The ABA comes through with another quality ethics opinion.

So, nearly everything is awful these days. Finding something interesting enough to avoid highlighting the awfulness around us is not altogether easy. This is pretty much too traumatic and damning to write about. Dwelling on this would just be petty at this point.

Coming through as a light at the end of the tunnel today is ABA Formal Ethics Opinion 494 released by the ABA Standing Committee on Ethics and Professional Responsibility addressing a decent topic.

The topic – what are an attorney’s obligations that can arise from personal relationships with opposing counsel? Patterned a bit, as it explicitly acknowledges, on a recent Formal Ethics Opinion regarding judicial personal relationships with lawyers (Formal Opinion 488), Formal Opinion 494 hits all of the correct notes for dealing with this issue.

Most importantly, it appropriately centers the analysis where it fits in the Model Rules: it is an issue involving RPC 1.7(a)(2) – material limitation conflicts arising from a lawyer’s own personal interests. The opinion stresses that ordinarily such conflicts are not imputed to others at the firm. And it lays out reasonable categories to help guide lawyers in their thinking about these issues.

It also makes the point that while, most of the time, the obligation on the lawyer is disclosure to the client and moving forward only if the client is willing to waive the conflict, there can be situations where the conflict is, itself, not waivable.

The opinion posits a relationship between two lawyers that is so close that the lawyer could never get comfortable filing a well-founded motion for sanctions against the other lawyer on behalf of a client as an example of a situation where the conflict may not even be waivable.

And that entire genre of thought has, over the years, been very helpful to me in talking lawyers through situations, both in their real practice, and just as an educational tool at seminars. I, like many other ethics CLE speakers, have used lots of hypotheticals to tease out ethics issues and one that has always been fun to discuss involves something like this scenario:

You are at lunch with opposing counsel on an appellate matter who is a close friend and former colleague. Unprompted, he says, “I bet you can’t wait to see what I’ve got in store for you in my response brief. Well, you’ll have to wait a bit because I’m going to take every day allowed for me before filing so you won’t get your hands on it until a week from tomorrow.” You know, because you just checked it before coming here, that his deadline for his brief is actually tomorrow. What do you say?

This scenario usually prompts a good discussion and there is always someone in the crowd willing to say that they would tell their friend to, at least, go back and double check their math on the deadline. The problem, of course, is that doing that without first talking to your client to get approval would be extremely ethically dicey. The easiest way to drive that point home to lawyers is to ask them if, since the personal relationship with opposing counsel is so important to them, they secured informed consent from their client at the outset with respect to how the lawyer’s personal interest in their close friendship with opposing counsel could materially limit the representation.

Formal Opinion 494 is a well-done explanation of this same concept as well as something that offers a more formal set of guiding principles for determining whether disclosure to a client may be required. The full opinion is worth a read.

Is it perfect? No. It is infuriating in one respect. It is dated July 29, 2020 but was only released today, October 7, 2020.

We are all struggling with linear time these days. The last thing we need is the ABA trying to gaslight us about what month it is. Plus, if they are going to do that, you might as well go full bore and date Formal Opinion 494 as having been issued on the 221st day of March 2020.

Truth is stranger than fiction.

This is not a post about politics in the United States, though the title of the post might make it seem like it could be.

This is instead a post that has to be written because I saw a headline and thought, “well that has to be fodder for a post,” and then it turned out to be a new story about someone I wrote about previously.

(NB: I could have titled this post, “Turns out it was a story about two men named Brady” but that would have been both too deep of a deep cut if you are a new reader, and a pretty unacceptable level of punnery even for a Friday post.)

Having now “cleared my throat” on screen more than sufficiently, I’ll actually deliver some content… this is a quick hit follow up on a story I wrote about back in the before-times… July 2019.

Christopher Brady used to be a Florida lawyer. He got disbarred for some Hollywood (California not Florida) style breaking and entering to steal a computer server from his former law firm.

I got pulled into writing about his story originally because the ABA Journal online ran a headline about how he got disbarred over punctuation which was, at best, partially correct. (He created a new law firm that had the same name as the firm that had terminated him but that added periods to the abbreviation part of the law firm name, so that his former employer was Barak Law Group, PA but his new firm was Barak Law Group, P.A.)

(Barak. Like a misspelled version of the first name of the most-recent prior President of the United States. Barack Obama. You remember him, right. A man who would have never responded to a question about whether there would be a peaceful transition of power in the United States in a chilling fashion.)

So, why am I rehashing this guy’s story? Well, because the ABA Journal got me with a headline again, but this time it appears the headline was 100% accurate:

Disbarred lawyer is convicted even though twin took responsibility for the crime.

I mean, come on. Now that I know this guy had a twin brother, how in the world was that not more integral to the defense of the disciplinary proceedings?

“No, I’m not the guy you see on that video recording tying a rope from that truck to the front door of the Barak Law Group law firm and then moving the truck so that the door rips open. . . No, sir, not me. Also, I’m not one of the two guys on that tape who go inside and take out a safe and a computer server. No, sir. I’ve got a twin. That has to be the work of my twin!”

