether communication is permitted is simply an unnecessary risk to take.

And, in reference to the title of this post, the unfortunate reasons opinions like this continue to be necessary in no small part comes from the fact that there are lawyers out there that will purposefully cc a client on a communication in hopes of trapping the other lawyer into allegedly unethical conduct by replying without removing the client from the thread and, likewise, there are lawyers out there that will take advantage of a reply all with the other lawyer’s client to talk about subject matter other than what the thread involves.

Don’t be those lawyers.

“It’s Groundhog Day… again.”

This past week included one of our nation’s most heralded fake holidays. Groundhog’s Day. Silly occasion, but still a really good movie, of course. But, playing off of the theme of repeating events and disappointing outcomes, we return to the oft-discussed topic of lawyers trying to respond to online criticism.

We’ve covered in the past in these parts that the current version of the ethics rules, in any jurisdiction using the ABA Model approach to RPC 1.6, prohibits lawyers from responding to online criticism posted by clients or former clients, even if the criticism is off base. We’ve also talked about the fact that if the criticism comes from someone who wasn’t actually a client, then the ethics rules do not prohibit a lawyer from going online to respond. We’ve also talked about how if the person is a client or former client and they lie about you online, that you could try to sue them for defamation. As to all of those approaches, we’ve also stressed that there are practical problems with doing some of the things that you could do, including The Streisand Effect.

What we’ve never directly addressed is the “could” or “should” of deciding to respond to online criticism from someone who was never a client or nonclient by deciding to file a lawsuit for defamation. This was an approach that an Illinois lawyer tried but was unsuccessful at the trial court level, having the claims dismissed as not actionable. Within the past week or so, the Seventh Circuit has now affirmed that dismissal. You can read the ABA Journal article about the ruling here. If you have more time to delve into the matter, you can read the full Seventh Circuit opinion here.

Interestingly, the underlying story is both one of a pretty unsympathetic character (the lawyer) and a story in which the lawyer stepped into puddles of his own making both in how he responded to initial online criticism and then in attempting to turn his situation into a federal case.

This lawyer’s tale of Internet woe starts, as many do, with a round of activity on Facebook. In response to the tantalizing “What’s on your mind, David?” that Facebook lays out to prompt users to post, this lawyer wrote: “Did Trump put Ukraine on the travel ban list?! We just cannot find a cleaning lady!” This initial statement was met with a good amount of negative feedback and criticism but limited to comments and replies in the Facebook thread itself.

The lawyer, however, proceeded to — in the words of the Seventh Circuit “double down” by responding in his comments thread with:

My business with Ukrainians will be done when they stop declaring bankruptcies. If this offends
your national pride, I suggest you look for underlying causes of why 9 out of 10 cleaning ladies we’ve had were Ukrainian and 9 out of 10 of my law school professors were not. Until then, if you don’t have a recommendation for a cleaning lady, feel free to take your comments somewhere else.

Now, the problems with this approach are varied, but they include the invitation to folks to branch out with where they provided their feedback. And branch out they did. The lawsuit explains that the people he offended with his anti-Ukrainian sentiments proceeded to the lawyer’s law firm Facebook page, his Google listing, and to Yelp to offer their opinions. The various statements ran the gamut from just 1-star reviews without comment, comments about the lawyer generally as a person, and some comments that negatively characterized his ability to be a lawyer since he was seen as being inappropriately prejudiced.

The lawyer filed a lawsuit in federal court for defamation against these posters and claiming a civil conspiracy. The opinion lays out examples of posts of the vaguer variety and those of a more specific variety, but, importantly, it does not appear that anyone he sued posted a statement that was clearly capable of being read as falsely indicating that the person had ever hired the lawyer and was commenting about something specific. Just about the closest any statements came to that was someone posting a 1-star review with the only feedback indicated being “awful customer service.” The courts at both levels were entirely unconvinced that anything that written online was something other than an unactionable expression of opinion.

Perhaps, best summarized in terms of the view of that particular court, and as food for thought for attorneys anytime they contemplate suing in similar circumstances, is this excerpt:

More fundamental, we must consider the particular social context of these online reviews and what it may signal about their contents. The defendants posted their reviews on Freydin’s Law Office’s Facebook, Yelp, and Google pages, which invite unfiltered comments. We trust that readers of online reviews are skeptical about what they read, both positive and negative. But it is enough in this case that these short reviews did not purport to provide any factual foundation and were clearly meant to express the opinions of the defendants in response to Freydin’s insults to Ukrainians generally.

