Monday Morning Answers: Memorial Day

Friday’s questions are here. The answers follow today’s Honor Roll.

Honor Roll

• Matthew Anderson, Pratt Vreeland Kennelly Martin & White
• Penny Benelli, Dakin & Benelli
• Jennifer Blomback, VATC
• Beth DeBernardi, ALJ, Department of Labor
• Robert Grundstein, Esq.
• Anthony Iarrapino, Esq.
• Keith Kasper, McCormick, Fitzpatrick, Kasper & Burchard
• Patrick Kennedy, First Brother, Dealer.Com
• Aileen Lachs, Mickenberg, Dunn, Lachs, Smith
• Kevin Lumpkin, Sheehey Furlong & Behm
• Hal Miller, Esq.
• Lon McClintock, Esq.
• Herb Ogden, Esq.
• Jim Runcie, Esq.

Stats

• Hardest:  Question 5. Of the ethics, Question 1.
• Easiest:  Question 4
• Hidden Pop Culture Reference: Question 3.  Emmit & Ray Stussy are the twin brothers played by Ewan McGregor in this season of Fargo.  I highly recommend it. V.M. Varga has quickly become one of my favorite characters in TV history.

Answers

Question 1

Firm represents Client.  The matter settles and Firm receives an insurance check for $50,000.  Firm notifies Cient and deposits the check into trust.

Firm presents client with an accounting that indicates that Client owes Firm $15,000. Firm is prepared to disburse the remaining $35,000 to Client.

Client contends that she only owes Firm $10,000.

Assume that nobody other than Firm & Client have interests in the settlement.  Which is most accurate?

• A.   Firm must keep the entire $50,000 in trust until the dispute is resolved.
• B.   Firm must disburse $40,000 to Client and keep $10,000 separate until the dispute is resolved.
• C.   Firm must disburse $35,000 to Client and keep $15,000 separate until the dispute is resolved.
• D.  Firm must disburse $35,000 to Client, disburse $10,000 to Firm, and keep $5,000 separate until the dispute is resolved.  See, Rule 1.15.  

Section (e) requires a lawyer to disburse funds that are not in dispute.  Section (a) prohibits commingling.  So, there is $45,000 that isn’t in dispute: Client’s $35,000 and the $10,000 Client agrees is owed to Firm.  Those portions must be disbursed, with the disputed $5000 remaining separate until the dispute is resolved.

Question 2

Attorney called with an inquiry.  I listened, then said:

• “The first thing the rule requires is that you not state or imply that you’re disinterested.”

Given my statement, it’s most likely that Attorney called to discuss:

• A.  A subpoena to testify about a former client’s matter
• B.  A prospective client who met with, but did not retain Attorney
• C.  A request from an unrepresented person to meet with Attorney to provide information related to a client’s matter.   See, Rule 4.3.
• D.  Serving on a jury

Question 3

Lawyer represents Emmit in a dispute with a government agency.  Lawyer learns that the agency interprets a regulation in a particular way.

Lawyer also represents Ray.  Ray is involved in a dispute with the same government agency, one that involves the same regulation.

Which is most accurate?

• A.   Absent Emmit’s consent, Lawyer may not use the agency’s interpretation to help Ray and, therefore, must withdraw from Ray’s matter.
• B.   Unless the agency’s interpretation is a matter of public record, Lawyer may not use the interpretation to assist Ray and, therefore, must withdraw from Ray’s matter.
• C.  If the two matters are the same or substantially related, Lawyer may use anything that he learns while representing Emmit to help Ray.
• D.  If it would not disadvantage Emmit to do so, Lawyer may use the agency’s interpretation of the regulation to help Ray.  See, Rule 1.8, Comment [5].

Question 4

Of the following, one has not traditionally been treated as a rules violation, viewed instead as a mistake that does not rise to the level of an ethics violation.  In my opinion, that should soon change, and the conduct should be considered a violation of the rules.

• A.   Withdrawing because a client calls or e-mails too often
• B.    An associate acting at the express direction of a supervising partner
• C.   Falling for a common trust account scam.  See, this post.
• D.   Representing a client who is adverse to a former client on the theory that “I don’t remember anything about the former client’s case.”

Question 5

Somewhat of a dichotomy given the weekend . . .

This lawyer collapsed and died of a heart attack near his Washington, D.C. home in 1988.  He was buried with full military honors in Arlington National Cemetery – in part because of his service in the U.S. Navy World War II, and in part because he once held a cabinet position.  The cabinet position: Attorney General of the United States.

In 1976, the lawyer was disbarred by the State of New York as a result of having been convicted of crimes that took place while he served as U.S. Attorney General.

Name the lawyer.

John Mitchell. Mitchell was Attorney General during Watergate.

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Langrock up for ABA seat

I don’t often post about individual Vermont lawyers – especially Vermont lawyers who are Canadiens fans. But, I think this is worth mentioning.

Vermont’s own Fritz Langrock is a candidate for a seat on the ABA Board of Governors.  Fritz is running unopposed to represent District 1.  Because who would challenge a Vermonter!?!?!

