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Accidental Clients 6/4/2018 OUT IN FRONT Establishing an Attorney-Client Relationship § 14. Formation of a Client-Lawyer Relationship A relationship of client and lawyer arises when: (1) a person manifests to a lawyer the person’s intent that the lawyer provide legal services for the person; and either 5th Annual Mid-South Agricultural & Environmental Law Conference (a) the lawyer manifests to the person consent to do so; or Accidental Clients (b) the lawyer fails to manifest lack of consent to do so, and the lawyer knows or reasonably should know that the person reasonably relies on the lawyer to provide the services; . Lucian T. Pera 901-524-5278 | Memphis | [email protected] 1. Cocktail Party Chatterer 1. Cocktail Party Chatterer • You attend a casual cocktail party. • Your cover is blown and INEBRIATE realizes you do bankruptcy work. • INEBRIATE poses legal questions to you about his business’ rights as a creditor in bankruptcy. QUESTION: Is INEBRIATE a client? 2. The Local Expert 3. The Man Who Would Be Client • You are an expert on foreclosure law. • POSSIBLE CLIENT wants help to purchase commercial property out of bankruptcy. • CEO of OUT-OF-STATE BANK calls, and says he may need your help. • You clear conflicts, and call POSSIBLE CLIENT • CEO starts telling you about two problem with rate and retainer information. loans, and asks you some questions about your state’s law. • POSSIBLE CLIENT says he’ll get back with you. QUESTION: Do you have a client? QUESTION: Do you have a client? 1 6/4/2018 4. The Man Who Would Be Client, Part Deux 5. Hidden Client? • You’re a part-time personal-injury lawyer. • You’re an expert on ag tax law. • Potential client, INJURED GUY, hurt in work • Lawyer COLLEAGUE retains you to assist on accident involving heavy machinery, has small part of larger deal he is handling. possible product liability claim. • You provide detailed advice to COLLEAGUE • You decide not to take the case, and you’re on the ag tax angles of the deal. about to call INJURED GUY to tell him…. QUESTION: Who’s your client(s)? QUESTION: Do you have a client? 6. The Joint Clients, or . Three Guys Walk into a Lawyer’s Office 7. I Love All My Children Equally • You are a corporate lawyer. • You’re foreclosing an $850,000 mortgage held by MEGA CORP. OF TENNESSEE. • Three individuals want to start a new business, and ask you to form the business • Your partner is asked to defend case brought by MEGA CORP. OF ALASKA, wholly-owned and be available to represent the new subsidiary of SUPER MEGA CORP. business. • SUPER MEGA CORP. also wholly owns MEGA QUESTION: Who’s your client? CORP. OF TENNESSEE, your client. QUESTION: Can your partner take the case? 7. I Love All My Children Equally 8. An Extended Corporate Family • You’re foreclosing an $850,000 mortgage held by MEGA CORP. OF TENNESSEE. SUPER MEGA CORPORATION • Your partner is asked to defend case brought by MEGA CORP. OF ALASKA, wholly-owned subsidiary of SUPER MEGA CORP. MEGA MEGA CORPORATION CORPORATION • You find outside counsel guidelines from OF ALASKA OF TENNESSEE MEGA CORP. OF TENN. representation…. QUESTION: Can your partner take the case? 2 6/4/2018 9. Always the Last to Know 10. The (Not-so?) Innocent Bystander • You’re foreclosing an $850,000 mortgage • You’re hired by COMPANY to respond to held by MEGA CORP. OF TENNESSEE. government subpoena to COMPANY. • Your partner is defending a case brought by • You work with CEO, CFO, and COO on MEGA CORP. OF ALASKA, a wholly-owned subsidiary of SUPER MEGA CORP., two COMPANY’s response to subpoena. companies unrelated to your client. • CFO quietly asks you suspicious question, • But then … you read that SUPER MEGA CORP. and you think you’d better let CEO know. is buying MEGA CORP. OF TENNESSEE. QUESTION: Any reason you shouldn’t? QUESTION: Is that a problem? 11. The Former Client Accidental Clients • Your partner represents SEVERAL PLAINTIFFS in discrimination case against PARENT COMPANY. • PARENT COMPANY says your partner has conflict due to your past representation of its subsidiary, SUBSIDIARY COMPANY. Questions? • Case for SUBSIDIARY COMPANY settled, and you’ve heard zero from them for more than three years, but the file is still “open.” QUESTION: Do you/your partner have a problem? 