Ethical Framework for Thinking About the Practice of Law

INTRODUCTION Ethical framework for thinking about the practice of law o Key word: AGENT . A lawyer is an agent . An agent is legally significant for two reasons:  (1) A lawyer is not a principal o What you do is about the client, not you . This is complicated because we often have our own ideas about what should be done in any given situation o Not only are you an agent of your client, you are also an agent of your firm . You are one agent among others that have the responsibilities of serving a corporate entity  (2) A lawyer is an agent and not a tool o An agent is someone who bears moral and legal responsibility for their actions . A tool has no such responsibility  There is a tension created in adhering to these two prongs: o You have responsibilities to your client and your firm, but you also have a responsibility to yourself to abide by moral and legal standardsREGULATION OF LAWYERSBAR ADMISSIONWhat drives ethics rules?  Power o There is a specific dynamic to which clients may be vulnerable to abuses . Clients must trust that a lawyer is substantively competent in a given area  Substantive competence requirements cover this . Clients must also trust that a lawyer, like any other agents, uses the power afforded them in good faith and with their best efforts  Keep in mind that lawyers could easily exploit people due to lay people’s lack of knowledge about what exactly lawyers do o Here, we are looking at the vulnerability of the system . The lawyer may know the substantive law well enough, but she could take advantage of or harm the client through engaging in invidious or foolish legal processes/behavior  Character and fitness requirements cover thisSubstantive competence  Bar exam  MPRE  Graduation requirementsCharacter & Fitness – 8.1, 3.3  Bar Admission & Disciplinary Matters – 8.1 o 8.1 Applies to: . Bar applicants; and . Lawyers in connection with a bar admission application or in connection with a disciplinary matter (lawyers assisting applicant) 1 o Duties – 8.1(a)-(b) . No material false statements – 8.1(a): shall not knowingly make a false statement of material fact . Corrections of Misapprehensions – 8.1(b): shall not fail to disclose a fact necessary to correct a misapprehension known by person to have arisen in the matter . Responding to Requested Information – 8.1(b): shall not knowingly fail to respond to a lawful demand for info from the bar . Limitation – 8.1(b)  confidential info under 1.6 NOT required to be disclosed o Rule favors disclosure . Disclosing is better than concealing; concealment may be punished worse than underlying offense  There is a strong presumption in favor of transparency . EX: applicant did not disclose on bar app that he was accused of perjury in old job  disqualified; perjury would not have disqualified, but lack of candor did (Radtke)  Types of Misconduct that May Prevent Bar Admission (8.4) o Acts of Dishonesty/Deception . Truthfulness is important b/c lawyers are often put in positions of trust and not checked up on . Only way to tell trustworthiness is by looking at past acts (propensity); e.g., honor code violations, perjury, forgery o Repeated Illegal Activity . Repeated criminal violations which indicate flagrant disregard for the law and the legal system . Matter of degree (e.g., couple parking tix is fine, but 30 speeding tix probably not) o Financial misconduct . Intentional: intentional abuses of a trust relationship are very serious, e.g., embezzlement, fraud  EX: denied admission for embezzling $$ from moot court fund (In Re Mustafa) . Unintentional: not quite as bad, but reflects poorly on judgment of lawyer, e.g., bankruptcy, defaulting on loans – worried that broke lawyer may get desperate and steal $$$ from clients o Domestic violence . Indicates an analogous relationship where a person in a position of power/trust used their position to abuse someone who is vulnerable. . Also, the reputation of the bar and the maintenance of a popular public image may drive bar admissions so as to effectuate its protection at sufficiently broad boundaries.  This can also be seen in cases involving assault, etc., even when proper rehabilitation has occurred o Substance abuse/Psychological issues . Restricted by ADA; required disclosures on Bar app are very specific now  Duties of Lawyer Advising Bar Applicant o First Question  Is Bar Applicant a Client? . Based on context in which advice is given – is it given as a lawyer or as a family member, friend, etc.? o If NOT a client  Rule 8.1 Applies . Duty Not to Lie – 8.1(a): lawyer has duty not to lie to bar re the bar applicant (e.g., should not give false reference) . Duty to Report Misrepresentations -- 8.1(b): lawyer has a duty to report misrepresentations he KNOWS someone (non-client) has made in a bar app  Limitation  1.6 applies: 8.1(b) does NOT require disclosure of confidential info under 1.6 . Facilitating Bar Applicant to Violate 8.1 – 8.4(a): lawyer also has a duty not to knowingly assist someone to violate a MR  So lawyer cannot knowingly assist bar applicant to violate 8.1 (lying to bar) o If a client  Rules 3.3 Applies . Rule 3.3(b) – Candor Toward the Tribunal: a lawyer representing a client in a proceeding who knows that a person is engaging in fraudulent conduct relating to the proceeding shall take 2 reasonable remedial measures, including, if necessary disclosure to the tribunal  (exception to 1.6 confidentiality)  Policy Justifications for Limiting Bar Admission o Legitimate . Harm to clients: potential monetary harm in civil cases, and penal risks in criminal cases . Reputation of profession: want to keep liars and cheats out so the profession doesn’t look bad o Illegitimate . Limiting competition: cannot restrict access to the bar to inflate the value of legal services; can’t try to limit # of lawyers so other lawyers make more $$$ . Exclusion based on unfavorable views/lifestyles: cannot exclude someone for their exercise of fundamental rights (e.g., S.Ct. held Bar can’t exclude communist)  Limitation  Oath requirement: can exclude people who refuse to take oath of loyalty to the US b/c this is germane to legal professionBAR DISCIPLINE Bar discipline Standards  Professional misconduct – toward clients o Duty of care (competence & diligence) . Pattern or single act?  Rarely discipline is applied for a single act unless it causes extreme harm or shows extreme negligence  Most times we see discipline for a violation of the duty of care when there is a pattern of negligent acts . The level of punishment is generally low at the beginning  Repeat violations move toward greater discipline much more quickly, i.e. removal from practice (disbarment) permanently or temporarily o This is where the client protection policy kicks in o Duty of loyalty (conflicts of interest) . When you are disloyal to a client to the benefit yourself, punitive punishment is dealt out much more quickly and sternly  E.g., most states have a one strike rule for the embezzlement of clients’ funds  Professional misconduct – toward courts and others o Corruption of process (8.4(d)-(f)) . Enough misconduct to suggest that you can control the conduct of judges and other officials  This goes back to the notion of vulnerability . This is up there with the breach of the duty of loyalty with the quickness and sternness in punishment  E.g., most states have one strike rules for paying a judge o Discovery abuse, etc. is less likely to result in significant bar sanctions, unless such abuse is reported by a court o Abuse of process (cf. 3.4) . It is not just people, it is the system that the bar is also interested in protecting  Serious wrongdoing outside role of lawyer (8.4(c)) o Directly relevant to practice – clearly predictive of misconduct in the lawyer role . Deception . Fraud o Other misconduct . Keep in mind that we want to maintain the reputation of the bar itself3  So, we consider acts that may not be directly related to their performance as a lawyer o Remember that so much of the law itself depends in large regard on people’s respect for it and the legal systemReporting Misconduct and Lawyer Disability – 8.3, 8.4  Duty to Report Professional Misconduct – 8.3(a) o One of the most commented on, but least enforced norms o Lawyer has a duty to disclose info when lawyer: . Knows that another lawyer has committed a violation of the Rules of Professional Conduct . Conduct raises a substantial question as to that lawyer's (1) honesty, (2) trustworthiness or (3) fitness as a lawyer in other respects . Info is NOT confidential under 1.6  In Re Himmel: o Under the current version of 8.3, Himmel would not have been subject to sanction because the exception of the obligation to report has been extended from privileged communications (information learned in a privileged setting – a communication from or to the client) to confidential communications (information learned in direct relation to the representation of your client). . The category of confidential communications is much more robust (and includes) the category privileged communications. . EX – Procrastinating Lawyer: lawyer has duty to act “with reasonable diligence and promptness in representing a client” under Rule 1.3 – if lawyer knows his lawyer friend is NOT representing clients diligently (violating 1.3)  duty to report . EX – Alcoholic Lawyer: duty to report lawyers who have violated a MR as a result of alcoholism  raises substantial question as to lawyer’s “fitness” to practice law o Disability Defense in Disciplinary Proceedings . Causal link: must show a causal link between the disability and the misconduct – e.g., you broke rules b/c you were drunk all the time (if there’s no link, then bar won’t consider it) . Showing recovery: if bar accepts disability defense will later have to return to bar and show: (1) disability is in control, and (2) there has been no more misconduct . EX – Alcoholic Lawyer: alcoholism can be considered a disability; most often considered by bar in setting a punishment rather than the decision of whether there IS a disciplinary violationDisciplinary Authority & Choice of Law Issues – 8.5 o Disciplinary Authority – 8.5(a) . Lawyers Admitted in jurisdiction: lawyer is always subject to the jurisdiction he is admitted to practice in (regardless of where conduct occurs) . Lawyers Providing Legal Services in jurisdiction: even if lawyer is not admitted in the J/D, he’s subject to disciplinary authority if he provides OR offers to provide legal services in that J/D  Parallel Proceedings Permitted: lawyer may be subject to disciplinary of multiple J/Ds for the same conduct . Choice of Law – 8.5(b)  Conduct Arising Out of Litigation  Rules of Court Apply – 8.5(b)(1) o This is easy; for conduct in connection with a matter pending before a tribunal, rules of the J/D in which the tribunal sits apply  Conduct NOT Arising Out of Litigation  8.5(b)(2) o For conduct that does NOT arise out of litigation, choice of law decision will be based on one of two things: . Rules of J/D in which the lawyer’s conduct occurred will apply; OR . If the predominant effect of the conduct is in a different jurisdiction than where conduct occurred, rules of that J/D shall be applied to the conduct 4 o Safe Harbor Provision – 8.5(b)(2): if lawyer can make good faith argument that he reasonably believed the predominant effect of conduct was in a particular J/D, then law of THAT J/D will apply . Procedure: good idea for lawyer to document/record reason why they thought a certain J/Ds rules applied . Problem  hard to tell in advance whether safe harbor will apply; so it doesn’t provide much help MALPRACTICE & OTHER NON-BAR REGULATION OF LAWYERS Elements of Malpractice Tort Claim – RST § 48-53  (1) Duty o Is There a Duty? Duty of care arises from lawyer-client relationship (may be duties to non-clients too) . Duty to Clients – RST § 50  Current Client: lawyer owes duty of care to current client  Former Clients: lawyer may undertake continuing duties to client when representation requires later conduct o Barnes v. Turner: by doing legal work for client that required a renewal after 5 years, lawyer undertook duty to at least let client know of renewal requirement (duty of care includes on-going duty to protect client’s security interests) . Duty to Non-Clients – RST § 51  Prospective Client: lawyer might owe certain duties to prospective clients; can face liability for: o Revealing confidential info o Failing to tell prospective client that statute of limitations is about to run on his claim  Voluntary Undertaking of Duty: may create duty if (1) lawyer invites non-client to rely on legal advice, (2) non-client so relies, (3) non-client is NOT too remote from lawyer to be entitled to protection  When legal objectives of a client unquestionably intend to benefit non-clients o EX: Beneficiaries of Wills: lawyer may have a duty to beneficiaries named in a client’s will if will doesn’t carry out the testator’s intention due to lawyer’s negligence . Majority of Courts  Yes: most courts permit this  So long as the beneficiary can show injury and causation vis-à-vis proving the intent of the testator . Minority of Courts  No: some courts don’t allow this claim b/c it could hinder how lawyer advises his clients (fearful of beneficiaries suing) o EX: Beneficiaries of Trusts: situations where a lawyer’s client is a trustee and the trustee is injuring the trust’s beneficiaries by spending funds from the trust on unapproved items. . Here, the intended beneficiary can sue the lawyer for malpractice on the basis of a breach of trust.  Like all of these cases, the beneficiary is going after the lawyer because the trustee (or someone similar) is judgment proof. . The lawyer has an affirmative duty if the trustee is getting paid out of the trust fund and is maintaining the trust for the benefit of the non-client.  (2) Breach of Duty o What is the Duty? Standard of Care – RST § 52 . Lawyer must execute obligations with the competence and diligence normally exercised by lawyers in similar circumstances 5 . MR may set the standard: standard of care is often defined by the relevant Model Rule (but MR and RST § 52 discourage violation of rule to be basis for liability) o Incompetent Lawyers: a lawyer who owes a duty of care must exercise the ordinary prudence of a reasonable lawyer  representation must be competent . EX: med mal lawyer takes on tax case even though he has no tax experience  competent lawyer would have recognized they were not competent to take on the tax case and would have referred it to someone else  duty breached o Unfavorable Settlements: lawyers who make bad settlements may breach duty to exercise ordinary diligence and competence . EX: med mal attorney settles before talking to a key witness or before having the P medically examined . Courts will reopen settlement agreements to permit malpractice claims against lawyers o However, keep in mind that an unfavorable outcome does not mean that there was malpractice  (3) Causation/ (4) Injury o Representation of criminal defendants . Most J/Ds: criminal D cannot bring suit until he has post-conviction relief (e.g., exonerated, granted new trial, etc. on a procedural technicality and/or actual innocence)  The Restatement doesn’t require actual innocence . Other J/Ds: follow the actual innocence standard – criminal D not only requires post-conviction relief, but must prove his actual innocence, by a preponderance of the evidence, to recover against his criminal defense D  If lawyer simply failed to raise a legal argument (e.g., 4th amend exclusion), but client is still actually guilty  NO malpractice o Representation of civil clients . Proving injury requires a trial-within-a-trial  You have to prove that the lawyer failed to do what was necessary and, to determine the scope of the injury and the lawyer’s according responsibility, you have to prove that the lawyer’s negligence caused some kind of harm. o In essence, it is a two-prong process. It mostly becomes a medical malpractice case where all elements must be proved to show that the result should have been better for the client. Actually proving the negligence of the attorney is the secondary, and often less time-consuming aspect of the case. o Possible Exception to Injury Requirement  Fee Forfeiture: in cases where the only remedy sought is fee forfeiture, P may not need to show an actual injury to get their fee back . EX: client doesn’t actually lose lawsuit, but lawyer had conflict and should have withdrawn (negligence)  they can get money back for negligence in the air  MR Scope ¶20 o A violation of an ethics rule does not prove malpractice, but may serve as evidence proving the scope of a the lawyer’s duty and whether that duty has been breachWaivers of Malpractice Liability  Prospective Waivers – 1.8(h)(1) o Client must have another lawyer: can only execute a prospective waiver of malpractice liability if the client is independently represented in making the agreement . Requirement extends beyond informed consent or the proffering of advice to seek independent counsel . Independent representation is required (requirement extends beyond informed consent or the proffering of advice to seek independent counsel)  This stringent requirement is