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Legals 16 Georgia’s New Expert Witness Rule: Daubert & More On the Cover By Robert E. Shields and Leslie J. Bryan Georgia’s New Expert 24 New Growth Industry: Racing to Georgia Courts Witness Rule: Daubert & More, page 16. Over Non-Competition Agreements By Donald W. Benson and Stephanie M. Bauer Features 32 Bankruptcy Law Changes Will Affect Business Cases Too: The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 Departments By C. Edward Dobbs and Eric W. Anderson 42 From One Georgia to Another 4 Letters to the Editor By Sarah I. Bartleson 6 From the President 46 Judge Rowland W. Barnes Endowment Fund By Lauren Larmer Barrett 12 From the Executive Director 48 Whose Data Is It Anyway? 14 From the YLD President By Jeffrey C. Morgan 56 Bench & Bar 52 State Bar of Georgia: 60 Office of the General Counsel A Record of Legislative Achievement 62 Lawyer Discipline 64 Law Practice Management 66 South Georgia Office 68 Section News 70 Professionalism Page 75 In Memoriam 76 CLE Calendar 80 Notices 94 Classified Resources 96 Advertisers Index Editorial Board Quick Dial Marcus D. Liner Attorney Discipline (800) 334-6865 ext. 720 Editor-in-Chief (404) 527-8720 Robert Henry Beer Ronald Arthur Lowry Consumer Assistance Program (404) 527-8759 Donald P. Boyle Jr. J. Kevin Moore Conference Room Reservations (404) 527-8712 Fee Arbitration (404) 527-8750 Clayton Owen Carmack E. Peyton Nunez CLE Transcripts (404) 527-8710 Erin Reynolds Chance Stephanie Ann Paulk Diversity Program (404) 527-8754 Charles Madden Cork III Cynthia B. Smith ETHICS Hotline (800) 682-9806 Lynda Carney Crum Mary E. Staley (404) 527-8741 Georgia Bar Foundation/IOLTA (404) 588-2240 Diane Lea DeShazo Robert R. Stubbs Georgia Bar Journal (404) 527-8736 David A. Dodd Thomas W. Thrash Jr. Lawyer Assistance Program (800) 327-9631 Bridgette Elizabeth Eckerson Martin Enrique Valbuena Lawyers Foundation of Georgia (404) 659-6867 Law Practice Management (404) 527-8772 John Michael Gross Kristin H. West Membership Records (404) 527-8777 Jennifer Carpenter Kane Pamela Y. White-Colbert Meetings Information (404) 527-8790 Robert Richard Long IV W. Scott Wright Pro Bono Project (404) 527-8763 Professionalism (404) 225-5040 Executive Committee Liaison Sections (404) 527-8774 Laurel Payne Landon Unauthorized Practice of Law (404) 526-8603 Young Lawyers Division (404) 527-8778 Advisor Rebecca Ann Hoelting Manuscript Submissions The Georgia Bar Journal welcomes the submission of Editors Emeritus unsolicited legal manuscripts on topics of interest to the State Bar of Georgia or written by members of the State Rebecca Ann Hoelting, 02-04 Charles R. Adams III, 89-91 Bar of Georgia. Submissions should be 10 to 12 pages, Marisa Anne Pagnattaro, 01-02 L. Dale Owens, 87-89 double-spaced (including endnotes) and on letter-size paper. Citations should conform to A UNIFORM SYSTEM D. Scott Murray, 00-01 Donna G. Barwick, 86-87 OF CITATION (17th ed. 2000). Please address unsolicited articles to: Marcus David Liner, State Bar of Georgia, William Wall Sapp, 99-00 James C. Gaulden Jr., 85-86 Communications Department, 104 Marietta St. NW, Suite Theodore H. Davis Jr., 97-99 Jerry B. Blackstock, 84-85 100, Atlanta, GA 30303. Authors will be notified of the Editorial Board’s decision regarding publication. L. Brett Lockwood, 95-97 Steven M. Collins, 82-84 The Georgia Bar Journal welcomes the submission of news Stephanie B. Manis, 93-95 Walter M. Grant, 79-82 about local and circuit bar association happenings, Bar William L. Bost Jr., 91-93 Stephen E. Raville, 77-79 members, law firms and topics of interest to attorneys in Georgia. Please send news releases and other information to: C. Tyler Jones, Director of Communications, 104 Officers of the State Bar of Georgia Marietta St. NW, Suite 100, Atlanta, GA 30303; phone: Robert D. Ingram President (404) 527-8736; [email protected]. J. Vincent Cook President-elect Disabilities Gerald M. Edenfield Secretary If you have a disability which requires printed materials in alternate formats, please contact the ADA Bryan M. Caven Treasurer coordinator at (404) 527-8700 or (800) 334-6865. Rob Reinhardt Immediate Past President Damon E. Elmore YLD President Headquarters 104 Marietta St. NW, Suite 100, Atlanta, GA 30303 Jonathan A. Pope YLD President-elect (800) 334-6865, (404) 527-8700, FAX (404) 527-8717 Laurel Payne Landon YLD Past President Visit us on the Internet at www.gabar.org. South Georgia Office Communications Committee 244 E. Second St. (31794) P.O. Box 1390 S. Lester Tate III Chairperson Tifton, GA 31793-1390 (800) 330-0446, (229) 387-0446, FAX (229) 382-7435 S. Kendall Butterworth Co-Vice Chairperson Nancy Jean Whaley Co-Vice Chairperson Publisher’s Statement The Georgia Bar Journal (ISSN-1085-1437) is published six times per year (February, April, June, August, October, Communications Staff December) with a special issue in November by the State C. Tyler Jones Director Bar of Georgia, 104 Marietta St. NW, Suite 100, Atlanta, Sarah I. Bartleson Assistant Director Georgia 30303. © State Bar of Georgia 2005. One copy of each issue is furnished to members as part of their State Bar Johanna B. Merrill Section Liaison dues. Subscriptions: $36 to non-members. Single copies: Jennifer R. Mason Administrative Assistant $6. Periodicals postage paid in Atlanta, Georgia and addi- tional mailing offices. Opinions and conclusions expressed in articles herein are those of the authors and not necessar- ily those of the Editorial Board, Communications Committee, Officers or Board of Governors of the State Bar of Georgia. Advertising rate card will be furnished upon request. Publishing of an advertisement does not imply endorsement of any product or service offered. POSTMAS- TER: Send address changes to same address. Don’t Worry About Editor Attacks on the Legal Profession we believe. And generally we are have been on the Board of the only ones with the guts to do it. We run the government, the Governors for over 30 years, churches, the business world, the and active in Bar affairs for military, etc. Every athletic team has I a lawyer, every art museum, every over 40. I am always amazed and recording studio, you name it. Contrary to popular opinion, letters to the amused at the constant and contin- most of us are well read intellectuals uous concerns voiced by members who will jump into the middle of a fray in a heartbeat. of the Bar, that our profession is The average person will never under attack. understand us and will never like us. No one likes anyone who they We have always been under believe is smarter than they are and attack. There is a line in one of can do no harm. Shakespeare’s plays written over If you want to be popular, be a 400 years ago, “the first thing we doctor, a preacher, or the village need to do is kill all the lawyers.” I idiot. If you want to make a differ- might remind you that after all that ence and walk a long, lonely road, time, we ain’t even on the endan- be a good lawyer. gered species list. Someone in France once said, Let’s face it. We as a profession “Everyone loves justice, but a just are never going to win any popular- man has few friends.” ity contests. We are always in the Don’t worry about it. thick of things. We champion unpopular causes because of what Alvin Leaphart August Bar Journal Arbitration Article
I began reading with high 1. Arbitration should be limited hopes, but ended with them because “attorneys comfortable dashed. The August article on with … the courtroom often Arbitration cited four astound- find it difficult to modify their ing—and unsubstantiated - propo- approach” for arbitration. sitions prior to the first footnote: 2. We “find it difficult to restrict
4 Georgia Bar Journal the scope of the traditional discovery process.” 3. “Arbitrators too often ‘split the baby.’” 4. Businesses will be less likely to have arbitration clauses because of potential arbitration of class actions. In response to these unsupported claims, (1) attorneys were more comfortable with demurrers and quill pens at one time, too; (2) see #1; (3) if attorneys stake out extreme positions, then a finding in the middle would be closer to justice, not splitting; and (4) if arbitration works for one claim and saves $1,000, then using it for a class claim of 1,000 would save $1,000,000: what’s not to like about that? After an examination of the AAA’s class action policy the authors state that “the AAA has taken the position that a separate class action arbitration demand may be filed on behalf of each and every potential named claimant …[thus]… a separate arbi- trator must hear each separate class action demand filed, unless the claimants consent to consolidation.” Curious. First, the AAA does NOT take such a posi- tion—see its Rule 4(a) which makes the determina- tion of class status a decision for the arbitrator; and second, if the problem is—as alleged—that class actions are bad for business in arbitrations, then avoiding class actions by individual claims would be good for business (if it were the rule, which—as noted—it is not). Now let it not be said that I am a “fan” of the expensive and slow and bureaucratic AAA—I am not. But in commercial realms, arbitration before an arbitrator paid to be good and paid to pay attention is better than a hearing before a judge who is neither. I note that the authors’ combined 20 years’ experi- ence has resulted in only 6 reported cases in Westlaw, none of which relate to arbitration—which may explain the lack of perspective on the issue.
John T. Longino, MBA/JD
Correction
On page 27 of the August 2005 Georgia Bar Journal, slain Superior Court Judge Rowland W. Barnes’ name was misspelled. The staff apologizes for the error.
October 2005 5 Judicial Independence: Inspiration for America’s Independence By Robert D. Ingram
making and of enforcing the laws is udicial independence has vested in one and the same man or long been a cornerstone for the same body of men... there can be no liberty.” While the law would be the American way of life.
President created by the legislative and execu- J tive branches, in a rough and tum- The importance of an independent ble environment where partisan- judiciary was certainly not lost on ship often reigns supreme, it would be interpreted and applied by an our nation’s founders. In fact, the independent judiciary. Although political parties play important quest for an independent judiciary, roles in influencing decisions made which was not allowed by the king by the executive and legislative
from the branches, our founders attempted of England, was one of the motivat- to remove this pressure from judges ing factors for those who signed the who were given lifetime appoint- ments so that judicial decisions Declaration of Independence. Those could be made by fair-minded “The public needs to jurists without regard to politics. signing expressed a number of rea- hear how hard the Today’s Judiciary sons for declaring independence third or judicial Fast-forward to October 2005, including the following: and we find that many Americans branch is working to [The king] made judges dependent do not understand the role of the fulfill the function on his will alone, for the tenure of their judiciary. In a recently completed offices, and the amount and payment of poll sponsored by the ABA, 82 per- intended by our their salaries. cent felt that separation of powers is How many of those who now important, but only 45 percent cor- founders of peaceful- question the independence of our rectly understand the concept. Only ly resolving disputes judiciary recognize its presence at 55 percent knew the three branches the core of the freedom and inde- of government. Lawyers and judges with the help of aver- pendence sought and established need to be invested in educating the age citizens serving by our nation’s founders? public about these issues. Alexander Hamilton and many oth- In Georgia, approximately 1,500 on juries.” ers rejected allegiance to the British men and women struggle daily to crown because the judiciary was fairly resolve disputes and to dependent upon the king, and the administer justice. Along with their parliament could override any judi- capable staff, Georgia judges were cial ruling it disliked. able to process more than 2.7 mil- Our founders established a gov- lion cases last year using less than 1 ernment with three equal, coexis- percent of the state’s budget. The tent branches, in an effort to balance public needs to hear how hard the power. They agreed with third or judicial branch is working Montesquieu that if “the right of to fulfill the function intended by
6 Georgia Bar Journal our founders of peacefully resolv- recognize that the judiciary should Georgia “...are demanding their ing disputes with the help of aver- refuse to bow to political pressure freedom, and they shall have it.” age citizens serving on juries. and public opinion from the left or Our president’s speech empha- No Opinion Poll the right. Only then is the judiciary sized America’s admirable goal of fulfilling the independent role our spreading freedom and democracy Necessary to Dispense founders intended. throughout the world. Following American Justice Ruthless Tyrants Hate his speech, President Bush met with leaders of the political opposi- America’s constitutional democ- Judicial Independence tion and was told that Georgia’s racy created a delicate balance democracy was still superficial between the power of the majority America’s 200-year history of a because it lacked a strong and at the ballot box and the protection strong and independent judiciary independent justice system. of the minority with the freedoms stands in stark contrast with Burgeoning democracies around and liberties that are guaranteed by authoritarian governments like the world see the need for a strong the Bill of Rights. Hitler’s Nazi Germany, Stalin’s and independent judiciary in their The role of the court is to fairly Soviet Union, the Taliban’s search for the freedom and liberties interpret and apply the laws creat- Afghanistan, or Saddam Hussein’s which have given us the American ed by the legislative and executive Iraq, all of which had two things in way of life. Although lawyers and branches. Judges are called upon to common: (1) a dependent judici- judges see the courts as an important apply the law without regard to ary, and (2) a weak or non-existent check on the power of government public opinion polls or the popu- legal profession. Respect for the and as our last bastion of protection, larity of the decision. In fact, judges rule of law and the ability to access many who have not had their life, erode public trust and confidence if justice was only a dream under liberty or property threatened fail to they do otherwise. those authoritarian governments. appreciate the court’s role. The State Americans rich and poor, U.S. Justice System – Bar needs to be a player in educating Republican and Democrat, conser- Protecting America’s the public on these issues. vative and liberal, should each expect the judiciary to render jus- Way of Life Respect for Rule of tice without regard to the status, Earlier this year, I watched with Law Goes Both Ways popularity or perceived power of pride when 300,000 people cheered My parents taught me that if you the parties before it. Those who in the former Soviet Republic of want respect, you must give it. If we understand the beauty and com- Georgia as President Bush declared want the legislative and executive plexity of America’s justice system that the oppressed people of branches to recognize and respect SOUTH GEORGIA ADR SERVICE, LLC
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October 2005 7 the independence of the judiciary, Supreme Court landmark ice and State Bar Commun- then we must show our own respect ruling ending segregation ications Director to provide for the rule of law as it applies to in schools (2003 program) suggestions to state, local and their roles. Lawyers and judges must • Dialogue on American Jury, specialty bar leaders on break- recognize that constitutional laws “We the People in Action” ing news stories impacting must be fairly interpreted and emphasizing right to trial by justice system and legal pro- applied even if we do not like them. jury as cornerstone of indi- fession Our remedy for bad laws that do not vidual freedoms guaranteed 9. Utilize media consultant violate the Constitution is to partici- by Bill of Rights (2004 pro- • Help draft clear and concise pate in the legislative process more gram) message points for current effectively. In an effort to do just that, 4. Prepare educational handouts events the State Bar needs to provide lead- on importance of: • Open doors and introduce ership in educating the public and in • Independent judiciary bar leaders to local newspa- building relationships with legisla- • Rule of law in America’s per editors to help spread tors so that our input will be consid- constitutional democracy truth about lawyers and jus- ered. The Foundation of Freedom • Role of lawyers in preserv- tice system Commission, chaired by Rob ing America’s way of life 10. State Bar Communications Reinhardt and vice-chaired by Jay 5. Create lists of opportunities Tool Kit Cook, is seeking to lead Georgia’s for lawyer participation in • Educating public about lawyers and judges in developing an public legal education value of lawyers (Wisconsin overall public legal education strate- • After-school programs Bar Project) gy. Below is a Draft Operational Plan • Law Day programs ❑ Value lawyers bring to to be considered by the Commission: • Career Day programs clients and communities FOUNDATION OF FREEDOM • Civic clubs/organizations ❑ Role of lawyers in provid- • Local business associations ing expert advice, problem COMMISSION - DRAFT • State/local Chamber of solving and community OPERATIONAL PLAN Commerce programs service A. Public Legal Education (a • “Ask a Lawyer” call-in radio 11. Jury Education memoran- process, not an event) shows dum/video • Lawyer/Student Education • Work with Councils of 1. Draft speeches and message- Program Superior and State Courts to point memos to assist lawyers • “Youth Justice in America,” prepare memo and in educating public about jus- a youth-focused exploration video/DVD designed to tice system and legal profes- of the criminal justice system educate citizens reporting sion • Publication We the Students for jury duty about vital role 2. Utilize brochures dispelling covers the most interesting our nation’s founding lawyer myths (Past-President Supreme Court cases for and fathers intended for the jury Bill Cannon project) about students system 3. Promote Justice Kennedy / 6. Educate and utilize Board of • Emphasize important role of ABA Dialogue on Law Governors to solicit assistance lawyers and judges in Program of local and specialty bar asso- administering rule of law • Designed for high school stu- ciations in public legal educa- through the justice system dents and community/civic tion • Emphasize importance of organizations regarding 7. Develop lawyer speakers independent judiciary important legal topics bureau list • Emphasize importance of • Dialogue on Freedom (2002 • Recruit lawyers with pas- providing access to justice program) sion and conviction about 12. American Juror Project • Dialogue on Brown v. Board legal profession and justice • Program to help citizens of Education commemorat- system understand critical role ing 50th anniversary of 8. Utilize State Bar eNews serv- jurors serve in U.S. justice
8 Georgia Bar Journal system (Texas Bar project) nesses, defendant, plaintiff with Georgia Bar Foundation ❑ Informative video with and jurors and the Civil Justice movie clips from “My • Age-adapted scripts for Foundation Cousin Vinnie” and “The mock trials 3. Georgia Association of Verdict” while educating • Elementary school students Broadcasters Partnership and inspiring citizens might try the “big bad wolf” Program about jury service for assault or “Goldilocks” • The Alabama, Missouri and ❑ Dispels common miscon- for theft and trespass South Carolina State Bars ceptions about jury service • High school students might have had successful media B. Bar Center Utilization (maxi- prosecute school vandalism, programs mize use in public education) DUI accident case or defend ❑ Educating public about the 1. Justice Kennedy’s “challenge” a personal injury arising value lawyers bring to at Jan. 15, 2005, Bar Center from automobile accident their clients Dedication Ceremony • Students to be taught about ❑ Educating public about • “One of the most important the vital role jury trials play importance of a strong and obligations of each genera- in the American justice sys- independent judiciary tion, and especially the bar, tem D. Rapid Media Response is to transmit the idea of 4. Legal History Museum Program freedom and the importance • State Bar is working with 1. Ohio State Bar Media of the rule of law to the next Georgia Legal History Response Program utilizes a generation.” Hon. Anthony Foundation to create a media consultant to assist bar M. Kennedy, Justice, United Museum of Law open for leaders in responding rapidly States Supreme Court school tours to unfair and unjust criticism 2. Student Education ❑ Highlight landmark deci- against the judiciary • Bar Center provides many sions E. State Bar Web Site opportunities for student ❑ Highlight trial by jury 1. Include written message education because of its ❑ Provide facts on juries as points and speeches for easy location in the heart of the democratic institution access for lawyers and judges state’s most sought-after ❑ Highlight quotes from 2. Create local bar activities page field trip venue, including: American leaders on jury for purpose of posting and ❑ Centennial Olympic Park trials promoting their activities and ❑ CNN Center 4. Lawyer-President Woodrow community service projects ❑ Philips Arena Wilson’s Office F. Lawyers in Legislature ❑ Georgia Dome • President Wilson’s 1882 law 1. Encourage lawyers to offer ❑ Georgia World Congress office in State Bar lobby gen- their time for political office Center erates interest for ABA’s including Legislature ❑ Future World of Coke site Lawyer-President exhibit 2. Support lawyers running for ❑ Georgia Aquarium • Critical role lawyer-presi- public office by volunteering, • More than 50,000 Georgia dents played in developing working in campaigns and school children should bene- America’s constitutional helping in fund raising fit from their interactive day freedoms/liberties guaran- G. Lawyers in Chamber of as participants in the judicial teed each citizen Commerce process and as observers at C. Explore Public Broadcasting 1. Join local, state and national the Legal History Museum Service Partnership Chambers of Commerce and in the State Bar Center 1. Allows non-profit organiza- become active within organi- 3. Mock trial courtroom tions to participate in public zations to help business lead- • Students will serve in education programs on radio ers identify lawyers as col- assigned roles as judge, and TV at substantially leagues and to provide the prosecutor, defense counsel, reduced rates legal profession with a voice bailiff, court reporter, wit- 2. Explore funding opportunities at the table
October 2005 9 H. Law School for Legislators communication experts which will many in order to effectively deliver 1. Develop annual training pro- resonate with Georgians from the message. Although the task is gram for new and veteran leg- Valdosta to Brasstown Valley and formidable, and many naysayers islators providing instruction from Savannah to Columbus. Our will try to discourage our efforts, on constitutional issues, role primary message topics include: the stakes are too high to sit by of judiciary as third branch of 1. Importance of judicial inde- idly. For those willing to help us in government, role of lawyers pendence; this effort, we ask that you call on in America’s constitutional 2. Access to justice for all; or send an email to the State Bar democracy, and practical tips 3. Respect for the rule of law; Communications Director, Tyler on drafting legislation 4. Role of American citizen Jones, at (404) 527-8736 or I. Law School for Journalists juries; and [email protected]. 1. Develop annual program for 5. Role of lawyers in preserving We not only request your partici- print and media journalists America’s way of life. pation but also your prayers as we 2. Educate regarding: Once the message is developed, begin a long term process of rebuild- • Common misconceptions all Georgia lawyers and judges will ing public trust and confidence in about justice system and be needed to help deliver it. Our our system of justice so that justice legal profession effort will be multifaceted and will will continue to be a reality to all • Truths about jury system involve building relationships with Georgians who seek it. • Importance of independent judiciary and the role of our Foundation of Freedom Commission Members third branch of government J. Legislator/Lawyer George R. Reinhardt Jr., Chairperson Communication Project J. Vincent Cook, Vice Chairperson 1. State Bar is developing a data Robert L. Allgood John T. Marshall base which matches lawyers Otis A. Brumby Jr. Johnny W. Mason Jr. with the legislators elected William E. Cannon Jr. Gary C. McCorvey from their home towns in an *Ronald L. Carlson Phyllis Miller effort to increase opportuni- *Stan Carter Samuel S. Olens ties for lawyer input through Robert W. Chasteen Jr. E. Wycliffe Orr Sr. increased communications Harold G. Clarke Paul W. Painter Jr. with local legislators Melodie H. Clayton James G. Richardson K. Take Your Legislator to Court Foy R. Devine *Helen Ridley Program C. Wilson DuBose David E. Shipley 1. State Bar to work with Board A. James Elliott *Betty L. Siegel of Governors members and Norman S. Fletcher Lamar W. Sizemore Jr. superior and state court James B. Franklin Mary E. Staley judges to arrange for legisla- Marjorie Girth S. Lester Tate III tors to visit their respective Hardy Gregory Jr. Thomas W. Thrash Jr. Adele L. Grubbs Derek Jerome White local court houses to observe a Joseph J. Hennesy Jr. Executive Committee Liaison trial or hearing, meet local Willis B. Hunt Jr. Gerald M. Edenfield judges and develop a better G. Conley Ingram understanding of the court’s Frank C. Jones Staff Liaison operations and needs. Steve C. Jones *Tyler Jones Goal of Foundation of Linda A. Klein Freedom Commission W. Pope Langdale III Reporter E. R. Lanier *Linton Johnson Our goal with the Foundation of Allegra J. Lawrence Freedom Commission is to develop Patrick E. Longan * Denotes non-attorney messages with the assistance of
10 Georgia Bar Journal ELECTRONIC SERVICE Service…
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nent that emphasizes school stu- t the Bar Center dents. We have the Georgia Law Related Education Consortium Dedication ceremo- with 15 years of experience in this ny earlier this year, area. We have a new Foundations Executive Director A of Freedom Program, which will U.S. Supreme Court Justice show Georgia citizens how the Anthony Kennedy said, “One of the rule of law and our justice system protect each American’s life, lib- most important obligations of each erty, property, security and opportunity. In short, we make a generation and especially the Bar, is huge difference and you will hear to transmit the idea of freedom and more about those efforts in
from the upcoming months. the importance of the rule of law to The following editorial was pub- lished in the Saturday, April 16, the next generation.” This has never “Recent news 2005, issue of the Houston Chronicle. been truer than it is today. It was written by State Bar of Texas events have Immediate Past President Kelly Justice Kennedy is an inspira- Frels. I hope you find it to be as compounded and tional speaker who really makes interesting and on target as I did. heightened what I you think about what your goals should be. As my father used to *** have found say to me almost daily, Recent news events have com- “Remember who you are.” In this pounded and heightened what I to be a consistent case we are members of the pro- have found to be a consistent nega- negativism and fession best qualified by educa- tivism and lack of knowledge about tion and experience to meet the our system of justice. It is directed lack of knowledge obligations expressed by Justice not just at lawyers, but also at Kennedy. And we have the judges, juries and the rest of our about our resources to do the job well. We third branch of government. system of justice.” have 36,700 lawyers and judges Have we forgotten our high already well trained in civics. We school civics lessons? We might all have a new Bar Center with a recall that the framers of the United strong public education compo- States Constitution created three
12 Georgia Bar Journal As a free society, we must all remember our Public discourse, even criticism of judges or the judicial system, is civics lessons, educate our children, and ensure our right under the First Amendment; but threats of retribu- that the adult population knows how and why tion against judges in the environ- ment of judges being the victims of our judicial system works the way it does. violence and death is unacceptable. branches of government: the leg- cians excoriated judges at all levels of Instead, we must help secure the islative, the executive and the judi- our judicial system for their per- individual safety of all judges so cial. Each has an important role in ceived arrogance and lack of defer- they can independently administer our democratic republic. ence to the wills of members of the laws without fear of retribution. A strong and independent judici- Congress. It seems “activist judges” We must firmly support the ary is essential to our democracy and often equates not to whether a partic- integrity of a strong and independ- freedom. This lesson was reinforced ular judge followed the law but ent judiciary. If citizens do not like to me when I visited Eastern Europe whether the person making the accu- the result of how a law is applied last year supporting a United States sation agreed with the judge’s ruling. by the courts, they can change the sponsored program to encourage the In times such as these, we should law through the legislative process. teaching of democracy in schools. We recognize that judges are called The recent approval of tort reform, found emerging democracies such as upon daily to rule in cases to protect regardless of your views on the Romania struggling to establish an the rights and liberties afforded to issue, demonstrates that legislative independent judiciary, a condition of all of us by our Constitution and change is a viable process. joining the European Union. laws. Judges do not have control As a free society, we must all I perceive the recent attacks on over the cases they hear, so judges remember our civics lessons, edu- judges in the United States as will inevitably become involved in cate our children, and ensure that symptomatic of a broader assault high profile cases where someone is the adult population knows how on our system of justice. Under the sure to find the results offensive. and why our judicial system works United States and Texas Each judge must rule solely on the the way it does. Legislative bodies Constitutions, the legislative Constitutions of the United States make the laws and members of the branch makes the laws and the and Texas plus other laws passed by judiciary apply the laws to the facts courts apply those laws to the facts Congress or the Texas Legislature. before them. of each case. In a recent conversa- All jury verdicts and lower court Most important, in our public tion, a former social studies judgments are, of course, subject to discourse and our private conver- teacher, now serving as an elected review and change by appellate sations, we must affirm and sup- representative in local government, courts. Members of the public must port our judicial system as an inde- criticized activist judges. When resist judging the judicial process pendent third branch of govern- reminded that many decisions are until the appellate process is com- ment. Our system of democratic reversed on appeal, he replied, pleted. Many lower court decisions government, the most admired in “The judges should have ruled like are reversed or modified on appeal. the world, depends on it. I wanted them to in the first place.” After 35 years as a lawyer, I’m *** The recent killings of the family accustomed to lawyer jokes and I would like to thank Kelly Frels members of a federal judge in unfriendly comments about my pro- for so eloquently addressing this Chicago and of a state judge and fession. Occasionally they’re important issue and letting us use three others in a courthouse in deserved. More often, they’re not. his opinion piece in the Georgia Bar Atlanta, as well as a courthouse But it hits close to home when Texas Journal. Your thoughts and sugges- shooting in East Texas, briefly politicians weigh in, especially when tions are always welcome. My tele- focused the nation’s attention on the the targets are judges. After Terri phone numbers are (800) 334-6865 courageous and commendable sacri- Schiavo died, some declared omi- (toll free), (404) 527-8755 (direct fice and service of the members of nously that judges will “answer for dial), (404) 527-8717 (fax) and (770) our judiciary. But during the final their behavior,” and impeachment of 988-8080 (home). weeks of Terri Schiavo’s life, politi- some judges was suggested.
October 2005 13 President A Little Bit of Praise Can Go a Long Way By Damon E. Elmore
the younger members of the Bar YLD ou gotta understand, have commented. Sometimes it seems we may even overlook it. It is it is tricky drafting the human capital involved in our analytical columns for practice and execution of the busi- Y ness of the law. Those are the peo- the Journal without sounding self- ple who are your colleagues, and serving or, worse, preachy. Survey associates who, more often than not, are new and young lawyers. any of my law school professors I repeatedly wonder whether we, from the those of us who have been practic- and they will tell you it is probably ing for some time, view our practice best if I leave the legal analysis and partners (this includes private prac- tice, government attorneys and cor- opinion to my colleagues on the porate attorneys alike), as inde- “I have come to pages that follow. More important- pendent contractors and do not consider them as true members of learn that we should ly, I have not thought about the I-R- the team. Look, I respect the food chain A-C method in years. keep in mind that and definitely know my place this thing we do Do not get me wrong; I do like within it. However, it is important those articles of analysis, especially that we maintain a sense of duty called ‘lawyering,’ when your YLD members assist as sculptor and conveyor of the is supposed to be with their drafting. It seems to me constant stream of appreciation that it is important for us all to be that should be given to our team more than just time constantly aware of the changes members. It is important that we and nuances in our profession, consistently display this quality at the office.” despite practice area. Therefore, I so that our younger lawyers not reserve the right to bore you with only receive that appreciation, but my vast knowledge and expertise also learn how to give it when on the Daubert standard for future their time comes. This is most editions. important as the newest members Lately, I have found myself of the Bar develop in their practice focused on an area of practice not and take on leadership roles. With often glamorized and one which buzz phrases like “mentoring,”
14 Georgia Bar Journal “perception of the profession” uine interest in the efforts of our Younger lawyers have often said and “image” of lawyers circulat- newer colleagues, we will create a that the “old hand” attorneys they ing each day, it is important for more productive working environ- most respect are those that take the us to build and maintain these ment. Sit in on a hearing of one of time to create a sense of connection relationships. our young associates, even if it will through these informal and non- Often, if you ask a young child, not appear in the Fulton County routine events. “What do you want to be when you Daily Report, and compliment them I have come to learn that we grow up?” they will tell you, “A on the job done. I reflect upon the should keep in mind that this thing lawyer!” So when those kids grow input I received from veteran attor- we do called “lawyering,” is sup- up to realize their dreams, what are neys and remember how much it posed to be more than just time at the rewards for getting the job helped in my development as an the office. Come on you guys, we done? We all enjoy the firm attorney. Likewise, accept an invi- are those kids who are, theoretical- retreats, summer associate happy tation to the bar league softball ly, living out our dreams. Done hours, holiday parties, year-end game (even if it is just for the fel- well, our profession can take on the bonuses and the like. But, does it lowship afterward); community same characteristics as a deep circle take a bit more? service project; mentorship oppor- of friends. After all, a little bit of I recently read, “few things feel tunity with a law student or recent praise can go a long way. Tie them better than heartfelt praise and admitee; or to the associate outing both together, and it will grow appreciation from someone else.” It in Augusta, Columbus, Peachtree closer to the level of family for should follow that if we show gen- City, or wherever it may be. future generations of lawyers.
