The More Things Change…

Since becoming bar counsel in June 2012, I’ve handled 4,421 ethics inquiries.  By far, the most common inquiry topic has been conflicts of interest.  Questions relating to conflicts have accounted for slightly more than half of all inquiries, with “former client” conflicts constituting the largest subset within the category.  Common questions:

  • Can I take a case against a former client?
  • I represent Buyer. I’ve known Seller for years.  She wants me to represent her. Can I?
  • For the past 10 years or so, I’ve represented a couple. Business stuff, some trusts, a small PI claim, nothing that either doesn’t know about.  They’re getting divorced.  Can I represent Wife?

This morning I realized that I needed to post today.  I was too busy watching the early coverage of The British Open to concentrate, so I figured I’d cheat with a “Throwback Thursday” post.

In between putts & wayward drives, I wondered what issues bar counsel types were dealing with 50 years ago.  So, I searched “legal ethics 1967.” I figured I’d find something simple, and post “here’s what was going on a long time ago.”

The top result was a compendium of the ethics opinions issued by the Indiana State Bar Association in 1967.

Opinion 1 is the genesis of this post’s title.

(Apparently, in 1967, lawyers had yet to resolve to use 37 words when 1 would do.  So, here’s the opinion, in its entirety.)

Opinion No. 1 of 1967
Lawyer Not Forever Barred From
Taking Case Against A Former Client

The Committee was asked its opinion by an attorney whose present
client wished to bring suit against a person who at one time had
been a client of the attorney.

Mr. Henry S. Drinker, in his book Legal Ethics, at page 112, stated:
“One may sue a former client if his representation is ended and. the
matter does not involve confidential communications.” An attorney
is not forever barred from suing a former client, so long as the present
matter was not connected with, and did not arise out of, the former
employment, and so long as there is no breach of confidential information
obtained during the former attorney-client relationship.

The opinion mirrors today’s rule.

Rule 1.9 prohibits a lawyer from representing a person:

  • in the same or a substantially related matter in which the lawyer represented a former client and in which the person’s interests are materially adverse to the interests of a former client, unless the former client gives informed consent, confirmed in writing.

Even if the matters are not the same or substantially related, Rule 1.9(c) prohibits a lawyer from using or revealing information relating to the representation of a former client.

Nothing has changed.

Next, I wondered what Vermont’s hot  topics in ethics were back in the day.  The Vermont Bar Association publishes advisory ethics opinions.  The earliest available are from 1978.  (As regular reader Hal Miller knows, it was a year that shall forever live in infamy on this blog.  More on that tomorrow.)

The VBA released 3 advisory ethics opinions in 1978.  They dealt with conflicts, conflicts, and conflicts.  Two of the three involved questions I continue to receive to this day.

Opinion 78-04 concluded that it is improper to represent both buyer & seller in real estate transaction.  I agree with the conclusion.

Opinion 78-03 concluded that it is improper for a lawyer who has represented a couple to represent one in a divorce if the issues in the divorce are substantially related to the former representation of the couple.  Again, I agree.  Comment 3 to Rule 1.9 addresses this very question.

I’m not complaining. If you have questions about a potential conflict, don’t hesitate to call, text, or e-mail.  I bring it up only because I’m struck by the fact that conflicts always have been and likely always will be the most common, but trickiest, ethics issue confronted by lawyers.

Actually, let’s be honest: I bring it up mainly I needed to post a blog about something- anything! – to drive traffic towards tomorrow’s #fiveforfriday quiz.

conflict

 

 

 

 

 

Confused by Conflicts? Think “Tug of War”

I coached varsity basketball for 15 years.  One thing I learned is that different players have different learning styles.

For example, I’d wager that the play I ran most often in my career was one we called “Texas.”  We had various ways to start “Texas,” but the critical action always came from the same set.

Texas

 

There are different ways to teach kids a play. For some, drawing it on a whiteboard (above) was sufficient.  Others needed to watch it demonstrated on the court.  Still others had to learn by doing; that is, walk through the play on the court in order to learn it.  We’d use each method.

I don’t want you to have to walk through a disciplinary investigation in order to learn what a conflict of interest is.  However, to help you avoid conflicts, I’m not going to make you read a blog clogged with cites to Rules 1.7, 1.81.9, and 1.10.  For all I know, that wouldn’t help anyone learn anything.  Instead, I’m going to try a visual.  And that’s where “Tug of War” comes in.

Unfortunately, this is the best visual I could find.

Tug of War

Most of you should be familiar with the rules of Tug of War.  If not, look at the picture.

There are 3 white lines in the dirt.

  • Line 1 is at the feet of the guy who is at the front of the team that is closest to us.
  • Line 2 is in the middle.  The ref is standing on it.
  • Line 3 is at the feet of the team farthest from us.

There’s piece of red tape in the middle of the rope.  At the start of the match, the piece of red tape is positioned over Line 2.  The team that pulls the piece of red tape over Line 1 or Line 3 wins.

Turning to conflicts, as a lawyer, you’re the piece of red tape.  (No pun intended).

Now, let’s pretend the team at the top of the picture is your client.  If there is nobody down here at the bottom pulling you towards Line 1, it’s likely that you’re conflict-free.

But, picture this: someone or something is tugging you towards Line 1.  Who or what? Could be anything.  For purposes of this blog, I want you to imagine that the tug is a duty that you owe to someone other than your client (the team at the top of the picture). For instance:

  • duties to another client;
  • duties to a former client;
  • duties to a third person; or,
  • a personal interest of yours

That tug – someone or something pulling you away from your client – probably has interests that conflict with your client’s.  Stated differently, do the interests of the two teams in the picture align? No, they don’t.  They conflict.

Your client isn’t required to tug you towards Line 3.  Rather, your client is entitled to representation free of any conflicting interests tugging you towards Line 1.