applied because the client may not know what she is giving up o Two factors that are considered are the lack of clarity with regards to the lawyer’s duties and the context in which the engagement letter is presented 6  So, why allow it with independent counsel? o It reflects the appropriate reality of in-house counsel negotiating a reduced fee structure in exchange for certain waivers o RST § 54: these are completely prohibited – no exceptions  Retrospective Waivers – 1.8(h)(2) o Can settle a past malpractice claim with a unrepresented or former client only if two conditions are met: . Opportunity to Seek Outside Counsel – 1.8(h)(2): lawyer advises client in writing of desirability of seeking independent counsel AND gives client a reasonable opportunity to seek advice of independent legal counsel  There is no demand that a client have independent counsel o 1.8(h)(2) is silent on a couple of things: . It doesn’t say anything about informed consent . It doesn’t say anything about fairness  Rationale for Prospective vs. Retrospective Waiver Distinction o Difficult for non-lawyers to imagine consequences of a future malpractice waiver o If it happened in the past, at least lawyer can give context to explain what happened to clientOther responses to lawyers’ misconduct  Disqualification in litigation  Post-conviction relief for client who shows “ineffective assistance of counsel”  Criminal or civil liability for participation in client wrongdoing  Statutory or regulatory provisions  …keep in mind that lawyers are subject to laws like the common person is, with very few exceptionsFUNDAMENTAL OF THE LAWYER-CLIENT RELATIONSHIPFORMATION OF THE ATTORNEY-CLIENT RELATIONSHIP Formation & Scope of the Lawyer-Client Relationship  Formation  Focuses on Client o RST § 14: lawyer-client relationship is formed when a person manifests to a lawyer the person’s intent that the lawyer provide legal services for the person, and either: . Lawyer manifests consent to representation; OR . Lawyer fails to manifest lack of consent, and the lawyer knows or reasonably should know that person reasonably relies on lawyer to provide the services o Internet Legal Advice: won’t create L-C relationship as long as lawyer doesn’t give individualized advice (just talks about general rules), and puts a disclaimer up saying it’s NOT legal advice o Documentation . Formal contract not required . Use of an engagement letter: best practices  Contents: o Identity of client o Scope of representation . It is important to note what stage of the relationship we are at  You are at the beginning of the relationship, and the attorney can still set the boundaries of his representation and the client can still accept them or not because he has informed consent7 o If you are not going to cover a matter, you give the prospective client the necessary legal advice (i.e., statute of limitations) and provide attorney references if possible o Fee o Limitations/conflicts  Who is the client? (spectrum: stranger  prospective client  present client) o Duties to Clients in Non-Profit Legal Services Programs – 6.5 . Very specific set of circumstances where lawyers may give general advice without forming and AC relationship  These types of sessions are flagged as allow because they come with very specific warnings to clients concerning the limited scope of this encounter with an attorney o Rule presumes these are self-contained matters that will not involve an on-going relationship  Distinguishing information and advice o Information does not tell somebody what to do . Gives general information about rules and where they can find further information o Information is focused on elicited facts and providing a narrow course of action . Conflicts Triggered by Knowledge – 1.6(a): conflict of interest disqualifications are only triggered if lawyer knows there is a conflict (basically a quasi-client) . Duty of confidentiality does not apply  In fact, if the information pertains to a client, you may in fact have a duty to disclose the information to the client . Duty of loyalty does not apply o Duties to Prospective Client – 1.18 . Prospective Clients – 1.18(a): A prospective client is a person who discusses with a lawyer the possibility of forming a client-lawyer relationship with respect to a matter . Duty of confidentiality – 1.18(b): Even if NO lawyer-client relationship ensues, lawyer shall not use or reveal information learned in a consultation with a prospective client . Duty of loyalty – 1.18(c): if the information would be significantly harmful to [the prospective client] in a given matter, the attorney cannot represent an adverse client in that given matter. . Conflicts of Interest – 1.18(d): initial interview should be a limited, screening interview  lawyer must show he took steps to limit exposure to confidential info to avoid getting conflicted out of representing clients adverse to prospective client  Lawyer is disqualified from representing a client IF: o Prospective client discloses info that could be harmful to his case to the lawyer; and o Client has materially adverse interests to prospective client in the same or similar case  Exception to imputation rule  1.10/1.18(d): o If a lawyer at your firm has received information from a prospective client that disqualifies him from representing another client, then your firm too is presumed to be barred from representing that client, UNLESS . (1) The lawyer who received the information took reasonable measures to avoid exposure to more disqualifying information than was reasonably necessary to determine whether to represent the prospective client; AND  Limit the initial conversation to four things: o What is your name? o Who is this claim against? o What is the nature of the claim? o When did all of this occur?8 . (2) The disqualified lawyer is timely screened from any participation in the matter and is apportioned no part of the fee therefrom; AND . (3) Written notice is promptly given to the prospective client. . OR…lawyer obtains informed consent (in writing) from new client and prospective client; . Malpractice liability: potential exists here o Duties to Present Clients (4 Cs) . Competence and Diligence – 1.1, 1.3: duty to have level of knowledge, skill, thoroughness, and preparation reasonably necessary for representation (1.1); duty to act with reasonable diligence and promptness in representing client (1.3) . Communication and Candor – 1.4, 2.1: duty to explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation (1.4); duty to exercise independent professional judgment and render candid advice (2.1) . Confidentiality – 1.6: duty NOT to reveal information “relating to the representation” of a client (any info about client) . Conflicts – 1.7, 1.8: duty to refrain from representing other clients whose interests are opposed to first client, and to refrain from self-dealing  Limiting the Scope of Representation – 1.2(c) o Lawyer may limit the scope of the representation only if: . Limitation is reasonable under the circumstances; and . Client gives informed consent o Reasonable? Have to have some reason for limitation (e.g., limiting representation to claims I have expertise in) o Must Inform Client of Other Remedies: lawyer must explain limitation of representation AND explain other possible remedies that lawyer is NOT handling (Nichols v. Keller) (workers comp lawyer had duty to explain all available remedies to client)  Allocation of Authority & Control Over Representation – 1.2(a) o Client’s Authority . Goals of Representation: Lawyer shall abide by a client's decisions concerning the objectives of representation . Settlements and Pleas: lawyer shall abide by clients decision to settle (civil) or enter a plea, testify, or waive a jury trial (criminal)  Criminal plea, testifying, waiving jury: non-delegable authority  Settlement: delegable and revocable authority (see below) o Lawyer’s Authority . Matter of basic agency law; what authority the principal (client) has given to the agent (lawyer)  Express Authority: e.g., explicit agreement stating lawyer has authority to settle o Such authority must be revocable  Apparent Authority: authority lawyer appears to have based on client’s statements to opposing side (e.g., if D tells P that lawyer gets to decide when to settle – that’s enough for apparent authority) o Assumption of Client Authority: absent an express or apparent agreement, assumption is that client has plenary control; decides all major things . Means of Representation – 1.2(a): lawyer must consult with client about how to achieve the client’s goals, but HE can make decisions about how to best achieve client’s goals  When Client Controls Means: client controls means when it will have a material impact on litigation (e.g., decision to allow a stay on a statute of limitations)  Lawyer can always refuse to do something; client can always fire lawyer o Lawyer shall not advise his client to engage in any unlawful behavior, but he may discuss the potential consequences of such activities 9 o The main thing to keep in mind is that this is basic agency lawBILLING FOR LEGAL SERVICES (LEGAL FEES) Requirements/protections for Fee Arrangements – 1.5  Procedural protections o Informed Consent . Lawyer has an obligation to ensure that client has a basis to understand the fee arrangement and the consequences of such an arrangement . Factors to Consider  Was it in writing?  Were alternative fee options presented to client?  Did lawyer explain consequences of different types of fee arrangements?  Sophistication of client?  Did the lawyer specify the types of things he would be charging for? (e.g., travel expenses) o Writing Requirement . Preferred for All Fee Arrangements – 1.5(b): all fee arrangements are preferred to be in writing . Required for Contingent Fees – 1.5(c): contingent fee agreements must be in writing  Rationale? o Timing/Changes in Fee Agreement (see below)  Substantive Protection o Reasonableness – 1.5(a) . Even if the client had informed consent (knew what they were getting into), is the fee arrangement nonetheless unreasonable in a way that merits non-enforcement?  RST is unclear on this point, but court should look at what parties could have known at outset of litigation  Underlying theme: lawyer has a fiduciary duty to client; can’t charge him unreasonably . Fee Reasonableness Factors – 1.5(a)(1)-(8)  Time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;  Likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;  Fee customarily charged in the locality for similar legal services;  Amount involved and the results obtained;  Time limitations imposed by the client or by the circumstances;  Nature and length of the professional relationship with the client (has client paid this same fee for long time?)  Experience, reputation, and ability of the lawyer or lawyers performing the services; and  Whether the fee is fixed or contingent  Other Factor  Fees Should be Truthful & Accurate o Must be a reasonable method for rounding off timing o Adequate billing mechanisms (software) o Reasonable staffing decisions (not too many people)  EX: In Re Fordham: biglaw firm charged guy $50k to do DUI case for his son; Held: fee was unreasonable b/c: (1) not a novel legal issue, (2) big disparity b/w $300k and prevailing legal rates for DUI cases (note: maybe could have overcome unreasonableness by strong showing of informed consent) . Unreasonable Billing Schemes  Overhead / Expenses: expenses are not a form of compensation; firm should try to cut costs as much as possible (e.g., firms should do in-house copying) (ABA Formal Opinion 93-379) 10 o You may charge your clients for reasonable expenses and the overhead necessary to maintain them . However, where the costs of something might be substantial – e.g., a trip to Singapore to interview a witness - you would ordinarily want specific advance consent of the client (even if the airfare for the trip was the most reasonable you could find).  In the absence of a specific agreement or in the case of any ambiguity, you, as a lawyer and fiduciary, resolve disputes that most advance the clients interest  Support Staff Hourly Fees: support staff expenses is generally overhead which is unreasonable to charge at a separate hourly rate (Columbus Bar Association v. Brooks) o Billing for paralegals is generally allowed, but not billing for legal secretaries  Non-Refundable Special Retainers: (see below) . Reasonableness of Changes in Fee Arrangements (“reasonableness” must be found at outset and post-settlement)  Must Notify Client – 1.5(b): duty to communicate to client changes in fee arrangements  Prior Notice of Potential Rate Changes? o If original fee agreement puts client on notice about potential changes  courts will be more deferential o BUT if the client has NO notice of potential fee changes  court will scrutinize reasonableness  Stage of Lawsuit? o How much would it burden the client to change lawyers at this stage of the lawsuit? o If lawsuit reaches stage where client has no choice but to stick with lawyer  court won’t allow a fee raise 2 Possible Consequences of Unenforceable Fee Agreements  No Fee / Fee Forfeiture – RST §§ 37, 40: only occurs when there is some serious ethical misconduct (e.g., lawyer was trying to steal from the client, lawyer tried to bill for paralegal)  this is rare o Fee forfeiture cases generally involve a lawyer’s breach of his duty of loyalty to his client via overreaching  Recovery through Quantum Meruit: if the rate problem was not the lawyer’s fault, then the court will decide on something reasonable, based on what a reasonable lawyer would have charged (difficult in contingent fee context b/c you don’t know what is owed) o These cases generally involve fee disputes outside of violations of the duty of loyalty.Types of Fee Arrangements  Hourly billing (biglaw model)  Fixed arrangements for discrete services (e.g., for a will)  Combination models (e.g., hourly + contingent)  Retainer Fees o General Retainer: fee is paid solely to secure exclusive availability of the attorney; fee is earned when paid and non-refundable . Generally, sophisticated clients use general retainers, rather than non-refundable retainers  Thus, the heart of this distinction is the sophistication of the client with whom the lawyer is contracting o Special Retainer: advanced fee for services to be performed . 1.16(d): at conclusion of representation, lawyer should refund any advance fee that has not been earned11 . Non-Refundable Retainers  Problematic: courts are very skeptical of these; many view it as void against public policy for burdening client’s right to discharge counsel; also “unreasonable” if lawyer didn’t earn it  Contingency Fees o Requirements – 1.5(c): contingent fee agreements must (1) be in writing, (2) state the method used to calculate fee, (3) how expenses are handled, (4) at conclusion of case, lawyer must send notice to client explaining recovery and how fee was determined o Contingency Based on Gross vs. Net Recovery . If lawyer’s fee is a percentage of client’s gross recovery (total recovery) court will be suspicious of whether there was informed consent . More reasonable to get percentage of client’s net recovery (e.g., client gets $100k (gross) – $30k (expenses) = $70k (net)  lawyer gets percentage of $70k) . Tiering of Contingency Fees  Tiers for Recovery  Permissible: ok, sometimes required, for lawyers to tier contingency fee based on amount of recovery (e.g., $20k recovery, lawyer gets 40%, $10k recovery, lawyer gets 50%, etc.)  Including Settlement  Suspect: courts are suspicious when tiered contingency fee agreements include settlements; lawyers cannot use tiers as a penalty to coerce clients to settle (e.g., lawyer gets 30% for settlement, but 80% if we go to trial) . Policy Limitations on Contingency Fees  Prohibited in Divorce Cases – 1.5(d)(1): lawyers shouldn’t have a monetary incentive to press parties through a divorce; strong policy disfavoring divorce  Prohibited in Criminal Defense – 1.5(d)(2): if criminal D lawyers only got paid for not guilty verdicts, they would be dissuaded from entering plea agreements; also, criminal lawyers want to be paid up front usually . Timing  “Reasonableness” determination is made at o Outset, AND . Generally determined by looking at the percentages generally taken in that locale o Post-settlement . At the outset of the relationship, was there any material uncertainty about the outcome, etc?  On the other hand, if there was no uncertainty about the outcome, range, or defendant’s responsibility, then even a $3 million recover may instead be found reasonable o A fee may only be found unreasonable when there is no uncertainty aboutHANDLING CLIENT PROPERTY; TERMINATING THE RELATIONSHIP  This section is involves situations in which the client may rightfully instill significant trust in his attorney as his fiduciary o Much different than the relationship…there exists a sense of asymmetry cutting against the lawyerHandling Client Property – 1.15  4 Steps for Handing Funds: (1) segregate, (2) notify, (3) account, (4) distribute o (1) Segregate . 