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.

Traps for the Unwary – Married lawyers edition.

Within the last week, there was an interesting Law.com article (subscription required) on a topic that has been something of a pet . . . well not really “peeve” of mine, and not really a pet project of mine, but a topic that I feel like is somewhat uniquely overlooked by the people to whom it should be most relevant — spouses/significant others who are both lawyers but who work different places.

The article discusses an Ohio disciplinary case that is ongoing and that involves something that – based on anecdotal evidence over the course of my career — is an extremely frequent occurrence:  the sharing of information about cases and matters between spouses and significant others who both are lawyers but who aren’t both representing the client in question.

Although (as indicated above – unless you are particularly wily about how you use the Internet and various search engines ability to “cache” content — you need a subscription to read the article, here’s a snippet to give you a flavor of the fact pattern involved.

The Ohio high court is set to review a proposed disciplinary sanction against two education law attorneys, ThomasHolmes and Ashleigh Kerr, who are engaged to one another and admitted to exchanging emails that included work product and confidential client information.

Although Holmes and Kerr focus on similar types of law—namely the representation of public school districts—they have never shared clients and they worked at different firm. Holmes practiced most recently at [a firm] in …Ohio, and Kerr practiced at [a different firm] in … Ohio.

In a disciplinary complaint lodged in December against the couple, the Ohio Supreme Court’s board of professional conduct said the two have lived together since October 2015 and became engaged in November of that year. From January 2015 to November 2016, the disciplinary complaint alleged, the two exchanged information related to their client representations on more than a dozen occasions.

“Generally,” the board alleged, “Kerr forwarded Holmes an email exchange with her client in which her client requested a legal document (i.e. a contract, waiver or opinion). In response, Holmes forwarded Kerr an email exchange with his client which attached a similar legal document that he had drafted for his client. More often than not, Holmes ultimately completed Kerr’s work relative to her particular client.”

If you want more of the detail, you can access the disciplinary complaint here.  And you can go read the pending recommendation of the Ohio board as to the discipline — which has been agreed to by each of the lawyers here.

The proposed, agreed discipline is a six-month suspension from the practice of law for each lawyer (but with the suspension fully stayed/probated.)

I suspect the outcome of that matter – and perhaps even the fact of disciplinary proceedings at all — will come as a huge surprise to many lawyers.  But the simple fact is that the underlying practice — sharing information about cases in order to try to get your spouse or significant other to help you — despite how much it may seem consistent with human nature is almost always going to be undeniably a violation of the ethics rules.  It is possible that one of the lawyers could get the client to consent to the arrangement, but beyond that approach there are very few ways to avoid the simple fact that RPC 1.6 in almost any jurisdiction won’t permit doing this.

I also strongly believe that most lawyers who do this kind of thing — if they think about it from an ethics standpoint – believe that the risk is quite low of ever being found out because of the marital privilege.  But not only because of some of the inherent limits on how far that may take you, but also because of the increasing frequency in which we all do everything digitally… this case demonstrates that there are a number of ways that the communications can surface into the light without anyone ever having a spouse voluntarily provide information any marital privilege notwithstanding.

RPC 5.6 and settlement agreements: The TN BPR messes up another ethics opinion.

This is not truly a development that merits the “Bad Ethics Opinion or the Worst Ethics Opinion” treatment, but it is a development that deserves commentary.

Last week while my wife and I were getting some short R&R, the Tennessee Board of Professional Responsibility issued Formal Ethics Opinion 2018-F-166.  If all you read of it were the first two paragraphs, it would sound like a reasonable (albeit somewhat circular) ethics opinion to have issued:

The Board of Professional Responsibility has been requested to issue a Formal Ethics Opinion on the ethical propriety of a settlement agreement which contains a confidentiality provision that prohibits any discussion of any facet of the settlement agreement with any other person or entity, regardless of the circumstances, and which prohibits the requesting attorney from referencing the incident central to the plaintiff’s case, the year, make, and model of the subject vehicle or the identity of the Defendants.

OPINION

It is improper for an attorney to propose or accept a provision in a settlement agreement that requires the attorney to be bound by a confidentiality clause that prohibits a lawyer from future use of information learned during the representation or disclosure of information that is publicly available or that would be available through discovery in other cases as part of the settlement, if that action will restrict the attorney’s representation of other clients.

So, again, that sounds reasonable in a vacuum (and it’s that last clause that makes it relatively circular as an application of RPC 5.6.  As the opinion makes clear that the rule on which it is premised and hinges is RPC 5.6(b), which provides:  “A lawyer shall not participate in offering or making: (b) an agreement in which a restriction on the lawyer’s right to practice is part of the settlement of a client controversy.”