The ABA Journal has this piece on the upcoming ABA elections. Scroll down a tad and you’ll see Fritz.

In an interesting (to me) sidenote, if you scroll down a bit further, you’ll see that Professor Myles Lynk is running unopposed for the seat as the Board’s Minority Member-at-Large.  Many years ago, Professor Lynk spent a semester as a visiting professor at George Washington Law School. Among other courses, Professor Lynk taught Civ Pro 2 to a class that included Mike Kennedy.

Congrats to both Fritz & Professor Lynk!

Fritz, in your honor, and for the first & last time on this blog, I’ll post this image:

Five for Friday: Memorial Day

Welcome to the Friday that marks the unofficial beginning of summer!

There’s a lot to do this weekend.

• Run (or cheer) in the Vermont City Marathon (I found at least 17 VT attorneys in the entry list, and that doesn’t even count the relay teams!),
• take in a different type of racing action at Bear Ridge, Thunder Road, or the Devil’s Bowl,
• travel on a special Vermont passport,
• sample the fare at Chowderpalooza,
• use Will-O-Wood, the official campground of Ethical Grounds, as your base to experience all that the NEK has to offer.
• send in your answers to the #fiveforfriday quiz

Whatever you do, enjoy it! But, if even for just a moment, remember those who gave their lives in the service of this country.

On to the quiz!

The rules

• There are none. It’s open book, open search engine, use whatever resource you have.  Reading the rules is a good thing!
• Exception: Question 5.  We try to play that one honest.
• Team entries welcome.  Creative team names encouraged.
• Unless stated otherwise, the Vermont Rules of Professional Conduct apply
• Please e-mail answers to michael.kennedy@vermont.gov
• Please do not use the “comment” feature to submit your answers (competence includes tech competence)
• I will post the answers Monday, along with the week’s Honor Roll
• Please consider sharing the quiz with friends
• Hashtag & share: #fiveforfriday

Question 1

Did you think I forgot to include math in this week’s column? Ha!

Firm represents Client.  The matter settles and Firm receives an insurance check for $50,000.  Firm notifies Cient and deposits the check into trust.

Firm presents client with an accounting that indicates that Client owes Firm $15,000. Firm is prepared to disburse the remaining $35,000 to Client.

Client contends that she only owes Firm $10,000.

Assume that nobody other than Firm & Client have interests in the settlement.  Which is most accurate?

• A.   Firm must keep the entire $50,000 in trust until the dispute is resolved.
• B.   Firm must disburse $40,000 to Client and keep $10,000 in trust until the dispute is resolved.
• C.   Firm must disburse $35,000 to Client and keep $15,000 in trust until the dispute is resolved.
• D.  Firm must disburse $35,000 to Client, disburse $10,000 to Firm, and keep $5,000 in trust until the dispute is resolved.

Question 2

Attorney called with an inquiry.  I listened, then said:

• “The first thing the rule requires is that you not state or imply that you’re disinterested.”

Given my statement, it’s most likely that Attorney called to discuss:

• A.  A supboena to testify about a former client’s matter
• B.  A prospective client who met with, but did not retain Attorney
• C.  A request from an unrepresented person to meet with Attorney to provide information related to a client’s matter
• D.  Serving on a jury

Question 3

Lawyer represents Emmit in a dispute with a government agency.  Lawyer learns that the agency interprets a regulation in a particular way.

Lawyer also represents Ray.  Ray is involved in a dispute with the same government agency, one that involves the same regulation.

Which is most accurate?

• A.   Absent Emmit’s consent, Lawyer may not use the agency’s interpretation to help Ray and, therefore, must withdraw from Ray’s matter.
• B.   Unless the agency’s interpretation is a matter of public record, Lawyer may not use the interpretation to assist Ray and, therefore, must withdraw from Ray’s matter.
• C.  If the two matters are the same or substantially related, Lawyer may use anything that he learns while representing Emmit to help Ray.
• D.  If it would not disadvantage Emmit to do so, Lawyer may use the agency’s interpretation of the regulation to help Ray.

Question 4

Of the following, one has not traditionally been treated as a rules violation, viewed instead as a mistake that does not rise to the level of an ethics violation.  In my opinion, that should soon change, and the conduct should be considered a violation of the rules.

• A.   Withdrawing because a client calls or e-mails too often
• B.    An associate acting at the express direction of a supervising partner
• C.   Falling for a common trust account scam
• D.   Representing a client who is adverse to a former client on the theory that “I don’t remember anything about the former client’s case.”

Question 5

Somewhat of a dichotomy given the weekend . . .

This lawyer collapsed and died of a heart attack near his Washington, D.C. home in 1988.  He was buried with full military honors in Arlington National Cemetery – in part because of his service in the U.S. Navy World War II, and in part because he once held a cabinet position.  The cabinet position: Attorney General of the United States.

In 1976, the lawyer was disbarred by the State of New York as a result of having been convicted of crimes that took place while he served as U.S. Attorney General.