(The above is, of course, entirely fictional dialogue I just made up out of whole cloth.)

The twin defense didn’t exactly work in the latest criminal case, of course, but still. “Feels” like this should have been mentioned earlier.

The criminal case that captured the ABA Journal’s attention this week involves a crime that has much more of a “Better Call Saul” flavor rather than the “Breaking Bad” style of the truck-door-computer server heist. The criminal act was the faking of a court order impacting child custody for the benefit of the lawyer’s twin brother. The fake order, which indicated it was filed on a day the court clerk’s office wasn’t open for business and which included misspellings such as “habeus” and “honerable,” commanded the twin brother’s ex-wife to deliver custody of the child to the twin brother. According to the news reports of the trial, the former lawyer was convicted for the forgery even though the twin brother testified that he was the one who committed the act.

Interestingly, these events all occurred earlier in time than the server heist. The events leading to this conviction actually did involve the Florida lawyer acting as a lawyer because he was representing his twin brother in the child custody proceedings and was still permitted to practice law during the events. Representing family is often a bad idea for lawyers. The reasons typically are more subtle than the issues presented by the Brady twins.

If you’re looking for photos of the twins (identical not fraternal), rest assured they do have the “Florida man” flavor you might expect and you can get them at this link to some local Florida media.

Ethics opinion about a business conflict goes wrong.

It is very tempting to stay on the topic of bar examinations today, given recent absurdist developments. Arkansas has declared it simply has to have its in-person bar exam in July 2020 because things are likely to get worse as the year goes on. Oklahoma has attempted to reassure everyone about the safety of their in-person planned exam in a message that simultaneously demands that all test takers self-quarantine for 14 days before the exam. Virginia, trying to take the cake apparently, is insisting on a courtroom attire dress code for their in-person exam but is doing away with having to wear a tie as a concession to COVID-19. It is tempting, but it’s all too frustrating, so…

Instead, let’s go back to some of our roots and discuss a recent ethics opinion. It comes out of Ohio and it addresses a conflict issue, but is noteworthy for at least two reasons: (1) it addresses a conflict of interest issue involving representation of a government entity and (2) it sort of addresses something that is more a business conflict issue rather than a true ethical conflict. If you’d rather just read the opinion, you can access it here.

Ohio Board of Professional Conduct Adv. Op. 2020-04 weighs in on whether a firm has a problem representing a group of landowners who are opposing a zoning variance sought by an agency seeking to establish a shelter for domestic violence victims. The agency is not a client of the firm in other matters, but the firm does represent a community mental health board that contracts with the agency. The firm has a one-year contract to perform legal services on an “as needed” basis to the board but has not been asked to do any work related to the zoning variance matter. The firm does know though that the board supports the agency’s effort to obtain the variance and wants the agency to succeed.

Now, most lawyers would hear that scenario and see a likely “business” conflict but no ethical conflict. By business conflict, I simply mean that the firm might not have wanted to take on the landowners because it might displease the institutional client – which might be a better source of ongoing and continued business to the firm.

The Ohio opinion, however, finds a way to treat the situation as an ethical conflict but, at its heart, it does so only by turning the business conflict into a material limitation conflict using the idea of “personal interest” of the lawyer as something that could be expanded to be the firm’s “personal” financial interests.

I am far from convinced that such an analysis actually works.

The opinion spends only a paragraph explaining something that should be obvious – this is not a representation involving direct adversity between firm clients. After that, the opinion lays out its argument for the existence of a “material limitation” problem for the firm. The opinion begins on the right foot by explaining how there does not appear at first to be any conflict because “the law firm’s provision of legal services to the board and its representation of the landowners are wholly separate and unrelated.” The opinion though pivots to a required “closer examination” leading it to the idea that “it would be reasonable to conclude that the board’s overall interest in supporting the agency’s zoning variance may compromise the firm’s
representation of the landowners opposing the variance.”

Delving into more explanation, the opinion speculates that the firm might be limited in pursuing legal alternatives for the landowners because of the overall interests of the other firm client. All of that is well and good, as it is true that sometimes material limitation conflicts require some digging to understand, but the opinion then moves fully into rhetoric that sounds as an analysis of a business conflict.

Specifically, the opinion points to the firm’s “inherent financial interest in maintaining its standing client-lawyer relationship with the board” as one of the factors leading to a conclusion that there is a material limitation conflict requiring waivers from both the landowners and the board in order for the firm to continue both representations.

The opinion further undercuts any claim to be purely addressing an ethical conflict question by explaining that, if the clients won’t provide consent, then the firm only has to withdraw from one of the two engagements. That remedy is most assuredly the stuff of business conflicts. Traditionally, a firm that needs to extract itself from conflicting representations that run afoul of the ethics rules cannot simply drop one of the two clients like a “hot potato,” but have to withdraw from both client representations. There are exceptions, but none of those exceptions are identified in this opinion.