Feeling tugged?  You might have a conflict.  You’ll need to consider whether to decline representation or, if representation has commenced, whether to withdraw.

Oh, “Texas” was a damn good play.

 

 

 

 

Attorney-Client Sex: It’s Time for a Rule

It’s time to raise this issue.  Again.

On July 10, the Professional Responsibility Board’s duties will expand to include reviewing and recommending changes to the Rules of Professional Conduct.  For many years, proposed amendments to the RPCs have flowed through the Advisory Committee on Civil Rules.

I expect that one of the Board’s first recommendations will be to propose a rule that bans attorney-client sexual relationships that do not pre-date the representation.

The Board has long felt that Vermont should join the 31 other states that have specific bans.  In January 2015, the Board recommended that the Court adopt a specific ban.  I supported the recommendation, as did then disciplinary counsel.  At the time, each of us had more than 13 years of experience prosecuting disciplinary cases, and first-hand experience with the challenges posed by the lack of a bright-line rule when prosecuting a lawyer who exploits the attorney-client relationship.

Please take the time to answer this poll question: should the PRB propose a rule that specifically bans lawyer client sexual relationships?  You can vote HERE.

Need information before you vote?  I blogged on the issue HERE and HERE.   For the click-averse, I’m pasting in the blog that I posted in December 2015.  It recounts the history of the Board’s efforts to pass a “bright-line” rule and includes some of the arguments for & against an affirmative ban.

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

The ABA has adopted Model Rules of Professional Conduct.  For the most part, Vermont’s rulestrack the model rules.  When it comes to sexual relationships between lawyers and their clients, Vermont’s rules do not track the model rule.

The model rules include a specific ban on client-lawyer sexual relationships.  It’s in Model Rule 1.8(j).  It reads:

  • “(j) A lawyer shall not have sexual relations with a client unless a consensual sexual relationship existed between them when the client-lawyer relationship commenced.”

Thirty-one states have followed the ABA’s lead and adopted specific bans on client-lawyer sexual relationships.  Vermont has not.

While not specifically prohibited by rule, Comment [17] to V.R.Pr.C. 1.8 addresses the “Client-Lawyer Sexual Relationship.”  It’s wordy, but important. It says:

  • “The relationship between the lawyer and client is a fiduciary one in which the lawyer occupies the highest position of trust and confidence.  The relationship is almost always unequal; thus, a sexual relationship between and client can involve unfair exploitation of the lawyer’s fiduciary role, in violation of the lawyer’s basic ethical obligation not to use the trust of the client to the client’s disadvantage.  In addition, such a relationship presents a significant danger that, because of the lawyer’s emotional involvement, the lawyer will be unable to represent the client without impairment of the exercise of independent professional judgment.  Moreover, a blurred line between the professional and personal relationships may make it difficult to predict to what extent client confidences will be protected by the attorney-client evidentiary privilege, since client confidences are protected by privilege only when they are imparted in the context of the client-lawyer relationship.  For all of these reasons, lawyers are cautioned that sexual relations with a current client could give rise to claims of incompetence under Rule 1.1, of lack of diligence under Rule 1.3, of a conflict with the lawyer’s personal interests under Rule 1.7(a)(2), of using client information to the client’s disadvantage under Rule 1.8(b), of conduct involving dishonesty or the like under Rule 8.4(c), or of conduct prejudicial to the administration of justice.”

(Okay, although this is a serious topic, lawyers don’t need to be so serious all the time. So, an aside: the very first “caution” against sexual relationships with clients was that such relationships might give rise to claims of incompetence.  The unintentional comedy is hilarious.)

In any event, in Vermont, for a sexual relationship with a client to be an ethics violation, the lawyer must do something else wrong. That is, disciplinary counsel would have to prove, for example, that the relationship created an impermissible conflict of interest under Rule 1.7(a)(2).  The conflict being that risk that the relationship would materially limit the lawyer’s duties to the client.

In 2009, the Civil Rules Committee amended some of Vermont’s ethics rules so as to conform with the ABA Model Rules.  The Committee intentionally omitted Mode Rule 1.8(j).  According to the Reporter’s Notes to the 2009 Amendments, the

  • “omission [was] based on the grounds that an absolute prohibition of lawyer-client sexual relations is both an invasion of privacy and a duplication of the effect of other rules requiring loyal and competent representation, as noted in the revised text of Comment [17].

Earlier this year, the Professional Responsibility Board (“PRB”) recommended a series of amendments to the Rules of Professional Conduct.  The recommendation included a proposal that the Supreme Court amend V.R.Pr.C. 1.8 to include the following language:

  • “A lawyer shall not have sexual relations with a client unless a consensual sexual relationship existed between them when the client-lawyer relationship commenced.”

The full text of the recommendation with respect to Rule 1.8 is HERE.

The Court forwarded the PRB’s recommendations to the Civil Rules Committee.

With one exception, the Civil Rules Committee voted to send the  PRB’s recommendations out for notice, comment, and possible adoption.  The exception:  the proposal to amend Rule 1.8 so as to include a specific ban on client-lawyer sexual relationships.

As I understand it, the Committee’s position is the same as it was in 2009, and that is outlined in the Reporter’s Notes to the 2009 Amendments to Rule 1.8.  That is, there is no need for specific ban, that client-lawyer sexual relationships can be prosecuted under other rules.

The upshot: the PRB’s recommendation that the Court adopt a per se ban on client-lawyer sexual relationships was rejected and not published for notice & comment. (note: the Committee voted to publish other proposals from the PRB for notice & comment. Those proposals are HERE).

The debate over whether the ethics rules should include a specific ban on client-lawyer sexual relationships is not new or limited to Vermont.  In 1993, the New Hampshire Bar Association’s Ethics Committee weighed in.  The debate raged in Texas in 2010, with bar eventually rejecting a proposal to enact a specific ban.  Commenting on the Texas debate, this blog post raises various arguments in favor of a per se ban, while this advisory opinion from Virginia, although not calling for a per se ban, sets out “the host of ethical problems” that arise when lawyers and clients have sexual relationships.

