LegalEthicsOutline_Dina_

Legal Ethics History of Ethics: 1908 – Canon of Ethics 1969-70 Model Code 3 parts: 1. ethical considerations → what lawyers should do. 2. disciplinary rules → what lawyers must do. good 3. BAR _______________ acceptable set minimum conduct bad 1983 – Model Rules – most states follow. Set forth rules & comments akin to DR (set forth minimum conduct acceptable) 2000 – Ethics 2000 Commission    California Rules of Professional Conduct – the only state to reject the ABA’s model rules or code. Ethics are governed by the highest court in the profession, not the legislature Vast majority of states, state bars (looking to ABA rules, not CA though) come up with the rules. 1. Licensing and Bar Admissions  Regulated by the states. Most jurisdictions have chosen to test as a means of acceptance to the bar.  Residency Requirement: 1. Out of State Residents - May the state discriminate against who gets into the BAR on the basis of residency? No. Supreme Ct v. Piper – woman applied to NH bar, lives 400 yards from NH border & application denied. Piper was admitted despite the state’s claims that non-residents were less likely to be familiar w/ local rules, lawyers not living in NH can’t be trusted, and out of state lawyers are less available for in state proceedings. Rule: State bar cannot discriminate on the basis of residency. 2. Geographical Restriction – some states permit waiver of the bar exam – ex: if many years of experience. Supreme Ct of VA v. Friedman – Friedman living in VA, practicing in DC, moved to MD, applied in VA on motion of VA law which said people could skip bar if resided in VA, but because she didn’t, VA denied her. Rule: A residency requirement allowing residents of one state to skip the bar discriminates against non-residents of that state & thus violates the privileges & immunities clause, so non-resident attorneys must be allowed to waive in, too.  Good Character requirement of the BAR - Honesty, integrity, mental health, loyal to system of government & system of law – general fitness to practice law.  Best indication of how someone will act in the future? How they acted in the past. In re Mustafa – in law school, Mustafa was head of moot court team, but stole & used the money from its treasury for his own. Ct held he shouldn’t be allowed to practice. Rule: Lawyers are trustees, often in charge of client’s money. If they cannot be trusted, they shouldn’t be allowed to practice.   Crimes involving moral turpitude? Some crimes involving fraud or dishonesty, are enough for denial of admission. (embezzling, bribery, theft). May be admitted a long time after crime committed. Misconduct on the application/failure to disclose? – may be refused admission. 1 Legal Ethics   What is disbarment? Taken off the bar, usually for 5 years, then lawyer can reapply. It’s not forever. Financial status? In re Gahan – despite having employment in past, student applied for bankruptcy & had the student loans discharged. Ct denied his admission, not b/c he applied for bankruptcy, but b/c he intentionally disregarded his financial obligations before bankruptcy (b/c he had a job & didn’t pay the loans). Living with member of opposite sex? Not grounds for denying based on moral character.  2. Multijurisdictional Law Practice   There is no national license to practice law, only state licenses General Rule: Lawyers can’t practice law in states unless been admitted to do so  3 exceptions: i. Pro hac vice – when a lawyer, licensed to practice in one state, has an occasional, nonrecurring need to represent a client in another state, he files a motion with the court to appear. Must associate with local counsel ii. When a lawyer is reasonably anticipating admission pro hac vice iii. What about trans. lawyers? It’s okay as long as they associate w/ local counsel, and the local counsel is actively involved in the representation. 1. Litigation-Related Leis v. Flynt - Flynt defending a suit in Ohio, wants attorneys from NY to defend him. Lawyers claim that under procedural due process, they have a right, as out of state lawyers, to appear pro hac vice in foreign court. Rule: There is no rule, statute or constitutional right to pro hac vice, so if the trial court doesn’t give it, it’s not warranted.  Ct held they could recover fees for any work done in state where they were licensed.  Whether k is illegal depends if suit was brought in NY or OH → b/c NY, it was illegal.  However, in a criminal case, if  himself pursued it, there might be a 6th amendment right of counsel leading to a different result. 2. Non-litigation multijurisdictional law practice - When a person engages in the unauthorized practice of law, civil and sometimes criminal penalties attach.  Activities that amount to the practice of law: 1. Court appearance 2. Legal advice & counsel → definitely improper if done by a fee or w/ doc. drafting. 3. Sale of do-it-yourself forms - okay only if not accompanied by advice on legal matters.  2 types of unauthorized practice: i. When lawyers practice outside the jurisdiction in which he’s licensed ii. When those not licensed engage in the practice of law  Consequences of unauthorized practice: i. In most jurisdictions, it’s a crime ii. Practicing law where not allowed may subject attorney to discipline (in which state?) iii. Attorney may not collect a fee if cannot lawfully practice in the state. Birbrower v. Superior Court – Birbrower, NY firm, defending CA firm in arbitration in CA, against contract governed by CA law. (“Triple nexus” in CA) Lawyers weren’t licensed to practice in CA. Ct held they “practiced law” in CA b/c lawyers gave recommendations, advice & strategy for dispute in CA 3 times, negotiated & acted in a representative capacity. Therefore couldn’t get paid. 2 Legal Ethics Rule: When measuring when a lawyer has engaged in the unauthorized practice of law look at: PRESENCE. (Physical or virtual) Rule: A lawyer may only collect a fee where the fee is legal. 3. Marketing Legal Services – Advertising & Solicitation  How to analyze legal marketing to see if it’s against the rules: 1. Begin by analyzing the differences between content and form a. Content: is it false or misleading? b. Form: does the form somehow violate the rules (aka: is it solicitation?) c. Rules 7.4 & 7.5 2. Then, ask is the lawyers marketing protected by the 1st Amendment? Attorneys have broad speech rights so long as the content of ads are not false and misleading. The Rules:  Rule 7.1 Governs content – the content of any communication regarding lawyer services must not be misleading or false.  Rule 7.2 Any medium whatsoever, via print, t.v., internet, whatever. i. Rule: Attorney is prevented from paying a fee to any individual for recommendations. (Can pay fee to phone book or newspaper, though)  Rule 7.3 - Solicitation Rule – prohibition against live (realtime, in person, phone, i.m., chatroom) contact w/ a prospective client to gain the prospective client’s business. i. Except for those which they have a close personal/financial relationship w/.  1st amendment & lawyer advertising: truthful advertising is protected by the 1st amendment. Unless there is a narrowly drawn substantial government interest, it cannot be restricted any more than necessary.  2. Solicitation vs. Advertising Bates v. State bar of AZ – state bar can ban ads that are false & misleading, coercive, or that promote illegal transactions. Solicitation Ohralik v. Ohio State Bar Association – guy went to girl in car accident’s hospital room then went to other passenger’s house. Girl signs k for him to be her lawyer, he records conversations, takes pictures of accident site before she even signed. His mode of contact is prohibited Rule: Solicitation Rule – in-person solicitation for pecuniary gain is not protected by the 1st amendment b/c of the possibilities for coercion & overreaching. Live = real-time, in person, phone, i.m, chatroom  The states interests/what we are protecting: undue influence, invasion of privacy, coercion, fraud, etc.  B/c the state’s interests are so high, individualized harm does not have to be shown – there is a complete ban on solicitation  Handing out business card? Solicitation if at Starbucks, someone spills, give them a card, but not in other social settings. Targeted Advertisements Zauderer – Ad for women who’ve used the Dalkon shield that caused medical problems. Ct held that ads will be analyzed for their content as long as they’re not false or misleading. Rule: Absent false or misleading language, state bar will not monitor targeted advertising. However, an ad that says no fees are owed unless the client recovers is misleading & therefore not 3 Legal Ethics constitutionally protected b/c it doesn’t inform that the client would be liable for other fees & ct costs even if there is no recovery. Targeted Mail Shapero v. Kentucky Bar Association - Lawyer sends a letter to people whose homes had recently been foreclosed on. Letter instructs people to call him, says he may be able to help. Rule: Targeted mail to prospective clients known to be in need of service advertised is protected.  Disclosure requirement – any targeted mailing must include the words “advertising material”  Rule: Any mandatory disclosure requirement furthering a state’s legitimate interest in preventing deception will be allowed  Those attorneys who did send out targeted mailers could still be subject to sanctions, not for solicitation, but for ethical violations if the writing was coercive, harassing, or put the prospective client under duress.  State can restrict ads to victims or families of victims of accidents - after death of accident victims, must allow 30 days after the accident before can contact survivors by mail.  A lawyer can advertise his specializations or certifications. Matter of Rovich - Apartment bldg blows up, w/in a few days lawyer parks his r.v. there as a mobile office. The attorneys didn’t walk up & tell the people who they were and offer their help (clear solicitation), but posted ads all over the place. Rule: B/c of the mix of time & location, this rises to the level of solicitation. Motives other than other pecuniary interests underlying ads In Re Primus - Women in town being sterilized to keep them from having children. Primus works for the ACLU & wrote a woman who attended a seminar on the legal rights of the women who’d been sterilized, offering free legal help from the ACLU. The letter is solicitation by mail. Rule: Motive is not the key – conduct is what the constitutional focus is on.  Hypo: African minister saw congregants being cheated by insurance co. They didn’t have access to an attorney, so minister called attorney to come speak to congregation. Talked to people, uninvited, gave them legal advice, and told them he could possibly help.  Asserted the defense that he was furthering associational goals. Therefore, his actions were constitutional. 4. Duty of Confidentiality and the Attorney-Client Privilege  Confidentiality – “all information relating to the representation of a client”. Idea is that attorney must hold sacred the info that the attorney learns about the client so that the attorney can learn all the necessary info about the case and best advise the client. It is an ethical rule that protects ALL info learned relating to the representation between attorney and client. Compare w/ the attorney/client privilege- Attorney/Client privilege is a rule of evidence that protects confidential communications made to attorney by client during the relationship (if no desire for confidentiality by client, privilege is not created.) To be protected, info. must come from the client or his agent.  Duty of confidentiality is more encompassing than a/c privilege..  Includes lawyer observations,  Communications from 3rd parties,  Work product (also works w/ evidentiary privilege)  Owed to former & prospective clients  There are exceptions that mandate or permissively allow disclosure by attorney. When info is w/in the ethical duty, but not the evidentiary privilege, a judge may order attorney to testify.  4 Legal Ethics Perez - Coca Cola truck hit school bus, which fell into water & killed bunch of kids.  claimed brakes failed & gave statement to 2 attorneys for Coke, who came to him & asked for the statement. The attorneys went & gave the statement to the D.A. Ct held it was a violation of a/c privilege – if there is an ethical duty to a client, a fiduciary duty to the client is owed as well. Issue: Who is a client for purposes of a/c privilege? Rule: If there’s a reasonable belief (subjective + reasonable) that there’s an a/c relationship, then there is one. Rule: When lawyer is asked to turn stuff over governed by the a/c privilege, attorney must not turn it over b/c it’s protected. Rule: A/C privilege protects communications from a client or a prospective client. Model Rules: What’s protected by the rules of confidentiality? Requires attorney to keep secret: (1) confidences – anything protected by the attorney/client privilege. (2) Secrets – things attorney learned from other sources where disclosure would hurt or embarrass the client.  Exceptions to the duty of confidentiality: Some exceptions are discretionary. Some of the exceptions are mandatory. o Client consent. Where client allows attorney to release the info. o Implied authorization – in order to carry out the purposes of the representation, some info. must be disclosed.  