Name the lawyer.

 

 

Protect Client Funds, and your Law License, by Learning to Identify Trust Account Scams

Re-posted on May 24, 2017 to reinforce the message and because I inadvertently posted a draft version last night.

I am scheduled to present several CLE programs on various topics between now and the end of June.  At each, no matter my assigned topic, I will use some of the time to warn about trust account scams.

At the seminars, I will be very clear: in my opinion, we’re not far from the day when “but I was scammed!” will not excuse a violation of the rules.  It might mitigate the ultimate sanction, but it will not excuse the failure to safeguard client funds.

By way of analogy, I’ve used this blog to stress the duty to safeguard client information.

With respect to client information:

• Rule 1.1’s duty of competence includes a duty to act competently to protect client communications.
• Rule 1.6 prohibits a lawyer from disclosing “information relating to the representation” absent client consent.
• Rules 1.1 and 1.6 operate to impose a duty to take reasonable precautions to ensure that client information is not disclosed to or accessed by people who shouldn’t receive or access it.
• The duty necessarily includes taking reasonable precautions to safeguard client information that is transmitted and stored electronically.

I feel the same about client funds.

• Rule 1.1 requires lawyers to provide competent representation.
• Rule 1.15 is entitled “safekeeping property.”
• I construe the two rules as operating to impose a duty to act competently to safeguard client funds.
• The duty necessarily includes a duty to take reasonable precautions to ensure that client funds are not disbursed to or accessed by people who shouldn’t receive or access them.

In order to take reasonable precautions to safeguard client funds, it’s crucial to understand the various threats to client funds.  Here are 3 common trust account scams and their telltale signs.

1. Client Outside Vermont is Owed a Debt by a Vermonter
2. Compromised E-Mail/Wire Instructions
3. Recipient of Trust Account Check Asks for Wire Instead

Client Outside Vermont is Owed a Debt by a Vermonter.  Client, who is outside of Vermont, contacts Lawyer by e-mail and asks Lawyer for help collecting a debt from someone in Vermont. This version of the scam can take various forms, including:

•  Client recently divorced and moved away (or was deployed).  The marital property was in Vermont.  Ex-spouse sold the property and has refused to send Client’s share of the proceeds.
• Client manufactures & sells goods.  Client shipped goods to Purchaser in Vermont.  Purchaser has refused to pay.

Typically, within a very short time of Lawyer agreeing to represent Client, UPS or FedEx delivers a check from “debtor” to Lawyer.  Client is thrilled at how quickly Lawyer convinced debtor to pay! Client directs Lawyer to deposit the check, keep a chunk, and wire the remainder to Client.  Lawyer deposits the check into trust & disburses Client’s share.

A few weeks later, Lawyer’s bank informs Lawyer that the check from “debtor” was fraudulent.  Money that belonged to other clients is no longer in trust, having vanished with the wire to Client.  Trust me, we ain’t in Kansas anymore.  The odds of contacting “Client” and having him or her return the money are not good.

This has happened MULTIPLE times in Vermont over the past year.  Last year, disciplinary counsel recommended that a hearing panel of the Professional Responsibility Board admonish a lawyer who had fallen for this precise scam and improperly disbursed over $400,000 from trust.  The panel rejected the request, concluding that falling for the scam did not rise to the level of an ethics violation.

It’s inconceivable to me that this version of the scam isn’t a violation.  It’s not the equivalent of a football team scoring a touchdown by surprising the defense with a trick play.  It’s Tom Brady throwing a pass to Rob Gronkowski running uncovered down the middle of the field – – with the defenders claiming in the post-game press conference that they didn’t know the Patriots might do that.

To be clear, if Gronkowski is double-teamed but makes an incredible catch of an even more incredible pass, that’s one thing.  On the other hand, the failure to cover Gronkowski as he runs down the middle of the field amounts to a failure to take reasonable precautions against a touchdown pass byTom Brady.

Compromised E-Mail/Wire Instructions.  This version scam typically targets real estate closings.  Attorney holds, or soon will hold, Seller’s proceeds. Attorney receives an e-mail instructing Attorney to wire the proceeds to an account that is different from any account Seller may have previously provided to Attorney.

In one version of this scam, the e-mail account is fake.  For example, let’s pretend I am the Seller.

My e-mail address is michael.kennedy@vermont.gov.  Attorney holds the proceeds of the sale of my house.  Attorney receives an e-mail from micheal.kennedy@vermont.gov instructing Attorney to wire the proceeds to an account that is not the same account that I previously provided to Attorney.

Do you see the scam? If not, here’s a hint.  My name is Michael.  Look closely at how I spelled my first name in the 2nd email address.

This happened in northern Vermont last year.  Seller’s attorney wired the funds after receiving an e-mail that appeared to be from Seller, but was from Seler.  In a stroke of incredible good fortune, Seller happened to walk into Attorney’s office within minutes of Attorney wiring the funds.  They quickly figured out what had happened, contacted Attorney’s bank, and stopped the wire.