To summarize, some of the arguments for a specific ban:

  • protects vulnerable clients from exploitation, coercion, undue influence;
  • keeps lawyers  from providing advice based on clouded judgment;
  • treats lawyers the same as most other licensed professions;
  • it’s clear, not complicated, leaves no wiggle room; and

Some of the arguments against a specific ban:

  • the existing rules work;
  • unnecessary invasion of privacy;
  • jilted clients will file frivolous malpractice/ethics complaints;
  • what about situations in which there’s no danger of a conflict or any other violation?  For example, corporate counsel and CEO, or a lawyer and a sophisticated transactional client.

Question_mark

 

So You Want to Represent Both Buyer & Seller?

Facts:  Mother owns home.  Mother wants to sell home to Son.  Mother & Son agree on the details, without the assistance of counsel.  Mother and Son ask Attorney to handle the purchase & sale, and to represent each of them at closing.

Wait a minute! Is it already April 1?  Mother & Son agreeing on details – of anything – without the assistance of counsel? In what crazy world does that happen?!?!

Anyhow, I digress.  Does Attorney have a conflict? If so, can it be waived?

According to IIlinois State Bar Professional Conduct Opinion 2017-04, the answer is yes there’s a conflict, and it likely cannot be waived.

According to the Illinois State Bar:

  • Representation of a buyer in a real estate transaction is directly adverse to representation of a seller.
  • Thus, Attorney has a conflict.
  • It is not reasonable for Attorney to believe that Attorney will be able to provide competent and diligent represntation to both Mother & Son.
  • Thus, the conflict cannot be waived.

A few relevant passages from the opinion:

  • “Pursuant to Rule 1.7(b)(1), the lawyer must analyze whether the lawyer may reasonably believe that the lawyer will be able to provide competent and diligent representation to each affected client. The question is whether a reasonable lawyer would conclude that the lawyer could provide the required diligence and competence to both the buyer and the seller in the transaction.”
  • ” In our view, if the buyer and the seller have not already executed a valid sales contract, the lawyer could not reasonably believe that he or she could provide competent and diligent representation to both the buyer and the seller. The lawyer could not negotiate on behalf of one client without harming or potentially harming the other client. The lawyer’s obligations and loyalties are so divided that the lawyer could not reasonably believe that the lawyer could provide adequate representation to both parties.”
  • “Even if the parties agree on the terms of the sale, and have already executed the sales contract, we believe that it is highly unlikely that a lawyer could properly represent both the buyer and seller in concluding the transaction. Issues often arise “after the parties have executed the contract and prior to closing that would require the lawyer to give unqualified advice to his or her client.”

Vermont’s Rule 1.7 is identical to the Illinois rule.  In Vermont, “a lawyer shall not represent a client if the representation involves a concurrent conflict of interest.”  Rule 1.7(a).  A concurrent conflict exists:

  • if the representation of a client will be directly adverse to another; Rule 1.7(a)(1), or,
  • if there is a significant risk that the representation of a client will be materially limited by the lawyer’s responsiblities to another. Rule 1.7(a)(2).

So, in Vermont, Attorney has a concurrent conflict:

  • if the representation of Mother will directly adverse to Son; or,
  • if there is a significant risk that the representation of Mother or Son will be materially limited by Attorney’s duties to the other.

If a concurrent conflict exists, Vermont’s 1.7 allows it to be waived if 4 criteria are met. The first is in Rule 1.7(b)(1): Attorney must reasonably believe that Attorney will be able to provide competent and diligent representation to both Mother and Son.

The Illinois State Bar concluded that it would not be reasonable for Attorney to believe such a thing. The opinon cites to the VBA Advisory Ethics Opinion 2004-3.

In the VT opinion, the Vermont Bar Associatioin’s Professional Responsibility Committee concluded that “an attorney may not simultaneously represent a client who is selling a parcel of real property and provide limited representation to the buyer of the same real estate by providing a title insurance policy to such buyer.”

The opinion is not exactly on point with the hypo with which I started this post.  However, the Committee went through exactly the correct analysis. Is there a concurrent conflict? If so, can it be waived.

In addressing the questions, the Comittee referred to an advisory opinion it had issued in 1978: VBA Advisory Ethics Opinion 78-04.  The opinion was rendered pursuant to the old Code of Professional Responsibility, the rules that governed until September 1, 1999.  Under the Code, even when faced with a conflict, a lawyer was allowed to “represent multiple clients if it is obvious that he can adequately represent the interest of each and if each consents to the representation after full disclosure of the possible effect of such representation on the exercise of his independent professional judgment on behalf of each.”  Code of Professional Responsibility, DR-5-105(C).

The Committee concluded that the rule’s two phrases had equal meaning.  That is, “[i]t is important to emphasize, however, that consent – even if knowledgeably given – is not a general panacea to conflicts of interest. It will only vitiate the conflict if ‘it is obvious that [the lawyer] can adequately represent the interest of each.’ ”

From there, the 1978 Committee concluded that:

  • “It is difficult to see how a lawyer could ever make full disclosure in the real estate area given the myriad of problems that may arise. Moreover, real estate transactions often involve parties of different legal sophistication and disclosures suitable to one may be insufficient for the other.”

And, that

  • In [its view], the Committee reaffirms its position that representation of both purchase and seller in a normal ‘arms-length’ real estate transaction is unethical, at least when the representation of neither side is in any way limited.”

Now, perhaps times have changed. And, as did the Illinois and Vermont comittees in each of the three opinions I cited to in my blog, I am not going to try to list each and every situation in which a waiver may be valid under Rule 1.7(b).

