I. INTRODUCTION: A. Intro 1. There is Always an Underground Ethical Aspect to an Atty’s Work: many of the ethical problems that confront attys are unseen or unidentified – therefore they sneak up on you (like a dull toothache) – the lesson is to be aware of the underlying ethical considerations at all times. B. Morality, Ethics, Professional Responsibility and the Law: Where does the Law Fit Into That Sort of Stuff? a. Public Perceptions of Attys: 1) Lawyers have a very visible role in society: a) Lawyers are also an integral part in the complex process of dispute resolution. 2) Growing cynicism about lawyers: a) Reasons for the Cynicism: (1) Public perception of lawyers is that of a wealthy, privileged class (i.e., those who aren‟t lawyers cannot practice law). (2) Public Morality Disconnect: some of the things we do as lawyers are seen as outside the bounds of society. (a) Zealous Advocacy Regardless of Personal Morality (MR 1.2(b), (d). (b) Public v. private morality: in many situations the public‟s view and the lawyer‟s private view of morality coincide, but not always. (c) Defense atty’s role is to protect the rights of even the guilty while the prosecutor’s role is to uphold the laws that reflect the view of society (thus society‟s public morality is usually reflected in prosecutor which defense atty is asked how can he represent a guilty person). (3) Argue in the Alternative: lawyers operate by arguing inconsistent alternatives, mitigating factors – this seems unethical to many in society. 3) Lawyers view themselves as gatekeepers of civilization: lawyers develop the system that is the societal mechanism for dispute resolution. 4) The public generally views laws as a restriction on their freedom. a) Thomas Jefferson - believed that laws are not restrictions, but rather a means to freedom, and as a means of preventing people from harming e/o. b) Holmes - lawyers are the price we pay for civilization. Role Differentiated Behavior: 1) Definition: method by which an individual lawyer squares his individual beliefs with the needs of the client and the needs of the legal profession. Thus the lawyer is to represent a client vigorously, even though the lawyer and the client may not agree with e/o or have opposite moral viewpoints. 2) Garbage Man Analogy: a) The garbage man does not like what he has to haul away; likewise, the atty does not always have to approve of his client‟s character to represent him. 3) An Atty’s Personal Views Are Irrelevant to Representation: the job of the lawyer is not 1. b. -1- to approve or disapprove of the character of his or her client - if lawyer is ordered to represent his client effectively, lawyer is to treat his own personal views as being irrelevant to the representation of the client. a) Lawyer’s personal revulsion at what his client has done should not play a part in lawyer‟s representation. b) MR 1.2(b) - a lawyer‟s representation of a client is not an endorsement of the client‟s actions or views. c) MR 1.2(d) & CMT#6 - a lawyer shall not advise a client to engage in criminal activity or assist client in activity that lawyer knows is criminal, but lawyer may discuss the legal consequences of any proposed course of conduct with a client. d) CMT#6 - there is a big difference b/n presenting an analysis of legal aspects of questionable conduct and recommending the means by which a crime or fraud might be committed with. e) Whorehouse hypo: Client wants to buy house. You know client will run whorehouse out of the house, but she does not ask you about the propriety of her business ventures. Can you represent her? Yes. You don‟t know client will use house as a whorehouse. It may be legit to represent a client so long as the engagement has no immediate illegality. So if client told you outright that it would be used as a whorehouse, you would not be able to represent her. c. Garratt v. Dailey - 5 year old pulls out chair from under elderly lady – issues to take note of in this case and follow throughout the course. 1) Who is the client? child & parents a) Note: there is no such thing as a group client - so if atty is representing parents and child, lawyer has 3 clients - thus there is always a potential for conflict of interest. (For ex: lawyer is presented with a settlement offer, but parents refuse. Lawyer, however, does not want to subject 5 yr old kid to the rigors of trial. Thus there is a conflict of interest). 2) Woodshedding – how far can atty go in influencing client’s or witness’ testimony? a) Especially when dealing with a susceptible client the lawyer needs to guard against overpreparation to the extent of putting words in the client‟s mouth b/c testimony might be altered to the point that it is no longer truthful. b) Discussing the law with the client BEFORE listening to the client’s story may lead to you putting words in the client’s mouth. 3) How should an atty deal with a child W? a) Fairness: Was it “fair” to sue a 5 yr old child? Is it fair to have child suffer for atty‟s screw ups? 4) What is the atty’s duty when a client lies? 5) What is atty’s duty when atty lies? In questioning Brian re: whether other kids pulled chairs out from under people, P‟s atty argued he was just trying to refresh Brian‟s memory - looks like P‟s lawyer lied to the ct. 6) Competence a) Competence - Rule 1.1 - a lawyer shall provide competent legal representation Brian‟s lawyer did not pursue an appealable issue, so he lost it. He screwed up badly and Brian suffers as a result of his atty‟s incompetence. (1) CMT#5 - atty must use proper methods and procedures. 2. a. b. c. Background of the Legal Profession: Originally, private disputes were dealt with in the religious/social process. 11th Century - removal of law from religious to legal dispute resolution process. Western legal tradition is still an amalgamation of church law, feudal law, and roman civil law - all the -2- trappings of the law, oaths, perjury, placing hand on Bible, etc, based on historical traditions. Self-Regulation: a. Tools of Self-Regulation: 1) Sources of self-regulation: a) Codes of Conduct (state and MRs). b) Ethics Opinions c) Non-legal professional sources (threat of malpractice and federal agency rules). History of the Model Rules: a) ABA Canons of Professional Ethics (1908): MR had their beginnings in this. b) ABA Model Code of Professional Responsibility (1969): the 2nd codification of the Model Rules - some states still follow the 1969 version of the MR. c) ABA Model of Rules of Professional Conduct (1983): the most recent edition. (1) NY & Cal haven‟t adopted any version of the MR and instead have made their own rules. d) ALI RSTMT (Second), The Law Governing Lawyers (2000): The Organized Profession is a Form of Self-Regulation The right to practice law is granted by the states (there is NO federal bar) – atty can only practice law in a state if atty passes that state‟s bar. b) Although there is no federal bar there is a national interest in state bar associations. c) Admission to practice before a federal court: once you become licensed in a state, you can be admitted to practice before a federal court if you apply to do so. a) Methods of Self-Regulation Voluntary Bar Associations (e.g., ABA): it‟s the largest national organization - about 45% of all lawyers belong to it. b) Specialty Lawyer Associations (e.g., Am. Ass‟n of Crim‟l Lawyers). c) Local Bar Associations (e.g., Philadelphia Bar Ass‟n). a) 4 Sources of Conduct Rules: State Conduct Rules: under the authority of each state‟s supreme court - sanctions are imposed under the inherent power of the court. (1) State standards of conduct are BINDING. (2) Bar Rules set the minimum standard for practice; thus atty can set higher standards for himself. (a) MR Scope - MR are rules of reason. Rules define areas where the atty has discretion and also define the nature of the relationship between lawyer and client. (3) Types of State Bars: (a) Unified Bar: some states require lawyers admitted to their bars to join and pay dues to the state bar association in order to practice in that state. Disciplinary mechanisms then reach all attorneys. (b) ??? Voluntary Bar: some states say that belonging to the bar is voluntary. Additional mechanisms for discipline must then be established. b) ABA Model Rules: (1) The Model Rules of Professional Conduct were developed by ABA. (2) Courts may Also look at history of rules preceding MRs (e.g., Canons, etc.) (3) State‟s Approaches: a) 3. 2) 3) 4) 5) -3- (a) about 40 states have adopted the Model Rules in full or modified form. (b) In essence, MR sets a nation-wide standard of conduct b/c so many states have adopted the MR. (4) Federal Court‟s Approaches: some federal courts have adopted MR in their entirety (US Tax Ct). (5) Authority of Model Rules: (a) Model Rules (developed by ABA) have no binding effect - the primary standards governing lawyers are state-based (i.e. state laws) – however, states may look to MRs for how to implement their own ethical rules. (b) NOTE: the state rules and ABA MR cannot be used as a cause of action against an errant lawyer; they are not a basis for civil liability. c) Ethics Opinions: often issued by the ABA as Formal Opinions. State and local bar associations also issue ethics opinions as well. (1) No binding effect but may be a persuasive source. (2) Example: double-billing was common practice before 1993 when ABA issued formal opinion saying it violates “reasonableness” of MR 1.5 and thus constitutes misconduct under MR 8.4. d) ALI RSTMT (Second): not really second, just another source for interpreting state conduct rules. b. Bar Admission: Character and Fitness Inquiries: 1) Generally: a) Common feature – applicant must be of good moral character b) There is no specific standard for truth-telling on the bar application. MR 8.1 - Bar Admission and Disciplinary Matters: Text of Rule: An applicant for admission to the bar, or a lawyer in connection with a bar admission application or in connections with a disciplinary matter, shall not (a) knowingly make a false statement of material fact; or (b) fail to disclose a fact necessary to correct a misapprehension known by the person to have arisen in the matter, or knowingly fail to respond to a lawful demand for information from an admissions or disciplinary authority, except that this Rule does not require disclosure of info otherwise by Rule 1.6. b) Compare to PA Rule 8.1: (1) Text of Rule: a lawyer may be subject to discipline if lawyer made a materially false statement in bar application, or if lawyer failed to disclose a material fact requested in a disciplinary matter. (2) Different focus based on semantics: (a) ABA MR says “false statement of material fact”: focus is on the fact. i. Atty cannot make a false statement about an important fact. (b) PA says “materially false statement”: i. Atty cannot make a statement that is importantly false. ii. Does not matter how important the fact is. iii. Thus, PA Rule seems to suggest that some stuff can be false so long as it is not material. c) “material” is a vague standard - go with your gut feeling as to what facts are “material”. d) There is a rebuttable presumption of good character until Board Examiners receive info to the contrary. (1) Thus, examiners looking for anything sufficiently important to examine further to see if presumption is rebutted. e) Most Bar examiners would prefer to have disclosure with explanation rather than nondisclosure. a) 2) -4- f) 3) The duty of accuracy and truth-telling is continuing. MR 8.4 - Misconduct: Text of Rule: It is professional misconduct for a lawyer to: (a) violate or attempt to violate the rules of professional misconduct, knowingly assist or induce another to do so, or do so through the acts of another; (b) commit a criminal act that reflects adversely on the lawyer‟s honesty, trustworthiness or fitness as a lawyer in other respects; (c) engage in conduct involving dishonesty, fraud, deceit or misrepresentation; (d) engage in conduct that is prejudicial to the administration of justice; (e) state or imply an ability to influence improperly a gov‟t agency or official; OR (f) knowingly assist a judge or judicial officer in conduct that is a violation of applicable rules of judicial conduct or other law. b) Most state bar applications and MR are broad in their definition of good lawyers; there is no affirmative standard. c) PA state Bar application recommendation letter presumes that the applicant to be of good character - it is only if the applicant‟s reference person feels that the applicant may not meet the character standards that the reference person must write a letter. d) Hypo: associate knows law clerk took money but replaced it before it was noticed to be missing. PA application process allows attorneys personal belief/feelings to determine what will be disclosed. (1) Mulroney believes that this past conduct should be disclosed and associate may make whatever recommendation that associate feels is justified. a) c. Disciplinary Mechanism: 1) ABA Reasons for Impose Discipline Under ABA Standards: a) (5.1) Failure to maintain personal integrity. b) (5.11) Disbarment appropriate when: (1) lawyer engages in serious criminal conduct (i.e. interfering w/ justice fraud, extortion, theft, drugs, etc) (2) engaging in any conduct that seriously adversely reflects on lawyer‟s fitness to practice. c) (5.12) Suspension is appropriate when lawyer knowingly engages in activities not listed in 5.11 that involve fraud, dishonesty, deceit, or misrepresentation that adversely affect atty‟s ability to practice law. d) (5.13) Reprimand appropriate for all other activities not already listed that involve fraud, dishonesty, deceit, misrep that reflects adversely on lawyer‟s ability to practice law. e) (5.14) Admonition appropriate for all other activities that reflects adversely on atty‟s ability to practice law. f) (5.2) failure to maintain public trust can result in disbarment or suspension (applies to lawyers in official positions abusing their powers). Most Common Complaints Against Lawyers: a) Not keeping the client informed b) Failure to know the law c) Misrepresentation There has been significant debate over the amount of sunshine/transparency in disciplinary processes. Disciplinary Process: 2) 3) 4) -5- Complaint Filed with Highest State Court: disciplinary process usually takes place under the authority of the highest court in the state. b) Initial Screening: each claim goes through an initial screening process in which most claims are weeded out (usually about 50%). c) Disciplinary Board: (1) If the claim has not been weeded out, it goes to this board, which determines whether and to what extent sanctions should be issued. (2) Matters before the Disciplinary Board are NOT matters of the public record and the court system is not involved - it is a private process. d) Appeal: attorney can appeal the decision of the Disciplinary Board up to the level of the state supreme court. (1) Impact of Appeal: by appealing to the state supreme court, the matter then becomes a matter of the public record b/c the ct system is now involved. a) 5) 6) d. State Bar Ass’n Fund. Never represent yourself – get atty who specializes in atty discipline. Precatory Creeds of Conduct: 1) 2) 3) 4) 5) Definition: these are non-binding creeds of civility and professionalism describing how attys should act toward each other (usually created by local & state bar ass‟ns). Although these creeds are non-binding on an atty, they set standards that an atty should follow. Example: PA Professionalism Rules instruct lawyers to be civil & punctual. Minimum Standards: standards set forth by these ass‟ns and the ABA are the minimum; an atty can always hold himself up to a higher standard. Competency: a) Text of Rule: A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation. b) Staying Current: atty has a duty to stay current w/ changes in the law & be competent in the field in which he practices. c) MR 1.1 does not define “competence” but CMT#2 says “a lawyer does not need special training or experience to handle legal problems with which the lawyer is unfamiliar”. d) Standard of competence: the competency standard for lawyers is a reasonable and prudent lawyer standard - what would a reasonable lawyer in the same circumstances do? (1) This is a highly fact specific question. (a) Example - Lucas v. Haas - attorney drafted a trust that violated the Rule Against Perpetuities. Court held that this was not incompetence on the part of the drafting lawyer b/c RAP is too difficult and lawyers of ordinary skill and diligence don‟t understand RAP. e) The atty‟s duty of competence is competence that must be shown to a known, specified client. f) Duty of competence applies only to the specific issue that the client asks the lawyer to address. (1) Example: if client consults you about a child custody matter, the client can‟t win a malpractice suit he brings against you re: toxic waste dumping. g) Using Competence as Grounds for Malpractice Suit (1) Difficult to meet the required showing - Garrett v. Dailey: attorney missed an appealable issue and client ultimately loses. It‟s difficult for clients to win a malpractice suit against attys b/c they must show that they would have won the initial suit but for -6- their atty‟s incompetence. h) Effect of Incompetence: if an attorney does not act competently, it is professional misconduct under MR 8.4. Outside Regulation of the Practice of Law: a. Malpractice: 1) Decisional law arising from malpractice suits identifies standards of good and bad lawyering - thus, the C/L of the law of lawyering is the outcome of all malpractice law. a) Malpractice law is one of the most significant outside influences on legal profession. Cases: a) 4. 2) Muhammad v. Strassburger: Facts: infant dies following circumcision. Parents sue their atty after atty & hospital reached a settlement of $26,000 for death of infant. Parents agreed to the settlement. Parents later didn‟t like the amt of the settlement & sue their lawyer. (2) Held: parents already agreed on the settlement and are not allowed to renege their agreement after it was already made. (3) Reason: Ct stressed the importance of settlements in promoting judicial economy/efficiency - cts like it when cases are settled out of court b/c that is one less case that will swamp the ct. (4) Note on Justice: this case illustrates that there are different kinds of justice - what may not seem fair to one of the parties (Muhammads only got $26k for death of their son) may be fair on a systematic/social basis (judicial efficiency). (1) b) Pittsburgh Coal & Coke v. Cuteri (1) Facts: law firm prepared an opinion letter that did not disclose title problems. Pitt only asked for firm to do a lien search; it didn‟t ask firm to do a title search. Firm knew or should have known that there were problems w/ the title b/c of its previous dealings w/ Cuteri. Purchaser (Pitt) relied on law firm‟s letter. Pitt later tried to sell property & 3d party purchaser discovered title problems & didn‟t buy property. Pitt sues law firm. (2) Held: in favor of law firm. (3) Reason: ct stated that a lien search is different from a title search and that firm was not asked to do title search - outside the scope of engagement. (a) Text of MR 1.2(a) -Scope of Representation: A lawyer shall abide by a client‟s decisions concerning the objectives of representation . . . and shall consult with the client as to the means by which they are to be pursued. i. Objectives: client has the responsibility to select the objectives/scope of the representation. ii. Means: once the client selects the scope/goal of the representation, the lawyer has the responsibility to select the means (i.e. technical & legal tactical issues) to achieve the client‟s goal (see CMT#1). (b) Issue: who was the client? (c) Pitt sued in tort (negligence). For Pitt to recover, Pitt had to show that defendant law firm owed Pitt a duty, that the plaintiff was foreseeable and that the harm was foreseeable. (4) Mulroney‟s Thoughts: thinks PA ct screwed up & that law firm should be held responsible. Scope of engagement question is a contract issue. Here, Pitt sued under tort theory - PA ct dodged the issue. b. Indirect Regulation by Malpractice Insurance Carriers: -7- 1) Influential: malpractice insurance carriers have a big stake in how well a lawyer performs ethically. a) Why? B/c malpractice insurers set the standards for lawyering. 