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October 2005 15 Georgia’s New Expert Witness Rule: Daubert & More
By Robert E. Shields and Leslie J. Bryan he 2005 Georgia Legislature adopted a far-reaching tort reform package. In T one broad piece of legislation, the General Assembly: ■ Abolished Georgia’s long history of joint and several liability;1 ■ Changed Georgia’s venue provisions;2 ■ Added criteria to the required O.C.G.A. § 9-11-9.1 affidavit for plaintiffs asserting claims for professional negligence;3 ■ Forced medical malpractice plaintiffs to relinquish federally-protected rights under the Health Insurance Portability and Accountability Act of 1996;4 ■ Adopted a confusing offer of judgment provision;5 ■ Altered the evidentiary rule concerning the admissibility of statements against interest;6 and ■ Created a new rule on the admissibility of expert testimony loosely based on the federal Daubert rule.7 It is this last provision that is the subject of this paper. The Development of the Daubert Rule The so-called “Daubert rule” refers, loosely, to four United States Supreme Court opinions: Daubert v. Merrell Dow Pharmaceuticals, Inc.,8 General Electric Co. v. Joiner,9 Kumho Tire Co. v. Carmichael,10 and Weisgram v. Marley Co.11 These four cases, and literally thousands of lower court decisions citing them,12 establish the basis for admitting expert testimony in the federal courts. The facts in Daubert v. Merrell Dow were simple. The plaintiffs alleged that the ingestion of the anti-nausea drug Benedectin during pregnancy caused birth defects. At issue was the standard for ruling on the admissibility of the plaintiffs’ expert causation evidence. The trial court rejected the plaintiffs’ expert
16 Georgia Bar Journal testimony, holding that the experts’ dence can reverse and render judg- mer Federal Rule 702 or Rule 702 as opinions were not “sufficiently ment if, without the rejected evi- amended to incorporate the established to have general accept- dence, the remaining record evi- Daubert standard. Georgia law did ance.”13 The United States Court of dence is insufficient to sustain the not provide for the broad “gate- Appeals for the Ninth Circuit verdict. keeper role” described in Daubert. affirmed.14 The United States The Daubert rule has had far- To the extent that prior Georgia Supreme Court granted certiorari reaching and unanticipated conse- law allowed trial judges to act as a to resolve a split in the circuits. quences in the federal courts.17 “gatekeeper” at all, that role was Like the facts, the Court’s hold- Now, the Georgia Legislature has appropriate only when a party ing was simple, but its impact has attempted to adopt the Daubert attempted to introduce the results been enormous. In Daubert, the rule18 and has replaced Georgia’s of a novel test or technique. Supreme Court held that, because historic rule on expert testimony, at The basis for Georgia’s historic of the adoption of the Federal Rules least in civil cases. In this article, rule was O.C.G.A. § 24-9-67, of Evidence, the standard for deter- we discuss Georgia’s historic which provided in part, “The mining the admissibility of scientif- approach to the admissibility of opinions of experts on any ques- ic opinion evidence could no expert testimony, review the spe- tion of science, skill, trade or like longer be the “general acceptance” cific provisions of the new rule, questions shall always be admissi- test that originated in Frye v. United and explore some of the concerns ble.” Thus, the Supreme Court of States15 because Rule 702 of the that have been raised because of Georgia repeatedly held that, pro- Federal Rules of Evidence sup- opinions coming out of the federal vided an expert is properly quali- planted Frye with a more “flexible” courts. fied in the field in which he or she 16 approach. This more flexible The Historic Rule in offers testimony and the facts approach is sometimes referred to relied upon are within the bounds Georgia and the as the scientific reliability test. The Daubert of the evidence, whether there is a trial judge, as the “gatekeeper” of Contrast with sufficient basis upon which to base the admissibility of evidence, The Georgia Court of Appeals an opinion goes to the weight and should determine whether expert and the Supreme Court of Georgia credibility of the testimony, not its testimony is scientifically reliable have declined to adopt the Daubert admissibility.23 and “fits” the facts of the case rule on several occasions. In Orkin The Supreme Court of Georgia before it can be presented to the Exterminating Co v. McIntosh, the adopted an exception to the gener- jury. The Court’s holding in Court of Appeals rejected the al rule in a criminal case, Harper v. Daubert was codified in 2000 by an Daubert rule on the ground that it State.24 In Harper, the court was amendment to Rule 702. was based on the Federal Rules of asked to evaluate the standard for Building on its opinion in Evidence, which had not been determining whether the results of Daubert, the Supreme Court ruled adopted by the Legislature in an interview, conducted while the in Joiner that review of a trial Georgia.19 The Court of Appeals defendant was under the influence judge’s rulings on expert evidence ruled similarly in Jordan v. Georgia of truth serum, were admissible. would be limited to an abuse of Power Co.20 The Court of Appeals The Court rejected the Frye rule of discretion standard. In Kumho Tire, also refused to adopt the Daubert “counting heads” and instead held the Court broadened the reach of Rule in Norfolk Southern Railway v. that it was proper for the trial judge Daubert to impose the new eviden- Baker.21 The Supreme Court of to decide whether the procedure or tiary standard on all expert testi- Georgia twice granted certiorari to technique in question had reached mony, and not merely to the “sci- consider whether to adopt the a scientific state of “verifiable cer- entific” evidence that was at issue Daubert rule, but in both instances, tainty.” This verifiable certainty in Daubert and Joiner. Finally, in after briefing and oral argument, it test, however, did not address the Weisgram, the Court ruled, basical- ruled that certiorari was improvi- admissibility of the opinions of ly, that litigants get one bite at the dently granted.22 expert witnesses generally; instead, apple. Under Weisgram, federal Georgia’s historic rule on the it addressed only the admissibility appellate courts that reverse a trial admissibility of expert testimony of the results of novel “procedures court’s admission of expert evi- was much broader than either for- and techniques.”25
October 2005 17 The Georgia rule provides: “Evidence must relate language: “which are or will be admitted into evidence at the hear- to the questions being tried by the jury and bear ing or trial.” Thus, subsection (a) of the statute allows an expert to rely upon them either directly or indirectly.” on “facts or data [that] need not be The Court of Appeals made this Evidence. Rule 702, as amended in admissible in evidence” if of a type distinction in rejecting the argu- 2000, is the codification of the reasonably relied upon by experts ment that the Harper rule was the Daubert rule. Subsection (a) of the in the field in forming opinions, same as the Daubert rule: new Georgia statute is word-for- but subsection (b), contrary to With respect to a particular sci- word the same as Rule 703. Federal Rule 702 and subsection entific procedure or technique, Subsection (b) of Section 7 of (a), requires expert opinion to be the trial court makes a determi- Senate Bill 3 is almost word-for- based on facts and data “which are nation “whether the procedure word Rule 702. It is the “almost” or will be admitted into evidence at or technique in question has that presents an apparent internal the hearing or trial.” What one sec- reached a scientific stage of veri- conflict in the statute. Another fun- tion gives, the other section takes fiable certainty,” based upon damental difference between the away. This contradictory language evidence, expert testimony, trea- new statute and Federal Rules 702 will likely only confuse courts and tises, or the rationale of cases in and 703 is the fact that the new litigants. other jurisdictions. . . . However, statute only applies in civil cases. It is notable that Georgia has not Orkin does not challenge a par- Criminal cases will continue to be adopted, in their entirety, either the ticular scientific test or technique tried under the “shall always be Federal Rules of Civil Procedure or employed by plaintiffs’ experts; admissible” standard. Neither the the Federal Rules of Evidence. That Orkin challenges the conclusions statute nor the legislative debate distinction is particularly impor- drawn by those experts from tes- reveals the reason for this exclu- tant in analyzing the new statute timony and evidence in the sion, but the original version of the for two primary reasons. First, Rule record. This determination is for new statute did not exclude crimi- 26(a)(2) of the Federal Rules of the jury, and the trial court did nal cases.29 Civil Procedure details the require- not err in denying Orkin’s Turning to the conflicting provi- ments for what must be included in motions for summary judgment sions, subsection (a) addresses the the disclosure of expert testimony. and directed verdict.26 basis of opinion testimony by The rule also directs the timing of In contrast, the Daubert rule experts. It is contrary to Georgia’s such disclosures. Georgia has no requires a broad “gatekeeper” historic rule, which prevented an parallel provision. Instead, discov- function for the trial court.27 expert from relying on hearsay evi- ery of experts is governed by Although Justice Blackmun indi- dence and which required the basis O.C.G.A. § 9-11-26(b)(4). That cated that the Daubert rule was to of expert opinion to be admitted in statute says that, in response to an be applied only to the methodolo- evidence independently. Federal interrogatory, a party must dis- gy and not to the conclusions and Rule 703, however, allows the facts close experts. The section provides opinions of experts, there can be lit- or data upon which an expert bases very little direction to litigants, tle question, based upon review of his opinion to be hearsay if such however, and both sides, historical- the massive number of federal evidence is of a type “reasonably ly, have provided scant informa- decisions applying the Daubert relied upon by experts in the par- tion on their experts outside of rule, that federal trial judges have ticular field in forming opinions or depositions. not limited their evaluation to inferences upon the subject.” In Second, the Daubert opinion methodology.28 that event, “the facts or data need speaks of “fit,” essentially a rele- vance inquiry into the subject of the The New Statute not be admissible in evidence for the opinion or inference to be proposed expert testimony. Section 7 of Senate Bill 3, codi- admitted.” Subsection (b)(1) of Georgia, however, has a different fied at O.C.G.A. § 27-9-67.1, Section 24-9-67.1 is inconsistent definition of relevance from that attempts to adopt Rules 702 and with—and contrary to—subsection contained in the Federal Rules of 703 of the Federal Rules of (a), because it adds the following Evidence. The Georgia rule pro-
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After attempting to adopt the Daubert stan- inconvenience of having expert witnesses appear for an eviden- dard for all civil cases, the Legislature tiary hearing prior to trial.37 Perhaps the most unusual part focused on the articulated purpose of the of the new statute is subsection (f): “It is the intent of the legislature statute, the “litigation-driven health care cri- that, in all civil cases, the courts of the state of Georgia not be viewed sis,” and included subsection (c), which as open to expert evidence that would not be admissible in other applies to professional negligence actions. states.” Normally, legislative intent vides: “Evidence must relate to the limitations) for at least three of the is expressed in the preamble and questions being tried by the jury last five years “with sufficient fre- not included in the substantive and bear upon them either directly quency to establish an appropriate provisions of the statute. In fact, or indirectly. Irrelevant matter level of knowledge, as determined this appears to be the only statute should be excluded.”30 By way of by the judge, in [performing or in Georgia containing statutory comparison, the Federal Rule pro- teaching] the procedure. . . .”34 That intent language. The meaning of vides, “‘Relevant evidence’ means provision alone is likely to spawn the provision is far from clear. Will evidence having any tendency to considerable litigation since, under Georgia courts need to continually make the existence of any fact that subsection (e), the requirement survey decisions of other states to is of consequence to the determina- applies to pre-filing affidavits determine whether an expert can tion of the action more probable or under O.C.G.A. § 9-11-9.1. testify under Georgia’s adoption of less probable than it would be with- Subsection (d) provides that, federal rules? If decisions of other out the evidence.”31 Are they dif- upon motion of a party, the court states have reached inconsistent ferent standards? The language is may hold a pre-trial hearing to results, what implication does that certainly quite different. Whether determine whether a witness qual- have for admissibility in Georgia? they are subject to the same inter- ifies as an expert and whether the If expert testimony is inadmissible pretations remains to be seen.32 expert testimony satisfies the in another state, but the other state After attempting to adopt the requirements of the rule. The orig- follows a more restrictive and dif- Daubert standard for all civil cases, inal version of the statute required ferent rule, what is the relevance of the legislature focused on the artic- the court to hold a pre-trial hear- such rulings under this provision? ulated purpose of the statute, the ing, but the term “may” was later All in all, the intent subsection will “litigation–driven health care cri- substituted for the “shall” lan- no doubt result in extensive litiga- sis,” and included subsection (c), guage of the original version. tion. These authors have not been which applies to professional negli- There is no comparable provision able to locate any similar provision gence actions. In addition to impos- in Federal Rule 702.35 To the con- in any other jurisdiction. ing a licensure requirement on any- trary, in Kumho Tire Co. v. The rest of the subsection, which one testifying as an expert in a pro- Carmichael,36 the United States indicates that the courts of the state fessional negligence case, this sub- Supreme Court held that it was may draw upon opinions of the section attempts to specify who not necessary to have a hearing on United States Supreme Court and may testify as an expert in a med- a Daubert motion, but that the trial specifically cites Daubert, Kumho ical malpractice case. In medical court had the discretion to decide Tire, and General Electric v. Joiner, malpractice cases, only one who how to consider the motion. The compounds the problem. We have has had “actual professional practice in the Eleventh Circuit, noted above that the new statute is knowledge and experience” can based on the decisions of the not entirely consistent with either testify.33 To determine whether a Court of Appeals, is either to the Daubert or Kumho Tire cases. potential witness has “actual pro- decide the matter based upon the Despite this inconsistency, subsec- fessional knowledge and experi- written submissions or to have an tion (e) directs the courts to draw ence,” the expert must have prac- evidentiary hearing during the upon those decisions. ticed or taught (subject to certain trial so as to avoid the expense and
20 Georgia Bar Journal The New Rule May problem is the dramatic increase in misinterpret scientific evidence in Have Far-reaching the cost of litigation that Daubert has their implementation of the Consequences brought. Both sides now are com- Daubert ruling.”46 pelled to require their experts to Thus, the concerns that Chief In his partial dissent in Daubert, expend substantially more time Justice Rehnquist and others have Chief Justice Rehnquist criticized preparing their testimony at signifi- expressed and that have come to the Court’s formulation of the trial cantly greater expense. There can be fruition in the federal courts may judge’s responsibility in determin- no question that it is extraordinarily soon plague the courts here. ing admissibility of expert testimo- expensive to prepare witnesses to Conclusion ny because it left open more ques- deal with Daubert challenges. 38 tions than it answered. He noted Not surprisingly, Daubert has There no doubt will be a period that the vagueness and ambiguity produced inconsistent results of time in which the Georgia trial in defining the “gatekeeper” role when trial courts examine the and appellate courts sort out how would greatly test the capacity of same expert evidence.42 That they will deal with the new rule. It trial judges and impose on them Daubert will lead to inconsistent is likely that there will be consti- the obligation to become “amateur evidentiary results should be tutional challenges to the rule 39 scientists” in order to do their job. expected given that appellate generally and to its application to The Daubert rule has had far- review is limited to an abuse of existing cases. The Daubert rule reaching, and often unanticipated, discretion standard. Nor is it sur- can be applied fairly and in a way consequences in the federal courts. prising that Daubert has resulted in that does not take away the basic It is likely to have similar conse- misinterpretations of science. The fact-finding function of the jury. quences in Georgia. Specifically, if noted legal scholar and expert on Let us hope that the Georgia Georgia follows the federal exam- evidence, Professor Margaret courts get it right. ple, it will increase the burden on Berger, addressed the problem in trial courts, it will ask trial judges to her seminal work and observed Robert E. Shields is a make decisions that they may not that the Daubert trilogy had shifted founding member of Doffermyre Shields be prepared by training and experi- the decision-making from juries in Canfield Knowles & ence to make, it may lead to contra- trials to judges in pretrial proceed- Devine, LLC. Shields dictory results, and it will add enor- ings.43 Federal judges are much graduated from New mously to the costs of litigation. more likely to exclude than to Since the Supreme Court issued York University School of Law in admit scientific evidence on a 1971, and received his undergrad- the Daubert opinion, much has been Daubert challenge, often on a basis uate degree from Wichita State written about its impact on the fed- of “new rules in the name of sci- University. He has contributed eral courts. Undeniably it has added ence that do not exist in the scien- chapters to three books and has substantially to the burden on trial tific community.”44 In fact, the authored a number of articles pri- courts by requiring the expenditure prestigious American Public marily on the subject of haz- of significant time and resources in Health Association has become so ardous waste and toxic torts. evaluating “scientific reliability” in aware of the possible conflicts all cases in which such expert testi- between science and law that it has Leslie J. Bryan is also 40 a member of mony is expected. The premise for recently published an entire sup- Doffermyre Shields requiring the trial judge to be the plement dedicated to exploring the Canfield Knowles & “gatekeeper” of expert testimony is issues that Daubert has raised.45 Devine, LLC. She is a that the judge is more able to evalu- Indeed, that organization has even ate scientific evidence than a jury. 1986 graduate of adopted a resolution urging Emory University School of Law Empirical studies, however, have “friend of the court briefs that and holds an M.S. from Georgia demonstrated that trial judges often address the problem inherent in State University and a B.A. from do not have the training and experi- the adoption of Daubert and Hollins College. Bryan has sub- ence to decide complex scientific Daubert-like court rulings, the stantial experience in complex liti- issues and are not more able to eval- application of Daubert in regulato- gation, having worked extensively 41 uate scientific evidence. A related ry proceedings, and when judges on Federal Multidistrict Litigation.
October 2005 21 Endnotes 15. 293 F. 1013 (D.C. Cir. 1923). nal cases. The notion that expert 16. The Court interprets the legisla- testimony in criminal and civil 1. Senate Bill 3, Section 12, 148th Gen. tively-enacted rules as it would cases should be treated differ- Assem., Reg. Sess. (Ga. 2005) [here- any statute. Daubert, 509 U.S. at ently does not seem to be a inafter Senate Bill 3] (amending 587. remarkable proposition. . . . O.C.G.A. § 51-12-31 and § 51-12-33). 17. See, e.g., Judge Janine M. Kern, What is remarkable is that 2. Sentate Bill 3, Section 11 (enacting Daubert v. Merrell Dow stricter admissibility stan- a new code section O.C.G.A. § 51- Pharmaceuticals, Inc.: “Gatekeeping” dards would apply in civil 2-5.1). or Industry “Safekeeping?”, 43 S.D. cases than in criminal cases. 3. Sentate Bill 3, Section 3 and Section L. REV. 566, 575 (1998). Paul C. Giannelli, Daubert 7 (amending O.C.G.A. § 9-11-9.1 18. In picking and choosing between Revisited, 41(3) CRIM. L. BULL. 5, at and § 24-9-67.1). various of the Federal Rules of 302, 309 (2005). 4. Sentate Bill 3, Section 4 (enacting a Evidence, the Legislature adopted 30. O.C.G.A. § 24-2-1 (2005). new code section O.C.G.A. § 9-11- a rule that is, in fact, internally 31. FED. R. EVID. 401. 9.2). With HIPAA, Pub. L. No. 104- inconsistent. 32. See Quinn v. State, 255 Ga. App. 191, 110 Stat. 1936 (1996), Congress 19. 215 Ga. App. 587, 592-93, 452 744, 747, 566 S.E.2d 450, 453 (2002) established standards to protect pri- S.E.2d 159, 165 (1994). (“But the United States Supreme vate health information. HIPAA, 20. 219 Ga. App. 690, 693, 466 S.E.2d Court’s interpretation of Rule 403 generally, preempts state laws that 601, 604-05 (1995). of the federal rules is not binding are less stringent than the federal 21. 237 Ga. App. 292, 294, 514 S.E.2d on this court as to the admissibility standards. The new medical 448, 451 (1999). of similar crimes or extrinsic acts authorization requirement from 22. Orkin Exterminating Co. v. Carder, evidence.”), overruled in part by Senate Bill 3 is less stringent. See 45 258 Ga. App. 796, 575 S.E.2d 664 Ross v. State, 279 Ga. 365, 366, 614 C.F.R. § 164.508(b)(5), (c)(2)(i) (2002), cert. granted on whether to S.E.2d 31 (2005) (“Although the (2005); see also Lockard v. Weisberg, adopt the Daubert rule (Apr. 29, Supreme Court . . . was interpret- Civil Action No. 05V5078568D 2003), cert. vacated (Sept. 8, 2003); ing Federal Rule of Evidence 403, (State Court of Fulton County, July Jordan v. Georgia Power Co., 219 it is similarly the law of this State 26, 2005) (Order of Judge Newkirk Ga. App. 690, 466 S.E.2d 601 that ‘relevant evidence “may be denying Defense Motion to Dismiss (1995), cert. granted on whether to excluded if its probative value is for failure to provide required adopt the Daubert rule (Apr. 12, substantially outweighed by the authorization). 1996), cert. vacated (Nov. 22, 1996). danger of unfair prejudice, confu- 5. Sentate Bill 3, Section 5 (enacting 23. Chandler Exterminators, Inc. v. sion of the issues, or misleading O.C.G.A. § 9-11-68). Morris, 262 Ga. 257, 259, 416 S.E.2d the jury.” ‘ “) (quoting Hicks v. 6. Sentate Bill 3, Section 6 (enacting 277, 278 (1992); King v. Browning State, 256 Ga. 715, 720, 352 S.E.2d O.C.G.A. § 24-3-37.1). Co., 246 Ga. 46, 47-48, 268 S.E.2d 762, 771 (1987)). 7. Sentate Bill 3, Section 7 (striking 653, 655 (1980). 33. O.C.G.A. § 24-9-67.1(c)(2) (2005). O.C.G.A. § 24-9-67 and enacting a 24. 249 Ga. 519, 292 S.E.2d 389 (1982). 34. Id. new O.C.G.A. § 24-9-67 and enact- 25. Id. at 525-26, 292 S.E.2d at 395-96. 35. If a hearing is held in federal court, ing O.C.G.A. § 24-9-67.1). 26. Orkin Exterminating Co. v. it is typically held pursuant to FED. 8. 509 U.S. 579 (1993). McIntosh, 215 Ga. App. 587, 593, R. EVID. 104, a provision in the fed- 9. 522 U.S. 136 (1997). 452 S.E.2d 159, 165 (1994) (quoting eral rules that has no parallel in 10. 526 U.S. 137 (1999). Harper, 249 Ga. at 525, 292 S.E.2d Georgia. 11. 528 U.S. 440 (2000). at 395). 36. 526 U.S. 137 (1999). 12. A Westlaw search conducted on 27. See, e.g., McClain v. Metabolife 37. See Cook ex rel. Estate of Tessier v. August 7, 2005 (query: daubert /s Int’l, Inc., 401 F.3d 1233, 1238 (11th Sheriff of Monroe County, 402 F.3d merrell) yielded the following Cir. 2005) (holding that a judge 1092, 1113 (11th Cir. 2005); Toole v. results: citation in 10 United States does not fulfill his gatekeeping Baxter Healthcare Corp., 235 F.3d Supreme Court cases; 1064 federal responsibilities if he merely con- 1307, 1312 (11th Cir. 2000); but see court of appeals cases; 1973 federal cludes that he lacks sufficient McClain v. Metabolife Int’l, Inc., district court cases; and 1609 state knowledge of the scientific issues 401 F.3d 1233, 1238 (11th Cir. 2005) court cases. There are also 3688 to exclude the evidence). (“Although the trial court conduct- documents listed in response to 28. In fact, the Joiner opinion itself con- ed a Daubert hearing, and both wit- the same search in the “Journals tributed to the controversy when it nesses were subject to a thorough and Law Reviews” database. muddied the distinction between and extensive examination, the 13. Daubert v. Merrell Dow Pharm., methodology and conclusions. court ultimately disavowed its abil- Inc., 727 F. Supp. 570, 572 (S.D. General Electric Co. v. Joiner, 522 ity to handle the Daubert issues. Cal. 1989), aff’d, 951 F.2d 1128 (9th U.S. 136, 146 (1997) (“But conclu- This abdication was in itself an Cir. 1991), vacated and remanded, sions and methodology are not abuse of discretion.”). Thus, merely 509 U.S. 579 (1993). entirely distinct from one another.”). holding a hearing is not sufficient. 14. Daubert v. Merrell Dow Pharm., 29. As one commentator noted: 38. Daubert v. Merrell Dow Pharm., Inc., 951 F.2d 1128 (9th Cir. 1991), One unexpected develop- Inc., 509 U.S. 579, 600 (1993) vacated and remanded, 509 U.S. 579 ment has been Daubert’s dis- (Rehnquist, C.J., concurring in part (1993). parate impact in civil and crimi- and dissenting in part).
22 Georgia Bar Journal 39. Id. at 601. 40. See generally MOLLY TREADWAY JOHNSON ET AL., EXPERT TESTIMONY IN FEDERAL CIVIL TRIALS, SF78 A.L.I.-A.B.A. (2001); Carol Krafka et al., Judge and Attorney Experiences, Practices, and Concerns Regarding Expert Testimony in Federal Civil Trials, 8 PSYCHOL., PUB. Unlock POL’Y & L. 309 (2002). your 41. See Sophia I. Gatowski et al., Asking the Gatekeepers: A National Survey of Judges on Judging Expert Evidence in a Post-Daubert World, 25 L. & HUM. BEHAV. 433 (2001); Chris Guthrie et al., Inside the Judicial Mind, 86 CORNELL L. REV. Potential 777 (2001); Margaret Bull Kovera & Bradley D. McAuliff, The Effects of Sign up for the Women & Minorities in the Peer Review and Evidence Quality on Profession Committee’s Speaker Clearinghouse Judge Evaluations of Psychological Science: Are Judges Effective Gatekeepers?, 85 J. APPLIED PSYCHOL. 574 (2000); Gary L. Wells, Naked Statistical Evidence of Liability: Is Subjective Probability Enough?, 62 J. PERSONALITY & SOC. PSYCHOL. 739 (1992); see also Jerome P. Kassirer & Joe S. Cecil, Inconsistency in Evidentiary Standards for Medical Testimony, 288 JAMA 1382, 1382 (2002) (“The courts appear to be asserting standards that they attribute to the medical profession, but that are inconsistent and some- times more demanding than actual medical practice.”). 42. Compare Rider v. Sandoz Pharm. Corp., 295 F.3d 1194 (11th Cir. 2002) (Parlodel; summary judg- About the Clearinghouse ment to defendants on medical causation) with Brasher v. Sandoz The Women and Minorities in the Profession Pharm. Corp., 160 F. Supp. 2d 1291 (N.D. Ala. 2001) (Parlodel; summa- Committee is committed to promoting equal ry judgment on medical causation participation of minorities and women in the denied) and Globetti v. Sandoz Pharm. Corp., 111 F. Supp. 2d 1174 legal profession. The Speaker Clearinghouse is (N.D. Ala. 2000) (same). designed specifically for, and contains detailed 43. Margaret M. Berger, Upsetting the Balance Between Adverse Interests: information about, minority and women The Impact of the Supreme Court’s lawyers who would like to be considered as facul- Trilogy on Expert Testimony in Toxic Tort Litigation, Litigation, 64 L. & ty members in continuing legal education programs CONTEMP. PROBS. 289 (2001). and provided with other speaking opportunities. For 44. Id. at 302. 45. See 95 AM. J. PUB. HEALTH (Supp. 1 more information and to sign up, visit www.gabar.org. 2005). To search the Speaker Clearinghouse, which provides 46. Am. Pub. Health Ass’n Res. 2004- 11 (adopted Nov. 2004). contact information and information on the legal experi- ence of minority and women lawyers participating in the program, visit www.gabar.org.
October 2005 23 New Growth Industry: Racing to Georgia Courts Over Non-Competition Agreements
mployers and employees with multi-state noncompete contracts may By Donald W. Benson and Stephanie M. Bauer want to lace up their best pair of running shoes and get ready for a race. E On April 1, 2005, in Palmer & Cay, Inc. v. Marsh & McLennan Companies, Inc.,1 the Eleventh Circuit Court of Appeals revised a ruling of the United States
District Court, Southern District of Georgia, that an employer’s noncompete agree-
ment was unenforceable only in Georgia. The employee initiated the case in Georgia
in order to take advantage of the pro-employee Georgia law regarding non-compete
and non-solicitation covenants (NCAs). The Eleventh Circuit extended the unenforceability to any other lawsuits regard- ing the NCA between the same parties, even if such other lawsuits are filed outside of Georgia. Most importantly, this ruling may provide an avenue of escape from an oth- erwise valid NCA to employees who can relocate to Georgia and are willing to pre- emptively bring a declaratory judgment action in Georgia. Because so many of these cases would be removable to federal court on the basis of diversity of citizenship, the Palmer & Cay decision is attracting significant atten- tion nationwide by confirming that federal courts sitting in diversity in Georgia will issue declaratory judgments in NCA disputes that are as broad in scope as those rendered by Georgia state courts. Although the Palmer & Cay case continues as the Defendant filed a Notice of Petition for Writ of Certiorari to the United States Supreme Court,2 the debate it is creating among commentators is likely to focus more and more attention on the importance of winning the race to the courthouse. FACTUAL BACKGROUND Marsh & McLennan Companies, Inc. (MMC) bought the brokerage that employed James Meathe in 1997. As part of the sale and transition, Meathe sold his shares in the acquired bro- kerage and accepted employment with MMC, ultimately becoming man- aging director and head of the Midwest Region of
24 Georgia Bar Journal MMC and (according to MMC) (b) Each Seller who is not a to such former client; or (y) solic- relocating to Illinois.3 In 1997, in director of the Company as of it any employee of the Company connection with the sale of his the date hereof hereby agrees or its affiliates to terminate his interest in MMC, Meathe executed that during the Non-Solicit employment.4 a stock sales agreement containing Period, such Seller will not (x) The 2002 Agreement included a an NCA (the 1997 Agreement). In solicit, accept or service business similar prohibition against accept- 2002, in order to be able to cash in that competes with businesses ing unsolicited business from MMC stock options, Meathe signed conducted by the Company, clients of the company who were another NCA that was triggered Buyer or any of their directly or indirectly solicited or upon the termination of his Subsidiaries (i) from any clients serviced by employee within two employment with MMC (the 2002 or prospects of the Company or years prior to the termination of Agreement). In February of 2003, its affiliates who were solicited employment. In it, Meathe agreed Meathe left MMC, relocated to directly by Seller or where Seller that he would not: Georgia, and joined Palmer & Cay supervised, directly or indirect- (a) solicit or accept business of in allegedly direct competition ly, in whole or in part, the solici- the type offered by the Company with MMC in both Georgia and his tation activities related to such during my term of employment former Midwest territory. clients or prospects or (ii) from with the Company, or perform The 1997 Agreement included a any former client who was such or supervise the performance of provision preventing Meathe from within two (2) years prior to any services related to such type soliciting or accepting unsolicited such termination and who was of business, from or for (i) clients business for a specified time from solicited directly by Seller or or prospects of the Company or any clients or prospects of MMC where Seller supervised, directly its affiliates who were solicited who were solicited by Meathe or indirectly, in whole or in part, or serviced directly by me or while with the company: the solicitation activities related where I supervised, directly or
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October 2005 25 indirectly, in whole or in part, employment-related NCA to on whom Meathe called while the solicitation or servicing enforce it to the extent reasonable.7 employed.14 While such an NCA activities related to such clients The 2002 Agreement did not arise would appear to be unenforceable or prospects; or (ii) any former contemporaneously with Meathe’s for the same reasons as the NCA in client of the Company or its affil- sale of stock (and was thereby the 2002 Agreement, the fact that iates who was such within two employment-related), and the the covenant appeared in a stock years prior to my termination of NCA was in essence a non-solicita- sale agreement and not in an agree- employment and who was tion of customers covenant without ment that was employment-related solicited or serviced directly by a geographic restriction. A non- affected the court’s analysis. me or where I supervised, direct- solicitation covenant that prohibits Although Georgia law is quite ly or indirectly, in whole or in the solicitation of an employer’s antagonistic to employment-relat- part, the solicitation or servicing clients that the employee actually ed NCAs,15 Georgia courts apply a activities related to such former contacted as part of their job for a lower level of scrutiny to NCAs clients; . . . 5 business purpose can be enforce- ancillary to the sale of a business To take advantage of Georgia’s able without a geographic restric- and will reform, or “blue pencil,” anti-NCA precedent, Meathe and tion.8 Such an NCA can even those objectionable portions of his new employer, Palmer & Cay, extend to prospective customers such NCAs to enforce them to the filed a declaratory judgment action where some business relationship extent allowed by Georgia law.16 in the federal district court in was established by the employee as Consequently, the first step for the Savannah, Georgia, seeking an a part of the job.9 Palmer & Cay Court was to deter- order that both the 1997 stock sale Unfortunately for MMC, mine whether the covenant in the NCA and his 2002 employment- although a non-solicitation NCA 1997 Agreement should be classi- related NCA were unenforceable. may be enforceable in Georgia fied as ancillary to employment or MMC counterclaimed for enforce- without a geographic limit, it is not to the sale of a business. ment of both agreements. enforceable if the same restriction If a stock sale occurs at the same Although both the 1997 and 2002 also precludes the former employ- time that an employee joins the Agreements contained forum selec- ee from accepting unsolicited busi- buying company, Georgia law has tion clauses, the district court ness.10 Such restrictions without a its own peculiarities for determin- found that the parties had waived geographic territory can only ing whether the NCA in a stock these contractual rights by litigat- restrict affirmative actions by the agreement is entitled to the lower ing the merits of the claims, coun- former employee.11 If the employer blue-pencil standard or the stricter terclaims, and defenses without wants to prevent the acceptance of standards for employment-related challenging venue: unsolicited business, then the non- NCAs. Georgia analyzes the bar- As a preliminary matter, the par- solicitation clause must specify a gaining capacity of the seller to ties have waived any “New geographic territory, thereby determine if it is more like the bar- York,” contractually forum- essentially transforming it into a gaining power of a business owner selected, venue rights they might non-competition restriction. or an employee.17 The court will hold. Plaintiffs did so by filing its The district court declared unen- look to the facts of each situation, case here; MMC did so by forceable the 2002 employment- including whether there was con- Answering, Counterclaiming related NCA preventing Meathe sideration independent of employ- and litigating the merits without from accepting unsolicited busi- ment for the NCA, the relative size challenging venue.6 ness,12 and the Eleventh Circuit of the seller’s stock holding in the 13 Unenforceability of affirmed. acquired company, the realistic The 1997 Agreement power of seller’s stock in a closely the 2002 Agreement held corporation, and whether the Georgia is one of the most diffi- The 1997 Agreement contained a seller had exercised control over the cult states for an employer to nearly identical NCA that was not decision to pursue a merger or obtain enforcement of an employ- limited by a geographic territory taken part in merger negotiations.18 ment-related NCA. Georgia will and restricted the solicitation of cus- Palmer & Cay and Meathe not “blue pencil” an overly broad, tomers and prospective customers argued that the 1997 Agreement
26 Georgia Bar Journal should be treated as an employ- dance either with the other juris- pute between the parties based on ment agreement and the NCA be diction’s law or the parties’ agreed the agreements and the facts given strict scrutiny because the upon choice of law provisions in alleged in the lawsuit. Although start of the non-solicitation period the 1997 and 2002 Agreements.23 injunctive relief would not be under the covenant was linked to The Eleventh Circuit reversed issued on a nationwide basis due to the termination of Meathe’s the district court’s territorial limita- limits in the federal statutory basis employment. The district court tion of its declaratory judgment as of injunctive authority, as con- agreed, granting judgment on the to the 2002 Agreement. A federal firmed in the earlier Keener case,27 pleadings in favor of Palmer & Cay court sitting in diversity in a state the declaratory judgment fully and Meathe.19 The Eleventh Circuit declaratory judgment action would resolved the dispute wherever the rejected this argument, however, apply that state’s interpretation of parties may be, not just as to claims finding that “the link between the its declaratory judgment statute’s and issues presented in a Georgia start of the non-solicitation period effect on claim and issue preclu- state or federal court.28 and Meathe’s termination of sion, unless that state’s law con- employment is alone insufficient to flicts with federal interests.24 The GROWTH allow us to conclude, at the plead- Eleventh Circuit cited a Georgia INDUSTRY IN ing stage, that the 1997 Agreement, case, Hostetler v. Answerthink,25 entitled ‘Stock Purchase involving a race to state courts in FORUM SHOPPING Agreement,’ is a contract ancillary Georgia and Florida, in which the Suppose an NCA is enforceable 20 to employment.” Accordingly, Georgia court was the first to issue under Alabama’s but not Georgia’s the court remanded to the district a final declaratory judgment, fully substantive law on NCAs. Before court for further findings of fact. resolving all issues and claims that Palmer & Cay, it was clear that if the the parties actually brought or employer could obtain jurisdiction SCOPE OF could have brought based on the in Alabama over its former 26 DECLARATORY events before the court. Because employee now living in Georgia, JUDGMENT Georgia does not limit its declara- the NCA would likely be enforced tory judgments in employment- by an Alabama court, particularly The district court, perhaps mind- related NCA cases, the federal if the agreement includes an ful of having been reversed in an court sitting in diversity would Alabama choice of law clause. It earlier case for granting nation- adopt an equally broad (i.e., world- was also clear that, if the same wide injunctive relief against wide) scope for the declaratory employee located in Georgia were enforcement of an invalid NCA judgment with respect to its issue sued in Georgia, a Georgia court under similar circumstances,21 and claim preclusion effects. applying Georgia law would not granted a declaratory judgment to In essence, the Eleventh Circuit enforce the agreement, even if the plaintiffs Meathe and Palmer & clarified that the declaratory judg- agreement stated that Alabama law Cay, finding the NCAs to be unen- ment issued as to the 2002 was to apply. Georgia’s choice of forceable in Georgia, and enjoined Agreement fully resolved the dis- law principles require its courts to MMC from enforcing them against Meathe in Georgia.22 Thus, the terri- torial scope of both the declaratory D. Jeff DeLancey, CPA, PC judgment and the injunctive award Certified Public Accountant/Certified Fraud Examiner were similarly limited to the state of Georgia by the district court. Forensic Accounting, Financial Investigations This appeared to leave open the & possibility that, if MMC could Litigation Support obtain jurisdiction over Meathe in some other jurisdiction, the compa- Suite 250, 9 Lumpkin Street, Lawrenceville, GA 30045 ny could sue him for competitive 770-339-9556, 404-358-1060 activities outside of Georgia and www.jeffdelanceycpa.com [email protected] obtain a favorable ruling in accor-
October 2005 27 As parties continue to assess the usefulness enter a final judgment that will have its judgment followed in other of the Palmer & Cay decision in avoiding jurisdictions.31 Consequently, employers may be NCAs, one message is clear: pro-active, forced to aggressively fight any Georgia litigation until a final judg- aggressive litigation strategies have grown ment can be obtained outside Georgia in a forum willing to apply even more important for employers. the NCA’s choice of law provisions. Conversely, companies seeking to analyze such choice of law provi- RESPONDING help a new employee avoid the sions by first determining whether enforcement of an NCA might pur- the NCA is enforceable under WITHIN AND sue a declaratory judgment that it is 29 Georgia law. The strong Georgia OUTSIDE OF unenforceable by rushing to a state public policy against NCAs would GEORGIA or federal court in a state, like not allow a Georgia court to Georgia, whose laws disfavor NCAs. enforce an NCA contrary to that Employees can more easily relo- In response to this development, policy, despite a choice of law pro- cate if their former territories an ounce of prevention may be vision in the NCA. A federal court include states like Georgia, or if their worth a pound of cure, even for in Georgia hearing a case based on job can be performed primarily by employers in jurisdictions that have diversity jurisdiction would also telephone or Internet from any state. not faced the issue yet. Employers apply Georgia law to such a con- An employer with operations near should carefully examine their con- tract dispute. Georgia should consider the likeli- tracts to make sure that they What was not clear prior to hood of such relocations and draft include useful forum selection, con- Palmer & Kay was whether the its NCA provisions with an eye sent to jurisdiction, and choice of employee could gain anything by toward enforceability in Georgia, law provisions. Recognizing that preemptively rushing to court in not just the current location of its some choice of law provisions may Georgia for a judgment declaring employee. Companies often send not be enforced in declaratory judg- the NCA unenforceable under “cease and desist” letters prior to an ment actions brought in Georgia, 30 Georgia law. Would that protect enforcement action. Now, pro- could the employer prevent a him only from suit in Georgia? longed letter writing may no longer declaratory judgment preemptive Could he still be sued elsewhere for be a useful tactic against a former strike by providing in a forum his prior competition outside of employee willing to rush to the selection clause that all disputes Georgia? Palmer & Cay now indi- courthouse to obtain a declaratory must be brought in a specific cates that, in the Eleventh Circuit, judgment in a favorable jurisdiction. forum, with parallel consents to the employee obtaining such a final Waiving venue and forum selec- jurisdiction and service? declaratory judgment would be tion clauses may decide a case’s protected if he were simultaneous- outcome. Litigants must balance FORUM ly or later sued outside of Georgia, the merits of a forum where juris- SELECTION whether or not his competitive diction is easily obtained and where activities were restricted to docket pressures allow for a quick CLAUSES Georgia. Rushing to court in hearing on a temporary restraining The next major battle in Georgia Georgia assures that Georgia’s sub- order (TRO) to be set against the may be over the enforceability of stantive restrictions against NCAs importance of a forum applying forum selection clauses in employ- will many times find an NCA favorable law. Employers may face ment-related NCA cases. The dicta unenforceable, even if courts in the multiple lawsuits, progressing in of two Georgia cases may indicate state in which it was originally different forums. Litigation strate- a willingness to refuse enforce- signed and drafted would reach a gy must recognize that it is not the ment of forum selection clauses different conclusion. first court that enters a TRO or pre- where enforcement would result in liminary injunction, but the first to application of a choice of law pro-
28 Georgia Bar Journal © Charles Moore, 1965
The University of Alabama School of Law celebrates the 40th anniversary of the Voting Rights Act with the re-publication of Powerful Days: The Civil Rights Photography of Charles Moore.
