STATE BAR OF MICHIGAN PROFESSIONALISM IN ACTION PROGRAM UNIVERSITY OF MICHIGAN LAW SCHOOL Problems for Discussion

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1 STATE BAR OF MICHIGAN PROFESSIONALISM IN ACTION PROGRAM UNIVERSITY OF MICHIGAN LAW SCHOOL Problems for Discussion Problem 1 (Duties to the Public and Profession) You are a new staff lawyer at a local legal services organization in Ann Arbor, Michigan. On your assigned day for intake, a young man, Rudy, comes to your office seeking help and possible representation. He explains that he was fired from his job as a computer programmer for a small start-up company that specializes in educational software. He claims that he was let go without notice because of a dispute between himself and his boss girlfriend. He hands you a copy of the employment contract and says that the termination was in violation of the agreement. Rudy is a bit high-strung. He gets exasperated a few times during his story, but he seems very credible. In fact, Rudy is not like most of your clients. He had a solid paying job and what seemed to be a relatively stable life before he was fired three months ago. Rudy explains that he is homeless because he was unable to pay his rent for two months. He has exhausted his savings and has no relatives that can help him. He is now staying in a shelter. Unfortunately, your caseload is full and you cannot take on any new matters. Anyway, this is outside of your expertise. You specialize in landlord/tenant litigation and public benefits. After giving the contract a closer read, you learn that Rudy s salary is based on a rather complicated compensation structure, partially dependent on company sales and his productivity. He tells you that on average he earns about $3,000 per month after taxes, or an annual income of about $42,000. It appears that Rudy was entitled to notice before termination and if he s fired, it must be for cause. It seems to you that Rudy may be entitled to compensation. Since you cannot take this case, you decide to contact one of the lawyers at Hardaway, Robinson & Burke, a large downtown firm that sometimes takes pro bono cases from your organization. You ask Rudy to come back the next day. Mark, a junior associate from Hardaway, Robinson & Burke agrees to take the case. When Rudy returns, you give him Mark s contact information and let him know that you have arranged a meeting and that he should follow up. Two weeks later you receive a call from Mark. He says that he s having a difficult time with managing Rudy. Apparently, Rudy s employer offered to settle the case for $15,000 but Rudy refused the offer. To make matters worse, he tells you that Rudy often shows up at his office unannounced and without an appointment. If Mark is busy, Rudy just waits in the lobby with all of his stuff piled in a shopping cart. He sometimes smells like he hasn t bathed in days. Mark tells you that, the offer is good enough and Rudy should just take it. He admits to you that he just doesn t have any more time he can waste on this case. The managing partner 1

2 in his firm has assigned him another case. More time with Rudy means that he would further neglect the pressing matter that needs tending to with the other paying client. Frankly, he confides that he needs the additional billables. Making a counter-offer and then waiting for a response will take at least another two weeks, especially if Rudy continues to turn them down. He wants you to speak to Rudy and persuade him that he should take the money. He thinks you can be more persuasive since you are accustomed to dealing with you know, people like him. Besides, Mark says that Rudy is probably headed your way because they just got into a really big argument. Finally, he tells you that if Rudy doesn t take the offer, he s going to find a way to terminate representation. You hang up the phone and think for a second. The $15,000 does sound a bit low and it s just an initial offer. Rudy might be able to get more money if they hold out. On the other hand, you know that Hardaway, Robinson & Burke s standard engagement agreement 1 with its pro bono clients limits representation to pre-trial matters. They will not represent Rudy in arbitration, should the negotiations break down. But you re worried. Judging from the way Mark sounds, Rudy may soon get fired as a client before things ever get to arbitration. Just then, your secretary calls you and says that Rudy is waiting in the lobby. Questions: a. Should you persuade Rudy to take the offer? b. Can Mark fire Rudy as a client? c. Are there different standards for representing pro bono clients? d. What are Mark s obligations to Rudy? e. What are your obligations to Rudy? Relevant Michigan Rules of Professional Conduct for Problem 1 (please see Appendix for relevant Model Rules): Rule Voluntary Pro Bono Publico Service A lawyer should render public interest legal service. A lawyer may discharge this responsibility by providing professional services at no fee or a reduced fee to persons of limited means, or to public service or charitable groups or organizations. A lawyer may also discharge this 1 Standard engagement agreement: a document that sets out the terms and conditions of the sale of legal services to a business or individual. It generally contains details such as: the name of the client, the name of the attorney or law firm providing legal services, a description of the legal services being provided, how the attorney will be compensated, whether the attorney will charge hourly rates or whether the law firm charges different rates for different members, the terms of the payment, whether the attorney charges a deposit and how much, and which state s laws will govern the agreement. 2