2) 3 Areas Where Insurance Carriers Exert Greatest Influence in Lawyering: a) Business transactions. b) Conflict of laws. c) Law office management issues. 3) Insurance Standards Are More Stringent than Rules: a) The standards set by malpractice insurance carriers are MORE stringent than the Model Rules b) Malpractice coverage may restrict certain types of behavior that are otherwise allowable under the Model Rules. c) Example: in contrast w/ MR 1.8, a carrier will not grant insurance to a lawyer who has engaged in a business transaction with a client. C. The Problem of Dealing with Minimum Standards: 1. The problem with this course is that it only tells you what you should not do (“thou shall not”) and does not tell you what you should do. II. WHO IS THE CLIENT? WHY SHOULD YOU CARE? A. The Lawyer’s Principle Duties: Summary: Loyalty - The Omnibus Duty: a. Lawyer‟s duties: 1) Representation of client; 2) Officer of legal system; AND 3) Public citizen. Duty of Loyalty: 1) Omnibus Rule: built into all other rules 2) Each of 4 Cs is written in reference to the CLIENT. 3) 4 Components (4 Cs): a) Competence - MR 1.1 (see above) 1. b. -8- b) Communication - MR 1.4 c) Confidences - MR 1.6 d) Conflicts (the absence thereof) - MR 1.7 - 1.11 c. Who is the client? 1) No definition in MRs. 2) Finding out who the client is very fact-specific. 3) Test = to whom does the lawyer owe a duty - if the lawyer owes someone a duty, then that person is his client. 4) Client relationship can also be established by K 5) Client, according to FRE 503 (p512), is a client is a person who is rendered professional legal services, or who consults a lawyer with a view to obtaining professional legal services from him. a) For ex: you are both a lawyer and an insurance salesman. You sell your client an insurance policy and the ins. Co goes bankrupt & client sues you. Can she win if she sues you in your capacity as a lawyer? (1) No - provided that you did not render legal services when you sold client the policy. Why do we care? 1) B/c atty‟s professional duties are determined by dutities he owes to a client. 2) Duties an atty owes help ID client. 3) Generally, atty only owes duty to a client. 4) Now, atty may owe duties to non-client. d. 2. Competence – MR 1.1 – p20supp: a. Text of MR 1.1: A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation. Standard = REASONABLENESS 1) It is unreasonable to breach the MRs – thus, client can use breach of other MRs to show incompetence. Incompetence Can be a Function of: 1) Workload = too many matters. 2) Ignorance 3) Inexperience 4) Lack of time 5) Neglect Single act of incompetence rarely leads to disciplinary action but may be basis for malpractice suit. Prove of incompetence under rules can often be basis for malpractice suits. Legal mistake does not necessary constitute incompetence. b. c. d. e. f. -9- 3. Communication – MR 1.2 and MR 1.4 – p26 supp and p39supp: a. b. Most common complaint by clients is that their attys DO NOT Return phone calls. Clients and Atty‟s Roles in Relationship: 1) Client sets objectives of representation 2) Atty sets out means to achieve objectives. Standard = atty must keep client reasonably informed. If atty makes a mistake, he must inform client. 1) Atty has ethical obligation to tell client that client has a claim against atty, even if that seems odd. 2) Good atty will make a record of mistake and of informing client. c. d. 4. Confidentiality – MR 1.6 – p61supp: a. See Below 5. The Absence of Conflicts of Interest – MR 1.7 to MR 1.11: B. Elements of Client Relationship: General: Confidentiality: a. General: 1) Text of MR 1.6 – Confidentiality of Info: (a) A lawyer shall not reveal information relating to representation of a client unless the client consents after consultation, except for disclosures that are impliedly authorized in order to carry out the representation and except as state in paragraph (b) (b) Lawyer may reveal such info to the extent the lawyer reasonably believes the necessary to: (1) prevent the client from committing a criminal act that lawyer believes will likely result in imminent death or substantial bodily harm; or (2) to establish a claim or defense on behalf of the lawyer in a controversy b/n the lawyer and the client. 2) Basic idea - you don’t talk about the client’s affairs. Period. 3) Standard = relating to representation a) Hard to define – (1) Bottom line: all info relating to the client‟s case is privileged. 1. 2. -10- b) CMT#5 - the confidentiality rule applies not merely to matters communicated in confidence by the client, but also to all information relating to the representation, whatever its source. (1) No publicly known facts exception. (2) No gossip exception - examples: (a) Naming your clients, the dates you represented them, etc would all be a breach of confidentiality (unless of course the client consents to your disclosure). (b) Even if the case is a public case & is on TV and in the papers (matter of public record), you still can‟t discuss the case. (c) Students in law firms and clinics also bound by rule of confidentiality. c) Caveats (1) State variations (2) RSTMT 4) Cases and Hypos: a) Perez v. Kirk & Kerrigan - Perez driving Coke truck. He crashes truck and kills 21 kids in process. 2 lawyers from Coke visit Perez in hospital and promise him confidentiality. They left & never saw Perez again; they also used his statement against him. HELD: in favor of Perez. Lawyers had a duty to keep their client‟s secrets inviolate. They breached MR 1.6. b) Hypo: Artificially creating a conf‟l info problem to prevent other side from getting effective counsel. (1) Assume that you are a client who interviews with 2 law firms. You choose one but not the other. The firm that you did not choose (losing firm) cannot represent the opposing party in your case b/c the losing firm has obtained privileged info from you when you interviewed them re: taking your case. This tactic can cause serious problems in small towns that only have a handful of law offices. (2) Some cts hold that the info you provided to the losing firm is not “information relating to the representation” b/c it was never intended to be used in representation b/c you were trying to disqualify the other firm at the outset. b. c. Ethical Rule: Attorney-Client Evidentiary Privilege – Work Product Rule: 1) ACP Generally: a) Atty-Client Evidentiary Privilege (ACP): a client has the right not to disclose (and the right to prevent his lawyer from disclosing) any confidential communication b/n the 2 of them relating to the professional relationship. b) Requirements for the ACP to apply: (1) there must be a communication from the lawyer to the client or the client to the lawyer. (2) that communication must be received by the client for purposes of receiving legal advice from the lawyer. c) NOTE: 3d party discussion about the client is not privileged. 2) Attorney-Client Privilege v. MR 1.6: a) ACP is evidentiary privilege distinguishable from MR 1.6. b) Atty-client privilege is much narrower than MR 1.6. (1) ACP belongs to the client. (2) The client‟s secrets cannot be disclosed by the attorney under the coercion of law when ACP applies. (a) Under MR1.6 voluntary disclosure is not allowed, but if the ACP test is not met, then this info can be given over by atty under compulsion of law. c) Voluntary Disclosure (MR 1.6) v. Compelled Disclosure (ACP) -11- d) Much information that is ethically protected will not be privileged but virtually all information considered privileged will be ethically protected. 3) Waiver: a) Client can waive either ACP or ethical obligation. b) Implied: if clients puts waiver in issue in the litigation or discloses to 3d party. c) Express: d) By revelation to Third Parties: conversations by a lawyer with a 3d party regarding the client‟s affairs do not fall within the privilege. Although communication to 3d party may not fall within the evidentiary privilege, the conversation does fall within MR 1.6. e) Inadvertent Waiver 4) Corporations and the ACP a) MR 1.13(a) - Organization as Client – p132supp: attorney represents the organization not the individual people who make up the staff of the organization (constituents). b) MR 1.13(b) provides a roadmap for attorney to follow for resolving disputes within the organization 1.13(b) (1) MR 1.13 provides a hierarchical approach and authorizes the attorney to work his way up the organizational ladder to resolve disputes in corp. (2) Atty must know that an officer, director, etc is or intends to violate the law and that this is likely to result in substantial injury to the corp before the atty can proceed. c) MR 1.13 has a communications requirement – (1) Atty has to communicate to constituents precisely who it is that the atty represents when it is apparent that the organization‟s interests are adverse to those of the constituents with who the atty is dealing – MR 1.13(d) & Cmt. 8. (2) Constituent is not the client, the organization is the client: friendship does not matter here; it may even be necessary to disadvantage the constituent for the benefit of the organization. d) If atty believes that a management decision will disadvantage the corp, atty should follow the procedures of 1.13(b) and read Cmt. 4.: (1) Cmt 4 - similar to MR1.2: decisions concerning policy and operations, including ones entailing serious risk, are not as such in the lawyer‟s province. If lawyer knows that the organization may be substantially injured by action of constituents that is in violation of the law, the lawyer should ask the constituent to reconsider the matter. If this fails, the lawyer should refer the matter to a higher authority or possibly independent legal opinion. (2) Whether the corporate atty needs to take action hinges upon whether atty thinks that the corp client may be substantially injured by action of the constituent that is a violation of the law. e) Evidentiary Attorney-Client Privilege and Work Product Doctrine in the Business Context (1) Different Tests: (a) Control group (b) Management test (2) Upjohn (a) Facts: Internal investigation by Upjohn counsel revealed problems with corporate bribes in foreign countries. Corp voluntarily notified IRS of the problems. IRS‟ discovery process sought Upjohn‟s questionnaires that it sent to management re: -12- the bribes. Questionnaires stated that the info sought was to be used for legal investigation and that the matter was to be kept confidential- outside parties were not to be given access to the info. Corp claimed these docs were protected. (b) Held: for Upjohn - IRS could not call on Upjohn‟s managers to testify about what they specifically told corp‟s lawyers about the bribes.. (c) Reason: i. Communication must relate to a bona fide representation - purpose of the activity is for the corp to seek legal advice. ii. Management -Speaking Test: Court rejects the control group test and replaces it with this test. Test = communications from any corporate constituent which conveys info to the corporation‟s lawyer so that the lawyer can provide legal advice are privileged. This test is a far broader test than the Control Group Test - which applied only to communications made by upper level managers of the corp to corporate legal counsel. (d) Limit: atty-client priv does not prevent opposing party from putting employees on the stand and asking them about the underlying facts about the communication the underlying facts are not privileged. So IRS could ask employees of Upjohn “Did you pay bribes?” (3) Scope of Upjohn: binding only in federal courts, not in state courts b/c states have adopted their own rules of evidence. (a) Many states have adopted Upjohn and many have not - these states still apply the control group test (Samaritan Foundation). Therefore, the forum where the case is brought is important. f) Waiver of the ACP: (1) General Rule: the atty-client privilege is waived if the information is disclosed to an unprivileged 3d party. Purpose of the privilege is to protect secrets, once the secrets have already been revealed, they are no longer secret and the privilege does not apply anymore. (2) Waiver can be either: (a) express - client says AI waive the privilege & choose to testify (b) inadvertent/implied - even if the privilege is inadvertently disclosed to an unprivileged 3d party, the privilege is waived. i. This originates from Wigmore‟s Eavesdropper Rule - if eavesdropper heard the atty and client talking about the case outside of the courtroom, the privilege was waived even though disclosure was involuntary. g) ACP, Work Product & Accountants: (1) General Rules (a) Rule: accountants are not entitled to the equivalent of the atty-client privilege nor the work-product doctrine protection. (b) Rationale: due to the difference in roles b/n atty and accountant: i. Accountants - have a public duty; they have a duty of disclosure, not of sequestration. Accountants have a public watchdog function. ii. Lawyers - have a duty to keep secrets; they have a duty not to disclose. (2) FRCP 26(b)(3): codifies the work product doctrine, but limits the scope of Hickman v. Taylor. (a) 26(b)(3) is limited to work prepared in preparation for litigation or during the course of litigation. (b) 26(b)(3) is not limited to just the work product of attorneys. i. the doctrine also applies to the work product of agents, insurers, and other -13- persons other than attys can have their work protected. Accountants do not fall within the scope of this rule. (Note: 2d Circuit recently held however, that accountants work product is protected). (3) Example - U.S. v Arthur Young – (a) Facts: client hires accounting firm and client hires atty. Atty sought financial info from accountant to help in legal representation. (b) Held: Ct held that the info disclosed o the accountants by the client was not privileged b/c client waived privilege by disclosing the info to non-privileged 3d party. (4) Permissible way of getting accountants involved w/o destroying ACP (a) Bell - shows how to get around the problem of waiver that plagued the lawyers in Arthur Young. (b) Letter therefore set the stage that the work product doctrine applied: client‟s engagement letter informed law firm that firm was being hired to provide legal advice w/certain aspects of the IRS Code to assess tax issues & for possibility of upcoming litigation.. (c) The lawyers (not the client) hired and paid the accountants - therefore the accountants became the agents of the law firm, not the client. The lawyers turned the info over to the accountants in order that the accountants can help lawyer provide legal advice to the client. (d) Chain of communication always passed through the law firm; therefore there was no waiver of the privilege in this case. h) ACP and fax cover letters: (1) Worthless Disclaimers? merely marking a communication “Privileged & Confidential” does NOT necessarily make the underlying communication confidential. (a) The words do not make the privilege; the ground rules create the privilege (b) But, sometimes the disclaimer will remind the recipient that some confidentiality is involved and not to go telling the info to others (disclaimer acts as a Heads Up device). (2) Waiver by Fax? (a) Rule: by sending the privileged material via fax, the ACP is waived as to potentially unprivileged parties. (b) Rationale is that the secret is no longer a secret because now, at least legally, anyone can access the secret information. 5) Atty’s Role as GC - Ford Pinto: a) Facts: Ford could have made Pintos safer re: gas tanks but chose not to b/c it was cheaper to not fix the problem. Ford attys likely helped in drafting memos and might have known about the gas tank problem. This was a big case re: public perception of corporate immorality. b) The corp is the atty’s client: if atty thought under MR 1.13 that the best interest (long term and short term) of corp was to blow the whistle. c) Atty’s options in this situation: (1) Followed the MR 1.13(b) internal process. (a) CMT#4: business risks in general are outside of the atty‟s province, but if a possible law violation is present the atty can get involved. i. Atty must figure out what “violation of the law” means - must atty know the law in all 50 states where product is sold? (b) During internal process, atty needs to remember that corp is his client: i. If atty gets inside info from friends in corp, atty should try to protect them as long as possible so as to continue the flow of info to atty - but remember these constituents aren‟t clients. -14- (2) If the corp‟s actions violate the law and after going up procedural ladder of MR 1.13(b) & corp does not want to change its course of illegal action - what can the atty do? (a) Could try to go public with the info - but this would violate MR1.6 Confidentiality. i. But MR 1.6(b) says that atty can reveal info that atty reasonably believes necessary from committing a criminal act. (Note: Ford‟s decision was not a criminal act b/c it was merely a cost-benefit analysis re: Pinto defect). (b) Atty could quit. Atty cannot resign in protest b/c by doing so atty would be violating MR1.6. (3) Fraud: can atty disclose info if the corp is fraudulently misleading the public? (a) NO - under the Model Rules. MR has not incorporated the crime-fraud exception. (b) YES - some states under state ethics regs have incorporated the crime fraud exception into the regs which authorizes the atty to disclose. d) Related Hypo: can a corp‟s attys lobby for lower safety standards/regulations when it has some info that supports the lower standards and tons of info unsupportive of lower standards? YES (1) The client (corp) has determined what are its best interests - corp has set the scope of representation - See MR 1.2(a) &(d) (2) This is really a consumer risk decision. (a) For ex: in Pinto case, if you want a safer car, don‟t buy a Pinto - buy a bigger more solid vehicle for more $. 6) People v. Belge - lawyers refused to disclose info regarding location of bodies of murder victims that their client killed. a) Belge was prosecuted for criminal misdemeanors related to body tampering. b) Ct held that Belge did the right thing b/c the atty‟s duty of confidentiality is so central and so key to proper representation, it can‟t be bent or waived even in a case like this. c) Case illustrates that even though the lawyer did the right thing by keeping secret hic client‟s confidences, the public didn‟t understand the lawyer‟s dilemmas and viewed lawyer as a scumbag. d) Ct ruled on the basis of ACP and not MR1.6 b/c the elements of the ACP were present in this case. Def made a communication b/n himself & his lawyers for the purposes of receiving legal advice. e) NOTE: the finding of the bodies by Belge after client told him where they were was not a communication, but it was a natural follow-up from Def‟s statements and therefore falls within the ACP. f) Civil suit by victim‟s parents against Belge: g) Since there was no particular relationship b/n Belge and the parents of the deceased, parents cannot succeed in their suit. h) Mulroney brings up MR 3.1 which prevents/discourages lawyers from filing frivolous claims & suits on behalf of their client. Similar to FRCP 11. Agency Theory: a. Text of MR 1.2 – Scope of Representation: A lawyer shall abide by a client‟s decisions concerning the objectives of the representation, and shall consult with the client as to the means by which they are to be pursued. The lawyer is the agent of the client (principal): Attys actions bind client even to client‟s detriment: 1) When the atty has the authority to act on behalf of the client, the atty‟s actions, so long as they 3. b. c. -15- are within the scope of his employment will bind the client, even if the lawyer acts adversely to the client‟s interests. 