2 Required Lawyer Accounts  Operating Account: for lawyer/law firm expenses12  Trust Account: for client funds; only money ever allowed in trust account is client money OR money that’s disputed . No commingling: operating funds can never commingle with trust funds; rationale: prevent commingling so we can tell who owns what  prevents lawyer theft, and also protects clients money from lawyers creditors if he owes a debt  Most state bars have a preemptory sanction –disbarment – for failing to segregate client and lawyer funds . Costs of segregation and protection can be passed along to the client, so long as he is so informed. o (2) Notify . Lawyer must notify client he’s received the money once he gets it and how the lawyer plans to get the money into the client’s hand . Tell him what recovery was, that you’re depositing in trust acct o (3) Account . Keep track of who got what money when the money was distributed . Complete records of trust account funds and other property shall be kept by the lawyer and shall be preserved 5 years after termination of the representation – 1.15(a) . Two kinds of trust accounts  Individual client accounts o If there is enough money to generate enough interest to offset the administrative fees of opening a separate account, then an individual client account must be created . The interest generated by such an account belongs to the client  General trust account – IOLTA (interest on lawyer trust account) o If there is NOT enough money to generate enough interest to offset the administrative fees of opening a separate account, then an IOLTA account must be created . Unrealistic to apportion administrative costs and interest gains among clients  Interest gains are used to cover administrative costs, or are donated to state bar organizations o (4) Distribute . Undisputed Property  Promptly Distribute: upon receiving property, lawyer shall promptly distribute all portions of the property as to which the interests are not in dispute – 1.15(e); upon request by the client, shall promptly render a full accounting regarding such property – 1.15(d)  Failure to disperse is a problematic as dispersing excessive funds into your account because the client will not be properly notified of what is being charged to him o Also, when you fail to disperse, the money is still determined to be yours, thus when you leave that money in the trust, the available funds turn into “commingled funds.” When funds in a trust are commingled with personal funds (i.e., the lawyer’s here), creditors gain access, that they previously did not have, to those funds. . Disputed Property  Retain & Segregate: if a person (including the lawyer) claims an interest in the property, lawyer shall be keep only the disputed portions of property separate until dispute is resolved  Handling Other Property – 1.15 (cmt. 1) o Lawyer should hold property of others with the care required of a professional fiduciary o Securities should be kept in a safe deposit box, except when some other form of safekeeping is warranted by special circumstances  EX – Improper conduct: lawyer gets in fee dispute with client; keeps client’s ring as collateral and wears it  improper handling of client property; (1) ring was NOT in dispute, so no reason to withhold, (2) must exercise due care w/r/t item (should have put it in safety deposit box if in dispute, not wore it) Terminating the Relationship: Withdrawal – 1.16 13  Notice Requirement: withdrawing attorney shall comply with applicable law w/r/t to giving notice to/obtaining permission from court – 1.16(c)  3 Categories of Withdrawal o Mandatory: Must Withdraw – 1.16(a) . Representation will result in violation of the rules of professional conduct or other law . Lawyer's physical or mental condition materially impairs the lawyer's ability to represent the client; or . Lawyer is discharged  The client has the right to discharge o However, if a client fires a firm, not for cause, on the eve of trial involving a contingent fee, the fired firm is still owed for the work they did leading up to trial . Keep in mind, that it will also owe the new firm its apportionment of the contingent fee  Exception  Incompetent Clients – 1.14(b): may need to take protective steps if client can’t act in his own interest o Permissive: May Withdraw – 1.16(b) . Harm to Client Material – 1.16(b)(1)  Withdrawal can be accomplished without material adverse effect on the interests of the client . Harm to Client Immaterial – 1.16(b)(2)-(7)  Client persists in a course of action involving lawyer's services that lawyer reasonably believes is criminal or fraudulent  Client has used the lawyer's services to perpetrate a crime or fraud  Split between MR 1.16 vs. RST § 32(4): MR  following reasons apply irrespective of harm to client vs . RST  lawyer may not withdraw if it would cause harm that significantly exceeds harm to lawyers/others in not withdrawing o Client insists on taking action that lawyer considers repugnant or with which lawyer has a fundamental disagreement o Client fails substantially to fulfill an obligation to lawyer regarding lawyer's services and has been given reasonable warning that lawyer will withdraw unless the obligation is fulfilled o Representation will result in unreasonable financial burden on lawyer OR has been rendered unreasonably difficult by client o Other good cause for withdrawal exists o Prohibited: Must NOT Withdraw – 1.16(c) . Order by Tribunal: when ordered to do so by a tribunal, a lawyer shall continue representation notwithstanding good cause for terminating the representation  Post-Termination Duties to Client o 1.16(d) Duties: Lawyer shall take steps to the extent reasonably practicable to protect a client's interests, such as: . Giving reasonable notice to the client . Allowing time for employment of other counsel . Surrendering papers and property to which the client is entitled . Refunding any advance payment of fee or expense that has not been earned or incurred . Limitation  lawyer may retain papers relating to the client to the extent permitted by other law o Duty to reduce prejudice to client: e.g., may need to find another lawyer if SOL is running; prepare form for client to file pro se, etc. o Duty of Confidentiality to Former Client – 1.9(c): lawyer shall NOT use info relating to rep of former client to client’s disadvantage OR disclose such info (unless permitted or required under these rules) Securing and Collecting Legal Fees  Security Interests in Client’s Property – 1.8 14 o Limitations – 1.8(a)(1)-(3): when lawyer gets a security interest in client’s property, 3 conditions must be met: . Reasonableness + Full disclosure: (1) terms on which the lawyer acquires the interest are fair and reasonable to client and are fully disclosed, and (2) transmitted in writing in a manner that can be reasonably understood by client (i.e., court will assess whether security taken is proportional to likely liability of client to lawyer) . Opportunity to Consult Another Lawyer: client must be advised in writing of the desirability of seeking and is given a reasonable opportunity to seek the advice of independent legal counsel . Informed Consent: client gives informed consent, in a writing signed by the client, to the essential terms of the transaction and lawyer's role in the transaction, including whether lawyer is representing client in the transaction o Interests in Lawsuit  Prohibited – 1.8(i) . Lawyer shall not acquire a proprietary interest in the cause of action or subject matter of litigation lawyer is conducting for client  Rationale: don’t want lawyer to usurp client’s power to define objectives of lawsuit . Liens  Permissible – 1.8(i)(1): lawyer may acquire a lien authorized by law to secure the lawyer's fee or expense (varies by state law)  2 types of Liens: o Retaining Lien . Holding onto property until client pays for services . Many jurisdictions recognize these liens, and also, that the property retained by such a lien may be both attorney work product and client work product  However, the Restatement disagrees o R. 43: The lawyer may place a retaining lien on papers prepared by the lawyer; however, the lawyer cannot place a retaining lien on papers the lawyer has not prepared (those papers which do not fall under the work-product rule). . This is the minority rule though. Most states allow lawyers to withhold all paperwork, except paperwork needed in cases of extreme emergency.  And, the MR punts o MR 1.16: lawyers may retain papers consist with state law . Attorney Work Product: includes deeds, wills, briefs, memos, etc. – all jurisdictions allow attorneys to hold onto this (not client’s property until he pays) . Client Work Product? Courts are split here; MR says lawyer may retain papers relating to the client “to the extent permitted by other law” – 1.16(d)  Retaining Lien jurisdictions: many jurisdictions say if anything is in the law firm’s possession (including client property), they can hold onto it pending payment (might give exception for hardship on client)  No Retaining Lien jurisdictions: jurisdiction that don’t recognize retaining liens say attorney can only retain attorney work product, cannot retain material created by client b/c it’s client’s property (RST § 43; CA; DC) o Charging Lien . Lien on the proceeds/recovery of litigation; way for lawyer to ensure opposing party pays him before paying client . 2 requirements15  Informed Consent: client must give consent to the charging lien at the outset of the fee arrangement; lawyer must explain consequences of the charging lien (RST § 43 requires written contract)  Notice to Payer: must give notice to the party paying the lien (i.e., P lawyer must tell D you have a lien on the proceeds) o Once such notice is given, the person paying the judgment or settlement is liable for the attorney’s fees if that person pays the entire judgment or settlement directly to the attorney’s client.  Suing to Collect a Fee o Potential malpractice liability: lawyers who sue to collect a fee risk the client bring up malpractice as a defense/counter-claim o Disclosing Client Confidences – 1.6(b)(5): may disclose confidential info when in litigation against the client (i.e., to establish a claim or defense) . Limited disclosure: lawyer can disclose only that which is necessary to establish a claim or defense  e.g., lawyer can’t coerce payment by threatening to give client info to IRS (Boelter) o Mandatory ADR for Fees  Permissible: local Bar authority can require mediation or arbitration for fee disputes, and lawyers are encouraged to use arbitration of it’s only permissive (1.5, cmt. 9) DUTY OF CONFIDENTIALITY Attorney-Client Privilege – R. 68-72  Elements – RST § 68 (the burden is on the client (lawyer) to prove that the information is privileged) o (1) A communication (R. 69) . Any expression by a privileged person conveying information to another privileged person, and any document revealing such an expression  Its what you hear, not what you see, that is privileged o The fact that you have seen your client is completely confidential, but such information is not privileged and thus testimony regarding it can be compelled . A defense lawyer may be compelled to testify how their client looked when he saw his client  This is important because if you have observed things that may lead to you being called as a fact witness, you may have to withdraw due to the fact that you won’t be able to participate in the matter all the way through . What is privileged?  What the lawyer and client said to one another in a particular communication (but not the underlying facts  Lawyer’s response to client  Lawyer’s judgments/impressions . What is NOT privileged?  Underlying facts known by the privilege holder (e.g., client may not refuse to disclose facts within his knowledge b/c he incorporated that fact in a communication with an attorney)  Lawyer’s factual observations (e.g., client had cut on his face)  Identify of client o Exception  Last Link Doctrine: identity of the client is privileged if the disclosure of the client’s name provides the last evidentiary link between the client and the commission of a crime (Baird v. Koerner) (not all courts follow this doctrine though) . EX: E.g., Drunk driving cases where an attorney negotiates on behalf of his client with the DA; then, the plaintiff files suit against a John Doe and serves a subpoena on the criminal defense attorney to compel the name of her client. 16 In this case, where everything has been laid out and all that is needed is a name, courts generally hold the client’s identity to be privileged information. o (2) Between privileged persons . Lawyer (includes non-lawyer who client reasonably believes is a lawyer) . Client (includes prospective clients) . Agents who facilitate communication  Will be part of the privileged circle  Translator – generally privileged  Accountant – it depends o There are times when the accountant is translating for either parties and thus -- communication would be privileged in this situation . You have to be careful to make sure that the accountant is there to facilitate communication, rather than some kind of adversarial purpose  Parents – it depends o Is the parent there to make the child comfortable? Is the parent there to advocate an interest? o Especially likely to impair privilege in situations where parent not asked to be there and/or child is an adult . Agents of lawyer for representation  Generally, receptionists, paralegals, other people hired by the lawyer/law firm, etc. will not destroy AC privilege o (3) Made in Confidence . Must have a reasonable expectation of privacy in the conversation (i.e., must reasonably believe only privileged persons will learn contents of communication)  You must have a reasonable belief that information is being communicated between only privileged individuals AND that you have made a reasonable effort to protect against unintended disclose to non-privileged individuals . Breaking confidence: privilege is lost if communications are made in presence of non-privileged persons (e.g., in restaurant, public places, airplanes, meta-data in word docs, etc.)  Limitation  Consultation with other lawyers re ethical duties: no breach of A-C privilege if you’re discussing your ethical obligations with another lawyer (see also 1.6(b) (4)) o (4) For the purpose of legal assistance . Statements must be made for purposes of giving or obtaining legal advice . Lawyers acting in other professional roles: if lawyer serves multiple roles  lawyer has duty to clarify whether he’s acting as a lawyer who is rendering legal advice (e.g., General Counsels, HR Directors, etc.)  Inapplicable to lawyer-lobbyists: when lawyers act as lobbyists, there is no A-C privilege protection (Marc Rich case) o (5) The privilege has NOT been waived . Common Interests & Joint Clients  Common Interest Privilege – RST § 76 o 2 or more clients, each client has his own lawyer o People who have common interests in litigation (on same side) can invoke privilege as to their joint communications o Scope: only protects communications involving lawyers; does NOT protect conversations solely b/w clients o Waiver Limited: no unilateral waiver; so if one criminal D settles, he one cannot divulge privileged conversation with common interest co-clients 17 o Exception – RST § 76(2): if parties end up in litigation against each other, then privilege won’t apply  Joint Clients o Multiple clients sharing ONE lawyer in same case o Same principles as common interest apply, one distinction o Distinction from Common Interest  1.4 vs. 1.6 Conflict: duty of confidentiality (1.6) and duty of candid communications w/ client (1.4) conflict when one lawyer represents multiple clients in same case . Solution = Informed Consent: tell joint clients that you have to tell each client about what the other one says – NO confidentiality against each other . What happens when a lawyer possesses a confidence from one client that would be useful to the other?  MR…correct approach o Lawyer is required to share information related to the representation with each co- client lest the client left in the dark be disadvantaged  ABA o Lawyer cannot share information and must withdraw . Exceptions to Privilege  Burden of Proof: burden of asserting privilege is on privilege holder, but burden of proving exception is on opposing side (so always assert)  Crime-Fraud Exception – RST § 82: no privilege when o Client consults lawyer for the purpose, later accomplished, of obtaining assistance to engage in a crime or fraud, OR o Client uses lawyer’s advice to engage in or assist a crime or fraud (Lewinsky case) o Testamentary Exception -- RST § 81: privilege can be breached to show a testator’s intent (when there is a dispute amongst beneficiaries; this usually occurs within the will interpretation context) (note: privilege survives death of client – Swidler & Berlin) . However, a court may refuse to require an attorney to testify if the interest of the decedent are adverse (usually within the context of privacy) to that of the personal representative. . Waiver of Attorney-Client Privilege  Client Must Waive: client holds the privilege, so only client can waive it  How Can it be Waived? o Privileged Communication is Put At Issue . Once client puts a particular communication at issue in the litigation, privilege is waived as to that communication . E.g., person charged with tax avoidance argues he didn’t have criminal intent b/c he relied on advice of counsel  client cannot invoke privilege as to the attorney’s advice o Voluntary Disclosure . E.g., X talks to lawyer, leaves firm and tells all his buddies at work about it  waives privilege o Inadvertent Disclosure / Accident . Common in corporate lit; corp accidentally mails / e-mails privileged docs during discovery . 