3 responsibility by service in activities for improving the law, the legal system, or the legal profession, and by financial support for organizations that provide legal services to persons of limited means. Rule 6.5 Professional Conduct (a) A lawyer shall treat with courtesy and respect all persons involved in the legal process. A lawyer shall take particular care to avoid treating such a person discourteously or disrespectfully because of the person's race, gender, or other protected personal characteristic. To the extent possible, a lawyer shall require subordinate lawyers and nonlawyer assistants to provide such courteous and respectful treatment. 6.6(Comment): Nonprofit and Court-Annexed Limited Legal Services Programs Legal services organizations, courts, and various nonprofit organizations have established programs through which lawyers provide short-term limited legal services, such as advice or the completion of legal forms, that will help persons address their legal problems without further representation by a lawyer. In these programs, such as legal-advice hotlines, advice-only clinics, or pro se consulting programs, a lawyer-client relationship may or may not be established as a matter of law, but regardless there is not expectation that the lawyer s representation of the client will continue beyond the limited consultation. 3

4 Problem 2 (Duty of Civility) QVC, Network, Inc. is interested in acquiring Paramount Communications, Inc., and has made a tender offer to Paramount s shareholders. Viacom, Inc. is also interested in acquiring Paramount, and has also made a tender offer. 2 But QVC believes that Viacom has done more than that. In fact, QVC claims that its efforts to acquire Paramount are being frustrated by illegal defensive measures undertaken by Paramount and Viacom, and QVC has sued both companies to prevent a Paramount-Viacom merger. During the course of the litigation, Wilma Johnston, an attorney for QVC, scheduled the deposition 3 of Hugh Liedtke, one of Paramount s directors. Liedtke was personally represented in the deposition by attorney Joseph Jamail. Paramount was represented in the matter by attorney Peter Thomas. Johnston began to ask Liedtke some questions about a document, and the following occurred: MS. JOHNSTON: Do you have any idea why Mr. Oresman was calling that material to your attention? MR. JAMAIL: Don t answer that. How would he know what was going on in Mr. Oresman s mind? Don t answer it. Go on to your next question. MS. JOHNSTON: No, Joe MR. JAMAIL: He s not going to answer that. Certify it. I m going to shut it down if you don t go to your next question. MS. JOHNSTON: No. Joe, Joe MR. JAMAIL: Don t Joe me, missy. You can ask some questions, but get off of that. I m tired of you. You could gag a maggot off a meat wagon. Now, we ve helped you every way we can. MS. JOHNSTON: Let s just take it easy. MR. JAMAIL: No, we re not going to take it easy. Get done with this. MS. JOHNSTON: We will go on to the next question. MR. JAMAIL: Do it now. MS. JOHNSTON: We will go on to the next question. We re not trying to excite anyone. MR. JAMAIL: Come on. Quit talking. Ask the question. Nobody wants to socialize with you. MS. JOHNSTON: I m not trying to socialize. We ll go on to another question. We re continuing the deposition. MR. JAMAIL: Well, go on and shut up. MS. JOHNSTON: Are you finished? MR. JAMAIL: Yeah, you- MS. JOHNSTON: Are you finished? MR. JAMAIL: I may be and you may be. Now, you want to sit here and talk to me, fine. This deposition is going to be over with. You don t know what you re doing. Obviously someone wrote out a long outline of stuff for you to ask. You have no concept of what you re doing. 2 Tender offer: a public offer, made by a person, business, or group, who wants to acquire a given amount of a particular security. The term comes from the fact they are inviting the existing stockholders to tender, or sale, their shares to them. Usually, tender offers are proposed in the hopes a would-be acquirer can accumulate enough common stock to either get a major presence on, or completely take over, the board of directors. 3 Deposition: out-of-court testimony made under oath and recorded by an authorized officer for later use in court. 4

