A bar counsel’s dozen!

Over the first two weeks of Five for Friday, Vermont lawyers submitted an impressive total of 9 perfect scores.

As impressive as it was, it was nothing compared to Week 3  in which 12 attorneys provided the correct answer to each of the 5 questions.

WEEK 3 HONOR ROLL

5 for 5

• Amber Barber — Barber & Waxman
• Amy Butler – Amy Butler Law
• Tim Fair – Blodgett, Watts, Volk & Sussman
• Robert Grundstein
• Jennifer Hartman – Vitt & Asscociates
• Scott Jaunich – Downs Rachlin Martin
• Elizabeth Kruska – Marsicovetere Law Group
• Samantha Lednicky – Downs Rachlin Martin
• Shannon Lenzini – Downs Rachlin Martin
• Susan McManus – Bennington County Public Defender
• Mary Parent – Downs Rachlin Martin
• Emily Tredeau – Prisoners’ Rights Office

4 for 5

• Hal Miller, First American

THE ANSWERS

Question 1:  Last night, during a meeting to discuss next week’s trial, Client told his Lawyer that Client intends to take his own life tonight.  Lawyer reasonably believes Client.  Under the Rules of Professional Conduct:

• a – lawyer must not disclose Client’s intent
• b – lawyer may disclose Client’s intent; Rule 1.6, Comment [10]
• c – lawyer must disclose Client’s intent

Question 2:  Vermont’s conflict rules do not prohibit common representation of multiple clients. However, a comment to the rules indicates that the risks posed by representation of multiple clients in a specific type of case is “so grave that ordinarily a lawyer should decline to represent” multiple clients. What type of case? CRIMINAL; Rule 1.7, Comment [23]

Question 3:  A lawyer calls me with an inquiry.  During the inquiry, I tell the lawyer that in 1997 the VBA issued an advisory ethics opinion that concluded that lawyers do not have an ethical duty to ENCRYPT EMAIL.  I tell the lawyer that most states agreed, but, now, states are re-thinking the issue.  I mention that “the availability of things like the Chrome extension ‘End-to-End’ ” might change the analysis.

Here’s more on the End-to-End extenstion

Question 4:  Another lawyer calls with an inquiry.  We spend some time discussing the meaning of the term “single source” as it appears in the Rules of Professional Conduct.  What topic did the lawyer call to discuss?

TRUST ACCOUNT – Rule 1.15A(a)(4)

Question 5:  Name the lawyer who was part of O.J. Simpson’s “Dream Team” and has since been disbarred.

F. LEE BAILEY

Five for Friday: #3

Welcome back!  Since this started, we’ve talked about tech competence, referral fees, and managing client expectations.  The response has been terrific.  As always, feel free to email me suggestions for future posts.

But it’s Friday.  So, on to the business at hand: this week’s quiz. They key question – can anyone keep up with Kruska and Gilmore???

Please email your answers to michael.kennedy@vermont.gov

Question 1:  Last night, during a meeting to discuss next week’s trial, Client told his Lawyer that Client intends to take his own life tonight.  Lawyer reasonably believes Client.  Under the Rules of Professional Conduct:

• a – lawyer must not disclose Client’s intent
• b – lawyer may disclose Client’s intent
• c – lawyer must disclose Client’s intent

Question 2:  Vermont’s conflict rules do not prohibit common representation of multiple clients. However, a comment to the rules indicates that the risks posed by representation of multiple clients in a specific type of case is “so grave that ordinarily a lawyer should decline to represent” multiple clients. What type of case?

Question 3:  A lawyer calls me with an inquiry.  During the inquiry, I tell the lawyer that in 1997 the VBA issued an advisory ethics opinion that concluded that lawyers do not have an ethical duty to _______.  I tell the lawyer that most states agreed, but, now, states are re-thinking the issue.  I mention that “the availability of things like the Chrome extension ‘End-to-End’ ” might change the analysis.

Fill in the blank that’s above – what specific ethical consideration have we discussed?  It is not necessarily a one-word answer.