In another version of this scam, the e-mail is actually from Seller or Seller’s attorney, but the account has been hacked/compromised.  The e-mail includes new wiring instructions and is often followed-up by a phone call from a number that’s been hacked to appear as if it’s from Seller or Seller’s attorney.  Like the others, this version of the scam recently caught a Vermont lawyer.

When wiring instructions are changed by e-mail or phone call, take the time to confirm the change by speaking with someone who you know (a) is who they say they are; and, (b) has the authority to make the change.

The North Carolina State Bar issued a warning about this version of the scam.   Please read the warning.  In my view, the duties that it highlights are as applicable in Vermont as they are in North Carolina.

Recipient of Trust Account Check Asks for Wire Instead.  This has been going on for years.  Attorney delivers a trust account check.  The recipient asks Attorney for a wire instead.

Alarm bells should go off whenever you deliver a check and the recipient asks that you disburse by wire instead.

Even if this happens at the closing table, and the request for a wire comes 3 seconds after you handed a trust account check to Seller, beware!  Without you noticing, Seller might have used a mobile device to scan and “deposit” the check.  When you take it back and send a wire instead, the money could be gone TWICE from your trust account. Money that belongs to other clients.

This too happened many years ago in Vermont.  Client arrived at Lawyer’s office to pick up a check.  Lawyer handed the check to Client.  Client left the office, but came back in about a minute later.  Client gave the check back to Lawyer and asked for a wire.  Lawyer took back the check, ripped it up, and wired the funds.

In the parking lot, Client had used an app to “cash” the check.

Key takeaway: your antennae should be tuned into any situation in which you deliver funds by trust account check & the payee later asks for them by wire instead.

Again, I do not think we’re far from the day when a lawyer who falls for a scam will be disciplined.  My thinking mirrors the conclusion reached by the North Carolina State Bar in Inquiries #4 & #5 of 2015 Formal Opinion 6.  As the NC Bar stated:

• a lawyer has a duty to implement reasonable security measures to protect client funds;
• a lawyer has a duty to stay abreast of the risks associated with online banking and to actively maintain end-user security at the law firm, including by non-legal staff; and,
• the failure to verify a disbursement change constitutes a failure to use to reasonable precautions to protect client funds.

I understand that scams are sophisticated and ever-evolving.  But most scams share telltale signs.  At some point, we’re going to have accept the old adage: fool us once, shame on you.  Fool us twice, shame on us.

Trust Account Scams: they won’t be an excuse for long.

Re-posted on May 24, 2017 to reinforce the message and because I inadvertently posted a draft version last night.

I am scheduled to present several CLE programs on various topics between now and the end of June.  At each, no matter my assigned topic, I will use some of the time to warn about trust account scams.

At the seminars, I will be very clear: in my opinion, we’re not far from the day when “but I was scammed!” will not excuse a violation of the rules.  It might mitigate the ultimate sanction, but it will not excuse the failure to safeguard client funds.

By way of analogy, I’ve used this blog to stress the duty to safeguard client information.

With respect to client information:

• Rule 1.1’s duty of competence includes a duty to act competently to protect client communications.
• Rule 1.6 prohibits a lawyer from disclosing “information relating to the representation” absent client consent.
• Rules 1.1 and 1.6 operate to impose a duty to take reasonable precautions to ensure that client information is not disclosed to or accessed by people who shouldn’t receive or access it.
• The duty necessarily includes taking reasonable precautions to safeguard client information that is transmitted and stored electronically.

I feel the same about client funds.

• Rule 1.1 requires lawyers to provide competent representation.
• Rule 1.15 is entitled “safekeeping property.”
• I construe the two rules as operating to impose a duty to act competently to safeguard client funds.
• The duty necessarily includes a duty to take reasonable precautions to ensure that client funds are not disbursed to or accessed by people who shouldn’t receive or access them.

In order to take reasonable precautions to safeguard client funds, it’s crucial to understand the various threats to client funds.  Here are 3 common trust account scams and their telltale signs.

1. Client Outside Vermont is Owed a Debt by a Vermonter
2. Compromised E-Mail/Wire Instructions
3. Recipient of Trust Account Check Asks for Wire Instead

Client Outside Vermont is Owed a Debt by a Vermonter.  Client, who is outside of Vermont, contacts Lawyer by e-mail and asks Lawyer for help collecting a debt from someone in Vermont. This version of the scam can take various forms, including:

•  Client recently divorced and moved away (or was deployed).  The marital property was in Vermont.  Ex-spouse sold the property and has refused to send Client’s share of the proceeds.
• Client manufactures & sells goods.  Client shipped goods to Purchaser in Vermont.  Purchaser has refused to pay.

Typically, within a very short time of Lawyer agreeing to represent Client, UPS or FedEx delivers a check from “debtor” to Lawyer.  Client is thrilled at how quickly Lawyer convinced debtor to pay! Client directs Lawyer to deposit the check, keep a chunk, and wire the remainder to Client.  Lawyer deposits the check into trust & disburses Client’s share.