THE UNIVERSITY OF ALABAMA SCHOOL OF LAW
AlabamaLawSchool.com vision contrary to the public policy dicta that the Iero appellant “failed to practiced in the Atlanta office of of Georgia disfavoring restraints carry the burden of showing how the Littler Mendelson, PC. Daniel on trade. application of New York law would received her B.S. degree in history In Iero v. Mohawk Finishing be contrary to the public policy of in 1999 from East Tennessee State Products, Inc.,32 a forum selection Georgia and that ‘enforcement of his University in Johnson City Tennessee, and her J.D. degree in clause in a non-competition employment contract would be 2003 from the University of covenant was enforced by the unreasonable under the circum- Tennessee in Knoxville, Tenn. She Georgia Court of Appeals because stances.’ ”39 The Hulcher decision can be reached at Iero did not show that the clause seems to be willing to consider [email protected]. was “unreasonable under the cir- whether a forum selection clause cumstances.”33 Unfortunately, may fail if it dictates an objectionable Georgia courts have shed little choice of law. The repeated efforts by Endnotes light on what constitutes “unrea- both opinions to phrase the standard 1. Palmer & Cay, Inc. v. Marsh & sonable under the circumstances.” in terms of public policy and to note McLennan Companies, Inc., 404 Georgia courts consider more than arguments not raised by those appel- F.3d 1297 (11th Cir. 2005). whether the chosen forum would lants may indicate that the enforce- 2. Id. (Notice of Filing Writ of be merely inconvenient for one of ability of such forum selection claus- Certiorari, filed September 6, 2005). 3. Defendant’s Opposition to the litigants, but also whether es in employment-related NCA Plaintiffs’ Motion For Judgment there is evidence of “‘fraud, undue cases may see additional litigation. On The Pleadings, Palmer & Cay, influence or overweening bargain- As parties continue to assess the Inc. v. Marsh & McLennan ing power.’”34 usefulness of the Palmer & Cay Companies, Inc., No. CV403-094 Although Iero enforced a forum decision in avoiding NCAs, one (S.D. Ga. Nov. 11, 2003). 4. Palmer & Cay, 404 F.3d at 1300. selection clause, the court noted message is clear: pro-active, 5. Id. at 1301. that it was leaving open the issue of aggressive litigation strategies 6. Palmer & Cay, No. CV403-094 (S.D. whether a forum selection clause have grown even more important Ga. Nov. 11, 2003) (order granting would be unenforceable in Georgia for employers. Motion for Schedule of Oral as against public policy on a differ- Argument). ent factual record.35 The Georgia Donald W. Benson is a 7. Id. 8. See, e.g., American Software USA, Court of Appeals pointed out that senior litigator at the Inc. v. Moore, 264 Ga. 480, 448 the United States Supreme Court Atlanta, Ga., office of Littler Mendelson S.E.2d 206 (1994); W.R. Grace & has noted “certain contractual Co. v. Mouyal, 262 Ga. 464, 422 where he helps forum selection clauses may be S.E.2d 529 (1992). employers avoid, held unenforceable if such clause 9. See Paul Robinson, Inc. v. Haege, resolve and litigate employment contravenes ‘a strong public policy 218 Ga. App. 578, 462 S.E.2d 396 disputes. Benson received his A.B. (1995). The situation regarding of the forum in which the suit is degree in 1976 from Davidson potential customers is not quite so brought, whether declared by College in Davidson, N.C., his M.A. clear where the prior contact was 36 statute or by judicial decision.’” degree in 1978 in philosophy from little more than an unsuccessful Perhaps this indicates that the the University of Georgia in “cold call.” Id. Georgia courts will someday con- Athens, Georgia, his J. D. degree in 10. Habif, Arogeti & Wynne, P.C. v. sider whether a forum selection 1984 from the University of Utah Baggett, 231 Ga. App. 289, 498 S.E.2d 346, 353 (1998). clause is unenforceable because it in Salt Lake City, Utah. He can be reached at [email protected]. 11. Waldeck v. Curtis 1000, Inc., 261 damages the litigants by applying Ga. App. 590, 583 S.E.2d 266 unfavorable law contrary to (2003); Singer v. Habif, Arogeti & Stephanie Bauer Georgia public policy in the select- Wynne, P.C., 250 Ga. 376, 297 Daniel is an associate ed forum, which the Iero Court S.E.2d 473 (1982);. in the Labor and expressly noted was an argument 12. Palmer & Cay, No. CV403-094 (S.D. Employment Ga. Nov. 11, 2003) (order granting not raised by Iero.37 Department in the Motion for Schedule of Oral A second Georgia Court of Cincinnati office of Argument). Appeals decision in Hulcher v. R.J. Dinsmore and Shohl, LLP. Prior to 13. Palmer & Cay, Inc. v. Marsh & Corman Railroad Co.38 also noted in joining Dinsmore and Shohl, Daniel McLennan Companies, Inc., 404
30 Georgia Bar Journal vision contrary to the public policy dicta that the Iero appellant “failed to practiced in the Atlanta office of of Georgia disfavoring restraints carry the burden of showing how the Littler Mendelson, PC. Daniel on trade. application of New York law would received her B.S. degree in history In Iero v. Mohawk Finishing be contrary to the public policy of in 1999 from East Tennessee State Products, Inc.,32 a forum selection Georgia and that ‘enforcement of his University in Johnson City Tennessee, and her J.D. degree in clause in a non-competition employment contract would be 2003 from the University of covenant was enforced by the unreasonable under the circum- Tennessee in Knoxville, Tenn. She Georgia Court of Appeals because stances.’ ”39 The Hulcher decision can be reached at Iero did not show that the clause seems to be willing to consider [email protected]. was “unreasonable under the cir- whether a forum selection clause cumstances.”33 Unfortunately, may fail if it dictates an objectionable Georgia courts have shed little choice of law. The repeated efforts by Endnotes light on what constitutes “unrea- both opinions to phrase the standard 1. Palmer & Cay, Inc. v. Marsh & sonable under the circumstances.” in terms of public policy and to note McLennan Companies, Inc., 404 Georgia courts consider more than arguments not raised by those appel- F.3d 1297 (11th Cir. 2005). whether the chosen forum would lants may indicate that the enforce- 2. Id. (Notice of Filing Writ of be merely inconvenient for one of ability of such forum selection claus- Certiorari, filed September 6, 2005). 3. Defendant’s Opposition to the litigants, but also whether es in employment-related NCA Plaintiffs’ Motion For Judgment there is evidence of “‘fraud, undue cases may see additional litigation. On The Pleadings, Palmer & Cay, influence or overweening bargain- As parties continue to assess the Inc. v. Marsh & McLennan ing power.’”34 usefulness of the Palmer & Cay Companies, Inc., No. CV403-094 Although Iero enforced a forum decision in avoiding NCAs, one (S.D. Ga. Nov. 11, 2003). 4. Palmer & Cay, 404 F.3d at 1300. selection clause, the court noted message is clear: pro-active, 5. Id. at 1301. that it was leaving open the issue of aggressive litigation strategies 6. Palmer & Cay, No. CV403-094 (S.D. whether a forum selection clause have grown even more important Ga. Nov. 11, 2003) (order granting would be unenforceable in Georgia for employers. Motion for Schedule of Oral as against public policy on a differ- Argument). ent factual record.35 The Georgia Donald W. Benson is a 7. Id. 8. See, e.g., American Software USA, Court of Appeals pointed out that senior litigator at the Inc. v. Moore, 264 Ga. 480, 448 the United States Supreme Court Atlanta, Ga., office of Littler Mendelson S.E.2d 206 (1994); W.R. Grace & has noted “certain contractual Co. v. Mouyal, 262 Ga. 464, 422 where he helps forum selection clauses may be S.E.2d 529 (1992). employers avoid, held unenforceable if such clause 9. See Paul Robinson, Inc. v. Haege, resolve and litigate employment contravenes ‘a strong public policy 218 Ga. App. 578, 462 S.E.2d 396 disputes. Benson received his A.B. (1995). The situation regarding of the forum in which the suit is degree in 1976 from Davidson potential customers is not quite so brought, whether declared by College in Davidson, N.C., his M.A. clear where the prior contact was 36 statute or by judicial decision.’” degree in 1978 in philosophy from little more than an unsuccessful Perhaps this indicates that the the University of Georgia in “cold call.” Id. Georgia courts will someday con- Athens, Georgia, his J. D. degree in 10. Habif, Arogeti & Wynne, P.C. v. sider whether a forum selection 1984 from the University of Utah Baggett, 231 Ga. App. 289, 498 S.E.2d 346, 353 (1998). clause is unenforceable because it in Salt Lake City, Utah. He can be reached at [email protected]. 11. Waldeck v. Curtis 1000, Inc., 261 damages the litigants by applying Ga. App. 590, 583 S.E.2d 266 unfavorable law contrary to (2003); Singer v. Habif, Arogeti & Stephanie Bauer Georgia public policy in the select- Wynne, P.C., 250 Ga. 376, 297 Daniel is an associate ed forum, which the Iero Court S.E.2d 473 (1982);. in the Labor and expressly noted was an argument 12. Palmer & Cay, No. CV403-094 (S.D. Employment Ga. Nov. 11, 2003) (order granting not raised by Iero.37 Department in the Motion for Schedule of Oral A second Georgia Court of Cincinnati office of Argument). Appeals decision in Hulcher v. R.J. Dinsmore and Shohl, LLP. Prior to 13. Palmer & Cay, Inc. v. Marsh & Corman Railroad Co.38 also noted in joining Dinsmore and Shohl, Daniel McLennan Companies, Inc., 404
30 Georgia Bar Journal F.3d 1297, 1297 (11th Cir. 2005). simultaneous or subsequent litiga- 14. Id. at 1300. tion in another state’s courts).. 15. Id. at 1303 (citing White v. 27. See Keener, 342 F.3d at 1269. Fletcher/Mayo/Assocs., Inc., 303 28. In Palmer & Cay, the District Court S.E.2d 746, 749 (Ga. 1983)). erred in ruling that on the pleadings 16. Palmer & Cay, 404 F.3d at 1303 (cit- there was no set of facts on which ing Swartz Invs., LLC v. Vion MMC could show that the 1997 Pharm., Inc., 556 S.E.2d 460, 463 Agreement was ancillary to the sale (Ga. Ct. App. 2001)). of a business. The Eleventh Circuit 17. See, e.g., Advance Tech. remanded for further proceedings Consultants, Inc. v. Roadtrac, LLC, regarding the 1997 Agreement. 551 S.E.2d 735, 737 (Ga. Ct. App. Palmer & Cay, 404 F.3d at 1311. 2001); Ward v. Process Control Corp., 29. See supra note 19 (explaining 277 S.E.2d 671, 673 (Ga. 1981). Georgia law on analyzing choice of 18. Palmer & Cay, 404 F.3d at 1303 (cit- law provisions in NCAs). Save ing White, 303 S.E.2d at 751; 30. See, e.g., Enron Capital & Trade Drumheller v. Drumheller Bag & Resources Corp. v. Polasky, 227 Valuable Supply, Inc., 420 S.E.2d 331, 334-35 Ga. App. 727, 490 S.E.2d 136, 138 (Ga. Ct. App. 1992)). (1997) (holding that a declaratory Research 19. Palmer & Cay, Inc. v. Marsh & judgment is available where a McLennan Companies, Inc., No. legal judgment is sought that Time CV403-094 (S.D. Ga. Nov. 11, 2003) would control or direct future (order granting Motion for action such as ongoing competi- Schedule of Oral Argument). tion and employment). Casemaker is a Web-based Although both agreements con- 31. See Hulcher Servs., Inc. v. R.J. legal research library and tained provisions declaring that the Corman R.R. Co., 247 Ga. App. search engine that allows you parties had agreed to interpret the 486, 489, 543 S.E.2d 461, 464 (Ga. to search and browse a vari- contracts according to New York Ct. App. 2000) (holding that not law, the district court looked to first injunction, but final adjudica- ety of legal information such Georgia law in determining that the tion of the merits is entitled to res as codes, rules and case law NCAs were unenforceable. The judicata and collateral estoppel). through the Internet. It is an court relied on the decision in 32. 534 S.E.2d 136 (Ga. Ct. App. 2000). easily searchable, continually Keener v. Convergys Corp., 342 F.3d 33. Id. at 138-39. updated database of case 1264 (11th Cir. 2003), in which the 34. Id. (quoting The Bremen v. Zapata Eleventh Circuit conformed its final Off-Shore Co., 407 U.S. 1, 12 (1972)). law, statutes and regulations. judgment to the Supreme Court of 35. Iero, 534 S.E.2d at 138 (“Under Each State Bar of Georgia Georgia’s ruling that it would these circumstances, Iero fails to examine a choice of law provision show that the mere enforcement of member my login to in an NCA only if it first deter- a freely negotiated forum selection Casemaker by going to the mined that the NCA did not violate clause violates Georgia public poli- State Bar's Web site at Georgia’s public policy. See Palmer cy. Indeed he does not even www.gabar.org. & Cay, No. CV403-094 at 4-5. address whether the New York 20. Palmer & Cay, 404 F.3d at 1306. court would apply New York law. The Casemaker help line is 21. See Keener v. Convergys Corp., Accordingly, our inquiry is limited operational Monday thru 205 F.Supp.2d 1374 (S.D. Ga. 2002), to whether enforcement of the Friday, 8:30 a.m. to 5 p.m. rev’d, 342 F.3d 1264 (11th Cir. 2003) forum selection clause is inconven- locally at (404) 527-8777 22. Palmer & Cay, No. CV403-094, at 11. ient or would deprive Iero of his 23. See supra note 19 (describing why day in court.”). or toll free at (877) CASE-509 the district court did not adhere to 36. Id. (quoting The Bremen, 407 U.S. at or (877) 227-3509. the choice of law provisions con- 15). Send e-mail to: tained in the agreements). 37. Iero, 534 S.E.2d at 138 (noting that 24. Palmer & Cay, 404 F.3d 1297, 1309. Iero only argued that the forum [email protected]. All e- 25. 599 S.E.2d 271 (Ga. Ct. App. 2004). selection clause harmed the form, mail received will receive a 26. Palmer & Cay, 404 F.3d 1297, 1309 not the litigants.) response within 24 hours. (citing Hostetler, 599 S.E.2d at 275, 38. 247 Ga. App. 486, 543 S.E.2d 461 which held that a declaratory judg- (Ga. Ct. App. 2000). ment from a Georgia court preclud- 39. Id. at 489, 543 S.E.2d at 464 (quot- ed parties from re-litigating issue in ing Iero, 534 S.E.2d at 137).
October 2005 31 GBJ feature
Bankruptcy Law Changes Will Affect Business Cases Too: The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 By C. Edward Dobbs and Eric W. Anderson
en the pace of Chapter 11 cases. In debtor is “generally not paying n April 20, 2005, the addition, in several instances such debtor’s debts as such debts president signed Congress conferred special benefits become due,” there is excluded any on certain constituencies in busi- debt that is the subject of a bona fide O into law S.256, ness cases. Finally, it is also appar- dispute “as to liability or amount.”4 ent that one effect of the amend- These changes subject virtually all titled the “Bankruptcy Abuse ments will be to increase the liquid- claims of a petitioning creditor to Prevention and Consumer ity needs of business debtors in the challenge by the debtor if there is early stages of a Chapter 11 case any bona fide dispute, even as to a Protection Act of 2005” (the Act), and upon exit from bankruptcy. portion of the amount owed (such which makes sweeping amend- The amendments generally as the reasonableness of claims for apply to cases filed after Oct. 17, accrued interest, attorneys’ fees or ments to the current Bankruptcy 2005. There are, however, a few termination charges). As a result, it Code (the Code).1 While the Act’s notable exceptions that are indicat- may be more risky for a creditor to ed below. serve as a petitioning creditor in an primary focus is on consumer involuntary case. COMMENCEMENT, debtors, and indeed most press Single Asset Real DISMISSAL AND coverage of the bill has centered on Estate Debtors CONVERSION OF Under existing law, certain pro- that aspect, the Act also makes CASES visions and procedures apply to numerous substantive revisions “single asset real estate” debtors with total secured debt that is less that will have far-reaching effects Involuntary Cases than $4 million. The Act removes Section 303 of the Code has been in business bankruptcy cases. This that debt limit to eligibility for amended to provide that the holder treatment of a case as a single asset article will briefly discuss some of of a claim against the debtor that is real estate case,5 thereby opening the subject of a bona fide dispute “as those provisions.2 the possibility for much larger to liability or amount” is not eligi- cases to qualify as single asset real 3 As will be seen, the apparent ble to be a petitioning creditor. estate cases. The Act also requires a intent of those changes is to quick- Further, in assessing whether the debtor in a single asset real estate
32 Georgia Bar Journal case to make monthly payments to cash collateral substantially harm- request an extension to do so, a tax- secured creditors at the non- ful to creditors, (iv) failure to pay ing authority may request dismissal default interest rate or on the value post-petition taxes, (v) failure to or conversion and, if the debtor of the creditor’s interest, and attend an examination or meeting does not file the return or obtain an allows payments to be made from of creditors without good cause, extension within 90 days after the rents or other income generated. (vi) failure to file a disclosure state- request, the bankruptcy court must Dismissal or ment or confirm a plan within the dismiss or convert the case, required time period, (vii) revoca- whichever is in the best interests of Conversion tion of a confirmation order, (viii) creditors and the estate. This is one The Act amends Section 1112(b) inability to effectuate substantial of several provisions in the Act that of the Code to require the bank- confirmation of a confirmed plan, give important benefits to federal, ruptcy court to convert or dismiss a (ix) material default under a con- state and local tax authorities. Chapter 11 case if a movant estab- firmed plan, or (x) termination of a An exception to mandatory dis- lishes any one of 16 enumerated confirmed plan by reason of a con- missal or conversion exists if the acts or omissions that constitute dition specified in the plan.7 debtor or another interested party “cause” for such dismissal or con- Furthermore, among a host of objects and establishes that there is version, absent specifically identi- new filing and reporting require- a reasonable likelihood of confir- fied “unusual circumstances.”6 ments for debtors under amended mation within a reasonable time Some of the enumerated causal Section 521, Congress created new (or within the time frame required grounds include (i) gross misman- provisions mandating conversion for small business cases), the agement of the estate, (ii) failure to or dismissal of a case if the debtor grounds for otherwise granting maintain appropriate insurance fails to timely file certain post-peti- conversion/dismissal include an posing a risk to the estate or the tion tax returns.8 If a debtor does act or omission for which there is a public, (iii) unauthorized use of not timely file a tax return or reasonable justification and that
October 2005 33 absent consent from the movant or Utilities other compelling circumstances.11 The Act enhances the rights of ADMINISTRATIVE utility providers by allowing a util- ity to “alter, refuse or discontinue” POWERS service if within the 30 days after the petition date it has not received Automatic Stay adequate assurance of payment 17 The new amendments create “that is satisfactory to the utility.” important new exceptions to the The court may modify the amount automatic stay. For instance, the of assurances required, but in stay is made inapplicable to the doing so, it may not consider cer- commencement or continuation of tain facts and circumstances that investigations or actions by “secu- courts routinely considered prior rities self regulatory organizations” to the amendments, such as that will be cured within a reasonable (such as NASD or the NYSE) to the utility did not hold security period of time, and the bankruptcy enforce such organizations’ regula- prior to bankruptcy, that the debtor court finds that no “unusual cir- tory power or to delist, delete or paid for utility services on a timely cumstances” exist establishing that refuse to permit quotation of any basis prior to bankruptcy, or that dismissal/conversion is in the best stock that does not meet applicable claims for post-petition utility serv- interests of the estate.9 regulatory standards.12 ices enjoy administrative expense 18 In addition, the Act provides The stay is also made inapplicable priority. An administrative that, in lieu of converting or dis- to certain pension plan obligations, expense priority alone does not missing a case, the court may such as an employer’s withholding constitute an adequate assurance of appoint a trustee or examiner if from wages and collections of payment, but adequate assurances such appointment is in the best amounts under an agreement with may be provided by a cash deposit, interests of creditors.10 This provi- the debtor for the repayment of loans certificate of deposit, letter of cred- 19 sion may well increase the fre- made by plans established by the it, surety bond or prepayment. quency of appointments of employer, so long as the amounts Finally, a utility may recover or set Chapter 11 trustees and examin- withheld are in fact applied to the off against a pre-petition security ers. Indeed, the appointment of an repayment of the loan.13 deposit without notice or court 20 examiner may be the settlement New Section 362(b)(26) provides order. These changes appear to option of choice for Chapter 11 that a setoff of income tax refunds represent a reaction to what had debtors against which motions to for pre-petition tax periods against become an almost routine practice dismiss or convert are filed. The income tax liabilities for tax peri- of limiting a utility’s rights under new mandatory dismissal/conver- ods ending prior to bankruptcy is Section 366 in “first-day” orders. sion provisions represent a signifi- not subject to the automatic stay, The new provisions will give sig- cant shift in leverage in favor of and allows income tax authorities nificant leverage to utilities in the creditors. to hold refunds pending resolution early stages of a bankruptcy case Not only does the Act increase of the taxpayer-debtor’s challenge and may substantially increase the the likelihood of more frequent dis- to tax liability.14 debtor’s liquidity concerns and missal/conversion motions, it cre- Finally, Section 362(b)(27) cre- financing needs. ates an expedited procedure for ates an exception to the stay to hearings on such motions by pro- allow setoffs under master netting CREDITORS viding that the court must com- agreements related to derivatives AND CLAIMS mence a hearing no later than 30 and other securities.15 This is one days after filing of the motion and of several changes to the Code State and Local Taxes must render a decision no later designed to accommodate the bur- than 15 days after the commence- geoning area of financial and deriv- The Act makes important and ment of the hearing on the motion, ative contracts.16 far-reaching changes in favor of
34 Georgia Bar Journal state and local tax authorities. For of debtors, particularly in Chapter SENTENCING CONSULT@TION instance, under previous law a 11 cases, has been to seek redeter- debtor was allowed to pay priority mination a property tax liability & @PPE@LS tax claims under a Chapter 11 plan based upon the purchase price WHEN IT’S TIME FOR A over a period of six years from the obtained in the Chapter 11 liquida- CHANGE date of assessment. Now, payment tion for specific property, as Georgia and All Federal Circuits of priority tax claims under a plan opposed to the possibly higher FEDERAL CRIMINAL LAW must be made in regular install- number previously determined for CENTER ments in cash over a period not to property tax purposes. This amend- Voice: 404-633-3797 exceed five years after the date of ment will limit the ability of debtors Fax: 404-633-7980 the order for relief,21 and must be to obtain such redeterminations. www.MSheinLaw.com [email protected] paid in a manner “not less favor- Priority Claims able than” payments to most favored non-priority unsecured In Chapter 11 cases, the Act A-AA-AA claims under the plan (other than excludes from a corporate debtor’s ATTORNEY REFERRAL SERVICE convenience claims).22 Further, discharge liabilities associated with secured tax claims that would be a fraudulent tax return or a willful Is your phone ringing like it used to? Last month we priority tax claims if not secured attempt to evade or defeat the tax. referred over 17,000 callers to The Act enlarges the statutory are entitled to the same treatment our attorneys. Are you ready to 23 as priority tax claims. “look-back” period for wage and start getting referrals? The Act creates a new Section 511, benefit priorities under Section Call us today! which provides that if a provision of 507(a)(4) from 90 to 180 days before (800) 733-55342 the Code requires the payment of filing and increases the combined 24-hhour paging: interest on a tax claim or an admin- monetary cap on priority wage and (888) 669-44345 istrative expense tax (or that the tax benefit claims from $4,925 to claimant receive the “present value” $10,000, subject to annual increases. of the allowed amount of its claim), This change is effective for all cases the rate of interest must be at the rate filed on or after April 20, 2005.27 By determined under applicable non- doubling the time period and dollar bankruptcy law (e.g., the applicable amount for wage and benefit priori- rate under state law on property ties, the Act is certainly more taxes secured by a lien).24 For taxes “employee friendly.” However, the paid under a confirmed plan, the practical impact may be to deplete applicable interest rate is the rate much needed liquidity for a debtor pegged as of the calendar month in in the early stages of a Chapter 11 which the plan is confirmed.25 case when employees may pressure Section 505 of the Code allowed the debtor to seek bankruptcy court debtors to ask the court to “deter- approval for the payment of pre- mine” the amount of various tax petition wages that are now entitled liabilities, regardless of when the to a priority in greater amounts. NEW HOME taxes were assessed. That provision Administrative CONSTRUCTION has been amended so that the court COMPLAINTS now may not determine the Expense Claims Residential Construction amount or legality of an ad valorem Several new categories of & Development Expert property tax (for real or personal administrative expenses were cre- • Code & Inspection property) if the time for contesting ated under the Act. The amend- Compliance or redetermining the tax has ments add the administrative • Cost/Quality Analysis expired under applicable non- expense priority under Section • Materials & Labor Evaluation bankruptcy law.26 This provision is 503(b)(1)(A) for certain awards by 770-922-4411 significant because a frequent tactic courts or the National Labor www.danielturnerbuilders.com
October 2005 35 Relations Board for back pay and ment will have little effect. Further, the initial period within benefits for services attributable to However, it is not unusual for busi- which a debtor must assume or post-petition periods, even if no ness debtors to “ride the trade” in reject leases of non-residential real services are performed.28 the months or weeks before bank- property has been lengthened to In another change favorable to tax ruptcy, with the result that trade 120 days (from 60 days),36 with authorities, the Act amends Sections debt is substantially increased in only one 90-day extension for cause 503(b)(1)(B) and (D) to include both amount and the collateral position permitted without lessor’s consent, secured and unsecured property of the debtor’s inventory lender and in any event assumption or taxes incurred by the estate, whether potentially increased, to the cha- rejection is required on or before liability is in rem or in personam,29 grin of the trade vendors. This confirmation date.37 This amend- and further provides that a taxing amendment will increase the ment is designed to preclude a authority is not obligated to file a upfront costs of exiting a Chapter debtor from seeking, and a court request for payment in order for 11 case for debtors that run up sub- from granting, repeated extensions allowance of that type of claim as stantial trade debt to suppliers of time to assume or reject leases of administrative expense.30 within the 20-day period before non-residential real property. This The Act does contain a few pro- they file for Chapter 11 relief. In limitation to a maximum of 210 visions helpful to debtors. In cases addition, the presence of these days in the aggregate within which where the debtor assumes, then claims may result in the “adminis- a debtor may assume a non-resi- subsequently rejects, an unexpired trative insolvency” of some dential real property lease will be lease of non-residential real prop- Chapter 11 debtors, increasing the particularly significant in large erty, the Act creates a cap on the possibility of dismissal or conver- debtor cases, especially those landlord’s administrative claim sion of their Chapter 11 cases. involving debtors operating a arising from that rejection, limited number of retail stores. THE ESTATE AND to the amount of all monetary obli- Seller Reclamation gations due for a two-year period AVOIDING (excluding penalties or amounts Rights arising from a failure to operate), POWERS Unpaid trade vendors and other less amounts recovered from guar- sellers of goods to debtors have antors or other sources.31 Executory Contracts been given improved rights and New Section 503(b)(8) creates an and Leases remedies under the Act. The administrative expense priority for Uniform Commercial Code gener- Pre-amendment case law was the actual necessary costs incurred ally provides sellers of goods on divided on the question of whether by the trustee or governmental credit with the right to reclaim a debtor was obligated to cure non- agencies in closing a healthcare busi- those goods from an insolvent monetary defaults in a lease as an ness, including disposing of patient buyer if the seller delivers appro- executory contract as a condition to records and transferring patients to priate and timely notice to the assumption, particularly when the another healthcare facility.32 insolvent buyer.38 default was “impossible” to cure. Favorable treatment is afforded The Act extends the time for a The Act eliminates any requirement by the Act to unsecured trade ven- reclaiming seller to make written to cure those type of defaults under dors, which are given an adminis- demand for reclamation from 10 to unexpired leases of real estate, trative claim for the “value” of 45 days after an insolvent debtor’s except defaults caused by the failure goods sold to a debtor (whether or receipt of goods (or, if the 45-day to operate in accordance with the not insolvent at the time) in the period expires after the petition terms of a non-residential lease.34 ordinary course and received by date, within 20 days after the peti- Instead, these non-monetary the debtor within 20 days prior to tion date).39 Consistent with exist- defaults must be cured by perform- bankruptcy.33 For debtors who are ing case law, the Act clarifies that ance at and after the assumption placed on “cash on delivery” or those reclamation rights are subject date and the lessor must be com- “cash in advance” basis by their to prior rights of lienholders. pensated for any pecuniary losses suppliers during the 20-day period Although the Act prohibits a court resulting from breach or default.35 prior to bankruptcy, this amend- from granting the seller an admin-
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12/04 New Section 503(c) prohibits retention and severance programs for “insiders” of the debtor unless they have a bona fide job offer from another business at the same or greater rate of compensation and the services provided by the insider are “essential to the survival” of the business. istrative claim in lieu of reclama- Trade vendors (and other credi- Voidable Transfers — tion, an unpaid vendor that does tors) made gains in the preference Fraudulent Transfers not seek or is not entitled to recla- area as well. A preference defen- mation will nevertheless receive an dant now may invoke the “ordi- The so-called “reach back” peri- administrative claim under new nary course of business defense” od for setting aside fraudulent Section 503(b)(9) for any goods by demonstrating that the transfer transfers and obligations is delivered to the debtor within 20 was (i) in payment of a debt extended by the Act from one to days of the petition date.40 incurred in the ordinary course of two years, effective for all cases filed on or after April 20, 2005.47 Voidable Transfers — business between the debtor and transferee, and (ii) that the transfer Further, the trustee may now Preferences was made either (x) in the ordinary avoid as a fraudulent transfer a The Act closes the perceived course of business between the pre-bankruptcy transfer to an loophole left by the 1994 amend- debtor and transferee or (y) accord- insider under an employment con- ments to the Code that attempted ing to ordinary business terms.44 tract not in the ordinary course of to override the well-known case of Under current law, both of the lat- business, unless the recipient gave In re DePrizio.41 That case held that ter two tests were required to be “reasonably equivalent value,” transfers made during the extend- satisfied, as opposed to being alter- without any necessity for the ed one-year insider preference natives, which many times made trustee to allege fraudulent intent period to non-insider lenders on the defense very difficult to estab- or any of the financial criteria for a account of loans guaranteed by lish, especially without the testimo- constructive fraudulent transfer, insiders were preferential and ny of an industry expert. such as insolvency. This provision could be recovered from the non- A debtor’s ability to set aside is effective for all cases filed on or 48 insider lenders. Some courts and liens as preferential transfers was after April 20, 2005. commentators interpreted the also curtailed under the Act. The Under new Section 548(e), a 1994 amendments to exempt only Act extends the safe-harbor period trustee may avoid a transfer with- “payments” made to non-insider within which a creditor may per- in 10 years prior to bankruptcy creditors42 and not to other trans- fect a purchase money security that was made by the debtor to a fers, such as grants of security interest from 20 to 30 days after self-settled trust or similar device interests in property of the debtor the debtor’s receipt of the assets45 of which the debtor is a benefici- during the extended insider pref- and extends to 30 days (from 10 ary, if the transfer was made with erence period. To remove any lin- days) the time within which to per- the intent to hinder, delay or gering doubt about the earlier fect all other security interests.46 defraud a person that was or “DePrizio fix,” the Act clarifies The Act amends 28 U.S.C. § 1409(b) became a creditor of the debtor that any preferential transfer to a to provide that an action to avoid a after the transfer. This provision non-insider creditor during the 90- nonconsumer debt against a nonin- applies to all cases filed on or after 49 day to one-year period preceding sider defendant for less than $10,000 April 20, 2005, and could have a the petition date may not be must be filed in the district in which significant impact upon “estate avoided. This provision is effec- the defendant resides, thereby planning” strategies that involve tive for all cases filed on or after depriving the trustee of the home the establishment of so-called April 20, 2005.43 court advantage. asset-protection trusts.