Question 4:  Another lawyer calls with an inquiry.  We spend some time discussing the meaning of the term “single source” as it appears in the Rules of Professional Conduct.  What topic did the lawyer call to discuss?

Question 5:  Name the lawyer who was part of O.J. Simpson’s “Dream Team” and has since been disbarred.

Five for Friday #2: Kruska & Gilmore remain perfect

In college football: Clemson, Ohio State, Iowa, Oklahoma State, and Houston remain undefeated and in the hunt for the college football playoff.

In the NFL: New England and Carolina are the only teams yet to lose.

In Five for Friday:  Elizabeth Kruska & Erin Gilmore remain perfect.

You might recall that each went 5 for 5 in the first Five for Friday.  Each repeated the feat in week 2.  Also turning in perfect scores this week: Amy Butler, Hal Miller, Mary Parent, and Dan Stevens. (note: neither Ryan Kriger nor Scott Jaunich entered, so, technically, they remain unblemished as well.)

Week 2 answers:

1. Another term for limited representation is UNBUNDLING. Unbundling is not new! Mary Aschcroft and I did a CLE on the topic in 2003.  As this post from the National Law Review points out, unbundled legal services are a valuable tool in the effort to improve access to justice.  For more on unbundling, check out unbundledlaw.org

2. The statement “Vermont’s rules specifically authorize straight referral fees” is FALSE.  Here’s my latest post on referral fees.

3.  “Except as provided in paragraph (g), a lawyer shall not disburse funds held for a client or third person unless the funds are COLLECTED FUNDS.”  That’s Rule 1.15, which is HERE

4.  C.  By rule, a lawyer shall not “prepare on behalf of a client an instrument giving the lawyer or a person related to the lawyer any substantial gift unless the lawyer or other recipient is related to the client.”  That’s Rule 1.8(c).

5.  Saul Goodman, from Breaking Bad and Better Call Saul, is the lawyer who inundated Albuquerque with outlandish advertisements. Kudos to Bob Grundstein and Amy Butler for knowing that Saul’s real name is Jimmy McGill.

Week 2 Honor Roll:

5 for 5

• Amy Butler – Amy Butler Law
• Erin Gilmore – Ryan Smith Carbine
• Elizabeth Kruska – Marsicovetere Law Group
• Hal Miller – First American
• Mary Parent – Downs Rachlin Martin
• Dan Stevens – Marsicovetere Law Group

4 for 5 

• Amber Barber – Barber & Waxman
• Robert Grundstein
• Jordana Levine – Marsicovetere Law Group
• Caryn Waxman – Barber & Waxman

 

Referral Fees

Last week’s Five For Friday included a question on referral fees. It generated several emails and calls, so I thought I’d post on the topic.

Vermont’s rules do not authorize straight referral fees.

Here’s the scenario: Client asks Lawyer for help in an area that Lawyer doesn’t practice.  Lawyer refers Client to Attorney.  Lawyer wants to be paid for the referral.  Under what circumstances, if any, can Attorney ethically pay Lawyer for the referral?

Believe it or not, we start with the advertising rule – Rule 7.2.

Rule 7.2(b) prohibits lawyers from giving “anything of value to a person for recommending the lawyer’s services.”  There are four exceptions.

One of the exceptions allows a lawyer to:

“refer clients to another lawyer or a nonlawyer professional pursuant to an agreement not otherwise prohibited under these rules that provides for the other person to refer clients or customers to the lawyer if:

• (i) the reciprocal agreement is not exclusive; and
• (ii) the client is informed of the existence and nature of the agreement.”  Rule 7.2(b)(4).

A comment to the rule is instructive.

Comment [8] states that “[e]xcept as provided in Rule 1.5(e), a lawyer who receives referrals from a lawyer or nonlawyer professional must not pay anything solely for the referral,” but may enter into reciprocal referral agreements that comply with Rule 7.2(b)(4).

So, then, what does Rule 1.5(e) provide?

