E TUT I ETHICS AND TH E ONSTRUCTION AWY E R ST C L N Prepared in connection with a Continuing Legal Education course presented at New York County Lawyers’ Association, 14 Vesey Street, New York, NY scheduled for November 30, 2010. P ROGR A M CO -SP O N SORS : NYCLA Construction Law and Professional Ethics Committees P ROGR A M CO -CH ai RS : Joel Sciascia, Pavarini McGovern LLC Barry Temkin, Mound Cotton Wollan & Greengras F ac U LT Y : Todd Bakal, Mound Cotton Wollan & Greengrass Bruce Green, Louis Stein Professor, Fordham University Christopher Murray, Chartis Insurance Barry Temkin, Mound Cotton Wollan & Greengrass NYCLA-CLE I 2 TRANSITIONAL AND NON-TRANSITIONAL MCLE CREDITS: This course has been approved in accordance with the requirements of the New York State Continuing Legal Education Board for a maximum of 2 Transitional and Non-Transitional credit hours: 2 Ethics. Information Regarding CLE Credits and Certification Ethics and the Construction Lawyer November 30, 2010 6:00PM to 9:00PM The New York State CLE Board Regulations require all accredited CLE providers to provide documentation that CLE course attendees are, in fact, present during the course. Please review the following NYCLA rules for MCLE credit allocation and certificate distribution. i. You must sign-in and note the time of arrival to receive your course materials and receive MCLE credit. The time will be verified by the Program Assistant. ii. You will receive your MCLE certificate as you exit the room at the end of each day. The certificates will bear your name and will be arranged in alphabetical order on the tables directly outside the auditorium. iv. If you arrive after the course has begun, you must sign-in and note the time of your arrival. The time will be verified by the Program Assistant. If it has been determined that you will still receive educational value by attending a portion of the program, you will receive a pro-rated CLE certificate. v. Please note: We can only certify MCLE credit for the actual time you are in attendance. If you leave before the end of the course, you must sign-out and enter the time you are leaving. The time will be verified by the Program Assistant. If it has been determined that you received educational value from attending a portion of the program, your CLE credits will be pro-rated and the certificate will be mailed to you within one week. vi. If you leave early and do not sign out, we will assume that you left at the midpoint of the course. If it has been determined that you received educational value from the portion of the program you attended, we will pro-rate the credits accordingly unless you can provide verification of course completion. Your certificate will be mailed to you within one week. Thank you for choosing NYCLA as your CLE provider! New York County Lawyers’ Association Continuing Legal Education Institute 14 Vesey Street, New York, N.Y. 10007 • (212) 267-6646 Ethics and the Construction Lawyer Tuesday, November 30, 2010 6:00 PM – 9:00 PM AGENDA Program Chair: Joel Sciascia, Pavarini McGovern LLC Faculty: Todd Bakal, Mound, Cotton, Wollan & Greengrass Bruce Green, Louis Stein Professor, Fordham University Christopher Murray, Chartis Insurance Barry Temkin, Mound Cotton Wollan & Greengrass 5:30 PM – 6:00 PM Registration 6:00 PM – 6:10 PM Introductions and Announcements 6:10 PM – 9:00PM** Discussion of Rules, Ethics and Cases *** There will be two ten minute breaks during the evening. Ethics and The Construction Lawyer New York County Lawyers’ Association Nov. 30, 2010 354203 NYCLA Construction Law Committee • Joel Sciascia, Chair, Pavarini McGovern LLC • Barry Temkin, Mound Cotton Wollan & Greengrass • Bruce Green, Fordham U. School of Law • Christopher Murray, Chartis Insurance • Todd Bakal, Mound Cotton Wollan & Greengrass 354203 Hypothetical 1 • You represent a crane operator in a civil case arising from a crane collapse that resulted in multiple deaths and catastrophic personal injures. • Your client, the crane operator, testifies that he was not intoxicated on the job and the jury finds for your client. • Later on, your client exclaims “I can’t believe they believed that story I told them.” When you ask him what he meant, he gestures to the champagne bottle in his hand and says “Let’s just say today is not the only time I was hitting the Dom!” 354203 Ethical Considerations • NY Rule 3.3(a)(1): An attorney shall not knowingly offer or use evidence that the attorney knows to be false. If the attorney’s client has offered material evidence and the attorney comes to know of its falsity, the attorney shall take remedial measures, including if necessary, disclosure to the tribunal. 354203 Ethical Considerations Cont’d • Do you know that your client lied on the stand? - NY Rule 1.0(k) defines “knowingly,” “known,” “know,” or “knows” as actual knowledge, and provides that a person’s actual knowledge may be inferred from circumstances. - An attorney must have actual knowledge before a reporting requirement is triggered. Mere suspicions of fraud are insufficient to mandate disclosure. Doe v. Federal Grievance Committee, 847 F.2d 57 (2d Cir. 1988). - Furthermore, NY Rule 3.3, Comment [8] states that an attorney cannot ignore an obvious falsehood. 