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Tuesday, July 28, 2009

Raid on Client Security Funds

Desparate times lead to desparate measures. Blame it on the recession as state governments strapped for cash look for ways to balance the budget. The August 2009 issue of The ABA Journal "Fast Moves in the Nutmet State" reports how the Connecticut legislature signed into law a measure that would allow it to siphon $2 million from the Client Protection Funds established by the Connecticut Bar Association. Fortunately, the bar fought the law and won!

Like the Virginia State Bar, the Connecticut Bar Association (CBA) collects dues from the lawyers and uses some of those dues to fund the Client Protection Fund (CPF). The purpose of the CPF is to remimburse clients who have suffered a loss of money due to dishonest conduct by their lawyer. Often the CPF is the only resort or remedy because malpractice insurance does not pay claims involving dishonesty by a lawyer. A CPF also does not generally pay claims involving negligence by a lawyer. The client will have to sue the lawyer for malpractice. Only the state of Oregon requires lawyers to have malpractice insurance although many lawyers have malpractice insurance anyway.

The CBA attempted to negotiate with the legislature but had to file suit and also launched a campaign to educate the legislators and the public about the nature and purpose of the CPF, emphasizing that the legislature's impoundment of those funds was an improper exercise of governmental power and an inappropriate way to bail out the state budget no matter how dire the circumstances. Not long after the CBA filed suit, the Connecticut General Assembly agreed to restore the funds to the CPF. The CBA lobbied successfully for a statute that would prohibit any future attempts to use CPF funds for any other purpose except as specified by the state supreme court which oversees the CPF.

The Ethical Duty of Confidentiality and the Attorney-Client Privilege

Lawyers often misunderstand the differences between the Ethical Duty of Confidentiality [Rule 1.6 of the VA or ABA Rules of Prof. Conduct] and the "Attorney-Client Privilege." There are some similarities but first and foremost the scope of information protected under the ACP is much more narrow than information protected under Rule 1.6. The ACP only protects the essence of a communication made in confidence between a client and a lawyer when the client is seeking legal advice or representation. Information from other sources given by the client to the lawyer does not make that information protected under the ACP. For example, a client's ordinary business records do not become privileged by handing them over to their lawyer. Lawyers often believe a client's file is "privileged" when in fact most of the material in the file is not likely protected under the ACP.

On the other hand, under ABA Model Rule 1.6, any information relating to the representation of a client is protected as confidential under Rule 1.6 even though it is not "privileged" under the ACP. In certain instances, even the client's identity or the fact of the representation may be information protected under Rule 1.6, meaning that the lawyer and/or her staff cannot disclose that information unless the client consents. Also, that fact the information relating to the representation is known or shared by others, or even "a matter of public record" does not remove that information from Rule 1.6's protection. Even if the client has shared the same information with others--which would waive protection under the ACP--a lawyer cannot reveal that information to others without client consent.

Virginia's version of Rule 1.6 is not quite as broad in scope as ABA Model Rule 1.6. Virginia's rule protects a client's "confidences," i.e., information protected under the ACP and "secrets" any other information which either the client has requested be kept confidential or which, if disclosed, would be "detrimental or embarrassing to the client."

Like information protected under the ACP, information protected under Rule 1.6 remains confidential and that protection survives the termination of the lawyer-client relationship and even the death of the client.

The ACP is an evidentiary doctrine meaning that a client's adversary is not entitled to discover, use or admit into evidence information that is protected under the ACP. A party in litigation may be entitled to a protective order as to matters that are privileged under the ACP or work product doctrine. A court commits legal error if it incorrectly orders a party to disclose information that is protected under the ACP. Such a ruling may leave a party and their lawyer with a difficult choice because generally rulings made on the ACP occur in the context of pre-trial discovery and there is generally no interlocutory appeal that may be taken to challenge the court's decision. A party may refuse to comply with an order requiring disclosure of information that the party insists is privileged and be found in contempt. The contempt order is a final order from which an appeal may be taken. On the other hand, if the party complies with the court's order and discloses information it unsuccessfully defended as protected under the ACP, the privilege will be deemed waived, and subsequent appeal of an adverse decision will be of no avail.