Rule 1.5(e) is Vermont’s rule on dividing fees between lawyers who do not work together. The rule authorizes a division of fees between lawyers who are not in the same firm only if:

1. the division is in proportion to the services performed by each lawyer or each lawyer assumes joint responsibility for the representation;
2. the client agrees to the arrangement, including the share each lawyer will receive, and the agreement is confirmed in writing; and
3. the total fee is reasonable.

I’m most often asked about paragraph 1.  Again, the Comment is helpful.

Comment [7] makes it clear that lawyers can divide fees based on “the proportion of services they render or if each lawyer assumes responsibility for the representation as a whole.”  It goes on to indicate that “[j]oint responsibility for the representation entails financial and ethical responsibility for the representation as if the lawyers were associated in a partnership.”

Back to our scenario: it seems to me that Attorney cannot pay Lawyer solely for the referral.  Attorney and Lawyer may divide the fee if:

• the total fee is reasonable
• Client confirms the agreement in writing, AND,
• the division is either
• in proportion to the services each performs, OR,
• Lawyer accepts ethical and financial responsibility for Attorney’s representation of Client.

FIVE FOR FRIDAY: #2

Last week’s inaugural Five For Friday was fantastic.  I received over 40 responses, with Erin Gilmore, Scott Jaunich, Ryan Kriger, and Elizbeth Kruska notching perfect scores.

Here we go with week 2.  Remember: referring to the rules is not only okay, it’s encourage.  Looking at the rules is never bad!

Email responses to michael.kennedy@vermont.gov

Question 1:  Rule 1.2(c) authorizes lawyers to limit the scope of the representation.  The family and civil rules also provide for limited representation agreements.  While it is not mentioned in the rules, what is the more common name for situations in which a lawyer and client agree to limit the scope of a representation.

Question 2:  True or False.  The Vermont Rules of Professional Conduct specifically authorize lawyers to pay straight referral fees to other lawyers and professionals.

Question 3:  Fill in the blank.   “Except as provided in paragraph (g), a lawyer shall not disburse funds held for a client or third person unless the funds are ____________.”  (two words)

Question 4: By rule, a lawyer shall not “prepare on behalf of a client an instrument giving the lawyer or a person related to the lawyer any substantial gift unless __________”

a.  the client provides informed consent

b.  the client provides informed consent, confirmed in writing

c.  the lawyer or other recipient is related to the client

d.  the client is given a reasonable opportunity to seek independent legal advice

Question 5: Advertising violations? Name the fictional criminal defense attorney who inundated Albuquerque with outlandish billboards and print & tv ads that featured an eponymous catch phrase.

GREAT EXPECTATIONS

Nothing earth-shattering this week.  My own duties of competence and diligence left me little time to come up with an idea for a compelling blog post.

But that reminds me: i’m often asked to discuss the “hot topics” in ethics.  The hot topic is what’s it’s always been: communication. Last week we learned that the rules consider “procrastination” to be, perhaps, the most widely resented professional shortcoming.

My experience has been different.  My experience has been that communication lies at the heart of most of the complaints and calls that I receive.

I’m not talking about “my lawyer never calls me back.”  Yes, that would be an issue, but it’s rarely what I hear.  Rather, I’m talking about situations in which it’s as if the client and the lawyer are talking about two entirely different relationships.  The reason: failure to manage client expectations.

Here’s an example: I screened an ethics complaint in September.  It was clear that neither the client nor the lawyer had a clear understanding of what the other expected out of the relationship.  The result: a total breakdown in communication, hard feelings, stress, and an ethics complaint.  I referred the complaint to an assistance panel for non-disciplinary resolution, the PRB’s version of “diversion.”

At the assistance panel meeting, things got worse.  The attorney couldn’t produce a fee agreement and couldn’t provide a clear response when the panel asked “what did this client hire you to do & what did you do?” The result: the panel referred the matter to disciplinary counsel for an investigation.

It could have been avoided.

The failure to establish and manage reasonable expectations about the representation leads to complaints. A simple example: you’d be surprised how I often I hear “I never knew I’d be billed for every email.   I wouldn’t have sent so many if I knew he was going to charge me for each reply!”