2) Client will be treated as if the client carried out the actions himself - therefore the client is not allowed to complain about his lawyer‟s screw-ups. d. e. Agency is not a contract, therefore contract principles don‟t apply. 3 types of authority: 1) express authority - arises from express agreement b/n agent and the principal. Agent can only carry out those actions specifically authorized by the principal 2) implied authority 3) apparent authority - occurs in instances where the client‟s actions cause a 3d party to reasonably believe that the atty has the power to do what he did, even though the atty & client have not specifically agreed to that action. a) for ex: client sits by idly during negotiations while lawyer does all the talking - 3d party reasonably believes that lawyer has power to negotiate. 4. Fiduciary Theory: a. Reasons why fiduciary theory applies to the atty-client relationship: 1) If client‟s confidences were disclosed, the atty would be a faithless counselor. 2) Very difficult for the beneficiary (client) to change the trustee (lawyer). a) Clients become attached to a lawyers once the representation begins either b/c of $ concerns or because of practicality concerns. b) Lawyer more dominant position as to the client - client far more dependent on the lawyer. Fiduciary Notions Embodied in MRs: 1) MR 1.8(a) - prohibits a lawyer from entering into business relationships with a client unless certain steps are taken. Good Atty: write goals and scope of relationship. Sex with clients: 1) Because of the nature of the atty-client relationship, having sex with the client is an extremely bad idea. 2) Cal. Rule Prof. Conduct 3-120 „ does not expressly prohibit having sex with clients but it doesn‟t promote the idea either. b. c. d. 5. Non-clients – Client Equivalents: a. b. Focus of MRs almost exclusively on relationship b/n lawyer and clients. BUT duty of loyalty does extend to non-clients in certain situations: 1) Most common example is the will-drafting situation: a) Beneficiaries may be treated as third party beneficiaries of the atty-client relationship. b) Example - Guy v. Liederbach: atty drafts will for client, but beneficiary witnessed the will & ct didn‟t allow her to take under the will. Beneficiary sues. HELD: atty liable under contract theory. Ct relied on 2nd Restatement of K‟s instead of normal malpractice theories. B/c MR do not address the issue of non-clients, cts generally turn to tort law & notions of fiduciary c. -16- duty (but see Guy). d. 3d party being disadvantaged by atty work-product: 1) Rule: a) Rule: law firm has no obligation to 3d parties to make sure that the client uses the atty‟s work product in an appropriate and legal fashion. b) Atty may have a duty if he knows third party will rely on it. 2) Case - Greycas v. Proud - ex of client using lawyer‟s advice to disadvantage a 3d party. a) Facts: atty wrote letter on behalf of his brother in law stating that there were no prior liens on bro-in-law‟s farm equipment so that bro could get a loan. There were liens and the lender relied on the letter to the lender‟s detriment. Atty argues that he didn‟t owe lender any duty b/c lender wasn‟t his client. b) Held: ct rejects this argument - for a non-client to succeed in a negligence action against an atty, the non-client must prove that the primary purpose and intent of the relationship b/n client and atty was to benefit or influence the 3d party. c) Reason: (1) In this case, purpose of the atty-client r/ship was to defraud the 3d party. (2) Ct also pissed off that lawyer never disclosed to lender that lawyer was bro in law of client. Therefore, lender never had a reason to be suspicious. 3) Case - Barker v. Henderson: a) Facts: client committed securities fraud by using a document that his atty had prepared for a separate issue. Client defrauded 3d party investors. b) Held: ct held that lawyer had no duty to the investors:/c: (1) the lawyers did not actively engage in the client‟s fraud. (2) lawyer had no duty to provide oversight as to the ways in which the client used (manipulated) the lawyer‟s advice - lawyer is not the client‟s keeper). 4) Hypo: You are an atty for a bank who is a trustee for a trust. Bank asks you for tax advice re: the management of the trust. Assume your advice is both written and oral. Assume beneficiaries of the trust later claim that trustee (bank) overpaid taxes and sue the bank. Assume beneficiaries ask you (atty) as to what you told the bank and they want a copy of your opinion letter to the bank. a) Must you honor the request? (1) Key issue is to determine who the client is: (a) if client is only the bank & the beneficiaries are not, you can invoke atty-client privilege and/or MR1.6 and don‟t have to hand over the info. (b) if the beneficiaries are also your clients, the ACP does not apply and atty must hand over the info to the beneficiaries. -17- C. Autonomy of Lawyers and Clients: MR 1.2 Scope of Representation: a. MR 1.2(a): atty shall abide by client‟s decisions concerning objectives of representation and shall consult with client as to means by which objectives are pursued - client gets to decide whether to settle in civil cases and what to plead in criminal cases. 1) Cmt. 4 - client gets to decide purpose within constraints of the law and the atty gets to decide the legal strategy. (For ex: client can decide to bring suit, provide objective of lawsuit, and in criminal cases - client decides what the plea will be and whether or not to waive a jury trial). 2) Cmt. 3 - legal representation should not be denied to clients with controversial or socially unpopular views. Representation of such clients does not mean atty approves of client‟s actions/views. Attorney cannot counsel a client to engage, or assist client in any conduct the atty knows to be criminal or fraudulent, but atty can discuss any legal consequences of proposed course of conduct with client. 1) Grey area: if client intends to break a law to protest a perceived immorality; ie apartheid protest, abortion protest. If the lawyer knows in advance and is standing by to provide legal services can this be considered “assistance” under MR1.2? a) Standing by may persuade people to break the law, knowing that they have a lawyer to bail them out of trouble. b) Majority view = standing ready to assist is probably not sufficient to require atty to withdraw. c) Minority view (Mulroney) = atty should withdraw b/c his presence encourages people to break the law. Atty has duty to inform clients of limitations on representation if questionable issues arise. 1. b. c. 2. Relationship is joint undertaking – division of labor. a. 2 types of clients: 1) Some clients want to run their own legal affairs entirely b/c of egoism, $ concerns, or clients who simply don‟t trust/like their atty (esp. ct. appointed attys). 2) Some clients want the atty to decide everything. a) Problem is that if atty decides issues on behalf of client that the client should be deciding for herself, client can sue atty under MR1.2 if client is dissatisfied. 3. Very important that both client and atty stay in their own roles and not cede or take on tasks of the other. a. b. If client cedes authority: if atty makes a decision that is the client‟s decision, then atty is liable. If atty cedes his authority: also a problem. 4. Do not do the “take a quick look at this issue” approach (especially as associate – manage relationship with senior partner). -18- 5. Civil v. Criminal Cases: a. b. MR 1.2 - in a criminal case, the lawyer shall abide by the client‟s decision, after consultation with the atty, as to a plea to be entered, whether to waive jury trial and whether the client will testify. ABA Standards for Criminal Justice 4-5.2(a) (p. 458 Supp.): same as above. Atty must fully inform client and then allow client to make choice re: guilty pleas, jury trial, testifying and appealing. 1) 4-5.2(c) if a disagreement b/n client and defense counsel arise re: legal tactics & strategy, atty should make a record of the circumstances, atty‟s advice and reasons, and the conclusion reached. Olfe v. Gordon - (civil case) client instructs her lawyer to sell property. Client told lawyer she was willing to take back a first mortgage, but not a second mortgage. Her lawyer negotiated a 2 nd mortgage, but tells client it was a first mortgage. Buyer defaults and P loses $25k. P sues atty. 1) Held: unlike Jones (supra) the discretion by the client to accept only a 2nd mortgage was not a tactic, but rather an objective of the client. Atty violated MR1.2 by usurping the authority of the client. Jones v. Barnes - (criminal case) criminal client wanted his atty to argue a number of issues, none of which were frivolous. Client even wrote his own brief, which atty attached to his own brief, but he didn‟t argue what the client had written. Atty argued only 3 of the issues. Client pissed and sues atty. 1) Held: S.Ct said that atty has the responsibility to choose the tactics - this is solely in the domain of the atty and not the client. The atty should only select & argue the key points. 2) Dissent: client should get to choose the tactics so long as the tactics are not ridiculous and the claims aren‟t frivolous. c. d. D. Undertaking the Representation: -19- 1. Identifying the beginning of the atty-client relationship: a. Togstad - Mrs Togstad‟s husband was paralyzed b/c of negligence by Drs in hospital. W consults atty for 45 minutes and atty says W has no claim, but that he would talk to his partners. Atty never called back. Although there was an interview, no medical records were checked, no fees were discussed and no retainer was signed. Wife believed she had no case. After 2 yr statute of limitations ran, W sues atty for giving her bad legal advice and for failure to inform her of statute of limitations. Held: for Mrs Togstad.. Wife was deemed atty‟s client even though no retainer agreement signed b/c it was or should have been reasonably foreseeable to atty that wife would follow atty‟s advice & that she would be injured by the advice if it were negligently given. Case within a case: 1) Here: in order to be successful against atty, wife had to 1st show that the hospital and Drs were negligent and she had to show that but for atty‟s negligence she would have prevailed against hosp and Drs. Wife also had to prove her damages. (This is why it is hard for clients to win malpractice claims - clients have to prove lots of stuff). 2) Elements of Malpractice Claim: a) Client-atty relationship b) Negligence, breach of K, agency, fiduciary duty c) Proximate cause d) But for atty‟s, P would have been successful – has to show damages. b. c. 2. Engagement Letters: a. Highly recommended b/c: 1) sets forth the fee schedule 2) sets forth the scope of representation 3) often the content is dictated by the atty‟s malpractice insurance carrier. b. Pa Rule 1.5: says that lawyers must write a letter indicating the fee schedule after the relationship has begun. c. MR1.5(b): not as strict as PA rule. MR1.5 says that atty must inform client of fee schedule, but does not have to do it in writing. d. Good idea to keep engagement letter short & concise so as not to intimidate the client. Declination Letters: a. Burden on atty to clarify declination. b. Solidifies the fact that atty didn‟t believe that the person was his client - shows that r/ship never started in the first place. c. Not highly used: many firms do not use these letters b/c they feel it shuts the door too soon - perhaps potential client will never want to come back to the firm after already being rejected by the firm. d. MUL‟s advice to be good atty: if your firm does not use declination letters, write a memo recording all that you told your non-client about your decision to decline the representation and keep the memo. 3. 4. Termination Letters: a. Also a good idea b. Termination letter gives the client no doubt that you are no longer going to continue to watch out for the client‟s affairs. Thus, if a later pertinent development occurs, you have no responsibility to call the -20- client‟s attention to it and if you miss it, you‟re off the hook. E. Terminating the Relationship: MR 1.16 - Declining or Terminating Representation – p158supp: a. MR 1.16(a): atty MUST withdraw or decline to represent if: 1) representation would entail violation of professional rules or other law 1. -21- 2) atty physically/mentally unable 3) atty is discharged b. MR 1.16(b): atty MAY withdraw if withdrawal does not materially adversely affect the interests of the client, or if: 1) client persists in conduct the atty reasonably believes is criminal/fraudulent 2) client has used atty to commit crime/fraud 3) client insists on pursuing an objective that atty finds repugnant or imprudent 4) client does not fulfill an obligation in connection with the lawyer‟s services (after notice) 5) representation is an unreasonable financial burden on the atty 6) other good cause for withdrawal exists. MR 1.16(c): when ordered to do so by tribunal atty shall continue representing client despite above MR 1.16(d): after termination, atty must take steps to protect the client‟s interests (e.g., give reasonable notice to client, send papers/property to which client is entitled, refund any unearned advance payments) c. d. 2. Important to know when termination occurs b/c then most duties end. Do not allow “termination by drift” b/c your duties continue. Termination Issues a. Use a termination Letter b. MR 1.16(c) - Court-Appointed Attorneys - the general rule is that client has the right to fire atty at any time, at which time lawyer is discharged & can no longer represent the client. 1) Catch 22: if you‟re a ct appointed atty for a criminal D, if the D fires you the ct often won‟t let you withdraw b/c court often can‟t find another atty to take D‟s case. c. CMT#4 - client can discharge atty at any time with or w/o cause. 1) Where future dispute about the withdrawal may be anticipated, leave a written statement reciting the circumstances - leave a paper trail. d. MR1.16(a) - Atty‟s voluntary withdrawal from atty-client relationship: 1) MR1.16(a) often applies to attys who have substance abuse problems: if atty has such a problem, the atty must voluntarily withdraw or be sanctioned. 2) Hypo: assume you are atty for a right to life group. Group tells you they will hold protest to obstruct entry into clinic. You tell group that protest is illegal and the ct will not accept the defense that morality required them to stage the protest. a) Must you withdraw from representation? No - see 1.16 CMT#2 and R1.2(d) - lawyer does not have to withdraw b/c he did not encourage the protest - he merely warned of the repercussions. b) Assume that before the protest, the members know that they may be arrested and ask you in advance to represent them if they are arrested. Knowing that they have a good lawyer encourages others to join the protest. (1) Must you withdraw? Probable - see MR 1.2 CMT#7 - lawyer is required to avoid furthering the wrong that he suspects the client is engaged in. c) MR1.16(d) - things that atty must do upon termination (1) Problem: is the client entitled to the memos and other docs that you drafted for the client? (a) Atty may be reluctant to hand over info that may contain damaging info about his 3. 4. -22- client (worried about possible malpractice claims). (b) PA law - client is not entitled to the atty‟s memoranda and other work product. d) What happens when you don’t know if a seemingly former client is still a client (i.e., if the object of the representation has been accomplished & you are no longer in contact with the client?) (1) If you believe that the representation is at an end, you should write a disengagement letter. When must an atty withdraw? a. MR 1.16(a)(1): lawyer MUST withdraw if the representation will result in a violation of the rules of conduct, or of other law. b. ABA Opinion 92-366: 1) Atty MUST withdraw if the atty finds out that the client is using its otherwise proper opinion letter (i.e. work-product) for the client‟s fraudulent purposes. 2) In addition, the atty MAY have to take affirmative steps to disavow atty‟s work product by informing the actual or intended targets of the client‟s fraudulent scheme (noisy withdrawal). c. If atty knows of a criminal act by client, the atty must remedy the act and withdraw. d. ??? You cannot make a noisy withdrawal and go public if it is a criminal act (but you can still withdraw). Can make noisy withdrawal if a civil act. Noisy Withdrawals (involve disclosure): a. ABA Opinion 92-366: 1) Where the atty finds out that the client uses the atty’s work product fraudulently, a) Atty MUST withdraw. b) Disclosure - atty MAY (up to atty’s discretion) take affirmative steps to inform those persons who might be disadvantaged or defrauded by the client‟s actions. (1) Atty tells these 3d parties not to rely on the product that the atty provided for the client = noisy withdrawal. 2) Imperfect Solution - Basic Idea of Noisy Withdrawal: a) A client has the right to an atty‟s unrestricted loyalty so long as the client does not abuse the atty‟s loyalty in an effort to defraud or harm 3d parties – MR 1.6. b) But under MR 1.2, atty cannot assist client in fraud. c) Make peace with MR 1.2(d) without violate MR 1.6 (imperfect solution but it is all we have). b. Potential problem of noisy withdrawals: you are letting a 3d party know the confidences of your client - seems to violate MR1.6. Atty still must protect client’s interests when withdrawing: a. MR 1.16(d) provides certain steps that the atty must take to protect the client when the representation ends. b. In the ordinary case, this means that if the atty is withdrawing, then he has to give the client: 1) reasonable advance notice (so that client can get other counsel) 2) maybe the atty has to refer the client to another atty 3) withdrawing atty has to hand over any unearned $ 4) hand over any papers or property to which the client is entitled (internal memos, etc are not considered entitlements of client in PA; unclear under ABA) Good Atty Notes: 5. 6. 7. 8. -23- a. b. Find out the rules in your jurisdiction about turning over atty work product to your client. Always prepare memos with idea that client will see them. F. Protecting the Relationship: No-Contact Rule: a. Text of MR 4.2 – Communications w/ Person Represented by Counsel [“No Contact”] – p260supp: In representing a client, a lawyer shall not communicate about the subject matter of the representation with a person the lawyer knows to be represented by another lawyer in the matter, unless the lawyer has consent of the other lawyer or is authorized by law. Old rule said “party” – new rule says “person” This is a violation that can sneak up on you. 1) Implications: you will be disqualified which will cause harm to your clients. Underlying Rationales: 1. b. c. d. -24- 1) Atty cannot interject himself into the relationship of another lawyer and that lawyer‟s client. 