A few weeks later, Lawyer’s bank informs Lawyer that the check from “debtor” was fraudulent.  Money that belonged to other clients is no longer in trust, having vanished with the wire to Client.  Trust me, we ain’t in Kansas anymore.  The odds of contacting “Client” and having him or her return the money are not good.

This has happened MULTIPLE times in Vermont over the past year.  Last year, disciplinary counsel recommended that a hearing panel of the Professional Responsibility Board admonish a lawyer who had fallen for this precise scam and improperly disbursed over $400,000 from trust.  The panel rejected the request, concluding that falling for the scam did not rise to the level of an ethics violation.

It’s inconceivable to me that this version of the scam isn’t a violation.  It’s not the equivalent of a football team scoring a touchdown by surprising the defense with a trick play.  It’s Tom Brady throwing a pass to Rob Gronkowski running uncovered down the middle of the field – – with the defenders claiming in the post-game press conference that they didn’t know the Patriots might do that.

To be clear, if Gronkowski is double-teamed but makes an incredible catch of an even more incredible pass, that’s one thing.  On the other hand, the failure to cover Gronkowski as he runs down the middle of the field amounts to a failure to take reasonable precautions against a touchdown pass byTom Brady.

Compromised E-Mail/Wire Instructions.  This version scam typically targets real estate closings.  Attorney holds, or soon will hold, Seller’s proceeds. Attorney receives an e-mail instructing Attorney to wire the proceeds to an account that is different from any account Seller may have previously provided to Attorney.

In one version of this scam, the e-mail account is fake.  For example, let’s pretend I am the Seller.

My e-mail address is michael.kennedy@vermont.gov.  Attorney holds the proceeds of the sale of my house.  Attorney receives an e-mail from micheal.kennedy@vermont.gov instructing Attorney to wire the proceeds to an account that is not the same account that I previously provided to Attorney.

Do you see the scam? If not, here’s a hint.  My name is Michael.  Look closely at how I spelled my first name in the 2nd email address.

This happened in northern Vermont last year.  Seller’s attorney wired the funds after receiving an e-mail that appeared to be from Seller, but was from Seler.  In a stroke of incredible good fortune, Seller happened to walk into Attorney’s office within minutes of Attorney wiring the funds.  They quickly figured out what had happened, contacted Attorney’s bank, and stopped the wire.

In another version of this scam, the e-mail is actually from Seller or Seller’s attorney, but the account has been hacked/compromised.  The e-mail includes new wiring instructions and is often followed-up by a phone call from a number that’s been hacked to appear as if it’s from Seller or Seller’s attorney.  Like the others, this version of the scam recently caught a Vermont lawyer.

When wiring instructions are changed by e-mail or phone call, take the time to confirm the change by speaking with someone who you know (a) is who they say they are; and, (b) has the authority to make the change.

The North Carolina State Bar issued a warning about this version of the scam.   Please read the warning.  In my view, the duties that it highlights are as applicable in Vermont as they are in North Carolina.

Recipient of Trust Account Check Asks for Wire Instead.  This has been going on for years.  Attorney delivers a trust account check.  The recipient asks Attorney for a wire instead.

Alarm bells should go off whenever you deliver a check and the recipient asks that you disburse by wire instead.

Even if this happens at the closing table, and the request for a wire comes 3 seconds after you handed a trust account check to Seller, beware!  Without you noticing, Seller might have used a mobile device to scan and “deposit” the check.  When you take it back and send a wire instead, the money could be gone TWICE from your trust account. Money that belongs to other clients.

This too happened many years ago in Vermont.  Client arrived at Lawyer’s office to pick up a check.  Lawyer handed the check to Client.  Client left the office, but came back in about a minute later.  Client gave the check back to Lawyer and asked for a wire.  Lawyer took back the check, ripped it up, and wired the funds.

In the parking lot, Client had used an app to “cash” the check.

Key takeaway: your antennae should be tuned into any situation in which you deliver funds by trust account check & the payee later asks for them by wire instead.

Again, I do not think we’re far from the day when a lawyer who falls for a scam will be disciplined.  My thinking mirrors the conclusion reached by the North Carolina State Bar in Inquiries #4 & #5 of 2015 Formal Opinion 6.  As the NC Bar stated:

• a lawyer has a duty to implement reasonable security measures to protect client funds;
• a lawyer has a duty to stay abreast of the risks associated with online banking and to actively maintain end-user security at the law firm, including by non-legal staff; and,
• the failure to verify a disbursement change constitutes a failure to use to reasonable precautions to protect client funds.

I understand that scams are sophisticated and ever-evolving.  But most scams share telltale signs.  At some point, we’re going to have accept the old adage: fool me once, shame on you.  Fool me twice, shame on me.

Monday Morning Answers: #72

Wow! Huge honor roll this week.  Great job readers!

Last Friday’s questions are here.  Today’s answers follow the Honor Roll.