So, today’s tip is practical: set clear expectations at the outset. Talk about them with the client and confirm them in a well-drafted representation agreement.  Things to consider:

1. Let the client communicate to you the objective of the representation.  Remember, rule 1.2(d) leaves this to the client.
2. In return, communicate to the client a candid assessment of whether the objective is reasonable.  Your job is to provide competent and candid legal advice.  Your job is not to tell the client what you think the client wants to hear.  Appeasement and unrealistic assessments inevitably lead to results in which expectations are not met and, really, never could’ve been met.  A key point here: if the matter is going to take a long time to resolve, tell the client.  It’s not uncommon for someone to call and tell me “i never would’ve done this if I had known it was going to take so long.”
3. Communicate to the client that Rule 1.2(d) leaves the means by which the client’s objectives will be pursued to you. (in consultation with the client and subject to all the rules, but rules 3.1 and 4.4.in particular) I’ve been contacted by clients who say “my lawyer won’t do the things I told him to do.  His job is to represent me as I say.” Communicate to the client what you will do, what you will not do, what you expect the client to do.
4. Communicate to the client how often the client should expect to hear from you. Rule 1.4 requires you to keep a client reasonably informed about the representation.  I don’t think this requires lawyers to respond to every single client communication. Sometimes, though, a simple “there’s no change since we last spoke” might be a good idea.  Rule 1.4 also requires lawyers promptly to reply to reasonable requests for information.  Do you have a policy on responding to phone calls and emails within a certain period of time? Assuming no emergency that requires a quicker response, that’s fine.  But, communicate the policy to the client.
5. Finally, communicate to the client the rate and basis of the fee.  Sometimes the first bill leads to “sticker shock” and, as I mentioned above, a call to me to say “she never told me she’d charge for things like that!”  Set clear expectations early.

These are just a few ideas based on the complaints and inquiries I’ve received.

For more,an oldie, but a goodie, is HERE.

Do your clients thank you?  If not, read THIS..

Finally, I don’t recommend setting expectations unreasonably low, but for some interesting tips on identifying, managing, and exceeding expectations, go HERE.

Tech Competence Update; Five For Friday Results

Thank you for the great responses to my post Competence Includes Tech Competence.  So far, it’s garnered over 1400 views, with several intriguing suggestions for follow-up posts.  Future posts that touch on the intersection of technology, social media, and ethics will include:

1.  A discussion of how lawyers can (must?) use technology to solve access to justice issues.  Thanks to Margaret Barry from Vermont Law School for the suggestion.
2. How the duty of competence includes a duty to act competently to protect information relating to representation when storing or transmitting it electronically.  Thanks Chris Chapman for the tip.  Chris is a member of the Professional Responsibility Board.

But now, what you’ve been waiting for – the answers to the inaugural Five For Friday quiz!  Without further adieu:

1. B.  According to Comment 3 to Rule 1.3, “[p]erhaps no professional shortcoming is more widely resented than procrastination.“
2. Besides Rule 1.6, the rule that sets out situations in which a specific act is either mandatory or permissive is Rule 1.16. It lists when withdrawal (or termination of the representation) is either mandatory or permissive.
3. Astroturfing is the act of paying others to post false, positive reviews on social media platforms.
4. Conflicts that are based on a “personal interest” of the lawyer are not imputed to others in the lawyer’s firm.  That’s Rule 1.10.
5. The tv show was Community. Joel McHale plays Jeff Winger, a lawyer who lost his license for representing that his degree from Colombia was really from Columbia.

Very pleased to report that the Honor Roll includes large firms, small firms, solos, private practice attorneys, government attorneys, and attorneys from all over the state.  Terrific start!

HONOR ROLL (in alphabetical order)

5 for 5!

1. Erin Gilmore – Ryan Smith Carbine
2. Scott Jaunich – Downs Rachlin Martin
3. Ryan Kriger – Office of the Attorney General
4. Elizabeth Kruska – Marsicovetere Law Group

4 for 4 (only missed the TV show – perfect on ethics!)

