Two quick technology takes – texting and more on email “bugs”

Not too long ago, I weighed in on an Alaska Ethics Opinion about the ethics of lawyers using email “bugs” that surreptitiously track what happens to an email after it has been sent.  There is a new, interesting read on the “legal or not” aspect of this technology in the ABA/BNA Lawyers Manual on Professional Conduct authored by Chad Gilles, a former lawyer who is now involved with customer strategy and legal affairs with a company called MailControl.net.  It certainly makes for an interesting and informative read, and I appreciate the short mention of a snippet of what I said here on my blog.  I was surprised in the Gilles article to read that Professor Dane Ciolino of Loyola University New Orleans had espoused a belief that it was ethical to use such technology if you were a sending lawyer and, for what it is worth, I’ve now gone and read Ciolino for myself on the issue  and … well, color me still unconvinced.

For what it is worth, the notion that Gilles explains that the jury is out on whether the conduct — using mail bugs — also runs afoul of one or more federal statutes (think the Electronic Communications Privacy Act and the Computer Fraud and Abuse Act) leaves me more confident that my conclusion that the conduct is unethical is on the right side of things.

On an unrelated note — other than being related by way of the broadly encompassing “technology” category — Thomas Spahn and I will be doing a teleseminar on January 20, 2017 focusing specifically on a variety of ethical issues that can arise in connection with lawyers using text messaging to communicate with clients and each other.  I haven’t been fortunate enough to do a seminar with Tom in a few years and am looking forward to discussing this topic with him.

I’ve also spent a little bit of time — unsuccessfully — trying to re-find a case/situation that was reported on within the last couple of years involving a lawyer who saw part of the contents of a text sent to a judge because the judge’s phone was laying out on the bench and it lit up and the first part of the message was viewable.  I can’t remember if it was the lawyer who got in trouble for the snooping or the judge because of what was on the text, but I remember it happening.  It serves as a great teaching tool for thinking about turning off the “preview” function for texts on your smart phone, but only if I can properly reference it.

If anyone reading this, recalls it or is more proficient at finding it before January 20, I’d appreciate you shooting me a message of where to find it.  And, either way, if you have the time please feel free to sign up for our teleseminar — it is being offered through a variety of bar entities so you should be able to find it with a google search, but here’s a link to one state bar where you can sign up for it.

 

Alaska you a question about read receipts.

Sorry, bad and lazy pun for a title.  As loyal readers of the site know, I like to write from time-to-time about formal ethics opinions issued by state regulatory bodies.  A recent one caught my attention at first for its — “I cannot believe someone even had to ask feel.”  But, ultimately after I read it all the way through, it intrigued me as a gateway to raise another, related and I happen to think a bit more interesting question.

With that as prologue, on October 26, 2016, the Alaska Bar Association Board of Governors approved Ethics Opinion 2016-1 for release.  The opinion tackles the following question:

Is it ethically permissible for a lawyer to use a “web bug” or other tracking device to track the location and use of emails and documents sent to opposing counsel?

The opinion gets the answer to that question undoubtedly correct by saying that, no, it isn’t and that doing something like that violates Alaska’s RPC 8.4 on generally deceptive conduct and is also problematic because it can undercut the receiving lawyer’s ability to comply with her own obligations under RPC 1.6 to attempt to protect information related to her representation of her client as confidential.

To give a better sense of the kind of technology being discussed, the Opinion explains:

One commercial provider of this web bug service advertises that users may track emails “invisibly” (i.e., without the recipient’s knowledge) and may also track, among other details:

  • when the email was opened;
  • how long the email was reviewed (including whether it was in the foreground or background while the user worked on other activities);
  • how many times the email was opened;
  • whether the recipient opened attachments to the email;
  • how long the attachment (or a page of the attachment) was reviewed;
  • whether and when the subject email or attachment was forwarded; and
  • the rough geographical location of the recipient.

Yikes, right.  That’s a pretty dogged little bug and one that would provide a significant, surreptitious window into the work of the lawyer on the other side.  When I saw the headlines at places like the ABA Journal online about the issuance of this opinion, I jumped to the incorrect conclusion that the lawyer requesting the opinion was a lawyer looking to use this kind of software feature.  At that point, I was surprised anyone would need to ask to know that you couldn’t do this, but the Opinion explains that the request actually came from someone who received an email with one of these “web bugs.”  Thus, the request for a definitive opinion of the wrongful nature of the conduct makes more sense.  (And, for those immediately wondering, apparently some email providers do have countermeasures in place that notify you about some of these “webbugs” and that has to be how the receiving lawyer knew what had transpired.)