But, this opinion isn’t issued in a vacuum.  It manages over the course of 4 pages to barely acknowledge the existence of an earlier-issued ethics opinion — Formal Ethics Opinion 98-F-141.  It also doesn’t even mention the existence of a more recent Formal Ethics Opinion 2010-F-154.  Those oversights are extremely unfortunate because the existence of those two FEOs should have made the issuance of this new FEO entirely unnecessary.

FEO 98-F-141 explained that a plaintiff’s attorney should not be required to, and should not agree to, be a party to a release and settlement agreement of their client unless the attorney is specifically releasing a claim for attorney fees.  Otherwise, being a party to the release creates conflict of interest issues between the client and the lawyer.  FEO 2010-F-154 repeated this guidance as part of explaining why – despite the problems associated with Medicare super liens — settlement agreements could not require the lawyer for the plaintiff to agree to indemnify the defendants for such liens.  Thus, the second paragraph of FEO 2018-F-166 (if it was ever issued at all) could have read:

We have already opined in FEO 98-F-141 and FEO 2010-F-154 that it is unethical for a plaintiff’s attorney to be required to, or to agree to, be a party to a client’s release and settlement agreement.  For any such provisions to be enforceable against plaintiff’s counsel, (s)he would have to be a party to the settlement agreement, which we’ve already explained is a no-no.  As long as the lawyer is not an actual party to the agreement, then any such provisions are only binding upon the client – not the lawyer — and whether or not the client wishes to agree to them is up to the client given that RPC 1.2(a) declares that the client’s decision to settle a case is something that a lawyer has to abide.  Thus, if a client wants to agree to terms of settlement that are lawful and the lawyer cannot be held to those terms as a party, then the client gets to do as the client wishes in that respect.

And then, FEO 2018-F-166 could have stopped right there.

Since it didn’t go down that way, this new opinion is, at best, unhelpful to the extent that it implies that a client doesn’t have the right to agree to things that they obviously would have the right to agree to or that it implies that if a client does it is somehow binding on the client’s lawyer going forward in future situations even if the lawyer is not a party to the release and settlement agreement and not bound thereby.

Awesome post. Except for the part that isn’t.

There is an awful lot to like and agree with in this post from Dan Lear, one of the folks who have been the face of Avvo for quite some time.  But there is a piece of it that is just simply wrong, and while it would be hyperbole to say it is dangerously wrong, it certainly is wrong in a way that lawyers don’t need to have reinforced.  Lear writes:

Do the RPCs apply when an attorney isn’t working as a lawyer? First, bar associations don’t regulate endeavors that aren’t the practice of law, especially awesome ones. While a lawyer may choose to apply the RPCs outside of the practice of law, the bar doesn’t regulate lawyers as a landlord, an expert witness, or even a restaurant owner.

Even understanding the larger point Lear is attempting to make, this is utterly and simply wrong.  ABA Model Rule 8.4 – with language that is tracked in I believe pretty much every U.S. jurisdiction — does not limit itself to situations in which a lawyer is only representing a client and also does not draw a bright line around a lawyer “being a lawyer,”

The easiest, and most obvious, part of the rule that makes the point is RPC 8.4(b) which gets lawyers in ethical trouble for certain criminal acts even having nothing to do with, or not happening while, they are working as a lawyer.

But there are two other, more broadly problematic ways that RPC 8.4 does extend to, and actually govern, the conduct of people who happen to also be lawyers while they are doing things that they don’t think of as working as a lawyer know matter how much they may subjectively think they are being “awesome.”

Those two other pieces are RPC 8.4(a) and (c).  When combined those pieces of the rule read:

It is professional misconduct for a lawyer to . . .

(a) violate or attempt to violate [the ethics rules], knowingly assist or induce another to do so, or do so through the acts of another . . . [or]

(c) engage in conduct involving dishonesty, fraud, deceit or misrepresentation….

I’ve often joked about 8.4(c) as being the only ethics rule in the books that has to mean something other than what it actually says because, as written, it would make it professional misconduct for me to answer questions from children about Christmas presents or bluff while playing poker or dive to get a call while playing over-35 soccer on Monday nights.  I’ve also, once before and also in response to something written by a lawyer more famous than I, advocated that it shouldn’t apply to a lawyer operating a parody account on social media.   But there are aspects of how that rule truly does apply to dishonesty by lawyers, even when not acting as lawyers, which are quite serious.  Easy examples from the recent past involve deans and others affiliated with administrative positions at law schools lying about statistics to improve enrollment numbers and the like.

And, perhaps the most perplexing and concerning of the examples Lear offers of things a lawyer could do where they wouldn’t be bound by the ethics rules is serving as an expert witness.  I’ve been fortunate enough to serve as an expert on more than a handful of occasions in my career, and, suffice it to say, RPC 8.4 is not the only ethics rule that will still apply to the lawyer when serving in that capacity.