Ex: where lawyer may reasonably believe that disclosing the information may allow the client to get a better settlement o Self-defense & fees – lawyer can reveal info. that would be protected in 3 situations: 1) to establish a claim OR defense in controversy btwn lawyer & client. 2) to establish a defense to a civil or criminal claim based upon conduct in which client was involved. OR 3) to respond to allegations in any proceeding concerning the lawyer’s representation of the client.  California has decided not to make an express rule on lawyer confidentiality. There is just a small short rule, w/ no exceptions listed out. Look to ABA for exceptions. o Future crimes, frauds & harms – lawyer HAS DISCRETION to reveal confidential information of anything that may result in death or bodily harm. Some states mandate disclosure.  Ex: HIV positive client. Client is having sex w/ woman w/ young child. Can attorney tell? Yes, attorney has discretion to tell of criminal acts that might result in death or GBH, so it turns on whether having sex w/ a woman while he knowingly has HIV is a crime.  Not for past crimes or frauds o If disclosure would mitigate or rectify the crime or fraud & prevent someone from losing $$, lawyer has the DISCRETION to disclose the info. o There is NO duty of confidentiality in a joint defense. The Corporate Client Upjohn - Lawyer talking to corporate employees about multinational bribery scandal to gather facts & info. Ct held to use the subject matter test, where the information talked about relates to the attorney’s representation of the corporation. Rule: Federal A/C Privilege: Communications made by a corporate client’s employees fall within the a/c privilege when they are made to a lawyer representing a corporate entity at the direction of corporate superiors, and are aware that the purpose of the communications is to secure legal advice for the corporate client (relate to the lawyer’s representation of the client). BUT, the facts 5 Legal Ethics are not immunized, as long as the 3rd party seeks the facts via discovery & not in violation of the no-contact rule.  Distinguish facts from communications. One does not immunize certain facts of confidentiality by telling them to their attorney. You can still seek the facts directly from the source, you just can’t ask the person what was actually said to their attorney. The communications themselves are protected.  No contact rule: lawyers can’t have contact w/ represented persons. Who’s a client for purposes of this rule? Good Samaritan - child’s heart stopped during surgery. Immediately after surgery, nurses & scrub technicians were interviewed by a paralegal for the lawyers for hospital. 2 years later, plaintiffs want to subpoena the interviews. Ct holds the subject matter test in Upjohn too broad, must analyze whether employee is client or witness. Ct finds that their conduct wasn’t at issue, therefore it’s not protected. Rule: only communications between an attorney & client are protected.  Employee is a client: If he/she is approached by corporate counsel, and the matter is within the scope of his/her employment, the employee is a client.  Employee is a witness: If the discussion doesn’t concern the employer’s own conduct, then the employee is just a witness.  Government & a/c privilege? Ex: Ken Starr subpoenas Hillary Clinton. She not only has her own lawyer, but also the White House’s lawyer. In between, she runs out into hall & talks to White House lawyer. Ken Starr wants the White House lawyer’s notes. Issue: 1. Is Hillary even a client? Does a/c privilege exist for government entities, do we want to recognize one?  Future crimes & frauds – exception to the duty of confidentiality Hypo: client comes in, wants attorney to make up fake corp. so he can scheme & take old ladies’ money.  W/ communications in furtherance of crime or fraud: if the client has sought & received the attorney’s services, attorney can disclose their crime or fraud. Merely listening to a story does not allow for disclosure, lawyer has to actually further in some manner the client’s crime or fraud. Hypo: Attorney kicked guy out, said he couldn’t help him. Later, client is caught, but attorney is subpoenaed...can he claim the privilege for the conversation with him & the client?  It was a confidential communication between attorney & client, BUT crime fraud exception applies. Where client seeks attorney’s assistance for a crime/fraud, attorney doesn’t need to do anything for the exception to apply, it automatically kicks in. Hypo: if Jane leaves after seeking attorney’s help in crime/fraud & gets hit by truck. Can attorney disclose next day? Rule: No, confidentiality survives the client’s death.  Identity & privilege Hypo: Drug lord’s friend, who already retains the attorney, wants attorney’s services for importing cocaine. The friend is paying for the attorney’s services for the drug lord. Then lawyer is called before a grand jury, they ask who’s paying for the representation. In this case, the identity of the person paying may be protected.  Identity is generally protected.  Fee structure is generally not protected  However, identity where it might incriminate can be protected. Hypo: What if drug lord’s paying the checks for the friend (who is the client)? 3rd parties writing out checks to pay for the client.... 6 Legal Ethics 5. Agency Principles and Lawyer-Client Autonomy: Communications w/ the client:  Duty to keep the client informed: 1. Duty to inform the client about decisions the client has the authority to make. 2. Lawyer must inform the client of the status of the matter. 3. Obligation to consult w/ client & keep client informed of decisions lawyer has the right to make. 4. Must respond to client’s reasonable request for information. Two ways to define standard used: 1. Attorney-centered standard – give information when the reasonable attorney would disclose 2. Client-centered measure – disclose what the average reasonable client would want to know.  Tort Duty to Advise Nichols v. Keller - worker’s compensation lawyer failed to tell client about other causes of action he could’ve brought w/ his worker’s comp claim. Attorney limited the claim solely to the worker’s comp claim. Ct held attorney needed to advise  to see attorneys outside his field. Rule: Standard for how far attorney has to go when retained by client: (tort duty to advise) 1. When does attorney have a tort duty to volunteer information? When necessary to protect the client’s interest. a. Exception? Don’t have to volunteer advice if the scope of the retainer is limited (don’t have to exceed the scope of that retainer) i. Exception to the exception: attorney must volunteer advice if reasonably apparent to protect the client’s interest.  Agency & attorney client relationship: 1. Attorneys are agents for their client & have a duty to act on their behalf. 2. An attorney in fact is someone who has been freely given (under rights of k) the right to make decisions on behalf on another person. 3. 2 issues to look at: a. Who gets to make the decisions? What decisions can the lawyer make, & which decisions does a client have authority to make?  General Rule - the client has authority over the objectives or goals of representation. The lawyer has authority over the means of obtaining these objectives.  Things clients have decision-making power over: 1. Whether to initiate the suit 2. Whether to settle the case 3. In criminal matters, whether to plead guilty/not guilty, whether to accept plea bargain, whether to appeal if lose at trial level. 4. Whether to have a jury trial 5. Whether to testify at trial  Lawyer and client can agree on the objectives; thus they can limit the objectives of representation. The Client’s Autonomy Olfe v. Gordon - Client wants to sell property, willing to finance part of the purchase price, but only if buyer only has a first mortgage. Lawyer sold property to person w/ 2 mortgages, & then lied to client about it. Client sued for malpractice. Rule – When a client gives you an express instruction as to the objective of the representation, it must be followed. 7 Legal Ethics The Lawyer’s Autonomy Jones v. Barnes - attorney has criminal client. The lawyer has selected 3 of the 7 issues he’s found wrong w/ ’s case to argue on appeal. The client wants him to argue all 7 & has suggestions of his own. Client wrote his own brief, lawyer exercises his discretion, chose his own arguments & turned in the client’s brief w/ the court. Rule: Even when client expressly instructs lawyer to do otherwise, it’s w/in the lawyer’s judgment to do what he believes is best. (Although the accused has ultimate authority to make certain fundamental decisions regarding the case, strategic & tactical decisions are the exclusive province of the defense counsel after consultation with the client.) b. When the attorney makes the decision, when is the client bound?  Hypo: personal injury matter. Lawyer & client haven’t discussed amount of settlement. Lawyer talks w/ ’s lawyer, offer for $300,000 settlement, which lawyer says expires in 1 hr. Lawyer can’t get a hold of client. Lawyer accepts for client.  This is a breach of the duty to inform. (Must tell client about settlement promptly)  It is not the lawyer’s call to accept a settlement offer on behalf of the client.  Can lawyer repudiate the settlement agreement if client is unhappy? No, the client is bound even if the attorney accepted the settlement offer b/c the lawyer had apparent authority, even though the attorney didn’t have actual authority. Taylor - lawyer failed to reveal identity of prospective witness before trial & then he was not allowed to call the witness at trial. Ct held client bound. Rule: The attorney is allowed to make technical decisions concerning the representation, and as an agency relationship, client is bound by the attorney’s decisions.  Ex: deciding not to x-exam a witness on a particular subject.  Clients with Diminished Capactiy  General rule – lawyer must attempt to maintain an ordinary lawyer-client relationship to the extent possible when representing a client whose decision-making capacity is diminished.  Lawyer can ask court for a guardian ad litem or someone to make decisions on behalf of the client when lawyer believes client can’t act in his own best interest. How to do this? Disclose confidential information relating to the representation. Hypo: representing client who wishes to be sole distributor of a particular brand of air conditioning units. Client reached deal w/ mfr. on all business points, needs help w/ legal points. Attorney agrees to draft business points & client says he wants arbitration clause in k that is binding on mfr. Attorney drafts it, but accidentally leaves out arbitration clause. Takeaway Rules:  Obligation to inform client that the draft does not contain the arbitration clause? NO. No informed consent necessary b/c client has already made the choice to suffer the provision in the k.  If the lawyer does disclose to corporate client, and the lawyer is a party to the signing of the agreement, then the lawyer has assisted his client in the commission of a fraud.  Does the mfr’s lawyer have the discretion to disclose to the other lawyer? Yes, b/c their clients already came to a consensus about this k. 8 Legal Ethics Hypo: Guy has certain amt. of time to file amended complaint, but family emergency comes up. He calls other side & asks to stipulate for an extension of time. Other side gives him the stipulation, but b/c it’s on remand, the time limit is jurisdictional & can’t be extended except by court order. Obligation of the other side to tell lawyer or can he just sign? When do you take advantage of the other side’s error?  Lawyer has the discretion to decide HOW to go about meeting the client’s objectives...Lawyer also has a duty to inform.  Unsure of the % chance of case being dismissed if lawyer misses deadline.  If it’s 100% certain, it’s the client’s decision to make the call. In order for client to make intelligent, informed decision, lawyer must tell them.  If it’s less, it’s the attorney’s decision to make the call. 6. The “No Contact” Rule and the Improper Acquisition of Confidential Information        General Rule – lawyers are prohibited from communicating about the subject matter of a dispute with represented opposing persons without first obtaining permission from the opposing person’s lawyer. Either lawyer must be present. Or get attorney’s consent. Or get a court order. Sanctions? Attorney could lose or could be dismissed. Only applies to communication regarding the subject matter of the representation. Lawyer can’t give legal advice to unrepresented person. Lawyer can’t represent that he’s disinterested in the matter to unrepresented person. Identifying who will be regarded as a represented opposing person or party is crucial.  