I think the opinion is pretty well done and reaches the obvious and correct solution.  It offers some interesting discussion about how, even if the webbug were not surreptitious but actually announced itself, the use of it by the sending lawyer could still be problematic as invasive on the attorney-client relationship through, among other things, potentially revealing otherwise work-product protected information and even endangering the whereabouts of clients who are trying to stay hidden.

What intrigued me enough to write this piece though was a tangential topic that is raised a bit in a footnote to the Opinion, the ethical issues surrounding generic “read receipts” on emails.  Specifically, in footnote 6, the Opinion says:

The use of “delivery receipts” and “read receipts” through Outlook and similar email services does not intrude upon the attorney’s work product or track the use of a document, and therefore is not at issue here.  Those types of receipts are functionally comparable to the receipt one may receive from the use of certified mail.

That last part may well be true — that these are digitally the functional equivalents of a return receipts on certified mail — but I have a slightly different view on this topic.  I certainly do not contend it is unethical for attorneys to send emails to other attorneys that include a request for a “read receipt,” but I uniformly refuse to comply when I get such “read receipt” requests, and I do so because of my obligations under the ethics rules.

If I’m getting an email only because I am an attorney representing a client, then information about when I read that email – how close to when you sent it to me or how far away from when you sent it to me – is “information related to the representation of my client,” and I see no need to do anything other than act to reasonably safeguard that information and decline the read receipt request.

I doubt anyone would ever get disciplined for doing otherwise as a violation of RPC 1.6, but I’m curious as to whether there are others reading this who conduct themselves the same way and have the same view of the “read receipt” issue.

 

Friday follow-up – more proof that it’s risky for lawyers to work with Avvo Legal Services

I’ve written about this topic several times (some might say probably too many times) now, but here is the first example of people who — unlike me — actually matter reaching a very familiar sounding set of conclusions about something that quite obviously is the Avvo Legal Services program.

South Carolina put out an advisory ethics opinion back in the middle of July.  I don’t exactly know how I missed it before yesterday, but thanks to an ABA Journal online story about it, I’ve now learned about it.  It hits exactly the two issues that, outside of jurisdiction like Tennessee that have a separate barrier like RPC 7.6, I tried not-too-subtly to emphasize in one of my earlier posts present a real problem for any lawyer thinking about signing up with Avvo Legal Services.  The two issues that, amount to something of a Schylla and Charybdis scenario, are the rule against fee sharing with non lawyers – RPC 5.4(a) — and the rule against paying people for giving people something of value in exchange for recommending your services – RPC 7.2(c).

The South Carolina opinion, quite succinctly, walks through why the arrangement about which it was asked manages to sound like both a fee sharing problem and alternatively a payment for referral problem.  As to fee sharing:

[T]he service collects the entire fee and transmits it to the attorney at the conclusion of the case.  In a separate transaction, the service receives a fee for its efforts, which is apparently directly related to the amount of the fee earned in the case.  The fact that there is a separate transaction in which the service is paid does not mean that the arrangement is not fee splitting as described in the Rules of Professional Conduct.

A lawyer cannot do indirectly what would be prohibited if done directly.  Allowing the service to indirectly take a portion of the attorney’s fee by disguising it in two separate transactions does not negate the fact that the service is claiming a certain portion of the fee earned by the lawyer as its “per service marketing fee.”

As to the lawyer giving Avvo Legal Services money in exchange for a recommendation or referral of the lawyer’s services and whether the “marketing fee” can be considered the “reasonable costs of an advertisement”:

The service, however, purports to charge the lawyer a fee based on the type of service the lawyer has performed rather than a fixed fee for the advertisement, or a fee per inquiry or “click.”  In essence, the service’s charges amount to a contingency advertising fee arrangement rather than a cost that can be assessed for reasonableness by looking a market rate or comparable services.

Presumably, it does not cost the service any more to advertise online for a family law matter than for the preparation of corporate documents.  There does not seem to be any rational basis for charging the attorney more for the advertising of one type of case versus another.  For example, a newspaper or radio ad would cost the same whether a lawyer was advertising his services as a criminal defense lawyer or a family law attorney.  The cost of the ad may vary from publication to publication, but the ad cost would not be dependent on the type of legal service offered.