Honor Roll

• Matthew Anderson, Pratt Vreeland Kennelly & White
• Penny Benelli, Dakin & Benelli
• Beth DeBernardi, ALJ, Dept. of Labor
• Anne Day, Esq.
• Andrew Delaney, Martin & Associates
• Laura Gorsky, Law Office of David Sunshine
• Robert Grundstein, Esq.
• Glenn Jarrett, Jarrett & Luitjens
• Keith Kasper, McCormick, Fitzpatrick, Kasper & Burchard
• Patrick Kennedy, First Brother, Dealer.Com
• Nicole Killoran, Vermont Law School
• Aileen Lachs, Mickenberg, Dunn, Lachs & Smith
• Jordana Levine, Marsicovetere & Levine
• Pam Marsh, Marsh & Wagner
• Lon McClintock, Esq.
• Jeffrey Messina, Bergeraon, Paradis & Fitzpatrick
• Hal Miller, First American, Oceanside Division
• Herb Ogden, Esq.
• David Sunshine, Esq.
• Emily Tredeau, Office of the Defender General

Stats

• Easiest – Question 1
• Hardest – Question 2

Answers

Question 1

Attorney called me with an inquiry. I listened. Then, I asked:

• “Is the new case the same as or substantially related to the old one?”

What general area of legal ethics did Attorney call to discuss?

• A.   Solicitation
• B.   File Retention
• C.   Conflicts of Interest, Rule 1.9(a)
• D.   Fee Agreements

Question 2

Which does not belong?

• A.  The client agreed.  
• B.   The result obtained
• C.   The lawyer’s experience, reputation, and ability
• D.   The skill requisite to perform the service properly

Rule 1.5 requires fees to be reasonable.  Rule 1.5(a) lists the factors that go into the analysis of whether a fee is reasonable.  Choices B, C, D are listed. Choice A is not.  It is widely accepted that the fact that a client agreed to a fee does not, standing alone, render the fee reasonable.

Question 3

A law firm deposited its own money into its trust account.  Which is most accurate?

• A.  Each lawyer in the firm violated the Rules of Professional Conduct
• B.  The firm’s partners (or equivalent thereof) violated the Rules of Professional Conduct
• C.  It depends whether the deposit exceeded $1000
• D.  It depends whether the deposit was in an amount reasonably necessary to pay bank charges to the account.  See, Rule 1.15(b).  The rule allows lawyers to deposit their own funds into trust in an amount reasonably necessary to pay bank charges on the account.  The fact that the question asked about a firm does not change the analysis.

Question 4 (Fill in the blank)

Lawyer called me with an inquiry.   I listened.  Then, I said

“As of now, there’s no duty to ENCRYPT routine electronic client communications. But, it won’t be long until the failure to do so is deemed ‘unreasonable’.”  See, Last Thursday’s Post: Encryption & The Evolving Duty to Safeguard Client Information

Question 5

This week’s question 5 is dedicated to a long-time reader.

John Luther Long was born on New Year’s Day in 1861.   He was admitted to the Philadelphia Bar in 1881.

I have no idea if Attorney Long was a competent or ethical lawyer.  However, it seems that he was a competent writer.

In 1898, Attorney Long published a short story about a journey of U.S. Naval Officer Benjamin Franklin Pinkerton.  The story caught the attention of Giacomo Puccini. In turn, Puccini wrote an opera based on Attorney Long’s story.

Puccini’s opera is one of the most famous operas of the 20th century.

Your mission, should you choose to accept it, is to identify the short story/opera.

Madame Butterfly.   Attorney Long’s wiki entry is here.  Puccini’s is here.

Was that Wrong?

Was That Wrong is a semi-regular column on Ethical Grounds. The column features stories of the absurd & outrageous from the world of legal ethics and attorney discipline. My aim is to highlight misconduct that I hope you’ll instinctively avoid without needing me to convene a CLE that cautions you to do so.

The column is inspired by the “Red Dot” episode of Seinfeld. In the episode, George Costanza has sex in his office with a character known only as “the cleaning woman.”  His boss finds out.  Here’s their ensuing exchange :

(Scene) In the boss’ office.

• Boss: I’m going to get right to the point. It has come to my attention that you and the cleaning woman have engaged in sexual intercourse on the desk in your office. Is that correct?
• George: Who said that?
• Boss: She did.
• George: Was that wrong? Should I have not done that? I tell you I gotta plead ignorance on this thing because if anyone had said anything to me at all when I first started here that that sort of thing was frowned upon, you know, cause I’ve worked in a lot of offices and I tell you people do that all the time.
• Boss: You’re fired.
• George: Well you didn’t have to say it like that.

The full script is HERE.  The scene is HERE.

Today’s version of a lawyer channeling Costanza comes to us from the Northern District of Illinois.  As reported by the ABA Journal, the lawyer’s disrespectful & unprofessional conduct resulted in the court’s Executive Committee suspending her from the court’s general bar for 90 days and from its trial bar for 1 year.  The order is here.

Someday I hope to launch a YouTube channel tied to this blog.  When I do, here’s how I imagine scripting today’s entry when I adapt Was That Wrong to the screen.