Mere witnesses are not represented parties. When a Corporation is a Party Niesig v. Team 1 - Corporation is a party in suit. Plaintiff’s lawyer wants to interview employees of the corp. Rule – current employees whose acts or omissions in the matter under inquiry are binding on or imputed to their employer are parties to a suit for purposes of the no contact rule. Employees who implement the advice of counsel also qualify as parties, but all others do not. Those who it applies to:  Employees who consult w/ the corporation’s lawyer  Employees who are managers relative to the subject matter & those in the control group  Employees who engaged in acts or omissions that are the subject of the matter  Employees who make statements or acts that may be imputed to the corporation for liability purposes (respondeat superior) When the Government is a Party  In criminal cases, the other party is “the people”. If no-contact rule is applied literally, attorney couldn’t talk to ANYBODY.  So the no-contact rule really doesn’t shackle criminal defendants from not speaking to people, not even the complaining witness. o Exception? If the individual witness has their own lawyer.  What happens when  is taken into custody?  has a constitutional right to counsel. U.S. v. Hammad - Hammad brothers’ attorney claims that the AUSA violated the no-contact rule, b/c he represented the Hammad brothers during the Medicaid investigation, so they already had counsel at this time, and the AUSA KNEW they had counsel at the time. AUSA forcibly cajoled a witness to wear a wire & forced him to get valuable info. from Hammad brothers, which he then used to indict the brothers. Hammad brothers find out, move to suppress. The US attorney gave a phony subpoena to get the informant to get info. 9 Legal Ethics General Rule: Prosecutors can communicate directly w/ a suspect through an undercover informant even if the suspect is represented by counsel.  Exception for serious misconduct (this case, fabricating a subpoena) – then the no-contact rule applies.  Improper Acquisition of Confidential Information  Can’t interfere w/ the confidential communications between lawyer & client. This is sufficient misconduct to have a criminal matter dismissed.  “Misdirected Fax” example – instead of sending fax to ’s fax, ’s secretary sends it ’s fax. Attorney is supposed to do everything w/in the bounds of the law to help the client win...but is it wrong to take advantage of this information? o Rule – if attorney receives confidential information that’s been inadvertently sent, don’t read it. Let the other side know & abide by their instructions. 3rd parties:  Hypo: Insurance carrier may authorize insurance adjuster to speak w/ carrier’s counsel. The one who caused the accident is a party. The carrier is not a represented person for purposes of the no-contact rule. There is no problem w/ speaking to the insurance adjuster b/c he’s just representing the interests of a THIRD-PARTY, the insurance carrier.  Hypo: A & B in accident. B has ins. company, C. C is a third party to the suit. Before a files a suit, A’s lawyer calls C to try & settle – this isn’t a violation b/c c isn’t a party.  Hypo: A has a claim against B, the insurance carrier. If the insurance carrier is represented by counsel, the no-contact rule applies.  7. Attorney Fees General Rules - Except for some aspects, attorney’s fees are left to the parties as a matter of contract.  Fees must be reasonable. Factors to consider: time, novelty, skill, going rate in the area, amount involved & results obtained, lawyer quality, etc.  The basis of the fee must be communicated to the client, preferably in writing.  CA requires attorney fee agreements to be in writing.  California Rule – prohibits the charging & collecting of unconscionable fee agreements, but lists similar factors to model rules, so “reasonableness” & “unconscionability” are pretty much the same standard.  Standard = does it shock the conscious of those evaluating it? Brobeck v. Telex - Telex gets huge judgment for them reversed. Hires Brobeck , the best firm in this area of practice for the appeals. The terms of the contingency fee were a minimum contingency fee of $1 million as long as Telex recovers at all. Brobeck filed the petition, & they felt they were entitled to the $1 million fee b/c IBM dropped their counterclaim against Telex. Rule: Ct held they were entitled to the fee & the k was not unconscionable b/c Telex had equal bargaining power.   Other rules:  Contingency fee - agreements must be in writing, signed by the client.  Prohibited types of cases – domestic relations (can’t base the fee amt on property, child support, or alimony recovered), criminal matters.  Fee splitting – okay if in same firm, but when lawyers who are not members of a firm share fees, problems arise.  It’s permitted if it’s proportional to the services rendered by each lawyer, the client agrees (in writing), and the fee is reasonable. 10 Legal Ethics Matter of Laurence S. Fordham - Kid in DUI. Fordham agreed to take on the case, even though he’d never done a dui before. Charged $50,000 in fees but he got the kid off. Rule - Good faith in the fee is not what saves the day – we still analyze for reasonableness & attorneys are expected to use their own dime to come up to speed.  Attorney who’s contracted w/ a client to bill hourly must adhere to that, no matter how much time it takes - can’t get a windfall just b/c attorney gets good at something. Non-Refundable Fees vs. Special Retainer Matter of Cooperman - clients signed agreement w/ a minimum, non-refundable fee. Rule - Non-refundable retainer for general availability is not enforceable b/c the fee is unearned. If the attorney has actually done work already, then he’s entitled to the fair value of his services & has to refund the rest. Hypo: Microsoft wants to have the leading antitrust expert at their beck & call. He says he’ll need $1 million to be available (non-refundable) for a year.  Rule: Distinguish between a special retainer for a particular matter & a more general retainer for availability. The first is generally enforceable.  Travel Time – if client should reasonably expect reasonable travel time, as long as the fee agreement allows for it, there’s nothing wrong w/ allowing for it.  It’s per se unreasonable to bill for the same thing twice. Ex: Bill one hour for the time you drafted the response to the motion, don’t bill for the travel time (if you do it on a train, for example)  California allows double billing in certain instances. BUT, client has to consent to it after lawyer gives full disclosure.  Rule: Must pass on the actual costs what the firm paid. Can’t mark it up (i.e. Westlaw, Lexis, or photocopy charges.) Must figure out the actual costs to the firm, and if it’s in excess, it’s unreasonable. Modifications to fee agreements - Amendment to a/c agreement is presumptively obtained under undue influence. The terms of this need to be fair & reasonable to the client in order to modify the agreement. Regulations imposed by law on fees – Particular types of actions have caps on the fees.  Ex: MICRA – caps the fees that can be earned in medical malpractice actions. If lawyer collects fee in violation of this, it’s considered illegal & per se unreasonable.   Price Fixing Goldfarb - husband & wife wanted to buy a home, but only a member of the state bar was able to do the requisite title examination. They contacted an attorney, who told them that he charged according to the minimum-fee schedule, a fee of 1% of property involved. They tried to shop around, but no other attorneys would charge less than the fixed rate. Rule – minimum fee schedules are prohibited (where lawyers are prohibited from charging a fee for a particular service less than one set by the bar’s minimum fee schedule) Court Ordered Fees City of Burlington v. Dague - Dague sued Burlington, who operated a landfill. Court ordered Burlington to close the landfill, & determined reasonable lodestar figure to be $198,000. The trial court awarded the attorneys an additional 25% over lodestar figure. Rule - lodestar method is the method in federal system to figure the amount of fees under feeshifting statutes and the figures will not be enhanced. 11 Legal Ethics  Common Fund Theory – Another way to shift-fees other than statute or k. The actions of one  have resulted in the collection of a fund to which other persons are entitled, so the other persons should pay their fair share of attorney’s fees. (Estate pays where attorney recovered funds misused by the executor) Settlement Conditioned on Fee Waiver Evans v. Jeff D. -  filed class action challenging educational programs & healthcare svcs available to handicapped children. Educational claims settled, & a week before trial,  offered a settlement on healthcare claims that included a waiver for any claim to fees. Rule – A settlement containing a fee waiver is permissible in negotiation for broad injunctive relief. 8. Conflicts of Interest  How to analyze? Ask: 1. What is the source of the conflict? 2. Does the conflict meet its particular rule’s threshold requirements? 3. Is the conflict one that imputes to the entire law organization? 4. If so, can the affected lawyer be effectively screened or isolated from the organization? 5. Is the conflict of a type that allows client waiver?  Clients are not allowed to waive certain conflicts, it’s simply not permitted: i. Taking literary rights to a client’s story when it is about the representation ii. Lawyer providing financial assistance to a client when litigation is pending. iii. Lawyer acquiring an interest in the subject matter of litigation 6. If so, what has to occur for the waiver to be effective? 2 types of conflicts: 1. Concurrent conflict – concerns at least one client. The interests of the client may be at odds w/ the interests w/ the lawyer, another client, or a third-party. 2. Successive conflict – exists between a current client and a past client. Ex: maybe the current client wants to sue the past client.   Concurrent Conflicts   Rule 1: Representation of client is forbidden where it would be directly adverse to another client. Rule 2: Representation where there is a significant risk that the representation of the client will be materially limited by other obligations is forbidden. o Analyze first: what are the convergent interests of the client & the third party, other client, etc. o Second: Are the interests at odds? o Third: Is there a significant risk (not a mere possibility) that there will be a conflict? When there is a conflict under 1 or 2, is there any way to continue representing the client? YES. A lawyer may be able to represent 2 clients whose interests diverge, but there are 4 requirements: 1. Lawyer must rx believe that he or she can still provide competent representation 2. Must be that representation of these clients is not prohibited by law. 3. The representation is not of 2 parties whose interests are head to head in the same litigation matter.  12 Legal Ethics 4. The lawyer must explain to the client what the risks are, then client gives informed consent, and makes the client commit in writing. a. Special Problems of Joint Representation in Criminal Cases Cuyler v. Sullivan - 3 ’s all represented by same lawyer. Sullivan claims the lawyer didn’t engage in major x-examination of prosecution’s witnesses or to put on any witnesses b/c he didn’t want to expose the witnesses & harm the trial of the other 2 ’s. Rule – Multiple representation of criminal ’s implicates ineffective assistance of counsel.  If  can demonstrate that an actual conflict adversely affected lawyer’s performance (i.e. show a connection between lawyers actions & the harm suffered by ), it will be considered ineffective assistance of counsel. (Must go beyond a significant risk, must come to fruition) Wheat v. U.S. - Wheat was a co- charged w/ drug smuggling whose co-conspirators were represented by the same lawyer Wheat wanted to substitute in two days before trial. Rule – The district court has a wide range of discretion to reject a client’s waiver of the right to conflict free counsel. b. Special Conflicts with Prosecutor Young v. U.S. ex rel Louis Vuitton – Ct appointed private firm to prosecute ’s failure to comply w/ court order, after the firm represented Louis Vuitton in prior action against . Firm wasn’t allowed to do both. Rule – Prosecutor’s must avoid conflicts between the representation of private clients & the prosecutor’s duty to seek justice on behalf of the public. Hypo: Jewish lawyer assigned to case being brought in South – partner & client agree it wouldn’t be best to bring the Jewish lawyer into the courtroom. Client’s interests are being affected, he feels it’s in his best interests - can client make this call? Yes. Can the individual lawyer insist on being on the case in contradiction of the client’s wishes? c. Business Transactions Between Lawyers & Clients  As a general matter, a conflict of interest exists when a lawyer’s representation is materially limited by the lawyer’s personal interests.  Can be waived if: 1. Lawyer reasonably believes he will be able to provide competent representation 2. Client must be advised in writing of the conflict (full disclosure) and then the client may give informed consent in writing.  