Illinois, apparently, does not have any anti-SLAPP mechanism’s, or, if it does, they were not taken advantage of here, but in any state that does, this kind of lawsuit by a lawyer would likely face that additional hurdle as well.

10 Things I Thought I Would Write About This July, But Didn’t.

So, anyone I might have hooked into caring about this site in May and June 2021 likely stopped checking for July content 1 or 2 weeks ago. Longer-term, repeatedly neglected, readers are likely still hanging in there (and forever earning my esteem).

There have been a bunch of times that I thought I was going to bust something out on here this month, but life, and work, and doom-scrolling, and an honest-to-goodness vacation have gotten in the way. On the doom-scrolling front, we’re back to having to do a bunch of that because the people out there with access to the vaccine but who are refusing to take it are really doing all they can to ruin this for everyone else. In states like Tennessee, the problematic Republicans that run things are actively trying to stop young teenagers from getting this vaccine by going so far as to try to stop the dissemination of information to teenagers about any vaccines of any sort. Sigh.

So, this won’t quite make up for the dry spell, but here are quick entries on the 10 things I thought I would write about this July, but didn’t.

(1) The Florida Supreme Court earlier this year did some rule-making that has resulted in Florida lawyers being unable to get CLE credit for any CLE sponsored by the ABA. Sounds absurd, right? It is. I am very proud to say that, among the many public comments filed by lawyers and groups of lawyers attempting to explain to the Florida Supreme Court why it should rescind its new rule, is one from the Association of Professional Responsibility Lawyers. . You can read that comment here. If you are interested in reading all of the comments – which are overwhelmingly opposed to the Court’s actions, you can get access to them here.

(2) Speaking of Florida, backwards as it can be in a number of respects (looking mostly at you Governor DeSantis), it has dipped its toe in the water of joining the ranks of Utah and Arizona in potentially bringing about drastic change in the legal landscape by allowing for nonlawyer ownership of providers of legal services to operate through a “sandbox” approach. You can read more here.

(3) Speaking of Utah and Arizona, we have statistics about the kinds of entities that have been approved in those states for performing legal services either through Utah’s sandbox or just generally in Arizona. A very good article providing an overview of the happenings in those two states can be found here.

(4) Staying out West, but angling a bit northward, the Oregon Supreme Court has issued a good new opinion on whether a lawyer can rely upon RPC 1.6 to attempt to disclose client confidential information to respond to online criticism. Spoiler alert: still a no-no.

(5) One of the things that we’ve discussed here before that a lawyer can do in response to unfair online criticism is to file a lawsuit about it. I’ve pretty steadfastly made the point that doing so likely will only make things worse. Speaking of making things worse by filing a lawsuit because you are mad about how you are being treated online, the twice-impeached former President of the United States filed a class action lawsuit against each of Facebook and Twitter claiming that their decision to ban him from their platforms was unconstitutional. Remarkably, Trump found even more lawyers to be willing to debase themselves and threaten any reputation that might have otherwise established to make highly frivolous arguments in a lawsuit – this time trying to argue that Facebook and Twitter are essentially the government and should have to comply with the First Amendment.

(6) Speaking of lawyers debasing themselves for Donald Trump of all people (and that’s still at many times the most staggering part of all of this, him? This is the guy that so many people are so willing to burn it all down for?), a raft full of lawyers involved in the “Kraken” lawsuits in Michigan had their sanctions evidentiary hearing and, based on all the reports you can go read, it went about as well for them as everything else has gone in the Kraken lawsuit. Then, of all things, one of the most prominent of the lawyers in the cross-hairs went and posted a portion of the video pf the proceedings in violation of the court’s explicit order not to do so. This has led to a follow-up show cause order regarding contempt. Most recently, the judge issued an order declining to find contempt but asking for an explanation for why discipline should not be imposed. I’ve written in the past about why we shouldn’t just be okay with the notion that courts are saying these public proceedings cannot be taped and re-broadcast but there’s a time and a place for most things. When you are already staring down the barrel of the kind of sanctions these lawyers might get, that certainly wasn’t the time.

(7) Sticking to stories with a political twist, President Biden has signed an omnibus Executive Order that attempts to do an awful lot of things.. One of the things it does is impose some prohibitions on requiring employees to sign non-compete agreements. I was among several lawyers quoted in a Law360 Pulse story about how that portion of the EO could impact the legal profession. Here is a link to the article itself, but you have to be a subscriber to see it. For the rest of you, I’ll just say that, for my part, I said the following:

The direct and immediate impact seems to be minimal because, as you already know, lawyers are ethically restricted from agreeing to noncompetes, and even prohibited from trying to ask a lawyer-hire to agree to them.

