Disclosure of Conflicts Information When Lawyers Move Between Law Firms

A new ABA opinion concludes that limited information related to a representation and necessary for lateral-hire conflict-checking may be communicated to the hiring firm without the candidate violating Rule 1.6. The opinion considers various exceptions to confidentiality under Rule 1.6(b), but concludes that they do not apply. Op. 09-455 (October 8, 2009) concludes that Rule 1.6(b)(6) -- disclosure of client information "necessary. . .to comply with other law" -- does not apply because "other" seems to mean "other than the Rules."
Op. 09-455 concludes, nonetheless, that certain limited information that is covered by Rule 1.6 may (unless there are other problems, such as actual harm to the client) be disclosed as necessary for lateral hire conflict-checking. The conclusion is based on the Rules being "rules of reason," on analogies to other ABA opinions and rule amendment, and (above all) because "disclosure of conflicts information otherwise protected by Rule 1.6 should be considered permissible as necessary to comply with the Rules." Put differently, public policy permits that which Rule 1.6(b)(6) addresses generally, but does not permit.
I think the ABA Model Rules should permit the disclosures permitted by Op. 09-455. However, the straightforward way to do that is to delete "other" from Model Rule 1.6(b)(6) (or otherwise make clear that "law" includes the Rules), rather than have a series of ABA opinions that have the same effect as such a rule amendment would.

Federal Judge Holds Red Flags Rule Over-Reaches When Applied to Lawyers

A federal judge has called the Federal Trade Commission’s Red Flags Rule over-reaching in its application to lawyers, and granted partial summary judgment on October 29, 2009 to the American Bar Association (“ABA”). Counsel for the ABA says it has won all the relief it sought in its challenge to the regulation, including injunctive relief.

The Red Flags Rule is an identity-theft prevention matter. It requires creditors who defer payments for goods and services to develop and implement written programs to identify, detect, and respond to warning signs of identity theft. In spring 2009, the FTC concluded that lawyers are considered creditors under the rule.

On August 27, 2009, the American Bar Association filed suit in the U.S. District Court for the District of Columbia against the Federal Trade Commission, seeking an injunction to block the application of the "Red Flags Rule" to practicing lawyers.

After the October 29, 2009 hearing, ABA President Carolyn B. Lamm issued a statement:

“This ruling is an important victory for American lawyers and the clients we serve. The court recognized that the Federal Trade Commission’s interpretation of the Fair and Accurate Credit Transactions Act over-reaches and its application to lawyers is unreasonable. By voiding the FTC’s interpretation of a statue that was clearly not intended to apply to the legal profession, the court has ensured that lawyers stay focused on the mission of their work: providing aid and counsel to the individuals and organizations that need us.”

An account of the hearing quotes Walton as saying, “I have a real problem with concluding that Congress intended to regulate lawyers when these statutes were enacted.” http://legaltimes.typepad.com/blt/2009/10/judge-ftc-cannot-make-lawyers-comply-with-identity-theft-laws.html

On October 30, 2009, Judge Walton entered an Order granting summary judgment as to Count I of the ABA’s Complaint alleging that the Commission's application of the Red Flags Rule to attorneys violates 5 U.S.C. § 706(2)(C) as it is "in excess of statutory jurisdiction, authority, or limitations, or short of statutory right." A memorandum opinion with points and authorities will issue within 30 days.

Legal Malpractice

The New Jersey Supreme Court is about to take another look at the "settle and sue" syndrome: When a client settles a case and then sues his or her lawyer over it. The case is Guido v. Duane Morris.

ABA Commission to Study Globalization of Legal Services and Impact of Techonology on Law Practice

ABA President Carolyn B. Lamm created the Commission on Ethics 20/20. The Commission will perform a thorough review of the ABA Model Rules of Professional Conduct and the U.S. system of lawyer regulation, and will ultimately propose policy recommendations that will allow lawyers and law firms to better serve their clients, the courts, and the public now and well into the future. The Commission members represent a broad spectrum of expertise in U.S. and global ethics rules, lawyer regulation, globalization, and technology. They come from the judiciary (state and federal), law firms (large and small), corporate counsel, government, and academia. You can learn more about them and the Commission’s work at www.abanet.org/ethics2020

Due to globalization and technology's impact on how lawyer's practice--enabling lawyers and law firms to have a virtual presence in other countries--questions have arisen regarding how the practice of law may be regulated in the future, including choice of law issues. Overseas, in the U.K and Austrailia, for example, there are significant changes being made in how legal services are delivered that are currently prohibited by bar regulators in the U.S.