All I’m saying is this: if Attorney wants to represent both Mother and Son, I read Rule 1.7(b) as requiring that it be reasonable for Attorney to believe that he can provide competent and diligent representation to each.

As always, let’s be careful out there folks.

Hill Street Blues

 

 

 

Lateral Transfers – Is VT’s Rule too Strict? Part 2.

Last week, I blogged  on lateral transfers, imputed conflicts, and ethical screens.

Consider this hypothetical:

  • Husband and Wife are divorcing
  • Old Firm represents Husband
  • New Firm represents Wife
  • Lawyer works at Old Firm.
  • Lawyer leaves for a job at New Firm

Upon Lawyer’s transfer, will New Firm be disqualified from representing Wife?

In Vermont, the answer is “it depends.”

The applicable rule is V.R.Pr.C. 1.10(a).  The critical question is whether Lawyer participated personally and substantially in Old Firm’s representation of Husband.

  • If the answer is “yes,” the rule imputes Lawyer’s conflict to New Firm and prohibits New Firm from curing the conflict by screening Lawyer.
  • If the answer is “no,” New Firm is not disqualified, even over Husband’s objection. as long as it screens Lawyer.

Last week, comparing the rule to the more lenient ABA Model Rule 1.10, I asked readers whether Vermont’s rule is too strict. I did not receive many responses.

Lateral Transfers: Three Different Approaches

I’ll use the original hypothetical throughout this post.

Jurisdictions are split on the issue.

One approach is to impute conflicts and prohibit screening.  Under this approach, absent Husband’s informed consent to waive the conflict, Lawyer’s conflict is imputed to all attorneys in New Firm and the firm is disqualified.

Other states, allow screening, even without the former client’s consent, but with exceptions.  This is Vermont’s approach.  Lawyer can be screened, but only if Lawyer did not participate personally & substantially in Old Firm’s representation of Husband.   Similarly, New Hampshire, New Firm could screen Lawyer, unless Lawyer “had substantial involvement in, or received substantial material information about, a matter that is ongoing at the time of the firm transfer and that would be the focus of the screening procedures.”  N.H. Rule 1.10(c).  

Finally, still other states allow New Firm to screen Lawyer, even over Husband’s objection, no matter how involved Lawyer was in Old Firm’s representation of Husband.  This is the  ABA approach, as reflected in ABA Model Rule 1.10, and is often referred to as “nonconsenual screening.”

The 2009 Amendment to the ABA Model Rules

Prior to 2009, the ABA Model Rules did not allow firms to screen lateral transfers.  In our hypo, absent Husband’s informed consent to waive a conflict, Lawyer’s conflict was imputed to New Firm and New Firm could no longer represent Wife.

However, upon the recommendation of the Standing Committee on Professionalism Ethics, the House of Delegates amended the rule to allow firms to screen lateral transfers, even over the objection of the affected former client.  The Committee’s Report & Recommendaton includes a majority view and a dissenting minority opinon.

By way of summary, the majority’s points:

  • Nonconsensual screening allows lawyers to switch jobs/enjoy professional mobility.
  • Screening strikes an appropriate balance between protecting the former client’s confidences & allowing lawyers to take jobs of their choosing
  • The rules already allow screening when lawyers move to & from government employment.
  • Several states already allow screening when private lawyers switch firms.
  • Screening works, as evidenced by the lack of disciplinary complaints & prosecutions in the states that allow it.

The dissent argued against nonconsensual screening, concluding:

  • “Current rule 1.10 protects former clients against the risk of adverse use or disclosure of confidential information. The proposed amendment substitutes the law firm’s resolution of this risk for the client’s. It catapults the lawyer’s interests over the former client’s determination at precisely the time the lateral lawyer and the new firm have their own and their client’s interests understandably in mind. Lawyers should consult with former clients about these matters and be bound by the client’s determination, which is precisely what current Model Rule 1.10 requires.”  Report & Recommendation, p. 17.

Screening Procedures

Jurisidictions that allow nonconsensual screening generally require the same types of screening procedures.

in Vermont, if Lawyer did not participate personally and substantially in Old Firm’s representation of Husband, New Firm must comply with the three subsections of Rule 1.10(a)(2).  Generally, New Firm must:

  1. Screen Lawyer from any participation in the matter and not letter Lawyer share in any fee generated by the matter; and,
  2. Provide Old Firm with written notice & description of the screening procedures that New Firm will use; and,
  3. Certify compliance with the screening procedures  periodically throughout the life of the case.

The ABA/BNA Lawyers Manual on Professional Conduct has written on The Elements of an Effective Ethics Screen.

Is Screening Enough?

Nonconsensual screening raises concerns regarding loyalty and confidentiality.  In our hypo, Lawyer will have “switched sides” in the Husband v. Wife dispute, and might share information about Husband with New Firm.

It would be a violation of the rules for New Lawyer to share the information.  For example, Rule 1.9(c)(1) prohibits Lawyer from using any information to Husband’s disadvantage.  Rule 1.9(c)(2) prohibits Lawyer from revealing any information about the representation.

To some, that’s not enough.

For example, the ABA Section on Litigation published this post shortly after the ABA House of Delegates adopted Model Rule 1.10.  The post quotes a delegate who opposed nonconsensual screening as saying:

  • “Today the ABA abandoned its commitment to client loyalty and confidentiality for nothing more than an undemonstrated need for lawyer convenience . . . Today, we compromised our birth right.”

The post goes on to quote Robert L. Rothman. At the time, Rothman was the Chair of the ABA Section of Litigation.

  • “Unfortunately, under new Model Rule 1.10, clients who believe their interests are placed at risk when their former lawyer moves to an adverse law firm no longer can merely refuse to waive the conflict created by the lateral move, they must bear the burden of going to court if they wish to disqualify the former lawyer and his or her new firm,” says Rothman. “We believe the new rule undermines client loyalty and sends the wrong message to clients, who will see this as the profession placing its own economic interests ahead of the best interests of our clients.”