2) An atty cannot take advantage of another lawyer‟s client w/o that lawyer‟s knowledge and consent. a) MR4.2 focuses on knowledge (1) If atty1 talks with a client and does not know that the client is represented by another atty, atty1 will not be punished under MR4.2. (2) Knowledge = actual knowledge or knowledge inferred from circumstances - p16 supp. 3) If atty is barred from speaking with client, atty’s agents (i.e. private investigator) is also barred from talking to the other side as well. See MR 8.4(a). e. Exceptions to the no Contact Rule: 1) An atty can talk to another atty‟s client about a matter that is unrelated to the dispute at issue. a) The no-contact rule is pointed at a specific representation, not representation in general. 2) MR 4.2 does not prevent a client from atty shopping if the client is dissatisfied with her present atty. a) Therefore, client and new atty can talk about the subject matter of the representation. Application in Corp Context: 1) Very murky rule in corp context. 2) MR 4.2 does not apply to depositions. 3) Niesig v. Team I - employee (P) injured on jobsite. P sues D corporation (employer). P wants to conduct interviews with other employees who were at the jobsite & witnessed accident. a) Issue: whether D‟s employees were clients of the corporation/alter egos of the corporation if they were, then P‟s lawyer not allowed to speak to them. b) Held: P could interview the witnesses b/c not all employees of a corp are protected from contact by an outside atty. c) Reason: alter ego group is that group of employees who were in a position to bind the corp (either b/c of their management position or b/c of their ability to make statements that would bind the corp.). d) Rule – p103: Those who were in a position to bind the corp could not be interviewed informally. (1) Party: includes corp EEs whose acts or omissions in the matter under inquiry are binding on corp (alter egos) or imputed to corp for purposes of liability or EEs implementing the advice of counsel. 4) Hypo: you are atty for H&W who were attacked in a hotel. Employees from the hotel, such as the security manager, voluntarily provide you with documents that the hotel management wants destroyed re lax security. a) Can you be disqualified from case under MR4.2 for talking to the other side? (1) Probably b/c: (a) the constituents (security manager) is in a position to make damning statements b/c of his position in the corp - he can bind the hotel. (b) Further you also received confidential information - bad idea. (2) Alternatives: perhaps you could suggest to the constituents trying to give you info that under 4.2 you‟re not allowed to talk to them. Maybe you could tell them to turn the info over to neutral parties (i.e. newspaper) who would then expose that info. (3) Are D‟s attys acting ethically? Although D‟s lawyers are using a technicality MR 4.2 to protect their client from its illegal acts, D‟s lawyers owe their primary duty to D - lawyer must take all legal steps to aid his client even if other side will be disadvantaged by it. Application to federal prosecutions: 1) Issue: Can a federal prosecutor, w/o the consent of the witness‟s lawyer, contact a potential f. g. -25- witness even though the witness is represented by a lawyer? a) Are federal prosecutors subject to state rules of conduct? 2) General Approach: cts tend to hold against the gov‟t, but not uniformly. 3) U.S. v. Hammad: brothers engaged in Medicaid fraud and possible arson. Prosecutor used an informer and phony subpoena to obtain information. HELD: such conduct might be authorized by law (undercover agent/informer) but not phony subpoenas. Improper Acquisition of Confidential Information: a. Issue: should atty receiving confidential information from the other side be disqualified or should receiving info be suppressed. 2 possible responses: 1) ABA Opinion 92-368: a) Once atty recognizes info to be confidential, he should: (1) immediately stop examining the information; (2) notify atty on the other side; AND (3) follow his instructions as to what to do with the information. 2) California: allows you to read the disclosed information and use it to the advantage of your client. a) Rationale is that the other side has waived the privilege. Common occurrence in pretrial discovery. It is essential to find out what the law is in your particular state as to what to do in this situation. 1) Do not want to disadvantage your client. 2. b. c. d. G. Special Clients: Family Members: a. Rule: under MR 1.7 (Conflict of Interest) clients are viewed as individuals - thus H&W are viewed as individual clients. 1) General view is that when you have multiple clients you represent each individually. 2) Emerging view is that there are cases where you are asked to protect the integrity of the family unit itself, apart from the interests of each individual client (i.e., family unit may be viewed as a distinct client from H&W). a) For ex: Brandeis was charged with conflict of interest in a family business situation that turned sour. He argued he was a counselor for the situation; a mediator for a particular dispute in a setting of common interest. b) An atty‟s primary role is that of advisor. Watch for conflict of interest problems Hypo: H&W ask you to draw up their will. 1) Facts: Wife tells you out of the presence of the H and after the will is drawn up and before the 1. b. c. -26- will is signed about an illegitimate child she wants to provide for. H does not know about child and will does not provide for this child. Dilemma is that you need to present H with the info he needs to make an informed decision, but you can‟t do so w/o wife‟s consent. Must you disclose info re: kid to H? 2) Lessons a) You should always identify the conflict before it arises. To prevent this conflict of interest, you should tell H&W at the beginning of the discussion that a potential for conflict exists. Ask if they want you to represent them both anyway and have the sign a waiver form. You should also discuss wills with each person separately w/o drafting them. b) MR 1.4 (Communication) & MR 1.2 (Scope of Representation) implicated 3) If atty did not follow the communication process, atty could withdraw when wife tells him the confidential info - would be a way of letting H know that there is something he should be aware of 4) If W signs will, atty could argue that he represented H&W as a family unit. If wife agrees to sign the joint will in order to preserve marital harmony & she tells you not to tell H, Mulroney says go ahead and have both sign the will. W must live with the consequences and either disclose to H or sign the will now and make changes later. Organizations: a. Generally: 1) Attorney must be aware of potential Conflicts of Interest problems when representing organizations. Partnerships: 1) Issue: if a partner in a p/ship wants you to represent p/ship, who exactly do you represent? 2) Resolution: several alternatives: a) P/ship itself b) Under UPA, each partner is individually liable for debts of p/ship. So if you represent p/ship and the individual partners - there is a potential for conflict of interest. c) If you represent a general partner in the p/ship you represent the entire p/ship. Corps: 1) The starting point is finding out who the client is. 2) MR 1.13(a) - a lawyer employed or retained by a corporation represents the organization acting through its duly authorized constituents. a) As in-house counsel for a corp, the corporation is your client not the constituents (i.e., the persons of the corp w/whom you have been dealing) b) For ex: if personnel director is your friend & she tells you that she disadvantaged the corp, your duty lies with the corp and you therefore may have to disadvantage your friend under MR 1.13(a). 3) Case - Jesse v. Danforth: a) Facts: Dr moved to disqualify law firm from representing P in P‟s medical malpractice suit against Dr on conflict of interest grounds b/c another atty from the firm had assisted in forming, and was corporate counsel of, the corporation which Dr was a shareholder in. Other atty dealt with Dr before the formation of the corporation. b) Held: no conflict of interest b/c law firm represented the corporation, NOT its constituents. c) Reason: (1) Dr. was not to regarded as the client of the firm b/c all of the activities b/n Dr and the firm dealt with incorporating the corporation. So even though corp was not formed yet, Dr. was to be viewed as a constituent of the corp and was not a client of the firm. 2. b. c. -27- (2) If Dr were viewed as a client, P‟s firm would have been precluded from using the financial info provided by Dr to the firm to disadvantage the Dr. (3) No breach of confidentiality b/c the communications were directly related to the purpose of organizing the corp. d) Significance: illustrates who is the client in a corporate context & confidentiality. d. Close Corps: 1) Rule: where dual representation of both a corporation and its individual owners presents a conflict of interest, the attys must obtain the corp‟s consent for such representation after full disclosure of all material facts. 2) Example - Admiral Murphy - illustrates the problem of using MR1.13 in the context of close corps. a) Facts: law firm representing a close corp assisted one of the co-owners in his efforts to take control of the corp. b) Held: where dual representation of both a corporation and its individual owners presents a conflict of interest, the attys must obtain the corp‟s consent for such representation after full disclosure of all material facts. c) Reason: (1) Here the lawyers failed to recognize the distinction b/n the constituent and the corp. (2) Attys failed to disclose the conflict and did not seek consent for the dual representation. (3) Associates in firm warned of ethics violations - partners merely turned over the problem to the same person who was in charge of the client relationship affected by the issue & who was the least likely to be objective - very poor law firm management. (4) Note: associates sent partners E-mail re: the potential violations. E-mail is discoverable; it does not go away. Misc - FDIC v. O’Melveny 1) Issue: who is the client? Did firm represent the S&L or its constituents? 2) Facts: 2 guys bought an S&L and then set up a real estate corporation so that they could loan themselves money from their own bank. They brought in lots of limited partners who lost their money when the real estate ventures faltered. O‟Melveny was responsible for preparing the documents used to attract the investors. The docs did not adequately explain the situation - this was a shaky deal. Bank fails and FDIC takes over. FDIC sues firm for professional negligence & breach of duty. Firm argues that it didn‟t do anything wrong b/c S&L was its client, not the wrongdoers (the 2 promoters). 3) Held: corporation was the client, not the promoters. 4) BUT law firm should have known about the questionable activities of the promoters. Law firm had a duty to make sure that the constituents (promoters) were not acting to the detriment of the corporation/S&L. The firm failed to adequately protect its client (S&L) and is therefore liable. e. -28- III. THE LAWYER’S ROLES IN REPRESENTING CLIENTS: Generally: attys play many roles in representing their clients - MR provide rules for attys acting as: advocates, negotiators, mediators, and advisors. A. Advocate: General: a. Attorney as an Advocate: attorney must represent the client with “warm zeal” while at the same time remaining within the confines of MR 3.1-3.5. 1) Big Theme = atty‟s duty to put client‟s interest above all else (thus, to represent one‟s client with warm zeal) is NOT absolute – it is subject to limitations outlined in MR 3.1 to MR 3.5 (e.g., truthtelling requirement of 3.3 acts as curb on “warm zeal”). Rules of Advocacy MR 3.1-3.5: 1) MR 3.1 Meritorious Claims and Contentions (see infra) a) Atty can only bring non-frivolous claims. b) This includes claim that is a good faith argument for extension, modification, reversal of existing law. c) Basically, this rule allows atty to take a position that is not 100% supportable – atty does not have to be 100% correct b/c the atty is not the judge. 2) MR 3.2 Expediting Litigation: atty should make reasonable efforts consistent with the best 1. b. -29- interests of the client to expedite litigation. Candor to Tribunal: a. MR 3.3 Candor Toward Tribunal - Text of Rule: 1) Summarized Text of Rule: (a) A lawyer shall not knowingly: (1) Make a false statement of material fact or law to the tribunal; (2) Fail to disclose material fact when necessary to avoid crime/fraud by the client; (3) Fail to disclose directly adverse legal authority from the controlling jurisdiction (4) Offer evidence lawyer knows is false. If lawyer presents evidence and later finds it to be false, he must take remedial measures. (b) These duties . . . continue to the conclusion of the proceeding, and apply even compliance if compliance requires disclosure of information otherwise protected by Rule 1.6. (c) An atty may refuse to offer evidence he reasonably believes is false. (d) In ex parte proceeding (grand jury), a lawyer shall inform the tribunal of all material facts known to lawyer which will enable the tribunal to make an informed decision, whether ot not the facts are adverse. Rationale = atty is also officer of the court. MR 3.3 allows the duty of candor to the tribunal to trump the duty of MR 1.6 confidentiality! See Boswell & Johnson statements of inner workings of legal system (p351-352) ??? The duty of the atty is to ensure that there is no falseness presented to the ct. 1) The duty of the atty is not to ensure that all true facts are before the court, rather the atty only has the duty to make sure that all true facts are before the court that help atty’s client. Different Circumstances Require Different Standards of Truth-Telling: 1) There are different standards of truth-telling required b4 a court than to an intermediary. 2) Fed Rule Civil Pro 11 tracks MR 1.3 closely. See CMT #4-6 See Client Perjury Section (infra). Example – see Taylor v. Illinois: 2. b. c. d. e. f. g. h. i. 3. Obligation to Reveal Adverse Facts, Authority: a. b. MR 3.3 Candor Toward Tribunal (for text of rule, see above). There is no affirmative duty for the atty to help out the other side with the case BUT the atty cannot play fast and loose with the facts. MR3.3(a)(1) - atty cannot knowingly fail to make a false statement of law or material fact to the tribunal. 1) “Knowingly”: atty not required to be omniscient, innocent mistakes are OK. c. -30- d. MR 3.3(a)(3) - atty cannot knowingly fail to disclose to the tribunal legal authority in the controlling jurisdiction known to the lawyer to be directly adverse to the position of the client and not disclosed to the opposing counsel. 1) Although atty has a duty to point out adverse authority to the ct, atty does not have a duty to point out adverse authority to opposing counsel, just to the ct. 2) Example – Jorgenson v. County of Volusia - atty failed to reveal an adverse case, which the atty participated in, that laid down the state supreme ct ruling on an area of statutory construction that had been awaited, and that had been in dispute b/w cts in state. Atty argued the case was not controlling. Ct said atty had duty to disclose adverse cases & atty had a duty to refrain from misleading the ct. MR 3.3(d) – in ex parte proceedings, atty must tell tribunal about adverse and favorable facts. Does Atty Have An Obligation to Reveal that Client Has No Case? 1) At one end of spectrum, atty cannot bring a frivolous action but at the other end are criminal cases and appeal issues - atty cannot take a frivolous matter before the ct. If client has no claim, atty must withdraw, but in criminal cases the atty must get the ct‟s approval before atty can withdraw. a) Anders v. California - criminal defense atty determined that client had no case & had to withdraw. In CA, atty must now write a brief (Anders brief) to the ct showing evaluation of appeal and including explanations as to why defense thinks there are no appealable issues. Basically, atty is selling his client down the river. Places atty in a difficult position b/w “warm zeal” and fairness to the court. Hypo: assume atty had a case in FL state ct re: atty-client privilege. 1) Does MR3.3(a)(3) require atty to call state ct‟s attention to the Upjohn rule re: ACP (remember Upjohn not controlling in state cts)? NO. 2) But as a practical matter, it won‟t get the ct angry at you if you cite to adverse cases that are not controlling. e. f. g. 4. Client Perjury: a. Generally: 1) ??? Also keep in mind MR 1.6 and MR 8.4. 2) MR 3.3 prohibits the atty, himself, from offering false facts or evidence. 3) MR 3.4 is based on fairness to the opponent – atty cannot unfairly obstruct the adversary‟s access to evidence. 4) See Quiz #2. Text of Rule: 1) Text of MR 3.3(a)(4): A lawyer shall not knowingly offer evidence that the lawyer knows is to be false. If a lawyer has offered material evidence and comes to know of its falsity, the lawyer shall take reasonable remedial measures. 2) Text of MR 3.3(c): a lawyer may refuse to offer evidence that the lawyer reasonably believes is false. 3 Categories of Client Perjury: 1) Anticipatory Cases (Whiteside & Brown)- atty knows in advance that the client proposes to lie. a) Atty must:: (1) Convince client not to lie - try to talk client out of his lying ways. b. c. -31- (2) If this fails, atty MUST either: (a) Withdraw; or (b) If withdrawal is not allowed, must inform the court if the client does in fact lie atty cannot affirmatively offer his client‟s false testimony. (c) ??? Allow witness or client to testify by narrative without guidance from atty. 2) Client Unexpectedly Lies on the Stand - atty had no previous knowledge client would lie; atty is surprised by client‟s lie on the stand. a) MR 3.3(a)(2) & 3.3(a)(4) & CMT 10 - atty must take remedial measures. b) Atty can try to get client to retract the statement. c) If client refuses to retract, then atty must disclose the matter to the court. 3) Atty doesn’t find out about perjury until after it has occurred a) MR 3.3(b): says MR 3.3 duties continue until the conclusion of the proceeding. (1) ??? “end”/ “conclusion”: when the verdict is in and atty has been paid (not defined in the MR). b) Whether atty has to disclose in this case result depends on whether the proceeding has come to an end. c) If the matter the atty represented the client on when the client lied has come to an end but the atty continues to represent the client in other matters, the atty should withdrawal. (1) If proceeding has not come to an end, then MR 3.3(b) and CMT 13 require disclosure to the court. (2) If it has come to an end, there is no duty to disclose. d. ??? Distinguish between MR 3.3(a)(4) and MR 3.3(c): 1) MR 3.3(a)(4) - atty cannot present evidence that atty knows is false. a) Text of Rule: A lawyer shall not knowingly offer evidence that the lawyer knows is to be false. If a lawyer has offered material evidence and comes to know of its falsity, the lawyer shall take reasonable remedial measures. b) “Knows” is a defined term - see p17supp. (1) Denotes actual knowledge of the fact in question. (2) Knowledge may be inferred from the circumstances. c) Atty must disclose client‟s perjury to the tribunal if atty knows the client has lied. d) Process: (1) 1st: before informing the tribunal, atty must try to persuade client to rectify the perjury (change/correct the testimony). (2) 2nd: if client refuses to correct testimony, atty must take reasonable remedial measures. (a) Different approaches by jurisdiction – possible remedial measures include – know the rules in your jurisdiction: i. Atty must flat-out tell the tribunal that the client has lied (some jurisdictions take this approach) - MR 1.6 & ACP are trumped!!! ii. Other jurisdictions say that there is no requirement that the court be informed of the perjury. Atty must withdraw, but does not have to disclose the perjury. (See Brown - atty did not want to violate MR 1.6, so he told ct that “substantial differences” had arisen b/n atty and client & therefore atty wants to withdraw. Ct has discretion in letting atty withdraw). 