When President Biden says something like “the era of it being difficult for someone licensed to do something in one state to get a license in another state needs to come to an end,” why shouldn’t that apply to lawyers too? There are significant discussions going on in the profession about how to better connect willing lawyers and interested potential clients when consumers are going unrepresented and lawyers are out there who don’t have enough work.

(8) A month or two ago, I wrote a bit on how New York and D.C. were putting out some proposed revised approaches to a rule that would help address harassment and discrimination by lawyers, but that are trying to be designed to avoid the “alleged” problems of ABA Model Rule 8.4(g). I neglected at the time to say anything about the fact that Connecticut was working on something in that regard as well. In June 2021, the Connecticut Supreme Court has adopted the proposed revision, and a new Rule 8.4(7) will go into effect in the Nutmeg State on January 1, 2022. You can check out the full language of the rule here.

(9) Big news was made recently in Texas with a decision from the Fifth Circuit Court of Appeals finding that mandatory bar membership in Texas was unconstitutional, in the current form of the Texas Bar, because of how the Texas Bar uses some of the dues of members to undertake political activity. I’ve written a few times over the years about the important distinctions that exist between states with unified bars, where membership is mandatory, and states where the bar association is just a voluntary membership organization. More recently, the Sixth Circuit wasn’t as friendly to an Ohio lawyer’s attempt to challenge mandatory membership in the Ohio bar. An ultimate ruling on the issue from the U.S. Supreme Court seems inevitable at this point. Given the current make-up of the Court, the era of mandatory bar associations is likely coming to an end.

(10) Remember three paragraphs ago when I said there was a time and a place for most things? When it comes to lawyers and using marijuana, the New York State Bar Association has released a new opinion that says the time is now and the place is New York.

So, those were 10 things I thought I was going to write about in July but I didn’t. Or did I?

(N.B. I will return before the month ends, and I will write a little bit more about that last item.)

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

Lawyers and publicity. Two related but unrelated stories.

This space has focused on a number of occasions on the difficulties for lawyers in dealing with certain forms of negative publicity. I won’t link to all of those past stories for a variety of reasons. (If you are stuck at home both because of the pandemic and winter weather and are looking for things to read, you can find them by searching for the “public relations” tag on this blog.) I will, however and for obvious reasons, offer a link to an article I had the opportunity to provide a number of quotes for that discusses the most recent ABA Ethics Opinion about the difficulties for lawyers in responding to a negative online review posted by a client. You can go read that piece here.

But lawyers can also be the harbingers of their own negative publicity online. The simplest way they can do that can also involve violating their obligations of confidentiality to their clients or former clients.

The opportunity to segue from the little bit of shameless self-publicity above to what I’m about to write below falls short of true hubris, I think, but also feels salient because one of the distinct memories I have of my interview with the reporter for the story linked above was demurring on her inquiries for me to offer an anecdote of a story where I actually helped a lawyer try to deal with negative online publicity because I couldn’t do so without violating my obligations of confidentiality.

An extremely high-profile version of one or more lawyers dunking on themselves occurred this week when the lawyers that made up the “team” that represented Donald Trump in his impeachment trial before the United States Senate appear to have cooperated with prominent peddlers of village gossip at The New York Times by speaking at length about the dysfunction among the attorneys for the former President.

The story certainly makes for a fascinating read and you can digest it here, but is a story that should never have been available because the lawyer who is repeatedly quoted in the piece, Schoen, had no business talking to the media about his representation of his client. (Lest it be unclear, he also would have had no business speaking to the media about any of his co-counsel’s representation of the client if he had left it at that because that still would have been information protected from disclosure by RPC 1.6.)

Now, I’m assuming that Schoen didn’t have permission from the client to have done so, but I feel I’m on pretty safe ground about that assumption.

Ironically, the only lawyer involved in the Senate representation that actually appears to respect his obligations of confidentiality is the lawyer who provided the worst substantive representation during the actual proceedings, Castor.

There are, of course, lots of side lessons that could be learned from all of the machinations involved and described in the article. But let’s just stick with a lesson that can have universal applicability.