38 Georgia Bar Journal CHAPTER 11 — consultants outside the ordinary who selected the CEO or CFO) par- course of business and not justified ticipated in actual fraud, dishon- OFFICERS AND by the “facts and circumstances” of esty or criminal conduct in the ADMINISTRATION the case.51 This section of the code management of the debtor or pub- attempts to address perceived abus- lic financial reporting. Executive es in the use of key employee reten- Committees tion plans (KERPs), which were pre- Compensation viously unregulated by the Code, Creditors committees in Chapter New Section 503(c) prohibits by restricting both the amount that 11 cases are frequently given access retention and severance programs may be paid and the circumstances to confidential and non-public for “insiders” of the debtor unless under which a bonus may be paid. information that is not always they have a bona fide job offer from Appointment of shared with creditors who are not committee members. To provide another business at the same or Trustee/Examiner in greater rate of compensation and more access to such information, the services provided by the insider Cases of Suspected new Section 1102(b)(3) requires are “essential to the survival” of the Fraud that an official committee must business.50 Section 503(c)(1)(C) provide “access to information” Under new Section 1104(e), imposes strict formulaic limits on for, and “solicit and receive com- applicable to all cases filed on or such compensation, based upon ments” from, creditors who hold after April 20, 2005, the U.S. similar compensation paid to non- claims of the kind represented by Trustee must move for the appoint- management employees, and that particular committee and have ment of a trustee/examiner if “rea- imposes a general prohibition on not been appointed to the commit- sonable grounds” exist to suspect post-petition payments or other tee. The Act provides that a com- that the CEO or CFO (or members transfers to officers, managers or mittee shall be subject to a court of the governing body of the debtor
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October 2005 39 order that compels additional notice sent to that creditor.56 If a relief is entered and the exclusive reporting or disclosure to be made creditor, during the 90-day period period for solicitation of votes (cur- to the creditors.52 There are also prior to the initiation of a voluntary rently 180 days) to 20 months.59 new provisions that allow a court case, in at least two communica- These unextendable time restric- to direct the U.S. Trustee to change tions with the debtor, provides the tions could decrease incentives for the membership of a committee debtor’s account number and the negotiation of consensual plans, as appointed pursuant to Section address to which the creditor recalcitrant creditors may elect to 1102(a) of the Code, including desires to receive “correspon- “wait out” the debtor until they requiring the U.S. Trustee to dence,” the debtor must send have the right to file a creditor plan. appoint a “small business concern” notices under the Code to such Prepackaged Plans to the committee if the court deter- address and include the account mines that the change is necessary number in the notices.57 Any notice Recognizing the increasingly to ensure adequate representation not given in accordance with the common practice of “prepackaged” of creditors.53 requirements of amended Section plans in Chapter 11 cases (that is, Retention of 342 is not effective until it is reorganization plans that have been “brought to the attention of” the drafted, negotiated and voted upon Investment Bankers creditor and, if the creditor has prior to the debtor filing its petition, The Act amends the definition of established internal procedures for and which generally pass through “disinterested person” (in Section dealing with such bankruptcy Chapter 11 very quickly), Congress 101(14)) by removing all of the ref- notices (by designating a person or amended the Code to allow a erences to “investment bankers,” organizational subdivision to be debtor to continue soliciting accept- with the result that an investment responsible for receiving notices), ances of its “prepackaged plan” banker is no longer automatically the notice will not be deemed to subsequent to bankruptcy even if disqualified under Section 327 have been brought to the attention there is not a court-approved dis- solely because it served as an of the creditor until the notice is closure statement. However, the investment banker with respect to actually received by the person or solicitation (whether occurring an outstanding security of the subdivision designated in those prior to or after bankruptcy) must debtor or any security issued with- procedures to receive such be in accordance with applicable 60 in three years of the bankruptcy fil- notices.58 While these notice provi- non-bankruptcy law. In the case ing.54 However, the general disin- sions appear benign on their face, of a pre-bankruptcy solicitation, the terestedness standard still requires they may create headaches for bankruptcy court, for cause, may that an investment banker not hold debtors in large Chapter 11 cases order the U.S. Trustee not to con- an interest “materially adverse to attempting to provide adequate vene a meeting of creditors or equi- 61 the interest of the estate or any and effective notice to hundreds or ty security holders. class of creditors or equity security thousands of creditors. holders.”55 CHAPTER 15 — CHAPTER 11 — OTHER CROSS- Notices to Creditors PLANS AND Amendments to Section 342 of BORDER CASES the Code add significant new CONFIRMATION The Act repeals the ancillary notice requirements for debtors. proceeding provisions of Section Notices to creditors must contain Exclusivity 304 and creates a new Chapter 15 the name, address and last four To address perceived excesses in to “provide effective mechanisms digits of the debtor’s taxpayer repeated extensions “for cause” of a for dealing with cases of cross-bor- 62 identification number and, if the debtors “exclusivity” period to pro- der insolvency.” Chapter 15 notice relates to an amendment posed and confirm a Chapter 11 largely incorporates the model law adding “a creditor to the schedules plan, the Act amends Section on cross-border insolvencies prom- of assets and liabilities,” the 1121(d) to limit the plan exclusivity ulgated in the United Nations debtor’s full taxpayer identification period (currently 120 days) to 18 Commission on International number must be included in the months from the date the order for Trade Law in 1997. Chapter 15
40 Georgia Bar Journal allows a foreign representative to Eric W. Anderson is 34. 11 U.S.C. § 365(b)(1)(A). commence in a U.S. bankruptcy also a partner at Parker, 35. Id. Hudson, Rainer & 36. 11 U.S.C. § 365(d)(4)(A). court an ancillary proceeding of a 37. 11 U.S.C. § 365(d)(4)(B). foreign insolvency proceeding to Dobbs LLP and concen- 38. See generally O.C.G.A. § 11-2-702. protect, recover and liquidate trates his practice in 39. 11 U.S.C. § 546(c). bankruptcy, workouts, assets in the U.S. of the debtor in 40. Id. financial restructuring and com- 41. 874 F.2d 1186 (7th Cir. 1989). the foreign proceeding. With the mercial finance. Anderson earned 42. 11 U.S.C. § 550 (c). increased globalization of com- 43. 11 U.S.C. § 547(i). both his B.A. (1982) and J.D. merce, it is anticipated that such 44. 11 U.S.C. § 547(c)(2). (1986) from the University of 45. 11 U.S.C. § 547(c)(3)(B). ancillary proceedings will be more Wisconsin-Madison. He regularly 46. 11 U.S.C. § 547(e)(2). frequently used. represents banks, financial institu- 47. 11 U.S.C. § 548(a)(1). tions, secured asset-based lenders 48. 11 U.S.C. § 548(a)(1)(B)(iv). CONCLUSION and other parties in bankruptcy 49. 11 U.S.C. § 548(e). 50. 11 U.S.C. § 503(c)(1). and financial restructuring matters. The Act is the most comprehen- 51. 11 U.S.C. § 503(c)(2). sive revision of our bankruptcy 52. 11 U.S.C. § 1102(b)(3). 53. 11 U.S.C. § 1104(a)(4). laws since The Bankruptcy Reform Endnotes 54. 11 U.S.C. § 101(14). Act of 1978. The law’s primary tar- 55. Id. 1. 11 U.S.C. §§ 101, et seq., (2005). 56. 11 U.S.C. § 342(c)(1). get was to correct perceived abuses 2. This summary does not cover all of 57. 11 U.S.C. § 342(c)(2). in the burgeoning area of consumer the changes made by the Act to the 58. 11 U.S.C. § 342(g). Bankruptcy Code or that might bankruptcy cases. However, as this 59. 11 U.S.C. § 1121(d). impact business bankruptcy cases. article has highlighted, Congress 60. 11 U.S.C. § 1125(g). In addition, this summary should 61. 11 U.S.C. § 341(e). also made many important changes not be looked upon as an expres- 62. 11 U.S.C. § 1501(a). to the Code applicable to business sion of legal opinions by the cases. Creditors, shareholders and authors as to the scope, applicabili- ty or effect of any provision of the debtors will all be affected by the Act to any specific set of facts. Earn up to 6 CLE Act’s broad reach. 3. 11 U.S.C. § 303(b)(1). credits for authoring 4. 11 U.S.C. § 303(h)(1). C. Edward Dobbs is a 5. 11 U.S.C. § 101(51B). legal articles and 6. 11 U.S.C. § 1112(b)(4). partner in the Atlanta, having them 7. Id. Ga., office of Parker, 8. See 11 U.S.C. § 521(j). published. Hudson, Rainer & 9. 11 U.S.C. § 1112(b)(2). Dobbs LLP, and is the 10. 11 U.S.C. § 1104(a)(3). Submit articles to: head of the firm's 11. 11 U.S.C. § 1112(b)(3). Marcus D. Liner commercial practice group. Dobbs 12. 11 U.S.C. § 362(b)(5). Georgia Bar Journal 13. 11 U.S.C. § 362(b)(19). 104 Marietta St. NW, Suite 100 is a 1971 graduate of Davidson 14. 11 U.S.C. § 362(b)(26) College and earned his J.D. 15. 11 U.S.C. § 362(b)(27). Atlanta, GA 30303 degree in 1974 from Vanderbilt 16. See, e.g., 11 U.S.C. §§ 556-62. Contact [email protected] University School of Law, where 17. 11 U.S.C. § 366(c)(2). he served as Articles Editors of 18. 11 U.S.C. § 366(c)(3). for more information 19. 11 U.S.C. § 366(c)(1). The Vanderbilt Law Review. He is or visit the Bar’s Web site 20. 11 U.S.C. § 366(c)(4). at www.gabar.org the author of two books (one on 21. 11 U.S.C. § 1129(a)(9)(C)(ii). enforcement of security interests 22. 11 U.S.C. § 1129(a)(9)(C)(iii). under the UCC and another on 23. 11 U.S.C. § 1129(a)(9)(D). Chapter 11 reorganizations). In 24. 11 U.S.C. § 511(a). addition, Dobbs has authored 25. 11 U.S.C. § 511(b). 26. 11 U.S.C. § 505(a)(2)(C). numerous law review articles on 27. 11 U.S.C. §§ 507(a)(4) and (a)(5). commercial law subjects and has 28. 11 U.S.C. § 503(b)(1)(A). contributed a chapter entitled 29. 11 U.S.C. § 503(b)(1)(B). "Debt Subordinations" to the 30. 11 U.S.C. § 503(b)(1)(D). Matthew Bender treatise on Asset 31. 11 U.S.C. § 503(b)(7). 32. 11 U.S.C. § 503(b)(8). Based Lending. 33. 11 U.S.C. § 503(b)(9).
October 2005 41 GBJ feature
From One Georgia to Another By Sarah I. Bartleson
worked closely here are two law stu- together on this pro- gram since 1993. Both dents studying at have worked hard Georgia State University and are proud of T what the program College of Law from Georgia. No, has accomplished. not the state, but the Republic of History Georgia—the small country situated In July 1993, Judge Beasley wrote a letter where Europe and Asia meet. to the executive direc- tor of the Central and Tamar Charbadze and Giorgi “Gigi” Beasley and GSU Photos courtesy of Judge Dorothy Toth Eastern European Tamar Charbadze and Giorgi Liluasvili arrive in Liluashvili are here for the semester Law Initiative (CEELI, Atlanta from the Republic of Georgia via a flight now Central European from Paris, courtesy of Delta Airlines. because of the efforts of the and Eurasian Law International Connection Program Initiative) in Washington describing Warsaw Pact countries formerly in the idea for such a project, which ref- the sphere of influence (not to men- at Georgia State University College erenced their discussion the previ- tion occasional military occupation) ous May about the possibility of of the Soviet Union, and finally the of Law. including within CEELI the arrange- dissolution of the U.S.S.R. itself, the The International Connection ments for a foreign law student to American Bar Association adopted Program invites law students from come and study as a special student as one of its major goals the promo- foreign countries to come to the at GSU College of Law. She said, tion of “the rule of law” on a global United States and study for a “My letter indicated that I had met scale, and established CEELI to semester at GSU College of Law. the day before with Dean Marjorie help promote law reform, legal and Tamar and Gigi are the third set of Girth of the law school and Terrence judicial professionalism, and legal students to rely upon the program Croft, president of the Atlanta Bar education in countries formerly for an educational opportunity Association, to talk about it.” Each under communism. they otherwise would never have. was enthusiastic and began explo- In 1992, CEELI invited several Professor Charles Marvin, direc- ration within their respective realms. dozen deans of law faculties from tor of the program, and Senior The program was initiated for a those countries to come to visit law Judge Dorothy Toth Beasley, who couple of different reasons. First, schools in the United States. They has played a central role in the pro- after the fall of the Berlin Wall, the also promoted the idea that sister law gram from the beginning, have turn toward the West of the school relationships be established
42 Georgia Bar Journal Q & A Time With the Fellows between law schools in countries How did you hear about the International Connection Program? where CEELI had operations and Giorgi: I heard about it from a classmate in law school, who knew that I American law schools. The foreign was searching for a fellowship like this one. I was especially interested law dean coming to GSU that fall was when I learned that ABA/CEELI was involved, because their office in the Svetlana Kamenova, dean of the Republic of Georgia, in the capital of Tbilisi where I live. They do so many Paissii Hilandarski Law Faculty in good things for young Georgian lawyers. Plovdiv, Bulgaria. Professor Marvin Tamar: I heard about it through the Georgian Young Lawyers Association of Georgia State University then paid branch office in Kutaisi, where I live. a reciprocal visit to Plovdiv during Was it hard to apply for the International Connection Program the latter part of the Spring 1993 term, and be accepted? teaching comparative administrative Giorgi: It was not hard to apply, but it was rather difficult to be accepted. law at the law faculty there. Nothing immediately came of that sister law Tamar: It wasn’t too hard to apply, but it was difficult to be a winner (note from Professor Marvin: the applicants had to go to Tbilisi to the CEELI school relationship probe, since Dean office there and be interviewed. From a short list of six applicants that the Kamenova soon thereafter was pro- CEELI committee cleared through as finalists, the International Connection moted to a position in the Bulgarian Committee in Atlanta picked its first two choices to be winners of fellow- national Academy of Sciences in the ships, with two alternates as backups. These two accepted the fellowships, capital, Sofia, and no follow-up con- so there was no need to follow through with the alternates.) tacts were forthcoming from Plovdiv. What is the most important thing so far that you have learned Going Global about Atlanta and being in the United States? Giorgi: This is my first trip to the United States. My impression is that peo- After learning that Atlanta would ple here in Atlanta work hard and obey the law. It reminds me of what host the 1996 Olympic Games, vari- President Kennedy said, “Ask not what your country can do for you, but ous businesses and professional what you can do for your country.” I am also impressed about how impor- tant it is for people and companies to pay their taxes. associations in the city committed themselves to involvement in vari- Tamar: A few weeks in Atlanta is enough to recognize how industrious and lawful the people are here. ous projects promoting internation- al relationships during the lead-up How do law classes at Georgia State differ from law classes in to the games. The Atlanta Bar your country? Association thought it would be a Giorgi: The differences between the law faculties in Georgia and the good idea to carry out a joint project United States are so great that it is hard to know where to begin my com- with a locally based law school to ments. Two things that come to my mind first are that most of the law professors in the United States are highly educated, work full time at that invite graduates from foreign law job and are very professional about it, something that is not true in faculties to come to Atlanta to Georgia. And second that there are opportunities to be involved in practi- obtain transnational law course cal clinics and externship courses in the United States, something that is not work and externship training. yet in place in Georgia. There would be a partnership Tamar: In the United States, the law students have the opportunity to among the bar, an Atlanta-based learn much more about the substantive content, procedures and methods law school, and perhaps other pri- of the law while in law school than do the students in Georgia, although we vate sector entities than the bar in our country do have a 5-year law school training program and then association itself. After discussions required examinations to pass if one wants to become a government pros- with then dean of the GSU College ecutorial attorney or a career judge. of Law, Marjorie Girth, an agree- What do you plan on doing with your law degree? What kind of ment was reached to launch the law will you practice? International Connection Program Giorgi: I hope to be a prosecutor of criminal cases, focusing on problems in 1995. The first two International of corruption, drug trafficking and other transnational criminal activities. Connection fellows were chosen. But I would like to have the opportunity to do further graduate legal study Since GSU and CEELI already had abroad before I settle into my career back home in Tbilisi. some contacts in Bulgaria, it was Tamar: I plan on working in the civil law (note from Professor Marvin: we decided that the 1995 fellows in the common law world would say “private law” as opposed to criminal or public law) area in Georgia, but hope also to have some international law exposure. For that reason, I am enrolled in contract law, corporation October 2005 43 law, and international law courses at Georgia State University this fall. The guests and the airport welcoming committee A reception at GSU was held for the fellows after they from the International Connection Committee, left to arrived in Atlanta. Pictured left to right, Giorgi Liluashvili, Liz right, Professor Charles Marvin, Tamar Charbadze, Price (president of the Atlanta Bar Association), Tamar John Parkerson (Delta Airlines lawyer), Giorgi Charbadze, Judge Dorothy Toth Beasley, Professor Charles Liluashvili, Judge Dorothy Toth Beasley, and Tamuna Marvin, John Parkerson, and Judge T. Jackson Bedford (chair Liluashvili (Southern Center for International Studies). of the Atlanta Bar Foundation).
would be chosen from that coun- try. CEELI personnel based in Sofia Members of the International Connection were prevailed upon to send Program Committee notices of the competition out to ■ Professor Charles Marvin, director of the program the various law faculties in Bulgaria, to interview individual ■ David Walbert, who with his wife Charlotte is hosting law student student applicants for the fellow- Tamar Charbadze in their home for the first half of the semester ships, and then send the resumes ■ Anton Mertens, chair of the International Law Section of the State and CEELI interviewers’ com- Bar of Georgia and representing the section ments concerning a short list of finalist candidates to Atlanta for ■ John Parkerson, chair of the International Transactions Section of the Atlanta Bar Association, representing that Section as well as the International Connection Delta Air Lines Committee to make the final deci- sion of who the invitees for the fel- ■ Jill Pryor, representing the Possible Woman Foundation lowships should be. ■ Rebecca Olson Gupta, representing the Georgia Association for The experience was such a suc- Women Lawyers cessful one, that a decision was ■ Ken Cutshaw, dean of the law school at the Georgian American made to repeat the International University in Tbilisi, Atlanta attorney and long-distance Connection Program in the Fall of 1997, when again a substantial ■ Tamuna Liluashsvili of the Republic of Georgia, who is program financial contribution was made coordinator at the Southern Center for International Studies in by the Georgia Power Atlanta Foundation, followed by the ■ Dorothy Toth Beasley, Senior Judge, State of Georgia; Mediator & Atlanta Bar Association, and Arbitrator, Henning Med.& Arb. Svc., Inc. Delta Airlines again provided Also instrumental were Claude Zullo and Nino Khurtsidze, CEELI Tbilisi transatlantic tickets to two fel- office, who recruited, interviewed and recommended a slate of candidates lows, this time chosen from and then helped students prepare for departure. Croatia. Two young women, Sanja Baric and Katerina Dominovic, from Pula and Split,
44 Georgia Bar Journal Judge Beasley wrote in her letter to CEELI in July 1993: “An exposure to our legal and court systems to a degree which cannot be achieved by a short visit, by a lawyer who can then return and share by teaching or contributing through participation in government or law practice, can assist in that (young lawyer’s) country’s democratic development.”
Croatia, were chosen to be have the unique opportunity afford- International Connection Fellows. ed by the International Connection Sponsors of the Funding Challenges experience to gain knowledge about International how the legal community operates in Connection Program Although the first two programs in a law-oriented society, and how civil 1995 and 1997 were successful, the society can best operate with cooper- Georgia State University program laid dormant for seven years ative programs involving both the College of Law – tuition and because of lack of funding. Late in public and private sector, profit- all administrative work with 2004, however, with strong encour- making and non-profitmaking respect to qualifying for agement from persons in the Atlanta organizations working together,” he admission to the law school, Bar Association and with the help of said. “The International Connection obtaining visas, travel Judge Beasley, Professor Marvin and Program is a unique joint effort of a arrangements, registration, Interim Dean Steven Kamenshine, the wide swath of differing organiza- and provision of courses, and program got off the ground again, tions and individuals, of which the a myriad of details with added financial assistance from city of Atlanta should be proud.” International Law Section, the Atlanta Bar Foundation, the Host families for the two current State Bar of Georgia – International Law Section of the State fellows, Tamar Charbadze and grant Bar of Georgia and the Possible Giorgi Liluashvili, are still needed Atlanta Bar Association Woman Foundation. GSU again com- from mid-October until Dec. 8, when Foundation – grant mitted to provide free tuition and they depart Atlanta for their home- graduate research assistantships for land at the end of the semester. David Possible Woman the fellows, and Delta Airlines yet and Charlotte Walbert and Carey Foundation – partial schol- again committed to the generous con- and Susan DeDeyn generously arship for Tamar Charbadze tribution of free roundtrip transat- opened their homes to provide hous- Delta Air Lines – roundtrip lantic tickets for the fellows. ing for the two students for the first transatlantic tickets Value of Studying half of the Fall semester. Professor Marvin continues to be David and Charlotte Abroad the coordinator of the International Walbert – home hosts When asked why she thought Connection Program. Those who Carey and Susan DeDeyn the Atlanta community should be wish to volunteer housing for – home hosts engaged in and support the legal either of the fellows, or who wish Georgia Association for education of foreign students here, to provide them with some extern- Women Lawyers – hon- Judge Beasley replied, “It is impor- ship experience, leisure or week- orary membership for the tant for us locally to participate in end activities, or simply a meal, are semester, for Tamar the education of young lawyers encouraged to contact Professor Charbadze and law students in order to foster Marvin at (404) 651-2436 or by e- the kind of cross-pollination that mail at [email protected]. International Transaction emerging democracies need.” Section, Atlanta Bar Professor Marvin echoed the sen- Sarah I. Bartleson is the assistant Association – activities for timents when he said, “It is impor- director of communications for the fellows the State Bar of Georgia. tant for foreign law graduates to
October 2005 45 GBJ feature
Judge Rowland W. Barnes Endowment Fund By Lauren Larmer Barrett
he unexpected and
very tragic passing of T Judge Rowland W. Barnes was a tremendous loss to
the community and our profession.
He was an inspiration to many
people throughout his life—as a
lawyer, as a judge, as a teacher and
as a friend. Though Judge Barnes served on the bench in Fulton County, his death touched many around (Left to right) Judge Douglas C. Pullen, Superior Court of Muscogee the state and even throughout the County; Lauren Larmer Barrett, executive director of the Lawyers nation. In Columbus, Ga., not too Foundation of Georgia; Claudia Barnes, widow of Judge Rowland W. long after his death, the litigants Barnes; and Paul Kilpatrick Jr., former State Bar president, Pope, McGlamry, Kilpatrick Morrison & Norwood. and judge in a class action lawsuit were discussing the terrible event Bar of Georgia. He and his partners is a sum of money left after distri- and decided that they would like at the law firm of Pope, McGlamry, butions are made to benefit the to honor Judge Barnes in a way Kilpatrick, Morrison & Norwood class members. These leftover that would benefit the communi- discussed the idea of establishing a funds are referred to as “cy pres.” ty and the profession throughout fund to benefit the High School The court can award the cy pres the state. Mock Trial Program and to honor funds to a not-for-profit organiza- It just so happened that Mike Judge Barnes by awarding some of tion that benefits the class and the McGlamry, one of the litigants in the residual funds in the class community. the class action lawsuit, had been action suit they were concluding. They met with the judge in the active with the High School Mock Whenever a class action suit is set- case, Judge Douglas Pullen of the Trial (HSMT) Program of the State tled in favor of the plaintiffs, there Superior Court of Muscogee
46 Georgia Bar Journal County, and sought the coopera- presented a check for $50,000 to mation about the foundation and tion of the firm of Sonnenschein, Barrett to begin the fund. The the endowment, please contact Nath & Rosenthal, the defendant’s endowment will benefit the efforts Lauren Larmer Barrett at (404) 659- counsel. The Sonnenschein firm is of the state champion HSMT team 6867, [email protected], or based in Chicago, Ill., but they as they seek to win the National 104 Marietta St., NW, Suite 630, were familiar with both the cir- Championship. The fund will be Atlanta, GA 30303. cumstances surrounding the housed at the Lawyers Foundation death of Judge Barnes as well as of Georgia, the philanthropic arm Lauren Larmer the benefits of the HSMT pro- of the State Bar of Georgia. The Barrett is the execu- gram, and they were quick to foundation will continue to accept tive director of the agree that this was an excellent donations to the endowment for Lawyers Foundation of Georgia. use of the cy pres funds. The the foreseeable future. For infor- judge and the attorneys all agreed that such an endowment to honor Judge Barnes and benefit the Judge Rowland W. Barnes HSMT program was a worthy use of the funds in this particular class Endowment Fund action suit. Established in 2005 at the Lawyers Foundation of The HSMT program of the Young Lawyers Division of the Georgia in memory of Judge Rowland W. Barnes of the State Bar of Georgia is 17 years old. Superior Court of Fulton County to honor and uphold Every year, lawyers and judges the standards of excellence he so valued. around the state devote hundreds of hours to the student partici- The Fund benefits the high school mock trial team which pants, helping them develop skills in critical thinking and oral advo- wins the State Championship in order to assist each such cacy. Not just the students, but team to participate in the National Competition. their families as well, learn a great deal about the law, their lawyer Established with the assistance and generosity of: coaches and their judges. There are Judge Douglas C. Pullen of the Superior Court of Muscogee County 129 teams in Georgia this school Pope, McGlamry, Kilpatrick, Morrison & Norwood year. This effort takes not only vol- Sonnenschein, Nath & Rosenthal unteer time, but volunteer money as well. In the past, the HSMT pro- gram has not had an endowment. Thanks to the efforts of one Georgia law firm and one Georgia judge, that has changed. On July 27, during the Annual Meeting of the Council of Superior Court Judges, Paul Kilpatrick Jr. of Pope, McGlamry, Kilpatrick, Morrison & Norwood, along with Judge Pullen and Lauren Larmer Barrett of the Lawyers Foundation of Georgia, and Claudia Barnes, widow of Judge Barnes, announced the establishment of the Judge Rowland W. Barnes Endowment Fund. Judge Pullen
October 2005 47 GBJ feature
Whose Data Is It Anyway? By Jeffrey C. Morgan
ichard Dreyfuss is
one of my favorite R actors. Who can for- get his exasperated marine biolo-
gist in Jaws, sputtering “This was
no boat accident!” Another of my
favorite Dreyfuss roles was the
quadriplegic artist who wanted to
die with dignity in Whose Life Is It
Anyway? That film asks the ques-
tion: Who should control a For many consumers the answer facts about a given person that is patient’s life—the patient or his is surprising: The commercial data useful to determine a given per- doctors? brokers do. At least with respect to son’s credit worthiness, employa- the types of information that have bility, and so forth. That is where Those two Dreyfuss roles exem- been traditionally part of public commercial data brokers—or plify, for me, a recent convergence records for years. Drivers license CDBs—come in. CDBs, like of circumstance in Georgia and all numbers, street addresses, mort- Alpharetta-based ChoicePoint, col- over the country. Companies who gages, phone numbers, and crimi- lect, aggregate, package, and resell collect personal data about virtual- nal convictions. These bits of “pri- such publicly and commercially ly every adult in the United States vate” information generally appear available information about indi- recently have had very public in records of local tax boards, cred- viduals as a service to private-sec- “boat accidents” of their own, it reporting bureaus, telephone tor companies and government which raise the question: Who con- books, court records, and so on. agencies alike. trols an individual’s personal Add to that the other commercially In early 2005, ChoicePoint data—the individual or the com- available information such as cred- revealed that it had been the victim mercial data brokers who compile it card numbers and late payment of data theft. ChoicePoint’s situa- and sell that information as part of histories, and you have a set of tion garnered the lion’s share of their businesses?