• Executive Committee:  It has come to our attention that you were continuously disruptive during a two-week trial, and that you often reacted to unfavorable testimony by rolling your eyes, shaking your head, and commenting on it in the presence of the jury.  We also understand that, after the court overruled an objection that you made, you rolled your eyes and said, ‘Fucking bullshit.’ ” Is that correct?
• Lawyer: Who said that?
• Executive Committee: The judge. And it’s in the transcript.
• Lawyer: Was that wrong? Should I have not done that? I tell you I gotta plead ignorance on this thing because if anyone had said anything to me at all when I first started appearing in federal court that that sort of thing was frowned upon, you know, cause I’ve had a lot of cases and I tell you . . . umm. . . .
• Executive Committee: Suspended!
• Lawyer: Well, you didn’t have to say it like that.

As an aside, a nugget buried in the order made me spit out my coffee and I wasn’t even drinking any when I read it.  On page 2, the Executive Committee noted that:

• “In mitigation, [the lawyer] has apologized and set forth a detailed plan to prevent a recurrence of the violation.”

What, exactly, is a “detailed plan” not to swear at the judge when your objections are overruled?

Honestly, I think that even Bart Simpson knows the plan:

************************************************************

Here are the prior entries in Was That Wrong?

• Conspiring with police to have your paralegal set up opposing counsel for a DUI mid-trial
• Bringing a gun to your disbarment hearing
• Sexting a Client
• Defrauding Investors, with Client Funds as Collateral
• Outrageous Falsehoods on a Resume
• Judge Orders Attorney Handcuffed to Jury Box

 

Five for Friday: #72

Welcome to #72!

I like to ease into the #fiveforfriday columns with blurbs related to the week’s number.

Math fascinates me.  More specifically, I’m fascinated by my utter lack of understanding of math. Like some (many?) of you, that’s why I went to law school.  But here’s one that even a lawyer can understand.

It gives me great joy to tell you that 72 is a Harshad Number!

A Harshad Number is a number that is divisible by the sum of its digits. So, in this case, 72 is a Harshad Number because it is divisble by (7+2).

For you lawyer/poli sci majors, that means that 72 is divisible by 9, with 9 being the sum of 7 & 2.

For you lawyer/history majors, that means “the answer is 8.”

Onto the quiz!

The rules:

• There are none. It’s open book, open search engine, use whatever resource you have.  Reading the rules is a good thing!
• Exception: Question 5.  We try to play that one honest.
• Team entries welcome.  Creative team names encouraged.
• Unless stated otherwise, the Vermont Rules of Professional Conduct apply
• Please e-mail answers to michael.kennedy@vermont.gov
• Please do not use the “comment” feature to submit your answers (competence includes tech competence)
• I will post the answers Monday, along with the week’s Honor Roll
• Please consider sharing the quiz with friends
• Hashtag & share: #fiveforfriday

Question 1

Attorney called me with an inquiry. I listened. Then, I asked:

• “Is the new case the same as or substantially related to the old one?”

What general area of legal ethics did Attorney call to discuss?

• A.   Solicitation
• B.   File Retention
• C.   Conflicts of Interest
• D.   Fee Agreements

Question 2

Which does not belong?

• A.  The client agreed
• B.   The result obtained
• C.   The lawyer’s experience, reputation, and ability
• D.   The skill requiste to peform the service properly

Question 3

A law firm deposited its own own money into its trust account.  Which is most accurate?

• A.  Each lawyer in the firm violated the Rules of Professional Conduct
• B.  The firm’s partners (or equivalent thereof) violated the Rules of Professional Conduct
• C.  It depends whether the deposit exceeded $1000
• D.  It depends whether the deposit was in an amount reasonably necessary to pay bank charges to the account

Question 4 (Fill in the blank)

Lawyer called me with an inquiry.   I listened.  Then, I said

“As of now, there’s no duty to ____________ routine electronic client communications. But, it won’t be long until the failure to do so is deemed ‘unreasonable’.”

Question 5

This week’s question 5 is dedicated to a long-time reader.

John Luther Long was born on New Year’s Day in 1861.   He was admitted to the Philadelphia Bar in 1881.

I have no idea if Attorney Long was a competent or ethical lawyer.  However, it seems that he was a competent writer.

In 1898, Attorney Long published a short story about a journey of U.S. Naval Officer Benjamin Franklin Pinkerton.  The story caught the attention of Giacomo Puccini. In turn, Puccini wrote an opera based on Attorney Long’s story.

Puccini’s opera is one of the most famous operas of the 20th century.

Your mission, should you choose to accept it, is to identify the short story/opera.

 

Encryption & The Evolving Duty to Safeguard Client Information

In December 2015, I posted To Encrypt or not to Encrypt?   

The post began with an analysis of how Rules 1.1 and 1.6 work together to impose a duty to act competently to safeguard client information, including information that is stored and transmitted by electronic means.

From there, I walked readers through a series  advisory ethics opinions.  Over time, the opinions moved from concluding that the duty to act competently to safeguard client information did not include a duty to encrypt to concluding that it might.