3 Approaches  Send it back (some states)  Finders keepers (other states)  FRE 502(b) – Middle ground (Fed): did the disclosing party take reasonable steps to prevent disclosure and to rectify error  look at disclaimers in e-mails, procedures for doc production, how quickly error was discovered, steps taken to remedy disclosure, etc.18  Ethical obligation of a lawyer who receives confidential information o 4.4(b) punts this question . However, there is one thing you have to do: inform the sender that they have sent you confidential information.  So, one thing you have to provide is notice. . Yet, the law is all over the place with regards to what you have to do next.  RT suggests not using such information for all it is worth. This is because in jurisdictions that use reasonable care to determine if something is disclosed, the information disclosed may still be considered privileged and thus you (and even your firm as a whole) may be disqualified from the case (and lose the fee owed to you). o Approach to take: turn it over and notify the other side.  Scope of the Waiver o Subject-Matter Waiver . When client waives privilege to a communication, he might waive privilege as to entire subject-matter of disclosed communication (depends on state rule) . Disfavored in Fed Proceedings -- FRE 502(a): SMW only allowed if: (1) waiver is intentional, (2) disclosed & undisclosed communications concern same subject matter, and (3) they ought “in fairness” to be considered together o Selective Waiver  Agreement to waive privilege to a select group of people (e.g., gov’t agencies) – corps didn’t want private plaintiffs bar getting a hold of it (DOJ changed policy though)  Not in FRE; so if party does disclose to gov’t, it’s in the public domainWork Product Doctrine – RST §§ 87-93  2 Elements o Created by lawyer or agents of lawyer . Who created it? Where did it come from? . Risky to have client act as agent of lawyer, but it’s possible o For litigation OR in reasonable anticipation of litigation . Why was document created? . Was it produced in ordinary course of business?  NO WP  Ordinary business records are not WP  E.g., HR Director, who happens to be lawyer, creates employment evaluations  not WP . Was it produced with present or future litigation in mind?  WP protected  Particular opponent in mind?  Particular type of legal problem in mind? . Underlying facts?  not WP  Protects lawyers assemblage of the underlying facts o E.g., interviews with witness and your corresponding notes  A witness’s testimony itself is not protected  2 Types of Work Product o Ordinary Work Product – RST § 88 . Just facts that attorney writes down – everything other than thoughts and mental impressions of lawyer . When Discoverable? Discoverable if opposing party shows: (1) substantial need for the material to prepare for trial, and (2) inability to obtain substantial equivalent of material without undue hardship  not a high standard; ordinary WP is likely discoverable o Opinion Work Product – RST § 8919 . Lawyer’s opinions and mental impressions . When Discoverable? Must show extraordinary circumstances to obtain opinion WP (e.g., witness dies) – courts are very reluctant to allow discovery here . WPD as a Litigation Tactic: courts are suspicious are lawyers who try to turn everything into opinion work product  court can review in camera to decide what should be disclosed o Justification for work product privilege . Trying to avoid the “free rider” problemDuty of Confidentiality – 1.6  Fiduciary obligation to protect (cf. MR 1.15) o Obligation of lawyer . You must make sure that the organization itself is designed to protect confidential information  This includes maintenance of systems and the hiring of people maintaining those systems, etc. o Obligation to create and maintain systems . Getting policies in place to train employees . You have to make sure people follow these policies . You have to makes sure these policies work  Also, if there has been an intrusion into your systems, you have to have remedial measures designed to cure such a problem  Scope o Prohibits disclosure of information “relating the representation of a client” o All communications are presumed confidential (opposite of A-C privilege; burden on privilege-holder to prove privilege) o Survives death and end of L-C relationship (like privilege)  Exceptions to 1.6 (distinguish from exceptions to AC privilege) o Consent of Client – 1.6(a) . Express: if disclosure poses risk of material harm, lawyer should get informed consent of client . Implied: client impliedly consents to lawyer disclosing information needed to carry out representation (i.e., info that poses no risk of material harm to client)  Identity of Client: it is confidential, but usually client would impliedly consent to lawyer revealing client’s identity (exception  last link doctrine: client’s identity would link him to the commission of a crime) o Mandatory Disclosures (lying in court) . Lying to Tribunal – 3.3(b)-(c): lawyer must take reasonable measures, including disclosure of confidential info, if client engages (or plans to engage) in criminal or fraudulent conduct relating to an adjudicative proceeding o Discretionary Disclosures – 1.6(b): may disclose to: . (1) Prevent Death or Harm: prevent reasonably certain death or substantial bodily harm (not imminent)  There must be some sense of a “real threat” o There must be some kind of proximal relationship between the information you have and the threat allegedly posed by your client . MR no longer requires a criminal act on behalf of the client and the threat’s effect no longer has to be “immediate”  However, there still has to be a sense of closeness with regards to the information and the threat posed…some level of detail and certainty . (2) Prevent Commission of Crime or Fraud: prevent client from committing crime or fraud that is:  Reasonably certain to result in substantial injury to the financial interests or property of another, and20  In furtherance of which the client has used or is using the lawyer's services ( Key requirement) . (3) Prevent Injury from Crime or Fraud: prevent, mitigate or rectify substantial injury to the financial interests or property of another that is:  Reasonably certain to result OR has resulted from the client's commission of a crime or fraud  In furtherance of which the client has used the lawyer's services (lawyers services are already used) . (4) Obtain Ethical Advice: secure legal advice about the lawyer's compliance with these Rules . (5) In Litigation Against Client: Establish a claim or defense on behalf of the lawyer in a controversy between lawyer and client . (6) Legal Compliance: Comply with other law or a court order o Information has become “generally known”  Using Client Confidences o Ethical Rules  triggered by disadvantage to client . Current Client – 1.8(b): lawyer shall NOT use confidential client info to client’s disadvantage unless client gives informed consent  Lawyer will only be disciplined if there is harm to client  Limitation  Fraud – 8.4(c): even if no harm to client, if lawyer engages in fraud under statutory law by using client’s confidential info  discipline (O’Hagan) . Former Client – 1.9(c): lawyer shall NOT use info relating to rep of former client to client’s disadvantage OR disclose such info unless it is generally known o Civil Liability – RST § 60  disadvantage to client immaterial . Reflects substantive agency law . If lawyer (1) uses confidential client info, (2) for pecuniary gain, (3) without client’s consent  lawyer must disgorge profitsConfidentiality and the Entity as a Client  Corporate Attorney-Client Privilege o Holder of Privilege  Corporation . Corp is the client, so it holds the privilege (i.e., corporate board)  Get in writing who exactly you represent . When a corporation is sold, NEW corporation buys the privilege o Scope of Privilege: Upjohn Standard . Employee  Lawyer – Privileged: communications from employees INTO corporate counsel that relate to employee’s work with the corporation-client are privileged . Lawyer  Employee – NOT privileged: communications from counsel TO employees are NOT always privileged; ONLY things that are privileged is legal advice given to employee relating to their work for the corporation  Must advise employees as to whether you’re giving advise as corporate attorney or personal attorney . Former Employee  In-House Counsel = Maybe Privileged: when former employee speaks to in-house counsel, it will be privileged only if employee is speaking because of continuing obligations to corporation o RST § 73 Standard: privilege extends to: (1) conversations otherwise privileged, (2) between agent of organization and privileged person, (3) concerns a legal matter of interest to organization, (4) is only disclosed to (i) privileged persons, and (ii) other agents of organization who reasonably need to know of communication to act for organization o WPD Applies: still available for materials prepared by corporate counsel in anticipation of litigation BUT it’s discoverable (privilege is absolute)  Government Attorney Privilege 21 o Holder  Gov’t Office: gov’t is the client; so it holds the privilege . e.g., Pres could not invoke privilege for conversations he had with white house counsel (Clinton whitewater case)  Lawyer Representing Trusts o Privilege Applicable: a trust is like an organization, and trustee can have privileged communications with counsel o Beneficiary generally cannot gain access to these communications . Exception  Alleged Breach of Trust – RST § 84: in suit in which beneficiary charges trustee w/ breach of fiduciary duties, communications are NOT privileged if: (1) relevant to claimed breach, and (2) made b/w trustee and lawyer retained to advise trustee concerning administration of the trust (NOTE: only applies if lawyer is representing trust, not trustee personally) CONFLICTS OF INTERESTS Overview  Is the Person a Client? o Current or former client?  Is there a Conflict? o Actual or potential conflict? o Direct adversity or material limitation?  Are the Conflicts Non-Waiveable? o Inadequate representation catch-all o Adverse litigants in same case o Prohibited by law  Waiving Conflicts o Can lawyer give adequate representation? o Client gives informed consent, in writing? o Current waiver?  favored; Prospective waiver?  disfavored  Direct or Imputed Conflict? o Screening? (not always permitted)  Remedy for Non-Waived Conflicts? o Disqualification (withdrawal won’t cure conflict – hot potato rule) o Fee forfeiture (based on breach of fiduciary duty) o Bar discipline (rare) o Malpractice liability (client must show damages)Current Clients – 1.7  Rationale driving the distinction between current and former clients o With respect to present clients, there is not just the effect on confidentiality, there is the effect on loyalty. . Present clients are entitled to the attorney’s loyalty, not just the protection of your confidences and property.  This is key to all these cases and highlights the distinction between the treatment of current and former clients within this realm.  Four categories nothing  prospective client  former client  current client o The according duty is heightened as you go up the scale  Who is a Current Client?  Factors – IBM v. Levin o Frequency of dealings in the same kind of legal matter (e.g., 1 case years ago or multiple cases on same matter?) 22 o Whether disengagement letter was sent o Repeat customer or fixed term deal?  Is there a pattern of repeated retainers? . Is there a Conflict? – 1.7(a)(1)-(2)  Direct adversity: clients are directly adverse to one another (e.g., 2 clients are on opposite sides in any litigation or transaction)  Material limitation: there is a significant risk that the representation of one or more clients will be materially limited by the lawyer’s responsibilities to: o Another current client o A former client or a third person, or o By a personal interest of the lawyer o Look at potential harm to client: has lawyer gained access to client confidences? Will lawyer be so limited that representation isn’t competent? Is lawyer biased to a client or his own interests?  Effect on confidentiality  Effect on single-minded zeal o Examples . Positional Conflicts: type of material limitation  representing clients who have adverse legal interests (e.g., representing client X in certain lawsuit may set bad legal precedent for client Y; representing 2 clients in 2 different appeals taking opposite positions on same legal issue before same appellate court) o What about in different appellate courts? . Pretty small odds that the US SC would grant cert. and take your case.  However, (1) is it a conflict? (2) would a reasonable lawyer do it? (3) did you disclose to your client? o You have a duty to disclose if the first of the two cases is likely to serve as persuasive authority in the second case. . Client Involved: where one client is involved in another client’s litigation (e.g., a witness against them in a trial) . Personal-interest Conflicts: lawyer has some personal interest that conflicts w/ repping client . Is the Conflict Non-Waiveable?...consentability  Catch-all: Inadequate Representation – 1.7(b)(1): where lawyer does NOT reasonably believe he can provide competent and diligent representation to each affected client (risks outweigh advantages) o Scope: zero-sum situations; lawyer cannot advance a position favorable to one client without harming another (e.g., by violating duty of competence, diligence, confidentiality, etc.) o EX:  Cross-examining a client in a separate case: there may be a risk that being gentle on cross would disadvantage your current client  Voting against client’s interest: A vote is NOT something that needs to be cleared with your client in advance  Drafting Client A’s will that disinherits Client B: It is NOT adverse for someone to come to you and say that they want to disinherit your client o Do you have a duty to tell Client B that she has been disinherited when she comes to for you for advice with the impression that she will inherit under the will (a mistaken assumption)? . Its in your best interest to refer this matter to another attorney. This way you do not violate your duty of loyalty to either client. o However, this is not the case when you are asked to give advice in such a matter, rather than simply reflecting Client A’s wishes.23  Client v. Client in Same Litigation – 1.7(b)(3): same lawyer cannot be sitting on both sides of table in same litigation o Non-litigation Context – 1.7 (cmt. 28) . Clients can consent to joint representation in non-litigation context (e.g., transactional, estate planning, divorce, etc.) . Consentability is a question of degree  e.g., are clients’ interests fundamentally antagonistic to each other, or have they already agreed on material terms?  Prohibited by law—1.7(b)(2): covers situations like former government lawyers prohibited by criminal statutes to represent certain clients . Waiving Conflicts  Requirements o Adequate Representation – 1.7(b)(1): lawyer reasonably believes he can represent both clients competently and diligently o Client’s Written Informed Consent – 1.7(b)(4) . Both clients must give informed consent to waiver of conflict . Must be in writing . Must know the consequences; both advantages AND disadvantages of lawyer’s representation  2 Types of Waivers o Current Waiver (favored) . Easier to predict potential conflicts, so it’s easier to get informed consent from client o Prospective Waiver (disfavored)  Prospective Waiver (disfavored)  what you should have o Waivers should NOT be treated as boilerplate o Former client is legally sophisticated (e.g., corp) o Has opportunity to consult with independent counsel o Person understands consequences of waiver (can’t disqualify me) o Waiver should be definite and narrow  the more definite the prospective waiver is, more likely it is enforceable . Good: our firm represents GE, GE does some similar things that you do, ask client to waive conflicts with GE (i.e., agree not to disqualify us) . Bad: you waive all conflicts that may ariseJoint Clients  Represent clients as a couple, not independently o Joint representation v. representation of concurrent clients re: information sharing . Information is shared in a situation involving JR, information is not shared in a situation involving the representation of concurrent clients.  