To others, screening is the answer, no matter Lawyer’s level of involvement with Husband’s matter at Old Firm.  In the Report and Recommendation from the ABA Standing Committee on Professionalism and Ethics,  the majority noted:

  • “Screening is not designed to impair the interests of clients, but to protect them. Screening provisions permitting private lateral screening have been adopted in nearly half the states, where hundreds of law firms and thousands of lawyers practice in cities like Baltimore, Charlotte, Chicago, Detroit, Louisville, Philadelphia, Pittsburgh, Portland, Seattle, and Wilmington, and in the various smaller communities in those states. No reported disciplinary cases or lawsuits have demonstrated any significant problem with the efficacy of screens. There is no record that screening in those states has been unable to protect confidentiality or to prevent the transferring lawyer from participating against the former client. Nor is there any record demonstrating that screens have been ineffective in the context of lawyers moving from government service to private practice. We are firmly convinced that screening can protect essential client interests in the context of private lawyers changing firms. The Ethics 2000 Commission came to the same conclusion.”

Is Vermont’s Rule Just Right or Too Strict?

Again, Vermont’s rule is more strict than the ABA’s.  We allow New Firm’s nonconsensual screening ofLawyer, unless Lawyer participated personally and substantially in  Old Firm’s representation of Husband.

In two posts last week, I asked whether our rule is too strict.  I did not receive many replies.

Two readers replied that Vermont’s rule is not too strict.  One wrote:

  • “The rule is not too strict.  We’ve got to stop making it easier for some lawyers to do things that make all of us look like scoundrels.”

My guess is that this lawyer’s comment  jibes with how  my non-lawyer friends and family members would react if they found themselves in Husband’s shoes upon Lawyer’s transfer to New Firm

An aspiring Vermont lawyer argued the opposite.  The aspiring lawyer wrote:

  • “my comment as to whether or not to adjust Rule 1.10(a)(2) would be to change it to match the ABA Model Rules.  It gives clients more freedom in choosing representation, it allows attorneys more employment opportunities and flexibility, and it allows firms to hire more seasoned attorneys without worrying about an attorney’s “personal or substantial” participation in former matters.”

Similarly, several months ago I heard from a Vermont attorney who was frustrated that our rule prevented a job change.  The attorney wrote:

  • “I understand the necessity to have such a rule, but the current iteration of the rule unfairly limits the movement of attorneys in Vermont. See generally Reporter’s Notes–2012 Amendment, V.R.Proc.C. 1.10 (Without such a procedure, a lawyer wishing to move from one Vermont firm to another may be denied his or her choice simply because of the unamended Rule 1.10)”

The attorney added that a potential new employer was “certainly large enough to put up a ‘wall’ until [the] litigation resolves itself.”

Connecticut does not allow screening.  A few years ago, the Connecticut Bar Association’s Committee on Professional Ethics recommended that the CBA amend its rules and adopt the ABA’s version of the rule.  The recommendation, which appeared in the Stoval Memo, is an excellent primer on the topic.  On page 8, it includes an argument that echoes the sentiment expressed by the frustrated lawyer who contacted me a few months ago:

  • “The Committee notes that amended Rule 1.10 does not permit ‘side-switching’ by an otherwise disqualified attorney. It simply permits other attorneys at his or her new  firm to continue to represent a party adverse to the moving lawyer’s former client.  1.9 would continue to prohibit such a lawyer from participating in a matter adversely to his or her former client, and would still dictate that the moving lawyer preserve former clients’ confidences and information, while still providing a lawyer the freedom to move  from one firm to another without encumbering his or her new firm with imputed conflicts of interest.”

Conclusion

I’m not ready to reach one.  I want to keep this debate going beyond me and 4 others.  What say ye?

  • A.  Leave V.R.Pr.C. 1.10 as is. If Lawyer participated personally & substantially in Old Firm’s representation of Husband, then New Firm can no longer represent Wife.  That’s the price of hiring Lawyer.

 

  • B.  Amend the rule. Trust New Firm to employ an effective screen and trust Lawyer to maintain Husband’s confidences. Prosecute Firm and Lawyer if they do not. Despite Lawyer’s  personal & substantial involvement at Old Firm, an effective screening rule strikes an appropriate balance between protecting Husband and allowing Lawyer the freedom to take another (perhaps, better) job.

Nonlawyers who are reading this, don’t hesitate to weigh in.  How would you feel if your lawyer started working at the firm that represents your adversary?

Irrelevant Post-Script

 

For you hockey fans, my head spun for weeks as I tried to figure out how to apply Rule 1.10 to Montreal’s hiring of Claude Julien within days of Boston’s decision to fire him .  Talk about switching sides. But then I learned that the B’s gave the Habs permission to negotiate with Julien.  Conflict waived.

Bruins

 

 

 

Changing Firms: Is our rule too strict?

Lawyers often change jobs, moving from one firm to another.  These so-called “lateral transfers” can raise concerns about conflicts-of-interest, particularly when the new firm represents a client with interests adverse to a client represented by the former firm.  Many lawyers assume that the new firm can simply “wall off”, or screen, the new lawyer.  Under our current rules, that is not an accurate assumption.

Caveat: this column applies only to transfers from private firm to private firm.  Transfers to an from government work, including agency to agency, are governed by Rule 1.11(d) and are a topic for another day.

Here in 2017 I present the scenario:

  • Attorney works for New Firm
  • Attorney used to work for Old Firm
  • In the matter of Michael v. Corporate, Old Firm represents Michael and New Firm represents Corporate
  • Does Attorney’s lateral transfer disqualify New Firm?

In my view, the answer is “it depends.”  I’ll go through 2 possibilities.