As the ABA Journal story indicates, Avvo continues to argue against this kind of result on the basis of things that maybe “ought” to be true but just aren’t “actually” true at the moment with respect to pretty much any state’s ethics rules.   Avvo also has in a variety of online spots advanced the argument that it is not even making referrals but just offering a marketplace.  All of this is extremely intellectually interesting from a distance of course because there are models for providing a “marketplace” that actually do work within the existing ethics rules, even ones where the company charges the attorneys for the privilege of getting to be in the marketplace.  But the approach in that regard doesn’t involve charging a fee that is only tied to successful outcomes – i.e., transactions where legal services are provided and fees paid.  (Although even that kind of approach can be made to work if the consumer is the one that pays the freight to the entity hosting the marketplace.)  A much less controversial approach along those lines would be like the eBay model of providing a marketplace, where the participants are paying a fee associated with being involved and they pay it whether they end up getting to a successful transaction or not.

Importantly, Avvo’s response to developments like this SC opinion also makes clear that it plans to carry on full speed ahead, as you’d expect it would given its size, its capital, and its investment in its approach.  That kind of reaction to regulatory barriers is very similar to other market disruptors in other industries who sort of take a “we’re so big and we’re so influential, we dare you to try to stop us” approach.  Uber would be a fine example, but as to Uber there is very little risk to the users or the drivers in being affiliated with the entity when regulators come calling.

As to Avvo Legal Services there are real, and potentially really serious consequences for participating lawyers.  Individual lawyers will make their own decisions, but South Carolina lawyers will have to be extremely reticent about doing business with Avvo Legal Services in light of this opinion.  And I don’t think the SC opinion will be the last to come out and to reach similar conclusions.  My guess is that this will be the first of several jurisdictions that will put out similar opinions.

Thus, if you are a lawyer that is thinking about participating in this kind of arrangement, or continuing to participate if you are already doing so, you know, of course, that no matter what Avvo won’t be the one getting reprimanded and they can’t serve your suspension for you, but it would be a pretty reasonable conversation to pursue to see if Avvo is willing to pay for the costs of your defense if you end up facing disciplinary proceedings over your participation.

 

Traps for the Unwary – Avvo Legal Services Comes to Tennessee

I’ve written previously about the maelstrom of issues presented by Avvo’s expansion from its original core business as a lawyer rating service into new things such as Avvo Legal Services — an arrangement where it makes clients, who will have already paid Avvo for the legal services they want, available directly to lawyers to perform certain limited duration, flat rate services.  This is not lead generation, which finds blessing in a Comment to ABA Model Rule 7.2.  Avvo’s own marketing materials make this perfectly clear:

Get paying clients, not leads.

With more than 8 million visits to Avvo each month, we can connect you with clients who have already paid for limited-scope legal services.  There’s no chasing leads.

Earlier this week, Avvo Legal Services launched in 4 more states, including Tennessee.  Right around the beginning of 2016, I wrote a post about why I don’t think anyone can do business with Avvo Legal Services in my state unless they can show compliance with RPC 7.6.  From the best I can tell, Avvo Legal Services hasn’t registered appropriately — they are not listed here — and that’s no surprise because back when its General Counsel was kind enough to interact on my site with a comment, he stated that it wouldn’t be registering as an intermediary organization.

Fundamentally, as I hinted at in the second post I wrote about the ALS rollout, the problem for any lawyer trying to decide whether to take on the risk of working with Avvo Legal Services is that ALS continues to largely ignore the gap between what perhaps “ought” to be and what actually “is” when it comes to various attorney ethics rules.

It is hard to blame Avvo for that approach, of course, as it, and the folks behind it, are in the business of making money and aren’t going to be the people who are going to get in trouble if their business model is ruled not to comply with the attorney ethics rules.  The people at risk of getting into trouble in those circumstances are the lawyers that decide to do business with Avvo Legal Services.

I can’t find anything that would involve any changes to the Avvo Legal Services business model that would change my initial conclusion that Avvo is likely to be treated as an intermediary organization under RPC 7.6 in Tennessee.

Of course, even if I’m wrong about that, the second layer of risk for Tennessee lawyers is that the most likely routes that might exist for trying to categorize what is going on as something not regulated by RPC 7.6 will only strengthen concern that the “marketing fee” that the lawyer pays Avvo is really fee-sharing with a nonlawyer.