RPC 1.6 – nearly everywhere – imposes an obligation of confidentiality on a lawyer as to any information related to the representation of a client. A lawyer can disclose such information if the client gives consent or if doing so is impliedly authorized in order to carry out the representation. The rule does not have any clear provision in it that would waive its requirements for publicly disclosed information. Rather, its commentary guidance indicates that it still applies even to matters of public record. Discussing internal quarrels after a representation is over will never fit the implied authorization requirement. Also, the same analysis that explains why none of the discretionary exceptions work to allow a lawyer to respond to a negative client review online applies pretty squarely to explain why “unhappy with public perception of my competence” isn’t a sufficient justification to speak publicly about work done for a client.

ABA SCEPR Increases Lifetime Batting Average.

Look at me with the super seasonally timely sports reference. Baseball. In January.

I have written on quite a few occasions in the past about the perils for lawyers in responding to criticism posted about them online. Well, the ABA has issued its latest ethics opinion to address the same topic. Behold ABA Formal Ethics Opinion 496 396 – Responding to Online Criticism.

Let’s have a double-header of untimely cultural references.

Issued January 13, 2021, ABA Formal Ethics Opinion 496 is the hottest ABA ethics opinion regarding online criticism ever.

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This opinion has everything. Sound rule interpretation. Meaty footnotes chock-full of research material for disciplinary cases and state ethics opinions. Acknowledgement of the important role that Barbara Streisand plays on this topic. Good practical guidance for what a lawyer might do.

Seriously, go read it.

The only quibble I have with it is its initial conclusion that online criticism alone from a client does not qualify as a “controversy” under Model Rule 1.6(b)(5). I think that is wrong, but the opinion goes on to even make my quibble pointless because they acknowledge that even if they are wrong about that, the lawyer wouldn’t need to respond online in kind to “establish a claim or defense on behalf of the lawyer” with respect to the controversy. I’d prefer that the opinion just rely upon that point rather than arguing that an online dust-up could not constitute a controversy.

To me, the point that is unassailable is that whether or not it is a “controversy” isn’t dispositive, the issue is whether an online response would be necessary to establish a claim or defense. Given how the internet works currently, the answer to that question with respect to the Model Rule, and any state that has adopted the same language, is obviously “no.”

You can access the full opinion here.

(Edited to fix my embarrassing mistake on the opinion number.)

Terror in Tennessee.

So somehow, given the time of year and the absolute flood of horrific news we all get exposed to on a daily basis, you might not have heard the news that a suicide bomber detonated a large bomb in the middle of downtown Nashville, Tennessee on Christmas morning.

The bomb detonated from the inside of an RV killing the suicide bomber, hurting 3 others, and doing significant property and infrastructure damage. My firm’s Nashville office was located several blocks away but was fortunate to sustain no damage.

As the story has developed, there is now an interesting legal ethics angle (or 2) to the events. Here’s a link to The USA Today article should you want to read it first: Nashville police were warned of Christmas bomber in 2019, report shows (usatoday.com)

As this latest story indicates, the suicide bomber’s girlfriend provided some information to the Nashville police more than a year before the incident that can be viewed as cause for concern. According to the media report, and apparently the accompanying police report, present and involved in that conversation was a Nashville attorney who held himself out to law enforcement as being a lawyer for both the girlfriend and the man about whom she was making a report to law enforcement.

That doesn’t seem at all like the kind of joint representation that the lawyer could have believed — at that point — was a conflict that could still be waivable/consentable. If the news report is to be believed, the purpose of the interaction with law enforcement was to get the police to take several firearms away from the residence because the girlfriend was afraid of her boyfriend having access to them. The reporting indicates that the attorney also said of the boyfriend, Warner, that he “knows what he is doing and is capable of making a bomb.” That disclosure is itself problematic unless the lawyer either had Warner’s consent or could otherwise justify it under RPC 1.6 (about which more later) but, if nothing else, it seems pretty clearly to signify a very strong divergence of interests between the two common clients.

The story goes on to then reveal that the lawyer declined a request from law enforcement to allow a search of Warner’s RV indicating his client would not consent and doesn’t explain at all whether law enforcement tried to get a warrant for such a search.

The other ethics issue that this story prompts for discussion to one degree or another is the role of lawyers in circumstances where they are legitimately worried that their client may be about to harm themselves or others. I have no idea if, at the time of the events in the story (back in August 2019), the lawyer could be held to a standard of having a sufficient degree of knowledge of such an outcome, but it could turn out to be an interesting angle on this story if the only justification for feeling like that kind of disclosure could be made in the first place about the client was a concern for safety.