5 Now, I ve tolerated you for three hours. If you ve got another question, get on with it. This is going to stop one hour from now, period. Go. MS. JOHNSTON: Are you finished? MR. THOMAS: Come on, Ms. Johnston, move it. MS. JOHNSTON: I don t need this kind of abuse. MR. THOMAS: Then just ask the next question. MS. JOHNSTON: All right. To try to move forward, Mr. Liedtke,... I ll show you what s been marked as Liedtke 14 and it is a cover letter dated October 29 from Steven Cohen of Wachtell, Lipton, Rosen & Katz including QVC s Amendment Number 1 to its Schedule 14D-l, and my question A. No. MS. JOHNSTON: --to you, sir, is whether you ve seen that? A. No. Look, I don t know what your intent in asking all these questions is, but, my God, I am not going to play boy lawyer. MS. JOHNSTON: Mr. Liedtke A. Okay. Go ahead and ask your question. MS. JOHNSTON: --I m trying to move forward in this deposition that we are entitled to take. I m trying to streamline it. MR. JAMAIL: Come on with your next question. Don t even talk with this witness. MS. JOHNSTON: I m trying to move forward with it. MR. JAMAIL: You understand me? Don t talk to this witness except by question. Did you hear me? MS. JOHNSTON: I heard you fine. MR. JAMAIL: You fee makers think you can come here and sit in somebody s office, get your meter running, get your full day s fee by asking stupid questions. Let s go with it. Questions: a. What does it seem to you that Mr. Jamail was trying to do? Was he successful? b. What do you think about how Ms. Johnston attempted to deal with the situation? Did she succeed? c. Does success in litigation require attorneys to be obnoxious? d. Do obnoxious lawyers make the professional and personal lives of other lawyers less pleasant? If so, does that matter? e. Does an obnoxious lawyer lose anything as a consequence of his or her obnoxiousness? Relevant Michigan Rules of Professional Conduct for Problem 2: Rule Respect for Rights of Third Persons In representing a client, a lawyer shall not use means that have no substantial purpose other than to embarrass, delay, or burden a third person, or use methods of obtaining evidence that violate the legal rights of such a person. 5

6 Problem Three (Fair Billing) You have agreed to draft a will and a complicated estate plan for a client. You quote your client a flat $1,500 fee for the whole package instead of an hourly rate. In arriving at your fee you took into account several factors, but your primary consideration was that it would probably take you ten hours to do the work. The client pays you in full in advance. Just as you are about to get started, you strike up a conversation with another lawyer in your office who has just finished putting together a will and estate plan for one of her clients who, coincidentally, is in nearly the same position as your client. This means that you will be able to use the other client s documents to draft your client s forms. Consequently, your work on this case will now only take a couple of hours at most to complete. Questions: a. Do you tell your client about this development? b. Do you owe the client any kind of refund? If so, how much should you give back? c. Discuss the use of engagement/retention letters and what should be put in a flat fee retention letter. Relevant Michigan Rules of Professional Conduct for Problem 3: Rule 1.5 Fees (a) A lawyer shall not enter into an agreement for, charge, or collect an illegal or clearly excessive fee. A fee is clearly excessive when, after a review of the facts, a lawyer of ordinary prudence would be left with a definite and firm conviction that the fee is in excess of a reasonable fee. The factors to be considered in determining the reasonableness of a fee include the following: (1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly; (2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer; (3) the fee customarily charged in the locality for similar legal services; (4) the amount involved and the result obtained; (5) the time limitations imposed by the client or by the circumstances; (6) the nature and length of the professional relationship with the client; (7) the experience, reputation, and ability of the lawyer or lawyers performing the services; and (8) whether the fee is fixed or contingent. 6

7 (b) When the lawyer has not regularly represented the client, the basis or rate of the fee shall be communicated to the client, preferably in writing, before or within a reasonable time after commencing the representation. 7