The opinion also suffers from at least one more flaw. Even under its own premise, it does not follow that both the board and the landowners would need to provide consent. The only representation that the opinion discusses as being potentially harmed by the conflict is the representation of the landowners. Thus, the landowners can be said to be the only clients “affected” by the material limitation conflict. Notably, the opinion never actually quotes the language of the rule it is purporting to apply and never reminds the reader that RPC 1.7(b) only requires informed consent from “each affected client.” Thus, as long as the landowners in the zoning variance proceeding were willing to provide informed consent to the firm’s representation despite the fact that the firm’s relationship with the board could limit available options and approaches, then the rule would still be satisfied.

Why can’t we (both) be friends (of the Court)?

So within the last few days the New York State Bar Association has issued an interesting new ethics opinion addressing a variation of an issue that is straightforward nearly everywhere.

Lawyers tend to know that conflicts questions can often be complicated but that there is at least one that is pretty straightforward: different lawyers in the same law firm cannot represent different clients who are on opposite sides of the “v” in the same lawsuit.

Can’t do it; can’t ask a client for consent; just a non-starter. (In Texas, your mileage may vary. But, otherwise pretty universal across the nation.)  NYSBA Ethics Op. 1174 evaluates a somewhat esoteric question that revolves around whether participation in litigation as counsel for an amicus curiae works the same way. Namely, whether amici on opposite sides of the same litigation matter can be represented by lawyers in the same firm.

I think that the NYSBA has gotten the answer on this correct though I’m not as certain about whether the escape valve they offered the inquiring firm is entirely correct. To get to bottom of both of those points, it strikes me as easiest to first analyze something that the NYSBA did not discuss because it should ease folks into the correct answer (if you aren’t there already).

If you were representing the plaintiff in a case, could another lawyer in your firm take on the representation of an amicus curiae seeking to persuade the Court to rule in favor of the defendant’s position in that case?  I think we’d all agree that the answer to that would be “no.” Maybe we’d argue over whether that was because that second matter would be “directly adverse” to the plaintiff client or whether it would just be a “material limitation” conflict. (FWIW, seems pretty directly adverse to my eyes.)

So, concluding that two different amici on opposite sides of the same litigation matter is a conflict seems like an entirely appropriate conclusion. It also seems fair to conclude, given the traditional language used in rules like Model Rule 1.7 (as does New York’s RPC 1.7(b)(3)) that it amounts to representing clients on both sides of the same litigation and, therefore, cannot be undertaken even with client consent. Those were the conclusions reached in Opinion 1174.

Because of the nature of the scenario that was presented to it, the NYSBA went a bit further to put together something of a “but you could do this” sweetener. The inquiring firm had surveyed its associates about interest in taking on an amicus matter on a pro bono basis and gotten mixed feedback because there were some folks who believed in the correctness of the opposite sides of the issue. The NYSBA indicated that lawyers in the same firm could appear for amici on opposite sides — if the lawyers were not representing a client but were acting pro se.

While that presents a potentially messy practical question for the firm, it seems like the correct result under the ethics rules if each side’s involvement is pro se. What is not clear to me is whether the NYSBA is intended to also address whether a firm lawyer could file a pro se amicus brief to take the adverse position to another amicus who is actually a client being represented by the law firm.

Certainly seems to me like some kind of additional conflict analysis would be required to evaluate that question because of the potential that the personal interest of one more lawyers that the firm could create a significant risk of materially limiting the firm’s ability to represent its client.
The opinion also does not address a much harder issue to both evaluate and to even “catch” in the first place … representing amici in different litigation matters who are on opposite sides of the same issue and advocating for outcomes that are markedly different on the same legal issue.

If a firm is fortunate enough to have built a conflicts system that would allow them to catch it, or if they otherwise figure it out ahead of time, that issue is one that should be run through the ringer as a “positional” or “issue” conflict and likely will turn on the relationship of the courts involved and whether one of the courts would be binding on the other when it decided the issue. At the very least, unlike the “same litigation” matter scenarios, that kind of conflict might be subject to waiver by the affected clients.

Fine lines and not so fine lines

About six weeks ago, The Law For Lawyers Today published a good post about a problem for lawyers that sometimes lurks around efforts to make demands in order to settle legal disputes for clients — the risk of being accused of extortionate conduct. You can read that post here.

That post was prompted by what was then the most recent high-profile instance of such a situation causing roiling public debate – whether the lawyer for The National Enquirer had crossed any lines into extortion with respect to his dealings with Jeff Bezos and what appeared to be threats to release sensitive photographs of Mr. Bezos unless Bezos would cause The Washington Post to back off an ongoing investigation of The National Enquirer. That post largely just helps with issue spotting and particularly emphasizes the need to know your state’s laws, general federal laws, and a reminder that you can disclose what you need to about a client’s matter in order to get advice about how to comply with your own ethical obligations.