And, Avvo Legal Services certainly does its case against the idea that it is sharing fees no favors when its General Counsel tackles the issue with a statement (appearing in the Frequently Asked Questions part of this link) such as:

Fee splits are not inherently unethical.  They only become a problem if the split creates a situation that may compromise a lawyer’s professional independence of judgment.

 

Now, I have no personal beef with Josh King.  He has been kind enough to post comments at my blog before and. like me, he’s an active member of the Association of Professional Responsibility Lawyers, and he’s advocating for his client’s position.  But the assertion that fee splitting is not inherently unethical and that a fee split is only a problem if might compromise professional independence of judgment is simply not a correct statement of the law.  It perhaps ought to be how the ethics rules are set up and perhaps ought to be how lawyers are regulated, but it isn’t how things currently are.

In Tennessee and many other states, the sharing of legal fees with a nonlawyer is inherently not okay and only ethical if it can be shown to fit one of the exceptions in RPC 5.4(a).  Maybe those rules should be changed, but any lawyer agreeing to participate in an arrangement that runs afoul of them until any such change occurs is running a real risk.

Is it a risk worth taking for any particular individual lawyer?  Not my call to make, of course, but you’d have to be extremely desperate to take on that kind of risk for say the $109 you would get, after Avvo takes its $40 marketing fee, for doing a document review.

Two updates – one persuasive, one not so much

An important development for labor lawyers that I delved into a bit recently here has now been put on hold.  I managed to point out that there would be significant efforts aimed through litigation at stopping the rule from ever going into effect.  Yesterday, a Texas federal district court has stayed the Department of Labor’s new “Persuader” rule from going into effect on July 1, 2016.  You can read the full 90-page order here or, if you’d prefer the cliffnotes, this ABA Journal online piece does a fine job as always.  Beyond the substantial concerns that exist about how the rule would impact the giving of legal advice and the seeking of legal counsel by employers in connection with union organizing efforts, the crux of things boils down to whether the Department of Labor exceeded its rule-making authority.

Speaking of people who are union members, some of you will recall that I’ve managed to write twice before, using Johnny Manziel as an example, about how much better off professional athletes can be if they would retain the services of an actual lawyer to represent them because of the benefits they would obtain from the obligations lawyers have to treat all information related to the representation of their clients as confidential.  Well, that didn’t work out so well.  We learned this week that Manziel’s lawyer handling his criminal matter managed to send a rather lengthy text to the Associated Press rather than to the prosecutor with whom he was intending to communicate.  On the upside, this time the lawyer quit rather than firing Manziel as his past agents did, but I’m starting to think that Manziel is just cursed at this point.

Unfortunately, this act of preventable negligence on the part of Manziel’s lawyer will, of course, spur some folks to argue that this is further proof that lawyers should never use text messaging to talk to a client or someone else involved in a matter about a client’s matter.  Do not count me among those folks as I think such advice is entirely unrealistic in 2016.  The only lesson to be learned is the old-fashioned, but harder to swallow, advice about being careful, cautious, and deliberate in all of your communications.

 

Digital assets and ethical issues – good news from the Tennessee legislature

Last week the Chattanooga Estate Planning Council was kind enough to have me come to speak to them about ethical issues arising from the uncertain world of the law regarding digital assets.  They were gracious hosts and, to the extent there were important ethics issues to really discuss, we managed to cover that most, if not all, such isssues stemmed from the fact that it is incredibly difficult for those working in estate planning to try to accomplish client objectives as to digital assets in Tennessee because we lack legislation to address it.  For that reason, it seemed to me that the two most prominent ethical concerns for lawyers working in that arena are the duty of competence under RPC 1.1 and the duty under RPC 1.4(b) to communicate about what their clients need to know to make fully informed decisions about the representation.

What’s necessary to address the duty of competence is difficult to pare down beyond recognizing that you have to be as fully up to speed on what Tennessee law does, and does not, address to understand the uncertainty and about how federal law (including the Computer Fraud and Abuse Act and the Stored Communications Act) permits service providers to deny requests for access to online information after users and subscribers have passed away.

The most difficult part about the duty of communication under RPC 1.4 is figuring out how to warn a client that no matter how well thought out their estate plan might be on the subject of distribution of digital assets, the client could, by accepting online terms and conditions for use (or updated and revised terms and conditions of use), thwart the plan by ceding ownership of digital assets or authorize service providers or online entities to refuse to honor the contents of such plans.