8 APPENDIX Relevant Model Rules for Problem 1: Rule 1.1: Competence A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation. Rule 1.2: Scope of Representation & Allocation of Authority between Client & Lawyer (a) Subject to paragraphs (c) and (d), a lawyer shall abide by a client's decisions concerning the objectives of representation and, as required by Rule 1.4, shall consult with the client as to the means by which they are to be pursued. A lawyer may take such action on behalf of the client as is impliedly authorized to carry out the representation. A lawyer shall abide by a client's decision whether to settle a matter. In a criminal case, the lawyer shall abide by the client's decision, after consultation with the lawyer, as to a plea to be entered, whether to waive jury trial and whether the client will testify. (b) A lawyer's representation of a client, including representation by appointment, does not constitute an endorsement of the client's political, economic, social or moral views or activities. (c) A lawyer may limit the scope of the representation if the limitation is reasonable under the circumstances and the client gives informed consent. (d) A lawyer shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal or fraudulent, but a lawyer may discuss the legal consequences of any proposed course of conduct with a client and may counsel or assist a client to make a good faith effort to determine the validity, scope, meaning or application of the law. Rule 1.3: Diligence A lawyer shall act with reasonable diligence and promptness in representing a client. Rule 1.7: Conflict of Interest: Current Clients (a) Except as provided in paragraph (b), a lawyer shall not represent a client if the representation involves a concurrent conflict of interest. A concurrent conflict of interest exists if: (1) the representation of one client will be directly adverse to another client; or (2) there is a significant risk that the representation of one or more clients will be materially limited by the lawyer's responsibilities to another client, a former client or a third person or by a personal interest of the lawyer. (b) Notwithstanding the existence of a concurrent conflict of interest under paragraph (a), a lawyer may represent a client if: 8

9 (1) the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client; (2) the representation is not prohibited by law; (3) the representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation or other proceeding before a tribunal; and (4) each affected client gives informed consent, confirmed in writing. Rule 1.14: Client with Diminished Capacity (a) When a client's capacity to make adequately considered decisions in connection with a representation is diminished, whether because of minority, mental impairment or for some other reason, the lawyer shall, as far as reasonably possible, maintain a normal client-lawyer relationship with the client. (b) When the lawyer reasonably believes that the client has diminished capacity, is at risk of substantial physical, financial or other harm unless action is taken and cannot adequately act in the client's own interest, the lawyer may take reasonably necessary protective action, including consulting with individuals or entities that have the ability to take action to protect the client and, in appropriate cases, seeking the appointment of a guardian ad litem, conservator or guardian. (c) Information relating to the representation of a client with diminished capacity is protected by Rule 1.6. When taking protective action pursuant to paragraph (b), the lawyer is impliedly authorized under Rule 1.6(a) to reveal information about the client, but only to the extent reasonably necessary to protect the client's interests. Rule 1.16: Declining or Terminating Representation (a) Except as stated in paragraph (c), a lawyer shall not represent a client or, where representation has commenced, shall withdraw from the representation of a client if: (1) the representation will result in violation of the rules of professional conduct or other law; (2) the lawyer's physical or mental condition materially impairs the lawyer's ability to represent the client; or (3) the lawyer is discharged. (b) Except as stated in paragraph (c), a lawyer may withdraw from representing a client if: (1) withdrawal can be accomplished without material adverse effect on the interests of the client; 9

10 (2) the client persists in a course of action involving the lawyer's services that the lawyer reasonably believes is criminal or fraudulent; (3) the client has used the lawyer's services to perpetrate a crime or fraud; (4) the client insists upon taking action that the lawyer considers repugnant or with which the lawyer has a fundamental disagreement; (5) the client fails substantially to fulfill an obligation to the lawyer regarding the lawyer's services and has been given reasonable warning that the lawyer will withdraw unless the obligation is fulfilled; (6) the representation will result in an unreasonable financial burden on the lawyer or has been rendered unreasonably difficult by the client; or (7) other good cause for withdrawal exists. (c) A lawyer must comply with applicable law requiring notice to or permission of a tribunal when terminating a representation. When ordered to do so by a tribunal, a lawyer shall continue representation notwithstanding good cause for terminating the representation. (d) Upon termination of representation, a lawyer shall take steps to the extent reasonably practicable to protect a client's interests, such as giving reasonable notice to the client, allowing time for employment of other counsel, surrendering papers and property to which the client is entitled and refunding any advance payment of fee or expense that has not been earned or incurred. The lawyer may retain papers relating to the client to the extent permitted by other law. 10