Look at whether advantages of joint rep outweigh the adversity (e.g., less expensive, more efficient, no antagonism b/w parties)  Limited Confidentiality & Privilege o Presumption with joint clients  NO confidentiality or privilege between the co-clients – RST §§ 62 & 75 o Must explain at outset of relationship for informed consent (one of the disadvantages)  Per se and not per se impermissible joint representations o EX – Private Adoptions: huge potential for conflict b/c lawyer must protect birth mother’s consent, but typically is paid by adopting parents . Per se impermissible o EX: Commercial Real Estate: Buyer and seller simply cannot be represented by the same attorney . Per se impermissible . RT thinks that this has to be fact-specific and should not be per se impermissible 24  Similar to the divorce context o EX – Divorce: courts are split here; some say it’s non-waiveable conflict even in an uncontested divorce to have same lawyer; others say it’s permissible early on, but not all the way through . NOT per se impermissible  Termination of waiver within the joint representation context o With very few exceptions, a client can terminate waiver whenever they please . This is just a species of the principle that a client can fire you anytime he wants to . When consent for joint representation is revoked  Ordinarily, you withdraw from representing both clients  Exception o (1) If client who withdraws their consent has no cause for doing so; and o (2) Withdraw will cause material harm to the other client o (3) client seeking to fire the lawyer will suffer no real harm in being unable to do so o EX: . This only happens in cases involving joint civil defendants who withdraw on the eve of trial when there is no good reason for the discharge, withdraw will cause material harm, and the client seeking to fire the lawyer will suffer no real harm in being unable to do so. o However, sometimes you are the one who has to terminate the waiver . Change of circumstances  You have to withdraw when an actual conflict arises and the interest of the jointly represented parties begin to diverge o In these cases, you have to withdraw from representing both . If the basic condition of transparency no longer exists, then you have to withdraw  EX: o Stupid client situation: what if wife tells you something secret under impression you can’t tell husband? Response? . Withdraw: withdraw b/c there’s a conflict . Limited Disclosure: disclose to co-client that wife has told you info that makes it impossible to represent both parties (can’t disclose what she said) Former Clients -- 1.9  Overview o Is the person a current or former client? o Representing current client in same matter you repped former client? o Representing current client in substantially related matter? o Are the client’s interests materially adverse? o Was there a valid waiver? (informed consent in writing)  Former Client Conflicts -- 1.9: lawyer who has formerly represented a client in a matter shall not thereafter represent another person in: o Current or Former Client? . Factors – IBM v. Levin  Frequency of dealings in the same kind of legal matter (e.g., 1 case years ago or multiple cases on same matter?)  Whether disengagement letter was sent  Repeat customer (continuing issues) or fixed term deal? o (1) The same or a substantially related matter 25 . Same Matter  Can’t represent a current client in the same matter you represented former client in, includes: litigation, transaction, issue you gave legal advice on . Substantially Related  Ultimate Issue  Exposure to Relevant Confidences: will lawyer’s possession of former client’s confidences give material advantage to present client? o RST § 134(2): matter is substantially related if there is a substantial risk that rep of current client will involve use of info acquired during rep of former client, unless that info has become generally known o Factors considered . Specific type of legal claim . Facts at issue (secret or public?) . Extent of Lawyer’s Knowledge of Former Client  Corporations: how much does lawyer know about how corp is governed? How power is allocated? Who can control others?  Individuals: does lawyer know potentially embarrassing stuff about former client that . Proximity in time of representations: how long ago did lawyer represent former client?  3 situations where there may be some exposure to relevant confidences: o (1) Same work . Does the current representation involve the same work? . There is a body of cases where lawyers come back and attack work that they have done in the past.  All these cases involve a lawyer putting together an agreement, and, at some point in time, comes back to attack that agreement on behalf of another party  Why don’t we let lawyers do this? o We don’t want anyone to have any incentive to build in weaknesses that they could later attack o (2) Same facts . This category makes up the bulk of these cases . Claims that may not involve the same two parties, but you are still making use of information that was involved in previous representations  This could involve specific pieces of information (related to the opposing parties’ specific vulnerability) or very broad knowledge  May involve facts related to the alleged wrongdoings, and may also involve facts pertaining to how the opposing party would respond to certain kinds of complaints, incidents, etc. . Ways to handle this situation  Actual facts o A party must allege that an attorney has knowledge of actual facts that would be harmful . This seems to defeat the purpose of confidentiality . Even if done in in camera review, the presentation of actual facts is done in front of the judge that you will be in front of in trial o So, what do we do…  Presumption o If there is a likelihood that facts gained from the previous representation would be relevant to your current representation, 26 then we will presume that the matter is substantially related (the lawyer can rebut this presumption by putting forth evidence that he did not gain any relevant confidential information) . This enables us to handle former client issues without forcing the client disclose confidential information to ascertain whether its disclosure would injure the former client o (3) Same legal issues . Specific type of legal claim . The most important issue is whether the attorney, as a result of the representation of a former client, knows how the opposing party would respond to certain kinds of complaints, incidents, etc.  It really comes down to whether the attorney has confidential information about the client, whether it be facts, policy-related, etc. o (2) In which current and former clients interests are materially adverse . Former client and current client are suing each other  materially adverse . Some threat to former client’s interests o (3) UNLESS former client AND the current client give informed consent in writing . You have to get the consent of the current client because there may be a shift that arises in the litigation that may limit your ability to represent the current client.  Waiving Conflict? Written Informed Consent o Former client waives by giving informed consent o NO non-waiveable conflicts (unlike with current clients) o Current Waiver (favored): former client consents to you taking on present client o Prospective Waiver (disfavored)  requirements . Former client is legally sophisticated (e.g., corp) . Has opportunity to consult with independent counsel . Person understands consequences of waiver (can’t disqualify me) . Waiver should be definite and narrow  Good: I am a med mal lawyer, I may represent [specific client], you waive right to disqualify me in that case  Bad: you waive right to disqualify me form any lawsuit  Non-lawyer professionals o Why do ethics rules apply? . MR 5.3 – responsibility for nonlawyer assistants  5.3 imposes the same obligations of confidentiality on nonlaywer assistants as the MR places on lawyers o The client has the expectation the nonlawyer assistants associated with their attorney will protect their confidential information accordingly . MR 8.4(a) – use of another to violate rules  Cannot use nonlawyer assistants to circumvent the rules o Differences . Presumption that non-lawyer only has confidences from matters on which he/she worked  For lawyers, the operating presumption is that a lawyer has knowledge of and is exposed to every matter going on within their firm . Narrowed scope of “substantially related” matters  Remedies for former client conflict o Malpractice . When a disclosure of confidential information exposes a former client to harm 27 o Discipline o Disqualification . Most of the fighting involves litigated matters and disqualification . Limits on use of disqualified lawyer’s work product?  Courts are going to be willing, but not eager, to listen to a claim that all of the work product has to be thrown out o And if you are moving to have all of the work product thrown out, you are going to have to give a distinct reason rather than just merely seeking to operate on an assumption . Most moving parties ask only for work product that is likely to be tainted to be thrown outCorporate / Entity Representation Conflicts  Hot Potato Rule o Lawyer’s duty of loyalty requires that lawyer cannot withdraw from representing a client solely for the purpose of taking on a matter adverse to the now former-client (Picker v. Varian) o Withdrawal won’t cure a conflict o Exception  Client Created Conflicts: e.g., when one client merges and creates a conflict, conflict is inadvertent and lawyer can choose who to represent (as long as confidentiality isn’t an issue) (Pennwalt v. Plough) o Exception  Unrelated Foreign Representation: e.g., law firm merged with foreign law firm that did work for the opposing party. However, the small amount of work that the foreign law firm did for the opposing party’s sub did not warrant disqualification of the law firm in the matter at bar (Pioneer). . Sometimes the risks of material harm to the client are so small that withdraw is not justified  Here, matters were unrelated and posed no likelihood of passing confidential information  Corporate Law Issues o Corporate Subsidiaries/Parents . You represent subsidiary corp, but you sue parent in unrelated case . Whether conflict exists will be resolved by functional analysis  Access to same confidences? e.g., if you rep subsidiary corp, did you gain confidences about the parent during that representation?  Same governing structure? Are same people running both the parent and the subsidiary? . If you are representing the parent, we are more likely to assume that the related sub is a client  On the other hand, if you are representing a sub, we would be less likely to assume that a parent of a truly distinctive sub is a client o In short, we have to ask whether serving one client gives us access to the confidential information of their sub or parent (that would hurt them if used in the matter involving the alleged conflict of interest) . If it does, the sub/parent will likely be determined to be your client . If it does not, the sub/parent is less likely be determined to be your client o Corporate Divisions . Division within one corporation is usually treated as part of the corporation itself (distinct from parent/subsidiary issue) . Eastman Kodak: firm sued Kodak but also represented HK division of Kodak in unrelated matter; did not get consent from Kodak general counsel  court disqualified firm from Kodak case o Constituents . Partners or shareholders of entity-client  Ordinarily, a shareholder is not deemed to be the client, even if the shareholder is a major shareholder  Exceptions o Places where the entity-shareholder distinction breaks down 28 . Factors that lead to constituents being deemed clients:  Undertaking representation of those constituents  Soliciting confidences o Remember, the burden is on the lawyer to clarify what he plans to use the information provided for, and thus establish the scope of his representation and duty owed the client . EX:  Representation of a closely held corporation, a family business, in which advice is being given the members more freely and informally  If you were representing an entity, but gave some advice to an officer  Trade Associations o General rule: Lawyer who represents a trade association does NOT represent the individual members o Exceptional Situation – Westinghouse: K&E invited trade association members to give them info promising it would be confidential, also represented Westinghouse in case against members  disqualifiedCriminal Representation Conflicts  2 Sixth Amendment Rights for Criminal Ds o Right to Effective Counsel (Strickland; Cuyler) o Right to Counsel of your Choice (Gonzalez-Lopez)  Standards for Ineffective Assistance of Counsel o General  Strickland Actual Prejudice Standard . Convicted criminal D may get a reversal based on ineffective assistance of counsel if two conditions are met:  Lawyer’s acts or omissions were “outside the wide range of professionally competent assistance” o Objectively unreasonable – like gross negligence  Ineffectiveness caused actual prejudice to the D o Very high standard o Basically must show that D would have won but for lawyer’s negligence . EX: lawyer failed to cross examine, slept through entire trial o Multiple Rep and Objection  Holloway Automatic Reversal Rule . If D makes a timely objection to multiple representation, and court forces lawyer to proceed w/o investigating conflict  automatic reversal (no prejudice or adverse affect required) o Multiple Rep and No Objection  Cuyler Actual Conflict Standard . To obtain reversal based on 6th amend violation when the D did not object at trial to multiple rep, D must show two things:  Actual conflict of interest o Not just potential – breach of duty of loyalty o lawyer actually advancing 2 inconsistent interests  Adversely affected adequacy of lawyer’s performance o Not as high as Strickland standard – don’t have to show that it was dispositive to case (prejudice is presumed when there’s an actual conflict) o But must point to something in trial that lawyer would have done differently w/o the conflict . Waiver of Conflicts  Presumptively Invalid  Under 6th amend it is presumed client can’t waive conflicts  Court must review and advise client – must decide itself whether to accept or reject the waiver . EX 29  Criminal price fixing situation o Can you represent the corporation and the partner accused of engaging in price fixing? . Issue of confidentiality  Information received from one client may be advantageous to the other . Joint representation may not be to the best advantage of both parties  Corporation may not want to look as if it is cooperating with the price fixing partner  Also, a deal offered by the prosecution may very well pit the two parties against one another o How do you deal with this if you are the corporation’s counsel? . Provide the partner with shadow counsel (along with the corporation’s regular counsel) from the outset.  This enables you to obtain information from the partner until a conflict arises. At that point, the shadow counsel steps in and becomes separate counsel for the partner, and the corporation’s regular counsel becomes counsel solely for the corporation.  Publication Rights Agreements o Prohibited During Representation – 1.8(d): before conclusion of representation, lawyer shall not negotiate agreement giving the lawyer literary or media rights to a portrayal of the representation (rationale: don’t want lawyer to put on lengthy, sensational trial at expense of client) o Permissible After Representation: need informed consent of client (waiving confidentiality under 1.6) . Representation may very well not end until all methods of appeal have been exhausted o Confidentiality Issues . Disclosure during OR after representation will waive privilege as to what is disclosed . Possibility of post-conviction relief if this happens without informed consent  Conflicts for Prosecutors (rare) o General Rule: prosecutor cannot have a personal interest in outcome of the case – want prosecutions based on public interest, not personal vendettas (otherwise all Ds are not treated alike  violates DP) o Examples . Victim of crime was, or was related to, someone working prosecutor’s office; e.g., victim’s mother was employed by prosecutor (Greer) . Private prosecutor who has a civil suit interest in outcome; e.g., civil P being appointed to prosecute civil D for criminal contempt based on conduct during civil trial (Young v. US) . Political motivations of prosecutor  generally not enough; need a specific personal stake in outcome of case o Delegation of prosecutorial function: If criminal penalties attach, prosecution must be done by a public entityPersonal-Interest Conflicts – 1.8  Requirements for Business Transactions with Clients – 1..8(a) o Lawyer shall NOT (1) enter into business transaction with client OR (2) knowingly acquire an ownership, possessory, security or other pecuniary interest adverse to client unless 3 conditions met: . Reasonableness + Full Disclosure: (1) terms on which the lawyer acquires the interest are fair and reasonable to client and (2) are fully disclosed and transmitted in writing in a manner that can be reasonably understood by client  What is fair & reasonable? court will assess whether interest is proportional to likely liability of client to lawyer (need independent valuation of stock at time of acquisition) . Opportunity to Consult Another Lawyer: advise in writing of desirability of getting independent counsel . Written Informed Consent: client gives written informed consent to transaction 30 o Exception  standard commercial transactions (cmt. 1): 1.8(a) duties are inapplicable to normal commercial transactions b/w lawyer and client for products/services that client generally makes to others (e.g., lawyer buying car from client who owns car dealership) o Former vs. Current Clients: 1.8(a) duties apply to business transactions even with former clients when transaction relates to prior representation (Timpone) (lawyer disciplined for getting loan from former client w/o satisfying 1.8(a) b/c loan money was generated from lawyer’s work in prior case)  Potential Material Limitation Conflicts – 1.7(a)(2) o Buying Stock in Client’s Company . If lawyer is going to own company stock, he will be a shareholder, then he owns part of client – representation could be materially limited by his personal equity interest . Solution: follow 1.8(a) requirements  make sure independent lawyer (w/o equity stake himself) reviews deal o Buying Stock in Client’s Competitor . Will be covered by 1.8(a) disclosure + consent requirements (i.e., lawyer acquires security interest adverse to client) if there is a material limitation as a result of lawyer’s personal interest . Depends on whether it would make a material difference to representation of client—  EX: you buy Pepsi stock while working for Coke – no material limitation b/c your stake is miniscule  EX: you buy stock in competitor in small market – may be material limitation if you’re a significant shareholder of a competitor corporation  Use of client confidences (use of confidences does not necessarily mean those confidences have been disclosed) o MR 1.8(b) . A lawyer will not be disciplined in using confidential information in a manner that does not disadvantage the client o R. 60…FOLLOW THIS RULE . If you use a client’s confidential information for pecuniary gain, you are accountable to your client for the profit that you make  This is basic agency law o If you are a fiduciary and make use of your client’s property, you have to disgorge whatever profit you make o Rule: bar will not discipline you if you use confidences in a manner that does not disadvantage the client, but fiduciary law may require you to disgorge profits if you decide to do so.  