This week the Tennessee legislature passed legislation so that the time period of such uncertainty now has an end date — July 1, 2016.  Effective at that time, Tennessee attorneys will be able to count on a version of the Revised Uniform Fiduciary Access to Digital Assets Act that solves many problems intrinsic to this area of the law.  You can access the version that will go into effect by downloading the PDFs from this post at the TBA Law Blog here.  It will be codified as Tenn. Code Ann.  35-51-101 et seq.  And if you are interested in seeing all of the areas where it differs from the Revised Uniform Act, you can see the full Revised Uniform Act here.

For those that don’t have the time (or the inclination) to go study the Tennessee Act, among the many important and helpful things it accomplishes, there are three I want to highlight.

First, the term “digital asset” will have a clear definition.

[A]n electronic record in which an individual has a right or interest.  ‘Digital asset’ does not include an underlying asset or liability unless the asset or liability is itself an electronic record.

Thus, for example, my URL and this blog should be recognized as a digital asset of mine under state law.  If you have gone green and only receive your bank statements in digital form, then those statements would be a digital asset even though the money in your bank account that they document would not.  If you’re invested in Bitcoin on the other hand, then the value of your holdings in Bitcoin would be digital assets under the Tennessee Act.

Second, the Tennessee Act generally establishes a hierarchy that puts something called an “online tool” at the top, estate planning documents next, and general terms of service agreements last when it comes to directions to online service providers/custodians about post-death disclosure of digital assets.  Section 5 of the Tennessee Act explains:

(a)  A user may use an online tool to direct the custodian to disclose or not to disclose some or all of the user’s digital assets, including the content of electronic communications.  If the online tool allows the user to modify or delete a direction at all times, a direction regarding disclosure using an online tool overrides a contrary direction by the user in a will, trust, power of attorney, or other dispositive or nominative instrument.

(b)  If a user has not used an online tool to give direction under subsection (a) or if the custodian has not provided an online tool, the user may allow or prohibit in a will, trust, power of attorney, or other dispositive or nominative instrument, disclosure to a fiduciary of some or all of the user’s digital assets, including the content of electronic communications sent or received by the user.

(c)  A user’s direction under subsection (a) or (b) overrides a contrary provision in a terms-of-service agreement that does not require the user to act affirmatively and distinctly from the user’s assent to the terms of service.

Online tool, is also a defined term under the Tennessee Act.  “An electronic service provided by a custodian that allows the user, in an agreement distinct from the terms-of-service agreement between the custodian and user, to provide directions for disclosure or nondisclosure of digital assets to a third person.”  I’m not sure, as a frequent user of the Internet, that I have encountered one of these items yet.

Third, while this legislation goes a long way toward reducing uncertainty for estate planning lawyers in Tennessee, it does not change the fact that lawyers will still have to have cogent discussions with their clients when the topic of providing for distribution of digital assets in their estate planning documents arises.  This is in no small part because blithe acceptance of online terms of service agreements will still have consequences in Tennessee as Section 6 of the Tennessee Act makes clear that the underlying rights of users are still going to be limited to whatever is created in a terms-of-service agreement in the first place.  Thus, there will still be lots of confusion on the part of clients who may think, for example, that they actually own and can leave behind that digital library of e-books they possess, yet the terms-of-service they may have agreed to without reading could indicate that they do not actually own any of those items but possess only a lifetime license to use.

Traps for the Unwary – nonrefundable fees and retainers

For my last post of 2015, some thoughts on a frequent source of trouble for lawyers in certain practice areas where efforts are often made to charge nonrefundable fees.  In Tennessee, back in 2011, our rules were revised to specifically acknowledge the legitimacy of the concept of a nonrefundable fee but also to impose certain strict requirements on its use.

Specifically, Tennessee enacted RPC 1.5(f) that reads as follows:

A fee that is nonrefundable in whole or in part shall be agreed to in a writing, signed by the client, that explains the intent of the parties as to the nature and amount of the nonrefundable fee.

We also enacted language in the Comment to the Rule to provide further guidance about this type of fee arrangement:

[4a]  A nonrefundable fee is one that is paid in advance and earned by the lawyer when paid.  Nonrefundable fees, like any other fees, are subject to the reasonableness standard of paragraph (a) of this Rule.  In determining whether a particular nonrefundable fee is reasonable, or whether it is reasonable to charge a nonrefundable fee at all, a lawyer must consider the factors that are relevant to the circumstances.  Recognized examples of appropriate nonrefundable fees include a nonrefundable retainer paid to compensate the lawyer for being available to represent the client in one or more matters or where the client agrees to pay to the lawyer at the outset of the representation a reasonable fixed fee for the representation.  Such fees are earned fees so long as the lawyer remains available to provide the services called for by the retainer or for which the fixed fee was charged.  RPC 1.5(f) requires a writing signed by the client to make certain that lawyers take special care to assure that clients understand the implications of agreeing to pay a nonrefundable fee.