1.  Ben Battles – Office of the Attorney General
2. John Hollar – Downs Rachlin Martin
3. Susan McManus – Bennington County Public Defender’s Office

3 of 4 – but all 3 correct answers were in ethics

1.  Sam Dworkin – Martin & Associates
2. Danielle Fogarty – Donovan & O’Connor
3. Heather Jarvis – Montpelier
4. William Schwartz – Schwartz Law Offices
5. David Sylvester – Downs Rachlin Martin
6. Carie Tarte – Maley and Maley

Competence Includes Tech Competence

Rule 1.1 requires lawyers to provide clients with competent representation.  It is the first rule in the Vermont Rules of Professional Conduct.

Now, the rules aren’t arranged in some sort of hierarchy of importance. It’s as important to comply with Rule 8.4 as it is to comply with Rule 1.1.

But it’s the first rule, which might mean that it’s the VERY FIRST THING the ubiquitous “they” thought of when they thought “what should the rules be?”

The Vermont Supreme Court is considering whether to  follow the ABA’s lead and adopt a comment that makes it clear that the duty of competence includes a duty to stay “abreast of changes in the law and its practice, including the benefits and risks associated with relevant technology.”  ABA Model Rule 1.1, Comment 8. 

Comment or not, it’s inconceivable that the duty of competence does not include understanding technology and how it impacts your clients.

Consider these questions:

1.  You represent a company.  Do you know whether the company provides its employees with mobile devices? What does the company do with the old ones that employees trade in? Do you know how to advise your client on preserving ESI?  When does the duty to preserve ESI kick-in?  Do you even know what “ESI” means?  Opposing counsel asks for discovery in native format.  Is your response “wait…what?”
2. You represent the plaintiff in a personal injury case.  Your paralegal informs you that the client recently posted to YouTube a GoPro video he took while boarding Stowe’s Nosedive trail.  A few minutes later, your client calls and asks if he should take down the video.  What’s your response?
3. You represent a criminal defendant.  The state has an eyewitness who is 100% certain that your client did it.  Your client, however, tells you that the eyewitness checked-in on Foursquare some 45 miles from the scene of the crime at the exact time the crime is alleged to have taken place.  Do you know how Foursquare works? Would you be able to authenticate and admit the check-in?
4. You communicate with your clients via text.  When the representation ends, Rule 1.16(d) requires you to deliver to the client “papers and property to which the client is entitled.”  Are texts “property” to which the client is entitled? Are they “writings” ?  If so, do you know how to move them from your mobile device to the file?  What if the client files an ethics complaint that alleges that you never communicated with her? Would you be able to retrieve and produce the text messages that prove otherwise?
5. Your practice focuses on estate planning. Have you heard of digital assets?
6. Do you know how to use technology and social media to create compelling demand packages or settlement offers for your clients?  If you’re in trial, are you using magic markers and an easel while the other side is using state-of-the art technology to present evidence?
7. Jury draw is next week. Is it ethical to review a juror’s internet presence? Is it ethical not to?

I ask these questions to try to convince you it’s no longer okay for attorneys to say “i don’t use technology” or “I don’t do social media.”  You know what? Your clients are using technology. Your clients are using social media. And their use of technology and social media may very well impact the matters in which you are representing them. Are you able to provide your clients with competent advice?

You don’t have to be an expert or know how to write code. However, it strikes me that the lawyer who chooses not to understand how technology and social medial will impact her clients does so at her own peril.

Oh – your client’s opposing party is a blogger.  Are his blog posts self-authenticating?

Thanks for reading. For those interested in reading more, here are some thoughts & resources:

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“ESI” is “electronically stored information.”  The discovery thereof is governed by Rule 34 of the Federal Rules of Civil Procedure and Rule 34 of the Vermont Rules of Civil Procedure.  The California State Bar recently issued an advisory ethics opinion outlining an attorney’s ethical duties in handling discovery of electronically stored information.  It’s here.  For a discussion of the opinion and many of the issues it raises, go here.  Not sure you’re ready to “do social media & technology?”  Well, take a look at this tale of a default judgment issued for discovery violations related to ESI?  Or this primer on “how NOT to produce” ESI.