Gifts o Soliciting Gifts: 1.8(c) prohibits solicitation of gifts . RST § 127 prohibits acceptance of gifts, rather than solicitation of gifts o Accepting Unso1icited Gifts: split b/w MR (ethical) and RST (substantive law) . 1.8(c): lawyer may accept a gift, as long as lawyer doesn’t prepare a legal document transferring title to lawyer or lawyer’s family  Exception: lawyer may prepare such an instrument if client is related to the lawyer or other recipient . RST § 127: same as 1.8(c), but lawyer may not accept gift unless  Lawyer is a relative or natural object of client’s generosity;  Gift is not substantial; OR  Client got or was encouraged to get independent counsel o Lesson: don’t prepare a gift, it will be voidable if challenged and you may be subject to bar discipline o Also, this is another situation where you might not be subject to discipline, but you might be subject to traditional fiduciary remedies  Lawyers as Executor / Lawyer for Administrator of Estate31 o Sometimes lawyer in this position will draft their FEE into the will o No per se bar, but it looks bad – lawyers usually do it for free o Question will be whether client had informed consent to this (did lawyer disclose alternatives?)  lawyer must defend this if challenged  Ban on Lawyer-Client Sexual Relationships – 1.8(j) o General prohibition: lawyer shall not have sexual relations with a client . Can’t waive conflict if sexual relationship arises during rep . Don’t want lawyers preying on vulnerable clients (divorce cases, criminal Ds) o Limitation  Pre-Existing Relationship: consensual sexual relationship existed before lawyer-client relationship commenced . Privilege issues: are confidences for purpose of legal advice, or talk b/w lovers? Harder for client to prove privilege in this context . Must waive conflict under 1.7(a)(2): this is a material limitation conflict that must be waived at the OUTSET for representation to proceed  Informed consent  advantage is that I’ll rep you for free, disadvantage is someone more objective might represent you better and privilege will be easier to establish  Corporate context: client corp must waive conflict (informed consent); client corp is vulnerable to bias created by lawyer’s relationship with its employees  Spousal context: spouse must waive conflict (informed consent); potential material limitation o Sex with Client’s wife: huge conflict here; in crim case, lawyer has interest in D being locked up (so he can sleep with D’s wife)…1.8(j) doesn’t reach this situation, but the 1.7(a) catch-all provision applies . Could waive conflict, but would need informed consent (tell husband you’re doing wife?  just withdraw) Imputed Disqualification – 1.10 & 1.9(a) . General Imputation Rule – 1.10(a)  Firm lawyer is prohibited from representing a client when another lawyer who works in the same firm would be conflicted out of the matter under 1.7 or 1.9 (current or former client conflicts) . What is a “firm”?  Basic rule – MR 1.0(c) – formal relationship o “associationships” . Should closely associated law firms be considered “firms”?  What are the types of things we look for in determining what a “firm” is? Look to the basic tenets of the imputation rule. o Integrated systems for the sharing of confidential information . Is the structure such as to allow access to confidential information across the various firms? o Shared financial incentives . Are the firms really cooperating together?  Are firms referring cases, or are clandestinely working on them together (so that they may attempt to reap the benefits of representing a client without suffering the risks)? o Example – lawyers sharing an office . What if they are sharing physical space? Are they sharing information? Are they sharing support staff? . The determination will turn on whether there is file/information sharing  Special considerations for public defenders offices? The conflicting decisions re: public defenders offices.32 o One camp says that PD offices should not be treated as “firms” because of the lack of competing financial interests. o But this camp is missing some key issues: . Are there shared confidences? . Is there shared supervision? o We need to focus on interlacing factors involving the possibility of shared confidences in the office space and also the possibility that two conflicting matters may be supervised by the same authority figure. o The general trend of the law is to make sure PD officers farm out a case to retained attorney if there is any reasonable likelihood of finger pointing.  Of counsel designation? o The answer depends on where the “of counsel” designation appears. . If on the firm’s website, then the attorney’s conflicts will be imputed. This is because the firm is holding the attorney out as being part of their enterprise, and thus the presumption is that that attorney has full access to firm information.  Even if she is involved in two different firms. . Very different when the affiliation with the firm is limited to a specific matter (e.g., name on a brief).  No office space in the firm. No access to the firms files.  This analysis applies to “temp attorneys” as well.  Exception  Personal Interest Conflicts – 1.10(a): if disqualified lawyer’s conflict is a personal- interest conflict and does not present a significant risk of materially limiting representation of client by firm’s other lawyers  NO imputation o Rationale . Why does imputation occur?  Presumption of confidentiality o We must consider the sharing of information within a firm and the need to protect confidential information  The obligation to act with zeal o Your interests must be really devoted to the welfare of your client, without facing any kind of distraction o Also, you don’t want to put attorneys in the position of having to make financial decisions (i.e., selecting/preferring more profitable clients) at the risk of compromising their loyalty obligations to other (less profitable) clients o Important to consider the duty of loyalty . Imputation of Migratory Lawyer’s Conflicts to New Firm  Old firm had client conflict  Conflict is imputed to lawyer via 1.10  Lawyer changes firms  Migratory lawyer carries imputed conflict only when he has actual knowledge of material client confidences – 1.9(b) o If mobile lawyer has NO actual knowledge of material confidences of old firm client, lawyer does NOT carry conflict to new firm  lawyer AND new firm can represent materially adverse clients o When DOES mobile lawyer carry conflict? (1) lawyer had imputed client conflict from old firm, (2) lawyer tries to rep client whose interests are materially adverse to former client, (3) lawyer had actual knowledge of former client confidences . Conflict imputed to NEW firm33 . NO SCREENING permitted o Applies to Non-Lawyers: if mobile non-lawyer (paralegal, legal assistant) has actual knowledge of former client confidences, then he carries conflict to new firm . Mobile Lawyers vs. Mobile Non-Lawyers  Presumption for non-lawyers is that they do NOT have actual knowledge (opposite presumption for lawyers)  burden on challenging party . The burden is on the departing lawyer to maintain that he had no confidential information about the client at his former firm  Courts are more willing to permit screening of non-lawyers o Alternate View  American Can . Mobile lawyer carries imputed conflict to new firm . BUT new firm’s lawyers are not vicariously disqualified if they can show mobile lawyer did not have actual knowledge of client confidences . Imputation of Migratory Lawyer’s Conflicts to Former Firm – 1.10(b)  When a lawyer leaves a law firm, that firm won’t be disqualified from any matter materially adverse to former lawyer’s client as long as: o It’s a former client (if a current client it would be 1.7 conflict) o Matter is NOT same or substantially related to matter that old lawyer repped former client in; and o NO lawyer in firm has confidential info under 1.6 or 1.9(c) . Have to show that everything mobile lawyer did for client is gone (e.g., support staff, lawyers working with old lawyer, files, etc.)  EX: biglaw firm practice group moves to another firm; old firm may be able to rep clients that old practice group had conflicts with . If we are in fact considering this kind of situation, it is quite possible that the no remaining lawyer has any confidences  Could be problematic if file remains on the server of the firm and/or the firm has some intent to retain the client (of the departing lawyer(s)) o If confidences have struck around, then 1.10(b) says the conflict sticks around. o Again, our presumption is going to be that the firm left behind has access to confidential information about the client . The burden is on the firm left behind to maintain that he had no confidential information about the client at his former firm . Screening to Avoid Imputation to New Firm  Only allowed in 10 states  If lawyer brings a former client conflict to a firm, he can be screened from case he’s disqualified from (conflict won’t be imputed to new firm)  Trigger  Actual knowledge of former client confidences o Mobile lawyer has imputed conflict, AND he has actual knowledge of client’s matter  screen required, 1.9 former client conflict o With Client Consent – 1.10(c) . Under MR, cannot screen w/o client’s informed consent o Without Client Consent – RST § 124 (and some states) . Lawyer can be screened without client consent when four conditions are met:  Must be former client conflict  Lawyer to be screened did not obtain confidences that would be significant to the subsequent case  Lawyer must be screened  Must give prompt notice to affected clients  How to Screen? 34 o Isolate lawyer from access to client information/confidences o Notify other lawyers that no info should go to disqualified lawyer o Physically separate lawyer from confidential info (separate floor o Former client interests . Notice and certifications of compliance with screening procedures must be afforded to the former client  Former client cannot object to the screen, but can object to the quality of the screen . Imputation of Conflicts to Affiliated Firms?  If firm X retains firm Y as local counsel, and firm X is later disqualified, is firm X disqualified by imputation? Look at certain factors o Public representations (holding themselves out as same firm) o Mutual access to client confidences o Fee sharing (if sharing fee, more likely to share info) o Shared office space  Imputation and family relations o Look to MR 1.7, Comment 11. . In situations involving present conflicts, if blood-related lawyers represent different clients in the same or a substantially related matter, each client must provide informed consent to allow each representation to continue  The financial interests of spouses are intertwined, and this may give an improper inducement of sharing confidences with your spouse.  Work and personal life are hard to divide. Truly accidental exchange of confidential information is a real possibility. o E.g., think about voicemail messages being heard by a lawyer spouse residing in the same house. o The language of the rules does not impute in situations involving former client conflicts . Why draw this line?  It has to do with the currency of information. o There is not the same flow of information about a former client. All of the information related to a former client is just that: former. . This is also important because it highlights when screening needs to occur. o However, DQs arising from a close family relationship is personal and ordinarily not imputed to members of firms with whom the lawyers are associated o Should it apply beyond blood/marriage? . Consider the abovementioned concerns. . You must be aware of situations in which your life may pose a materially adverse interest to full, zealous representation of your client.  Others who may be screened o 1.11 – people leaving government service o 1.12 – people leaving the judiciaryADVISING CLIENTS Note that you have not yet acted on behalf of the client o Advising v. advocating . Advocate – past conduct and taking the facts as found . Advising – future conduct and relationshipsADVISING INDIVIDUAL CLIENTS 35 Advising Individual Clients – 2.1  In representing a client a lawyer shall (1) exercise independent professional judgment; and (2) render candid advice  may refer not only to law but to other considerations such as moral, economic, social and political factors, that may be relevant to the client's situation  Being an Advisor (not an advocate) o Give client perspective (how other people see him) o Gather info (from anyone) to figure out what plausible version of truth is before giving advice . Try to reconcile “inconsistent stories” o Help client understand the consequences of an action o Help client understand what they want in long term, short term, etc. . Help the client formulate a strategy -- the lawyer must facilitate the client’s ability to make an informed, autonomous decision  Determine a successful end point o Sometimes you have to frame the client’s objectives so that achieving those objectives are realistic . This is not supposed to be paternalistic, but rather it is supposed to be collaborative  Point out obstacles that will impede reaching that successful end point o You have to make sure to explain how the world views the client . Part of being a lawyer is representing the client to the world, and part of being a lawyer is representing the world to the client  Truth matters o One of the things the lawyer cannot do is counsel or aid a client in committing a fraud – MR. 1.2(d) . You cannot manufacture fake evidence o Consider whether the measures the client wants you to engage in could lead to real harm o Counsel the client about legitimate points of advocacy  Counseling Future Crime/Fraud – 1.2(d) o A lawyer shall not (1) counsel or (2) assist a client to engage in conduct that the lawyer knows is criminal or fraudulent (no limits on advising about past conduct) o Limitation  lawyer may (1) discuss legal consequences of any proposed course of conduct with a client (i.e., sanctions), and (2) counsel or assist a client to make a good faith effort to determine the validity, scope, meaning or application of the law . Permissible: analyzing legal aspects of questionable conduct  Advising Gray Areas: e.g., if EPA enforcement policy differs from regulation (won’t enforce below certain limit), may explain enforcement pattern to client, but also that they can renege at any time . Prohibited: recommending the means by which a crime or fraud might be committed with impunity (lawyer is explaining how to avoid getting caught)  Avoiding Detection: e.g., EPA only does checks 1st Monday of month; just make sure your plant is clean on that Monday  prohibited  Counseling Client with Diminished Capacity – 1.14(a) o Normal Relationship: lawyer shall, as far as reasonably possible, maintain a normal client-lawyer relationship with client who has diminished capacity . Owe duties of confidentiality, competence & diligence, conflicts, and candor & communications o Diminished capacity? Mentally/physically disabled, alcoholic, a child o Limitation  Harm to Client – 1.14(b) . If lawyer reasonably