3 5th Annual Mid-South Agricultural & Environmental Law Conference Accidental Clients Hypotheticals June 8, 2018 University of Memphis Cecil C. Humphreys School of Law Memphis, Tennessee Lucian T. Pera 901-524-5278 | [email protected] ATLANTA | BATON ROUGE | BIRMINGHAM | COLUMBIA | FORT LAUDERDALE | HOUSTON | JACKSON JACKSONVILLE | MEMPHIS | MOBILE | NASHVILLE | NEW ORLEANS | SARASOTA | ST. PETERSBURG | TALLAHASSEE TAMPA | WASHINGTON, DC Establishing an Attorney-Client Relationship Restatement (Third) of the Law Governing Lawyers § 14 (2000): § 14. Formation of a Client-Lawyer Relationship A relationship of client and lawyer arises when: (1) a person manifests to a lawyer the person’s intent that the lawyer provide legal services for the person; and either (a) the lawyer manifests to the person consent to do so; or (b) the lawyer fails to manifest lack of consent to do so, and the lawyer knows or reasonably should know that the person reasonably relies on the lawyer to provide the services; or (2) a tribunal with power to do so appoints the lawyer to provide the services. 1 ABA Model Rule of Professional Conduct 1.18, Comment [2]: [2] A person becomes a prospective client by consulting with a lawyer about the possibility of forming a client-lawyer relationship with respect to a matter. Whether communications, including written, oral, or electronic communications, constitute a consultation depends on the circumstances. For example, a consultation is likely to have occurred if a lawyer, either in person or through the lawyer’s advertising in any medium, specifically requests or invites the submission of information about a potential representation without clear and reasonably understandable warnings and cautionary statements that limit the lawyer’s obligations, and a person provides information in response. See also Comment [4]. In contrast, a consultation does not occur if a person provides information to a lawyer in response to advertising that merely describes the lawyer’s education, experience, areas of practice, and contact information, or provides legal information of general interest. Such a person communicates information unilaterally to a lawyer, without any reasonable expectation that the lawyer is willing to discuss the possibility of forming a client-lawyer relationship, and is thus not a "prospective client." Moreover, a person who communicates with a lawyer for the purpose of disqualifying the lawyer is not a “prospective client.” 2 Resources: Susan R. Martyn, Accidental Clients, 33 HOFSTRA L. REV. 913 (2005), available at: https://pdfs.semanticscholar.org/441c/9945dc1170438778a8fe0 4956de3197f7b58.pdf. State v. Jackson, 444 S.W.3d 554, 598-601 (Tenn. 2014) (attorney- client privilege question). Stinson v. Brand, 738 S.W.2d 186 (Tenn. 1987) (malpractice decision). Akins v. Edmondson, 207 S.W.3d 300 (Tenn. Ct. App. 2006). State Bar of Calif. Standing Cte. On Prof. Resp. and Cond., Formal Op. 2003-161. “Firm that Dropped Subsidiary as Client Can’t Maintain Suit against Parent Company,” 22 Law. Man. Prof. Cond. 450 (Sept. 20, 2006). Order on Defendants’ First Motion for Disqualification of Counsel, Jones v. Rabanco Ltd., 2006 U.S. Dist. LEXIS 53766 (W.D. Wash. Aug. 3, 2006). Lawyer Dealing with Unrepresented Person May Go Beyond Mere Advice to Seek Counsel,” 25 Law. Man. Prof. Cond. 194 (April 15, 2009). Ass’n of the Bar of the City of New York, Cte. on Prof. and Judicial Ethics Formal Op. 2009-2. www.FreivogelOnConflicts.com 3 1. COCKTAIL PARTY CHATTERER One Saturday night, you drop by a cocktail party in honor of a friend who is moving out of town. Late in the party, another guest, INEBRIATE, hears that you handle bankruptcy cases. INEBRIATE starts to lay out a series of questions for you on what his rights as a creditor are in the pending bankruptcy of a customer of his business. QUESTION: Is INEBRIATE a client? 4 2. THE LOCAL EXPERT You are an expert in foreclosure law. One day, the CEO of OUT-OF-STATE BANK calls you, saying he has heard that you are the go-to gal on this kind of thing. He says that he may need to hire you. He immediately starts telling you about two problem loans that OUT- OF-STATE BANK has in your city, and asks a few questions about notice requirements, costs associated with foreclosures in your state, and some other technical questions about how the law in your state. QUESTION: Do you have a client? 5 3. THE MAN WHO WOULD BE CLIENT POSSIBLE CLIENT calls you from out of state about representation in the purchase of several large pieces of commercial property near your city’s airport. He says a company now in bankruptcy owns the parcels. You run a conflict check and call POSSIBLE CLIENT back and tell him that you are clear to take on the matter, what your hourly rate is, and that your firm will require a $5,000 retainer to be held as an advance against fees. POSSIBLE CLIENT thanks you, and tells you he will get back with you within a day or so. QUESTION: Do you have a client? 6 4. THE MAN WHO WOULD BE CLIENT, PART DEUX Occasionally, you handle a plaintiff’s personal injury case. Last week, you met with a potential new client, INJURED GUY, who was badly hurt in a workplace accident involving a piece of heavy machinery.
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