2) MR 3.3(c) a) Text of Rule: a lawyer may refuse to offer evidence that the lawyer reasonably believes is false. b) Unlike MR 3.3(a)(4), atty has a choice (“may”) - atty can: (1) present the client‟s evidence, or (2) refuse to offer the evidence, or (3) tell client that he (atty) will inform the ct that client intends to lie. -32- e. Key Question – when does atty “know” that client lied 1) Timing of knowledge will determine whether atty has duty to inform tribunal. 2) See supra. Affirmative Avoidance: is it permissible for atty to affirmatively avoid getting knowledge that is unfavorable to the client in order to avoid the requirements of MR 3.3? 1) Examples: a) Do not ask client, “what did you do?” – instead, ask “what does the DA think you did?” b) Do not ask client “did you kill X?” – instead, ask “is there anyone who will corroborate your story?” 2) Probably – 3.3 is requirement that atty avoid falsity and NOT an affirmative duty toward truth – thus, atty only has the duty to present facts that are not untrue but be aware that purposeful avoidance may be seen as assisting in the commission of perjury if it goes to far. 3) Mulroney - atty has a reasonable duty to acquire all of the facts from the client so that atty can represent the client effectively so that above examples are not good lawyering. A client has no const‟l right to lie: a client who chooses to lie has no constitutional right to have an atty assist him in lying. 1) Nix v. Whiteside - client is on trial for murder. Client changes his version of facts as the case progresses. Client told lawyer that he was going to lie on the stand. Atty told client that if client lies, atty would either withdraw from the case or inform the ct that client was lying. Client does not lie on stand and loses. Client sues atty under 6A, claiming ineffective assistance of counsel. HELD: effective assistance of counsel does not include the right to lie. 2) Atty has the duty of truthtelling - he cannot personally mislead the ct, nor under Whiteside can atty allow the client to mislead the ct. Scope of 3.3 – Only applies to testimony/evidence that atty has control over: 1) Atty has no duty on MR 3.3 if opposing party’s witnesses or clients lie. 2) Exceptions: a) Unfavorable Lies: if your client lies to defeat opposing party‟s unfavorable lies, have to point them both out. b) Favorable Lies: while there is no duty to bring forth a favorable lie by an opposing party, atty cannot rely, in any way, on such favorable false testimony. f. g. h. 5. Trial Tactics: a. Rules: 1) MR 3.3 2) MR 3.4 Generally: 1) Question under 3.4 is NOT whether but the extent to which the atty can play with the truth. 2) Atty cannot use “unfair means” to represent client – thus, issue is determining when atty has unfairly interfered with witnesses. CrossX the Truthful Witness: 1) CrossX can be a matter of trial tactics and a matter of ethics. 2) Atty is allowed to examine adverse witnesses, even though the atty thinks the witness is telling the truth - why? b. c. -33- a) Atty is not the trier of fact b) Atty can still cross-examine so the jury can determine the adequacy of the witness’ story. c) Atty‟s role is to defend the client and test the witness’ credibility. d) Defense atty needs to exploit witness credibility to the client’s advantage. 3) However, in some cases, it may NOT be advantageous to crossX. d. Witness Preparation - Coaching: 1) Text of MR 3.4(b): A lawyer shall not falsify evidence, counsel or assist a witness to testify falsely, or offer an inducement to a witness that is prohibited by law. 2) Coaching witnesses is allowed, but if carried too far (woodshedding) atty can end up with MR 3.3 and 3.4 problems. 3) Must draw the distinction between falsifying and embellishing. a) Atty can refresh the witness‟ memory, but atty cannot put new thoughts into the witness’ head. b) Demeanor Evidence: atty can correct some of W‟s mannerisms, tendencies (i.e., swearing) but cannot totally change the witness – be wary – there is a very fine line b/w changing demeanor, altering communication style and falsifying evidence. Negative Inferences: 1) Rule: even if atty does not think an inference is true, he may argue that inference as long as it is based on true facts. 2) But if attorney knows the inference is false, he cannot argue it to the jury. 3) Example - Nationwide - atty while representing his client (def.) destroyed def‟s business records despite the fact that he knew they would be needed by opposing party as part of that party‟s burden of proof. Atty said that cost of storing the records was too high & therefore records had to be destroyed. Other side argued that the fact that the records were destroyed leads to the belief that the records were unfavorable to the def. ISSUE: does it violate MR 3.4(e) for atty to make somewhat of a haphazard guess that the records were unfavorable to def? HELD: no - it is permissible to draw negative inferences - non-production of evidence supports a finding of negative inference. Altering Evidence: 1) Rule: atty is allowed to review a deposition and make minor changes (to make it more readable), but if substantive changes are to be made, the atty must inform the opposing side as per FRCP 11. 2) Example - Combs - atty totally redrafted his client‟s deposition w/o informing either his client or the other side. HELD: atty is allowed to review a deposition and make minor changes (to make it more readable), but if substantive changes are to be made, the atty must inform the opposing side as per FRCP 11. Misleading by Silence: 1) Rule: generally, atty can remain silent if fact-finder or opposition makes a false inference or misapprehension. a) However: while the CT has said silence is generally not misleading in violation of MR 3.3(a)(1) BUT under CMT #2 there are circumstances where failure to make a disclosure is the equivalent of an affirmative misrepresentation. b) Advise to clients and witnesses: tell them to respond truthfully to all questions but not to offer evidence. c) Burden is on opposing party to find other info (adversarial process). 2) Example – In DiSabatino, atty sanctioned for failing to inform judge #3 that he appeared before that the first 2 judges had denied his client bail. Judge #3 granted bail. HELD: atty violated MR e. f. g. -34- 3.3(a)(1) - although atty did not lie outright, he misled by silence. h. Correcting Misleading Testimony: 1) Rule: client‟s atty does not have the duty to correct the testimony, provided that the client did not lie outright (if client lies, atty must take remedial measures - withdraw, etc). a) ??? Thus, an atty does not have the duty to correct his client’s testimony when the client did not lie even if the sum of the client‟s answers on stand give the wrong impression. b) See Bronston - client on stand does not testify falsely about his possession of Swiss Bank accounts. When asked if he ever had Swiss bank accounts, he said that his co no longer has Swiss bank accounts. Client testified truthfully, but his answers were misleading. 2) Rationale: such evidence is to be marshaled competitively though the adversarial process. a) Opposing counsel has the responsibility to develop the facts further through cross examination of the witness – see CMT#1 6. Frivolous Position, Delay, Hardball Tactics: a. b. Generally: Frivolous Positions: 1) FRCP 11(b) - states that an atty cannot argue a frivolous position before the court. By signing & placing before the court motions, pleadings, & arguments, the atty is arguing that this stuff has a reasonable basis. a) Deals with atty as advocate and advisor. b) Measurement: frivolous argument has less than a 10% chance of success. c) Impact: atty will be sanctioned if he presents frivolous claims. d) Mulroney says to view FRCP 11 as the measure of the quality of professional legal advice for competence purposes. (1) B/c an atty cannot advise a client to take a position that the court would throw out as frivolous – this is not competent advice. 2) MR 3.1- Meritorious Claims a) Text of Rule: A lawyer shall not bring or defend a proceeding, or assert or controvert an issue therein, unless there is a basis for doing so that is not frivolous, which includes a good faith argument for an extension, modification or reversal of existing law. A lawyer for the D in a criminal proceeding, or the respondent in a proceeding that could result in incarceration, may nevertheless so defend the proceeding as to require that every element of the case be established. b) MR 3.1 takes similar approach as FRCP 11(b)(2) but is slightly narrower b/c only deals with role of atty as ADVOCATE (not as advisor). c) Interpretation - atty can only bring non-frivolous claims. (1) Non-frivolous claims include a good faith argument for an extension, modification or extension of existing law. (2) Criminal defense atty may defend so that every element of the case must be proven. 3) Lesson: You cannot take a case & defend the client if your only defense/argument is a frivolous one. a) Atty cannot advise client to take a position that is not the law. (1) Atty cannot advise client to take a position that cannot be litigated in court. (2) This does not mean the position is illegal. b) Dealing with Client: when a client advises you to take a highly aggressive position, you may have to warn client that you cannot pursue this matter in court b/c it is frivolous & court will not hear the argument because it is not supportable. -35- c) Note: Friedman ct takes opposite view: atty can represent frivolous claims. Ct undercuts blackletter law rule that atty cannot advocate positions that are untenable. c. Delay and Dilatory Tactics: 1) MR 3.2 - Expediting Litigation: a) Text of rule: A lawyer should make reasonable efforts to expedite litigation consistent with the interests of the client. b) This is an affirmative duty. c) Have to balance (1) doing what is best for client with (2) being an officer of court, expedite litigation. (1) MR 3.2 presents a Catch 22 situation - atty must expedite litigation, but at the same time atty must guard client‟s best interests. (2) What to do then? Delay, but make it look like you are delaying for a legitimate purpose. 2) MR 4.4 - Respect for Rights of Third Persons: a) Text of Rule: In representing a client, a lawyer shall not use means that have no substantial purpose other than to embarrass, delay, or burden a third person, or use methods of obtaining evidence that violate the legal rights of such a person. b) Takes similar approach as MR 3.2. c) Bottom line: when atty is outside of the courtroom (i.e. in negotiations), the atty shall not use tactics that have the primary purpose of delaying & harassing the opposing side. 3) There is No Bright Line Rule on How Far Atty Can Go Before Violate 3.2: a) The atty must delay wisely - he cannot delay for delay’s sake. b) Double Standard: (1) If really out of bounds, court will say you violated 3.2 and 4.4 (2) If merely aggressive, atty will probably get away with it. c) Common Tactics – these are probably all allowed under Rules but should you do – question of justice: (1) Atty represents large wealth corp client, insist on extensive discovery in effort to run poor adversary out of money. (2) Delay trial in hopes that ailing W or client will die. (3) Delay settlement efforts to let client get enough money to pay settlement. Hardball Tactics: 1) Necessary to Use: In some cases it might be necessary to engage in hardball tactics in order to represent your client effectively (e.g., vilifying a victim in a rape case to show that she was promiscuous). 2) Very Subjective: hardball tactics are very subjective in terms of their identification. When faced with having to adopt hardball tactics, the choice to adopt such tactics is up to the atty (gut feeling). 3) Example – Paramount: during deposition Defense atty called P‟s atty an asshole & acted very rude & uncivil during the course of the deposition. HELD: a lawyer who acts in such a manner is not properly representing his client. 4) Solutions: a) Use MR 3.5(c) - Impartiality and Decorum in the Courtroom - to show atty is to refrain from abusive or obstreperous behavior while in the courtroom. (1) Text of Rule: A lawyer shall not: (a) Seek to influence a judge, juror, prospective juror or other official by means prohibited by law; (b) Communicate ex parte with such a person except as permitted by law; OR (c) Engage in conduct intended to disrupt a tribunal. b) Use MR 4.4 – Respect for Rights of Third Persons - to show atty was merely trying to embarrass. d. -36- c) Use creeds of professional and civility even though non-binding. (1) Problem: ethics committees across the country have developed their own rules of professionalism/courtesy but these rules are not mandatory & these rules alone do not give rise to sanctions. 7. Advocate-Witness Rule: a. Text of MR 3.7 – Lawyer as Witness: (a) A lawyer shall not act as an advocate at a trial in which the lawyer is likely to be a necessary witness except where: (1) the testimony relates to an uncontested issue; (2) the testimony relates to the nature and value of legal services rendered in the case; OR (3) disqualification of the lawyer would work substantial hardship on the client. (b) A lawyer may act as advocate in a trial in which another lawyer in the lawyer‟s firm is likely to be called as a witness unless precluded from doing so by Rule 1.7 or Rule 1.9. Courts Are Split on Application of Substantial Hardship Exception (MR 3.7(a)(3)): 1) cts are split as to whether economic hardship is enough. 2) Example: client‟s atty is disqualified at the last minute & client must now find another atty to take the case at the last minute. This is very expensive to do. Application of MR 3.7(b): 1) Even if atty is disqualified from representing a client at trial b/c atty is likely to be called to testify, another atty in the disqualified atty‟s firm can take the case. 2) The disqualified atty is allowed to work behind the scenes in order to help the new atty get familiar with the case. 3) Unless precluded by a conflict of interest under MR 1.7 or MR 1.9. Rationale: 1) Strong possibility that an atty W will have adverse effect on client or opposing side. 2) Factfinder might give greater weight to atty‟s testimony than it deserves. 3) Factfinder might give lesser weight to atty‟s testimony than it deserves (cynicism). 4) Cross X concerns – party may only call atty to degrade him in eyes of jury. 5) Closing argument concerns: how can an atty give weight to his own testimony? Limited Scope: MR 3.7 applies only to trials - it does not apply to settlement, or administrative panel hearings. Lesson: 1) This can be a sleeper issue – all of a sudden, atty is disqualified (“involuntarily dismissed) and client is angry – this would be incompetent representation. 2) A “Competent” Atty Will Plan for MR 3.7: atty should plan for 3.7 especially in transaction negotiation where atty probably helped pull transaction together and can therefore be a witness for either side regarding the transaction and negotiation process. b. c. d. e. f. 8. Advocate in Criminal Cases: a. Generally: -37- 1) Generally, the stakes are higher in criminal cases; const‟l rules affect both the Prosecution and the Defendant. b. Special Role of Prosecutor: 1) MR 3.8 - Special Responsibilities of a Prosecutor: a) Text of Rule: The prosecutor in a criminal case shall: (a) refrain from prosecuting a charge that prosecutor knows is not supported by probable cause; (b) make reasonable efforts to assure that the accused has been advised of the right to, and the procedure for obtaining, counsel and has been given reasonable opportunity to obtain counsel; (c) not seek to obtain from an unrepresented accused a waiver of important pretrial rights . . .; (d) make timely disclosure to the defense of all evidence or info known to the prosecutor that tends to negate the guilt of the accused or mitigates the offense . . . ; (e) exercise reasonable care to prevent . . . persons assisting or associated with the prosecutor . . . from making an extrajudicial statement that the prosecutor would be prohibited from making under MR 3.6. (f) not subpoena a lawyer . . . to present evidence about a past or present client unless prosecutor reasonably believes . . . ( 3 things) (g) except for statements . . . refrain from making extrajudicial comments that have a substantial likelihood of heightening public condemnation of the accused. 2) Cross Reference with MR 3.3(d): prosecutor must disclose favorable and unfavorable facts in grand jury proceeding. 3) Prosecutors have a higher standard to live up to than do regular attys: MR 3.8 makes certain acts by a prosecutor constitute misconduct under the rules and therefore make prosecutor subject to punishment/discipline. a) These same acts, if committed by a non-prosecutor, would probably be okay under the MRs. b) Prosecutor has to make sure that the system treats the D fairly. c) Hard blows are okay but foul blows are not. 4) MR 3.8 identifies standards of prosecutorial misconduct, which if abused, may be evidence of a denial of the D’s constitutional rights. 5) Example – Kojayan: a) Facts: Prosecutor failed to give D Brady material that D were entitled to (i.e.. that a key witness had struck a deal with the Prosecution), and Prosecutor lied during his summation. b) Held: conviction reversed. c) Reason: (1) Atty representing the gov‟t in criminal cases serve truth and justice first. (2) The prosecutor‟s job is to win, but to win fairly, staying within the rules. (3) Prosecutor is a minister of justice and not simply that of an advocate (CMT#1). (4) Unlike in civil cases when the atty screws up, in crim‟l cases the D cannot sue the prosecutor for malpractice - D‟s only redress is through the professional discipline system, therefore prosecutors held to a higher standard. 6) Plea Bargains: a) MR 3.8(a) limits the use of plea bargaining: prosecutor is not allowed to bring a big criminal charge against D which the prosecutor has no probable cause to bring in order to get D to plea bargain & plead guilty to smaller crimes in order to avoid being charged with the bigger crime. -38- 9. Destruction or Concealment of Evidence: a. MR 3.4 – Fairness to Opposing Party and Counsel: 1) Text of MR 3.4(a): A lawyer shall not . . . unlawfully obstruct another party‟s access to evidence or unlawfully alter, destroy or conceal a document or other material having potential evidentiary value. A lawyer shall not counsel or assist another person to do any such act; MR 8.4 – Misconduct: prohibits an atty from committing unlawful acts. Compare to Criminal Contempt 1) Criminal Contempt Rule: once a summons or a subpoena requiring production of evidence has been issued, it is a crime to destroy the requested evidence 2) The MRs are not limited to a subpoena or summons – there is no need for the trial to have begun. 