believes client with diminished capacity  Is at risk of substantial physical, financial or other harm unless action is taken, and 36  Cannot adequately act in the client's own interest . Lawyer may take reasonably necessary protective action, such as  Consulting with individuals or entities that have the ability to take action to protect the client, and o You must go beyond simply taking the word of a client when the client’s competency is in question  In appropriate cases, seeking the appointment of a guardian ad litem, conservator or guardian o Seeking guardianship  last resort: should only seek guardianship when there’s no other way to protect client’s interests (major injury to client’s autonomy) . In essence, the individual (your (former) client) becomes the legal equivalent of a child  There is a level of inhumanity/disrespect/paternalism in appointing a guardian, whether an individual is competent or incompetent o Keep in mind that most of us have a lack of capacity in judging whether your client has capacity . So, generally you want to turn to another professional who is more qualified to make this judgment  Chances are the client may have already talked to someone (whether it be a doctor or family member), and thus the needed information may already be out there somewhere  However, there is still a confidentiality problem o You cannot disclose information regarding the capacity of your client without his permission . What do you do if a client does not give permission? . Then, you would have to push back and explain to the client that she, as a lawyer, is not the only audience set to judge her capacity . You can override this need for client consent when you encounter an emergency situation where the lawyer MAY disclose under MR 1.6(b) (keep in mind that you have not “acted” for her as of yet). . Remember: our general rule for disclosure is that you disclose in a way that is least invasive/damaging to a client’s interest, and you have no other real option aside from doing so (disclosing) . Preserving Confidentiality – 1.14(c): when taking protective action under 1.14(b), lawyer is impliedly authorized to reveal confidential info under 1.6(a), but only to the extent reasonably necessary to protect the client's interests ADVISING BUSINESS CORPORATIONSAdvising Business Corporations – 1.13  Identity of Client o 1.13(a): organization is the client (not an individual) . Even with very sophisticated corporate agents (officials), you must remind them (orally and in writing) that you do not represent them, you represent the entity  Reporting Employee Wrongdoing o General (non-emergency process for addressing problems . Assist the individual in carrying out their job…try and counsel them to act differently 37  Not making the individual look bad  Highlight aspects of the problem and risks that the corporate official is not taking into account  Help official see whether the individual’s interest is in line with the entity’s interest o Look to whether he is just seeking to help his division, rather than the entity as a whole  This is where you really can serve as a counselor by providing the broadest perspective possible o If employee ignores you…Up the Ladder Reporting – 1.13(b) . Trigger:  (1) Lawyer has actual knowledge of employee/officer’s wrongdoing  (2) The action involves a matter related to the lawyer’s representation o If the information does not relate to a matter related to the lawyer’s representation of the client, then the lawyer MAY disclose – the lawyer’s discretion then kicks in . Here, failure to disclose is not likely to result in discipline/punishment for the attorney o If the information relates to a matter related to the lawyer’s representation of the client, then the lawyer MUST disclose – the lawyer’s discretion then kicks in . Here, failure to disclose is likely to result in discipline/punishment for the attorney  (3) The action is: o A violation of legal obligations to corp OR o A violation of law that reasonably might be imputed to organization; and  (4) The action is reasonably likely to cause substantial injury to organization . Duty  Must take remedial action  Lawyer shall refer the matter to higher authority in organization  If necessary, lawyer shall refer to highest authority in organization  Limitation  if lawyer reasonably believes it is NOT necessary in best interests of org  no duty to report up the ladder (may be able to handle it directly w/ employee) o A cost-benefit analysis must be done by the lawyer (it is in his discretion) at each rung of the ladder: a lawyer must ask whether, each time, it is worth it to continue going up the ladder. . Take note that organizations/corporations often have reporting mechanisms in place for people to internally report (probably to the auditing committee), so it may be the case where the board of directors has delegated authority to an entity to which lawyers should report, and thus the lawyer does not need to go to the board. o Permissive Disclosure to 3rd Parties – 1.13(c) . Its conceivable that drastic action by regulatory agency, creditors, or shareholders could save the corporation in some way – meaning that you technically advanced your client’s interests by violating your duty of confidentiality.  Bear in mind, though, that the house really needs to be on fire for this to work – you have to be on the Titanic with the crew getting drunk below-deck and icebergs in sight. . Trigger: (1) highest authority within org (e.g., board of directors) fails to appropriately respond to a clear violation of law; and (2) Lawyer reasonably believes that violation is reasonably certain to result in substantial injury to organization . Option  lawyer may reveal confidential (1.6) info, but only to extent necessary to prevent injury to org (best to reveal to gov’t) . Limitation on Permissive Disclosures – 1.13(d): lawyer can NOT disclose confidential info if:  Lawyer was retained to conduct an internal investigation of alleged violation of law, or38  Lawyer is defending the organization, or one of its employees, against claim based on alleged violation of law  Close relationship between 1.13 and 1.14 (incapacity)…RT really likes this analogy (EXAM) o When representing a corporation start with the presumption that the person giving you directions is competent to do so. . Here, the lawyer’s job is to follow instructions.  If the lawyer would do something different, he may give advice about what he thinks the best interests of the client would be served, but he is not the ultimate decision-maker. o BUT, there are times when the client acts in a way that leads the lawyer to question the client’s capacity . Lawyer must try as best as possible to maintain normal lawyer-client relationship  Lawyer should go to the person first and talk, and if that doesn’t work, lawyer should cause the least disruption possible to achieve the ideal result o “go up the ladder” (all the way to the president of the corporation if you have to)  Attorney as Corporate Counsel and Director o Potential Conflicts – 1.7 (cmt. 35) . Lawyer should assess likelihood that dual role will lead to conflict . Will depend on how often lawyer must give legal advice to Directors and seriousness of conflict . Lawyer as a Witness: personal conflict of interest (1.7)  lawyer won’t be able to defend things he was a witness to as a VP (applies to in-house counsel too) o Confidentiality/Privilege . Privilege won’t attach unless it’s made that the purpose of the conversations are for legal advice . Everything won’t be privileged o Malpractice Insurance . MP insurance would be liable for lawyer’s conduct on the board as well as his conduct as a lawyer – they don’t like it . Deters lawyers from being on boards  Shareholder Derivative Suits – 1.13 (cmt. 13-14) o Shareholders of corporation suing to compel the directors to perform their legal obligations in the supervision of the organization o Ethical issue: can corp’s lawyer defend against shareholders when board is allegedly not acting in its best interest? . Suits Alleging Breach of Duty of Care  YES  Lawyer should be able to defend these suits (e.g., corp didn’t investigate something adequately)  Exception: situations where lawyer’s conduct may be involved in breach of duty . Suits Alleging Breach of Duty of Loyalty  NO  Corporation will probably have to get independent counsel here, especially when lawyer’s conduct is involved  Conflict b/w lawyer’s relationship to the board vs. duty to corporation  material limitation conflict 1.7  Malpractice Liability o Liability to Successors for Failure to Investigate . Duty to Investigate: lawyer has a duty to protect corporate entity from misconduct by fellow agents of the entity, and may face claims by successors of corporation for failing to investigate when there were signs of misconduct (FDIC cases) (see also 1.13(b) – up the ladder reporting requirements) . Scope: duty to investigate to matters relating to lawyer’s work, BUT also things lawyer stumbles across (can’t close eyes to it) o Liability to Employees for Personal Legal Advice39 . May face liability to employees if lawyer does NOT make clear that he only reps corporation, and employee could have reasonably thought that lawyer was acting as personal lawyer . Advice to under-represented parties – 4.3: lawyer must correct client’s misunderstanding about lawyer’s role in a matter . Solution  give 1.13(f) corporate Miranda warnings OPINION LETTERSOpinion Letters for 3rd Parties – 2.3  3 Steps for Opinion Letters o Who is asking for it? What is their relationship to me? . Client? CEO of corporation I represent? . Make sure I get informed consent at outset AND delivery of letter o Who is the recipient? . IRS? . Or a Bank, Auditor? o Extent of recipient’s reliance? . Dictates level of duty that the lawyer has  And this duty dictates whether a lawyer can be held liable for negligent misrepresentation (in an opinion upon which someone had the right to rely) . If sent to IRS, they’re not going to rely, be more of an advocate . If sent to Bank or Auditor, then you have obligations to be objective and truthful, to protect their reliance interest  Disclosure of all asserted claims against client  Client Consent – 2.3: when the lawyer knows or reasonably should know that the evaluation is likely to affect the client's interests materially and adversely, the lawyer shall not provide the evaluation unless the client gives informed consent o Consent at Outset: let client know that you have duty to be truthful and may have to disclose confidential, even damaging info o Consent at Point of Delivery: show client what exactly you’re disclosing and future consequences of disclosure (e.g., waiver of privilege) o Make sure to explain to the client seeking an opinion letter that your engagement in producing the opinion letter operates as a departure from your normal attorney-client relationship  Recipient & Contents of Letter o If Recipient won’t rely  advocacy: letter can be slanted in client’s favor (e.g. IRS will not rely on your letter – you’re arguing for your client) . Only have a duty to make a reasonable, good faith, non-frivolous argument (ABA Formal Opinion 85-352) o If Recipient will rely  objectivity: lawyer has a duty to investigate before writing letter to recipients who will rely on the letter (e.g., bank or auditor trying to assess financial liability of company) . Lawyer can’t unreasonably rely on representations of client . Must conduct investigation to confirm facts . NOT like advocacy, must be completely objective . Disclosure of Asserted Legal Claims to Auditors  Asserted claims: duty to disclose all asserted claims, except where loss is remote or trivial  Unasserted claims: duty to disclose arises when the claim is (1) probable, (2) if asserted, it will likely be successful, and (3) if successful, it will be material (i.e., big damages) . Disclosure of Past or Future Fraud – 1.6(b)(2)-(3)  Lawyer may disclose adverse facts in opinion letter to prevent commission of fraud or injury resulting from a committed fraud, in which lawyer’s services were used  Lawyer’s Liability to Recipients 40 o If lawyer knows 3rd party will rely on opinion letter, may face liability for: intentional or negligent misrepresentation (must exercise due care) o Trigger  Knowledge of reliance: lawyer’s duty of care is dependent on whether they know recipient will rely on it and use it for some purpose  At a minimum, you do NOT give an opinion that is misleading o If you cannot decide what to do, simply do not give an opinion at allCLIENT FRAUDIndividual Client Fraud & Fraud by Corporate Employees  Advising or Assisting Fraud – 1.2(d) o A lawyer shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal or fraudulent – the lawyer must withdraw  Duties on Discovering Client’s Prospective Fraud o 1.6(b)(2): may disclose confidential info to prevent client from committing crime/fraud (1) that is reasonably certain to result in substantial injury, and (2) in which client used lawyer’s services o 1.13(b)-(c): up the ladder reporting requirements for corporate lawyers– MUST report fraud to higher-ups once lawyer gains actual knowledge of it (if in best interests of organization) and MAY disclose to 3rd parties if no one takes remedial steps  Duties on Discovering Client’s Past or On-Going Fraud o 1.6(b)(3): may disclose confidential info to prevent substantial injury that is (1) reasonably certain to result from client’s crime or fraud, and (2) in which the client used lawyer’s services  Permissive Withdrawal for Past or Current Fraud – 1.16 o Current Fraud – 1.16(b)(2): may withdraw if client persists in action involving lawyer’s services that lawyer reasonably believes is criminal or fraudulent o Past Fraud – 1.16(b)(3) may withdraw if client has used the lawyer's services to perpetrate a crime or fraud  SEC Rule 205: Corporate Fraud Reporting Requirements o Trigger for Application  Are you practicing before the SEC? . Anyone who does legal work or provides legal advice relating to compliance with securities laws is practicing before the SEC (anyone doing finance or corporate legal work) o Trigger for Duty  Lawyer “becomes aware” . Lawyers “becomes aware” of “evidence” of a client’s (1) “material violation” of securities laws, (2) a material breach of fiduciary duty by an officer/agent of client (e.g., clear self-dealing in breach of duty to shareholders), or (3) a similar violation of federal or state law  Awareness? It would be unreasonable not to assume a violation has occurred; NOT actual knowledge – just an awareness o What does lawyer do? 2 Tracks . Track A  Step 1: go to Chief Legal Officer of client-organization, reveal facts that lead you to believe there’s been a violations of securities law  Step 2: if CLO ignores me, I have to keep reporting (audit committee within organization), until I get to the top; but am NOT required to report to gov’t (like 1.13) . Track B  Qualified Legal Compliance Committee: lawyer would report to this committee if corporation HAS one o Committee made up of independent directors that initiates compliance checks of corporation o Better than facing liability under track A o What is lawyer reaches the top and nothing happens? 41 . Permissive withdrawal: lawyer can withdraw at this point under 1.16, no mandatory disclosures to gov’t once you reach the top  Noisy Withdrawal? SEC rule 205 requires corp to make public that outside counsel quit (like noisy withdrawal) . Permissive disclosure -- 1.13(c): lawyer may disclose to gov’t if he reasonably believes crime/fraud will cause substantial injury to organizationETHICAL PROBLEMS IN LITIGATIONDISCLOSURE OF LAW OR FACTSDuty to Disclose Adverse Law – 3.3(a)(2)  Lawyer shall disclose: o Legal authority in the controlling jurisdiction o Known to the lawyer to be directly adverse to the position of the client, and o Not disclosed by opposing counsel  What is “directly adverse authority”? o MR: directly adverse, in the controlling jurisdiction o It is not clear whether dicta analogy meets this standard  How do you disclose? o You need to drop more than a footnote . However, you probably don’t need to include a parenthetical explaining how your position is adverse  Tuttle’s Anger standard: if you’re the judge, and counsel failed to bring this authority to you, would you be angry? o You want to cite, so that you appear trustworthy to the court, so that you can provide the best advocacy possible for your client  Policy rationale: we are more interested in protecting society as a whole o We are protecting against waste . We do not want to waste judicial effort/resources when the matter is just going to get overturned o We are protecting against skewed precedent . Wrongly decided case may not get appealed and thus may exist in direct conflict with the controlling precedent  This creates confusion that didn’t need to be there  Cases in which there has been discipline for failure to disclose adverse law o The one strand in a lot of these cases in the casebook is that the lawyer not only knew about the case he failed to cite, but was counsel in that case o You must make sure to avoid misleading selective quotation o Lawyers must state accurately what happened below when they argue on appealDuty to Disclose Adverse Facts  Very narrow, unlike adverse law disclosures  FRCP requires you to disclose evidence that you intend to offer  Exception: Ex Parte Proceedings – 3.3(d): in an ex parte proceeding, a lawyer shall inform the tribunal of all material facts known to the lawyer that will enable the tribunal to make an informed decision, whether or not the facts are adverse o Must disclose all facts b/c ex parte proceedings are non-adversarial, opposing side cannot protect themselves . Alternative: if you don’t want to disclose harmful facts, then you do not have to seek emergency relief 42  Misrepresentations o Affidavits: you find out that the affidavit you have attached to a brief you are about to file contains false statements . What do you do?  