For those of you who are lawyers reading this in states that have an ABA Model Rule version of RPC 1.6, it is worth your while to know that Tennessee deviates and goes further. Our rules require a lawyer to reveal information – despite the ethical duty of confidentiality – “to the extent the lawyer reasonably believes disclosure is necessary: (1) to prevent reasonably certain death or substantial bodily harm.” Tenn. Sup. Ct. R. 8, RPC 1.6(c).

That’s all from me in the absolute horror show of the year that was 2020. I hope to see you all in 2021, and I hope that we all end up together in a better place during the coming year.

Panzerotti ≠ calzone : NY confidentiality ≠ TN confidentiality

It’s been a while. I know. But I saw a blurb about a story that caught my attention in the before-times and then a second story about the same case more recently that hooked me enough to write about.

Primarily, it hooked me because it provides a compelling opportunity to discuss two important points about legal ethics at the same time. First, the ethical obligations lawyers owe to former clients go beyond simply restricting certain future representations and include restrictions on using the client’s information. Second, even a clear violation of the ethics rules does not automatically translate to a viable cause of action against an attorney.

As we’ll see at the end, it is a story that because it happened in New York might just be a bad look for the lawyer involved when it would be a lot more damning if it had happened here in Tennessee.

The initial story that caught my eye was this one in Law360 where the proprietors of a panzerotti restaurant in Brooklyn sued an attorney saying he had stolen their idea for such a restaurant and the logo they used. The more recent story that lured me, also from Law360, is that the lawyer has now filed a motion to dismiss that suit, in part, arguing that the USPTO had rejected the restaurant’s trademark claims.

You can go read the amended complaint in the lawsuit in question for yourself:

But from the “former client” side of the story, this is how they tell it. Its principals retained the lawyer, Cea, to help with documents to be filed in connection with the seeking on E-2 visa application and that, as part of that process, they had to turn over their confidential business plan for the proposed restaurant. After they did that, they say they also retained Cea to represent the business regarding lease negotiations and obtaining a liquor license for their restaurant.

The lawsuit then claims that after their restaurant opened, Cea and a partner opened a competing restaurant, but in Manhattan, using the improperly obtained confidential business plan information of the former client. The lawsuit also claims that the competing restaurant’s logo infringes upon their logo in violation of The Lanham Act.

Now, I’m no trademark lawyer but my unsophisticated eyeball comparison of the two logos doesn’t impress me at all. The rest of the complaint, though, when it focuses upon the strong similarities on how the insides of the restaurants are laid out, and the kinds of equipment used, and even approaches to menu items is a bit more compelling. The complaint also alleges that the lawyer even hired the same architect that the former client used for its restaurant for the competing restaurant. Notably, the complaint also alleges that when first contacted after the opening of the competing restaurant, the lawyer claimed that his only involvement was in helping the second restaurant with its lease.

When first digging into this story, I was overwhelmed by the audacity of any lawyer thinking they could ever do something like this without running afoul of RPC 1.9(c)’s restrictions on adversely using information related to the representation of a former client.

In Tennessee, that rule reads as follows:

A lawyer who has formerly represented a client in a matter … shall not thereafter reveal information relating to the representation or use such information to the disadvantage of the former client unless (1) the former client gives consent, confirmed in writing, or (2) these Rules would permit or require the lawyer to do so with respect to a client; or (3) the information has become generally known.

While proving a successful cause of action would be a different kettle of fish for reasons discussed below, because Tennessee (like most jurisdictions) treats all information related to the representation as confidential, under Tennessee’s rules, someone doing what Cea was alleged to have done would have real problems defending a disciplinary complaint. Perhaps, as to some of the allegations, Cea could engineer a defense based on all of the public facing aspects of the former client’s restaurant became “generally known” once they opened for business.

Even in Tennessee though, violations of RPC 1.9(c) wouldn’t automatically translate to a viable civil cause of action. (The actual lawsuit asserts a breach of fiduciary duty claim and that would likely be what someone would hazard as a claim in Tennessee.) That is because we, like most states, clarify in the Scope section of our rules that while ethics rules exist as a framework for imposing discipline, they are not intended or designed to provide a basis for an independent cause of action.

[21] Violation of a Rule should not itself give rise to a cause of action against a lawyer nor should it create any presumption in such a case that a legal duty has been breached. In addition, violation of a Rule does not necessarily warrant any other nondisciplinary remedy, such as disqualification of a lawyer in pending litigation. The Rules are designed to provide guidance to lawyers and to provide a structure for regulating conduct through disciplinary agencies. They are not designed to be a basis for civil liability….