48 Georgia Bar Journal public attention, but its situation in place, the public demands (right- was not unique. Within weeks of ly or wrongly) that CDBs do more ChoicePoint’s disclosure that crim- to safeguard personally identifiable inals had misappropriated some of information. To a number of indus- its data files, other CDBs and busi- try observers, the public was blam- nesses who collect personally iden- ing the victim of the crime—the tifiable information, including CDBs—for having the information LexisNexis and Bank of America, in the first place. To the public, it felt revealed that they too had experi- like their privacy had been violated. enced unrelated security breaches The popular media also stepped of their own. Indeed, according to into the fray. The Atlanta Journal- Deloitte’s Global Security Survey Constitution, for example, suggest- 2004, 83 percent of companies ed in an editorial that companies responding experienced a security should be prohibited from ware- breach in 2004, compared to 39 per- housing personal information in the cent in 2002.1 first place. How can companies The truth is that hacking or legally amass all sorts of personal “malicious intrusions” are every- data about individuals and then day realities for today’s business- resell it? After all, isn’t the “right to es—and not just for the CDBs of the privacy” part of our culture as world. It is essential that business- Americans, if not an underling prin- es have an effective information ciple of the Constitution itself? security program to reduce the risk The Constitution, of course, of data loss—and the damage to actually cuts the other way. The the businesses’ credibility that goes First Amendment protects CDBs’ with it. State and federal govern- rights to collect and share informa- ments are also creating new regula- tion about individuals. But like tory responsibilities for companies many aspects of commercial whose data security breaches result speech, the government can in unauthorized disclosure of indi- impose rules and regulations gov- viduals’ personal data. erning the rights and responsibili- Financial institutions and health ties CDBs may have with respect to care providers have for several such data. years now had privacy and infor- For 10 years, the European mation security standards imposed Union has had a Data Privacy on them by the Gramm-Leach- Directive governing the collection Bliley Act and in the Health and use of personally identifiable Insurance Portability and information about EU citizens. The Accountability Act (HIPPA), EU Directive generally prohibits respectively. But what steps should the collection and processing of businesses not within the regulato- personal data unless “the data sub- ry schemes of those laws take to ject has unambiguously given his protect personally identifiable data consent,” or unless other excep- from “malicious intrusion” or out- tions, such as national security con- right theft? Should they do any- siderations, are present.2 thing at all? Such prohibitions do not exist in The recent public outcry over the the United States, largely due to theft of this type of data from First Amendment considerations. ChoicePoint and others shows that, Until very recently, only California even without a regulatory scheme had a law requiring CDBs to
October 2005 49 inform individuals about a data mines that it will not compro- rity of the system following dis- security breach affecting personal- mise the investigation. covery or notification of the ly identifiable information. breach in the security of the data Under the California law, a California’s law, California Civil to any resident of this state “breach of the security of the sys- Code § 1798.82, provides: whose unencrypted personal tem” means “unauthorized acqui- information was, or is reason- (a) Any person or business that sition of computerized data that ably believed to have been, conducts business in California, compromises the security, confi- acquired by an unauthorized and that owns or licenses com- dentiality, or integrity of personal person. The notice shall be made puterized data that includes information maintained by the per- in the most expedient time pos- personal information, shall dis- son or business.” “Personal infor- sible and without unreasonable close any breach of the security mation” means an individual’s first delay, consistent with the legiti- of the system following discov- and last names in combination mate needs of law enforcement, ery or notification of the breach with certain other “data elements,” as provided in subsection (c) of in the security of the data to any such as the individual’s social secu- this Code section, or with any resident of California whose rity number, driver’s license num- measures necessary to deter- unencrypted personal informa- ber, or credit card number and mine the scope of the breach and tion was, or is reasonably password. Perhaps significantly, restore the reasonable integrity, believed to have been, acquired the California law also provides security, and confidentiality of by an unauthorized person. The that: the data system. disclosure shall be made in the (f) For purposes of this section, most expedient time possible (b) Any person or business that “personal information” does and without unreasonable maintains computerized data not include publicly available delay, consistent with the legiti- on behalf of an information bro- information that is lawfully mate needs of law enforcement, ker that includes personal infor- made available to the general as provided in subdivision (c), mation of individuals that the public from federal, state, or or any measures necessary to person or business does not local government records. determine the scope of the own shall notify the informa- breach and restore the reason- Lawmakers in a number of other tion broker of any breach of the able integrity of the data system. states, including Georgia, have security of the data immediate- recently rushed to introduce legis- ly following discovery, if the (b) Any person or business that lation of their own that, similar to personal information was, or is maintains computerized data the California law, would require reasonably believed to have that includes personal informa- companies to notify individuals been, acquired by an unautho- tion that the person or business whose data has been the subject of rized person. does not own shall notify the a security breach. owner or licensee of the informa- (c) The notification required by On May 5, 2005, the Georgia tion of any breach of the security this Code section may be General Assembly approved Act of the data immediately follow- delayed if a law enforcement 163, S.B. No. 230. Act 163 would ing discovery, if the personal agency determines that the noti- amend Title 10, Chapter 1 of the information was, or is reasonably fication will compromise a Official Code of Georgia by creating believed to have been, acquired criminal investigation. The noti- a new Article 34. The provisions of by an unauthorized person. fication required by this Code Article 34 are modeled after the section shall be made after the (c) The notification required by California statute and provide: law enforcement agency deter- this section may be delayed if a 10-1-912 mines that it will not compro- law enforcement agency deter- mise the investigation. mines that the notification will (a) Any information broker that impede a criminal investigation. maintains computerized data Like the California law, the The notification required by this that includes personal informa- Georgia law defines “breach of the section shall be made after the tion of individuals shall give security of the system” as any law enforcement agency deter- notice of any breach of the secu- “unauthorized acquisition of an
50 Georgia Bar Journal individual’s computerized data other states that collect information tomers or suppliers, then entry into that compromises the security, con- from users located in Georgia and markets will be reduced. fidentiality, or integrity of personal then use that information for a Economists know that facilitating information of such individual wide variety of other purposes, entry is one of the best ways to maintained by an information bro- sometimes for monetary compen- keep consumer prices low, so mak- ker.” But the Georgia law differs sation? These questions do not yet ing entry more difficult will have from the California law in certain have clear answers. an unseen but substantial effect on important respects. For example, Further, unlike California, the consumer prices.”4 the reach of the Georgia law is not Georgia law imposes the addition- Going forward, the question limited to any “person or busi- al requirement that: should not be whether CDBs ness.” Rather, it applies to “infor- should be “permitted” to collect, (d) In the event that an infor- mation brokers.” An “information package, and resell data, but rather mation broker discovers cir- broker” under the Georgia law is: what balance should be struck cumstances requiring notifica- between the rights of CDBs to pro- any person or entity who, for tion pursuant to this Code sec- vide their important services, and monetary fees or dues, engages tion of more than 10,000 resi- the rights of consumers to be noti- in whole or in part in the busi- dents of this state at one time, fied when their personally identifi- ness of collecting, assembling, the information broker shall able data may have been compro- evaluating, compiling, report- also notify, without unreason- mised. In these uncharted waters, ing, transmitting, transferring, able delay, all consumer report- CDBs should seek appropriate legal or communicating information ing agencies that compile and counsel to minimize the legal and concerning individuals for the maintain files on consumers on business risks involved in collecting primary purpose of furnishing a nation-wide basis, as defined and safeguarding data. There are personal information to nonaf- by 15 U.S.C. Section 1681a, of sharks in these waters, and they are filiated third parties, but does the timing, distribution, and trolling for businesses’ data. I can not include any governmental content of the notices. almost hear Richard Dreyfuss now: agency whose records are main- CDBs provide valuable services “Boys, oh boys... I think he’s come tained primarily for traffic safe- to the economy. Dr. Paul H. Rubin, back for his noon feeding.” ty, law enforcement, or licens- a professor of economics and law at ing purposes. Emory University and author of Jeffrey C. Morgan is a litigator in O.C.G.A. § 10-1-911(2). The “Privacy and the Commercial Use Troutman Sanders LLP’s Intellectual Georgia law raises important ques- of Personal Information,” has Property Practice Group and a tions as to the types of businesses argued that CDBs “make it possi- member of the firm’s Privacy & affected by the regulations. ble to purchase insurance quickly Data Security Practice Team. He can Although it seems fairly certain and with relatively little paper- be reached at (404) 885-3661 or by e-mail at jeffrey.morgan@trout- that the Georgia law would apply work. Similarly, they reduce the mansanders.com. to large CDBs primarily engaged in cost and increase the speed of back- the business of data collection and ground checks for employment, distribution, does it apply to other apartment rental and numerous Endnotes business who collect, compile, or other day to day transactions. The 1. www.deloitte.com/dtt/cda/ transmit “information concerning reduction in hassles and increase in doc/content/dtt_financialser- individuals” such as credit card speed is something that directly vices_SecuritySurvey2004_0517 companies? What about retail busi- benefits consumers.”3 04%282%29.pdf 2. www.cdt.org/privacy/eudirec- nesses who collect information CDBs “might make access to tive/EU_Directive_.html#HD_ from users and then sell that infor- information more difficult in order NM_2 mation to “nonaffiliated third par- to deter theft, but this will also 3. Paul H. Rubin, Data Security: Protect Our Information, Don’t ties?” What exactly is a “nonaffili- have costs…. If as a result it Banish it, Atlanta Journal- ated third party?” Do subsidiaries becomes more difficult for new Constitution, April 11, 2005, at or affiliates qualify? And what businesses to purchase information A9. about Internet Web sites located in from [CDBs] about potential cus- 4. Id.
October 2005 51 GBJ feature
State Bar of Georgia: A Record of Legislative Achievement
he State Bar takes great
pride in its legislative T program that benefits Georgia businesses and citizens, as
well as the legal profession, the
judiciary, and our system of justice.
The State Bar has been particularly
effective in passing legislation and
funding initiatives that serve the To accomplish these objec- The following is an overview of tives, the State Bar has a process the State Bar’s legislative achieve- public and improve the delivery of where the Advisory Committee ments in recent years. on Legislation reviews legisla- legal services to all Georgians. tive recommendations generated Business Law Section Recent highlights include the from the various sections of the (Banking and Corporate, creation and funding of a State Bar. The State Bar’s Board Partnership sections) statewide public defender system; of Governors, in turn, debates ■ HB 555 enhances corporate substantial revisions and adoption the merits of each recommenda- code relating to ability to use of UCC Articles (2A, 3, 4, 5, 8 and tion and decides whether to electronic transfers for certain 9); modernization of the probate, endorse a particular measure for notices, etc. (2004) corporate, non-profit, and inclusion in the State Bar’s annu- ■ HB 555 (Committee Substitute) guardianship codes; and the cre- al legislative agenda. Then, the modernizes the corporate non- ation of family and business law State Bar’s professional lobbyists profit code (2004) courts. The State Bar has also effec- create and implement a plan for ■ SB 211 conforms Georgia’s tively defended against efforts to navigating the agenda through merger provisions to Delaware eliminate education requirements the legislative process. standard (2003) for taking the Bar exam, objected Voluntary financial contribu- ■ HB 1253 completely revises to initiatives that limit access to tions by State Bar members make Article V relating to letters of justice in the civil courts, and possible this important legisla- credit (2002) defeated efforts to impose a busi- tive program, which is viewed as ■ SB 253 clarification of LLC code ness/occupation tax for attorneys. one of the finest in the country.
52 Georgia Bar Journal regarding LLC membership Real Property Law Section Fiduciary Law Section withdrawal rights (2002) ■ ■ ■ HB 191 complete rewrite of HB 1311 creates statutory HB 406 allows trustees to make Article IX of the UCC relating to authority ensuring that only investment decisions for best secured transactions (2001) licensed attorneys can close real total return in situations where ■ SB 397 strengthens corporate estate transactions (2004) they have a duty to both the ability to fend off hostile takeover ■ SB 97 expands the transfer tax income beneficiary and remain- (2000) exemption to transactions derman (2005) ■ ■ HB 224 included five separate involving individuals and enti- HB 229 is a massive overhaul Bar initiatives in annual corpo- ties that they control (2003) and modernization of guardian- rate code revision (1999) ■ HB 1582 assures that real estate ship code (2004) ■ ■ SB 41 revised LLC statute filing fees are used to complete HB 646 states that a renunciation regarding dissolution of compa- electronic grantor/grantee index of future interests vests during nies (1999) system (2002) the lifetime of the renouncing life ■ SB 42 accomplished technical ■ HB 597 preserves integrity of estate holder (2002) ■ modification to LLP statute (1999) grantor/grantee index by HB 541 simplifies the probate ■ SB 402 amended Article 8 pertain- requiring written copies to be court fee schedule (2001) ■ ing to transfer of securities (1998) maintained by clerks (2000) HB 245 enacted additional revi- sions to probate code (1997) ■ HB 294 contained annual tech- ■ HB 429 empowered closing ■ HB 1030 enacted complete over- nical revisions to corporate code attorneys to cancel satisfied haul of probate code (1996) (1997) security instruments (1999) ■ ■ SB 171 authorized conditional HB 349 allowed single member ■ HB 597 required clerks to main- powers of attorney (1993) Limited Liability Companies tain printed grantee/grantor ■ SB 189 confirmed authority of fidu- (1997) index for attorneys (1999) ■ ciary to renounce property (1993) HB 1388 revised significant por- ■ HB 1522 allowed certain intan- tions of Article 3 and Article 4 of gible taxes to be paid directly to corporate code (1996) the clerk (1998) ■ HB 1425 enacted annual revi- ■ HB 1189 required notice of spe- sions to corporate code (1996) cial agriculture tax status (1998) ■ HB 1627 permitted limited part- ■ HB 533 established a simple nerships to become LLPs (1996) procedure for removing unau- ■ HB 563 provided for creation of thorized liens (1997) LLPs (1995) ■ HB 1587 validated tax deed ■ HB 670 passed the annual cor- after four-year period (1996) porate code revisions (1995) ■ SB 243 clarified that duly ■ HB 1502 contained annual tech- nical revisions to corporate code recorded mortgage provides (1994) notice (1995) ■ ■ HB 264 authorized creation of HB 1642 allowed collection of LLCs (1993) intangible taxes by county court ■ HB 395 adopted Article 2A of clerk (1994) the UCC (1993) ■ HB 515 eliminated “Equal ■ HB 149 provided for various Dignity Rules” regarding agency amendments as part of annual (1993) revision (1993) ■ HB 1612 amended code regard- ■ HB 761 regarded the treatment ing presumptions of corporate of certified securities (1992) authority (1992) ■ HB 762 revised the law relating ■ SB 267 changed the law relating to wire transfers (1992) to sealed documents (1991) ■ HB 226 revised Georgia’s non- ■ HB 563 created exemptions to profit corporations code (1991) real estate transfer tax (1991)
October 2005 53 ■ HB 794 consolidated trust pro- ■ HR 68 and HB 164 allows Federal year of operation of statewide visions into single code section District Courts to certify ques- public defender system (2005) (1991) tions of law to the Georgia ■ HB 1EX provides a reliable fund- ■ SB 173 required certain wrong- Supreme Court (2003) ing mechanism for the statewide ful death recoveries to be held ■ HB 1256 prohibits public notaries indigent defense system (2004) by a guardian (1993) from practicing law (2002) ■ SB 116 provides for discovery in ■ SB 670 amended Trust Act to ■ SB 465 created loan forgiveness juvenile court proceedings (2003) protect fiduciary powers (1992) program for public interest ■ Two million dollars in funding ■ HB 1520 amended provision attorneys (2002) for partial year of operation of regarding administrators with ■ SB 346 conforms state law to Public Defender Council (2003) Will Annexed (1992) federal rule allowing interna- ■ HB 770 Creation of statewide ■ HB 968 allowed provisions for tional service by mail (2002) Public Defender Council (2003) non-terminal conditions in liv- ■ HB 708 conforms services of ■ Appropriation increase of ing wills (1992) process procedure to federal rule $1,250,000 for Indigent Defense ■ SB 41 addressed the admissibil- by allowing a waiver of service Council (1997) ity of will copies (1991) to initiate lawsuit against defen- ■ HB 187 added Indigent Defense Family Law Section dant (2000) Council Director to Criminal ■ SB 176 creates a procedure for Justice Council (1997) ■ Appropriation of $2,600,000 for collecting civil and criminal ■ HB 1239 provided for represen- victims of domestic violence (2005) case filing data on a statewide tation of insane defendants ■ Appropriation of continuation basis (2000) (1996) for Court Appointed Special ■ Creation and funding of state ■ Continued appropriation of Advocates (1999) funded juvenile court in each $3,000,000 for Indigent Defense ■ Appropriation of $220,000 to judicial circuit (2000) Council (1996) establish a pilot family court (1998) ■ SB 59 expanded Court of Appeals ■ Appropriation increase of ■ Increased appropriation of to twelve members (1999) $1,000,000 for indigent defense $63,000 for CASA (1997) ■ Appropriation of $1,300,000 for (1994) ■ HB 1288 allowing CASA to be new appeals judges (1999) ■ HB 402 and 403 created interest appointed as guardian ad litem ■ HB 592 corrected an anomaly in accounts benefiting indigent (1993) venue law that had been criti- defense fund (1993) ■ HB 1519 extended child support cized in case law (1997) Elder Law Section obligations past the age of 18 ■ Continued appropriation of (1992) $300,000 for Appellate Practice ■ HB 295 exempted DHR injunc- ■ HB 251 specified criteria for inher- Resource Center (1997) tions from automatic super- itance by illegitimate child (1991) ■ SB 133 amended ADR proce- sedeas provisions (1997) ■ SB 182 reaffirmed right of ward Judicial Administration dures (1997) ■ SB 283 permitted recording of to engage counsel to terminate and Procedures depositions by non-stenograph- guardianship (1997) Section and Appellate ic means (1996) ■ HB 339 protected rights of wards Practice Section ■ Appropriation of $500,000 for 10th (1996) Court of Appeals judge (1996) ■ SB 651 provided for administra- ■ $800,000 appropriation for ■ Appropriated significant money tive hearings for personal care Georgia Appellate Practice Center for trial and appellate court residents (1994) (2005) judges (1994) ■ $100,000 appropriation for ■ HB 143 created a local funding The State Bar legislative represen- newly developed pilot business mechanism for ADR programs tatives are Tom Boller, Rusty Sewell, Wanda Segars and Mark court (2005) (1993) ■ HB 90 gives State Bar admissions Middleton. Contact them at (404) statutory authority to conduct Criminal Law Section 872-2373 for further legislative information, or visit the State FBI background checks (2003) ■ $32 million appropriation for full Bar’s Web site at www.gabar.org.
54 Georgia Bar Journal
the American Academy of Appellate Lawyers. He KUDOS is a member of the American Law Institute and Deborah S. Ebel, partner with McKenna Long & the American Bar Foundation. Aldridge LLC has received the American Bar
Bar Association’s award for pro bono work on behalf Richard Costigan III, who was of children. Given to a single lawyer in the nation recently named deputy chief of staff annually, the Ann Liechty Pro Bono Award was to Gov. Arnold Schwarzenegger, was
& presented to Ebel at the ABA’s annual meeting in honored by the California Business Chicago in August. The ABA’s only award honor- Properties Association as an ing pro bono legal services to children in custody “Outstanding Public Servant” and cases, the Liechty Award is one of a total of five also received a “Special Recognition Award” from given annually by the ABA’s Standing Committee the California Building Industry Association. on Pro Bono and Public Service. Ebel is the first Over the past year, Costigan has delivered numer- Georgian to receive the Liechty Award. A co- ous keynote speeches on the administrations poli- founder in 1990 of the Atlanta Volunteer Lawyers cies and objectives to the California Chamber of Foundation’s special program to represent the Commerce, the California Business Association, the Bench best interests of children in custody cases, she has California Bankers Association, the California accepted almost 30 cases involving thousands of Healthcare Institute/California LifeSciences Day, pro bono hours. Since the program’s inception, the board of directors of the California Restaurant she also has regularly donated her time to devel- Association, the National Public Affairs Council oping new materials for the program’s training and numerous other organizations. In November of manual and to training new volunteers, including 2003, Costigan was named Legislative Affairs traveling throughout Georgia to help other juris- Secretary and now holds both titles. In his position, dictions develop similar programs. he is the governor’s chief negotiator with the Legislature, responsible for developing and over- Gail Leverett Parenti, a partner with seeing the governor’s legislative agenda, advising Parenti, Falk, Waas, Hernandez & the governor on all pending legislation and issues Cortina, P.A., in Coral Gables, Fla., before the legislature and working with over 70 was installed as the president of the agencies and departments on legislative matters. Florida Defense Lawyers Association Costigan has extensive interaction with agency sec- at the organization’s 2005 Annual retaries, with the state budget and policy issues, Meeting at the Biltmore Hotel in Coral Gables. communications and external affairs.
Gary L. Sasso of Carlton Fields, Kilpatrick Stockton announced P.A., will succeed Thomas A. Snow associate Kali Wilson Beyah was as president and CEO of the firm selected to serve a two-year term on when Snow retires in February 2006. the Commission on Access and Sasso has served in a number of Fairness in the Courts. The commis- leadership positions in the firm, sion, established by the Supreme most recently as a member of the firm’s executive Court of Georgia, is responsible for implementing committee and board of directors. Sasso also the recommendations made in the final reports of chairs the firm’s litigation and dispute resolution the Supreme Court Committee for Gender practice group. Prior to joining Carlton Fields in Equality and the Supreme Court Commission on 1987, Sasso worked as a litigator for Bredhoff & Racial/Ethnic and Gender Bias in the Courts and Kaiser in Washington, D.C. He also served as a developing new initiatives that address law clerk for Justice Byron R. White on the U.S. racial/ethnic and gender bias and prejudice in Supreme Court and as a law clerk for Judge Georgia’s courts. The commission’s members are Spottswood W. Robinson III, on the U.S. Court of voted upon and approved by the Supreme Court Appeals for the District of Columbia Circuit. of Georgia. Beyah is a member of the firm’s litiga- Sasso participates in numerous professional and tion practice group. Her practice includes repre- community organizations. He serves as a member senting clients in complex commercial disputes of the Council of the American Bar Association and defending clients in product liability and Section of Litigation. He is a co-chair of the civil commercial tort claims. section of the Tampa Bay chapter of the Federal Bar Association and the former editor-in-chief of Cohen Pollock Merlin Axelrod & Small, P.C., Litigation Journal, which is published by the announced Christopher T. Graham, partner, has Section of Litigation of the ABA. He is a fellow of been chosen as a 2005 Georgia Super Lawyer- the International Academy of Trial Lawyers and Rising Star. Rising Stars represent less than 2.5
56 Georgia Bar Journal percent of Georgia attorneys each year. These Ippolito, general business; Stan Jones, health care Bench individuals are recognized by their peers as being law; Caroline Kresky, Wade Malone and Ken among the top up-and-coming lawyers in the Millwood, business litigation; Daniel Shea, labor state. Graham specializes in developing and and employment; Sara Turnipseed, general litiga- implementing creative family wealth strategies for tion; and Charles Vaughn, mergers & acquisi- high net worth individuals. He has extensive tions. Surveys were sent to more than 23,500 attor- experience in both personal and business tax and neys in Georgia and attorneys were asked to vote estate planning, including capital gain tax mini- for the best lawyers they had personally observed mization, charitable planning, business succes- in action. The top point-getters were selected as & sion, wills and trusts. Super Lawyers, honoring the top 5 percent of licensed attorneys in the state. Hunton & Williams LLP announced Bar that partner Rita Sheffey was select- Attorney Carlos A. González was invited into the ed by the Women in the Profession membership of the Academy of Court Appointed Section of the Atlanta Bar Masters. Membership in the academy is by invita- Association to receive the tion and open to attorneys who have served as Outstanding Woman in the court-appointed masters in nationally important Profession Achievement Award in June. The cases. González currently serves as a special mas- annual award honors the woman whose contribu- ter for federal courts in Alabama, Tennessee and tions have assisted in promoting and empowering Georgia. women in the profession. Sheffey is the current president of the Atlanta Legal Aid Society. Within The law firm of Davis, Zipperman, Kirschenbaum the law firm, she has been the director of Hunton & Lotito, LLP, announced that all four of its name & Williams’ Southside Legal Center since it partners were named Georgia Super Lawyers for opened 10 years ago. The center was developed in 2005. Super Lawyers identifies attorneys who have cooperation with the Atlanta Project and serves attained a high degree of peer recognition and pro- residents of southside Atlanta who qualify for fessional achievement. Only 5 percent of the State legal aid, as well as those whose incomes are too Bar of Georgia receives this honor. E. Marcus large for ALAS, yet too limited to hire a private Davis is a plaintiff’s lawyer who has handled attorney. Sheffey currently chairs the Atlanta many significant cases especially in the area of office pro bono committee and coordinates the medical malpractice. Barry L. Zipperman is a busi- firm’s Atlanta pro bono efforts. She has won the ness and transactional lawyer representing indi- firm’s Pro Bono Public Award and has received viduals and corporations in their business ven- the firm’s E. Randolph Williams Award for Pro tures. Seth D. Kirschenbaum and Nicholas A. Bono Service every year since its institution in Lotito are both criminal defense lawyers. 1995. For 10 years, Sheffey served as a member of Kirschenbaum is a former president of the Atlanta the board of directors of the Atlanta Volunteer Bar Association. Lotito is a past president of the Lawyers Foundation, serving as president from Georgia Association of Criminal Defense Lawyers. 2002 to 2004. Recently, she agreed to co-chair the Atlanta Bar’s One Child One Lawyer program in The Juvenile Law Committee of the Young Lawyers the juvenile courts of Fulton and DeKalb Division presented their annual Child Advocate of Counties. Sheffey also serves on the executive the Year Awards to those whose extraordinary con- committee of the Atlanta Bar Association, is treas- tributions demonstrated a commitment to excel- urer of the Atlanta Bar litigation section, and lence in the field of child advocacy. The 2004 Child serves on the board of directors for the Atlanta Advocate of the Year award was presented to Rep. Victim Assistance Program. Although she has Mary Margaret Oliver. Award recipients in other made substantial contributions in the area of pro categories included Robert Coleman, special assis- bono and community service, she also has a busy tant attorney general; Rosamund Braunrot, juvenile litigation practice. Sheffey, who holds a Ph.D. in defense attorney; Robert Keller, district attorney, chemistry, handles a variety of complex litigation and the Hon. Michael Key, juvenile court judge. matters ranging from environmental and toxic tort to trademark and trade secrets. Carlton Fields announced that Atlanta attorney Benjamine Reid was one of 39 Carlton Fields Nelson Mullins Riley & Scarborough placed 10 attorneys that were selected by their peers for attorneys based in their Atlanta office in the 2005 inclusion in the 2006 edition of The Best Lawyers list of Georgia Super Lawyers, in eight different in America. Reid’s practice focuses on bet-the- practice areas. Rick Herzog, bankruptcy & work- company litigation, commercial litigation and per- out; Richard Hines, civil litigation defense; Ugo sonal injury litigation.
October 2005 57 Atlanta attorney John J. Scroggin Morris, Manning & Martin, LLP, has been appointed as editor of the hired Jennifer King as director of on-line estate planning publications Business Development. Her respon- of the National Association of Estate sibilities will include strategic devel-
Bar Planners and Councils. Scroggin has opment and implementation of prac- also been appointed to the board of tice group initiatives in the identifi- directors of the Historic Roswell Convention and cation and pursuit of new business while expand-
& Visitors Bureau. In 2005, he had articles published ing the firm’s role and reputation in the business, in the ABA Practical Lawyer, the Estate Planning professional, civic and charitable communities. Journal, the Georgia Bar Journal, Trusts and Estates, King most recently served as director of Business Taxes Magazine, Advisor Today, Practical Estate Development for Dixon Hughes PLLC, a large Planning, various newsletters of the Society of regional CPA and advisory firm. The Atlanta Financial Service Professionals and National office is located at 1600 Atlanta Financial Center, Underwriter. 3343 Peachtree Road NE, Atlanta, GA 30326; (404) 233-7000; Fax (404) 365-9532; www.mmmlaw.com. ON THE MOVE Bench Cohen Pollock Merlin Axelrod & Small, P.C., announced that Joshua Berman joined the firm as In Atlanta a partner and Anna M. Humnicky and Scott I. Merlin joined the firm as associates. Berman, for- merly an attorney with PowellGoldstein LLP, prac- tices with the firm’s family wealth planning group. He will continue his practice focusing on estate planning, probate and trust law. Humnicky’s prac- tice consists of commercial litigation, creditors’ Kim Hopkins Yost Williams rights and bankruptcy. She was one of 23 attorneys Lord, Bissell & Brook LLP has elected four part- selected by the Georgia Association of Women ners to the Atlanta office. Paul T. Kim represents Lawyers as a Committee Star. Merlin’s practice publicly traded and privately held businesses encompasses corporate, estate planning and fran- throughout the United States and internationally chise law. The newly expanded offices of Cohen in trial and arbitrations concerning complex busi- Pollock are located at 3350 Riverwood Parkway, ness litigation matters. He has represented clients Suite 1600, Atlanta, GA 30339; (770) 858-1288; Fax in matters relating to banking, finance transac- (770) 858-1277; www.cpmas.com. tions, joint ventures, cross-border transactions, licensing agreements, intellectual property and Powell Goldstein LLP announced the insurance. J. David Hopkins is a commercial liti- formation of a Special Matters and gator with extensive experience in complex busi- Investigations practice. John T. ness litigation, including both federal and state Marshall, senior partner at Powell court class action defense, administrative hear- Goldstein, will lead an experienced ings before the Georgia Commissioner of team of lawyers from the firm assisted Insurance and alternative dispute resolution pro- by vice-chairs Scott Sorrels and Ralph Caccia. The ceedings. Jeffrey A. Yost concentrates his practice practice will provide counsel in the areas of internal in the areas of mergers and acquisitions, business investigations, audit committee representation, formations and general corporate counseling. He grand jury and regulatory investigations, corporate has worked with an economically diverse group and securities compliance and federal and state of clients, ranging from non-profit institutions white-collar representation. The group includes for- and family-owned businesses to publicly and pri- mer federal and state prosecutors with the U.S. vately-held companies. Gerry L. Williams focus- Department of Justice and District Attorneys’ offices. es on corporate finance matters for large institu- Corporate investigations, white-collar crime and cor- tional and middle-market companies, private porate and securities compliance are among the equity and mezzanine funds and banks. Williams main areas of focus for Marshall’s new team. The places a particular emphasis on mergers and team also will offer counsel for Sarbanes-Oxley and acquisitions, public and private offerings of equi- Securities and Exchange Commission compliance, as ty and debt securities and leveraged buyouts. The well as other federal and state laws and regulatory Atlanta office is located at The Proscenium, processes. Powell Goldstein’s Atlanta office is locat- Suite 1900, 1170 Peachtree St. NE, Atlanta, GA ed at One Atlantic Center, Fourteenth Floor, 1201 30309; (404) 870-4600; Fax (404) 872-5547; West Peachtree St. NW, Atlanta, GA 30309; (404) www.lordbissell.com. 572-6600; Fax (404) 572-6999; www.pogolaw.com.