Just say no. You can’t file the brief with this accompanying affidavit. MR 3.3(a).  File a motion to for extension of time o Arguing that new information making your positions inconsistent is the best thing you can do without disclosing the clients lied o Disclosure of Client’s Criminal Record: no duty to disclose . BUT if judge asks you directly you must answer honestly or if the judge relies on false information you cannot endorse his incorrect judgments  You can just say “I do not answer those types of questions” . Also, keep in mind that you cannot bride a court official to engage in deceit designed to confuse the judge o Lying in Depositions – 3.3(a)(3): If lawyer, lawyer’s client, or a witness called by the lawyer, has offered material evidence and the lawyer comes to know of its falsity, the lawyer shall take reasonable remedial measures, including, if necessary, disclosure to the tribunal . Reasonable remedial measures? If client has lied in a deposition, do not have to disclose fact that they lied about, instead can re-open deposition and get witness to give a different answer – you don’t have to affirmatively state that your client lied  Some jurisdictions may even let you correct the transcript  Remember…do what is required, but do it in a way that causes the least harm to achieve the optimal result…KEY THEME THROUGHOUT THE COURSE o Client is on the witness stand: your client makes a surprising misrepresentation (that you know to be false) during cross-examination, and after a break, your client tells you that she will not correct her false testimony later . What do you do?  Gradually escalating response (keeping in mind the notion that you are trying to take the route to the optimal solution that will prove least harmful to your client) o You don’t immediately run to the judge and tell him “my client just lied”…  Plan of action o (1) try to convince your client to tell the truth . There are many negative consequences that come from lying  Criminal o E.g., increased sentence  Civil o E.g., separate charge of perjury, adverse inference . You have to explain to the client that once he lies, he is starting a train that could lead to many problems o (2) seek to withdraw . Judge will ask why you have to withdrawal  No easy way to resolve at this point . You will be hard pressed to obtain a withdrawal from the judge without ratting out your client o (3) if all else goes awry, you will have to disclose to the judge and the prosecution (criminal) or opposing counsel (civil) . Most judges will not allow for a mistrial in such a case43 . Also, courts will not find in favor of an argument for ineffective assistance of counsel because disclosing the truth is not the sole reason for the client’s conviction, the fact that he did the crime is  Look at the Model Rules o There is a lot of handwringing in the criminal defense context o There is not as much handwringing in the civil contextElectronically stored information (ESI)  Zubulake (p.431 in casebook) – key ESI case o Standard of care re: ESI . Once you have a reasonable anticipation of litigation, and thus the duty to preserve has attached, you must:  When you reasonably anticipate a claim . (1) Issue a written litigation hold  Identify what the subject matter of litigation  Have to have someone in control o See Qualcomm case below . (2) Identify all key players involved  Who is likely to have discoverable information?  Tell those people to retain all documents, digital and paper . (3) Stop deleting records in the party’s possession, custody, or control  Take custody of and make reasonable arrangements to obtain documents of present and former employees . (4) Make and preserve back-ups  Preserve backup tapes when they are the sole source of relevant information or when they related to key players, if the relevant information maintained by those players is not obtainable from readily accessible sources.  What makes this complicated is the multiplicity of sources of information o E.g., work email, home email, Twitter accounts, etc.  Qualcomm o The big problem was that nobody was talking to anybody else about how information was being stored and how it could be accessed . Inside counsel was not communicating to engineers involved in the matter . Outside counsel did not communicate with inside counsel re: issuing an adequate litigation hold o So, one of the things that resulted was that someone must be appointed to take charge and take control of and coordinate discoveryHANDING PHYSICAL EVIDENCE Handling Physical Evidence – 3.4  What if it is unclear that the property delivered to you is linked to criminal activity? o What to consider: . Your actual knowledge . Conclusions that a reasonable person would draw from the facts actually available to you  Evidence of Past Crime44 o Obstructing Access or Altering Evidence -- 3.4(a): A lawyer shall not (1) unlawfully obstruct another party's access to evidence, or (2) unlawfully alter, destroy or conceal a document or other material having potential evidentiary value. (3) A lawyer shall not counsel or assist another person to do any such act . What can lawyer do?  Lawyer can take items into his possession, but cannot do anything that would change the character of the evidence o Also, you cannot counsel for destruction of the evidence of in these situations. . You can counsel re: the consequences of destroying the evidence though  Cannot alter in any way (e.g., firing a murder weapon, having finger printer test the gun, etc.) o Obligations of Defense Counsel: criminal defense lawyer must turn over to the prosecution real evidence that he obtains from his client or 3rd party; if you take it, you have to turn it over (Morrell v. State, AK) . Does not apply to the lawyer’s work product (i.e., pictures of real evidence) – but does apply to things that client gives lawyer  Disclosing Evidence of Ongoing Wrong o Permissive Disclosure – 1.6(b)(1): Lawyer can disclose confidential info to prevent reasonably certain death or substantial bodily harm o Must Withdraw – 1.7: if lawyer discloses info or evidence to prosecutor, he must withdraw b/c there’s a conflict . Lawyer will likely be called as a witness, has taken adverse position to client by calling cops . But it is NOT ineffective assistance of counsel per se (McClure)  Client ID o The general rule is that the identity of the client is NOT privileged (even though it may be confidential) -- identity of client must come out if the lawyer is called to testify . What if police want the name of the person (robber) who visited your office?  Here, the identity of your client is almost certainly NOT privileged o This is because the fact that someone met with you does not require your disclose any other confidential information . What if a defendant gives the wrong name and defrauds the court?  Lawyer has a duty to disclose the client’s ID because it is not privileged and you cannot act as an accomplice in defrauding the court. . “Last link” doctrine (exception to the general rule)  Identity of the client IS privileged if the disclosure of the client’s name provides the last evidentiary link between the client and the commission of a crime.  Payment of a fee is not privileged – it is not testimonial  Incriminating Documents o 15 USC 1519 (SOXA) – Federal Investigations and Bankruptcy . You may not intentionally destroy evidence related to or in contemplation of any matter or case  This statute broadens the documents/information that must be preserved o It is no longer limited to when you think that your client is facing or will soon face prosecution. o Concealing documents: almost always better to have damaging document than have it missing and try to explain why it’s missing – will get adverse inference in civil case, possible criminal sanctions (e.g., obstruction of justice for obstructing an open an investigation) o Generally considered in relation to document retention policies – policies explaining how and why company destroys documents . Three step process to installing a document retention policy:  (1) Make o Make the document retention policy o Must be instated before investigation to be genuine 45  (2) Teach o Must implement compliance efforts (make sure everyone is shredding in accordance with policy) – otherwise policy looks like a sham o Teach people what the policy is . Make sure to teach it to them on a regular basis  (3) Keep (documents) o You must routinely retain documents as required o Litigation holds may come into play . Lawyer’s duty – 3.4(a): tell the employees to STOP following the policy once an investigation starts . Once you become aware of matters that raise the possibility of litigation, you must institute a hold  Really hard to tell what that moment is o If you have reason to be concerned enough to ask whether a litigation hold should be instituted, you should probably institute a litigation hold . Why litigation holds are important:  You want to avoid going to jail or having your employees go to jail  If it looks like you have engaged in selective retention, it is even easier to prove that the stuff that is gone had been wrongfully destroyed o This guilty intent has immense consequences . Money . Jail time, which could be lengthy, if its bad enough . Hidden material that is subsequently discovered is going to have a significantly negative effect on your case at trial…self-defeating (more problematic to try and hide the documents/information) . Gaps created by hidden material that is NOT discovered are to be given adverse inference at trial… self-defeating (more problematic to try and hide the documents/information) o The lying often times creates worse results then simply being forthcoming about your wrongdoing DELIVERY OF LEGAL SERVICESUNAUTHORIZED, MULTI-JURISDICTIONAL, AND MULTI-DISCIPLINARY PRACTICE Unauthorized Practice of Law (UPL) – 5.5  A lawyer shall not practice law in a jurisdiction in violation of the regulation of the legal profession in that J/D, or assist another in doing so o What is the “practice of law”? . Both the Restatement and Rules delegate the definition of “practice of law” to the states  And there are some fairly significant differences among the states o Some states have UPL laws with very limited reach o Other jurisdictions have very expansive UPL . If you are representing someone (another live person or corporation), not yourself, in front of a tribunal that adjudicates right, then you are engaged in the practice of law . Giving of advice and preparing of transactions – more complicated situation  We are not talking about giving people general information – speaking about the law in general is not the practice of law 46 o The practice of law has to involve the application of rules to specific facts  EX: non-lawyer going into court to represent someone, non-lawyer applying legal judgment to set of facts  When does this arise? o Fee Collection: client disputes fees by saying lawyer is engaged in UPL – subject to fee forfeiture if lawyer was not authorized o Firm Support Staff: firms can’t let non-lawyers engage in UPL (e.g., paralegals, secretaries, etc.)  must supervise non-lawyers under 5.3 to prevent this . EX: paralegals holding themselves out as lawyers, doing immigration services, or doing estate planning  Legal Forms  Is the person exercising independent legal judgment? o Creation of Legal Forms: more general the better, the more specific the advice in the forms are, closer it is to UPL . The production of form books is not the practice of law because doing so is general and does not involve the giving of specific advice about how rules of law apply to them  Even in cases where software programs ask you questions so as to personalize the document o Why is this not the practice of law when situations involving the supervision/practice of nonlawyers is the practice of law (see below)? . What are we legitimately worried about when policing UPL? Lack of training of the person offering services; lack of safeguards for the client. In short, we are worried about vulnerability of the client.  When dealing with the computer programs, the decision-making process is transparent to the outside world. Whereas, the decision- making process that occurs in an office is not so transparent. o Real Estate Deals: most J/Ds allow non-lawyers to do substantial part of real estate  must ask at what point filling out the form requires someone to exercise independent legal judgment  Sanctions for UPL can be quite strict o Criminal sanctions o Bar discipline o Legal malpracticeMulti-jurisdictional Practice – 5.5  General prohibition (5.5(b)): there is a general prohibition on multi-jurisdictional, unauthorized legal practice o Merely advising someone who comes to your office and lives in your state about the application of another J’s law is generally okay . What about if someone comes to you virtually?  Virtual law firms are okay so long as someone is the lead lawyer on a matter is admitted to the jurisdiction where the matter is centered o E.g., you are admitted in NC and advise NC virtual clients; you are admitted under a federal bar and you advise virtual clients in relation that the area of the law  Temporary Exceptions (5.5(c)): A lawyer admitted in another US jurisdiction may provide legal services on a temporary basis in this jurisdiction that: o (1) Association with Local Counsel: are undertaken in association with a lawyer who is admitted to practice in this jurisdiction and who actively participates in the matter; o (2) Pro Hac Vice: are in or reasonably related to a pending or potential proceeding before a tribunal in this or another jurisdiction, if the lawyer, or a person the lawyer is assisting, is authorized by law or order to appear in such proceeding or reasonably expects to be so authorized o (3) ADR: are in or reasonably related to a pending or potential arbitration, mediation, or other alternative dispute resolution proceeding in this or another jurisdiction, if the services arise out of or are reasonably 47 related to the lawyer’s practice in a jurisdiction in which the lawyer is admitted to practice and are not services for which the forum requires pro hac vice admission . EX: lawyer admitted in VA, represents DC client  lawyer can arbitrate in DC o (4) Catchall: arise out of or are reasonably related to the lawyer’s practice in a jurisdiction in which the lawyer is admitted to practice . As long as CLIENT contacts lawyer’s J/D for purposes of legal advice  you can work for them in other jurisdictions  Permanent Exception for In-House Counsel – 5.5(d) o A lawyer admitted in another US jurisdiction may provide legal services to the lawyer’s employer or its organizational affiliates n any jurisdiction where client has a business  Prohibited Representations – 5.5(b) o Lawyer may not hold out to the public or otherwise represent that the lawyer is admitted to practice law in this jurisdiction if he is NOT admitted  Federal Practice Lawyers o Lawyers who practice exclusively in fed law (e.g., bankruptcy, patent) can be admitted in any state to practice fed law – do NOT need to be admitted in the state they practice in o Cannot handle any ancillary state work – must be federal  Sanctions for MJP o The real practical significance of this is the fact that fees may be denied for your unauthorized, multi- jurisdictional practice.Multi-Disciplinary Practice – 5.4  Fee division with nonlawyer (5.4(a)): general prohibition o Exceptions . Nonlawyer employees may participate in compensation/retirement plan . Estate of deceased lawyer may receive fees  Prohibited Partnerships – 5.4(b): lawyers cannot enter into a partnership with non-lawyers if any of the activities of the partnership consist of the practice of law  Prohibited Employment – 5.4(d): lawyers cannot enter into corporation authorized to practice law if non-lawyers control profits and/or non-lawyer has right to control professional judgment of lawyer o Trigger  Governance: are non-lawyers governing?  Post-Enron concerns that drive the current rules in this area: o Professional independence o Conflicts of interest o Supervision . Related to independence o Confidentiality . The importance of preserving the privilege  What we have now are much more limited ways in which nonlawyers can be involved in the practice of law. o Any relationships with other non-law firms has to be made apparent. o We do not want lawyers to be subject to the control of non-lawyers.48

Ethical Framework for Thinking About the Practice of Law

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