I’m writing today because there is now an even higher-profile situation involving a lawyer attempting to teach all of the rest of us about what not to do when it comes to avoiding being accused of extortion. This instance involves the lawyer previously best known for representing Stormy Daniels and injecting himself into the Brett Kavanaugh confirmation hearings in a way that, frankly, unfairly-tarred women who were making highly-credible claims, Michael Avenatti.

Avenatti has been indicted in federal court in New York with charges involving some of the federal statutes referenced by the linked blog post over an alleged effort to extort some $20 million from Nike. You can read the 11-page indictment here.

Now there are certainly aspects of this topic that can be nuanced and properly viewed as the kind of slippery slope on which ethical guidance is extremely wise, but this does not seem to be one. This seems to be a lot more straightforward of a situation in which the line crossing is pretty clearly apparent in the narrative, if the facts alleged can be proven. (Admittedly, part of why it seems easy to reach that conclusion is not only the substance of the indictment but the fact that the lawyer in question was also separately charged that same week in California for what is alleged to have been efforts to defraud a client out of settlement funds. You can read that California criminal complaint here.)

But sticking to the substance of this indictment, these alleged facts are the problematic ones:

a. On or about March 19, 2019, in Manhattan, MICHAEL AVENATTI, the defendant, and CC-1 met with attorneys for NIKE, Inc. (“Nike”) and threatened to release damaging information regarding Nike if Nike did not agree to make multi-million dollar payments to AVENATTI and CC-1 and make an additional $1.5 million payment to an individual AVENATTI claimed to represent (“Client-1”).

b. On or about March 20, 2019, AVENATTI and CC-1 spoke by telephone with attorneys for Nike, during which AVENATTI stated, with respect to his demands for payment of millions of dollars, that if those demands were not met “I’ll go take ten billion dollars off your client’s market cap … I’m not fucking around.”

And then this piece offered later in the indictment as further background to explain:

8. … Specifically, AVENATTI threatened to hold a press conference on the eve of Nike’s quarterly earnings call and the start of the annual National Collegiate Athletic Association (“NCAA”) tournament at which he would announce allegations of misconduct by employees of Nike. AVENATTI stated that he would refrain from holding the press conference and harming Nike only if Nike made a payment of $1.5 million to a client of AVENATTI’s in possession of information damaging to Nike, i.e. Client-1, and agreed to “retain” AVENATTI and CC-1 to conduct an “internal investigation” – an investigation that Nike did not request – for which AVENATTI and CC-1 demanded to be paid, at a minimum, between $15 and $25 million. Alternatively, and in lieu of such a retainer agreement, AVENATTI and CC-1 demanded a total payment of $22.5 million from Nike to resolve any claims Client-1 might have and additionally to buy AVENATTI’s silence.

Now, assuming that was how things actually played out, it is quite to formulate some helpful guideposts to a lawyer trying to figure out distinctions between legitimate settlement demands and extortion.

First, if you are a lawyer who actually has a client with a potential legal cause of action against a publicly-traded company that involves allegations that – once lodged in a publicly-filed court document – could result in negative publicity for Nike, you not only can, but might well be ethically obligated – to make a settlement demand for the client to try to avoid filing suit. (Depending on the nature of the claims and what your client might actually be able to recover in court, it is possible that you could even demand tens of millions of dollars in exchange for the client’s agreement not to sue.

Second, generally speaking, if what you are demanding money in exchange for is refraining from filing a lawsuit or pursuing some other legal proceeding that a client would have at least a colorable right to otherwise pursue, then you are pretty stable ground. If what you are demanding money to refrain from doing is holding a press conference. You should be worried that, perhaps, you are headed down the wrong path.

Third, if you are threatening a publicly-traded company and you decide to tie your settlement demand with a blatant threat that your action will directly damage their market valuation, you ought to again really ponder what you are doing. Particularly, if you are not threatening to file a suit for a client and, perhaps, unless you are threatening to file a suit for a client that would actually be a suit over whether or not the company has made appropriate public disclosures directly linked to how much its shares of stock now sell for.

Fourth, if part of your threat involves the party being threatened having to agree to let you represent them, you have definitely careened off the path of being engaged in legitimate efforts on behalf of a client to resolve a matter. Not only are you setting yourself up for the kind of fall that can result in jail time, you are also – at that point – likely violating your home state’s ethics rules on the solicitation of clients. Not to mention rules on conflicts of interest because – if you’ve decided to go down this path, you likely have also failed to realize that you are going to need a pretty good conflict waiver from the client you are claiming to represent in the first instance in order to have any chance of complying with your state’s version of RPC 1.7 (and, even then, you would still be likely to have a real problem on your hands regarding your state’s version of RPC 5.6.)

A teachable moment to make your eyes water.

When you spend a lot of time consulting with and advising lawyers, finding teachable moments from examples of things that happen in real life are extremely helpful.

The world can be filled with teachable moments. On a non-ethics front, here is one: If you don’t pay attention to when a credit card has a new expiration date and update accordingly, you could end up having your domain briefly expire leaving you vulnerable to someone else potentially buying it.