3) Absence of knowledge requirement in 3.4 makes reach of rule broader. a) There is no requirement that atty know evidence be related to a pending trial or lawsuit. b) In criminal contempt case, the evidence destroyed must be relevant to a clearly potential case. What Is “Evidence”? 1) Not all evidence is physical – MR apply to tangible and intangible evidence (CMT#2). a) The location of the wallet was itself evidence – see Meredith where the court sanctioned defense counsel for concealing the location of D‟s wallet in a robbery/murder case (atty removed wallet from the place where it was located). b) Commonwealth v. Stenhach - leading case. Ct-appointed atty‟s client charged with murder. Atty‟s investigator went to the scene and found client‟s rifle butt that he used to commit murder, but not the knife client said the victim had. Atty kept rifle butt in desk since atty felt it was w/in ACP. Atty has a duty to turn over incriminating evidence to prosecutor under general laws. In this case atty‟s conviction was overturned b/c PA rule was overbroad. 2) Big issue = when does neutral material become “evidence”? a) MR 3.4(a) emphasizes that stuff having “potential evidentiary value” should not be destroyed. b) Problem arises b/c you do not know what will be potential evidence until the cause of action/triggering event has already occurred. 3) New hot topic is what to do with documents in digital format. Atty Should Be Concerned About Negative Inferences: 1) A possible danger arising from the destruction of evidence is that the jury can draw negative inferences from the destruction. 2) Example – Strachan: the destruction of evidence weighs very heavily against the destroyers makes it look as though they had something to hide. 3) Lesson: atty should advise client not to destroy evidence b/c jury will draw negative inferences. Document Destruction and Retention as Standard Business Practices: 1) Rule: a corp should stop standard business practice of shredding as soon as it receives notice/warning that the docs would be needed as potential evidence under MR 3.4(a) 2) A good atty will: a) Document in advance that it is the regular business practice of the client to shred documents after a certain time period. b) If atty has notice of pending litigation, he should advise client to cease routine shredding practices immediately. b. c. d. e. f. -39- 3) Scenario: a) Document destruction (shredding) is part of standard business practice of many businesses. Atty represents a corp that keeps records of all its activities, but corp shreds records after a certain time period as part of its standard practice. In July 1996, corp receives a letter from P saying that it has violated antitrust laws. In Aug, 1996 suit is filed. In Sept, 1996 a document request is filed. Assume corp keeps shredding documents after July and stops when Sept request is received. Corp is unable to fully comply with the doc request. P is disadvantaged b/c it doesn‟t have the docs it needs to prove its case. HELD: corp should‟ve stopped its document destruction after it received the 1st letter in July - this is when it first received warning that the docs would be needed as potential evidence under MR 3.4(a) g. Ways Atty May Be Held Accountable for the Destruction of Evidence: 1) Professional Disciplinary Action: can be initiated against atty for destroying evidence 2) Tort Liability for Spoilation of Evidence: a) Primary Tort – Spoilation of Evidence: (1) Plaintiff has an expectancy interest in evidence - plaintiff should not be disadvantaged by the atty spoiling the evidence - destruction of evidence interferes with client‟s expectancy interest. b) Secondary Tort - Legal Malpractice: it atty negligently fails to advise client NOT to destroy evidence (usually records). (1) Courts will look to MR 3.4 as authority for what a reasonable atty should have advised . 3) Criminal Sanctions: a) Available against atty for obstruction of justice. b) For police & prosecutors, destruction of evidence may become a const‟l issue - D deprived of his const’l rights (due process). 10. Threatening the Other Side: a. Issue: if atty represents P in a civil action, can atty threaten D with a criminal action in an effort to force the other side to settle the civil case? Applicable Rules: 1) MR 4.4 - Respect for the Rights of Third Persons: a) Text of Rule: A lawyer shall not use means that have no substantial purpose other than to embarrass, delay, or burden a third person, or use methods of obtaining evidence that violate the legal rights of such a person. b) Basically, this rule prevents an atty from making a groundless threat. 2) MR 8.4(b) – Misconduct: a) Text of Rule: It is professional misconduct for an atty to commit a criminal act that reflects adversely on the atty‟s honesty, trustworthiness or fitness as a lawyer in other respects. Two General Approaches: 1) Threatening Permitted: a) ABA Opinion 92-363 allows an atty to threaten opposing counsel provided that following qualifications are met: (1) The criminal action on which the threat is based must be related to the civil suit (there must be a nexus); (a) Rationale: it‟s a misdemeanor in the nature of compounding a crime to accept any pecuniary benefit to report, or to aid in suppressing info about a criminal act. (2) Atty must be reasonably certain that there is a criminal action. (3) ??? If client is entitled to restitution which is effected by D‟s crime, then atty can use b. c. -40- threat of criminal exposure. (4) MR 4.4 is independent limit - atty cannot threaten simply to harass the other side. (a) Thus, even if atty has reasonable certainty about criminal action – he cannot use this knowledge simply to harass. 2) Threatening NOT Permitted: a) Some jurisdictions completely prohibit threats. b) D.C. Rule 8.4(g) (p959supp). d. Be Aware of Specific State Rules and Conflict of Law Rule: B. Advisor, Intermediary: Generally: a. Article 2 describes atty‟s role as a counselor. 1. -41- 2. Atty as Advisor: a. b. Role of advisor is actually the most common role for the lawyer, but is mostly out of the public eye. General aim of advice-giving is to anticipate and thereby avoid future legal problems. 1) When acting as advisor, atty often drafts “private legislation” (i.e. contracts, etc). The atty is drafting the rules of the engagement & is trying to foresee and deal with any potential dangers that may arise in the future. MR 2.1 - Advisor: 1) Text of Rule: In representing a client, a lawyer should exercise independent professional judgment and render candid advice. In rendering candid advice, a lawyer may refer not only to law but to other considerations such as moral, economic, social and political factors, that may be relevant to client situation to the client‟s situation. 2) The “independent professional judgment” language indicates that atty has a right and a duty not to be influenced by others. a) Atty Cannot Use Clients to Enhance of Personal Reputation. (1) Problem: atty must always be careful to avoid pushing his/her own views on the client in giving legal advice. (2) Example: Civil rights legislation is enacted and a women‟s group asks atty to see if they have a case against their employer using this legislation. Atty believes that the legislation really is not applicable in the way women want to use it. But, women‟s position meshes with atty‟s own personal views and atty strongly urges women to sue. Atty says women will benefit society by suing. But atty does not inform them that this case will greatly enhance atty‟s reputation nor did atty inform women of all the costs involved and the potential disruption of the workplace that will occur b/c of suit. (3) Result: (a) Atty likely violated MR 2.1 by pushing his own views on the clients. (b) Atty allowed his own personal agenda to color the client‟s views & by doing so, atty prevented the clients from making a fully informed choice in violation of MR 1.4. 3) Atty Should Consider Other Non-Legal Factors When Giving Advice: lawyer should consider factors other than pure legal issues when giving advice - there are times when giving purely legal advice would not be in the client‟s best interests. 4) Read Editor’s Note and CMTs. c. 3. Atty as Intermediary: a. Generally: 1) Definition: MR 2.2 allows an atty to represent multiple clients when they have a common interest/aim, even though there may be a potential conflict of interest. 2) Acting as an intermediary is a cost effective way of doing business. 3) Each of the individual clients is an individual and separate client, but the atty is acting simultaneously to promote their interests. 4) Common role for attys involved in the formation of a business enterprise. 5) Goal is to avoid the dispute resolution process. MR 2.2 - Intermediary: 1) Text of Rule: (a) A lawyer may act as intermediary between clients if: (1) the lawyer consults with each client concerning the implications of the common representation, including the advantages and risks involved, and the effect on the attorney-client privileges, and obtains each clients consent to the b. -42- common representation. the lawyer reasonably believes that the matter can be resolved on terms compatible with the clients‟ best interests, that each client will be able to make adequately informed decisions in the matter and that there is little risk of material prejudice to the interests of any of the clients if the contemplated resolution is unsuccessful; AND (3) the lawyer reasonably believes that the common representation can be undertaken impartially and without improper effect on other responsibilities the lawyer has to any of the clients. (b) While acting as intermediary, the lawyer shall consult with each client concerning the decisions to be made and the considerations relevant in making them, so that each client can make adequately informed decisions. (c) A lawyer shall withdrawal as intermediary if any of the clients so requests, or if any of the conditions stated in paragraph (a) is no longer satisfied. Upon withdrawal, the lawyer shall not continue to represent any of the clients in the matter that was the subject of the intermediation. 2) Under MR 2.2(b), the atty must consult with all clients throughout the process and keep all informed - very important part of rule. 3) separately (including effect on ACP, risk-benefit issues and confidentiality issues) and all clients consent (i.e. sign waiver after being fully informed of potential C of I); and Bb (2) c. Almost works as an exception to the confidentiality and conflict of interest rules: as an intermediary, the atty must be able to keep client confidences when indicated and share them when indicated communication is the key to success. 1) Qualifications for abandonment of usual confidential and COI rules: a) Atty must consult separately with each client. b) Atty must believe that all clients’ interests can be reasonably served. c) Atty must believe that each client can act with independent judgment in his own affairs; AND d) Atty must believe that he can bring impartiality to the arrangement. Distinguished from an arbitrator: Termination: 1) Under MR 2.2(c), the atty shall withdraw if client requests or if one of above elements is no longer satisfied – atty cannot continue to represent one party. 2) Each client has the right to terminate the intermediary relationship. 3) Result: atty must withdrawal from representation of all clients. Distinguish from Class Action Suit: acting as an intermediary is different from atty acting in a class action lawsuit, in which the atty is representing each individual client. Good atty will have an engagement letter expressly setting out the intermediary relationship. d. e. f. g. -43- C. Negotiator: Generally: Article 4 covers atty‟s role as a negotiator. Rules: a. MR 4.1 - Truthfulness in Statements to Others: 1) Text of Rule: In the course of representing a client a lawyer shall not knowingly: (a) make a false statement of material fact or law to a third person; OR (b) fail to disclose a material fact to a third person when disclosure is necessary to avoid assisting a criminal or fraudulent act by a client, unless disclosure is prohibited by Rule 1.6. 2) MR 4.1 was drafted to take the context of commercial negotiations into account. 1. 2. -44- b. MR 4.4 – Respect for Rights of Third Parties: 1) Text of Rule: In representing a client, a lawyer shall not use means that have no substantial purpose other than to embarrass, delay or burden a third party, or use methods of obtaining evidence that violate the legal rights of such a person 3. Problem - Negotiation is NOT the Sole Province of Attys: a. Non-attys involved in negotiation process are not subject to the rules and standards that attys are. Compare Truth-Telling Requirements of MR 4.1(a) and MR 3.3(a)(1): a. See CMT#2 to MR 4.1: Rule provides greater protection than constitution for investigations by governmental entities. MR 4.1 = lower truth-telling standard than the standard for truth-telling in a tribunal. 1) MR 3.3(a)(1) requires that a lawyer not “(knowingly or unknowingly) make a false statement of material fact or law” when dealing with a tribunal. 2) MR 4.1 only requires that a lawyer not “knowingly make a false statement of material fact or law” when dealing with third parties. Rationale for Lower Truth-Telling Standard: 1) Atty should not be held to a higher standard than non-atty businessman during negotiations – will hurt clients‟ interest. 2) Atty, for clients‟ best interest, should be allowed to use ordinary business standards. Result of Lower Truth-Telling Standard - total honesty not required for: 1) Commercial Puffing: atty is allowed to diminish the facts in order to arrive at a deal beneficial to the client BUT atty is NOT allowed to make flagrant misrepresentations to 3d parties. a) Fine line b/w puffing and aiding a client in fraud. 2) Atty can argue plausible interpretations of cases/statutes to favor the client even if this is not atty‟s personal view. 3) Holding back the client‟s true figure in settlement to limit the amount that the other side asks for. a) Example: atty says “my client is willing to settle for $1 million” is not a statement of material fact. So, if client says he is willing to settle for $600k, but atty says client is willing to settle for $1 mil, this is O.K. No Bright Line: the exception stops where overt misrepresentation begins. 1) Where atty acts as a negotiator, concepts of agency, tort and K apply and will indicate when overt misrepresentation begins. 4. b. c. d. e. 5. MR 4.1(a) - atty shall not knowingly make a false statement of material fact or law. a. What is a material fact? 1) CMT#2 says that whether a particular statement should be regarded as one of fact can depend on the circumstances - provides for lots of wiggle room. 2) Misrepresentation is a matter of subjective judgement – requires BALANCE – there is a lot of middle ground b/w these two extremes: a) Atty no affirmative duty to supply/disclose all info to other side; AGAINST b) Atty cannot affirmative mislead other side. b. General Rules: -45- c. 1) ***** If an atty affirmatively and knowingly and overtly provides misleading facts, then this will probably violate MR 4.1. 2) Opinion is usually not a violation of MR 4.1. 3) Generally, intentional ambiguity is not a violation of MR 4.1. a) This is a frequent occurrence. b) Attys, sometimes, intentionally use ambiguous terms as a platform for later negotiations (1) Good tool for when all future problems cannot be foreseen and some type of K is desired/necessary. 4) Generally, silence is not misrepresentation and not a MR 4.1 violation a) However, silence could be a violation of a local disclosure statute if one exists. b) Rationale: fraud has a very specific meaning under the MRs: (1) “Fraud” or “Fraudulent” denotes conduct having a purpose to deceive and not merely negligent misrepresentation or failure to apprise of relevant info (p17supp). Examples: 1) Atty says “this looks like a good deal” - probably not a misrepresentation b/c it is an opinion and not a material fact. 2) Does atty have a professional duty to disclose the existence of buried oil tanks on seller‟s property during land deal negotiations? Is atty‟s silence in support of a fraudulent act by the client (which is prohibited under 4.1(b))? Probably not b/c this does not fit the definition of “fraud” under the MRs. 3) For ex: Inventor of board game signs a contract with corp, where corp says that it will not market a competitive game. Atty purposefully used the word “competitive” knowing that the corp was going to market a similar game to inventors. There is a good argument on both sides that under MR4.1 and CMT 2 that the term “competitive” is not a statement of fact; therefore atty‟s statement was not a false statement of material fact. Atty can also argue that he was looking out for the best interests of his client, the corp. He cannot mislead the other side and should inform the corp, but otherwise his purposeful use of an ambiguous term is OK. 6. MR 4.1(b) says that an atty cannot knowingly fail to disclose a material fact if disclosure is necessary to avoid assisting the client in the commission of a fraudulent or criminal act. a. ??? MR 1.6 Problem - If MR 4.1 says you have to make disclosure in certain circumstance, what about MR1.6? 1) 1.6(b)(1) allows disclosure of a confidence (absent express or implied client consent) only where a criminal act is involved. 2) MR Jurisdictions: the MR4.1 requirement to disclose client fraud is prohibited by MR 1.6. 3) Non-MR Jurisdictions: in other jurisdictions (e.g., PA Rule 1.6), fraud is included as one of the confidences an atty can disclose w/o client consent (See Virzi). a) In Virzi, mediator thought case was worth $35k. D accepted the figure. Prior to hearing P died, but P‟s atty did not inform the other side, although he was not asked. D said the reason it settled was that P would have been a very strong witness. D would not have settled had it known P died. HELD: atty had a duty to disclose. Ct relied on MR 3.3 and 3.4 – atty‟s duty of candor required that atty disclose info essential to the suit, regardless of whether atty was asked to disclose. Mulroney says that if MR 4.1 applied, atty would still have to disclose b/c death of P was a material fact. 7. Withdrawal: if atty cannot client to disclose, then atty must withdrawal from representation under MR . -46- D. Evaluator: Rules: a. MR 2.3 - Evaluation for Use by Third Persons: 1) Text of Rule: (a) A lawyer may undertake an evaluation of a matter affecting a client for the use of someone other than the client if: (1) the lawyer reasonably believes that making the evaluation is compatible with other aspects of the lawyer‟s relationship with the client; AND (2) the client consents after consultation. (b) Except as disclosure is required in connection with a report of an evaluation, information relating to the evaluation is otherwise protected by MR 1.6 2) See CMT#1 for examples: a) Audits. b) Title of property. MR 1.6 Waived: a. When the client asks atty to look at the client‟s affairs & to report on them to a 3d person, MR 1.6 is affirmatively waived in this instance (this is rationale for atty getting client consent). Problem = When Does Atty’s Role as an Evaluator Create a Duty to a Third Party? a. This is rare occurrence but sometimes the role of an atty as an evaluator can create a duty in the atty 1. 2. 