Possibility 1:  Attorney Participated Personally & Substantially in the Representation of Michael while working at Old Firm.

As I interpret the rules, if Attorney participated personally & substantially in the representation of Michael while at Old Firm, Attorney has a conflict that is imputed to New Firm, and that cannot be cured by screening Attorney.

Start with Rule 1.9.  Section(b) indicates that Attorney has a conflict. I don’t think there’s any doubt that Attorney is prohibited from switching sides and representing Corporate in the same matter in which Attorney used to represent Michael.

Now, go to Rule 1.10. It’s the rule on the imputation of conflicts. Rule 1.10 was amended in 2012.  Depending on which copy of the green book you have, the current rule might be in the pocket part. Or, the rule is HERE.

Attorney’s conflict is based on Rule 1.9(b).  Thus, Rule 1.10(a) imputes the conflict to New Firm, unless one of the exceptions applies.

The exception in Rule 1.10(a)(1) does not apply.  Attorney’s conflict is not personal. It is a former client conflict that arises under Rule 1.9.

The exception in Rule 1.10(a)(2) does not apply.  Rule 1.10(a)(2) allows New Firm to screen Attorney if:

    1. Attorney’s prohibition is based on Rule 1.9(a) or (b); and
    2. Arises out of Attorney’s association with a prior firm; and
    3. In a matter in which Attorney “did NOT participate personally or substantially.”

Comment 7 hammers home the point: with lateral transfers, new firms can screen transfers, but only if the new lawyer is “one who ‘did not participate personally and substantially’ in the matter giving rise to the conflict.” (emphasis added).

In this version of the hypothetical, Attorney’s prohibition is:

  • based on Rule 1.9(b); and
  • arises out of Attorney’s association with a prior firm; and
  • arises out of a matter in which Attorney participated personally & substantially

Thus, Rule 1.10(a) imputes Attorney’s conflict to New Firm and prohibits New Firm from screening Attorney.  Of course, New Firm would not be disqualified if Michael provided informed consent, confirmed in writing.  See, Rule 1.9(a).

Possibility 2:  Attorney did not Participate Personally & Substantially in the Representation of Michael while working at Old Firm.

If Attorney did not participate personally & substantially in the representation of Michael, then it appears permissible for New Firm to screen Attorney.

If Attorney did not participate in the representation of Michael, Attorney likely does not have a conflict under Rule 1.9(a).  Of course, it is possible that Attorney acquired information about Michael, even without participating in Michael’s representation. If so, Attorney is bound to protect the information, but Attorney has a conflict under Rule 1.9(b).

However, in this scenario, the third prong of Rule 1.10(a)(2) is not present.  Let’s look at each prong again:

  • Rule 1.9(b) prohibits Attorney from representing Corporate; and
  • the prohibition arises out Attorney’s association with a prior firm; BUT
  • Attorney did not participate personally & substantially in the representation of Michael.

Therefore, Rule 1.10(a)(2) permits New Firm to screen Michael.  Subsections i, ii, and iii set out the specific screening procedures with which New Firm must comply.

ABA Model Rule 1.10 is not as strict as Vermont’s Version of Rule 1.10

In 2009, the ABA amended Model Rule 1.10(a)(2).  As amended, the Model Rule does not include the phrase “in a matter in which the disqualified lawyer did not participate personally and substantially.”  In other words, under the Model Rule, a new firm is permitted to screen a lateral transfer even if the new lawyer participated personally and substantially in the matter while at the old firm.

Question for Vermont

Should we follow the ABA’s lead and drop the ” participated personally & substantially” language?  That is, should we permit firms to screen new lawyers — no matter how substantial the lawyer’s involvement with a matter at a previous firm?

An argument for “no”:  the new lawyer has so much information that it would be patently unfair to allow new firm to remain in the case even if new lawyer is screened from participation.”

An argument for “yes”: Vermont is a small state with many potential conflicts.  We should not have a rule that restricts lawyers from leaving for new opportunities.

Go Cats Go!

conflict

 

Unsolicited E-Mail: What now? Part 3

Update: This post was completed before last night’s College Football Championship game ended.  Congrats to Clemson…and to my Dad.  He lives in Flat Rock, NC, just over an hour from Clemson.  Last week he entered his first “Five for Friday” and in his entry wrote “Clemson by 6.”

Lawyer receives an unsolicited email from a prospective client who, as it turns out, is adverse to one of Lawyer’s current clients.  What now?

Part 1 of this series is HERE.

Part 2 of this series is HERE.

For part 3, I’ll focus again on this hypothetical:

“Dear Lawyer – I heard that you’re an expert in labor law.  Well, I’m about to blow the whistle on my employer for all the illegal stuff that goes on over there.  I’d like to talk to you before I do.  One thing that worries me is that they’ll fire me. And, on that, I’ve been running a fantasy football league for the last 5 years. Each week, I spend about 8 hours of work time on the league and I use my work computer and email to send league updates.  My manager is in the league. She told me that as I long as I get all my regular work done, it’s okay to do the league stuff but still put in for 40 hours. Is she right? Or will that give them an out? Please respond so we can set up a meeting.  Thank you. Sincerely, Person.”

Of course, Employer is a current client of Lawyer’s.

In part 2, I posited that Rule 1.18(b) prohibits Lawyer from forwarding the e-mail to Employer. Today, let’s look at this scenario: Employer asks Lawyer for legal advice related to Person’s employment.

What now?

Again, Rule 1.18 applies.  Rule 1.18(c) states that a lawyer cannot:

  • represent a client with interests materially adverse to those of a prospective client’s
  • in the same or substantially related matter
  • if the lawyer received information that could be significantly harmful to the prospective client.

So, in our scenario, if the two matters are the same or substantially related, and if the e-mail constitutes information that could be significantly harmful to Person, then Lawyer cannot represent Employer.