11 Relevant Model Rules for Problem 2: Rule 3.1: Meritorious Claims and Contentions A lawyer shall not bring or defend a proceeding, or assert or controvert an issue therein, unless there is a basis in law and fact for doing so that is not frivolous, which includes a good faith argument for an extension, modification or reversal of existing law. A lawyer for the defendant in a criminal proceeding, or the respondent in a proceeding that could result in incarceration, may nevertheless so defend the proceeding as to require that every element of the case be established. Rule 3.2: Expediting Litigation A lawyer shall make reasonable efforts to expedite litigation consistent with the interests of the client. Rule 3.4: Fairness to Opposing Party and Counsel A lawyer shall not: (a) unlawfully obstruct another party' s access to evidence or unlawfully alter, destroy or conceal a document or other material having potential evidentiary value. A lawyer shall not counsel or assist another person to do any such act; (b) falsify evidence, counsel or assist a witness to testify falsely, or offer an inducement to a witness that is prohibited by law; (c) knowingly disobey an obligation under the rules of a tribunal except for an open refusal based on an assertion that no valid obligation exists; (d) in pretrial procedure, make a frivolous discovery request or fail to make reasonably diligent effort to comply with a legally proper discovery request by an opposing party; (e) in trial, allude to any matter that the lawyer does not reasonably believe is relevant or that will not be supported by admissible evidence, assert personal knowledge of facts in issue except when testifying as a witness, or state a personal opinion as to the justness of a cause, the credibility of a witness, the culpability of a civil litigant or the guilt or innocence of an accused; or (f) request a person other than a client to refrain from voluntarily giving relevant information to another party unless: (1) the person is a relative or an employee or other agent of a client; and (2) the lawyer reasonably believes that the person's interests will not be adversely affected by refraining from giving such information. 11

12 Relevant Model Rules for Problem 3: Rule 1.5: Fees (a) A lawyer shall not make an agreement for, charge, or collect an unreasonable fee or an unreasonable amount for expenses. The factors to be considered in determining the reasonableness of a fee include the following: (1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly; (2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer; (3) the fee customarily charged in the locality for similar legal services; (4) the amount involved and the results obtained; (5) the time limitations imposed by the client or by the circumstances; (6) the nature and length of the professional relationship with the client; (7) the experience, reputation, and ability of the lawyer or lawyers performing the services; and (8) whether the fee is fixed or contingent. (b) The scope of the representation and the basis or rate of the fee and expenses for which the client will be responsible shall be communicated to the client, preferably in writing, before or within a reasonable time after commencing the representation, except when the lawyer will charge a regularly represented client on the same basis or rate. Any changes in the basis or rate of the fee or expenses shall also be communicated to the client. (c) A fee may be contingent on the outcome of the matter for which the service is rendered, except in a matter in which a contingent fee is prohibited by paragraph (d) or other law. A contingent fee agreement shall be in a writing signed by the client and shall state the method by which the fee is to be determined, including the percentage or percentages that shall accrue to the lawyer in the event of settlement, trial or appeal; litigation and other expenses to be deducted from the recovery; and whether such expenses are to be deducted before or after the contingent fee is calculated. The agreement must clearly notify the client of any expenses for which the client will be liable whether or not the client is the prevailing party. Upon conclusion of a contingent fee matter, the lawyer shall provide the client with a written statement stating the outcome of the matter and, if there is a recovery, showing the remittance to the client and the method of its determination. (d) A lawyer shall not enter into an arrangement for, charge, or collect: 12

13 (1) any fee in a domestic relations matter, the payment or amount of which is contingent upon the securing of a divorce or upon the amount of alimony or support, or property settlement in lieu thereof; or (2) a contingent fee for representing a defendant in a criminal case. (e) A division of a fee between lawyers who are not in the same firm may be made only if: (1) the division is in proportion to the services performed by each lawyer or each lawyer assumes joint responsibility for the representation; (2) the client agrees to the arrangement, including the share each lawyer will receive, and the agreement is confirmed in writing; and (3) the total fee is reasonable. 13