Unlike the ACP, the ethical duty of confidentiality is not an evidentiary matter and may not serve as a basis to resist a court's order to disclose information otherwise protected under Rule 1.6. Both the ABA and Virginia Rule 1.6 permit lawyer to disclose information otherwise protected under the rule when required by law or a court order.

Information protected under the ACP may be disclosed if the client consents or if there has been a waiver of the privilege. The ACP does not attach to communications by and between jointly represented clients and their common lawyer. The ACP does not apply if the client is communicating with a lawyer for the purpose of securing legal advice to commit a crime or fraud. This is called the "crime fraud" exception to the ACP. A client will be deemed to have waived the ACP if he or she accuses the lawyer of wrongdoing or unethical conduct or if a dispute arises between the lawyer and the client relating to the representation. Under those circunstances, the lawyer may reveal information that would otherwise be privileged when necessary to defend herself against the client's accusations of misconduct or to establish a claim against the client for unpaid legal fees. Similar exceptions apply to information protected under Rule 1.6. Under ABA Rule 1.6 the lawyer may reveal information necessary to prevent serious bodily injury or death to another, or to prevent the client from committing a crime or fraud that is reasonably certain to cause substantial economic injury to another, or to mitigate the consequences. Under Virginia's Rule 1.6 a lawyer must reveal the client's stated intent to commit any crime and must advise the court if the client insists on committing perjury or has perpetrated a fraud on the court. Under ABA Model Rule 3.3, a lawyer must take remedial measures if the client insists on committing perjury or if the lawyer has submitted evidence or information that the lawyer has since learned is false or fraudulent

A lawyer may be "impliedly authorized" to disclose information protected under Rule 1.6 if necessary to carry out the representation of the client. Information given by the client to non-lawyer support staff employed by the lawyer (paralegal or secretary) may also be protected under both the ACP or Rule 1.6.

Monday, July 27, 2009

Law Firm Names: Use of the term "Associates"

Law firms must have at least two lawyers in them in order to use the word “Associates” in their name, and at least three lawyers to use the phrase “& Associates,” according to a Minnesota legal ethics opinion (Minnesota Lawyers Professional Responsibility Bd., Op. 20, 6/18/09).
Sole practitioners must refrain from including the word to describe their practice, the board said, because it would convey the impression that the practice has more attorneys in it than is actually the case. Use of the term "Associates" is also improper if the lawyer is merely sharing office space with other lawyers.

Friday, July 24, 2009

Ethics of Tweeting and Blogging

I spoke on a panel today about the ethics issues that lawyers may face when blogging, tweeting or using LinkedIn. One of the panelists, Jeff Geiger, a partner at SandsAnderson in Richmond, VA commented that law firms need to have a policy for employees that use social media and networking. It seemed that most lawyers in the audience did not blog or tweet but were interested in how these tools could be used to market legal services. I talked about whether blogs and tweets were subject to bar rules regarding lawyer advertising and the importance of not revealing client information (without client consent) or giving legal advice through this type of media.

Wednesday, July 22, 2009

Is Secret Recording Unethical?

The Supreme Court of Virginia rejected an attempt by the Virginia State Bar to amend Rule 8.4 of the Rules of Professional Conduct that would allow lawyers under certain circumstances to conduct an investigation on behalf of a client using a recording device. In Virginia, undisclosed recording is not illegal under federal or state law if the recorder is a participant in the communication. The legal ethics committee of the Virginia State Bar, however, has opined that it is unethical for a lawyer to record or advise another to record a conversation without the other party's knowledge and consent. In other words, conduct that is legal is nonetheless unethical. The Court did not provide any comment in its order rejecting the bar's petition. Lawyers have to "walk the tightrope" when a client asks if he or she can tape record a spouse that is abusing them. It seems to me that lawyers should be able to advise clients regarding conduct that is legal. Unfortunately, doing so places the lawyer at risk of being disciplined. This is not a satisfactory state of affairs, in my view.