Fee arrangements w/ client? Lawyer represents internet start up. Lawyer gets 10% of the stock as payment for his services. Problems? Yes, it’s almost like a contingency fee b/c if it doesn’t work, lawyer won’t get paid. o Rule: a lawyer is prohibited from acquiring an interest in litigation or its subject matter  This conflict cannot be waived. Matter of Neville - Neville represented Bly in case. After, they entered into K, where Neville had a promissory note to Bly b/c he bought some of his land. Neville claims rule doesn’t apply b/c Bly wasn’t his client at the time they entered the k. Ct held rule applied Rule – As long as there is an a/c relationship of some kind (lawyer doesn’t have to be representing client in that particular transaction), it is enough to invoke the rule that: Business transactions may be entered into with clients, but only if: 1. Client must be advised to seek independent counsel concerning the k 2. Transaction itself must be objectively reasonable & terms in writing 3. Client gives informed consent in writing. 13 Legal Ethics  Justification? Fiduciary duty lawyer owes client, and lawyer is in an inherently better bargaining position. d. 3rd Party Interference – Conflict exists when someone not a party to a/c relationship seeks to affect the independence of the lawyer’s judgment on behalf of the client. 1. 3rd party payment of fees  Rule – Lawyer represents the client’s interests only, not those of a 3rd party payer. The lawyer is prohibited from taking direction from a 3rd party payer. 2. Insurance Companies – often a lawyer is hired & paid by an insurance co. to represent the insured.  Duties of insurance co:  Insurance co.’s duty to indemnify the insured up to the policy’s limits for any money the insured owes a third party  Insurance co.’s duty to defend any lawsuit covered by the policy.  Duties of insured:  In return the insured gives $$ in the form of premiums  Duty to cooperate = to act as if the insured’s own interests were on the line, cooperate in general  Majority view: 2 client model – Many states still adhere to this view – an insurance defense lawyer represents both the insured & the insurance company.  Issue: Can duty of confidentiality & the duty to keep ins carrier informed co-exist if atty finds out the policy doesn’t cover the event? 2 views: 1. Mandatory withdrawal – the only way for the duty of confidentiality to client & the duty to inform company can coexist peaceably. 2. The lawyer must tell the carrier. Two theories as to why:  B/c the insurance defense attorney represents both in joint defense, so the duty of confidentiality doesn’t apply.  B/c the attorney is impliedly authorized to disclose this information (implied disclosure exception to confidentiality). B/c of the k between the insured & the attorney, and b/c the insured has a duty to cooperate, the attorney is impliedly authorized to tell.  CA follows the two-client model.  One client model – supported by the ABA & MR. An insurance defense attorney represents the insured, not the insurance carrier. Since this is not a joint defense, duty of confidentiality is present, and there can be no disclosure of conf. info.  If other side’s lawyer asks point blank in dep. If it was purposeful, they must answer truthfully & can’t lie. So it might come out anyway, & ins. adjuster looks at the status to consider whether to deny coverage.  If A lies when asked whether hit wife on purpose or ’s lawyer never asks, does lawyer have an ethical dilemma?  The client has committed fraud on ins. carrier & is making a claim not covered under policy. A lawyer CANNOT help a client commit a fraud. This is a situation where silence may be assistance!!! Public Service Mutual Insurance Co. v. Goldfarb -  filed suit against , her dentist, for sexual abuse. Carriers filed suit for declaratory relief against  b/c claim the specific liability is not covered by the policy. Ct held the company had to defend  anyway. Rule: If coverage is within the realm of possibility, insurance company has a duty to defend, and must provide a lawyer for the insured. 14 Legal Ethics  The insured is entitled to an attorney of his own choosing where the interests of the insured & the carrier conflict (i.e. where the carrier denies coverage, but the insured wants coverage). B/c of the broad duty to defend, the carrier still has to pay for the attorney, but the carrier doesn’t get to select the attorney (unlike the usual practice where the carrier chooses the attorney) . e. Sexual Relations with a Client  Rule – sexual relations with a client are prohibited whether or not it harms the attorney/client relationship  California prohibits it where it either affects the representation or where the client was coerced into the relationship. f. Conflict in Remedy Fiandaca v. Cunningham – law firm represents class action of women in jail, also represents school for retarded people. Proposed settlement for the inmates was to build a new facility on the school’s grounds. Firm wasn’t allowed to represent both. Rule: Even though it’s a conflict in remedy, it’s enough to warrant disqualification of lawyer Malpractice based on conflicts Simpson v. James – Oliver, lawyer, represents both buyer & seller in sale of restaurant business. Seller ends up screwed b/c fire destroys inventory before he was paid. Rule: In a malpractice action, must still ask if the attorney met the standard of care – a conflict of interest itself will not make the court presume negligence.  Client CAN consent to a conflict of interest (after being advised of the risks of the representation & if both sides consent to it), but can the client still sue for malpractice later if seller loses $$ on the deal? g. Attorney as a Witness  A lawyer cannot act as an advocate at trial where the lawyer is likely to be a necessary witness.  Ex: if there are 4 other witnesses to ’s car accident, the attorney is not necessary & therefore not barred.  Exceptions for when attorney CAN testify: a. Uncontested matters b. As an advocate at trial - It’s only a problem if the attorney gets up to talk → no prob. If he’s sitting as 2nd chair at trial. c. Nature & value of legal services d. Substantial hardship from disqualification  If appropriate, the rule bars the attorney acting as an advocate NOT the attorney acting as a witness.  Rule doesn’t protect the observation of physical evidence; only conversation between attorney & client. 15 Legal Ethics  Successive Conflicts  The issues is in the use of confidential information, learned from a former client, used to  that client’s detriment to benefit a new client. General Rule: A lawyer may not represent the adversary of a former client if there is a substantial relationship between the two representations Analytica v. NPD Research – NPD wants to pay M, it’s employee, in stock rather than $. NPD will pay for the lawyer, but M hires Fine, his own lawyer, to value the stock. NPD gave Fine all financial information necessary to value the stock. M leaves, forms a new firm, Analytica & hires Fine to represent it in a suit against NPD. Fine can’t represent NPD Rule: If a lawyer learns information from a first client that could be used against a second in a substantially related matter, he is precluded from taking a position adverse to the former one.  But, this conflict may be waived by both clients through informed consent. Hypos: 1. Lawyer represents client in breach of k suit. After, 3rd party wants to sue the client. Lawyer cannot represent the 3rd party. 2. Lawyer currently represents company, but an investor in the company w/ lots of $$ wants lawyer to represent it in suit for securities fraud. o Rule: lawyer may not drop the corporation as a client in an attempt to turn a concurrent conflict into a successive one. 1) Grounds for permissive withdrawal do not include attorney’s own financial interests. 2) There is a fiduciary duty owed to corporation; the client’s interests are put before the corporation’s. 3. Firm A retained by investor, Firm B retained by Corp. The two firms merge, who decides which client goes? The court. 4. Who is a “former client”? In matter 1, Attorney 1 negotiates for husband in divorce case to keep most of the stock in closely held corporation. In matter 2, Attorney 2 represents Bank, which has started making demands on corporation b/c it’s not paying on time. Husband finds out that Attorneys 1 & 2 work in same firm. o Rule: Presume that an attorney with access to financial information has knowledge of financial information. Therefore, the corporation has shared confidential information with Attorney 1, and it is considered a former client, even though technically it’s not a former client. 16 Legal Ethics  Imputed Conflicts  General rule – when a lawyer has a conflict of interest, that conflict imputes to all of the lawyers in the organization in which the lawyer works b/c of a presumption that the attorney will share confidential information. Cromley v. Board of Education – Lawyer switched sides to defend  after working at firm representing . He’s personally barred from representing , but what about the firm? Not D.Q.’ed. Minority Rule – Screening procedures will prevent the imputed dq rules b/c the presumption will be rebutted. BUT, must prove the screening was from the beginning of employment at the 2nd firm. Majority Rule – Can’t rebut the presumption, so the 2nd firm is dq’ed. There is no screening process. Hypos: 1. Attorney switching from representing  to  is from a different department.  Rule: Can rebut the presumption if the attorney worked in a different department by showing the bills & proving he’s never worked on the case. 2. Law firm fires Joe, who has a very loyal client that the firm knows will leave with him, so that it can hire Fred.  Cannot intentionally create or attempt to remove conflicts! (ex: a company spreading its legal work around a variety of firms so none of them can represent clients against the company) 3. Law firm has 100 lawyers, one that represents . Lawyer leaves to go do something else. Client comes in & wants to sue . Can the firm represent new client in a substantially related matter against ?  Rule: Provided a lawyer did not leave behind any confidential information, a firm can be purged of a conflict once the conflicted lawyer leaves. If the lawyer was very reclusive, and never delegated any of the case, the conflict goes w/ him. 4. Lawyer represents buyers of toasters made by company in action against company. Lawyer leaves & is hired by new firm that represents the company.  Lawyer is disqualified. Firm? If they screen & undertook specific institutional measures, as soon as he was hired, to prevent lawyer from sharing confidential information, then the firm is not imputedly d.q.’ed.  What if the first claim settled before lawyer left the firm, but then similar facts arise at the new firm that represents the company? Lawyer is still personally d.q.’ed → it’s a substantially related matter. 17 Legal Ethics  Special Role-Related Conflicts Former Government Lawyers–special rules apply to lawyers moving from gov’t to private practice Armstrong v. McAlpin – Altman worked at SEC, supervised investigation against McAlpin (head of Capital Growth). Later, Altman went to work for private firm retained by Capital Growth, and was put on committee in charge of the Capital Growth investigation. Altman was disqualified. Rule: A former government lawyer shall not represent a client in connection with a matter in which the lawyer participated personally & substantially as a government lawyer.  Exceptions: former gov’t lawyer may still participate in the later private representation even if his participation was personal & substantial: 2 cases 1. If the attorney did not work on a “matter” – this excludes rule & regulation drafting & other general agency actions. 2. If the government employee is screened. There are 2 requirements: a. Lawyer receives no portion of the fee b. The government agency is notified so that they can monitor the screening – CONSENT IS NOT NEEDED.  Rule: Former government lawyer can’t represent private parties who are adverse to parties about whom the lawyer has confidential information gained in the government practice that could be used against the adverse party. (The private party’s interests are at risk, not the government’s, so the private party would have to waive, not the gov’t) o Ex: lawyer works for DOJ doing investigative work on GM. He can’t go to private practice & get put on a case representing an antitrust claim for GM just b/c the DOJ consents to it. 9. Ethics in Advocacy a. Client Perjury and the False Argument  Issues: Duty to represent client’s interest, duty of confidentiality to client.  General Rule – A lawyer is prohibited from offering evidence he knows to be false. o What does “known” mean? A suspicion is not enough. The standard is that the lawyer must have a firm, factual basis that the client is not telling the truth. The most likely clear way is that the client has deviated from a wellestablished story. o It doesn’t matter if it’s a client or a 3rd party witness – no known false info! Perjury by Client Nix w. Whiteside – Whiteside convicted of murder, told atty that he knew he had to say victim had a gun as an element of self-defense defense. Lawyer knew he was lying. Rule: A lawyer must take “reasonable remedial measures”. What are these? 1. Talk to the client in private – tell him he can’t commit perjury & convince him to tell the truth (explain perjury, that it’s a crime, that the lawyer won’t help him in court, and therefore must disclose to the court & abide by whatever court tells atty to do if the witness intends to continue in that course of conduct) 2. Threaten to withdraw. 3. If can’t convict the client to change his mind, the lawyer must disclose the perjury information to the court. Rule: What are the judge’s obligations? 