58 Georgia Bar Journal The international law firm of Jones Day The firm is celebrating its 40th anniversary this year Bench announced that E. Kendrick (Ken) Smith has and is located at 6 Courthouse Way, Jonesboro, GA joined its litigation practice as partner. Smith joins 30237; (770) 478-8894; Fax (770) 478-9606. Jones Day’s 150-attorney Atlanta office and 1,000 litigators worldwide after leading the litigation In Toccoa department at Atlanta’s Smith, Gambrell & The firm of Sanders & Smith, P.C., announced Russell, LLP. Smith is experienced in resolving that Brian C. Ranck has become an associate of fiduciary and shareholder controversies, in con- the firm. Ranck will be assisting the firm with mat- tract litigation and appellate work. He is trained in
ters involving civil litigation, creditor bankruptcy, & mediation and arbitration and serves as a profes- real estate, collections, personal injury and local sional neutral for Closure ADR Group. Smith was government law. The office is located at 311 South selected as one of Georgia Trend’s “Legal Elite” in
Big A Road, Toccoa, GA 30577; (706) 886-7533; Fax Bar 2003 and 2004 and as one of the 25 most effective (076) 886-0617; www.sanderssmith.com. business litigation attorneys in Georgia. He was also named by Atlanta Magazine and Law & Politics Media, Inc. as a “Georgia Super Lawyer” for 2004 Mock Interview and and 2005 in the area of business litigation. The Atlanta office is located at 1420 Peachtree St. NE, Resume Review Workshop Suite 800, Atlanta, GA 30309; (404) 521-3939; Fax This year’s State Bar Committee on (404) 581-8330; www.jonesday.com. Women and Minorities in the In Dalton Profession's Mock Interview and Resume Review Workshop was held on Leitner, Williams, Dooley & Saturday, Aug. 27, for Georgia law stu- Napolitan, PLLC, announced the dents, sponsored by King & Spalding. opening of a Dalton, Ga. office. The firm’s expansion into Dalton further The subcommittee was chaired by strengthens the ability to offer service Bettina Yip of Cingular Wireless and that is economic and efficient. L. Jennifer Burns of Equifax. Hugh Kemp will be the senior attorney in the Dalton office and joins the firm as of counsel. Kemp has been in practice over 30 years and is active in community affairs including serving as president of the Dalton-Whitfield Chamber of Commerce. His primary practice areas are insurance defense, professional malpractice, personal injury and prod- uct liability. The Dalton office is located at 100 N. Selvidge St., Dalton, GA 30720; (706) 270-0222; Fax (706) 270-0021; www.leitnerfirm.com.
In East Point (Left to right) Allegra Lawrence of After 25 years on Washington Road in East Point, Glen Edward Ashman announces the relocation Sutherland Asbill & Brennan, Bettina Yip of his law practice to the historic former Bank of of Cingular Wireless, Monique Fulton County Building. In addition to practicing McDowell of King & Spalding and Dawn law, Ashman is also a municipal judge for the city Jones of King & Spalding are all of East Point. The office is now located at 2791 members of the Women and Minorities Main St., East Point, GA 30344; (404) 768-3509. in the Profession Committee. In Jonesboro Keith C. Martin has joined the law firm of Driebe & Driebe, P.C. Martin If you have an announcement of an office served as solicitor of the State Court change or something you have of Clayton County for 16 years and accomplished and would like to share previously as an assistant district with the legal community, please e-mail attorney. He will focus on trial prac- [email protected]. tice including criminal cases and other litigation.
October 2005 59 To Pay or Not to Pay By Paula Frederick
“ Counsel reat news!” You announce to
your client as she answers the G telephone. “I just received the settlement check from your accident! I’m
depositing it into my escrow account today,
and I’ll send checks to you and Dr. Sappy
immediately.” upon the ABA Model Rules of Professional “I’ve been meaning to ask you about that Conduct may be surprised to learn that their check to Dr. Sappy,” your client responds. obligations have changed. Under the old rule, “Her bill is awfully high. And those treat- a lawyer did not have any obligation to a ments really haven’t done me much good—I client’s creditors unless the creditor had a still have a stiff neck, and my knees hurt legally enforceable lien. The current version when it rains.” of Rule 1.15(I)(b) requires a lawyer to “Are you saying you don’t want to pay the “promptly notify” a third person upon receipt bill?” you ask, horrified. “I promised Dr. of funds in which that person has an interest, Sappy that if she would treat you without and to “promptly deliver” to the third person requiring payment up front, I’d pay her from
Office of the General any funds they are entitled to receive. the settlement proceeds. Remember? You In this case, unless you make a good faith agreed to the whole thing!” determination that Dr. Sappy is not entitled “Well, that was before I knew how much to receive the amount she has billed, you she was going to charge! I’ll barely get one- need to notify her of the settlement and send fourth of the money after I’ve paid all those her what she is owed. Although Comment 3 bills! I really don’t think I owe her that much. to Rule 1.15(I) discourages a lawyer from uni- I want you to send the money to me, and I’ll laterally assuming to arbitrate this type of decide whether to pay her or not.” dispute between clients and creditors, you “I don’t know,” you respond. “Since I made could (with client consent) attempt to work her that promise, she may claim that I’m liable out some compromise on the bill before send- for the bill if you won’t pay. Why don’t you ing Dr. Sappy her fee. If the matter cannot be think it over and we’ll talk again tomorrow.” resolved quickly, the prudent thing to do With a sigh of resignation, you hang up the would be to interplead the money and ask a phone and begin to research your options. You court to decide the rightful owner. quickly realize that your informal agreement with Dr. Sappy did not create a legally enforce- Paula Frederick is the deputy able lien. Nonetheless, you did make a prom- general counsel for the State Bar ise and you would like to keep it if possible. of Georgia. Lawyers who last researched this issue before Georgia adopted an ethics code based
60 Georgia Bar Journal LexisNexis® Time Matters®, the leader in practice management, enables you to focus on what really matters.
Go Beyond Cases & Codes Your law practice matters. Your firm’s reputation matters. And how well you manage clients, cases, communications, documents, your Manage Your Practice calendar and your time—clearly, that matters, too. The challenge today is to do all of this and more, without losing your focus on the law. Grow Your Practice LexisNexis Time Matters is the legal profession’s most widely used, most award-winning practice management tool. It helps you manage a wide range of matters, from client activity to firm communications and billable time—all from a central desktop location. The new Time Matters 7.0 gives you dozens of calendar, email, and reporting improvements, plus new Client and Matter Journals that track all critical information on one screen, active Monitors that alert you to special client and matter needs, and Customizable Navigators based on your workflow which dramatically simplifies using practice management. You also get standout support options and a money-back guarantee*. Visit our web site to see a complete list of the top 40 new features and improvements. LexisNexis® … more than research. Visit www.timematters.com/ or call 800.328.2898.
*Full 60-day money-back satisfaction guarantee subject to terms and conditions. Limited-time offer. Other restrictions may apply. See Web site or Online Store at www.timematters.com/sales/freetrial for additional details. LexisNexis and the Knowledge Burst logo are registered trademarks of Reed Elsevier Properties Inc., used under license. Time Matters is a registered trademark and It’s How You Know is a trademark of LexisNexis, a division of Reed Elsevier Inc. Microsoft and Outlook are registered trademarks of Microsoft Corporation. BlackBerry is a registered trademark of Research In Motion Limited. Other products or services may be trademarks or registered trademarks AL8349 of their respective companies. © 2005 LexisNexis, a division of Reed Elsevier Inc. All rights reserved. Discipline Notices (June 17, 2005 through Aug. 10, 2005) By Connie P. Henry
DISBARMENTS/ in June 1996. After the client alleged facts at the hearing that may have constituted a VOLUNTARY claim for age discrimination, the hearing SURRENDERS officer suspended the hearing to allow Pilgrim to investigative whether it was nec-
Discipline essary to file a complaint on the client’s Swain Alvin Lewis behalf with the Georgia Commission of Dublin, Ga. Equal Opportunity. Pilgrim subsequently On June 30, 2005, the Supreme Court determined that sufficient facts did not accepted the Petition for Voluntary exist to file a claim but he failed to inform Surrender of License of Swain Alvin Lewis the hearing officer and failed to ask the (State Bar No. 451283). Lewis pled guilty in hearing officer to place the case on the January 2005 to violating 18 USC § 4 (mispri- hearings calendar within the time designat-
Lawyer sion of a felony). ed by statute. When Pilgrim did ask for the case to be placed on the calendar, the hear- William S. Shelfer Jr. ing officer refused to do so and the client Decatur, Ga. lost his rights to pursue the claim. William S. Shelfer Jr. (State Bar No. In another case Pilgrim was hired to rep- 640100) has been disbarred from the practice resent a client in a sexual harassment and of law in Georgia by Supreme Court order racial discrimination claim against her dated June 30, 2005. In January 2004 the employer. Although Pilgrim filed a lawsuit, bank at which Shelfer maintained his attor- he failed to take any further action on her ney trust account provided the State Bar behalf; did not inform her about the status with an overdraft notice. Although Shelfer of her case; and filed a motion to dismiss the initially made attempts to explain the over- case without her authorization. draft, he eventually ceased responding to Although Pilgrim received an the State Bar’s inquiries and failed to pro- Investigative Panel Reprimand in 2003, the vide all of the documentation requested by Court noted in mitigation of discipline that the State Bar. Shelfer was personally served Pilgrim was remorseful, accepted responsi- with a Notice of Investigation but failed to bility for his conduct and resulting conse- respond. Neither did he respond to the quences, and he did not have a dishonest or Notice of Discipline. selfish motive.
SUSPENSIONS Harry Rand Marc Albert Pilgrim Kennesaw, Ga. Atlanta, Ga. Harry Rand (State Bar No. 593750) has Marc Albert Pilgrim (State Bar No. been suspended for 5 years from the practice 580160) has been suspended for 6 months of law in Georgia by Supreme Court order from the practice of law in Georgia by dated July 8, 2005. Rand may seek reinstate- Supreme Court order dated May 23, 2005. ment under the rules applicable at the con- In one case Pilgrim was hired to handle a clusion of his suspension. Five formal com- claim for wrongful termination of employ- plaints were filed against Rand based on sep- ment. Pilgrim appeared at a Georgia arate instances of misuse of settlement funds Department of Human Resources’ hearing received on behalf of personal injury clients.
62 Georgia Bar Journal The special master found that Rand to the Disciplinary Board, her the special master found that suffers a significant mental disabil- timely good faith effort to make Denny had no prior discipline; that ity and because of that he failed to restitution, and her remorse. he was suffering from a chronic and properly account for funds held in debilitating illness during the time a fiduciary capacity and that he Jeffrey Scott Denny of the representation; that he was applied settlement funds improp- Dallas, Ga. remorseful; and that he lacked a erly. The special master found in On July 8, 2005, the Supreme dishonest or selfish motive. mitigation of discipline that Rand Court of Georgia ordered that had no prior discipline, the absence Jeffrey Scott Denny (State Bar No. INTERIM of a dishonest or selfish motive; 218397) be administered a Review SUSPENSIONS existence of personal and emotion- Panel reprimand. Denny was hired al problems; timely good faith to represent a client in a personal Under State Bar Disciplinary effort to make restitution and recti- injury action. He actively prosecut- Rule 4-204.3(d), a lawyer who fy consequences; full and free dis- ed the case, but later dismissed the receives a Notice of Investigation closure to the disciplinary board case without prejudice, did not tell and fails to file an adequate and cooperative attitude; good his client he dismissed the case, and response with the Investigative character and reputation; mental effectively terminated his represen- Panel may be suspended from the disability or impairment; interim tation of the client, but without practice of law until an adequate rehabilitation; and remorse. telling the client. After the filing of response is filed. Since June 17, the formal complaint and appoint- 2005, five lawyers have been sus- REVIEW PANEL ment of a special master, Denny pended for violating this Rule and REPRIMANDS filed a petition for voluntary disci- none have been reinstated. pline seeking a Review Panel repri- Connie P. Henry is the clerk of the Suzanne M. Boykin mand. In mitigation of discipline, State Disciplinary Board. Norcross, Ga. On June 30, 2005, the Supreme Court of Georgia ordered that The Suzanne M. Boykin (State Bar No. 073445) be administered a Review winning edge NLRG Panel reprimand. A client’s wife National Legal Research Group retained Boykin in June 2003 to for Georgia CHARLOTTESVILLE, VIRGINIA represent a client in a criminal Put us to work helping you win today. 1-800-727-6574 or [email protected] matter. She was paid $600 in attor- attorneys Fast, Affordable, Specialized ney’s fees, and agreed to file a Research, Writing and Analysis Motion to Modify Sentence. since For more information, and to see what your Although she drafted the motion 1969 peers are saying about us: www.nlrg.com in June 2003, she did not file the motion until May 17, 2004. After the client’s wife discovered that the motion had not been filed until May 17, 2004, she terminated Boykin’s services and Boykin pro- vided her with a copy of the file and returned the attorney’s fees. While the Court found in aggrava- tion of discipline that Boykin received a letter of formal admoni- tion in June 2001 in another case, the Court found in mitigation of discipline Boykin’s full disclosure
October 2005 63 Capturing Time in the Law Office By Natalie R. Thornwell
Regardless of the type of law you practice, hether you begrudgingly the only way to determine the profitability of
Management your work is by tracking time spent on any track time or are a real given matter. Flat-fee bill lawyers, listen up. stickler about doing it It is important for you to know whether you W are losing or making money on matters. You every day, time tracking is an essential part of can only determine this by tracking the every lawyer’s practice. Reviewing your cur- amount of time you have worked on a matter and recording the expenses on the file. With rent time tracking techniques can help identi- proper time tracking, you will also have a record of the work you have done, and this fy weaknesses and lead to the discovery of can help immensely with the court or client more effective methods of dealing with this that comes asking what was done on the file. The most common way of tracking time is onerous task. Improved time tracking is a skill by writing it down on paper — listing what
Law Practice you have done and for how long. These that is easily learned, and with today’s tech- pieces of paper, the stock in trade for lawyers, nology it is easier than ever to keep up with. eventually make it to the bookkeeper or other accounting staff person to begin the billing cycle. If not handled properly, these pieces of paper can make the lawyer pay a price in terms of lost time and/or profit. The other method for getting time to the billing stage is to dictate the information so that a paralegal or other legal assistant can transcribe it and enter it into a system that can bill it out. There is even a multi-step method that allows the paralegal or legal assistant to record time spent on any given matter and input it into the billing system at a later time. Because the time information can go through so many different transfor- mations, it is easy to see that the likelihood of data entry errors and the mismanagement of information are increased in inefficient time tracking scenarios. Again, this can result in lost time and/or profit. This is espe-
64 Georgia Bar Journal 10-05GBJ.qxp 9/26/2005 10:59 AM Page 65
cially true when the firm does not The bottom line is your time have a good pre-bill and final tracking techniques can usually be Ralph Cunningham billing process. improved. There are many options The good news is that there are when it comes to time tracking and Motor Vehicle many methods of tracking time. billing programs. The Law Practice Accident Reconstruction and Some of these not only address Management Department can help Component Failure Evaluations how many times information must you choose proper time tracking Event Data Recorder be transformed before entering the techniques and tools so you can Downloads final bill stage, but ensure that the move toward a more productive frequency of time capture is such and profitable practice. Conyers, Georgia 770-918-0973 that time is not lost due to the egre- Fax: 770.918.8076 gious method of the lawyer recre- Natalie R. Thornwell is the director www.RalphCunningham.net ating the time at the conclusion of of the State Bar of Georgia’s Law a matter as opposed to tracking Practice Management Program. time as work is performed. Lawyers who track more time can Attorney Coaches are Needed for bill more time, and consequently, can position themselves to receive High School Teams Throughout Georgia more money. Efficient time entry is accom- CLE credit is available for plished best by using technology. coaching a mock trial team! Today’s time and billing applica- tions allow attorneys to directly Serve as a mentor to high school impact input time. The popup timers in students and make an in your community! many of the programs keep track (404) 527-8779 of time as it passes and the lawyer A special thank you to the following or (800) 334-6865 Ext. 779 simply provides the work details contributors for their financial support and stops to the timer to enter the [email protected] during the 2005 mock trial season: duration of the task performed. To For online sign-up: Georgia Bar Foundation ensure constant access to the www.gabar.org Council of State Court Judges process, many handheld devices (YLD link, HSMT page, Georgia Civil Justice Foundation and remote entry options are avail- “Join the Committee” link) Criminal Law Section able for time tracking as well. Labor and Employment Law Section Bankruptcy Law Section These automated methods make it General Practice and Trial Law Section easier for lawyers to keep time as School and College Law Section they work. Creditor’s Rights Law Section Regardless of the chosen method, make sure you: ■ retain detailed information on Show the Jury the work performed Demonstrative Evidence ■ keep track of the actual amount 3 Are you involved in a case with so many Contact: of time worked documents that it’s difficult to keep track of them Jonathan A. Clark ■ record both billable and non- and make a credible presentation to the jury? billable time 3 Do you need to make an illustrative presentation 10460 Colony Glen Drive showing a surgeon’s error in a medical Alpharetta, GA 30022 ■ use terminology that will trans- malpractice case? late into an easily understood bill 3 Would illustration help explain an industrial or (770) 667-7673 ■ avoid redundancy in time cap- motor vehicle accident to your jury? Let Jonathan A. Clark help you make your point [email protected] ture techniques prior to getting with a presentation. His experience and training information into your billing in computer science can make all the difference. system His presentations can make your case!
October 2005 65 10-05GBJ.qxp 9/26/2005 10:59 AM Page 66
Office Keeping Up with the South Georgia Office By Bonne Cella
lthough the pace of life is a lit-
tle slower in South Georgia, A the Bar’s satellite office has stayed busy experimenting with technology,
hosting events and keeping tabs on other
South Georgia lawyer-oriented events taking place. Experimenting with
Technology Photos courtesy of Bonne Cella Fred Graham, president of the Houston The State Bar’s satellite office in Tifton now County Bar Association welcomes participants boasts state-of-the-art live video-teleconfer- to The Nuts and Bolts of Recent Tort Reform. encing capabilities. Georgia attorneys now have the ability to conduct meetings or depo- tion, the organization now has its own home sitions with their counterparts anywhere in and serves, Tift, Worth, Turner and Irvin the country. Just recently a successful meet- counties. Children’s Advocacy Center (CAC) ing took place with the U.S. Attorney’s office also reads: Caught in the Act of Caring. in Miami and an expert witness from South Director, Ina Woodroff stated that the center Georgia, saving time and money for both provides a child-friendly facility where pro- parties. fessionals work together as a team to protect If you are interested in trying out the new and treat child abuse victims while holding equipment, call the Satellite office at (800) 330- offenders accountable. Other objectives 0446. When reserving the conference room, include increasing the number of children keep in mind that the other party must have receiving immediate medical exams to avoid comparable equipment. For those attorneys in losing physical evidence due to time lapse; Atlanta who want to take advantage of video increase the number of children seen for men- teleconferencing, call Kyle Gause, (404) 419- tal health counseling and to increase the num- 0160, conference center A/V manager at Bar ber of offenders prosecuted and convicted. headquarters to make arrangements. The center provides videotaped interviews by Hosting Events professionally trained forensic interviewers as well as community education. One of the agencies the satellite office has Another function of the satellite office is to provided meeting space for is Children’s help local bar associations with programs or Advocacy. Through tireless work and dedica- CLE. An example of a recent program is, The
66 Georgia Bar Journal 10-05GBJ.qxp 9/26/2005 10:59 AM Page 67
Rob Reinhardt, Lori Beaumont and John Tibbets share a laugh after Tibbets spoke to their local bar association. Newly appointed Superior Court Judge Rusty Simpson addresses guests at a reception as Rob Reinhardt looks on.
A court reporter and attorney at the satellite office in Tifton prepare for a live videoconference with the U.S. Attorney’s office in Miami, Fla.
Nuts and Bolts of Recent Tort A memory table with photographs Reform, which was held at the and roses was set up at the recep- Houston County Justice Center. If tion in honor of the beloved Judge your bar association would like Davis. Ina Woodroff, Director of the help in facilitating a similar pro- It is all too seldom that attorneys Children’s Advocacy Center gram, call the satellite office or e- hear praise for their profession. explains the mission of the program. mail [email protected]. Such was not the case when Col. daunting task of facilitating a Keeping Tabs John Tibbets (ret.) spoke at a recent smooth transition of thousands of Tifton Circuit Bar meeting. Tibbets, troops and tons of equipment The Tifton Circuit Bar along with a West Point graduate served 21 through the quagmire of cultural other local sponsors held a recep- years in the army before retiring. diversity while adhering to inter- tion in appreciation of the service He was stationed at the Pentagon national law. of Immediate Past State Bar on 9/11 and also served in Desert President, Rob Reinhardt and to Storm, Operation Iraqi Freedom, Bonne Cella is the office adminis- welcome newly appointed Tift and Afghanistan. The nature of his trator for the South Georgia office Superior Court Judge Ralph missions called for him to work of the State Bar of Georgia. “Rusty” Simpson. Gov. Perdue closely with Army attorneys. appointed Simpson to fill the unex- Tibbets praised their sharp minds, If you would like to hold a meeting at pired term of Judge Harvey Davis attention to detail and knowledge the South Georgia Office, call (800) of Ocilla who passed away in May. of law. The attorneys had the 330-0446 or e-mail [email protected].
October 2005 67 10-05GBJ.qxp 9/26/2005 10:59 AM Page 68
Activity High in Early Fall By Johanna B. Merrill
which was an entertainment mediation and News s the 2005-06 Bar year moved dispute resolution panel. The panelists were from late summer into early Monica Ewing of Register Lett LLP and a Fulton County magistrate judge; Hank A fall, section activity was high. Kimmel of Hank Kimmel Mediation Services; Several sections co-hosted their annual semi- and R. Wayne Thorpe of JAMS/Endispute. The Antitrust Law and International Law nars and institutes with ICLE, such as the sections hosted a well attended luncheon with Federal Trade Commission Chairman
Section Fiduciary Law Institute, July 14-16, the Deborah Platt Majoras at the offices of Environmental Law Seminar, Aug. 5-6 and Kilpatrick Stockton in Atlanta on Sept. 7. the one-day Tech Law Institute on Sept. 20. Chairman Majoras spoke on “Creating a Global Competition Culture.” The Technology Law Section also hosted The Intellectual Property Law Section has a quarterly CLE lunch meeting on Aug. 25 at had an event-filled fall with several round- Witness Systems in Roswell, Ga. The topic table lunches and a social event. On July 21 discussion, “Streamlining the Transaction the section’s patent committee, chaired by Process: a Focus on Forms, Negotiating, and Tina McKeon, hosted a roundtable luncheon the Business Process,” was led by Brian at the Bar Center with speaker Charles Leslie, director, product licensing and in- “Chico” Gholz, who discussed the topic “An house counsel for Witness Systems. The 30 Introduction to Patent Interference Practice.” attendees each received one hour of CLE On Sept. 22 the patent committee and the lit- credit. igation committee, chaired by Philip Burrus, On Aug. 17 members of the Entertainment hosted a luncheon titled “Baffled by Phillips? & Sports Law Section were exposed to the tit- What is the Right Angle on Patent Drafting illating topic of legal issues in the adult enter- and Claim Construction in Light of Phillips v. tainment industry at a CLE luncheon titled AWH Corp.?” Panelists were Lawrence Nodie “The Other Side of Entertainment” held at the of Needle & Rosenberg and Eric Hanson of Food Studio in the King Plow Arts Center. Smith, Gambrell & Russell. On Sept. 29 the Attorney panelists Alan Begner, partner, social committee, chaired by Shane Nichols, Begner & Begner, PC; Cary Wiggins, partner, hosted an open house happy hour featuring a Cook Youngelson & Wiggins; and Rich panel discussion on how members could Merritt, terminated from Powell Goldstein become more involved in the section’s vari- LLP due to the release of his autobiography, ous committees at King & Spalding’s offices. Secrets of a Gay Marine Porn Star, for which he If you are interested in joining one of the is currently negotiating film rights addressed Bar’s 38 sections, including the newly formed issues involved in representation of night- Consumer Law Section, please remit the clubs and adult entertainers, including First appropriate dues, along with your name, Bar Amendment Rights, employment law, life number, address and the name of the section story rights acquisitions, literary deals and you would like to join, to: State Bar of property rights, and criminal representation. Georgia, Membership Department, 104 Joe Habachy of Law Offices of Joe Habachy, Marietta St., Atlanta, GA 30303. moderated. The section hosted another CLE luncheon on Sept. 28 at the Clubhouse at Johanna B. Merrill is the section liaison for Lenox Square titled “Let’s Talk This Out,” the State Bar of Georgia.
68 Georgia Bar Journal 10-05GBJ.qxp 9/26/2005 10:59 AM Page 69
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Page Starting with Professionalism First Year Students Get Lessons in Professionalism By Sally Evans Lockwood
or the 13th straight year, the Law
School Orientations on F Professionalism scored high Professionalism marks from entering students at each of the
five law schools in Georgia. The programs
were initiated in 1993 with the goal of Students from the Emory University School impressing upon law students at the outset of of Law take the Professionalism Oath administered by Supreme Court Justice their careers the importance of professional- P. Harris Hines.
ism in law school and in practice. A joint education required of all active members of the State Bar of Georgia: that the function of effort of the law schools, the State Bar lawyers is to assist clients in the proper use of Committee on Professionalism and the Chief the legal system, that a lawyer acts as both advocate for the client and counselor to the Justice’s Commission on Professionalism, the client. When acting as advocate, the lawyer represents the client’s interest to others in a program is a central feature of the orientation vigorous and committed manner, while at process at each law school. the same time remaining conscious of duties to other lawyers, the legal system, and the These programs emphasize the impor- community in general. tance of adhering to a code or rule of ethics— Each orientation on professionalism begins whether as student or practitioner—while at with an address by a judge or Bar leader, fol- the same time going beyond what is mini- lowed by a 90-minute breakout session. Here mally required by rules to the values that group leaders assist students in examining define the legal profession: competence, hypotheticals designed to provide a frame- character, civility, commitment to the rule of work for discussion of some of the profes- law, to the lawyer’s role as officer of the sionalism and ethical issues they may court, to public and community service. The encounter in law school and to enable them message to the law students is identical to the to see the connections, and the differences, message of professionalism continuing legal between their responsibilities as law students
70 Georgia Bar Journal 10-05GBJ.qxp 9/26/2005 10:59 AM Page 71
and as lawyers. Breakout groups The incoming students enter law school are composed of eight to 10 stu- dents and two leaders drawn from with a clean slate. Covering professionalism the bench, bar and law faculty. A reception or lunch follows the on their first day forms a platform for breakouts where students and group leaders can continue the dis- everything else they will learn during their cussions. Each year, the orientations on next three years. professionalism reach more than group leader to contour the law spective to take into the law school 800 students and attract more than school and practice dimensions of experience. In fact, the only recur- 200 Georgia lawyers, judges, and the discussions and to encourage ring complaint was “needed more legal educators who volunteer as faculty to raise professionalism time.” Student comments range speakers and group leaders. issues in substantive courses. from enthusiastic to insightful: Several of the schools now incorpo- Another variation at Emory is the “This was so helpful! Thank rate into these programs a ceremo- addition of a follow-up session at you!” ny where a judge administers the the beginning of the second semes- “Good job! I liked it.” student conduct code or profession- ter where the focus is the transfor- “Outstanding program—contin- alism pledge to the students, lend- mation the students are experienc- ue this as long as possible.” ing symbolic importance to this ing as they move from being “Looking forward to January!” moment in their professional devel- novices in the legal system to partic- “The program underlines the opment. As one student wrote, ipants who bear responsibility for it. fact that we have entered a profes- “The seminar’s formal organization The 2005 evaluations from stu- sion and are now held to higher conveyed the gravity of an oath.” dents and group leaders reveal that standards.” Emory pairs a faculty member the programs are effective in giving “It was effective in helping me to with each judge or practitioner the students a professionalism per- realize the high standard of ethical
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October 2005 71 10-05GBJ.qxp 9/26/2005 10:59 AM Page 72
Judge Robert Rodatus administers the Professionalism Oath to students Judge James Bodiford speaks to from Mercer University School of Law. the students at John Marshall Law School. 2005 LAW SCHOOL ORIENTATIONS ON PROFESSIONALISM programs based on the Georgia School Speaker professionalism orientations. The Honorable P. Harris Hines, These orientations have proved Emory University School of Law Justice, Supreme Court of Georgia successful not only in fostering an awareness of professionalism in The Honorable Randy Rich, Judge, entering law students, but also in Georgia State University Gwinnett County State Court, serving as a means of bringing the College of Law Lawrenceville, Ga. legal community—lawyers, judges, faculty and law students—together The Honorable James G. Bodiford, for a shared professional experi- John Marshall Law School Judge, Superior Court, Cobb ence. As one group leader put it, Judicial Circuit, Marietta, Ga. “Thank you for permitting me to The Honorable Robert V. Rodatus, participate. I’m very encouraged Mercer University School of Law Judge, Gwinnett County Juvenile about the future of our profession Court, Lawrenceville, Ga. based on meeting the students and hearing their views.”
University of Georgia School Lisa Godbey Wood, U.S. Attorney, Sally Evans Lockwood is execu- of Law Southern District, Savannah, Ga. tive director of the Chief Justice’s Commission on Professionalism. conduct necessary to be an attor- that input is really crucial.” She Earn up to 6 CLE credits for ney in the state of Georgia.” went on to say, “I think that when authoring legal articles and A practitioner leader wrote: more is expected of students, they having them published. “Thank you for doing this. It are more likely to rise to the chal- Submit articles to: helped me as much as the stu- lenge of professional behavior and Marcus D. Liner dents.” Welcoming the practice personal integrity.” Georgia Bar Journal perspective, a law faculty member Over the years, the law school 104 Marietta St. NW, Suite 100 found, “The students really seem to professionalism programs in Atlanta, GA 30303 appreciate the ‘real world’ view of Georgia have attracted national Contact [email protected] for more informa- the practitioner. Also—for faculty attention. A number of law schools tion or visit the Bar’s Web site www.gabar.org. who have never practiced (e.g. me) around the country conduct similar
72 Georgia Bar Journal 10-05GBJ.qxp 9/26/2005 10:59 AM Page 73
SEVENTH ANNUAL JUSTICE ROBERT BENHAM AWARDS FOR COMMUNITY SERVICE “The outstanding contributions of lawyers to their local communities often go unrecognized by their peers and the public. This award is designed to recognize those lawyers, who in addition to practicing law, also deserve recognition for their valuable contributions to their communities.” Justice Robert Benham Supreme Court of Georgia
CALL FOR NOMINATIONS The Community Service Awards Selection Committee and the State Bar of Georgia invite nominations for the Seventh Annual Justice Robert Benham Awards for Community Service.
Eligibility: To be eligible a nominee must be: 1) Member in good standing of the State Bar of Georgia; 2) Participant in outstanding community service work; 3) Not a member of the Selection Committee; and 4) Not engaged in a contested judicial or political contest in calendar year 2005.
Nomination should include: I. Nominator: Name (contact person for law firm, corporate counsel or other legal organization), address, telephone number and e-mail address. II. Nominee: Name, address, telephone number, e-mail address. III. Nomination Narrative: Explain how the nominee meets the following criteria: These awards recognize judges and lawyers who have combined a professional career with outstanding service and dedication to their communities through voluntary participation in community organizations, government sponsored activities or humanitarian work outside of their professional practice. These judges’ and lawyers’ contributions may be made in any field, including but not limited to: social service, education, faith-based efforts, sports, recreation, the arts, or politics. Continuous activity over a period is an asset.
Specify the nature of the contribution and identify those who have benefitted. IV. Biographical Information: Nominee’s resume or other biographical information should be included. V. Letters of Support: Include two (2) letters of support from individuals and organizations in the community that are aware of the nominee’s work. Selection Process: The Community Service Task Force Selection Committee will review the nominations and select the recip- ients. One recipient will be selected from each judicial district for a total of ten recipients. If no recipient is chosen in a district, then two or more recipients might be selected from the same district. Stellar candi- dates may be considered for the Lifetime Achievement Award. All Community Service Task Force Selection Committee decisions will be final and binding. Awards will be presented at a special ceremony in Marietta in January.
Send Nomination materials to: Mary McAfee, Chief Justice’s Commission on Professionalism, Suite 620, 104 Marietta St. NW, Atlanta, Georgia 30303, (404) 225-5040
Nominations must be postmarked by November 1, 2005. 10-05GBJ.qxp 9/26/2005 10:59 AM Page 74
“And Justice for All” 2005 State Bar Campaign for the Georgia Legal Services Program, Inc. (GLSP)
When you give to the Georgia Legal Services Program... you make good things happen!
Your contribution helps GLSP provide critical legal assistance to thousands of low-income families who cannot afford a private attorney. Give to our State Bar’s only campaign for justice for low-income Georgians. Use the coupon below and mail your gift today!
YES, I would like to support the State Bar of Georgia Campaign for the Georgia Legal Services Program. I understand my tax-deductible gift will provide legal assistance to low-income Georgians. Please include me in the following giving circle: Benefactor’s Circle $2,500 or more Sustainer’s Circle $250-$499 President’s Circle $1,500-$2,499 Donor’s Circle $150-$249 Every Gift Counts! Executive’s Circle $750-$1,499 or, I’d like to be billed on (date) ______ Leadership Circle $500-$749 for a pledge of $______Pledge payments are due by December 31st. Pledges of $500 or more may be paid in installments with the final installment fulfilling the pledge to be paid by December 31st. Gifts of $150 or more will be included in the Honor Roll of Contributors in the Georgia Bar Journal. Donor Information Name ______Georgia Legal Services Program (GLSP) Business Address ______City/State/Zip ______Thank you for your generosity! Please check one: Personal gift Firm gift GLSP is a non-profit law firm recognized as a 501(c) (3) by the IRS. Please mail your check to: State Bar of Georgia Campaign for Georgia Legal Services, P.O. Box 999, Atlanta, Georgia 30301 10-05GBJ.qxp 9/26/2005 10:59 AM Page 75
he Lawyers Foundation of Georgia Inc. sponsors activities to promote charitable, scientific and educational purposes for the public, law students and lawyers. Memorial contributions may be T sent to the Lawyers Foundation of Georgia Inc., 104 Marietta St. NW, Suite 630, Atlanta, GA 30303, stating in whose memory they are made. The Foundation will notify the family of the deceased of the gift and the name of the donor. Contributions are tax deductible.