354203 Ethical Consideration Cont’d • Does an attorney’s ethical obligation survive beyond the conclusion of a case? 354203 Ethical Considerations Cont’d - ABA Rule 3.3(c): The duties stated in paragraphs (a) and (b) [regarding reasonable remedial measures] continue to the conclusion of the proceeding, and apply even if compliance requires disclosure of information otherwise protected by Rule 1.6. - This provision was not incorporated into the New York rule. - The New York State Bar Association states: “the obligation to disclose extends for as long as the effect of the fraudulent conduct on the proceeding can be remedied, which may extend beyond the end of the proceeding – but not forever. If disclosure could not remedy the effect of the conduct on the proceeding, but could merely result in punishment of the client, we do not believe NY Rule 3.3 disclosure duty applies. - N.Y.S. Bar. Op. 831 (2009) 354203 Ethical Obligations Cont’d • What is a reasonable remedial measure under NY RPC 3.3? 354203 Ethical Considerations Cont’d – Talking to client and convincing him to correct or withdraw the falsity. - Mistakes or misstatements as to non-material matters do not need to be corrected. - If the client refuses to correct the material falsity, despite the attorney’s best and persistent efforts, the attorney must take the final step of disclosing the misrepresentation to the tribunal, as is reasonably necessary to remedy the situation, even if doing so requires the attorney to reveal confidential information that would otherwise be protected by NY Rule 1.6. 354203 Ethical Considerations Cont’d • Is the answer different under the current NY RPC than under the former code? 354203 Ethical Considerations Cont’d – Yes. Under former DR-7-102(B)(1), an attorney who received false information “clearly establishing” that a client perpetrated a fraud on a “person or tribunal” had a duty to call upon the client to rectify the fraud, and if the client refused, the attorney should have revealed the fraud to the affected person or tribunal, except when the information was protected as a confidence or secret. 354203 Hypothetical 2 • You represent a subcontractor, Metallica, on a project to build a project at the former World’s Fair site in Queens. • The contract calls for pricing at cost plus 20% (10% labor and 10% materials). Metallica puts in a claim order for payment for 1,000 H-11 rebars from Wunderbar Rebar Co. at $10 a rebar. • You prepare the change order at Metallica's request while simultaneously preparing a claim order for another client, in an unrelated job. • In that other job, you learn that Wunderbar charges $3.50 on its H-11 rebars. 354203 Ethical Considerations • Do you know that Metallica committed a fraud? • Is it different if it is a public company? 354203 Ethical Considerations Cont’d • NY Rule 1.0(k) denotes “know” as actual knowledge, which may be inferred from circumstances. • If a public company? • Under both the Federal and New York State False Claims Act (31 U.S.C. § 3729 and NY State. Fin. Law, ch. 13 §§ 187-194), liability for “knowing” submissions of false claims to the federal, state or local governments can occur by (1) actual knowledge; (2) deliberate ignorance; or (3) reckless disregard of whether they are true or false. 354203 Ethical Considerations Cont’d • Does the attorney have any obligation to inform any party? 354203 Ethical Considerations Cont’d • NY Rule 1.6(a): A lawyer shall not knowingly reveal confidential information, as defined in this Rule, or use such information to the disadvantage of a client or for the advantage of the lawyer or a third person, unless – (1) the client gives informed consent, as defined in Rule 1.0(j); – (2) the disclosure is impliedly authorized to advance the best interests of the client and is either reasonable under the circumstances or customary in the professional community; or – (3) the disclosure is permitted by paragraph (b). • Confidential information consists of information gained during or relating to the representation of a client that is (a) protected by attorney-client privilege; (b) likely to be embarrassing or detrimental to the client if disclosed; or (c) information that the client has requested to be kept confidential. 354203 Ethical Obligations Cont’d • NY Rule 1.6(b): A lawyer may reveal or use confidential information to the extent that the lawyer reasonably believes necessary: – (2) to prevent the client from committing a crime; – (3) to withdraw a written or oral opinion or representation previously given by the lawyer and reasonably believed by the lawyer still to be relied upon by a third person, where the lawyer has discovered that the opinion or representation was based on materially inaccurate information or is being used to further a crime or fraud; – (6) when permitted or required under these Rules or to comply with other law or court order.