3 possibilities: 1. “Don’t do anything, counsel” – let the jury decide, that’s what they’re there for. 2. Judge can tell jury about the low quality of the testimony & how much weight to give it. 3. Allow the defense lawyer to permit narrative testimony → this way, the attorney can avoid assisting the client commit perjury. 18 Legal Ethics     What about in a civil case (different in criminal b/c of ’s right to testify on his behalf)? Lawyer could just not put  on the stand. Lawyer has discretion to choose who testifies, if he thinks  will lie, doesn’t have to call him. What if lawyer just plays dumb? If lawyer doesn’t inquire into the facts of his client, he isn’t providing competent representation, he can’t have it both ways! Rule: Truthful evidence that is misleading may be offered → it is the other side’s responsibility to correct it.  Ex: If ’s lawyer says “did you do it?” &  says yes, lawyer says “did you do it at 11?” &  says “no” b/c he did it at 12, it’s fine for lawyer to call witnesses of client to say he was playing poker at 11. It’s the prosecutor’s job to correct this, especially in the criminal setting b/c of the heightened obligation for effective assistance of counsel. If lawyer learns the client’s testimony was perjurious before proceedings end, lawyer must attempt to persuade the client to testify truthfully to rectify the matter. If he won’t, the lawyer must reveal the perjury to the court. Once proceedings end, lawyer has no duty to reveal. b. Duty of Candor & Professionalism  Rule: Layer is prohibited from making false statements of law to the court. Controlling, Adverse Authority Matter of Thonert – attorney based his argument concerning  on an earlier case that had been overruled by 2nd case in which he was an attorney, and didn’t mention the 2nd case. Rule –If a lawyer knows of directly adverse, controlling authority, he must disclose it to the court. (even if the other side fails to find it)  There is no reciprocal discovery provision of law that says attorney has to disclose all the evidence he knows of.  What about dicta contrary to client’s position, but no affirmative holding? Even though it’s not controlling, the duty to disclose still exists. Suppressing Evidence Southern Trenching, Inc. v. Diago – lawyer didn’t disclose that his client had been in a prior accident, led the jury to believe all of ’s injuries were from the car accident in the current suit. Attorney told client not to volunteer info. Ct held attorney committed a fraud on the court. Rule: If the attorney knew from the beginning that the complaint was a fraudulent document (ex: $500,000 in injuries proximately caused from the accident), then it’s an affirmative representation. (even though the client is the one who failed to disclose) Hypo: lawyer’s client dies before settlement is approved by the court, but lawyer never tells the ct or . The reason  wanted to settle was b/c  would’ve made a great witness. Rule: Although sometimes silence is not an affirmative misrepresentation, the attorney made an affirmative misrepresentation merely by walking in the court & representing that he’s the attorney for .  Duty to Bring Meritorious Claims & Sanctions – lawyers have a duty not to bring frivolous claims or defenses – they must well-grounded in both law & fact.  Criminal context - Consider the argument where the client was playing poker at 11 in the robbery case when he did it at 12 – this would be frivolous in other contexts, but no in the criminal context.  FRCP 11 – beyond the ethics code, sanctions liability also exists. A lawyer must bring an action based in fact or law & not for an improper purpose (ex: delay). AND, the attorney must make a “reasonable investigation” in the matter. o Ex: If lawyer reads an article in magazine on action against company, then files his own complaint, then 2 other lawyers file complaint based on his b/c they figure he’d already done the work. 19 Legal Ethics   Majority Rule – if you have a complaint w/ bases in both law & fact, it’s enough, even though the attorneys just happened to get lucky. Minority Rule – getting luck b/c the motion has a basis in both law & fact is not enough; you still have to investigate.  Maybe could get out of it if it was the last day of statute of limitations. Hardball Litigation Tactics Mullaney v. Aude – During deposition, ’s attorney made a comment that  was a slut, called ’s attorney a babe. Rule: Lawyers are subject discipline to for severe comments that serve no useful purpose other than to throw the adversary off balance & gain a tactical advantage.  Preparing a witness for trial  Not speaking to client before he testifies to find out what he’s going to say = suborning perjury.  Is preparing a witness for trial considered suborning perjury? Not generally. o Can get in trouble with witness prep – lawyers are prohibited from requesting or advising a client to refrain from voluntarily cooperating → if attorney counsels the client to avoid answering certain questions. Or instructing the client to answer stuff improperly. c. Obligations Concerning Evidence Meredith -  stole ’s wallet, discarded it in burn barrel, tells lawyer. Lawyer has investigator see if it’s true, investigator finds the wallet, brings it back to office, and lawyer gave it to the prosecutor. Analyze: 1. Client’s statement to the lawyer – Standard a/c privilege & confidentiality analysis would shield compelled production of these statements. 2. Physical evidence itself, the wallet – B/c it’s contraband (fruit of a crime), it’s not subject to the a/c privilege, its possession is illegal & attorney must turn it over to authorities 3. Source of wallet, location of wallet, condition of wallet – Context.  Rule: if the source of the physical evidence was obtained as the direct result of a privileged communication, it too will be privileged. o Exception: the source, location, context will no longer be considered privileged under the a/c privilege if it’s moved or altered → it’s only when it’s in its natural state.  If the lawyer had merely observed the wallet & left it in the bin, no duty to submit it to the prosecutor, and lawyer could not be required to reveal its location. o Is the attorney’s knowledge of the location, etc. privileged?  Exception: only if the attorney is called as a witness. Under the duty of confidentiality, attorney has no duty to disclose it. In re Ryder -  told lawyer that the proceeds of robbery were in safety-deposit box. Lawyer went to bank, removed the $ & gun, and put them in a box under lawyer’s name. This does not fall within the a/c privilege....get notes on this!!!!!!!!!!!!!!!!111 20 Legal Ethics 10. Attorney First Amendment Rights  General Rule: litigants have a right to a fair trial heard by an impartial jury that decides the case based on the evidence, so there are limits to what lawyers may say to the media regarding pending litigation & criminal investigations.  Only applies to lawyer involved in the case!  CA now has pretrial publicity rule. How may a court ensure pretrial publicity will no rob  of a fair trial? 1. Court can issue gag order 2. Voir dire specifically designed to eliminate jurors who’ve formed conclusions outside the evidence. 3. Change of venue 4. Sequester the jury 5. Ethical ban on lawyers from discussing cases in which they are involved → conflicts w/ free speech rights.  Gentile v. State Bar of Nevada – lawyer makes a statement b/c of all the publicity surrounding a case, which pointed to his client looking guilty. Lawyer was disciplined. Rule: Lawyers are prohibited from making out-of-court statements that a reasonable lawyer would expect to be disseminated by public communication & that the lawyer knows or should know will have a substantial likelihood of materially prejudicing the matter.  How to know if “substantial likelihood”? Will it affect the outcome of the trial? The closer to jury empanelment, the more of a chance it’ll occur.  BUT, in this case, there is an example of a self-help remedy: we consider this a defense to combat publicity that has already occurred, rather than as “materially prejudicial” to the trial.  What statements are permitted? o General comments about the defense o Finger pointing at other parties → some courts think it’s okay, some too far o Acknowledging that an investigation is in process o Test results usually not allowed (ex: if  won’t take a polygraph) Prosecutors’ supervision of subordinates’ statements – Prosecutors have the obligation to exercise reasonable care to ensure that investigators, police, & others under their supervision do not make violative statements that the prosecutor would be prohibited from making.  Lawyers & Publicity Concerning Judges  Lawyer can announce what judges they want appointed to gov’t.  But there is a limit on what lawyers may say about sitting judges b/c it undermines compliance with the court. Matter of Holtzman – DA wrote letter about judge who’d made rape victim demonstrate for judge the position in which she was attacked. Statement found to be wrong later, lawyer claimed assistant DA told her. Court says she’s guilty even though she thought it was true. Rule: the mindset of the attorney isn’t what is important b/c it’s detrimental to the integrity of the court – an attorney who makes a statement about a judge recklessly disregarding the truth is guilty.  Model Rules: much more forgiving – a lawyer can only be disciplined for making a statement with knowing falsity or reckless disregard for the truth. o Statements of opinion are not sanctionable under this rule. o Exception: Statements that disrespect the judge in open court may be subject to sanctions. Same statement outside the courtroom probably won’t be sanctionable b/c it’s considered an opinion then. 21 Legal Ethics o Hypo: statement implying that judge makes decisions based upon personal preference & not law.  Implies judge’s integrity is poor.  Must prove knowledge & falsity? 11. Lay Participate in Law Business & Multidisciplinary Practice  How may lawyers be involved in the dispensation of legal services? 1. Lawyers teaming up with non-lawyers 2. Non-lawyers who decide to open their own mini-law firms, entirely non-lawyer owned. Then the legal services are hired either part or full time. 3. The business is entirely owned by the lawyer, but the lawyer wants to do something else, too, like accounting. Issues?  Lawyers have a duty to undertake independent judgment (what is in the best interest for the client) in dispensing legal services.  They might have a pecuniary interest in mind. For example, if a non-lawyer has a managerial role, wants the lawyer to stop spending so much time w/ a certain client.  Non-managerial interference with the representation  Confidentiality – there’s no duty for non-lawyers.  Money – it is a powerful incentive to put other interests in front of the client’s. Such as when a 3rd party pays for legal services.  Free market concern – any time legal services can be packaged that way, there’s more competition, which =’s lower profits. Fee-sharing  General Rules: i. Lawyers cannot share fees with non-lawyers. 1. Exception: Lawyers can freely compensate non-lawyer firm personnel. a. Ex: Pay secretaries b. Probably can’t give paralegal 1% of lawyer’s 30% for doing a great job. X-mas bonus? Maybe, there’s no clear line. ii. Lawyers cannot form professional partnerships with non-lawyers iii. Non-lawyers cannot hold positions of power in the firm structure iv. In a professional corporation, a non-lawyer is not allowed to be a shareholder, hold position of power. v. Limited liability partnership – can also not let people at managerial position not be lawyers.   Non-Profit Groups – Can a state, under the first amendment, criminalize the involvement of a non-profit entity in a case, such as the NAACP, that solicits certain goals & hire lawyers to carry them out? NAACP v. Button – NAACP wants to end the forced publication of public schools & can’t do it politically, so they are searching for a . The organization, NOT the lawyer, makes the pitch to find a . Ct says they have a 1st amendment right to solicit people to further their political goals. Rule: 1st amendment allows non-profit groups to solicit ’s to further their political goals. Labor Unions United Transportation Union v. State Bar of Michigan – Union for railroad men prescreens lawyers, finds them competent, & has the lawyers agree to cap their fees, only charge 25% for representation of members of the union. State bar is upset b/c attorneys aren’t making as much as   22 Legal Ethics they should, therefore, it’ll probably be lower fees in the area. Also, the Union is giving most of the business to Chicago attorneys rather than MI attorneys. Ct held Union’s activities are protected. Rule: Unions have a constitutional right to associate on behalf of their members to represent & serve them as economically as possible.  For-Profit Groups – Can an organization owned by non-lawyers that hires lawyers on staff, and engages lawyers to do private work for them, or if they’re on staff, sell legal insurance to members of the public & provide legal covered services?  Issues?  