Richard W. Best Meg J. Mantler Roop Science in Political Science W. Palm Beach, Fla. Dunwoody, Ga. and a Masters of Public Admitted 1950 Admitted 1986 Administration in 1993 at Died July 2005 Died June 2005 Georgia College, during which time he became a Francis I. Breazeale Spencer W. Saunders Sr. member of the Cordell Hull
Memoriam Kingston Springs, Tenn. Salisbury, N.C. Chapter of the Phi Alpha Admitted 1971 Admitted 1979 Delta Law Fraternity. He then Died March 2005 Died May 2005 received his Juris Doctorate from Cumberland School of In Vivian E. Brooks Harold E. Smith Jr. Law at Samford University in Atlanta, Ga. Decatur, Ga. Birmingham, Ala., in June Admitted 1944 Admitted 1961 1996. After being admitted to Died February 2005 Died June 2005 the State Bar of Georgia that same year, Williams worked Charles Frank Fennell Morgan Stanford as an attorney at a local law Atlanta, Ga. Atlanta, Ga. firm in Macon for a year Admitted 1939 Admitted 1947 before opening a private law Died June 2005 Died June 2005 practice. He spent the next seven years doing criminal Pamela J. Fightmaster- Gordan Lee Sullivan defense and assorted trial Wycoff St. Simons Island, Ga. work, including personal Lawrenceville, Ga. Admitted 1939 injury law. He was most Admitted 1994 Died March 2005 recently working as an Died July 2005 Assistant Public Defender for Cornelius B. Thurmond Jr. the Towaliga Judicial Circuit Leroy S. Fowler Augusta, Ga. in Forsyth, Ga., a position he Savannah, Ga. Admitted 1950 had held since Jan. 1, 2005. In Admitted 1949 Died April 2005 addition to his practice, Died March 2005 Williams taught paralegal John Turoff courses at Macon State James Kilpatrick Atlanta, Ga. College and Business Law at Rome, Ga. Admitted 1955 Wesleyan University, both in Admitted 1951 Died January 2005 Macon. He enjoyed going to Died June 2005 the beach, his dog Autumn Shannon Williams and being with friends and Charles E. Leonard Macon, Ga. family. Williams is survived Atlanta, Ga. Admitted 1996 by his mother, Marcia Carol Admitted 1971 Died June 2005 Williams of Warner Robbins, Died January 2005 Ga.; grandmother Gloria E. Shannon Trippi Penland, Aunt and Uncle Pope McIntire Williams, 35, of Gloria and John Marshall of Atlanta, Ga. Macon, Ga., died Macon; Uncle and Aunt Buck and Sara Penland of Juliette, Admitted 1947 in June. Williams Ga.; Aunt Judy C. Walker of Died July 2005 was born in Macon, Ga., in Warner Robbins; Uncle Randy and Aunt Brenna Murphey Rogers 1970. He received an Williams of Panama City Ocilla, Ga. Associates of Arts in Political Beach, Fla., and several Admitted 1946 Science in 1990 from Macon cousins. Died June 2005 State College, a Bachelors of
October 2005 75 10-05GBJ.qxp 9/26/2005 10:59 AM Page 76
Note: To verify a course that you do not see listed, please call the CLE Department at (404) 527-8710. Also, ICLE seminars only list total CLE hours. For a breakdown, call (800) 422-0893.
LORMAN BUSINESS CENTER, INC. Complaint Documents Retention & Destruction October 2005 Albany, Ga. 5 6.7 CLE
GEORGIA ASSOCIATION 9 OF CRIMINAL DEFENSE LAWYERS William W. Bill Daniel Trial Advocacy Program LORMAN BUSINESS CENTER Calendar Atlanta, Ga. Solving Moisture & Mold Problems 26.5 CLE including 26.5 Trial Atlanta, Ga. 6 CLE LORMAN BUSINESS CENTER, INC. 11 Problem Solving for Condominiums & Homeowners’ Association LORMAN BUSINESS CENTER, INC.
CLE Atlanta, Ga. Health Reimbursement Accounts, 6 CLE Health Saving Accounts, Section 125 6 Savannah, Ga. 6.7 CLE ICLE Trial Tactics 12 Atlanta, Ga. LORMAN BUSINESS CENTER, INC. 4 CLE Overtime, Exemption & the FLSA: What You Need to Know ICLE Athens, Ga. U.S. Supreme Court Update 6.7 CLE Atlanta, Ga. 6 CLE 12
ICLE LORMAN BUSINESS CENTER, INC. Title Standards Commercial Lending Requirements Atlanta, Ga. & Loan Documents 6 CLE Atlanta, Ga. 6.7 CLE 6-8 14 ICLE Workers’ Compensation Institute ICLE St. Simons, Ga. Advanced Slip and Fall 13 CLE Atlanta, Ga. 6 CLE 7
ICLE ICLE Class Actions Nuts & Bolts of Family Law Atlanta, Ga. Atlanta, Ga. 6 CLE 6 CLE
ICLE ICLE Employers’ Duties and Problems Professional and Ethical Dilemmas Atlanta, Ga. Atlanta, Ga. 6 CLE 3 CLE
NBI, INC. ICLE—Video Replay Revised UCC Article 9 Secured Transactions Power Point in the Courtroom Atlanta, Ga. Atlanta, Ga. 6 CLE including 0.5 Ethics 3 CLE
LORMAN BUSINESS CENTER, INC. ICLE Document Retention & Destruction Internal Corporate Audit Savannah, Ga. Atlanta, Ga. 6.7 CLE 6 CLE
76 Georgia Bar Journal 10-05GBJ.qxp 9/26/2005 10:59 AM Page 77
PROFESSINAL EDUCATION SYSTEMS, INC. AMERICAN ARBITRATION ASSOCIATION CLE Ultimate Divorce Practices Chairing and Arbitration Panel Atlanta, Ga. Atlanta, Ga. 6.5 CLE including 3.8 Trial 2 CLE 18 24
LORMAN BUSINESS CENTER, INC. NBI, INC. Calendar Commercial Lending Requirements Ounce of Prevention, Pound of Cure: & Loan Documents Critical Financial Mistakes Macon, Ga. Atlanta, Ga. 6.7 CLE 6 CLE including 0.5 Ethic 19 27
LORMAN BUSINESS CENTER, INC. ICLE Hispanic Bar Association IDEA Reauthorization Atlanta, Ga. Atlanta, Ga. 6 CLE 6 CLE ICLE LORMAN BUSINESS CENTER, INC. Selecting Your Jury Basic Worker’s Compensation Atlanta, Ga. Albany, Ga. 6 CLE 6 CLE 20 CLE INTERNATIONAL, INC. Negotiating Leases Conference ICLE Atlanta, Ga. Criminal Law 10 CLE including 1 Ethic Atlanta, Ga. 6 CLE LORMAN BUSINESS CENTER, INC. Health Reimbursement Accounts, ICLE Health Savings Accounts, Section 125 Macon, Ga. Tort Reform from Both Sides 6.7 CLE Atlanta, Ga. 6 CLE 28
NBI, INC. ICLE Georgia Elder Care Planning Georgia Personal Injury Practice Atlanta, Ga. Atlanta, Ga. 6 CLE including .5 Ethics 6 CLE 20-21 ICLE Premises Liability ICLE Atlanta, Ga. Business Law Institute/Securities Litigation 6 CLE Atlanta, Ga. 12 CLE ICLE Spinal Cord Injury Cases 21 Atlanta, Ga. 6 CLE ICLE ADR Institute LORMAN BUSINESS CENTER, INC. Atlanta, Ga. Standardized Field Sobriety Tests 6 CLE Atlanta, Ga. 6.3 CLE ICLE Zoning Atlanta, Ga. 6 CLE November 2005
ICLE 1 Building on the Foundation LORMAN BUSINESS CENTER, INC. Atlanta, Ga. Collection Law 6 CLE Atlanta, Ga. 6.7 CLE
October 2005 77 10-05GBJ.qxp 9/26/2005 10:59 AM Page 78
2 8
ICLE LORMAN BUSINESS CENTER, INC. Family Law Health Reimbursement Accounts, Augusta, Ga. Health Savings Accounts, Section 125 6 CLE Athens, Ga. 6.7 CLE including 1 Ethics NBI, INC. Getting Maximum Benefits for your 9 Social Security Disability Clients ICLE Atlanta, Ga. Mentor Training 6 CLE including 0.5 Ethic Atlanta, Ga.
Calendar 3 3 CLE
ICLE LORMAN BUSINESS CENTER, INC. Auto Insurance Law Medical Records Law Atlanta, Ga. Atlanta, Ga. 6 CLE 6 CLE
CLE 3-5 10
ICLE ICLE Medical Malpractice Institute American Justice Amelia Island, Fla. Kennesaw, Ga. 12 CLE 3 CLE
4 ICLE—GPTV—Video Replay ICLE Professionalism, Ethics & Malpractice RICO See www.iclega.org for locations Atlanta, Ga. 3 CLE 6 CLE ICLE ICLE Commercial Real Estate Adoption Law Atlanta, Ga. Atlanta, Ga. 6 CLE 6 CLE ICLE ICLE—GPTV—Live Buying & Selling Private Businesses Professionalism, Ethics & Malpractice Atlanta, Ga. See www.iclega.org for locations 6 CLE 3 CLE ICLE ICLE Federal Criminal Practice Municipal Development in Georgia Atlanta, Ga. St. Simons, Ga. 6 CLE 6 CLE LORMAN BUSINESS CENTER, INC. ICLE Construction Lien & Public Contract Bond Law UGA Professionalism Symposium Savannah, Ga. Athens, Ga. 6.7 CLE 6 CLE LORMAN BUSINESS CENTER, INC. LORMAN BUSINESS CENTER, INC. Zoning & Land Use Real Estate Investment Analysis & 1031 Exchange Athens, Ga. Atlanta, Ga. 6 CLE including 1 Ethic 6.7 CLE 10-11
7 ICLE NBI, INC. Trial Evidence Real Estate Title: Identifying Defects Atlanta, Ga. & Finding Solutions 12 CLE Atlanta, Ga. 6 CLE including 0.5 Ethic
78 Georgia Bar Journal 10-05GBJ.qxp 9/26/2005 10:59 AM Page 79 CLE 10-14
ICLE December 2005 Entertainment Sports & Intellectual Property Institute San Juan, Puerto Rico 1 12 CLE ICLE—GPTV—Video Replay 11 Recent Developments Calendar See www.iclega.org for locations ICLE—GPTV—Live 6 CLE Successful Trial Practice See www.iclega.org for locations ICLE 6 CLE Family Immigration Law Atlanta, Ga. 16 6 CLE LORMAN BUSINESS CENTER, INC. Section 504 vs. the IDEA ICLE Atlanta, Ga. Taxation Law 6 CLE Atlanta, Ga. 6 CLE 17 PROFESSIONAL EDUCATION SYSTEMS, INC. ICLE—GPTV—Video Replay Estate Planning on the Edge Successful Trial Practice Marietta, Ga. See www.iclega.org for locations 6.7 CLE 6 CLE NBI, INC. ICLE Confidently Administering the Georgia Estate Negotiation & Conflict Resolution Various Dates & Locations, Ga. Atlanta, Ga. 6.7 CLE including 0.5 Ethic 6 CLE LORMAN BUSINESS CENTER, INC. ICLE Understanding Land Records Landlord &Tenant Law Atlanta, Ga. Atlanta, Ga. 6 CLE 6 CLE 1-2 NBI, INC. Internal Controls ICLE Macon, Ga. Corporate Counsel Institute 6.7 CLE including 1 Ethics Atlanta, Ga. 12 CLE LORMAN BUSINESS CENTER, INC. 2 Employee Handbooks: Everything You Need to Know Albany, Ga. ICLE—GPTV—Live 6 CLE Trial Advocacy See www.iclega.org for locations NBI, INC. 6 CLE Getting the Results You Want: Successful Georgia Medical Malpractice ICLE Atlanta, Ga. Basic Fiduciary Practice 6 CLE including 0.5 Ethic Atlanta, Ga. 6 CLE 18
ICLE ICLE Corporate Litigation Georgia Tort Law Atlanta, Ga. Atlanta, Ga. 6 CLE 6 CLE
ICLE—GPTV—Live LORMAN BUSINESS CENTER, INC. Recent Developments Advanced Partnerships, LLCs & LLPs See www.iclega.org for locations Atlanta, Ga. 6 CLE 6.7 CLE
October 2005 79 10-05GBJ.qxp 9/26/2005 10:59 AM Page 80
First Publication of Proposed Formal Advisory Opinion No. 05-11
Formal Advisory Opinion No. 99-1, issued to be considered by the Board. Any comment by the Supreme Court of Georgia on May 27, to a proposed opinion should make reference 1999, provides an interpretation of the to the number of the proposed opinion. After Standards of Conduct and Ethical consideration of comments received from
Notices Considerations (ECs). On June 12, 2000, the State Bar members, the Formal Advisory Supreme Court of Georgia issued the Opinion Board will make a final determina- Georgia Rules of Professional Conduct, tion of whether the opinion should be issued. which became effective on January 1, 2001, If the Formal Advisory Opinion Board deter- replacing the Standards of Conduct. The mines that an opinion should be issued, final Canons of Ethics, including Ethical drafts of the opinion will be published, and Considerations and Directory Rules, were the opinion will be filed with the Supreme deleted in their entirety. Court of Georgia.
It is the opinion of the Formal Advisory PROPOSED FORMAL ADVISORY Opinion Board that the substance and/or OPINION NO. 05-11 conclusion reached under Formal Advisory Opinion No. 99-1 has changed due to the QUESTION PRESENTED: Georgia Rules of Professional Conduct. Accordingly, the Formal Advisory Opinion May an attorney ethically defend a client Board has redrafted Formal Advisory pursuant to an insurance contract when the Opinion No. 99-1. Proposed Formal attorney simultaneously represents, in an Advisory Opinion No. 05-11 is a redrafted unrelated matter, the insurance company version of Formal Advisory Opinion No. 99- with a subrogation right in any recovery 1. Proposed Formal Advisory Opinion No. against the defendant client? 05-11 addresses the same question presented in Formal Advisory Opinion No. 99-1; how- SUMMARY ANSWER: ever, it provides an interpretation of the Georgia Rules of Professional Conduct. This In this hypothetical, the attorney’s success- proposed opinion will be treated like a new ful representation of the insured would opinion and will be processed and published reduce or eliminate the potential subrogation in compliance with Bar Rule 4-403(c). claim of the insurance company that is a client of the same attorney in an unrelated As such, pursuant to Rule 4-403(c) of the matter. Thus, essentially, advocacy on behalf Rules and Regulations of the State Bar of of one client in these circumstances consti- Georgia, the Formal Advisory Opinion Board tutes advocacy against a simultaneously rep- has made a preliminary determination that resented client. “Ordinarily, a lawyer may the following proposed opinion should be not act as an advocate against a client the issued. State Bar members only are invited lawyer represents in some other matter, even to file comments to this proposed opinion if the other matter is wholly unrelated.” See, with the Formal Advisory Opinion Board at Rule 1.7, Comment 8. This is true because the following address: adequate representation of any client includes a requirement of an appearance of State Bar of Georgia trustworthiness that is inconsistent with 104 Marietta Street, N.W., Suite 100 advocacy against that client. Atlanta, Georgia 30303 Attention: John J. Shiptenko Thus, if the insurance company, as opposed to an insured of that company, is in fact the client An original and eighteen (18) copies of any of the attorney in the unrelated matter, then comment to the proposed opinion must be this representation would be an impermissible filed with the Formal Advisory Opinion conflict of interest under Rule 1.7(a) and con- Board, through the Office of the General sent of both clients, as sometimes permitted Counsel of the State Bar or Georgia, by under Rule 1.7 to cure an impermissible con- November 15, 2005, in order for the comment flict, would not be available. See, Rule 1.7(c)(3).
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If, however, as is far more typically the case, it is not of the representation; and the insurance company that is the client in the unrelated matter, but an insured of the insurance company, then (3) having been given the opportunity to consult there is no advocacy against a simultaneous representa- with independent counsel. tion client and the representation is not prohibited for that reason. Instead, in such circumstances, the attorney (c) Client consent is not permissible if the may have a conflict with the attorney’s own interests representation: under Rule 1.7(a) in that the attorney has a financial interest in maintaining a good business relationship (1) is prohibited by law or these rules; with the non-client insurance company. The likelihood that the representation will be harmed by this financial (2) includes the assertion of a claim by one client interest makes this a risky situation for the attorney. against another client represented by the lawyer in Nevertheless, under some circumstances the rules per- the same or substantially related proceeding; or mit this personal interest conflict to be cured by consent of all affected clients after compliance with the require- (3) involves circumstances rendering it reasonably ments for consent found in Rule 1.7(b). Consent would unlikely that the lawyer will be able to provide not be available to cure the conflict, however, if the con- adequate representation to one or more of the flict “involves circumstances rendering it reasonably affected clients. unlikely that the lawyer [would] be able to provide ade- quate representation to one or more of the affect If the representation of the insurance company in the clients.” See, Rule 1.7(c). The question this asks is not the unrelated matter is, in fact, representation of the insur- subjective one of whether or not the attorney thinks he ance company, and not representation of an insured of or she will be able to provide adequate representation the company, then we get additional assistance in inter- despite the conflict, but whether others would reason- preting Rule 1.7 from Comment 8 which states that: ably view the situation as such. The attorney makes this “Ordinarily, a lawyer may not act as an advocate against determination at his or her our peril. a client the lawyer represents in some other matter, even if the other matter is wholly unrelated.” This is true OPINION: because adequate representation of any client includes a requirement of an appearance of trustworthiness that is Correspondent asks whether an attorney may ethical- inconsistent with advocacy against that client. This pro- ly defend a client pursuant to an insurance contract hibition is not because Georgia lawyers are not suffi- when the attorney simultaneously represents, in an ciently trustworthy to act professionally in these cir- unrelated matter, the insurance company with a subro- cumstances by providing independent professional gation right in any recovery against the defendant client? judgment for each client unfettered by the interests of In this hypothetical, the attorney’s successful representa- the other client. It is, instead, a reflection of the reality tion of the insured would reduce or eliminate the poten- that reasonable client concerns with the appearance cre- tial subrogation claim of the insurance company that is a ated by such conflicts could, by themselves, adversely client of the same attorney in an unrelated matter. affect the quality of the representation.
This situation is governed by Rule 1.7, which provides: Thus, in this situation there is an impermissible con- flict of interest between simultaneously represented (a) A lawyer shall not represent or continue to repre- clients under Rule 1.7(a) and consent to cure this con- sent a client if there is a significant risk that the flict is not available under Rule 1.7(c) because it neces- lawyer’s own interests or the lawyer’s duties to sarily “involves circumstances rendering it reasonably another client, a former client, or a third person will unlikely that the lawyer will be able to provide ade- materially and adversely affect the representation of quate representation to one or more of the affected the client, except as permitted in (b). clients.” See, generally, ABA/BNA LAWYERS MANUAL ON PROFESSIONAL CONDUCT 51:104-105 and cases and advi- (b) If client consent is permissible a lawyer may rep- sory opinions cited therein. See, also, ABA Comm. on resent a client notwithstanding a significant risk of Ethics and Professional Responsibility, Informal Op. 1495 material and adverse effect if each affected or former (1982) (lawyer may not accept employment adverse to client consents, preferably in writing, to the repre- existing client even in unrelated matter; prohibition sentation after: applies even when present client employs most lawyers in immediate geographical area, thereby making it dif- (1) consultation with the lawyer; ficult for adversary to retain equivalent counsel).
(2) having received in writing reasonable and If, however, as is far more typically the case, it is not adequate information about the material risks the insurance company that is the client in the unrelated
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matter, but an insured of the insurance company, then of all affected clients after compliance with the require- there is no advocacy against a simultaneous representa- ments for consent found in Rule 1.7(b). Consent would tion client and the representation is not prohibited for not be available to cure the conflict, however, if the con- that reason. Instead, in such circumstances, the attorney flict “involves circumstances rendering it reasonably may have a conflict with the attorney’s own interests unlikely that the lawyer [would] be able to provide ade- under Rule 1.7(a) in that the attorney has a financial quate representation to one or more of the affect interest in maintaining a good business relationship clients.” See, Rule 1.7(c). The question this asks is not the with the non-client insurance company. The likelihood subjective one of whether or not the attorney thinks he that the representation will be harmed by this financial or she will be able to provide adequate representation interest makes this a risky situation for the attorney. despite the conflict, but whether others would reason- Nevertheless, under some circumstances the rules per- ably view the situation as such. The attorney makes this mit this personal interest conflict to be cured by consent determination at his or her our peril. First Publication of Proposed Formal Advisory Opinion No. 05-12
Formal Advisory Opinion No. 00-1, issued by the An original and eighteen (18) copies of any comment to Supreme Court of Georgia on January 31, 2000, pro- the proposed opinion must be filed with the Formal vides an interpretation of Directory Rules (DRs). On Advisory Opinion Board, through the Office of the June 12, 2000, the Supreme Court of Georgia issued the General Counsel of the State Bar or Georgia, by Georgia Rules of Professional Conduct, which became November 15, 2005, in order for the comment to be con- effective on January 1, 2001, replacing the Standards of sidered by the Board. Any comment to a proposed opin- Conduct. The Canons of Ethics, including Ethical ion should make reference to the number of the proposed Considerations and Directory Rules, were deleted in opinion. After consideration of comments received from their entirety. State Bar members, the Formal Advisory Opinion Board will make a final determination of whether the opinion It is the opinion of the Formal Advisory Opinion should be issued. If the Formal Advisory Opinion Board Board that the substance and/or conclusion reached determines that an opinion should be issued, final drafts under Formal Advisory Opinion No. 00-1 has changed of the opinion will be published, and the opinion will be due to the Georgia Rules of Professional Conduct. filed with the Supreme Court of Georgia. Accordingly, the Formal Advisory Opinion Board has redrafted Formal Advisory Opinion No. 00-1. PROPOSED FORMAL ADVISORY Proposed Formal Advisory Opinion No. 05-12 is a OPINION NO. 05-12 redrafted version of Formal Advisory Opinion No. 00- 1. Proposed Formal Advisory Opinion No. 05-12 QUESTION PRESENTED: addresses the same question presented in Formal Advisory Opinion No. 00-1; however, it provides an When the City Council controls the salary and bene- interpretation of the Georgia Rules of Professional fits of the members of the Police Department, may a Conduct. This proposed opinion will be treated like a councilperson, who is an attorney, represent criminal new opinion and will be processed and published in defendants in matters where the police exercise discre- compliance with Bar Rule 4-403(c). tion in determining the charges?
As such, pursuant to Rule 4-403(c) of the Rules and SUMMARY ANSWER: Regulations of the State Bar of Georgia, the Formal Advisory Opinion Board has made a preliminary deter- Representation of a criminal defendant in municipal mination that the following proposed opinion should court by a member of the City Council where the City be issued. State Bar members only are invited to file Council controls salary and benefits for the police impli- comments to this proposed opinion with the Formal cates Rule 3.5(a), which prohibits attorneys from seek- Advisory Opinion Board at the following address: ing to influence officials by means prohibited by law. In any circumstance where the representation may create State Bar of Georgia an appearance of impropriety it should be avoided. 104 Marietta Street, N.W. Suite 100 OPINION: Atlanta, Georgia 30303 Attention: John J. Shiptenko This opinion addresses itself to a situation where the City Council member votes on salary and benefits for
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the police. Particularly in small municipalities, this situ- indicate to an officer that as a result of the attorney’s posi- ation could give rise to a perception that a police offi- tion as a member of the City Council a favorable recom- cer’s judgment might be affected. For example, a police mendation as to one of the attorney’s clients would result officer might be reluctant to oppose a request that he in benefits flowing to the officer, or that an unfavorable rec- recommend lesser charges or the dismissal of charges ommendation would result in harm, the attorney would when the request comes from a council member repre- have committed the offense of bribery, OCGA §16-10-2 senting the accused. Situations like the one at hand give (a)(1), or extortion, OCGA §16-8-16(a)(4). The attorney rise to inherent influence which is present even if the would also have violated Rule 3.5(a). attorney who is also a City Council member attempts to avoid using that position to influence the proceedings. The mere fact of representation of a criminal defen- dant by an attorney who is a member of the City Council, Rule 3.5 provides that “A lawyer shall not, without when the City Council controls the salary and benefits of regard to whether the lawyer represents a client in the mat- the members of the Police Department, and when the ter: (a) seek to influence a judge, juror, prospective juror or police exercise discretion in determining the charges other official by means prohibited by law....” As a general does not, by itself, establish a violation of Rule 3.5(a). To matter, a police officer is a public official. See White v. establish a violation, there must be a showing that the Fireman’s Fund Ins. Co., 233 Ga. 919 (1975); Sauls v. State, 220 attorney sought to exercise influence in a manner pro- Ga. App. 115 (1996). But see O.C.G.A. §45-5-6. Where a hibited by law. We note, however, that Comment 2 to police officer exercises discretion as to the prosecution of Rule 3.5 provides that “The activity proscribed by this criminal charges, the police officer is a public official with- Rule should be observed by the advocate in such a care- in the meaning of Rule 3.5(a). By its express terms, Rule ful manner that there be no appearance of impropriety.” 3.5(a) applies only when an attorney seeks to influence, Pursuant to Rule 3.5, therefore, an attorney should not that is where an attorney has the intent to influence, an offi- represent a criminal defendant where an influence of cial by means prohibited by law. If an attorney were to improper influence can reasonably be drawn. NOTICE OF FILING OF FORMAL ADVISORY OPINIONS IN SUPREME COURT
Second Publication of Proposed members of the Bar. The State Bar of Georgia and the person requesting the opinion shall follow the briefing Formal Advisory Opinion No. 05-2 schedule set forth in Supreme Court Rule 10, counting Hereinafter known as “Formal from the date of the order granting review. A copy of Advisory Opinion No. 05-2” the petition filed with the Supreme Court of Georgia pursuant to Rule 4-403(d) must be simultaneously Members of the State Bar of Georgia are hereby served upon the Board through the Office of the General NOTIFIED that the Formal Advisory Opinion Board has Counsel of the State Bar or Georgia. The final determi- issued the following Formal Advisory Opinion, pur- nation may be either by written opinion or by order of suant to the provisions of Rule 4-403(d) of Chapter 4 of the Supreme Court and shall state whether the Formal the Rules and Regulations of the State Bar of Georgia Advisory Opinion is approved, modified, or disap- approved by order of the Supreme Court of Georgia on proved, or shall provide for such other final disposition May 1, 2002. This opinion will be filed with the as is appropriate. Supreme Court of Georgia on or after October 17, 2005. In accordance with Rule 4-223(a) of the Rules and Rule 4-403(d) states that within 20 days of the filing of Regulations of the State Bar of Georgia, any Formal the Formal Advisory Opinion or the date the publica- Advisory Opinion issued pursuant to Rule 4-403 which tion is mailed to the members of the Bar, whichever is is not thereafter disapproved by the Supreme Court of later, only the State Bar of Georgia or the person who Georgia shall be binding on the State Bar of Georgia, the requested the opinion may file a petition for discre- State Disciplinary Board, and the person who request- tionary review thereof with the Supreme Court of ed the opinion, in any subsequent disciplinary proceed- Georgia. The petition shall designate the Formal ing involving that person. Advisory Opinion sought to be reviewed and shall con- cisely state the manner in which the petitioner is Pursuant to Rule 4-403(e) of Chapter 4 of the Rules aggrieved. If the Supreme Court grants the petition for and Regulations of the State Bar of Georgia, if the discretionary review or decides to review the opinion on Supreme Court of Georgia declines to review the its own motion, the record shall consist of the comments Formal Advisory Opinion, it shall be binding only on received by the Formal Advisory Opinion Board from the State Bar of Georgia and the person who requested
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the opinion, and not on the Supreme Court, which OPINION: shall treat the opinion as persuasive authority only. If the Supreme Court grants review and disapproves the Georgia Rule of Professional Conduct 1.8(h) offers opinion, it shall have absolutely no effect and shall not the following direction: constitute either persuasive or binding authority. If the Supreme Court approves or modifies the opinion, it “A lawyer shall not make an agreement prospectively shall be binding on all members of the State Bar and limiting the lawyer’s liability to a client for malpractice shall be published in the official Georgia Court and Bar unless permitted by law and the client is independ- Rules manual. The Supreme Court shall accord such ently represented in making the agreement . . . .” approved or modified opinion the same precedential authority given to the regularly published judicial This rule seeks to prevent attorneys from taking opinions of the Court. advantage of clients and avoiding the removal of nega- tive consequences for malpractice. See, Opinion 193 (D.C. 1989). Neither of these policies would be well STATE BAR OF GEORGIA ISSUED BY served by prohibiting the use of “hold harmless” agree- THE FORMAL ADVISORY OPINION ments between employers and attorneys employed in- house if the employer is exercising an informed business BOARD PURSUANT TO RULE 4-403 judgment in utilizing the “hold harmless” agreement in ON JULY 15, 2005 lieu of malpractice insurance and doing so on the advise FORMAL ADVISORY OPINION NO. of any counsel other than the counsel being employed. Consultation with in-house counsel satisfies the require- 05-2 (Redrafted Version of Formal ment of the rule. First, the position of the client as Advisory Opinion No. 90-1) employer, and the sophistication of those who employ in-house counsel, eliminates almost all overreaching concerns. Secondly, the lawyer as employee does not QUESTION PRESENTED: avoid the negative consequences of malpractice because he or she is subject to being discharged by the employ- “Hold Harmless” Agreements Between Employers er. Apparently, discharge is preferred by employers of and Their In-House Counsel. in-house counsel to malpractice suits as a remedy for negligent performance. See, Opinion 193 (D.C. 1989). Whether an attorney employed in-house by a corpo- ration may enter into an agreement by which his or her Accordingly, we conclude that “hold harmless” employer shall hold the attorney harmless for malprac- agreements are ethical when an employer of in-house tice committed in the course of his employment. counsel makes an informed business judgment that such an agreement is preferable to employee malprac- SUMMARY ANSWER: tice insurance, is done on the advice of counsel, and is permitted by law. The determination of whether such “Hold harmless” agreements between employers agreements are permitted by law is not within the and attorneys employed in-house are ethical if the scope of this Opinion. Finally, we note that the pro- employer is exercising an informed business judgment posed “hold harmless” agreement does not limit liabil- in utilizing the “hold harmless” agreement in lieu of ity to third parties affected by in-house counsel repre- malpractice insurance on the advice of counsel and the sentation. Instead, the agreement shifts the responsibil- agreement is permitted by law. ity for employee conduct from an insurance carrier to the organization as a self-insurer. NOTICE OF FILING OF FORMAL ADVISORY OPINIONS IN SUPREME COURT
Second Publication of Proposed issued the following Formal Advisory Opinion, pur- suant to the provisions of Rule 4-403(d) of Chapter 4 of Formal Advisory Opinion No. 05-3 the Rules and Regulations of the State Bar of Georgia Hereinafter known as “Formal approved by order of the Supreme Court of Georgia on Advisory Opinion No. 05-3” May 1, 2002. This opinion will be filed with the Supreme Court of Georgia on or after October 17, 2005. Members of the State Bar of Georgia are hereby NOTIFIED that the Formal Advisory Opinion Board has Rule 4-403(d) states that within 20 days of the filing of
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the Formal Advisory Opinion or the date the publication STATE BAR OF GEORGIA ISSUED BY is mailed to the members of the Bar, whichever is later, only the State Bar of Georgia or the person who request- THE FORMAL ADVISORY OPINION ed the opinion may file a petition for discretionary BOARD PURSUANT TO RULE 4-403 review thereof with the Supreme Court of Georgia. The ON JULY 15, 2005 petition shall designate the Formal Advisory Opinion sought to be reviewed and shall concisely state the man- FORMAL ADVISORY OPINION NO. ner in which the petitioner is aggrieved. If the Supreme 05-3 (Redrafted Version of Formal Court grants the petition for discretionary review or decides to review the opinion on its own motion, the Advisory Opinion No. 90-2) record shall consist of the comments received by the Formal Advisory Opinion Board from members of the QUESTION PRESENTED: Bar. The State Bar of Georgia and the person requesting the opinion shall follow the briefing schedule set forth in Ethical propriety of a part-time law clerk appearing Supreme Court Rule 10, counting from the date of the as an attorney before his or her present employer- order granting review. A copy of the petition filed with judge. the Supreme Court of Georgia pursuant to Rule 4-403(d) must be simultaneously served upon the Board through SUMMARY ANSWER: the Office of the General Counsel of the State Bar or Georgia. The final determination may be either by writ- The representation of clients by a law clerk before a ten opinion or by order of the Supreme Court and shall present employer-judge is a violation of Rule 1.7 of the state whether the Formal Advisory Opinion is approved, Georgia Rules of Professional Conduct. modified, or disapproved, or shall provide for such other final disposition as is appropriate. OPINION:
In accordance with Rule 4-223(a) of the Rules and This question involves an application of Rule 1.7 gov- Regulations of the State Bar of Georgia, any Formal erning personal interest conflicts. Rule 1.7 provides: Advisory Opinion issued pursuant to Rule 4-403 which is not thereafter disapproved by the Supreme Court of (a) A lawyer shall not represent or continue to repre- Georgia shall be binding on the State Bar of Georgia, the sent a client if there is a significant risk that the State Disciplinary Board, and the person who request- lawyer’s own interests or the lawyer’s duties to ed the opinion, in any subsequent disciplinary proceed- another client, a former client, or a third person will ing involving that person. materially and adversely affect the representation of the client, except as permitted in (b). Pursuant to Rule 4-403(e) of Chapter 4 of the Rules and Regulations of the State Bar of Georgia, if the (b) If client consent is permissible a lawyer may rep- Supreme Court of Georgia declines to review the Formal resent a client notwithstanding a significant risk of Advisory Opinion, it shall be binding only on the State material and adverse effect if each affected or former Bar of Georgia and the person who requested the opin- client consents, preferably in writing, to the repre- ion, and not on the Supreme Court, which shall treat the sentation after: (1) consultation with the lawyer, (2) opinion as persuasive authority only. If the Supreme having received in writing reasonable and adequate Court grants review and disapproves the opinion, it information about the material risks of the represen- shall have absolutely no effect and shall not constitute tation, and (3) having been given the opportunity to either persuasive or binding authority. If the Supreme consult with independent counsel. Court approves or modifies the opinion, it shall be bind- ing on all members of the State Bar and shall be pub- (c) Client consent is not permissible if the representa- lished in the official Georgia Court and Bar Rules man- tion: (1) is prohibited by law or these rules; . . . (3) ual. The Supreme Court shall accord such approved or involves circumstances rendering it reasonably unlike- modified opinion the same precedential authority given ly that the lawyer will be able to provide adequate rep- to the regularly published judicial opinions of the Court. resentation to one or more of the affected clients.