The Commission will engage ABA and affiliated entities, the judiciary, the bar (including international, state, local, and specialty bar associations), and the public in framing and discussing the issues, and enlist their support in fashioning policy recommendations. The Commission will hold public hearings, roundtables, and present educational programs live and via the web. It will conduct e-surveys and provide broad opportunities for written submissions and comments. At the conclusion of its three-year term, the Commission will issue a report with its recommendations.

Trial Conduct: Lawyer denied right to wear baseball cap in court

A federal district court in New York has ruled that a lawyer has no free speech right to wear a baseball cap while appearing in court as a pro se litigant. (Bank v. Katz, E.D.N.Y., No. 08-cv-1033, 9/24/09). The lawyer's desire to make a “fashion statement” is not a fundamental right that trumps the state court's legitimate interest in “maintaining proper decorum, etiquette, and respect for the judicial process,” the court wrote. Judge Nicholas G. Garufis stated: “[I]t is appropriate for a court to expect litigants to appear in attire that is suitable to the dignity of a courtroom, rather than to show up in clothes they might have worn to a baseball game.”

Prosecutor's Duty to Disclose Exculpatory Information

The ABA's Standing Committee on Legal Ethics and Professional Responsiblity has just issued a new opinion, Formal Op. 09-454 (2009) which holds that a prosecutor's ethical duty under Model Rule 3.8 is broader in scope than the constitutional requirements under Brady v. Maryland. The key difference, according to the Committee, is that Rule 3.8 (d) "requires the disclosure of evidence or information favorable to the defense without regard to the anticipated impact of the evidence or information on the trial's outcome." (emphasis added). In contrast, the constitutional standard is that the prosecutor need only turn over material evidence which means that the trial's outcome would likely had been different had the disclosure been made.

Ex Parte Contacts with Employees of Represented Corporation

A new decision in this developing area of law holds that plaintiffs' counsel may contact non-supervisory employees of the defendant company that is represented by counsel in a Title VII action in federal court. The case is Smith v. United Salt Corp, USDC W.D. Va. (Sept. 9. 2009). The defendant argued that Lewis v. CSX Transp. Inc., 202 F.R.D. 464 (W. D. Va. 2001) is controlling and that such employee's are "off limits" for ex parte contacts by plaintiff's counsel. Plaintiffs counsel relied in part on Cmt. [4] to Va. R. Prof. Conduct 4.2 which indicates that employees that cannot bind the employer or who are outside the "control group" are not regarded as "represented" by counsel for the employer. Judge Sargent ruled that statements by non-supervisory employees in a Title VII case do not bind the employer and cannot be used as admissions or impute liability to the employer. The employer is subject to vicarious liability only for acts of supervisory personnel. Applying both Rule 4.2 and Fed. R. Evid 801 (d)(2)(D), Judge Sargent held that the ex parte contacts are not prohibited.

Justice Sotomayor and Per Curiam Orders

In Ricci vs. DeStefano, more than a dozen white firefighters, as well as one Hispanic, sued New Haven, Conn., for discrimination after the city threw out the results of its lieutenant and captain exams because black firefighters performed disproportionately poorly and wouldn't have been promoted. A federal district court judge found in 2006 that the city was justified. The firefighters appealed, and the case was assigned to a three-judge panel of the 2nd Circuit Court of Appeals that included Sotomayor. In February 2008, the panel issued a summary order, without comment, upholding the lower court's finding. Another 2nd Circuit judge asked the full appeals court to rehear the case, but the court's other judges declined. After that, Sotomayor and the other two judges on the panel issued a new "per curiam" order that adopted the lower court's ruling as their own, calling it "thorough, thoughtful, and well-reasoned."

The issue of the per curiam order came up during the Senate confirmation hearings.