At the same time that Tennessee adopted this new rule, we also adopted revised language in the Comment to RPC 1.15 to help lawyers focus on the earned/unearned distinction, rather than other nomenclature, for making a proper determination about whether money paid to the lawyer by the client should go into the client trust account or somewhere else:

[10] Whether a fee that is prepaid by a client should be placed in the client trust account depends on when the fee is earned by the lawyer.  An advance payment of funds upon which the lawyer may draw for payment of the lawyer’s fee when it is earned or for reimbursement of the lawyer for expenses when they are incurred must be placed in the client trust account.  When the lawyer earns the fee, the funds shall be promptly withdrawn from the client trust account, and timely notice of the withdrawal of funds should be provided to the client.

The Comment goes on to explain, as do other aspects of the Comment accompanying RPC 1.5, that advance fees not earned must be refunded but a reasonable nonrefundable fee does not have to be returned to a client.

Therein lies the rub, of course, or at least one of the two peskier rubs.  The reasonableness requirement that applies over and above the technical/procedural requirements of RPC 1.5(f) can still create real issues.

Just as a 60% contingent fee agreement with a client is subject to challenge as unreasonable even if the client had signed a written agreement otherwise satisfying all the procedural requirements of RPC 1.5(c), a nonrefundable fee agreement remains subject to challenge even if RPC 1.5(f) could otherwise be shown to be satisfied if the amount is unreasonable.

The other pesky rub for lawyers comes when they properly document something with their client as one thing, but then deposit it into the wrong account.  For example, being scrupulous in papering up a fee as nonrefundable and thus earned by the lawyer at the time of payment, but not having faith in the arrangement and depositing the fee into trust “out of an abundance of caution.”  Down that road lies commingling no matter how good the lawyer’s intentions.

Earlier this week, the Tennessee Supreme Court issued a new opinion involving the suspension of a lawyer (who just so happens to be the lawyer whose constitutional challenge argument on behalf of another lawyer was characterized by the Tennessee Supreme Court as “rambling and bordering on incoherent”) for multiple offenses, including charging an unreasonable nonrefundable fee.

Reading the opinion, the lawyer seems to have only attempted to treat the fee as nonrefundable after she was discharged by her client.  The opinion indicates that she believes she deposited the $10,000 into trust and then withdrew amounts from trust as billed.  And her fee agreement, as described, does not seem to have involved an effort to satisfy the language of RPC 1.5(f).   (In fact, rather than make an effort to reference that rule, the agreement referenced instead a 1992 Formal Ethics Opinion that interpreted pre-2003 versions of the ethics rules.)

Nevertheless, even if the lawyer had a well-documented agreement making the $10,000 payment a nonrefundable fee, the facts as they played out were ones in which I suspect most lawyers in Tennessee would likely end up agreeing to refund a substantial amount of the difference between the $10,000 paid up front and the roughly $2,000 worth of work performed at hourly rates before the client discharged the lawyer.  Questions certainly exist in Tennessee about how RPC 1.5(f) will be interpreted with respect to the timing of how to determine reasonableness and whether you only evaluate it prospectively, or retrospectively, or a little of both, but I don’t think many lawyers would want these kinds of facts to be involved in any test case addressing those issues.

Fortunately, the Court did take this opportunity to stress the earned/unearned distinction now spelled out in the Comments to our rules with a reference to one of the best sources of discussion for the distinctions to be drawn among the three arrangements lawyers manage to call “retainers” these days, a law review article by my friend Doug Richmond.

Thus, to the extent that lawyers in Tennessee may continue to focus on what they call a fee when trying to figure out where it should be deposited, our Court considers a “classic” or “true” retainer — a payment to ensure lawyer availability — as earned when paid.  Likewise, “advance fee retainers” are considered to be synonymous with “fixed” or “flat” fees, and also earned when paid.  Thus, both of these types of “retainers” should not go into a client trust account.  The third type of “retainer,” the “security retainer” — the type of advance fee payment that you draw down from as you perform work (i.e. what the $10,000 paid to this now-suspended lawyer actually was — goes into the trust account because at the time it it paid it is not yet earned.