There are two threats to professional judgment posed when a law clerk undertakes to represent a client before the judge by whom the law clerk is also currently employed. The first is that the lawyer will be unduly restrained in client representation before the employer- judge. Comment [6] to Rule 1.7 states that “the lawyer’s personal or economic interest should not be permitted
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to have an adverse effect on representation of a client.” for a party in a matter in which the lawyer is partici- And Comment [4] explains that: pating personally and substantially as a judge or other adjudicative officer or arbitrator. A lawyer “loyalty to a client is also impaired when a lawyer serving as a law clerk to a judge, other adjudicative cannot consider, recommend or carry out an appro- officer or arbitrator may negotiate for employment priate course of action for the client because of the with a party or lawyer involved in a matter in which lawyer’s other competing responsibilities or interest. the clerk is participating personally and substantial- The conflict in effect forecloses alternatives that ly, but only after the lawyer has notified the judge, would otherwise be available to the client.” other adjudicative officer or arbitrator. In addition, the law clerk shall promptly provide written notice Because of this risk, the representation of clients by of acceptance of employment to all counsel of record an employer-judge is a violation of Rule 1.7. Moreover, in all such matters in which the prospective employ- the Georgia Supreme Court has ruled that for a full- er is involved. time law clerk concurrently to serve as appointed co- counsel for a criminal defendant before one of the Rule 1.12(b) allows a law clerk for a judge to accept judges by whom the law clerk is employed constitutes employment with a party or lawyer involved in a mat- an actual conflict of interest depriving the defendant of ter in which the clerk is participating personally and his Sixth Amendment right of counsel.1 substantially with the approval of the judge and prompt written notice to all counsel of record in matters Rule 1.7 permits client waiver of personal interest in which the prospective employer of the law clerk is conflicts through client consultation with the lawyer, involved. Rule 1.12(b) addresses future employment providing reasonable and adequate written information by a judge’s law clerk and should not be read to allow about the material risks of the representation to the a law clerk to represent a party before the judge whom client, and giving the client the opportunity to consult he is currently employed. Rule 3.5(a) and Comment [2] with independent counsel. This waiver provision must to that Rule would prohibit the appearance of tamper- be read consistently with other guidance from the pro- ing with judicial impartiality that the close employment fession. Because of a second threat to professional judg- relationship between judge and current law clerk ment, client waiver is impermissible in this situation. would inevitably raise. Client waiver is inconsistent with the guidance of Rule 3.5(a) of the Georgia Rules of Professional This opinion addresses the propriety of the lawyer’s Responsibility, which prohibits a lawyer from seeking conduct under the Georgia Rules of Professional to influence a judge, juror, prospective juror or other Responsibility. It does not address the ethical propriety official by means prohibited by law. (There is an impli- of the same conduct in his or her capacity as part-time cation of improper influence in the very fact of the clerk. We do note, however, that many courts have pre- employment of the attorney for one of the parties as the vented the conduct in question here as a matter of court judge’s current law clerk.) It is also inconsistent with the rules in accord with this opinion.3 We also note that guidance of Rule 3.5(a) Comment [2] which states, judicial clerks are often treated as “other judicial offi- cers” for the purpose of determining disqualifications “If we are to maintain integrity of the judicial and other ethical concerns.4 Under that treatment, the process, it is imperative that an advocate’s function conduct in question here would be analogous to a be limited to the presentation of evidence and argu- request by a part-time judge to practice before his or her ment, to allow a cause to be decided according to own court in violation of the Code of Judicial Conduct law. The exertion of improper influence is detrimen- and statutory provisions.5 See O.C.G.A. § 15-7-21.6 tal to that process. Regardless of an advocate’s inno- cent intention, actions which give the appearance of tampering with judicial impartiality are to be avoid- Endnotes ed. The activity proscribed by this Rule should be 1. 269 Ga. 446, 499 S.E. 2d 897 (1998). observed by the advocate in such a careful manner 2. In accord, Advisory Opinion CI-951 (Michigan) (1983). that there be no appearance of impropriety. (Part-time law clerk may not work in any capacity as pri- vate counsel on any case pending in employer-judge’s Accordingly, a part-time law clerk should not seek circuit and must give notice to clients of his inability to client waiver of the conflict of interest created by repre- appear in the circuit.) sentation of clients before the employer-judge.2 3. Sup. Ct. R. 7. (An employee of the Supreme Court shall not practice as an attorney in any court while employed by the Court.) A related rule is found in Rule 1.12(b), which states: 4. See, eg., ABA/BNA Lawyers’ Manual on Professional Conduct 91:4503 and cases cited therein; see, also, ABA A lawyer shall not negotiate for employment with Model Rules of Professional Conduct Rule 1.12 (1984); any person who is involved as a party or as lawyer and Opinion 38 (Georgia 1984) (“Lawyers and members
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of the public view a Law Clerk as an extension of the ings in which they have served as judges or in any other Judge for whom the Clerk works”). proceeding related thereto.) 5. Georgia Code of Judicial Conduct. (Part-time judges: (2) 6. O.C.G.A. § 15-7-21(b). A part-time judge of the state court should not practice law in the court on which they serve, may engage in the private practice of law in other courts or in any court subject to the appellate jurisdiction of the but may not practice in his own court or appear in any mat- court on which they serve, or act as lawyers in proceed- ter as to which that judge has exercised any jurisdiction.
NOTICE OF FILING OF FORMAL ADVISORY OPINIONS IN SUPREME COURT
Second Publication of Proposed is not thereafter disapproved by the Supreme Court of Georgia shall be binding on the State Bar of Georgia, the Formal Advisory Opinion No. 05-4 State Disciplinary Board, and the person who request- Hereinafter known as “Formal ed the opinion, in any subsequent disciplinary proceed- Advisory Opinion No. 05-4” ing involving that person. Members of the State Bar of Georgia are hereby Pursuant to Rule 4-403(e) of Chapter 4 of the Rules NOTIFIED that the Formal Advisory Opinion Board has and Regulations of the State Bar of Georgia, if the issued the following Formal Advisory Opinion, pur- Supreme Court of Georgia declines to review the suant to the provisions of Rule 4-403(d) of Chapter 4 of Formal Advisory Opinion, it shall be binding only on the Rules and Regulations of the State Bar of Georgia the State Bar of Georgia and the person who requested approved by order of the Supreme Court of Georgia on the opinion, and not on the Supreme Court, which shall May 1, 2002. This opinion will be filed with the treat the opinion as persuasive authority only. If the Supreme Court of Georgia on or after October 17, 2005. Supreme Court grants review and disapproves the opinion, it shall have absolutely no effect and shall not Rule 4-403(d) states that within 20 days of the filing constitute either persuasive or binding authority. If the of the Formal Advisory Opinion or the date the publi- Supreme Court approves or modifies the opinion, it cation is mailed to the members of the Bar, whichever is shall be binding on all members of the State Bar and later, only the State Bar of Georgia or the person who shall be published in the official Georgia Court and Bar requested the opinion may file a petition for discre- Rules manual. The Supreme Court shall accord such tionary review thereof with the Supreme Court of approved or modified opinion the same precedential Georgia. The petition shall designate the Formal authority given to the regularly published judicial opin- Advisory Opinion sought to be reviewed and shall con- ions of the Court. cisely state the manner in which the petitioner is aggrieved. If the Supreme Court grants the petition for STATE BAR OF GEORGIA ISSUED BY discretionary review or decides to review the opinion THE FORMAL ADVISORY OPINION on its own motion, the record shall consist of the com- ments received by the Formal Advisory Opinion Board BOARD PURSUANT TO RULE 4-403 from members of the Bar. The State Bar of Georgia and ON JULY 15, 2005 the person requesting the opinion shall follow the brief- FORMAL ADVISORY OPINION NO. ing schedule set forth in Supreme Court Rule 10, count- ing from the date of the order granting review. A copy 05-4 (Redrafted Version of Formal of the petition filed with the Supreme Court of Georgia Advisory Opinion No. 91-3) pursuant to Rule 4-403(d) must be simultaneously served upon the Board through the Office of the General Counsel of the State Bar or Georgia. The final QUESTION PRESENTED: determination may be either by written opinion or by order of the Supreme Court and shall state whether the Ethical propriety of a lawyer paying his nonlawyer Formal Advisory Opinion is approved, modified, or employees a monthly bonus from the gross receipts of disapproved, or shall provide for such other final dis- his law office. position as is appropriate. SUMMARY ANSWER: In accordance with Rule 4-223(a) of the Rules and Regulations of the State Bar of Georgia, any Formal The payment of a monthly bonus by a lawyer to his Advisory Opinion issued pursuant to Rule 4-403 which nonlawyer employees based on the gross receipts of his
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law office in addition to their regular monthly salary is on a profit-sharing arrangement; and permissible under Georgia Rule of Professional Conduct 5.4. It is ethically proper for a lawyer to compensate his (4) a lawyer who undertakes to complete unfin- nonlawyer employees based upon a plan that is based in ished business of a deceased lawyer may pay to whole or in part on a profit-sharing arrangement. the estate of the deceased lawyer that proportion of the total compensation which fairly represents OPINION: the services rendered by the deceased lawyer.
Correspondent asks whether a lawyer may pay non- Georgia’s Rule of Professional Conduct 5.4 is analo- lawyer employees a monthly bonus which is a percent- gous to its counterpart in the ABA Code of Professional age of gross receipts of the law office. Responsibility. In 1980, the ABA amended DR 3-102(A) to add an additional exception regarding the sharing of Georgia Rule of Professional Conduct 5.4 necessitates fees with nonlawyer employees: “A lawyer or law firm the modification of Formal Advisory Opinion No. 91-3, may include nonlawyer employees in a compensation which was based largely on Standard No. 26 of Georgia or retirement plan even though the plan is based in Bar Rule 4-102. Georgia Rule of Professional Conduct 5.4 whole or in part on a profit sharing arrangement.” replaces the former standard and provides as follows: (emphasis added). ABA DR 3-102(A)(3). The Georgia Rules of Professional Conduct are consistent with the (a) A lawyer or law firm shall not share legal fees ABA’s principles of fee sharing with non-attorneys. with a nonlawyer, except that: As the Comment to the Model Rule 5.4 of the ABA (1) an agreement by a lawyer with the lawyer’s Model Rules of Professional Conduct states, the policy firm, partner, or associate may provide for the underlying the limitation on the sharing of fees between payment of money, over a reasonable period of lawyer and layperson seeks to protect the lawyer’s inde- time after his death, to the lawyer’s estate or to one pendent professional judgment. The Comment cautions or more specified persons; that if a layperson, not guided by professional obliga- tions, shares an interest in the outcome of the represen- (2) a lawyer or law firm who purchases the prac- tation of a client, the possibility exists that he or she may tice of a deceased, disabled, or disappeared lawyer influence the attorney’s judgment. may, pursuant to the provisions of Rule 1.17, pay to the estate or other representative of that lawyer In light of all of the foregoing, we conclude that the the agreed-upon purchase price; payment of a monthly bonus payable to nonlawyer employees based upon a plan that is in whole or in part (3) a lawyer or law firm may include nonlawyer on a profit-sharing arrangement does not constitutes a employees in a compensation or retirement plan, sharing of legal fees in violation of Georgia Rule of even though the plan is based in whole or in part Professional Conduct 5.4. NOTICE OF FILING OF FORMAL ADVISORY OPINIONS IN SUPREME COURT
Second Publication of Proposed Rule 4-403(d) states that within 20 days of the filing of the Formal Advisory Opinion or the date the publi- Formal Advisory Opinion No. 05-5 cation is mailed to the members of the Bar, whichever is Hereinafter known as “Formal later, only the State Bar of Georgia or the person who Advisory Opinion No. 05-5” requested the opinion may file a petition for discre- tionary review thereof with the Supreme Court of Members of the State Bar of Georgia are hereby Georgia. The petition shall designate the Formal NOTIFIED that the Formal Advisory Opinion Board Advisory Opinion sought to be reviewed and shall con- has issued the following Formal Advisory Opinion, cisely state the manner in which the petitioner is pursuant to the provisions of Rule 4-403(d) of Chapter aggrieved. If the Supreme Court grants the petition for 4 of the Rules and Regulations of the State Bar of discretionary review or decides to review the opinion Georgia approved by order of the Supreme Court of on its own motion, the record shall consist of the com- Georgia on May 1, 2002. This opinion will be filed ments received by the Formal Advisory Opinion Board with the Supreme Court of Georgia on or after from members of the Bar. The State Bar of Georgia and October 17, 2005. the person requesting the opinion shall follow the brief-
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ing schedule set forth in Supreme Court Rule 10, count- OPINION: ing from the date of the order granting review. A copy of the petition filed with the Supreme Court of Georgia Correspondent law firm asks if it is ethically permis- pursuant to Rule 4-403(d) must be simultaneously sible to employ the following system for payment of cer- served upon the Board through the Office of the tain costs and expenses in contingent fee cases. The law General Counsel of the State Bar or Georgia. The final firm would set up a draw account with a bank, with the determination may be either by written opinion or by account secured by a note from the firm’s individual order of the Supreme Court and shall state whether the lawyers. When it becomes necessary to pay court costs, Formal Advisory Opinion is approved, modified, or deposition expenses, expert witness fees, or other out- disapproved, or shall provide for such other final dis- of-pocket litigation expenses, the law firm would obtain position as is appropriate. an advance under the note. The firm would pay the interest charged by the bank as it is incurred on a In accordance with Rule 4-223(a) of the Rules and monthly or quarterly basis. When a client makes a pay- Regulations of the State Bar of Georgia, any Formal ment toward expenses incurred in his or her case, the Advisory Opinion issued pursuant to Rule 4-403 which amount of that payment would be paid to the bank to is not thereafter disapproved by the Supreme Court of pay down the balance owed on his or her share of Georgia shall be binding on the State Bar of Georgia, the expenses advanced under the note. When a case is set- State Disciplinary Board, and the person who request- tled or verdict paid, the firm would pay off the client’s ed the opinion, in any subsequent disciplinary proceed- share of the money advanced on the loan. If no verdict ing involving that person. or settlement is obtained, the firm would pay the bal- ance owed to the bank and bill the client. Some portion Pursuant to Rule 4-403(e) of Chapter 4 of the Rules of the interest costs incurred in this arrangement would and Regulations of the State Bar of Georgia, if the be charged to the client. The contingent fee contract Supreme Court of Georgia declines to review the would specify the client’s obligations to pay reasonable Formal Advisory Opinion, it shall be binding only on expenses and interest fees incurred in this arrangement. the State Bar of Georgia and the person who requested the opinion, and not on the Supreme Court, which shall The first issue is whether it is ethically permissible treat the opinion as persuasive authority only. If the for lawyers to borrow funds for the purpose of advanc- Supreme Court grants review and disapproves the ing reasonable expenses on their clients’ behalf. If so, opinion, it shall have absolutely no effect and shall not we must then determine the propriety of charging constitute either persuasive or binding authority. If the clients interest to defray part of the expense of the loan. Supreme Court approves or modifies the opinion, it shall be binding on all members of the State Bar and In addressing the first issue, lawyers are generally shall be published in the official Georgia Court and Bar discouraged from providing financial assistance to Rules manual. The Supreme Court shall accord such their clients. Rule 1.8(e) states: approved or modified opinion the same precedential authority given to the regularly published judicial opin- A lawyer shall not provide financial assistance to a ions of the Court. client in connection with pending or contemplated litigation, except that:
STATE BAR OF GEORGIA ISSUED BY (1) a lawyer may advance court costs and expenses of THE FORMAL ADVISORY OPINION litigation, the repayment of which may be contingent BOARD PURSUANT TO RULE 4-403 on the outcome of the matter; or ON JULY 15, 2005 (2) a lawyer representing a client unable to pay court FORMAL ADVISORY OPINION NO. costs and expenses of litigation may pay those costs and expenses on behalf of the client. 05-5 (Redrafted Version of Formal Advisory Opinion No. 92-1) Despite that general admonition, contingent fee arrangements are permitted by Rule 1.5(c), which states: QUESTION PRESENTED: (1) A fee may be contingent on the outcome of the 1) Ethical propriety of a law firm obtaining a loan to matter for which the service is rendered, except in a cover advances to clients for litigation expenses; matter in which a contingent fee is prohibited by paragraph (d) or other law. A contingent fee agree- 2) Ethical considerations applicable to payment of ment shall be in writing and shall state the method by interest charged on loan obtained by law firm to cover which the fee is to be determined, including the per- advances to clients for litigation expenses. centage or percentages that shall accrue to the lawyer
October 2005 89 10-05GBJ.qxp 9/26/2005 10:59 AM Page 90
in the event of settlement, trial or appeal, litigation lawyers have originally borrowed the money instead of and other expenses to be deducted from the recovery, advancing it out-of-pocket would seem to be irrelevant, and whether such expenses are to be deducted before and the arrangement is thus not impermissible. or after the contingent fee is calculated. The bank’s involvement would be relevant, however, (2) Upon conclusion of a contingent fee matter, the were it allowed to affect the attorney-client relation- lawyer shall provide the client with a written state- ship, such as if the bank were made privy to clients’ ment stating the following: confidences or secrets (including client identity) or per- mitted to affect the lawyer’s judgment in representing (i) the outcome of the matter; and, his or her client. See generally, Rule 1.6. Thus, the lawyer must be careful to make sure that the bank (ii) if there is a recovery, showing the: understands that its contractual arrangement can in no way affect or compromise the lawyer’s obligations to (A) remittance to the client; his or her individual clients. (B) the method of its determination; (C) the amount of the attorney fee; and The remaining issue is whether it is ethically permis- (D) if the attorney’s fee is divided with another sible for lawyers to charge clients interest on the lawyer who is not a partner in or an associate of expenses and costs advanced via this arrangement with the lawyer’s firm or law office, the amount of fee the bank. As in the first issue, the fact that the expens- received by each and the manner in which the es originated with a bank instead of the law firm itself division is determined. is irrelevant, unless the relationship between lawyer and bank interferes with the relationship between The correspondent’s proposed arrangement covers lawyer and client. Assuming it does not, the question only those expenses which are permitted under Rule is whether lawyers should be permitted to charge their 1.8(e). Paragraph (e) of Rule 1.8 eliminates the former clients interest on advances. requirement that the client remain ultimately liable for financial assistance provided by the lawyer and further In Advisory Opinion No. 45 (March 15, 1985, as limits permitted assistance to cover costs and expenses amended November 15, 1985), the State Disciplinary directly related to litigation. See Comment (4) to Rule 1.8. Board held that a lawyer may ethically charge interest on clients’ overdue bills “without a prior specific agree- The arrangement also provides that when any recov- ment with a client if notice is given to the client in ery is made on the client’s behalf, the recovery would advance that interest will be charged on fee bills which first be debited by the advances made under the note, become delinquent after a stated period of time, but not with payment for those advances being made by the less than 30 days.” Thus, the Board found no general firm directly to the bank. The client thus receives only impropriety in charging interest on overdue bills. that recovery which remains after expenses have been There is no apparent reason why advanced expenses paid. The client is informed of this in correspondent’s for which a client may be responsible under a contin- contingent fee contract, which states that “all reason- gent fee agreement (whether they are billed to the client able and necessary expenses incurred in the representa- or deducted from a recovery) should be treated any dif- tion of said claims shall be deducted after division as ferently. Thus, we find no ethical impropriety in charg- herein provided to compensate attorney for his fee.” ing lawful interest on such amounts advanced on the client’s behalf.1 In the case where recovery is not obtained, howev- er, the lawyers themselves are contractually obligated In approving the practice of charging interest on over- to pay the amount owed directly to the bank. due bills, the Board held that a lawyer must comply with Correspondent’s proposed contract as outlined in the “all applicable law 1 . . . and ethical considerations.” request for this opinion does not inform the client as to possible responsibility for such expenses where there The obvious intent of Rule 1.5(c) is to ensure that is no recovery. It is the opinion of this Board that clients are adequately informed of all relevant aspects of Rules 1.5(c) and 1.8(e), taken together, require that the contingent fee arrangements, including all factors taken contingent fee contract inform the client whether he is into account in determining the amount of their ultimate or is not responsible for these expenses, even if there is recovery. Since any interest charged on advances could no recovery. affect the ultimate recovery as much as other factors mentioned in Rule 1.5(c), it would be inconsistent to per- Although the client may remain “responsible for all mit lawyers to charge interest on these advances with- or a portion of these expenses,” decisions regarding the out revealing the intent to do so in the fee contract. appropriate actions to be taken to deal with such liabil- Thus, we conclude that it is permissible to charge inter- ity are entirely within the discretion of the lawyers. est on such advances only if (i) the client is notified in Since this discretion has always existed, the fact that the the contingent fee contract of the maximum rate of inter-
90 Georgia Bar Journal 10-05GBJ.qxp 9/26/2005 10:59 AM Page 91
est the lawyer will or may charge on such advances; and Endnotes (ii) the written statement given to the client upon con- clusion of the matter reflects the interest charged on the 1. The opinion makes specific mention of O.C.G.A. 7-4-16, expenses advanced in the matter. the Federal Truth in Lending and Fair Credit Billing Acts in Title I of the Consumer Credit Protection Act as amend- ed (15 USC 1601 et seq.). We state no opinion as to the applicability of these acts or others to the matter at hand. NOTICE OF MOTION TO AMEND THE RULES AND REGULATIONS OF THE STATE BAR OF GEORGIA
No earlier than thirty days after the publication of Regulations of the State Bar of Georgia be amended in this Notice, the State Bar of Georgia will file a Motion to the following respects: Amend the Rules and Regulations for the Organization I. and Government of the State Bar of Georgia pursuant to Proposed Amendments to Part VIII, Part V, Chapter 1 of said Rules, 2004-2005 State Bar of Continuing Lawyer Competency, of the Rules Georgia Directory and Handbook, p. H-6 to H-7 (here- of the State Bar of Georgia inafter referred to as “Handbook”). I hereby certify that the following is the verbatim text It is proposed that Rules 8-103, 8-104, 8-105 and 8-107 of the proposed amendments as approved by the Board of Part VIII of the Rules of the State Bar of Georgia of Governors of the State Bar of Georgia. Any member regarding continuing legal education requirements be of the State Bar of Georgia who desires to object to these amended as follows: proposed amendments to the Rules is reminded that he or she may only do so in the manner provided by Rule Rule 8-103. Commission on Continuing Lawyer 5-102, Handbook, p. H-6. Competency. This Statement, and the following verbatim text, are intended to comply with the notice requirements of (A) Membership, Appointment and Terms: Rule 5-101, Handbook, p. H-6. *** Cliff Brashier (B) Powers and Duties of the Board: Executive Director *** State Bar of Georgia (C) Finances:
IN THE SUPREME COURT (1) Purpose. The Commission should be adequately STATE OF GEORGIA funded to enable it to perform its duties in a finan- cially independent manner. IN RE: STATE BAR OF GEORGIA Rules and Regulations for its (2) Sources. Costs of administration of the Organization and Government Commission shall be derived from charges to mem- bers of the State Bar for continuing legal education MOTION TO AMEND 2005-2 activities.
MOTION TO AMEND THE RULES AND (a) Sponsors of CLE programs to be held within REGULATIONS OF THE STATE BAR OF GEORGIA the State of Georgia shall, as a condition of accred- itation, agree to remit a list of Georgia attendees COMES NOW, the State Bar of Georgia, pursuant to and to pay a fee for each active State Bar member the authorization and direction of its Board of who attends the program. This sponsor’s fee shall Governors in regular meetings held on August 18, 2005, be based on each day of attendance, with a pro- and upon the concurrence of its Executive Committee, portional fee for programs lasting less than a presents to this Court its Motion to Amend the Rules whole day. The rate shall be set by the and Regulations of the State Bar of Georgia as set forth Commission. in an Order of this Court dated December 6, 1963 (219 Ga. 873), as amended by subsequent Orders, 2003-2004 (b) The Commission shall fix a reasonably compa- State Bar of Georgia Directory and Handbook, pp. 1-H, et rable fee to be paid by individual attorneys who seq., and respectfully moves that the Rules and either (a) attend approved CLE programs outside
October 2005 91 10-05GBJ.qxp 9/26/2005 10:59 AM Page 92
the State of Georgia or (b) attend un-approved Rule 8-105. Reporting Requirements. CLE programs within the State of Georgia that would have been approved for credit except for On or before January 31 of each year, commencing in the failure of the sponsor to pay the fee described 1985, each active member shall make and file an in the preceding paragraph. Such fee shall accom- Affidavit Annual Report with the Commission in such pany the attorney’s annual affidavit report. form as the Commission shall prescribe, reporting com- pliance with Rule 8-104. (3) Uses. Funds may be expended for the proper administration of the Commission. However, the Rule 8-107. Non-Compliance. members of the Commission shall serve on a volun- tary basis without expense reimbursement or com- (A) Notice of Non-Compliance. pensation. (1) In the event an active member shall fail to com- Rule 8-104. Education Requirements and Exemptions. plete the required units at the end of each applicable period, the Affidavit Annual Report required under (A) Minimum Continuing Legal Education Requirement. Rule 8-105 may be accompanied by a specific plan for *** making up the deficiency of necessary units within (B) Basic Legal Skills Requirement. sixty (60) days after the date of the Affidavit Annual *** Report. The plan shall be deemed accepted by the (C) Exemptions. Commission unless within fifteen (15) days after the receipt of the Affidavit Annual Report, the (1) An inactive member shall be exempt from the Commission notifies the affiant lawyer to the con- continuing legal education and the reporting require- trary. Full completion of the affiant’s plan shall be ments of this Rule. reported by Affidavit to the Commission not later than fifteen (15) days following the sixty (60) day (2) The Commission may exempt an active member period. Failure by the affiant lawyer to complete the from the continuing legal education, but not the plan within the sixty (60) day period shall invoke the reporting, requirements of this rule for a period of sanctions set forth in paragraph C. not more than one (1) year upon a finding by the Commission of special circumstances unique to that (2) In the event that an active member shall fail to member constituting undue hardship. comply with these rules in any respect, the Commission shall promptly send notice of non-com- (3) Any active member over the age of seventy (70) pliance. The notice shall specify the nature of the shall be exempt from the continuing legal education non-compliance and state that unless the non-com- requirements of this rule, including the reporting pliance is corrected or a request for a hearing before requirements, unless the member notifies the the Commission is made within sixty (60) days, the Commission in writing that the member wishes to statement of non-compliance shall be filed with the continue to be covered by the continuing legal edu- Supreme Court. cation requirements of this rule. This notice, as well as any other notice or mailing (4) Any active member residing outside of Georgia required by Part VIII of these Rules, shall be mailed by who neither practices in Georgia nor represents first class mail to the member’s current address con- Georgia clients shall be exempt, upon written appli- tained in the membership records of the State Bar of cation to the Commission, from the continuing legal Georgia. Service or actual receipt is not a prerequisite education, but not the reporting, requirements of this to actions authorized by these Rules. rule during the year for which the written applica- (B) Hearing. If a hearing is requested, it shall be held tion is made. This application shall be filed with the within thirty (30) days by the full Commission, or one annual reporting affidavit report. or more members designated by the Commission. Notice of the time and place of the hearing shall be (5) Any active member of the Board of Bar Examiners given ten (10) days in advance. The party cited may be shall be exempt from the continuing legal education represented by counsel. Witnesses shall be sworn; and, but not the reporting requirement of this Rule. if requested by the party cited, a complete electronic record or a transcript shall be made of all proceedings (D) Requirements for Participation in Litigation. and testimony. The presiding member shall have the *** authority to rule on all motions, objections, and other matters presented in connection with the hearing. The hearing shall be conducted in conformity with the Georgia Rules of Civil Procedure, and the practice in
92 Georgia Bar Journal 10-05GBJ.qxp 9/26/2005 11:00 AM Page 93
the trial of civil cases. The party cited may not be (ii) If the Commission determines that there was required to testify over his or her objection. The chair- not reasonable cause for noncompliance, a record man of the Commission who conducted the hearing of the matter, including a copy of the findings, the shall (1) make findings of fact and determine whether determination, and the recommendation of the the party cited has complied with the rules; and (2) Commission for appropriate action, shall be filed upon a finding of noncompliance, shall determine promptly with the Supreme Court. If requested by whether there was reasonable cause for noncompliance. the Commission, or the party cited, the record A copy of the findings and determination shall be sent shall include a transcript of the hearing to be pre- to the party cited. If it is determined that compliance pared at the expense of the requesting party. has occurred, the matter shall be dismissed and the Commission’s records corrected to reflect compliance. (C) Supreme Court of Georgia Action. If it is determined that compliance has not occurred, the *** Commission shall proceed as follows: SO MOVED, this ______day of ______, 2005 Counsel for the State Bar of Georgia (i) If the Commission determines that there was reasonable cause for noncompliance, the party ______cited shall be allowed fifteen (15) days to file a spe- William P. Smith, III cific plan for correcting the noncompliance within General Counsel the next sixty (60) days following submission of State Bar No. 665000 the plan. The plan shall be deemed accepted by the Commission unless, within fifteen (15) days ______after receipt, the Commission notifies the party Robert E. McCormack cited. Completion of the plan shall be reported by Deputy General Counsel Affidavit the lawyer in writing to the Commission State Bar No. 485375 not later than fifteen (15) days following the sixty (60) day period. If the party cited fails to file an OFFICE OF THE GENERAL COUNSEL acceptable plan, or fails to complete and certify State Bar of Georgia completion within the sixty (60) day period, the 104 Marietta Street, NW – Suite 100 Commission shall proceed as though there was not Atlanta, Georgia 30303 reasonable cause for noncompliance. (404) 527-8720 Consumer Pamphlet Series
The State Bar of Georgia’s Consumer Pamphlet Series is available at cost to Bar members, non- How to be a Legal Lawyers and Juror’s Bar members and organizations. Pamphlets are Good Witness Legal Fees Careers Manual individually priced at 25 and 75 cents each Patents, Selecting a plus shipping. Questions? Call (404) 527-8761. Auto Buying Trademarks & Nursing Home Accidents Copyrights a Home The following pamphlets are available: Auto Accidents Bankruptcy Buying a Home BankruptcyState Bar How to Choose of Georgia A Lawyer Divorce How to Be a Good Witness How to Choose a Lawyer Juror's Manual Lawyers and Legal Rights of State Bar State Bar Selecting a Legal Fees Legal Careers Legal Rights of Nursing Nursing Home ofDivorce Georgia Personal Willsof Georgia Residents Care Home 93 Home Residents Patents, Trademarks and Copyrights Selecting a Nursing Home Selecting a Personal Care Home Wills
State Bar State Bar State Bar State Bar of Georgia of Georgia of Georgia of Georgia Visit www.gabar.org Consumer Consumer Consumer Consumer Pamphlet Pamphlet Pamphlet Pamphlet Series 93 Series Series 93 Series for an order form and more information or e-mmail [email protected].
October 2005 93 10-05GBJ.qxp 9/26/200511:00AMPage94
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