Idaho why lawyers are so often tripped up on this.

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

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

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

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

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

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

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

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

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

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

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

Those provisions provide:

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

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

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

and

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

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

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

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

EVA(n) good things are complicated by ethical obligations.

So, this week’s biggest news in terms of the role of artificial intelligence in the practice of law is the rollout of a new, free AI product from ROSS Intelligence.  The product is called EVA, and you can read all about it here.

The short version of it is that when the other side files a brief in your lawsuit, you can upload the brief and EVA will analyze the cases being relied upon, alert you to other cases where those cases have been negatively treated, and point you to other relevant cases to fast track your research efforts.

It sounds great, and it probably is great.  But, me being me, I immediately started thinking about questions such as:

Will ROSS, through EVA, be keeping all of the data that is uploaded to it?

What are the terms and conditions lawyers have to agree to in order to use EVA?

Will those lawyers need their client’s permission to upload such documents into the EVA platform?

Here is a link to those terms and conditions so you can read them yourself should you be so inclined (at that link, you will need to click on the link titled Terms of Use to get those to popup on your screen), but I think the short version is that, almost always, a lawyer can safely make the decision to upload the other side’s brief into EVA without even talking to your client by relying upon the authority provided under Rule 1.6(a) to say that doing so is impliedly authorized in order to carry out the representation of your client.

It is, of course, interesting that what you are uploading is actually the work product of the other side and that the terms and conditions require you to say that you have all the necessary ownership rights to send the document through the EVA service.  Along those lines, I would imagine the weird instances of counsel attempting to claim trademark rights in briefs they file could complicate usage issues.  More realistically though, cases that are operating under protective orders and where briefs are filed under seal would seem to be the one area where lawyers could get themselves into trouble by using the free EVA service.

Friday follow up – TIKD off by a DQ motion and the Supremes won’t stop suspending the wrong lawyers.

In the middle of Roadshowing (short break until the next stops next week) and also still trying to handle client matters to boot, so this will be a quick post.

(If you are here next week looking for the Roadshow playlist, just keep scrolling down as it can be found in the post immediately below this one.)

The dustup between the smartphone app known as TIKD and the Florida Bar has been back in the news in the legal trades recently over a motion to disqualify TIKD’s counsel filed by the Florida Bar.

On its face, it sounds like a pretty decent disqualification motion on the merits as the Florida Bar is alleging that TIKD’s counsel who is a former Florida Bar president had access during his term in office to internal information evaluating the Florida Bar’s antitrust liability exposure given its structure in the wake of the U.S. Supreme Court’s ruling in an antitrust suit against the board that regulates dentistry in North Carolina.  (You might recall that I wrote a bit about that in the past as well as it is that case that has revived interest in, and concerns about, antitrust issues for the regulation of the practice of law in unified bar/mandatory bar jurisdictions.)  That would seem like a slam-dunk in terms of disqualification if that person had been a former General Counsel or otherwise a lawyer for the Florida Bar, but the analysis may be a lot murkier if, as is the case generally of bar presidents, that the president of the Florida Bar is always a lawyer but isn’t necessarily acting as a lawyer for the organization during the term of office.

Oh, and speaking of the U.S. Supreme Court, I wrote a bit earlier this year (as many other people did) about the weirdness associated with the fact that the United States Supreme Court made the very unfortunate mistake of suspending the wrong attorney – confusing one lawyer named Christopher P. Sullivan for another lawyer named Christopher P. Sullivan.  At the time, I tried to make discussing the circumstances a bit more worthwhile substantively and not just anact of piling-on by citing that epic mistake by the highest court in the land as maybe the ultimate example of the need for people in our profession to be deliberate in their actions and take their time because what we do can have real consequences for us and for others.

As is of course true for literally billions of other people on the planet, the Clerk of the U.S. Supreme Court is not a dedicated reader of this space (or didn’t take heed of that message) as a new story came to light a week or so ago of pretty much the same thing happening again with the Court suspending a lawyer named Jim Robbins instead of a lawyer named James A. Robbins.  (Even more coincidentally, the Sullivan who was wrongly suspended earlier in 2017 practiced law with a firm called Robins Kaplan.)

Actually, to say that pretty much the same thing happened isn’t quite right, as the James A. Robbins that deserved to be suspended wasn’t actually a member of the U.S. Supreme Court bar at all.

I’ve been fortunate enough to have been admitted to the U.S. Supreme Court since December 2008 and even more fortunately it appears to be an admittee with a name, Brian S. Faughnan, that seems highly unlikely to be duplicated on (or off) its rolls.

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.