Update – Caveat requestor is where we will stay in TN.

I’ve previously written about a pending rule revision in Tennessee that the BPR initiated and to which the TBA responded here.  Last week the Tennessee Supreme Court entered this order and adopted essentially the language that the BPR was seeking and did not incorporate the suggestions the TBA made that would have actually provided the protection that the rule proposal was supposedly seeking.

So, effective as of October 6, 2015, the language of the rule governing the issuance of informal ethics opinions by disciplinary counsel to lawyers in response to oral or written requests will read as follows:

(c)  An advisory ethics opinion may be issued by Disciplinary Counsel when there is readily available precedent.  The advisory opinion shall not be binding on the Board and shall offer no security to the person requesting it.  All requests for advisory opinions, oral and written, and any response by Disciplinary Counsel shall be confidential and shall not be public records or open for public inspection except as subject to waiver by the requesting attorney or as otherwise provided in Section 32.

Whether this has accomplished anything of any value, in my opinion, remains to be seen, but I am doubtful.

If the concern and problem was only a public records law issue, then the Court’s ruling has fixed that situation.  If the concern though, as the BPR’s own filings in support of the revision indicated was in the mix, was that lawyers seeking guidance in the form of informal ethics opinions from disciplinary counsel may be at risk of not complying with RPC 1.6(b)(4) (the exception to the confidentiality rule that permits lawyers to disclose client confidential information to get advice on their own obligations under the rules) because the communication is not one that is protected as privileged when it is made, then this revision really does nothing to address that concern.  Comment [9] to our RPC 1.6(b)(4) still indicates that disclosure can only be made if the disclosing lawyer makes sure it will be protected as attorney-client privilege.  For lawyers like me, who need lawyers to be willing to pay to retain private counsel in order to make sure that the advice that they receive complies with the rules, the fact that the Court didn’t go down the path offered by the TBA is, selfishly, a good outcome.  But, for lawyers who opt to seek out free advice from disciplinary counsel, it means that they really need to be careful and see if they cannot manage to seek and obtain the advice without getting into much detail beyond generalities or, at least, find a way to use pseudonyms for the folks involved to avoid disclosing any RPC 1.6 information.

But what is really the most disappointing development is that, to the extent this rule proposal opened up an opportunity for the BPR to openly embrace, or for our Court to require, the BPR to leave the advice-giving function to its Ethics Officer and not other disciplinary counsel who also pursue investigations or litigate disciplinary cases, that opportunity was spurned.  And that means that lawyers posing requests to disciplinary counsel under Rule 9, Section 5.4(c) really do need to be wary because there doesn’t seem to me to be any protection in the rule, as revised, against the information disclosed by the lawyer in seeking the informal opinion to be freely disseminated among disciplinary counsel at the BPR and using such information against that lawyer in a subsequent disciplinary proceeding (including one that could be sparked by the very inquiry itself).

Your IT pro is your best friend, but can’t always protect you from fraud.

Last week I was confronted with another example of how valuable excellent IT professionals can be for practicing lawyers.  As routinely happens, our firm’s spam filter trapped a significant number of emails last Wednesday. Because legitimate email sometimes gets wrongly blocked or filtered, our IT folks also review what gets caught in the filters.  Last Wednesday, our IT gurus noticed an email that, if given the benefit of the doubt, could potentially be a legitimate effort by a lawyer in another state to share with me a document through a well-known online document sharing service.

I was asked by our IT department if I recognized the sender and whether the email address being used was legit.  I did and it was, but there were still enough peculiarities about the details of the email that the IT folks were skeptical about whether it was legitimate or the result of hacking or spoofing.  Although this lawyer might very well have a reason to be in touch with me (I do have a blog read regularly by perhaps a dozen people after all), I had to admit that I wasn’t expecting to hear from this lawyer.  I agreed to send a new email to the person explaining what had transpired on our end and asking “did you mean to send me some documents through [high-profile service],” fairly quickly, a response came back from the person’s email address that was short and sweet:  “Yes i did.”