On an ethics front, the importance of making sure you do what you can to make clear in an engagement letter who is and who is not your client, as well as what you are being hired to do versus other things someone might later try to claim were your responsibility is pretty high. As a result, paying attention to outside counsel guidelines or other documents that may come into your firm from a client that address those issues is extremely important.

A February 2019 case from the Federal Circuit stands as a very good teachable moment about how not paying attention to such things can lead to disqualification. If you practice in a law firm of any significant size, the full opinion is worth reading because it addresses not only the topics mentioned but also involves a fact pattern involving lateral movement that, ultimately, resulted in the disqualification proceedings coming to pass in the first place. Specifically, the lawyers who moved from another firm to Katten Muchin and brought with them their representation of a party adverse to a corporate parent of Bausch & Lomb in the first place were only ever informed that Katten Muchin was representing Bausch & Lomb.

The disqualification of the law firm of Katten Muchin in the lawsuit of Dr. Falk Pharma Gmbh et al. v. Generico, LLC et al. truly came about, however, because the firm did not push back on outside counsel guidelines it received that expanded the universe of what could constitute a conflict of interest (or, more realistically, didn’t pay attention at any true level that such was occurring).

The underlying moving parts of litigation are pretty detailed and intricate and involve patent litigation and trademark matters, part of which (I only mention to bring a satisfying end to the attempt at humor in my title) involved a dispute over the trademark MOISTURE EYES™.

If you want a more thorough understanding of the intellectual property issues in play in the various proceedings, you can get that over at Mike McCabe’s blog here.

For our purposes today, w/r/t the teachable moments, the following excerpts from the opinion ought to be able to drive home the importance of knowing what is in engagement letters that come from clients rather than emanate from your firm and knowing the details of any outside counsel guidelines being incorporated into any engagement letter:

The motions to disqualify stem from Katten’s representation of Bausch & Lomb Inc. … a corporate affiliate of Valeant-CA and Salix, in a trademark litigation and its concurrent representation of Mylan, adverse to movants, in the pending appeals. Specifically, Katten signed an engagement letter with Bausch & Lomb that broadly defined Katten’s client as any Valeant entity. Attorneys [Mukerjee and Soderstrom] represented Mylan during various stages of [these proceedings] first, as attorney from Alston & Bird LLP, but later, as attorneys from Katten. The parties agree that Mukerjee and Soderstrom moved to Katten as of May 3, 2018.

[snip]

In the course of representing Bausch & Lomb, Katten signed a general engagement letter “governing the overall relationship between [Katten] and Valeant Pharmaceuticals International, Inc…. This engagement letter incorporates by reference Valeant’s Outside Counsel Guidelines (“OC Guidelines…”

[snip]

The OC Guidelines also specify that “Valeant expects a significant degree of loyalty from its key external firms,” defined as “firms with 12 month billings exceeding one million dollars.” These key firms should “not represent any party in any matters where such party’s interests conflict with the interests of any Valeant entity.”

[snip]

On May 3, 2018, Mylan notified the district court that Mukerjee and Soderstrom had left Alston & Bird to join Katten. On May 25, 2018, Valeant-CA filed a motion to disqualify Katten in the district court action.

[snip]

Because the engagement letter creates an ongoing attorney-client relationship between the law firm, Katten, and its organizational clients, Valeant-CA and Salix, Katten’s representation of Mylan adverse to movants in Valeant II gives rise to a concurrent conflict of interest under Rule 1.7.

[snip]

Finally, we conclude that Katten’s erection of an ethical wall is insufficient to resolve its violation of Rule 1.7. Katten claims that this wall cordons off Mukerjee and Soderstrom from Katten attorneys who have worked for matters for Bausch & Lomb, Valeant-CA, or affiliates in the 18 months preceding May 7, 2018. But this wall does nothing to address concerns stemming from Katten’s violation because it was created after Mukerjee and Soderstrom joined Katten, it applies only partially to work conducted within 18 months before May 7, 2018, and Katten never previously informed movants of any potential conflict.

Now, in fairness, even without the engagement letter terms and the OC Guidelines, the outcome may have been the same because, as the opinion explains, the corporate entities involved here were so interrelated in terms of common infrastructure and shared legal departments, and financial interdependence as to be treated as amounting to corporate affiliates still subject to treatment as clients under conflict of interest rules. But that is another teachable moment issue for a different day.

Asking for a conflict waiver is a step that is hard to take back.

Look, I understand too little too late
I realize there are things you say and do
You can never take back
But what would you be if you didn’t even try
You have to try
So after a lot of thought
I’d like to reconsider
Please
If it’s not too late
Make it a cheeseburger

– Lyle Lovett

Working though questions of conflicts of interest can certainly be challenging for lawyers.  The initial phases of figuring out whether a conflict exists are highly important.

From a loss prevention standpoint, you want to get it right as you certainly do not want to take something on that you shouldn’t because you had a conflict that you simply couldn’t even ask to be waived or for which you strongly suspected you’d never be able to get a waiver from those from whom a waiver would be needed.