With confidentiality – plan sponsor will want to know stuff about financials, (ex: #s about automobile cases to know if they should drop that from coverage) If lawyer is making most of his $ from the plan, and not much from his firm, the danger is that the temptation will be too much & he’ll give in.  With Fee-sharing – is the plan taking $$ from the clients & giving it to a lawyer?  Client confusion – company owned & operated entirely by non-lawyers employing lawyers to dispense legal services.  Bottom line rule: Lawyers can sign up with prepaid legal plans, but they must watch out for: 1. Independent professional judgment – lawyer must act on behalf of client & the client alone. 2. Lawyer’s duty of confidentiality remains unchanged – can’t share information with plan sponsors 3. Lawyer must take great care to avoid conflicts of interest 4. Can’t call this a law firm. Multi-disciplinary Practice – an entity that provides more than one service. Ex: accounting, will drafting, form corporations, etc. o Can law firms in effect bundle other services with non-lawyers? No. MDP is not allowed in the U.S. o Hypo: law firm w/ 50 lawyers who also are CPA’s who want to provide legal & accounting services. Opposite of prepaid legal plan → non-legal services entirely dispensed by lawyers.  Rule: Lawyers are subject to the rules of professional conduct for lawyers while providing ancillary services when either of the following 2 conditions if present: a. When the services provided are not distinct from the lawyer’s legal services. b. When the services are provided by an entity controlled either by the lawyer or by the lawyer with others, and the lawyer fails to communicate clearly to the client that the services are not legal services and are not subject to the normal protections in the lawyer-client relationship (like if lawyer claims there is no duty of confidentiality in accounting).  12. Judicial Ethics  General Judicial Attributes: i. Independent – no outside influences ii. Integrity → appear to have it & actually have it. Avoid appearance of impropriety iii. Impartiality → follow the law 23 Legal Ethics iv. Diligent v. Competent  Personal Conduct i. Rule: Judges must avoid the appearance of impropriety 1. Judged by reasonable person standard – when a reasonable person believes the judge’s ability to carry out judicial responsibilities with integrity, impartiality & competence is impaired. 2. Applies to activities in the judge’s personal life, too. Liljeberg v. Health Services Acquisition Corp. – Judge on board of directors for University that was negotiating w/ hospital for construction of a new building. Success of the negotiations depended on a case pending before the judge in which the hospital was . Judge didn’t know of the conflict until after the case was decided. Judge should’ve removed himself b/c he should have known of the conflict. Rule: Actual knowledge of appearance of impropriety is not required to be a violation (reasonable person std). If there is an objective question of impropriety, regardless of the judge’s mindset, judge must remove himself.  If not, judge must at least explain on the record the reasons to the parties about why he’s not recusing himself.  Other Personal Conduct of Judges  Bias Rule: If a judge has a personal bias arising through outside means, must remove himself. Ex: ex-wife of judge represents .  Parties CANNOT consent to the judge presiding over the case when there is personal bias.  Fiduciary, individual interests in litigation? – or a member of judge’s family, household, judge must recuse himself.  Membership in organizations? Judge is forbidden from holding membership in any discriminatory organization of any kind.  Rule: there is a constitutional right to be involved in boy scouts. BUT, if an issue comes before the court where the issue is sexual discrimination, the judge must disclose on the record that he is involved in boy scouts. Then the parties can either consent or challenge his presiding over the case. Adjudicative responsibilities i. Affirmative duty to hear cases brought before him/herself ii. Must be faithful to law, not swayed by outside influence iii. Judges must control their demeanor in courtroom for sake of appearing fair. Other duties/rules i. Ex parte communications – communications (written or oral) that involve less than all of the parties or their counsel in a pending matter, made by or to the judge presiding in the matter. Judges may not engage in them. 1. Ex: if judge is at conference & finds out some of the speakers are going to be experts in a case in front of him, he cannot speak with them b/c he may discuss issues that may arise in the courtroom with witnesses. a. This also lends to an appearance of impropriety issue. ii. Judges cannot make public comments about proceedings that might affect a pending case (ex: Scalia & pledge of allegiance) iii. Judges must report lawyers who engage in unethical misconduct in their courtroom to the appropriate authorities, usually state BAR. 1. There is a correlative duty for lawyers to do so.   24 Legal Ethics Bias In re Marriage of Iverson – Woman suing Iverson in divorce prenup. Judge expressed gender bias towards the woman & found for the man. Rule: If there even appears to be gender bias, it’s enough to find grounds for reversal b/c the judge is drawing presumptions from the bias rather than the facts/law Matter of Bourisseau – Judge talking to media, says he’d permit abortion if it was the rape of a white girl by a black man. Rule: Judges must avoid bias and prejudice in order to remain impartial & to avoid affecting the reputation of the court to make unbiased decisions.  Judges & Political Activities (PUT IN CANON INFORMATION HERE)  2 candidate positions for judicial offices: 1. Those seeking a position 2. Those seeking to retain their position  Restrictions on judicial candidates  Solicitation of funds i. Judges can’t seek funds themselves, they can seek through a committee who will see to raise funds & use it on their behalf. 1. Candidates for appointment CANNOT raise money either directly or indirectly. If they are appointed they don’t need money anyways. 2. Candidates for judicial office CAN raise money, but they can’t raise it directly. They can have fund-raising communities.  Public speeches while running for position i. Judges cannot make pledges on how they will vote when an issue comes before their court (ex: tough on crime) ii. Judges must abstain from giving opinions on issues likely to come before their court.  Judge must resign from judicial office if he becomes a candidate for a nonjudicial office 13. Negotiation and Transactional Matters  General rule: a lawyer is prohibited from making false statements of material fact to the court or 3rd parties and from otherwise engaging in acts of omissions that amount to fraud.  BUT, lawyer does not have to reveal unfavorable facts to the court.  Issue? Balancing the interests of the client (confidentiality) & complying with candor obligations to the court. Affirmative Misstatements to 3rd Parties Rubin v. Schottenstein – lawyer signed forms certifying his client’s, a company, financial statements & audits that said company was in good standing, when it was really in default w/ bank. Rule: An attorney does not have a duty to non-clients, however, once he chooses to speak, he is not immunized from lying to or misleading 3rd parties.  Even though the attorney made a material misrepresentation, must examine the 3rd party’s reliance to make sure it was reasonable. o A 3rd party has to perform due diligence to evaluate the facts on his own. 25 Legal Ethics  Future Crimes and Frauds  When an attorney unknowingly assists a client commit a fraud, what happens? Ex: the lawyer who writes a letter certifying company’s financial position to help the company get a loan, then CEO tells him that the company is worth a lot less than he certified.  Rule: A lawyer MUST withdraw from representation in a situation where the client continues to use the attorney’s services to further a crime or fraud.  Noisy Withdrawal: When withdrawal is mandatory b/c of the client’s intent to use the lawyer’s services to commit a future crime or fraud, the lawyer may make a noisy withdrawal. Consists of: 1. Notifying 3rd parties that the attorney is withdrawing for x 2. Allowed to repudiate any written work product produced (ex: the opinion letter for the bank) 3. The repudiation of work product may be required to keep from assisting the client in a fraud.  Contrast these rules with permissive rules: o Issue: May the attorney disclose information the attorney reasonably believes will rectify the fraud?  Rule: Yes, the attorney who has unwittingly assisted in a fraud MAY disclose the information to rectify the fraud.  Rule: An attorney MAY reveal the intention of his client to commit a crime & the information necessary to prevent the crime. When is Silence Tantamount to “Assistance”? Virzi – Attorney failed to tell the other side that his client had died until after settlement approved by court. Other side wants to set aside settlement b/c settlement was based on the thought that the client would’ve made a good witness. Ct held this to be a fraud b/c he didn’t really represent the client anymore, he represented the estate. Rule: Although a lawyer is under no general obligation to reveal unfavorable facts to the court, a lawyer must disclose material facts when disclosure is necessary to avoid assisting a criminal or fraudulent act by the client.  Hypo: client hurt in accident, only has $100,000 policy, but over $100,000 in bills. There are 3 insurance policies to cover the injuries (one for $1,000,000). ’s counsel negotiates w/ the hospital to release the lien, but only tells them about the $100,000 policy (if you’re injured & got to hospital, hospital has a contractual right to take from your recovery if another party is at fault). Hospital later finds out about $1,000,000 policy.  The settlement was set aside by the court b/c it viewed the negotiation as fraudulent. Attorney’s actions suggested there was no way to pay.  The court’s view w/ fraud – a court may not be able to say exactly why something is fraud, but they’re willing to set aside settlements when they think an attorney has committed it by either misstating a material fact or remaining silent.  Sanctions? 3 things: 1) setting aside the agreement entered into 2) civil liability to 3rd parties 3)??? Threatening Criminal Prosecution: may an attorney threaten criminal prosecution in a civil matter for tactical advantage?  Ex: ’s attorney sends a letter to ’s attorney stating that they’re willing to release the claim for assault & battery for x amount, or if not accepted by a certain date, they’ll seek criminal prosecution. o Rule: MR don’t allow threats of criminal prosecution solely to obtain advantage in a civil matter – seems like it’s taking advantage of a 3rd party way more than the attorney’s actual power will let them go (it’s the prosecution’s call to determine criminal prosecutions)  26 Legal Ethics  ABA is silent on it. 14. Lawyers for Entities: Duty of Loyalty & “Whistleblowing” Murphy v. Demory – Pillsbury is corporate counsel for corporation consisting of 2 50% shareholders. Murphy, one of the shareholders, attempted to take control over corp. & tried to use Pillsbury to help him steal old employees, give speeches to new ones, etc. Ct held there was an obligation to tell the board of Murphy’s plans, but not Demory b/c shareholders are not clients. Rule: 1) The corporate entity is the client for purposes of a present client, not the individuals (major shareholders, directors etc.) Therefore, the duty of loyalty is owed to the client, the corporation (through the broad of directors), not the shareholders (they’re not clients). 2) The corporate counsel CAN represent individuals (shareholders, directors, etc.) subject to normal conflict of interest rules.  Hypo: If Pillsbury had waited on the sidelines till fight was over, then Murphy left & tried to get the employees to come & work for him, Pillsbury COULD represent Demory (as the corporation) in suit against Murphy for unfair business practices! Duty for Purposes of Conflict of Interest Rules Tekni-Plex, Inc. – TP1 owned by sole shareholder who was bought out by a shell corporation, TPA & TP1 disappeared. TPA became the new TP. New TP brings suit against old shareholder claiming he falsely represented that TP1 complied w/ environmental regulations. Old shareholder wants the firm that represented TP1 for 20 years till the time it was sold to represent him. Rule:  3 scenarios for the duty of loyalty: 1. In a merger situation, the surviving entity takes over as a former client, meaning that corporate counsel’s obligation to a “former client” include the surviving entity of the merger. Thus, corporate counsel can’t take a position adverse to the former client in substantially related matter. 2. If there are changes in the corporate entity, such as when all of the old shareholders, directors, officers, etc. have left, either by attrition or something else, and the corporation is dominated by all new people, the corporate entity is still a “former client” so corporate counsel cannot take an adverse position in substantially related matter. 3. In an asset sale, the corporate client sells everything, equipment, furnishings, inventory, contractual rights to labor, customer lists, name of co., etc, so the outside purchaser is NOT considered a former client. Duty of loyalty is owed to the entity that sold the corporation.  