Now I was distracted by other aspects of what I was doing along with dealing with this issue and I really had not focused on the fact it was a little early in this person’s part of the world for them to be sending the first email and the fact that the response email was a little too pithy to be consistent with their personality, but the folks who handle IT for a living at our firm have a much more singular focus and not only weren’t distracted but were still quite concerned about details of the email and, most particularly, that one of the links in the email appeared to be pointing to an IP address in French Polynesia rather than to anything affiliated with the document sharing service.  Relying on that person’s expertise, it was easy for me to agree that it was more likely that the intruder who had hacked into this person’s email was sufficiently in control to be drafting replies sent to the email account then than (edit: and thx to a loyal reader for catching the error) that the lawyer had really tried to share a document with me using a file sharing service.

I’m relatively tech savvy and would like to think that, even without the involvement of the IT professional, I would never have clicked on a link that when hovered over didn’t look right, but having such high-quality IT folks in my corner made sure that I never even had the opportunity to make that mistake.

Unfortunately, not every situation is one where your IT folks can protect you from falling victim to fraud.

Much has been written online about financial scams targeting lawyers.  A few better pieces available online discussing various aspects of these issues can be found here, here, and here.  Gone are the days when such scams were as easy to see through as the Nigerian Prince emails.  Instead, common current scams involve contacts from companies that on paper actually exist  and that want to hire you to pursue litigation against someone who owes them money or to pay you to defend them in a case where they are accused of owing someone else money.  Once you agree to be hired, the case then quickly settles and the settlement proceeds flow through your trust account and you are instructed to quickly send the proceeds, minus payment for yourself of course, to the party owed the money under the settlement agreement whether that is your client or the other party (depending on the variation of the scam being deployed).  Any lawyer that acts too quickly, however, comes to find out that the funds were no good – money orders forged or wires reversed or checks bounce – and the lawyer is left holding the bag and trying to get out from under a hellish trust account deficit and inquiries from disciplinary counsel about RPC 1.15 compliance.

One iteration of this scheme involving forged money orders, shell companies on both sides controlled by the fraudsters, and with an interesting twist also involving hacking and spoofing of law firm email accounts can be studied in this story today from the ABA Journal and the indictment of a Texas lawyer who was on the criminal side (rather than the victim side) of such an endeavor.

In the unforgettable words of Roy Trenneman from The IT Crowd: “People.  What a bunch of bastards.”

Traps for the Unwary – RPC 2.2: Lawyer as Intermediary

Press releases on public discipline issued by the BPR can be something of an art form and sometimes, but not always, don’t tell the whole story.  So setting aside any tea-leaf reading that might otherwise go into this one involving what sounds like a situation in which a lawyer was perhaps unknowingly used by clients to assist with some hinky efforts to shield assets, the reference to RPC 2.2 as being among the rules violated raises a fine opportunity to remind Tennessee lawyers about another trap for the unwary.

Tennessee is one of only two U.S. jurisdictions (Mississippi is the other) that still has such a rule on their books.  RPC 2.2 is pattered upon an ABA Model Rule that was quickly scuttled after adoption by the ABA.  As such, the existence of RPC 2.2 in Tennessee presents both a blessing and a curse.

If you are aware of it, and understand when it applies, it is a blessing because it makes excruciatingly clear what needs to be in your engagement letter with your various clients, what you need to say about your role, what your duties and obligations are, and when you have to terminate representing any of the clients because the situation has blown up.  If you are not aware of its existence, then it’s a curse because, given its very detailed requirements, a lawyer could find themselves incorrectly looking to RPC 1.7 and complying with those provisions to try to obtain informed consent to a joint representation only to learn later that s/he followed the wrong rule altogether.

For the lawyer involved, and the fact that this whole set-up apparently turned out to involve a gratuitous transfer, this might have become a second-level trap as Comment [4] to RPC 2.2 indicates that where what is going on is a gratuitous transfer, RPC 1. 7 and not RPC 2.2 is the relevant rule with which to comply.

But, for everyone other than the lawyer involved, this still presents a decent teachable moment to remind Tennessee lawyers that if you are undertaking to represent multiple parties in an undertaking that involves “provid[ing] impartial legal advice and assistance” to multiple parties who “are engaged in a candid and non-adversarial effort to accomplish a common objective with respect to the formation, conduct, modification, or termination of a consensual legal relations between them,” then your engagement would be as an intermediary and RPC 2.2 is the rule on point.  RPC 2.2 thoroughly details how to determine whether you have a conflict that would prevent undertaking the representation at all, what you need to do to go about getting informed consent of the multiple clients involved, and what the rules of the road are for the engagement going forward.