This update from Gibson Dunn is one of the most comprehensive I’ve found.

Several states have issued advisory opinions related to the ethics of social media.  Opinions from Florida and Pennsylvania include guidance on advising clients to “clean up” social media platforms.  The most famous case on the topic might be this one, and it resulted in a 3 year suspension of the attorney’s license and a significant monetary sanction in the underlying civil case.

New York State Bar Association, Commercial& Federal Section, Updated Social Media Ethics Guidelines, June 29, 2015:  HERE

North Carolina State Bar Association, Formal Ethics Opinion 14-08, January 23, 2015 (discusses lawyer accepting “friend” request or other social media contact from judge):  HERE

Massachusetts Bar Association, Ethics Opinion 2014-5 (discusses when a lawyer may “friend” an unrepresented adversary): HERE

American Bar Association, Formal Opinion 466, Lawyer Reviewing Jurors’ Internet Presence, April 24, 2014:  HERE

Washington State Bar Association, Advisory Opinion 201402, (ethical issues of online endorsements & ratings):  HERE

State Bar of California, Standing Committee on Professional Responsibility & Conduct, Formal Opinion Interim No. 12-0006, December, 2014 (under what circumstances are lawyer blogs subject to the Rules of Professional Conduct)  HERE

New Hampshire Bar Association, Ethics Committee Advisory Opinion 2012-13/5, Social Media Contact with Witnesses in the Course of Litigation, June 20, 2013: HERE

San Diego County Bar Association, Legal Ethics Opinion 2011-2, May 24, 2011 (discusses lawyer sending “friend” requests to high-ranking employees of opposing party):  HERE

Philadelphia Bar Association, Professional Guidance Committee, Opinion 2009-02 (March, 2009) (discusses lawyer sending “friend” request to unrepresented witness whose testimony is favorable to adverse party):  HERE

FIVE FOR FRIDAY: #1

It’s time for the first ever “Five For Friday.”  Email your answers to michael.kennedy@vermont.gov

I’ll publicly recognize contestants who get at least 4 correct answers.  That’s way better than a public reprimand!!  Don’t worry – 3 or fewer right and it will remain between you and me.  Added bonus – and, selfishly, to encourage people to forward a link to my blog, I’ll recognize the firms, offices, and counties with the highest percentages of responses that get at least 4 correct. Contest closes whenever I make my next blog post, which will most likely be Monday afternoon.

Good luck and happy Love Your Lawyer day!

By the way: for questions 1-4, I don’t care if  you use Google, if you phone a friend, or if you go to those weird old things called “green books.”  At least it’ll mean you’re reading the rules!  But for #5, let’s play it honest.  Oh yeah, these are 5 questions for which i’m not available. As a result, and so I can be the first blogging bar counsel in history to open and close a post with links to videos, you can’t call me.

1.    According to the Rules of Professional Conduct, ” [p]erhaps no professional shortcoming is more widely resented than _________________”

a.    dishonesty

b.     procrastination

c.     a lack of communication

d.     a lack of preparation

2.    Rule 1.6 prohibits the disclosure of information related to a representation absent client consent.  However, the rule makes it clear that there are some situations in which the disclosure of information  is mandatory, even absent client consent, and others in which disclosure is permissive, again, with or without client consent.  Besides Rule 1.6 and the disclosure of otherwise protected information, there is one other rule that sets out the instances in which a specific act is either mandatory or permissive.  What is the act?

(EDIT: I’m NOT looking for Rule 1.13 here.  It’s technically correct, but is essentially the same as disclosing otherwise protected information. I’ll give credit to anyone who already answered “1.13.” Poorly phrased question.  My fault.)

3.    Nationally, an emerging ethics issue involves lawyers who pay others to post fake, positive reviews of the lawyer on various social media platforms.  Arguably, such a practice violates the advertising rules and Rule 8.4(c).  What is the one word most often used to describe the practice of paying others to post fake, positive reviews?  That is, a lawyer who pays others to post fake, positive reviews might be charged with ____________________.  (again, it’s ONE word, not the specific disciplinary charge, but the colloquial term for the practice of posting fake reviews).