There are two exceptions to the general rule.

The first is in Rule 1.18(d)(1).  For the purposes of our scenario, even if Lawyer received information that could be significantly harmful to Person,

  • Lawyer may represent Employer in the same or substantially related matter
  • if both Person & Employer give informed consent, confirmed in writing.   

Why Person would give informed consent is beyond me and might lead someone to question whether the “consent” was, in fact, informed.  “Informed consent” is defined in Rule 1.0(e).

The second exception is in Rule 1.18(d)(2).  Turning again to our scenario, even if Lawyer received information that could be significantly harmful to Person,

  • Lawyer may represent Employer in the same or substantially related matter if:
  1. Lawyer took reasonable measures to review no more information from Person than was reasonably necessary to determine whether to represent Person; and,
  2. Lawyer is timely screened from participation in the matter and is apportioned no portion of the fee from the matter; and,
  3. written notice is promptly given to Person.

A few thoughts.

  1. “Reasonable measures to review no more information from prospective clients than is reasonably necessary to determine whether to represent client.” To me, this suggests a rigorous process for reviewing incoming e-mails.  One idea: having a non-lawyer assistant conduct an initial conflict screening.  Here, it would’ve been obvious that Employer was a current client.
  2. “Lawyer is timely screened .”  Clearly, this provides no solace for the sole practitioner who reads too much before realizing that there’s a conflict.

Finally, don’t forget about Rule 1.7.  It’s the general conflict rule and prohibits a lawyer from representing a client if there is a significant risk that the representation will be materially limited by the lawyer’s duties to another client, former client, or third person.

Returning to our scenario one last time: in Part 2, we established that Lawyer most likely owes a duty of confidentiality to Person.  Thus, under Rule 1.7, if there is a significant risk that representation of Employer will be materially limited by complying with that duty, Lawyer has a conflict.

clemson

 

 

 

Monday Morning Answers: #50

Kind of a lame quiz last week. I take the blame.  I was too busy relaxing at my Dad’s to fire up my brain.  So, I picked 4 numbers at random & (re) used one question from each corresponding week of the quiz.  Spoiler alert: the answers follow the honor roll.

Honor Roll

(perfect scores in red)

Permanent Honor Roll Status

  • Beth DeBernardi, Esq.
  • Patrick Kennedy, First Brother, Dealer.Com

Answers

Question 1

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 lawyer or other recipient is related to the client.   Rule 1.8(c)
  • B.  The client gives informed consent
  • C.  The client gives informed consent, confirmed in writing
  • D.  The client is advised of the benefit of seeking independent legal advice and given a reasonable opportunity to do so

Question 2

Attorney called me with an inquiry.  She expressed concern that the area of law in which she focuses is fraught with conflicts and that she often struggles to identify her client.  I shared some thoughts & referred her to material that discussed “The Tripartite Relationship.”

Identify the type of law upon which Attorney focuses.

INSURANCE DEFENSE.  For  more, go HERE.

Question 3

The Vermont Rules of Professional Conduct specifically require:

  • A.   Three way reconciliation
  • B.   An attorney’s signature
  • C.   Collected funds prior to disbursement.  Rule 1.15(f)
  • D.   All of the above

Question 4

Which is different than the others?

  • A.   A conflict of interest involving a former client
  • B.   A conflict of interest involving concurrent clients
  • C.   A conflict based on a personal interest of the lawyer.  (Unlike the conflicts in A & B, this type of conflict is not automatically imputed to other lawyers in the firm. See, Rule 1.10 (a)(1)).
  • D.  Trick question.  Each is treated the same as the others.

Question 5

Identify the document in which two groups of people who had originally intended to live in Virginia agreed to:

  • “convenant and combine ourselves together into a civil body politic, for our better ordering and preservation and furtherance of the ends aforesaid; and by virtue hereof do enact constitute and frame such just and equal laws, ordinances, acts and constitutions . . .”

THE MAYFLOWER COMPACT

ESI: Who has what?

Lawyer works at Firm and represents Client.  Lawyer leaves for another job, Client’s paper files (and business) follow.   Some of Client’s information, however, remains at Firm.  In particular, electronically stored files that include sensitive information.

Scenario:

  • Person becomes involved in a dispute with Client.
  • Lawyer represents Client.
  • The dispute is substantially related to a matter in which Lawyer initially represented Client while formerly employed at Firm.
  • The electronically stored files that Lawyer left behind include a strategy memo that outlines Client’s strategy to the entire case.

Question:  can Firm represent Client?

  • A.  No
  • B.  Yes
  • C.   Yes, as long as any review of the ESI is limited to info needed to determine whether a conflict exists.

The Analysis

The Rule

Rule 1.10(b) says:

  • “When a lawyer has terminated an association with a firm, the firm is not prohibited from thereafter representing a person with interests materially adverse to those of a client represented by the formerly associated lawyer and not currently represented by the firm unless:
    1. the matter is the same or substantially related to that in which the formerly associated lawyer represented the client; and
    2.  any lawyer remaining in the firm has information that protected by Rules 1.6 and 1.9(c) that is material to the matter.

The Issue

From the facts, we know that Person’s interests are materially adverse to Client’s and that the instant matter is substantially related to the matter in which Lawyer represented Client while still employed at firm.  So, the issue becomes Rule 1.10(b)(2): whether any lawyer remaining at Firm has information that is protected by Rules 1.6 and 1.9(c) that is material to the matter.

What say ye?  The electronically stored information is protected and is material to the matters.  Do the remaining lawyers have it?

A New Jersey court recently addressed this exact issue.