Duty for Purposes of Confidentiality: The corporation owns all of the old files exclusively, and shareholders cannot have access to them.  Exception: An individual within the corporate structure has the right to access these confidential records when there is joint representation of the entity & the individual. (ex: during the time of negotiations when firm represented the sole shareholder AND TP). Hypo: 18 shareholders form company w/ corporate counsel. One shareholder, A, borrows $300,000 from company & won’t pay it back.  Rule: When an attorney forms a corporate entity, we say that the attorney has never represented the individual promoters or shareholders. We say that the representation of the corporation dates back to the very first meeting & all of the discussions, communications, etc. are considered representations of the corporate entities & not the individual. i. So, corporate counsel CAN represent corporation against A even though it appears to be taking a position directly adverse to a “former client” on a related  27 Legal Ethics matter! (related b/c could’ve learned something in the first representation relating to the later matter) The In-House Counsel Attorney General dynamics – In house counsel attorney for company discovered many employees were doing drugs & spearheaded an investigation into it. They fired him. Rule: 2 theories of recovery for a fired in-house lawyer 1. Breach of implied k – if there are facts that show the employee could reasonably expect to have a job, then these circumstances give rise to an implied k. (ex: worked there for 14 years. good reviews by supervisors.) Employer can still fire counsel; just have to pay damages. 2. Tortious discharge claim – when an employee is discharged in violation of public policy → there is a tort claim against the employer. This COA will lie where: i. The attorney was engaging in conduct permitted by statutory or constitutional authority. ii. That statute or constitutional authority was meant to help the public at large, not just the individual employee. iii. The lawsuit vindicates the ethical rule.  Limitation? The duty of confidentiality is a concern in any dispute w/ employer & former client.  Rule: If the lawyer can’t build the case for tortious discharge without discussing or entering into evidence confidential information, then the court can dismiss it. It’s a judgment call the court has to make.  Tactics the court may use to minimize disclosures: might be able to use in camera proceedings, sealing & protective orders, limited use of certain testimony.  Many jurisdictions won’t even recognize this COA for in-house counsel.  Another theory for why tortious discharge claim shouldn’t be permitted.  Gambro – lawyer figured out that dialysis machines produced by his client were defective & could harm people – it was in violation of FDA standards, so it was illegal. Corporate counsel told the President of the company, who told him to ignore it. In IL, the rules mandated that the lawyer tell someone. President fired him, lawyer told the FDA.  Corporate counsel pursued tortious discharge claim in violation of public policy. Ct wouldn’t recognize the COA b/c it didn’t need to recognize the COA to vindicate the public policy b/c a lawyer has an ethical obligation to tell the FDA that the client was breaking the law. o This is bad b/c it doesn’t give attorneys the incentive to do what’s right.  Hypo: lawyer helped corp prepare financial info. Lawyer finds out corporation is lying to their investors by hiding debt in their subsidiaries. Lawyer goes to President, asks him to stop, Pres says no. Lawyer says he’s going to tell on company; he’s fired.  Rule: Lawyer can disclose confidential info to prevent or mitigate injury to others if his services have been used unknowingly in a crime or fraud.  Can the attorney bring a wrongful discharge claim?  First, is the firing a public policy violation? Yes, the lawyer acted according to the rules.  How to go about it? Noisy withdrawal: o Withdraw & notify SEC. Then disavow any written work product that contains the financial statement. 28 Legal Ethics 15. Competence, Continuing Legal Education, Supervisorial Responsibilities, and the Unauthorized Practice of Law  Competence  An attorney must possess & exercise on the client’s behalf the legal knowledge, skill, thoroughness, & preparation reasonably necessary for the representation. This is not a rule for overall competency, just the representation. o The BAR may sanction for incompetent representation. o What is competent representation?  Must have the time to commit to a client’s case or matter.  Can’t take on too many clients at once.  Must have the requisite knowledge  Even it lawyer has to learn some of it as they go, it’s okay.  Expertise  Can associate w/ another lawyer if expertise is not up to speed (ex: brand new lawyer)  Can then sue the supervisor.  Continuing Legal Education (CLE) – in order to continue competence. Some states require it – CA requires 30 hrs per 3 years.  Supervisory Responsibilities  Obligation on firm partners to ensure everyone in the firm observes the rules of professional responsibility.  Hypo: Scott Peterson’s attorney takes depo. b/c boss makes her – she quits & tells news station that Peterson admitted he did it in the interview. It was the lawyer’s duty to make her aware of the duty of confidentiality.  When will a partner/supervisor be held vicariously liable? 3 situations: a. Instruction: Where partner orders something subordinate to do something unethical. Ex: file a frivolous claim. i. Rule: Subordinate lawyers are independently responsible for adhering to ethics rules & cannot raise the defense of “he told me to do it” when ordered to do something. 1. Exception: A lawyer is not subject to discipline for relying on the advice of a superior when it is on a debatable question of professional duty. This defense will not work if it’s patently in violation. b. Ratification: Where the partner ratifies the subordinate’s unethical conduct. i. Ex: Associate tells lawyer he filed frivolous claim, partner says good. c. Failure to Remedy: Partner learns of subordinate’s misconduct in time to mitigate or ameliorate the effects, but does nothing. i. Lawyer tells partner he filed a frivolous claim, partner does nothing. ii. Inability to act may be excusable – ex: associate tells partner he made a bold faced lie to court. The Unauthorized Practice of Law  When a person engages in unauthorized practice of law, civil & sometimes criminal penalties attach.  29 Legal Ethics Professionals & others whose business borders the law may not engage in the legal work that borders their other professional duties. Real estate agents, bankers & insurance professionals are common examples. What is the “practice of law”? Professional Adjusters v. Tandon – couple’s house burned in fire, they received settlement from insurance co, thought it was too small so hired an outside adjuster company to get them more $$$. Adjuster’s fee was contingent on amt. of recovery. Ct held adjuster’s negotiations for more money were unauthorized practice of law, and the statute permitting it was unconstitutional. Rule: Interpretation of contract terms and negotiating a settlement are activities constituting the practice of law.  Courts are the ONLY ones with the apparent authority to regulate the practice of law despite the fact that the legislature has allowed this type of conduct.  Other activities considered the practice of law: 1. Representation of parties before judicial or administrative bodies. 2. Drafting of papers (pleadings, complaint, motions) & pleading incident to actions & special proceedings 3. Management of proceedings (when to have trial, continue it, move it) 4. Giving legal advice (applying law to the facts) & counsel 5. Rendering a service that requires use of legal knowledge or skill 6. Preparing instruments & contracts by which legal rights are secured  What is not considered the unauthorized practice of law? 1. A person can represent him/herself 2. A person may write his/her own k 3. Standardized forms handed out to clients for some things, ex: or a will, real estate transactions (from r.e. agent) are okay. 4. What if the real estate agent fills out the form for you? This IS considered the practice of law b/c it’s securing a k by which legal rights are secured – but it’s usually allowed!  Public policy reasons, such as that it’s cheaper, make courts usually allow for it.     Hypo: accountant promised his clients that if they’re audited, he’ll give them whatever help they need. Client is audited. Activities undertaken by accountant:  IRS wants to know if client’s spent $$ on X,Y, Z. Accountant goes thru & assembles a collection of documents & earmarks those responsive to IRS’ question – NOT unauthorized practice.  Then accountant goes thru & says they are deductible b/c they are reasonable business expenses necessary for his business. This IS the unauthorized practice b/c this is a legal service → applying the law to the facts. Hypo: books out thre that help people who don’t want to seek hiring a lawyer. Are the books unauthorized practice of law? As long as they are strictly informative, it’s okay.  Rule: Simply describing the law, or explaining how to meet the standards of the law, is fine b/c it’s not helping any one particular person. Hypo: Software that you type in info. then it chooses whatever forms are needed to advance your interests: ex: marital dissolution. Then it drafts your responses to fit those particular forms. This is unauthorized practice of law.  Rule: Once something or someone, based on responses, adapts the responses to fit a person’s legal rights, it goes too far to assist the person w/ their particular problem. 16. Malpractice 30 Legal Ethics   Malpractice is a civil claim for relief intended to remedy a wrong done by a lawyer o an individual client or a group of clients. 3 issues: 1. Who is owed the duty, who may sue? The duty is owed to the client. But who is a client? Need a signed attorney fee agreement. (Quid pro quo – attorney give services, client pays) Thus a/c relationship agreement, and duty owed. 2. When is expert testimony needed in malpractice? 3. What effect does an ethics violation have on a malpractice claim? 1. To Whom is a Duty Owed?  3 COA’s 1. Professional Negligence 2. Breach of K Lawyer/Client K at the Beginning of the Relationship Togstadt – client consults attorney about possible med. mal. claim for 45 minutes, lawyer told her that he doesn’t think she has a claim, but he’d consult w/ his partner. She never heard from him, and after sol had run, client learned she had a valid claim. Ct held there was an a/c relationship under both negligence & k theories. Rule: 1) Duty? Yes. Negligence:  received legal advice which lawyer could’ve reasonably forseen she’d take. K:  sought & received legal advice & actually relied on it. 2) Breach? Yes. He didn’t meet applicable standards of care. He didn’t make it clear he wasn’t rendering legal advice. Rule: it’s the attorney’s obligation to be clear – he should’ve sent her a letter saying he gave NO opinion, keep it on file. Or send her away as soon as he hear “med mal” 3) Causation & Damages? Not enough to say lawyer fell below standard of care. She’d have to prove a) that her lawyer was negligent & b) that her case was very meritorious – but for the bad advice, she would’ve pursued a claim & won. 3. Breach of fiduciary duty Tante – Client & her attorney had sex. Client sued b/c claimed attorney used confidential information to his advantage to create a relationship w/ client & to her disadvantage. Rule: Duty? the duty not to use confidential information to his own advantage. Breach of standard of care? It’s inferred whether the attorney gave substandard care. Economic damages? Inferred  4 Elements of the COA’s 1. Duty a. Duty for negligence: (did a/c relationship exist)? A/C relationship is created where  receives legal advice under circumstances that make it reasonable for  to rely on the advice. ( doesn’t have to ask!!) b. Duty for k: A/C relationship formed when  seeks legal advice & actually relies on it) 2. Breach a. Breach for negligence: Ask what would the average reasonable lawyer in a similar situation have done, and did this particular lawyer adhere to it? b. Breach for k: If ct does recognize breach of k action as a species of malpractice, cts will generally imply a covenant in the k that the lawyer promises to provide services in a competent manner. i. It’s a breach of this implied promise that results in a breach of k. c. Breach for fiduciary duty - To measure, look at the duties the lawyer has under the ethics code – loyalty, confidentiality, competency, etc. 3. Causation 31 Legal Ethics a. Causation: Generally it’s the “but for” standard: must be a “substantial factor”. Ex: ’s breach of fiduciary duty was a “substantial factor” in damages. 