3. -47- b. c. to the third party. Test (Petrillo v. Bachenberg (NJ 1995) (p736)): attys may owe a duty of care to third party non-clients when: 1) the atty knows or should know that non-clients will rely on the atty‟s representations; AND 2) the non-client third parties are not too remote from the attys to be entitled to protection – see Balancing test: in determine whether atty owes duty to Third party, court should balance: 1) atty‟s duty to represent client vigorously WITH 2) atty‟s duty not to provide misleading information on which third parties will foreseeable rely. 4. How Far Must an Atty Go in Disclose Unfavorable Info to an Auditor? a. See IRS Regulations (193supp). Use Standard Form Opinion Letter to Give Evaluation: a. Definition: a letter issued by atty to a third party (usually a buyer or lender) assuring that the atty believes the transaction is legal, etc (p193supp). b. Many third parties rely on opinion letters and they are often a condition of sale. c. Most firms have standard form opinion letters (that have been drafted to prevent atty liability) - do not start from scratch. 5. 6. Withdrawal a. Greycas v Proud - atty failed to discover the liens on the farm machinery; he failed to use due diligence. Assuming that atty could not make a favorable opinion letter for client, and client has already told other side that a favorable opinion letter is forthcoming, what should arty do? Atty is not allowed to make a false opinion letter, but should atty write a bad opinion letter for his client? Atty must 1st consult with the client and inform client of problems that atty found. If atty is unable to carry of the objectives of the representation, the atty must withdraw under MR 1.16. b. Effect of Withdrawal: 1) Problem with withdrawing is that it might tip off the 3d party that something is wrong - by withdrawing, the atty has indirectly conveyed client confidences to the 3d party. 2) That is OK - see CMT#15 to MR 1.6. -48- E. Lawyer in Administrative Proceedings: Generally: a. This rule is often a sleeper issue BUT it is very important. b. TENSION b/w duty to client and duty as an officer of the legal system. Issue - How Far Atty Can Go in Shield Client From Adverse Action Will Depend on the Role Atty Takes With the Agency. a. What truth-telling standards apply when atty is before an administrative agency - is it the standards for advocacy (higher b/c court tribunal [MR 3.3]) or the standards for negotiator (lower b/c third parties [MR 4.1])? b. ??? Why is this not resolved – rule says atty has to follow 3.3? MR 3.9 Advocate in Non-Adjudicative Proceedings a. Text of Rule: a lawyer representing a client before a legislative or administrative tribunal in a nonadjudicative proceeding shall disclose that the appearance is in a representative capacity and shall conform to the provisions of Rule 3.3(a) through (c), 3.4(a) through (c), and 3.5. b. ??? Interpretation: 1) If the agency is NOT acting like a court (i.e., adjudicating - no party being challenged in that case), MR 3.3 and 3.4 apply. a) Atty = advocate. b) It is important for the true facts to be disclosed because it is not in the public‟s interest for atty to disclose facts. 2) If the agency is acting like a court (in an adjudicative manner), then MR 3.4, and 3.5 do not apply and the regulations of the agency will apply. a) Atty = negotiator. 1. 2. 3. -49- 4. ??? Supremacy Clause Problems: a. Problem: 1) This issue is likely to arise where a federal administrative agency has investigative and compliance functions in relation to its substantive statute. 2) In order to determine whether a regulated business is in compliance, the agency’s regulations may require the disclosure of info that is disadvantageous to the company. 3) The atty who represents the co may decide to advise the co not to turn over the info BUT as a person authorized to practice before the agency, the atty is bound to follow its regulations. 4) Further, the atty’s duty to the client is essentially defined by reference to state law BUT the agency and its regs are created by federal law - Supremacy Clause problems here. b. ??? Approaches – what are the two approaches: 1) Kaye Scholer: a) HELD: agency felt that its regulations trumped the firm‟s responsibility to its client – atty was acting as advocate. 2) ABA Opinion 93-375: came out differently than the agency in Kaye Scholer. a) Facts: atty represented a bank that was under investigation by bank examiners. The atty discovered that the bank had made a loan in violation of the agency‟s regs. The bank examiners did not know about the loan. b) Issue: did atty have a duty to disclose the loan? c) HELD: opinion said atty acted in role of a negotiator and was thus subject to the truthtelling standards of 4.1. d) Reason: (1) The existence of the loan was material to the investigation, disclosure would have been against the client‟s interests and absent client consent, disclosure would violate MR 1.6. (2) If the atty believed the client had a legal obligation to disclose the loan under the agency‟s regs, then the atty had a duty to counsel the client to do so. (a) BUT, in the course of giving that advice, MR 2.1(d) permits the atty to advise about the adverse legal consequences of disclosure. (b) If the client chooses not to disclose, the atty cannot voluntarily do so under MR 1.6. (3) The lawyer could continue to represent the client before the bank examiners so long as the representation does not cause the bank examiners to overlook the loan, or mislead them as to the existence of the bad loan. (4) Basically, while the atty cannot mislead the agency, there is no obligation of an atty do disclose weaknesses of a client‟s case. -50- IV. CONFLICTS OF INTEREST: A. General: Generally: a. Basic question to ask is: Can one atty, acting alone, represent both of these clients at the same time? If the answer is no, there is a conflict of interest that extends to the atty, other attys in the same firm, and to other firms the atty may go to. 1. 2. Rationale of Conflict of Interest Rules: a. Atty owes unfettered loyalty to each and every one of his clients - atty will be precluded from doing this if he has 2 clients whose interests are directly opposed. 2 related issues: 1) MR 2.1 can‟t be met if atty represents 2 adverse clients. 2) MR 1.6 also poses a problem b/c atty can‟t use the conf‟l info he received from one client to benefit the other client. b. 3. Preliminary Question - who is the client? a. Ordinarily you can‟t represent 2 clients with 2 opposing interests, but if one person is not considered a client, then you are O.K. 4. Key Point: a. a conflict exists where the lawyer is representing 2 people with adverse interests. Up front, the lawyer should get the consent of both clients. In some cases, the lawyer will be required to withdraw from one or both clients‟ representation. -51- 5. Three types of Conflicts: a. Concurrent/Present Conflicts of Interest: this is when atty represents 2 adverse clients at the same time - governed by MR 1.7 & 1.8 Consecutive/Serial Conflicts of Interest: this is when atty represents a current client that has a conflict of interest with a former client that the atty represented - governed by MR 1.7 & 1.9 Imputed Disqualification: this is when one atty in a firm has a conflict of interest. The question is whether if other attys in atty‟s firm are tainted by the one lawyer‟s conflict of interest. b. c. B. Concurrent Conflicts (Present Clients): 1. MR 1.7 Conflicts of Interest - General Rule: a. Text of Rule: a lawyer shall not represent a client if the representation of that client will be directly adverse to another client UNLESS (1) The lawyer reasonably believes the representation will not adversely affect the relationship with the other client; AND (2) Each client consents after consultation. Dual Requirement: both (1) and (2) must be met if atty wants to represent both clients 1) An atty representing P& D in the same lawsuit could NEVER meet the requirements of MR 1.7(a) - even if both consent to the representation, MR 1.7(a)(1) is not met. 2) CMT 3: if the gravamen of the 2 lawsuits is NOT SUBSTANTIALLY SIMILAR, then the atty can proceed in representing the 2 clients (b/c the 2 suits are wholly unrelated). MR1.7(a) only applies when the representation of one client would be directly adverse to the other. A simultaneous representation in UNRELATED matters of clients whose interests are only generally adverse, such as competing economic enterprises, does not require the consent of the respective clients. Key issue is whether the 2 suits are: 1) substantially related, and 2) the underlying interests are only generally adverse. Potential Problem: in order to get consent from both parties you have to tell each party that you represent the other, but this is a MR 1.6 problem. So, first, you have to get the consent of each client to disclose the representation to the other client (see CMT 5). If the client won‟t consent, that‟s the end of the matter. Timing - A concurrent conflict of interest can arise: 1) New Client (at the outset of the representation); or 2) New Matter with Existing Client (it can arise much later, after the representation has already begun when it was not apparent that a conflict of interest would arise). Example: if atty represents A in A v. B, which is an environmental pollution matter, and atty represents B in B v. C, a local zoning matter that has nothing to do w/the environmental issues of the 1st suit, the atty can also represent B in B v. C. Insurance Triangle: concurrent Conflicts often arise in the Insurance area. 1) Key theme here is divided loyalty. b. c. d. e. f. g. -52- 2) Problem exists in this area b/c the insured person (D) is represented by an atty provided by the insurance company. Very often the insurance co will try to find a loophole in the policy so that the co will not have to pay the legal bills. Divided loyalty can exist between the atty who is representing the defendant and the insurance co who is paying atty‟s bills. 3) Goldfarb - ct found that insured was entitled to be represented by an atty of his choice, but the insurance co was not allowed to select the insured‟s atty. But, the insurance co must pay insured‟s legal fees. h. Cases: 1) Cuyler v. Sullivan - D and 2 accomplices were on trial for murder; they were represented by the same lawyers. Defense for D1 rested w/o presenting any evidence. D1 was convicted and he appealed on grounds that a conflict of interest existed as to his representation. HELD: the mere potential for a conflict of interest in representation is not sufficient to invalidate a conviction – D must show an ACTUAL CONFLICT. Atty still had the duty to provide for competent representation and had a duty to advise and communicate to clients about the possibility of a C of I arising in the future. 2) Fiandaca - Legal aid society represented a group of women prison inmates who sued state demanding better facilities. Society also represented a class of students at a state school in an unrelated matter. State offered to convert one of the school buildings into a penitentiary for women. Students vehemently objected. State later argued that the society should be DQ‟d for conflict of interest. HELD: there was a definite conflict of interest that necessitated withdrawal of the Society b/c Society could not represent both clients with the “warm zeal” that was required. Loyalty to a client is materially limited when a lawyer cannot recommend a possible course of action due to loyalty to another client. Conflicts of Interest arise in all aspects of a lawyer‟s role (in negotiation, litigation, etc.) 3) Hypo: assume you are an atty who is a lobbyist in Washington. You have 3 clients, each of whom wants their measure/bill passed. You talk to a Congressman who tells you that Congress will allow only 1 of the 3 to pass, but you (atty) can choose which one. What do you do? Do not choose b/c you have a conflict of interest situation; leave it up to Congressman to decide. 2. MR 1.8 Conflicts of Interest - Prohibited Transactions: a. Key point of this rule is to guard against self-dealing by the attorney. 1) For ex: MR 1.8(c) flatly prohibits an atty from drafting a will that will benefit either the atty or the atty‟s relatives. Also, you can‟t recommend a fellow associate to write the will for you, leaving you a specific request b/c his activities will be imputed to you. 2) For ex: MR 1.8(d) - atty cannot make or negotiate media rights to a portrayal or an account based in substantial part on info relating to the representation until after the representation has ended. When do MR 1.8 issues arise? 1) When client does not have enough $ to pay you, so he therefore lets you become part of his business deal. 2) When client allows atty to invest in his business. 3) Whenever an atty has a $ interest in the affairs of his client. a) See Neville - whenever lawyers knowingly acquire an ownership, possessory, security, or other pecuniary interest adverse to a client, the client must be given a reasonable opportunity to seek the advice of independent counsel. Key Point = Fiduciary Responsibility: trust between the client and the atty - client is entitled to have faith and trust in his atty. Note: MR 1.8 was not applied in a situation where there was a concurrent conflict of interest, but rather where there was a potential consecutive conflict of interest. MR 1.8(a) has 3 requirements that must be met if an atty is to enter into a business transaction with a b. c. d. e. -53- client: 1) the transaction and terms on which the lawyer acquires the information are fair and reasonable to the client and are fully disclosed and transmitted in writing to the client in a matter which can be reasonably understood by the client; and 2) the client is given a reasonable opportunity to seek the advice of independent counsel in the transaction; and 3) the client consents in writing thereto. C. Consecutive Conflicts (Former Clients) – MR 1.7 & MR 1.9: Generally: a. These conflicts arise when the representation of a current client is limited/impaired because the atty has represented someone who is no longer the atty‟s client. Courts have determined that there is an ongoing duty of loyalty to former clients - loyalty to the former client continues on even when the client is no longer your client anymore. 1. b. 2. MR 1.9 - Conflict of Interest: Former Client a. Text of Rule: A lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which that person‟s interests are materially adverse to the interests of the former client unless the former client consents after consultation Basically it is a prohibition against an atty switching sides. There are 2 tests to be met for the operation of MR 1.9(a): 1) The matter for the present client must be the same or substantially similar to the matter that involved the former client; and 2) Representation must be materially adverse to the former client (see CMT 2 to MR1.9). b. c. 3. Part 1 - Substantial Relation Test: a. Analytica v NPD Research: Law firm represented a constituent of a close corp in a stock transfer deal. The corp paid for the atty services. The same constituent then later formed Analytica and sued NPD (using the same firm that was used in the prior deal) for antitrust violations. HELD: ct said that the firm could not represent since they had obtained confidential financial information of NPD during the tax/stock representation. Issues of the claim were substantially related matters under the language of MR 1.9. 1) Substantially related test is met in every case in which the lawyer in fact had ACTUAL ACCESS to the confidences of former client A, whether or not in fact the atty actually did know of those confidences. 2) Reasoning: even though the old matter and the new matter were not the same legal issue in this case, the new matter was considered substantially related b/c of the potential relevance in the 2 nd matter of the financial info the lawyer got in the old anti-trust case when he was representing former client. Rule: the substantial relationship test depends not on whether the legal issue is the same or different, but instead on the target atty‟s knowledge of the facts as to the former client. 1) Rationale:a client would feel wronged if an opponent prevailed against him with the aid of an atty who formerly represented the client in the same matter. b. -54- 2) The client is entitled to not have her atty change sides against her in the same or a substantially similar case. c. Hot Potato Issue: a firm cannot avoid a C of I by merely firing a current client in order to take on a new client. All this does is to make the current client a former client; the issue has been moved from 1.7 to 1.9. 1) AmSouth: example of a law firm taking its duty of loyalty to its client very seriously. The C of I did not arise until after the firm represented both clients. Once the C of I arose, the firm asked both sides to consent to the representation; if they consented then 1.7 would have been satisfied. Both sides refused to consent. Firm forced to discharge a client. Firm based its discharge decision on the basis of which party would be the least disadvantaged by the firm’s withdrawal. Firm provided far more service to smaller client than larger client. Consequently, firm chose to represent the smaller client, even though the smaller client would be merged with a bigger corporation and firm would likely lose the client b/c of the merger. Firm did the right thing. 4. Part 2 - Position of former client and current client must be materially adverse: a. Maritrans - Maritrans‟ law firm also represented Maritrans‟ competitors in the same industry. Eventually firm fired Maritrans in favor of the more lucrative competitors (This is a “Hot Potato” case b/c the firm turned the issue from a MR 1.7 case to a MR 1.9 case). Maritrans pissed off and sought to enjoin firm from representing the new clients. HELD: ct disqualified the whole firm on the basis of loyalty and fiduciary responsibility to its client. The atty switched sides. The matters were substantially related and the 2 clients, fierce competitors, had materially adverse interests. b. Rule: If the current client‟s interest is materially adverse to the interest of the former client, then the atty is prohibited from working that case. 1) MR 1.9 CMT 2: “When a lawyer has been directly involved in a specific transaction, subsequent representation of other clients with materially adverse interests clearly is prohibited.” c. Rationale: breach of duty of loyalty – there is a fiduciary responsibility. d. Note: something can be materially adverse even though no case or controversy exists b/w former and current clients – it is adverse b/c the atty switched sides. e. Mulroney‟s Comment: law firm here did not do the right thing. -55- D. Imputed Disqualification: Generally: a. General rule: if there is one atty in firm with a conflict, the other attys in the firm will be imputed as having the same conflict and will also be prevented from representing that client. Key Issue: how the conflicts of one atty in a firm get imputed, or placed upon, the other members of the atty‟s firm. Basically, this category is really just a branch of the first two categories (i.e., how consecutive and concurrent conflicts operate in the context of lawyers practicing together in one firm). Common scenario = “Migratory Lawyer” who moves from one firm to another. 