We also have a final sentence in that part of the Scope that tries to clarify that there are some situations in which the violation of a rule can be relevant to determining whether a breach of the standard of care also occurred but since New York doesn’t I’ll leave that for another day.

New York’s approach to client confidentiality though is different and, as a result, even though its RPC 1.9(c) reads largely similar to Tennessee’s on adverse use of information its reduced scope of confidentiality under RPC 1.6 really changes the landscape.

New York’s RPC 1.6 limits confidential treatment to “information gained during or relating to the representation of a client, whatever its source, that is (a) protected by the attorney-client privilege, (b) likely to be embarrassing or detrimental to the client if disclosed, or (c) information that the client has requested be kept confidential.”

That distinction and what it means for a lawyer appears to be salient to Cea’s situation. Cea’s motion to dismiss, while primarily focused on an attempt to enforce an alleged settlement agreement as well as other procedural arguments, does poke at the margins of whether he was ever asked to treat any of the information he learned from any client as confidential. He also appears to take issue even with the idea that he ever had any fiduciary relationship with anyone who is a party to this litigation. You can look at the memorandum of law supporting that motion to dismiss if you are so inclined.

There will be content.

So, it is March 20, 2020. We don’t know much about much in terms of what comes next. Stress and anxiety are most folks constant companions at the moment I’m certain. (And I bet a lot of you weren’t expecting the need to tech competence under the ethics rules to come at you quite this fast.) Whether or not there will be things to read here probably matters almost not at all to most people. Nevertheless, for better or worse, as long as I’ve got access to the internet I will plan to continue to post contents on the same weird and unsettling sort of “schedule.” Today’s another one of those days.

Today’s post is an opportunity to talk a bit about the dark side of litigation funding. Now, do not get me wrong, I’m generally “pro” when it comes to the topic of litigation funding. In fact, I had the opportunity to be a lawyer for one of the early litigation funding companies that operated in a niche, high-end space. Even then, one of the consistent issues for a company doing things the right way was the stigma of litigation funders as being companies that would take financial advantage of people in need.

Today’s story isn’t exactly about taking advantage of the kind of person in financial need you might think of, but it certainly is a story that sheds some light on unsavory aspects of an industry that speculates on the outcome of litigation.

Today’s story though also is something of a revisiting of the travails of a prominent California law firm that I’ve written about a few times in the past. Those posts had focused on a very contentious set of litigation matters between the firm and one of its former partners that effectively boiled down to a “he said, it said” sort of situation where the “he” was saying that the “it” was engaged in financial fraud and fired him when he raised questions about it and the “it” said that “he” was a sexual harasser. (If you aren’t familiar with that post, you can catch up here.)

It’s been a very bad couple of weeks for just about everyone in the United States. It’s been an even worse couple of weeks for John Pierce, the founder of the Pierce Bainbridge law firm. It has been such a bad couple of weeks that it is hard for an objective viewer not to think that the previously-referenced “he” seems to have a leg-up in proving his side of events against the “it” in the “he said, it said” landscape.

Before elaborating on the litigation funding issue, just a short recap of the recent chronology of events for the founder of this particular law firm.

And, about that deal, that is the deal with Parvati Capital that was front and center in the allegations in the “he said, it said” litigation. As a result of the Philadelphia suit, the details of that arrangement have come out and involve a highly -unusual approach to litigation funding where the law firm was given the sole responsibility for placing a value on their cases as part of agreeing to a 50-50 split with the litigation funder on the fees obtained in such future cases.

If you have access to Law360, you can read a pretty good article about that piece of the puzzle, one in which a former law partner of mine (who I practiced with back when I had the chance to represent a good litigation funding company many years ago) speaks on the ethical problems with the Parvati Capital deal. (Spoiler: pretty squarely an RPC 5.4 problem since it quacks very much like a fee-sharing duck.)

There are lots of aspects to dealing with litigation funding arrangements that can raise difficult ethics issues. But there are a variety of ways to obtain litigation funding within the ethics rules. Interestingly enough, while the Parvati arrangement seems very problematic as to some issues, and while having the lawyer assign a value to cases is bad news for a variety of reasons, such an approach does avoid altogether problems with navigating how to share documents and other details with a litigation funder for purposes of evaluating a case while doing what can be done to comply with RPC 1.6 and seek to protect privilege and work product.