I stated that, at the very least, lawyers had a duty to warn clients about the risks associated with unencrypted electronic communications.  Then, I wrote:

• “My sense is that we will soon reach, if we haven’t already reached, a day upon which it will not be considered reasonable to transmit client information via unencrypted email.  Encryption is not as difficult or expensive as it used to be and more secure alternatives are readily available.”

Last week, that day drew closer.

On May 11, the ABA’s Standing Committee on Ethics & Professional Responsibility issued Formal Opinion 477: Securing Communication of Protected Client Information. The opinion analyzes the duties imposed by Rules 1.1 and 1.6.  It reviews a series of advisory ethics opinions and discusses the trend towards requiring lawyers to encrypt electronic client communications.

Opinion 477 concludes that lawyers must make reasonable efforts to safeguard client information.  It states that “[w]hat constitutes reasonable efforts is not susceptible to a hard and fast rule, but rather is contingent upon a set of factors.”  That is, lawyers must employ a “fact-based analysis” when transmitting & storing client information.  Factors in the analysis include:

• the sensitivity of the information,
• the likelihood of disclosure if special safeguards are not used,
• the cost of using special safeguards, and
• the difficulty of using special safeguards.

With respect to these factors, the opinion concludes that lawyers must, on a case-by-case basis, constantly analyze how they communicate electronically about client matters . . . to determine what effort is reasonable.”

The opinion makes clear that lawyers must remain cognizant that the analysis will change as technology evolves. In other words, what’s reasonable today might not be reasonable in 2020.

More importantly, what was unreasonable in 1997 might be reasonable today.  For example, as the opinion notes, “a fact-based analysis means that particularly strong protective measures, like encryption, are warranted in some circumstances.”

The opinion suggests that the duty to safeguard client communications likely requires lawyers to:

• Understand the nature of the threat,
• Understand how information is transmitted & where it is stored,
• Understand & use reasonable electronic security measures,
• Determine how electronic communications should be protected,
• Label communications as “privileged & confidential,”
• Train partners, associates, and nonlawyer assistants in information security, and
• Exercise due diligence when choosing a vendor.

For more on each, see pages 5-9 of formal opinion 477.

In my view, the opinion sends a strong signal that the failure to use basic and widely available tools violates the duties imposed by Rules 1.1 and 1.6.  Those tools include:

• Within an office, using adequate login passwords
• Changing those passwords on a regular basis
• Password protecting email attachments
• Using secure WiFi (as in, not the coffee shop’s Wifi)
• Installing & updating firewalls, anti-malware, anti-spyware, and anti-virus software
• Using client portals instead of email
• Using established & secure cloud-based file storage vendors to send, exchange, and view documents
• Remembering that client information is on, or has been accessed from, multiple devices: cell phones, tablets, remote log-ins

If you take anything away from this, as usual, let it be my refrain that “competence includes tech competence.”  For, if you find yourself in times of trouble, it will not be acceptable to respond “but that tech stuff is too complicated!”

It isn’t.

As technology evolves, so evolves the standard of “reasonable efforts to safeguard client information.”

Have you evolved?

 

 

 

 

Tech Competence: It includes more than you might think.

Last week I stepped off my e-soapbox and blogged that Tech Competence Isn’t Everything: Soft Skills Matter.

Today I’m e-jumping back onto the e-soapbox.  (Sadly, my e-vertical is infinitely higher than my real vertical was in my playing days.)

Tech encompasses things less techy than you think.

The Legal Rebels section of the ABA Journal has a very interesting new post from Ivy Grey.  It’s here:  Not competent in basic tech? You could be overbilling your clients – and be on shaky ground.

I recommend reading the entire post.  But, here are 3 sections that caught my eye.

• “Data security and e-discovery may get attention in the press, but lawyers should not neglect learning about the mundane tools that they use every day. Document preparation, drafting, and polishing consumes a significant amount of every lawyer’s time regardless of practice area. And MS Word is more sophisticated with greater capabilities for meeting our complex needs than you might otherwise think. It is an area ripe for learning. Ignoring that touches on bigger issues like unearned fees.”
• “Technology competence is broad. However, its definition must include the tools that lawyers use to practice law, such as case management software, document management software, billing software, email, a PDF system with redacting capabilities, and the MS Office Suite, particularly MS Word. Any lawyer who does not develop basic skills in these six types of programs will risk ethical rebuke”
• “By remaining technologically incompetent, lawyers are knowingly wasting clients’ time and money due to lack of computer skills. That is unacceptable. It is time to recognize that inefficient use of technology, such as MS Word, could mean overbilling a client. When lawyers choose not to learn technology because the old way of doing things leads to more billable hours, they are not serving their clients fairly.”

Here’s my takeaway.

Rule 1.1 mandates competence.  Rule 1.5 prohibits unreasonable fees.  At some point, an inability to use the most basic tech tools causes an attorney to spend an unreasonable amount of time on a task.  Billing for that time might violate Rule 1.5.

Food for thought.