4. Damages a. Cts will generally compensate ’s for economic loss in a malpractice action (for breach of k, or negligence theory) b. In beach of fiduciary duty case, standard are relaxed, often don’t need to prove economic loss b/c damages will be inferred. c. Must not only prove the malpractice case – i. Must also prove “but for the attorney’s negligence, I would’ve won”   Malpractice Claim w/ Non-attorney? Ex: w/ an accountant: must prove that the investor would rely on the attorney’s work product, that he wouldn’t have invested but for the accountant’s advice. Liability to Non-Clients? Some jurisdictions say that lawyers are liable to the clients & their clients alone. a. For the jurisdictions that DO recognize malpractice claims by non-clients, there are 2 key situations: i. Primary purpose is to benefit a 3rd party – a non-client may sue a lawyer where the primary purpose of the legal services was to benefit or influence a 3rd party.  Ex: Lawyer leaves out 2 beneficiaries from will. Beneficiaries can sue b/c duty created to them since the primary purpose of the legal services was to benefit them. ii. Primary purpose is to influence a 3rd party – w/ the noisy withdrawal. Lawyers may evaluate certain situations & create work product, i.e. opinion letter, to influence 3rd parties to benefit his client. Liability for negligent opinions.  Ex: opinion letter to bank – careless error in the letter exposes attorney to liability to the bank in states that recognize it. Liability to 3rd parties for negligent misrepresentation (legal services aren’t being rendered!) Perillo – Lawyer gave a brochure with false information saying a septic system could be installed on property to a real estate broker who ended up selling the property to an unknowing buyer. Rule: a lawyer will be liable for malpractice to a 3rd party if he negligently represents facts, not just for negligent performance of legal services, where the attorney invites the 3rd party to forseeably rely on the representation.  What to do to avoid liability? Provide a disclaimer – “this is for your info. only, not to be relied upon by anyone else!” 2. Expert Testimony in Malpractice Action  General Rule: Expert testimony is usually needed in mal. cases to establish 2 things: 1. To establish duty: standard of care - what would reasonable lawyer have done? 2. To establish breach: that the lawyer failed to adhere to the standard.  Exception: Where the malpractice is so obvious that a layperson can understand it w/out expert testimony,  will not have to introduce expert testimony. Ex: failure to act or failure of omission.  Ex: client wants attorney to write up worker’s comp claim – he fails to follow up & follow, then SOL runs out. No expert testimony needed. 3. To What Extent are Ethics Rules Applicable in Malpractice Actions? 32 Legal Ethics Should a client be able to show that the lawyer failed to comply w/ ethics rules to see how far below the standard the attorney has acted? Smith – Attempt to bring in expert testimony on an ethical standard. Rule: As long as the ethics standard was created to protect  in cases like this, expert testimony concerning the violation can come in.  Jury can use this testimony – no negligence per se for falling below ethics.  The violation of ethics does NOT give rise to a new claim in & of itself. Hypo: Client feels attorney screwed up, he doesn’t want to pay. 2 years pass (sol for mal is 2 years) & lawyer files claim for failure to adhere to k.  Rule: malpractice as a defense is not time-barred (client can still raise it!)  Rule: Malpractice claims for above a certain amt must be reported to state BAR. Hypo: Lawyer breaches duty of fiduciary duty by representing multiple parties when there were conflicts of interest. Since the attorney provided incompetent representation, there was a diminished value in the services. 2 options: 1. Forfeiture – if the attorney is seeking to recover a fee he hasn’t gotten yet. 2. Disgorgement – if the attorney has already received the fee, it’s taken away.  Criminal Defense Lawyers Performing Negligently  If the attorney conduct is at issue (ineffective assistance of counsel), conviction may be set aside, new trial ensues. But there are proximate cause issues in the malpractice arena. Peeler - US attorney signed an affidavit for an offer to get  completely off for making illegal write offs to wealthy clients if she sold out others committing the same crime. ’s lawyer forgot to tell her about the settlement offer.  finds out she could’ve gotten out of her conviction & sues attorney for causing her conviction. Ct does not allow her to sue. Majority Rule: in order to have a ct hear a malpractice case from a criminal , the criminal  must first be exonerated. Majority Rule: Most states require that the criminal  go an additional step beyond exoneration:  must prove actual innocence.  Duty? Yes. Breach? Yes – he had to tell her about the settlement offer. Causation? But for the failure to relay the info, she’d have to say she would’ve accepted the offer. Damages? Yes, damage to marriage, years of jail.  BUT, she was in jail b/c she’s guilty – not b/c of the lawyer’s failure to inform! BUT, she can’t be exonerated b/c she’s guilty – one who is guilty CANNOT be exonerated! Hypo: busy defense lawyer, doesn’t find witnesses who could’ve testified to ’s alibi (even if they were shady former criminal witnesses).  found guilty, on appeal, claims ineffective assistance of counsel. New trial, new attorney finds witnesses &  is acquitted.  was exonerated, but proof of actual innocent is probably necessary. The lawyer will be sanctioned by the state BAR.  How do lawyers pay for this? Thru insurance carriers.  17. Discipline    Discipline vs. Malpractice – Discipline is imposed for the protection of the public generally & for the benefit of the profession. Malpractice is a tort or contract based civil action meant to compensate victim’s of lawyer’s negligence of contract breach. Courts retain inherent authority to sanction or punish any unethical conduct. However, State BAR may also sanction. Grounds for discipline:  Violation of the adopted ethics code  Criminal conduct that reflects adversely on the lawyer’s fitness as a lawyer (even outside the role of a lawyer) 33 Legal Ethics     Hypo: Lawyer went home, client reconciled, relationship is over. He engages in spousal abuse, sanctionable by criminal law & civil law – but what about state BAR?  Rule: Not all violations of criminal law lead to BAR sanctions. Spousal abuse IS a crime of violence, and thus sanctionable by state bar b/c it doesn’t reflect well on lawyer’s ability to practice. Conduct involving fraud or dishonesty – Even if not relating to representation of a client will also subject a lawyer to punishment by the state BAR. Acts involving moral turpitude – ex: having sex w/ client b/c client couldn’t pay bills. Conduct prejudicial to the administration of justice – broad, catch-all category for other forms of misconduct. Ex: rude in ct, drunk in ct, paying witnesses. Lawyers have a reporting requirement – lawyer having knowledge of another’s violation of the ethics code must turn the other in if the violation raises a substantial question about the other’s fitness to practice law. o What is a substantial violation? There has only been one reported case of a sanction for failure to turn in.  In re Henry – he not only didn’t turn him in, but extorted him as well. o  Procedures of the state BAR in punishing:  It’s like a criminal proceeding: o Prosecutor must prove the violation by clear & convincing evidence o Due Process Rights that attach – examine witnesses, claim 5th against selfincrimination, appeal, etc. o CA has extensive manner of sanctions – that’s why highest BAR dues in country.  Scope of the BAR’s ability to sanction: o Rule: State BARS can punish ethical transgressions occurring by a licensed attorney no matter where they occur. So, NY lawyer in CA when violation occurs can be punished by CA state BAR.  Choice of law for the sanction o Rule: if an ethical violation occurred in a state’s court, then the ethical standards of that state are applied in judging the lawyer’s conduct. o Rule: In non-litigation settings, apply the ethics rules in the state in which the conduct occurred.  Exception: Sometimes lawyers commit acts in one state that have effects in another state – ex: lawyer calls someone in CA while in NY & lies that a witness is unavailable.  Rule: Apply the ethical rules of the state in which the “predominant effect” occurs. How the state bar determines the sanctions it may impose on lawyers: 2 steps: 1. Determine whether there’s an ethical violation in the first place (liability) 2. Look at mitigating & aggravating factors – a. Mitigating = Have they cooperated w/ the state bar, good record, was there a good reason for the violation (ex: lawyer’s own financial exigencies, substance abuse), evidence of rehabilitation b. Aggravating = Bad intent, recalcitrant, cooperative w/ state bar, look at overall pre-existing record. Punishments state BAR may impose on lawyers: a. Private reprimand to the lawyer – in a letter addressed to him, a statement of reproach issued by BAR to reprimanded lawyer telling him he’s broken the rules.   34 Legal Ethics b. A public reprimand to the lawyer – The reprimand statement is released to the public (newspaper). c. Restitution or performance of certain activities to recompensate the victims d. Suspension – can’t practice law for a particular time e. Disbarment – Infinite dismissal. In reality, it’s a suspension for a fixed period, then the lawyer can re-apply (usually 5 years). Discipline for the Mishandling of Client’s Money/Example of violation of ethics code In re Warhaftag – Lawyer continually issued to checks to himself for fees in pending real estate transactions. He replaced the advances when he actually received the closing funds or when closings fell thru (lawyer’s supposed to wait till escrow closes to take his fees). Lawyer used personal funds to cover withdrawn fees, thought shouldn’t be punished b/c no one was ever hurt. Rule: This was a knowing misappropriation of a client’s money that was entrusted to him. The lawyer’s subjective intent to borrow rather than permanently steal doesn’t matter, nor does the lack of client harm – he’s still disbarred. Rule: Attorneys cannot commingle funds. An attorney must keep the client’s money in its own particular trust account (all of the clients’ money may be together, but it can’t be mixed w/ lawyer’s) Discipline for Mishandling of 3rd Party’s Money/Example of discipline for fraud/deceit. In re Austern – Lawyer represented client who was converting bldgs into condos. Prospective purchasers agreed to immediately close on several units on the condition that client deposited $10,000 into an escrow acct to cover the costs of completing necessary work on the units, just in case client didn’t perform. If client performed the work, the $ would be given back to him. Lawyer agreed to act as escrow agent, even after learning that client had written a bad check. Rule: Lawyer is under an affirmative duty to withdraw from representation when a client wants the attorney to assist in a crime or fraud. This dishonest conduct was a violation of the lawyer’s fiduciary duty as an escrow agent that he owed to the purchasers. Atty subject to public censure.  Compare punishment w/ Warhaftag – actually taking money is considered more egregarious than to lie about its existence.  State Bars are more concerned w/ what attys do w/ client’s $ than 3rd parties. Sanctions for Engaging in Sexual Relations w/ Clients Matter of Tsotsouris – lawyer had sex w/ client, she complains, even though his representation was very competent. Ct held it was a breach of fiduciary duty. Majority Rule: B/c of the potential for problems & concerns, no sexual relationships are allowed unless it pre-existed the a/c relationship.  Potential problems?  Lawyer could exploit client for personal gain  The relationship could affect the representation. Ex: representing wife in divorce, husband wants to get back together – atty may encourage her not to.  Problems w/ the a/c privilege. Ex: If lawyer finds out information outside the scope of the a/c relationship (b/c of the increased opportunity to find this stuff out). Then it’s not protected by the a/c relationship! Discipline for Abusive Behavior/Example of Obstruction of Justice Schiff –Schiff screamed at other lawyer, called her names during depo in attempt to prevent her quest for relevant info. He was publicly censured. Rule: Lawyer may not engage in conduct to obstruct justice. This also leads to the client suffering from the chilling effect of relationships btwn counsel. Now the lawyer might not partake in usual niceties, granting continuances, participating in settlements. 35 Legal Ethics Hypo: lawyer has tough time, judge yelled at him, he leaves courthouse & beats up homeless man. It’s criminal conduct reflecting on his ability to practice law.  After, he tries to pass off a fake check in liquor store – he knows there’s no $ in acct.  Dishonest, yes punishable.  What if another attorney walks in store & sees him trying to pass the check, and he knows there’s no $ in the acct?  “Substantially affects” his fitness to practice law?  What if it was a $10,000 check to buy an entertainment system.  Maybe closer to substantially affects, more reason to rat him out.  Unclear what amt is enough. Hypo: lawyer licensed in AZ, the bad conduct above occurs in CA – he was admitted to practice pro hac vice in CA.  The fact that he’s licensed somewhere makes him sanctionable in CA.  He can ALSO be sanctioned in AZ! Can be punished in multiple jurisdictions. 36