It is also important to get right, however, so that you don’t treat something as a conflict that isn’t a conflict.  Once you start down the path of asking someone for a conflict waiver, you empower them to tell you “no” and you potentially reduce your choices about what to do in such event pretty severely.  It is not impossible to change course after unsuccessfully asking for a conflict waiver and begin to claim that the waiver wasn’t needed in the first place.  But it is certainly difficult.  Thus, it isn’t just the case that you don’t want to treat something as a conflict that isn’t a conflict; you also might want to think long and hard about treating something as a conflict if you intend to contend it isn’t a conflict.

An interesting story touching on just how difficult unwinding such a situation can be was written about by The American Lawyer earlier this week.  It involves an effort – seldom used (for reasons that ought to be a bit obvious) — to file a separate lawsuit seeking a declaratory judgment that something was not a conflict in the first place and an injunction to allow the lawyer to start working for a new firm.

You can read the full article here, but the short version is this: a Houston lawyer who was looking to change firms has been unable to do so because a corporate entity much in the news of late – USA Gymnastics — refused to provide a conflict waiver requested by the lawyer.  USA Gymnastics is a client of the lawyer’s former firm.  The firm to which the lawyer had hoped to move currently represents a number of individuals who have sued USA Gymnastics over the sordid situation involving Larry Nassar.

Typically, conflicts of interest get litigated through motions to disqualify.  Although firms and clients do not like to have to deal with those for obvious reasons, at least in those proceedings the firms and clients have the ability to argue that the party moving for disqualification has the burden of proof.  Even that procedural tool can be lost when the lawyer or firm is the one bringing the action to ask a court for a ruling that they have no conflict.

A quote from the story itself taken from the managing partner of the firm to which the lawyer wanted to go to work provides a helpful bit of transition:

The law as we understand it is that if a person worked at a law firm and doesn’t work on a case, and goes to work for another law firm that has that case and [the lawyer] is shielded from the case … there’s no conflict.

Now, if this were being governed by Tennessee law, I could readily delve into whether that statement would be correct or incorrect assertion of the state of play here, but these are events that involve other states and different rules.

But, to repeat the larger point, if that is what the relevant law or rules set out, then the lawyer and his new firm should never have sought the waiver in the first place.

“Boies will be boys was never a good response” or “Advance waivers are still better than unwanted advances”

(I’ve apologized once before for a Bullwinkle-style title and here I am doing it again.  The underlying societal issues are not funny in the least but it’s been a hard week for many folks and a little bit of levity can help you make it through.)

If you are inclined to read this blog from time to time, then you likely already have read or heard something about the mess David Boies has found himself in related to his firm’s simultaneous representation of The New York Times and his efforts to assist another client Harvey Weinstein in working with a black-ops style investigation outfit to try to stop an NYT story about Weinstein.

If you haven’t read anything about it, there is a wave of reporting to catch up on.  You can start with this ABA Journal article which gives easy jumping off points to this article in The Atlantic, and this The New York Times article, and this further ABA Journal article addressing additional issues after the NYT fired Boies’s firm.

The whole situation weaves a tale more than worthy of a law school essay exam question.  I could likely manage to spend the full three hours of the Ethics Roadshow talking about the ethics issues raised in the scenario.  (I probably won’t, but you’ll never know for sure unless you attend in one of the six cities where it will be taking place.)

While there are quite a few angles ripe for discussion, I just want to talk a bit today about the advanced waiver angle involved.  As most of the articles discuss, in addition to minimizing his role in assisting Weinstein, Boies pointed to language in his firm’s engagement letter with the NYT as authorizing certain conflicts in advance.

The topic of whether and when a lawyer can obtain an advanced waiver from a client to a future conflict is still a surprisingly controversial one in ethics and lawyering circles.  There are some who ardently fight for the position that no conflict can be waived in advance, even by sophisticated clients.  I don’t count myself among their number and, instead, believe that the availability of advance conflicts waivers is an important part of modern law practice from an ethics standpoint.  Along those lines, I believe that Tennessee, and other states that have language in a Comment to RPC 1.7 patterned after the Model Rules get the ethical guidance on the situation correct.

Tennessee’s Comment [22] to RPC 1.7, for example, explains how things generally should work when a lawyer requests a client to waive conflicts that might arise in the future:

The effectiveness of such waivers is generally determined by the extent to which the client reasonably understands the material risks that the waiver entails.  The more comprehensive the explanation provided to the client of the types of future representations that might arise and the actual and reasonably foreseeable adverse consequences of those representations, the greater the likelihood that the client will have the requisite understanding.  Thus, if the client agrees to consent to a particular type of conflict with which the client is already familiar, then the consent ordinarily will be effective with regard to that type of conflict.  If the consent is general and open-ended, then the consent ordinarily will be ineffective, because it is not reasonably likely that the client will have understood the material risks involved.  Nevertheless, if the client is an experienced user of the legal services involved and is reasonably informed regarding the risk that a conflict may arise, such consent to a future conflict is more likely to be effective, particularly if, e.g., the client is independently represented by other counsel in giving consent and the consent is limited to future conflicts unrelated to the subject matter of the representation.