The New Jersey Case

The case is Estate of Kennedy v. Rosenblatt.  The opinion is HERE.  A quick recap:

  • Plaintiff sued the Estate of Kennedy.
  • Firm represented Estate.
  • Plaintiff voluntarily dismissed complaint.
  • Estate’s lawyers left Firm, taking Estate and its paper files with them.
  • Oddly, Plaintiff’s lawyer joined Firm, where he recommenced suit against Estate.
  • Firm acted to “wall off” lawyers assigned to Plaintiff  from reviewing Estate’s electronically stored information.
  • Senior Lawyer and Firm’s IT staff conducted an analysis of the electronic file.
  • Estate’s lawyers, who used to be a Firm, moved to disqualify Firm.

A trial court granted the motion.  An interlocutory appeal followed.

On appeal, there was no dispute that the two matters were substantially related. Nor was there any dispute that the electronic files were protected by Rules 1.6 and 1.9(c). The only dispute was over the meaning of “has information.”

Plaintiff argued that “has information” means “has actual knowledge of the information and its contents.”

The Estate argued that “has information” means “has access to.”  In the alternative, Estate argued that the senior lawyer who analyzed the electronic information gained knowledge thereof and, as such, “had” the information.

The Court concluded that “has information” means:

  • has actual knowledge; or
  • has accessed the electronic file; but,
  • there’s an exception for limited access made to investigate a potential conflict.

The court remanded the matter to the trial court for further proceedings.  Specifically, the court noted that the record did not contain sufficient information for it to determine whether Senior Lawyer “has” any information.  Among other questions the court instructed the trial court to address:

  • did Senior Lawyer merely access metadata to determine who had accessed the substantive contents of the electronic file?
  • did Senior Lawyer look only at the names of various files?
  • or, did Senior Lawyer (or anyone else) access and read substantive content, including the strategy memo?

In sum, the appellate court suggested that the trial court should not disqualify firm if Senior Lawyer’s review was limited to accessing only that information needed to determine whether a conflict existed.  Such a limited review is not the equivalent of “having” information.

 

 

 

 

Conflict? It’s Tricky.

Conflicts can be tricky to navigate.  Heck, sometimes it’s tricky enough just to figure out which rule applies.

No conflict under Rule 1.9(a)?  That’s great, but don’t forget to analyze whether application of Rule 1.6 through Rule 1.9(c) creates a conflict under Rule 1.7(a) that may or may not be waived pursuant to 1.7(b).

And those are the easy ones.  Lawyers moving between firms? Whoa! To screen or not to screen? Do we even allow screening?  It can’t be a conflict, I don’t even remember the case! Right, Mike?  Mike…..right?

Talk about raising hell. You get the point.

Well, here’s one that makes even my head spin. The Utah Supreme Court recently faced this question:

  • “This case is about whether a person acting in the capacity of sole heir and personal representative of an estate can sue him or herself as an individual for damages under the wrongful death and survival action statutes. Barbara Bagley, in her capacity as sole heir and personal representative of her deceased husband‘s estate, argues that these statutes permit her to sue herself as an individual for negligently causing her husband‘s death.”

The answer, “yes.” The opinion is HERE.

Now, Utah’s wrongful death statute is well beyond the scope of this blog.  What makes my head spin about the case is the ethics implications for the lawyers involved.  Here’s what we have:

  • In 2011, Barbara Bagley was driving a vehicle in which her husband was a passenger. There was an accident. Her husband died of his injuries.
  • Ms. Bagley was the sole heir and personal representative of her husband’s estate.
  • Ms. Bagley had an auto insurance policy.
  • To compel the insurer to pay her, she sued herself.
  • She alleged that she negligently caused her husband’s death, depriving his sole heir  (herself) of his “love, companionship, society, comfort, care, protections, financial support, pleasure, and affection.”
  • She also alleged that she caused her husband “to experience pain and suffering prior to his death, which entitles [his] estate to damages such as funeral expenses and medical bills.”

Against that backdrop, here’s where my head began to spin.

After Ms. Bagley sued herself (no idea if she tried to dodge service) she filed a 12(b)(6) motion to dismiss.  That’s correct: Ms. Bagley argued that she had failed to state a claim against herself.  The thrust of her argument: Utah’s wrongful death and survival statutes don’t allow her to sue herself.

The trial court agreed and dismissed her complaint.

Presumably unhappy with the result she’d achieved as a defendant, Plaintiff Bagley appealed.  Defendant Bagley did not go away lightly. On appeal, she raised the same arguments she had below and, in addition, argued that allowing her to sue herself would contravene Utah’s “absurdity doctrine.”

That’s right: she argued that it would be absurd to let her do what she’d done. Not to be outdone, Plaintiff Bagley argued that Defendant Bagley hadn’t preserved the absurdity doctrine argument below.  My guess is that she’d remember.

An intermediate level appellate court concluded that the trial court had erred in dismissing the complaint.  The Utah Supreme Court agreed, affirming the decision of the mid-level court.

Now, at least on appeal, Plaintiff Bagley and Defendant Bagley had separate counsel.  I assume they (she?) also had separate counsel below. If so, I can’t wrap my head around the potential violations.

Potential conflicts aside, a lawyer must not disclose information relating to the representation absent client consent.  How does this work when client is also the opposing party? Opposing party can consent to the disclosure of client’s otherwise confidential information?

How did (and will) Ms. Bagley’s attorneys comply with the duty to communicate with her without, at the same time, violating the rule against communicating with a represented person on the subject of the representation?

I’m not arguing or even suggesting that the Utah Supreme Court reached the wrong conclusion under Utah state law.  And I expect that everyone involved, including Ms. Bagley, knew exactly what was going on and consented to it.  Still, I’m simply befuddled by the ethics issues that must have arisen.

And what will happen now?  Can she reject an offer that she authorizes her [other] attorneys to make?  Can her lawyers compel her to respond to discovery requests?

  • “Our client insists there is more to produce.  And she’s in a position to know.”

It’s tricky.  At least to me.

its-tricky