1. b. c. d. 2. MR 1.10 Imputed Disqualification: a. Text of MR 1.10: (a) While lawyers are associated in a firm, none of them shall knowingly represent a client when any one of them practicing alone would be prohibited from doing so by Rules 1.7, 1.8(c), 1.9 or 2.2. (b) When a lawyer has terminated an association with a firm, the firm is not prohibited from thereafter representing a person with interests materially adverse to those of a client represented by the formerly associated lawyer, and not currently represented by the firm unless: (1) The matter is the same or substantially related to that in which the formerly associated lawyer represented the client; AND (2) Any lawyer remaining in the firm has information protected by Rules 1.6 and 1.9(c) that is material to the matter. (c) A disqualification prescribed by this rule may be waived by the affected client under the conditions stated in Rule 1.7 Rationale for this Rule: Loyalty to the client and confidentiality undergird this rule. Test under MR 1.10 – CMT #6: treats the law firm as one atty: 1) Each atty in firm is treated as if they personally represent all of the clients of the firm (even though each client is represented by separate attys w/in the same firm). 2) A firm is a firm regardless of how scattered across the globe its offices are (i.e., Chicago office and NY office of firm treated as the same office). a) Westinghouse v Kerr-McGee - firm with branches in Washington & Chicago. Washington branch represents petroleum trade ass‟n. Chicago branch brought suit on behalf of client against oil companies. Firm as a whole was treated as one firm, even though firm set up a Chinese wall. Firm was disqualified from representing the oil co‟s. Rules Adopt Broad Definition of “Firm”: also includes the in-house corporate counsel function, sharing of office space by solo practitioners, sharing of secretarial services, bookkeeping services, etc. b. c. d. 3. Chinese Wall: a. Definition: firm sets up screening mechanisms to prevent shared confidences b/w attys with potential -56- conflicts of interests – occurs with migratory lawyers and when firms switch sides. b. Two Approaches: 1) ABA Model Rules Approach: MODEL RULES DO NOT ALLOW FOR SCREENING/CHINESE WALL DEFENSE. a) Majority approach. b) Rationale: even if there is no actual exchange of shared confidences, the court said the potential for improper use and disclosure was sufficient to breach the atty‟s duty of loyalty and confidentiality to the client. c) Example - Westinghouse v Kerr-McGee - firm with branches in Washington & Chicago. Washington branch represents petroleum trade ass‟n; Chicago branch brought suit on behalf of client against oil companies. Firm as a whole was treated as one firm, even though firm set up a Chinese wall. Firm was disqualified from representing the oil co‟s. Court rejected Chinese wall defense. 2) Minority Approach: allow firms to use screening mechanism as a defense – usually 3-part test. a) Rationale: silly to impose disqualification when there is no risk of shared confidences. b) PA and 7th Cir. follow this rule. c) Example – Cromley v. Board of Education (7th Cir..), cert denied, (US 1994) - teacher sues Bd of Ed. Teacher was represented by atty Weiner. While suit was in progress, Weiner left his firm for the Sciarno firm, which represented the school board. Weiner withdrew as the teacher‟s atty. Teacher moved to disqualify Weiner‟s new firm from representing the Board b/c of imputed Conflict of Interest. HELD: ct did not disqualify firm b/c of the Chinese wall defense. (1) ??? Reason: 3-part test to prove imputed disqualification: (a) Does a substantial relationship exist b/w the subject matter of the prior and present representations? i. If no, do not continue analysis – no need for disqualification. ii. If yes, go to question #2. (b) Is there a presumption of shared confidences between the lawyer in the new firm and his old client? i. If no, there were no shared confidences, or if there was no opportunity for shared confidences, then do not continue analysis – no need for disqualification. ii. If yes, go to #3. (c) Can the firm rebut the presumption of shared confidences with respect to the PRIOR and PRESENT representations? i. If no, then disqualification is proper. ii. If yes, then disqualification is improper. (2) Apply test to facts: ct found that atty did not fail the 3d part of the test because the new firm had set up effective screening devices that prevented the atty from sharing confidences about his former client with his new colleagues (i.e., locked file cabinets, stuff about the case kept in other office, etc) - these screening devices are known as the Chinese Wall. 4. Migratory Attorneys: a. General Rules: 1) Key Issues: a) Does the lawyer bring the conflict with her and impute this conflict to her new firm? IT DEPENDS. -57- b) When the atty leaves her old firm, do any conflicts remain behind to disqualify her old firm from representing present or future clients? IT DEPENDS. 2) Summer law clerks fall under the ML rules. 3) If there is a COI by the inbound lawyer, the ABA does not allow any screening mechanism (i.e. Chinese Wall). b. ??? 4 General Situations Where Migratory Lawyer Problem Arises: 1) ML Comes to New Firm Empty-Handed - represented clients from old firm: a) Problem: what happens to conflicts with clients from the old firm that ML actually represented? b) General Approach - MR 1.9 applies to ML, and MR 1.9, via MR 1.10, applies to ML’s new firm: (1) ML‟s old clients (who stayed behind at the old firm) are nevertheless former clients of hers and thus, by imputation, are former clients of the new firm as well. 2) ML Comes to New Firm Empty-Handed – non-represented clients from old firm: a) Problem: what happens to conflicts with clients from the old firm that ML did NOT represent? b) General Approach – conflicts based on imputed (means no actual or presumptive knowledge) knowledge do not pass with ML to new firm. (1) Rule: these conflicts will only pass to new firm (and thus be viewed as former clients under MR 1.9) if ML had actual or rebuttable presumptive knowledge about these clients while at old firm. (2) Said another way: if the ML has no actual or rebuttable presumptive knowledge about clients for whom she did not work in the old firm, then those clients are not former clients of hers and pose no disqualification for the new firm. c) Rationale: if ML did not bring any specific information about the client, then no confidences are endangered. d) Example - Silver Chrysler Plymouth v. Chrysler Motors - represents the idea that conflicts based on imputed info do not pass with lawyer to new firm. 3) ML Comes to New Firm with Client that ML Represented in Old Firm – Impact on NEW Firm: a) Problem: what conflicts will new firm have with ML‟s carried over clients ? b) General Approach – have to check for conflicts. (1) Chinese Wall Defense: if there is a conflict, new firm can try to use screening mechanism (Chinese Wall) but it will depend on jurisdiction whether that is allowed majority does NOT allow it. (2) Impact on New Firm: (a) New firm must test ML‟s carried over clients against current clients of new firm. (b) New firm must test ML‟s carried over clients against former clients of new firm. 4) ML Comes to New Firm with Client that ML Represented in Old Firm – Impact on OLD Firm: a) Problem: do these clients count as former clients of the old law firm? b) General Approach –if any lawyer in the old firm had actual or rebuttable presumptive knowledge about the departing clients, then they are considered former clients, under MR 1.9, of the old firm. (1) If no lawyer had any knowledge, then those clients are not former clients and thus no conflicts exist. (2) Impact on Old Firm: the old firm can take on a new matter (new matter with an existing -58- c) client or a new client), even if it is materially adverse to the interests of a former client that the ML took with him, so long as no atty remaining in the old firm has any actual knowledge about the former client - see MR 1.10(b) & PA 1.10(c). Rationale: (1) While the ML was with his old law firm, his knowledge about his own clients was imputed to all the other attys in the old firm. When that atty left and took his clients w/ him the knowledge from him to the other attys in the old firm evaporated. So the lawyers remaining behind no longer are treated as knowing what the ML knew. 5. Conflict Check Systems are Very Important and Very Expensive. a. Costs of a Conflict Check - can conflict check be billed to the client? 1) MR 1.5 allows the firm to bill reasonable fees for representation – it is not clear this is reasonable. 2) Should the partners or associates who dedicate their time to conflict checking become sort of second-class citizens b/c they are not the ones going out and getting the big cases? Answer depends on the nature of the firm. If you are assigned a disproportionate amount of time to conflict checks, you should note to firm that you do not deserve to be less highly treated. E. Conflicts and Corporations: Corporate Counsel – read PlexiTech Case!!!!! a. b. Conflicted b/c representing the corporate parent and the subsidiary Example: this could happen in a leverage buy-out situation where the subsidiary will be dismantled and the parent corp will continue on. Parent may feel that the buy-out will be good for the parent, but the buy-out may be horrible for the subsidiary. ABA‟s Position: atty‟s representation of the parent does not automatically disqualify it from 1. c. -59- representation of a company who has adverse interests but also says that in some situations subsidiaries may be considered clients. 1) ABA says that there is not necessarily a conflict if the atty represents both the subsidiary and the parent. 2) Rationale: parent and subsidiary are separate legal entities 3) If a conflict were to arise, it would be a concurrent conflict. d. When In-House Counsel Leaves 1) When in-house counsel leaves the corp, the corp is her former client and MR 1.6 applies to atty when atty goes to new firm. 2) Problem: sometimes a firm hires an atty because she worked for that particular corporation. All of her client‟s confidences are imputed to her new colleagues at the new firm. If something turns up that is adverse to her former employer, there may be a conflict of interest. 3) A corp’s in-house legal counsel is treated like a single law firm. Non-Atty Role in Corporation 1) What if atty in a corporation is not acting in a lawyer role (i.e. working as an accountant) - could a conflict of interest situation arise here? 2) Law in this area is unclear: if atty can be said not to be working for a client, then maybe the COI do not apply. e. V. Professional Responsibility of Judges: A. Generally: 1. 2. See Notes for 04-05-01 and 04-10-01. See Model Code of Judicial Conduct (p641supp). a. Merely precatory. b. Applies to judges and anyone who performs judicial duties. Reasonableness standard. 3. -60- B. Conflicts: C. Bias: D. Recusal: VI. Law Practice Issues: A. Fees and Billing Practices: 1. Fees Generally – MR 1.5: a. Theme: A lawyer‟s fee shall be REASONABLE. 1) Compare to PA Rule which says a lawyer shall not collect any “illegal or clearly excessive” fee. 2) PA Rules is based on earlier version of ABA ethical rules – is a “unreasonable” fee the same thing as a “clearly excessive” fee? b. Tension b/w provide competent representation and keep client‟s expectation of reasonable fee in mind. c. Implicit in idea of reasonable is that atty is providing valuable legal services. d. This is awkward part of client relationship: make sure you tell client what you will charge (this is different from telling client what his presentation will cost). 1) Best practice is to put this is an ENGAGEMENT LETTER with objectives and other stuff laid out. -61- 2. MR 1.5(a): a. Identifies various criteria that indicate reasonableness. b. Not all of these criteria need to be met, nor are these criteria mutually exclusive. MR 1.5(b): a. Text of MR 1.5(b): (b) When the lawyer has not regularly represented the client, the basis or rate of the fee shall be communicated to the client, preferably in writing, before or within a reasonable time after commencing the representation. b. Different Approaches to Writing Requirement: 1) MRs suggest but do not require that fee be in writing: while this is not mandatory, it is a very good idea. 2) Under PA Rules, it is mandatory. MR 1.5(e) - Forwarding Fee or Fee-Sharing Between Attys: a. Text of MR 1.5(e): (e) A division of fee b/w lawyers who are not in the same firm may be made only if: (1) the division is in proportion to the services performed by each lawyer or, by written agreement with the client, each lawyer assumes joint responsibility for the representation; (2) the client is advised of and does not object to the participation of all the lawyers involved; AND (3) the total fee is reasonable. b. MUL‟s added requirement: atty can only share in fee if he actually does some work for the client or has responsibility for some of the work. 1) Simple referral is NOT enough to receive fee: no payment can be made simply for the referral - the atty must actually do some work in order to receive the referral fee. a) Goes back to idea that “reasonable” implies valuable legal services – there is no value in a referral. Contingency Fees: a. MR 1.5(c) and MR 1.5(d) allow contingency fees but place limits on them. b. General Approach: contingency fees usually allowed BUT frowned 1) Rationale for allowing: they allow access to lawyers by clients who don‟t have adequate funds to pay up front. c. Under MR 1.5(d), contingency fees are not allowed in: 1) Criminal cases. a) Example: retainers are allowed in criminal cases (get most of your fees up front), but atty cannot require that client pay atty if atty gets client out of jail and does not have to pay if atty loses. 2) Divorce proceedings. d. Risk Factor: “reasonableness” of fee in contingency cases is different b/c it reflects the value of the legal services provided and the value of the risk the firm took. e. Tax Issue: atty must report any payments/fees that equal or exceed $10,000 . Padding Hours: a. Scenario: attys are often tempted to pad their hours - reading the WSJ and billing the client for it, even though there was nothing in the paper that has to do with your client. b. Padding is DIRECT VIOLATION of MR 1.5 (amounts to theft b/c the atty is charging client for 3. 4. 5. 6. -62- services he did not provide) and probably constitutes fraudulent behavior as well. B. Keeping Client Property and Funds: MR 1.15 - Safekeeping Property Issue: what do you do when you as an atty hold a client‟s property and/or funds? The client account is considered a TRUST FUND – Client Security Act. a. Governed by state fiduciary duty laws. b. Surprise audits Rules Vary From State to State Most Courts and Bar Ass’ns Have ZERO TOLERANCE for Attys Who Use Client Funds. 2 Key Principles: a. If you hold a client‟s property, you must SAFEGUARD the client‟s property: 1) Atty must take reasonable steps to protect the client’s property: keep it in a safe or a safe 1. 2. 3. 4. 5. 6. -63- b. deposit box (for ex: putting client‟s stock certificates in desk is not good enough). 2) Keep location and description of safe keeping in formal office file/record. If you hold funds for a client, do not commingle the client‟s funds with your own funds or the funds of the firm: 1) Atty must keep the client‟s funds in a separate account. 2) Courts have zero tolerance for attys who use or commingle client funds. C. Client Solicitation – Advertising: Generally: a. Perspective: people tend to look at the issue from the 1A free speech or consumerism perspective. 1) MUL says this is a matter of good taste or commercialism v. professionalism. b. NOTE: the success of some firms depends on lawyer advertising, especially firms that have tons onetime clients (for ex: criminal defense firms). MR 7.1 - Communications Concerning a Lawyer’s Services: a. Text of MR 7.1: A lawyer shall not make a false or misleading communication about the lawyer or the lawyer‟s services. 1) The rule goes on to define what makes a communication “false or misleading” 2) CMT: an atty is not allowed to create an unjustified expectation for clients: a) Example: atty can‟t put forth his record that he won every case he ever had; thereby leading client into thinking that atty will win client‟s case as well. MR 7.2 – Advertising: a. Specifically allows for atty advertising (telephone books, radio, TV, etc) b. Atty advertising must still comport with requirements of MR 7.1 - the ad cannot be false or misleading. c. ??? Web-based advertising disclaimers. 1. 2. 3. -64- 4. MR 7.3 - Direct Contact with Prospective Clients (aka “Ambulance Chasing Prohibition”): a. Generally: an atty cannot personally solicit legal business, nor can atty solicit through an agent (“runner”). b. Very Fine Line: an atty can‟t solicit business from persons who are particularly vulnerable, but atty can let people know that he is in fact an atty. 1) Sending Flowers to Funeral: atty sent flowers and his business card to the funerals of accident victims - not allowed. 2) National Disasters: attys soliciting business for national disasters is permissible if done correctly. 3) Compare “Lemon Car” advertisement with “New Distinguished Atty Hired” advertisement. c. Real Law is NOT in Rules But in Decisional Law: use Rules merely as guidelines, be careful and always check b4 advertising. d. Examples: 1) Zauderer: atty placed an advertisement in local paper featuring a picture of a woman‟s contraceptive device and listed several health problems associated with the device. Ad said that women should call atty to see if they have any legal claims against the atty. State law banned use of pictures for atty advertising. HELD: ban was unconst‟l b/c it inhibited atty‟s free speech rights. The aim of preserving atty dignity may be sufficient to prohibit some forms of atty advertising but does not validate a complete prohibition. It was not clear that the use of illustrations was inherently undignified. 2) Cadwalader Letter - law firm sent out letter touting its partners who had substantial, high level government positions before joining the firm and that these partners still maintained substantial connections. Unintended negative effect - actual results of letter was to make it more difficult for the firm‟s staff to get calls returned from gov‟t officials, rubbed lots of people the wrong way. Letter was within the MR, but showed very poor taste. MR 7.4 - Communication of Fields of Practice and Certification: a. Issue: how far can atty go and how specific must atty be in representing his qualifications to a client? b. General Rules: 1) An atty cannot states that he has been “recognized or certified as a specialist in a particular field” unless he is either: a) a patent atty, or b) an admiralty atty. 2) An atty can indicate his areas of practice, and if an atty practices in certain fields, he may so indicate (therefore Martindale-Hubble excerpts are OK). 3) Atty is permitted to say he is a specialist (but not a “certified specialist”) but such communication is subject to the false and misleading standard applied in MR 7.1. 4) Compare to PA Rules where atty cannot use term “specialist” except in certain areas. c. Competitor Attys are Ones Who Will Enforce These Advertising Rules – Accuse Another Atty of Misleading Advertising. 5. -65- D. Subordinate and Supervising Attorneys: See other outline E. International Law Practice – Unauthorized Practice of Law: See other outline F. Multi-Disciplinary Practice: See other outline G. Women in the Profession: See other outline H. Impaired Attys (and Clients) – Substance Abuse in the Office: See other outline I. Pro Bon Publico: -66- See other outline J. Quality of Life: See other outline -67-
"Law School Legal Outline Notes for Legal Profession"