This Boies/Weinstein/NYT saga, however, isn’t particularly all that helpful in terms of providing guidance into the question of whether any advance conflict waiver obtained by Boies complied with New York’s ethics rules, but it is extremely helpful in reminding that whether or not an advance conflict waiver passes muster under the ethics rules is just one aspect of the situation that lawyers and law firms need to keep in mind (and though it is a bit sacrilegious to say it might not always be the most weighty aspect of the situation).

The Boies/Weinstein/NYT saga is extremely helpful as a reminder that whether to take on a representation that can only be justified to another client on the basis of an advance waiver is extremely tricky as a business decision.

Boies’s firm included an advance waiver in its engagement letter with the NYT undoubtedly to try to maximize the number of clients it could have has now managed to lose both the NYT and Weinstein as clients.

The loss of Weinstein under all the circumstances might be a net positive, but the loss of the NYT likely stings and would have stung even if it hadn’t ended up managing to say this publicly in the process of cutting ties with Boies:

We consider this intolerable conduct, a grave betrayal of trust, and a breach of the basic professional standards that all lawyers are required to observe. It is inexcusable and we will be pursuing appropriate remedies.

Whether or not an advance waiver is consistent with the ethics rules, an offended client can always still decide to drop the lawyer or his firm and what that mess might looks like if or when that comes to pass might be the most practical way for lawyers to think through these issues.

 

Coming to praise rather than bury: NYC Bar Op. 2017-6

About two weeks ago, I had the opportunity to speak to the Tennessee Defense Lawyers Association for an hour on ethics issues, using a “hot topic” format.

One of the topics I covered was the many things there are beyond just being parties on opposite sides of the “v” in litigation that present conflicts to be managed, avoided, and addressed in handling lawsuits.

I mentioned the difficult situations that can arise as a case evolves and someone shows up on the radar screen as an important witness — particularly an expert witness — and the importance of running supplemental conflicts checks to make sure that a lawyer or her firm doesn’t first figure out the problem when learning during the deposition that the witness claims to be a client of the lawyer’s firm.  That is a scenario that lawyers sometimes don’t always think about in advance but for which there is little, if any, push back on the idea that it is a conflict about which to be concerned.

I pivoted from that topic to a similar topic — issuing subpoenas for documents to witnesses — that lawyers are more inclined to want to try to intellectualize as not creating a conflict situation because it can have the feel of a “routine” act and it also “feels” like an administrative hassle.

At the time of that presentation, I somehow had not yet seen a recent Formal Ethics Opinion out of the New York City Bar on that very topic – if I had seen it I certainly would have pointed to it — because it is a very well done treatment of the issue.  The question addressed in NYC 2017-6 is:

What ethical restrictions apply when a party’s lawyer in a civil lawsuit issues a subpoena to another current client or may need to do so?

Now, a word before delving into the insight that can be gleaned by all lawyers in all jurisdictions from this opinion about an important, but not dispositive, difference in the language of New York’s Rule 1.7(a).

In Tennessee, and many other jurisdictions with rules patterned after the ABA Model Rules, RPC 1.7(a) reads so as to address two types of conflicts as being “concurrent conflicts of interest.” One where the lawyer would be required to represent one client in matter directly adverse to the interests of another client, and one where the lawyer’s duties to someone else (or the lawyer’s own personal interests) will impose a “material limitation” on the lawyer’s ability to represent the client.

The NY version of Rule 1.7(a) has slightly different language on each of those two fronts.  NY’s 1.7(a) indicates that a lawyer has a conflict:

if a reasonable lawyer would conclude that either (1) the representation will involve the lawyer in representing differing interests; or (2) there is a significant risk that the lawyer’s professional judgment on behalf of a client will be adversely affected by the lawyer’s own financial, business, property or other personal interests.

And, “differing interests” is specifically defined in NY’s rules to mean “every interest that will adversely affect either the judgment or the loyalty of a lawyer to a client, whether it be a conflicting, inconsistent, diverse, or other interest.”  Now those NY variations on the language make it a bit easier and cleaner to see the issues created when a lawyer pursues a subpoena for records from one client for another client but so much of the opinion that explains the analysis is written not just well, but in a practical fashion that, in my opinion, allows it to resonate for lawyers in jurisdictions with the ABA Model Rule language on conflicts as well.

After surveying the landscape of earlier opinions on these subjects, the NYC opinion laid out a number of helpful conclusions:

First, issuing a subpoena to a current client to obtain testimony from that client will ordinarily give rise to a conflict of interest.  Obtaining testimony typically inconveniences the witness, involves probing a witness’ recollection, and at times may involve challenging and confronting the witness, any of which a current client may reasonably perceive to be disloyal.