4.   In Vermont, a lawyer’s conflict of interest is imputed to all other lawyers in the firm.  There is an exception for attorneys who have moved between private practice and the government.  There is also an exception for conflicts that are based upon a __________ ___________ of the lawyer.  (two words)  What is it?

5.  Name the TV show in which a lawyer lost his law license after it was discovered that his degree was not from Columbia Law School, as he had led his employers to believe, but from the country of Colombia.

Trust Account Scams: Disciplinary Prosecutions Possible?

I’ve been warning about trust account scams – one in particular – for years.  Unfortunately, lawyers continue to fall victim to the scam.

The most common trust account scam is the one in which a potential client from out of state (and often out of the country) contacts a Vermont lawyer by email and claims to be owed money by an individual or business in Vermont.  The lawyer takes the case.  Within days of the lawyer’s involvement, the opposing party is suddenly willing to pay up.  A check arrives at the lawyer’s office.  Lawyer deposits the check into trust and notifies the client.  Client instructs lawyer to wire the funds.  Lawyer does.  Weeks later, lawyer’s bank notifies lawyer that the check was counterfeit and demands repayment of funds wired out.

Best case: the lawyer was not holding any funds belonging to other clients and only has to deal with the bank. Worst case: funds that belonged to other clients were in trust and were sent to the scammer.

A Vermont lawyer fell for the scam last week.  It’s the second time this year (that I’m aware of) a lawyer has done so.

Please be diligent.  Along with the @VTBAR , I’ve been warning about this scam for so long that there’s really no excuse not to know about it. My friends at the Arizona bar have written about the scam.  The New Hampshire bar has issued a warning.  Last spring, I posted a warning about a different scam.  The New York State Bar Association has issued an advisory opinion that outlines the duties of a lawyer targeted by a scam.

At various seminars where I’ve issued warnings, I’ve noticed that there seems to be a perception that lawyers who fall victim to trust account scams will not face disciplinary prosecutions.  As Lee Corso would say, not so fast my friends.

Rule 1.1 requires a lawyer to act competently.  Rule 1.3 requires a lawyer to act with reasonable diligence. Rule 1.15 requires a lawyer to safeguard client property. Rule 1.15(f)(2) states that a lawyer “shall not use, endanger, or encumber money held in trust for a client or third person for the purposes of carrying out the business of another client or person without the permission of the owner give after full disclosure of the circumstances.”

If you are holding funds for me in trust, and you disburse those funds to a scammer, it strikes me (1) that you may not have acted competently to safeguard my property; (2) that you may not have acted with reasonable diligence to safeguard my property; and (3) that you may have impermissibly used, endangered, and encumbered my money for the purpose of carrying out your scammer client’s business.

Disciplinary authorities are starting to prosecute lawyers who fail to detect trust account scams.  In November of 2014, Ohio’s disciplinary board recommended a 6-month suspension for a lawyer who fell for a scam remarkably similar to the one outlined above.  The attorney resigned his license before the Ohio Supreme Court could rule on the recommendation.

In Minnesota, lawyers who fall for trust account scams are routinely admonished for violating the trust accounting rules, as well as for failing to act with reasonable diligence and competence to ascertain a client’s true identity.  Recently, a Minnesota lawyer agreed to a 12 month suspension of his law license after being charged with a host of violations related to a trust account scam.  (the case also involved misappropriation of some of the funds that were to be sent to the scammer!)  The Minnesota Supreme Court ordered the parties to file briefs on why the lawyer should not be disbarred.

In 2013, the Iowa Supreme Court suspended a lawyer who fell for a scam.

Be careful! In my view, we are at the point where lawyers should know about trust account scams. If so, “but it was a scam” might not be a defense to a disciplinary prosecution.  Finally, if you fall victim to a trust account scam, even if no action is taken against your license, you likely will have to make good on the money that is no longer in your trust account.