In a July 1, 2009, column in Human Events headlined "So much for wise Latinas," conservative columnist Coulter wrote that "Sotomayor threw out their lawsuit in a sneaky, unsigned opinion — the judicial equivalent of 'talk to the hand.'" Coulter's criticism was unfair.

Practicing lawyers understand that "unsigned" means the ruling was "per curiam," or "for the court" — simply, that everyone on the panel agreed with the decision and decided to issue a single opinion. The panel that heard the case stands behind its decision. Coulter's attempt to distort the truth by accusing Sotomayor of hiding behind a "bad decision" is disingenuous. There was nothing sneaky or underhanded about the decision made in this case, even if you do not agree with it. Moreover, federal judges cannot be removed for making unpopular decisions so what motivation would Sotomayor, or any other federal judge have to "hide behing a per curiam order?" The court's file, a public record, will reveal which judges heard the case even if they are not identified in the per curiam opinion.

Perhaps this discussion raises the question of whether judges should be required to at least sign or be identified as the author of an opinion. If a per curiam opinion represents the opinion shared by the three-judge panel that heard the case, why should they not be identified or sign off on the opinion?

Lawyer Advertising Rules Challenged in Federal Court

On August 3, 2009, U.S. District Court Judge Martin L.C. Feldman issued an order and reasons ruling on cross motions for summary judgment. Judge Feldman's order upheld most of the challenged provisions of the Louisiana advertising rules scheduled to go into effect on October 1, 2009, while also denying the defendants' motion to dismiss. Washington D.C.-based Public Citizen, Inc. and lawyers Morris Bart, William N. Gee III and Scott G. Wolfe, Jr. sued the Louisiana Attorney Disciplinary Board, its chair and its chief disciplinary counsel to block enforcement of the Rules claiming that they were unconstitutional.

Citing the U.S. Supreme Court in Edenfield v. Fane, the Court stated, "The State may not by scatter-shot condemn lawyer advertising, but does indeed have a substantial interest in addressing the ethical standards of the profession, as well as in preventing public confusion or deception."In its 39-page Order, the Court upheld:

Rule 7.2 (c) (1) (D) - References to Testimonials of Past ResultsThe Court stated that "reference to past results, even if truthful,...could... be inherently misleading."

Rule 7.2 (c) (1) (E) - Communications that Promise ResultsThe Court said "prohibition of communications that promise results regulates only speech that is inherently misleading."

Rule 7.2 (c) (1) (J) - Portrayal of a Judge or JuryThe Court said it agreed that "portrayal of a judge or jury in an ad is inherently misleading." It further stated "such material simply conveys an untrue message. It is compellingly misleading."

Rule 7.2 (c) (1) (L) - Use of Mottos that State or Imply An Ability to Obtain ResultsThe Court found that this provision "materially advances the State's interest in preventing deception of the public, and is narrowly tailored to achieve those ends."

Rule 7.2 (c) (1) (I) - Non-Authentic ScenesThe Court cited Zauderer, which held that "an advertizer's (sic) rights are adequately protected as long as the disclosure requirements are reasonably related to the State's interest in preventing deception of consumers." The Court stated "such dramatizations are in and of themselves capable of unintended guile or delusion."

Rule 7.2(c)(10) - Disclosures and DisclaimersFurther citing Zauderer, the Court stated that "the written disclaimer requirements of Rule 7.2(c)(10)" do not violate the First Amendment and "this Court believes such disclaimers would have a beneficial purpose."

Rule 7.2(c)(11) and Rule 7.6(c)(3) - Payment by Non-Advertising Lawyer and Electronic Mail CommunicationsThe Court noted that the plaintiffs did not address these Rules in their motion for summary judgment, "thus, their attack does not reach those Rules."

Finding a lack of evidentiary support, Judge Feldman struck down the additional disclosure requirements for a non-lawyer spokesperson under Rule 7.5(b)(2)(C) and also struck down Rule 7.6(d), and Rule 7.7 as it applies to the filing requirements for Internet advertising.

To review the court's order go to this link:

http://www.lsba.org/2007MemberServices/Advert0609/OrderandReasons8-3-09.pdf

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.

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.

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.

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.