[snip]

Second, it will ordinarily be a conflict of interest for a lawyer to seek to obtain documents via a subpoena to a current client.  The production of documents in response to a subpoena very often requires an allocation of resources (time and money) which the subpoenaed party would prefer not to expend.  This is all the more so when outside counsel needs to be retained, and the scope of production needs to be negotiated.

[snip]

The opinion then goes on to offer some further practical advice for lawyers to keep in mind because of their ethical obligations which the opinions lays out as:

(a) the necessity for lawyers to run conflict checks prior to serving a subpoena; (b) the potential need to decline or limit a representation, or to obtain informed consent, if a lawyer knows before being retained that subpoenaing a current client may be necessary; and (c) the retention of “conflicts counsel” to avoid the need to withdraw, or the risk of disqualification, when a lawyer learns during the course of a litigation of the need to subpoena another current client.

The opinion does go on to provide helpful explanatory details for each of those topics, and you can go read the opinion in full at this link.

 

Bad ethics opinion or the worst ethics opinion? Rhode Island 2017-02

I have perused a lot of ethics opinions over the years.  Whether a kind of scenario presents a conflict is a frequent subject of ethics opinions.  I don’t think I’ve read many that address whether a particular conflict of interest is fairly treated as a consentable conflict, however.  Having now read Rhode Island Ethics Advisory Panel Op. 2017-02, which does address that topic, I wish it hadn’t.

It is an extremely short opinion, but it gets a remarkable amount wrong in a limited amount of space.

The short version of the question it tackles is:

ISSUE PRESENTED

The inquiring attorney asks whether the law firm may represent the buyer and the seller, two current clients of the firm, in the sale of a division of the seller’s business to the buyer.

The additional factual details that you need, at minimum, to begin to wrap your head around the astoundingly bad conclusion reached in the opinion are:

  • The buyer is a manager of a division of the seller’s business.
  • The buyer will now be purchasing assets of that division from the seller.
  • The buyer will then also have to work out a lease arrangement with the seller for the premises where the division currently operates.
  • The buyer has been represented by one attorney in the firm on a number of matters unrelated to this business – that attorney has no relationship with the seller or any knowledge of work done for the seller by his/her firm.
  • The seller has been represented by a different attorney in the firm on a number of matters, including matters related to the operation of the seller’s business  – that attorney has no relationship with the buyer or any knowledge of work done for the buyer by his/her firm.
  • Both the buyer and the seller want the firm to represent them as to negotiations and drafting of necessary documents.
  • The firm, if it moves forward, intends to erect an ethics wall/screen (i.e. locked drawers for hard copy materials and limits on electronic access to files) as to the two matters so that there would be no flow of confidential information between the two sides of the proposed representation.

On those facts, the Rhode Island opinion reaches a conclusion that the conflict is so severe that the clients cannot be allowed to give their consent to it.  Now, maybe I have left out the facts that the ethics opinion treats as apparently the most important of all – the distinction between the experience level of the seller and the buyer:

The inquiring attorney states that the seller is experienced in business, including the ownership, purchase, and sale of businesses.  He/she states that the buyer is sophisticated in the industry of the division, but has never owned, purchased, or sold a business.

Well, there you go.  The seller is super sophisticated whereas the buyer is just merely sophisticated.  Seriously.

And, no there is nothing unique or unusual about Rhode Island’s version of RPC 1.7 that would explain the conclusion that this conflict is not consentable.  Rhode Island’s RPC 1.7(b) looks just like the ABA Model version, as it reads:

(b) Notwithstanding the existence of a concurrent conflict of interest under paragraph (a), a lawyer may represent a client if:

(1) the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client;

(2) the representation is not prohibited by law;

(3)  the representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation or other proceeding before a tribunal; and

(4) each affected client gives informed consent, confirmed in writing.

On the facts set out above, the Rhode Island opinion concludes that there is no way that each lawyer could “reasonably believe that they will be able to provide competent and diligent representation to the buyer and to the seller in this business transaction.”

And, if that weren’t problematic enough (it is), the opinion also does further disservice to readers with its discussion of screening, stating:

The Rules of Professional Conduct permit screening in only three situations, none of which is presented in the facts of this inquiry: screening for lateral hires under Rule 1.10, screening for former government officers and employees under Rule 1.11, and screening for former judges, arbitrators and mediators under Rule 1.12.

The omission of the modifier “nonconsensual” before screening in that quote is an important one.

It’s important because it means that the Rhode Island opinion writers either failed to understand altogether, or simply chose to ignore, the difference between aspects of the ethics rules that permit a firm to erect a “nonconsensual screen” to address a conflict even over a client’s or former client’s objection and the constant ability of a firm to erect a consensual screen if it is part of what is deemed necessary or desirable in order for one or more clients to agree to give informed consent to waive a conflict.

On the whole, this is just an astoundingly poor ethics opinion and one that reaches a result that rings contrary to the client-friendly position that I’m certain the authors thought they were taking.