Outline of the Law Governing Lawyers Selection of Rules John Steele JOHN STEELE, ATTORNEY AT LAW 2225 E. BAYSHORE ROAD; SUITE 200 PALO ALTO, CA 94303 WWW.JOHNSTEELELAW.COM JOHN.STEELE@JOHNSTEELELAW.COM John Steele (2012) John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
ABOUT THE AUTHOR: John Steele is a solo practitioner, representing clients on matters of legal ethics, professional liability, risk management, and the law of lawyering. For over fifteen years, he served as the top internal ethics lawyer at an AmLaw 100 firm, where he was Special Counsel for Ethics, and at an AmLaw 200 firm, where he was a trial lawyer and litigation partner. He has taught professional responsibility for over thirty semesters at UC-Berkeley School of Law, Stanford Law School, Santa Clara University, Golden Gate University, and Indiana University Maurer School of Law. The Second Circuit recently cited and relied upon a law review article authored by Mr. Steele in a case of first impression on an important conflict of interest issue. (GSI Commerce Solutions v. BabyCenter, LLC, 618 F.3d 204 (2nd Cir. 2010)) He has served on a variety of professional committees, including the State Bar of California s standing Committee on Professional Responsibility and Conduct (COPRAC), and serves an arbitrator in fee disputes. He speaks widely to professional audiences, including providing CLE credits, on issues of legal ethics and risk management, elimination of bias in the legal profession, substance abuse, and law practice management, and is a cofounder of a leading blog on legal ethics, LEGAL ETHICS FORUM (www.legalethicsforum.com). ABOUT THE ILLUSTRATIONS ON THE COVER: The two illustrations symbolize the same concept: the lawyer s duties to the client are balanced against the lawyer s duties to society in general and to particular social systems (e.g., courts, the public markets, etc.) with which the lawyer is interacting. FUNDAMENTAL AXIOM OF LEGAL ETHICS: In criminal prosecutions, the prosecutor owes fair process and a fair result to the accused and to society; in all other matters, the lawyer owes fair process to society and owes to the client as advantageous a result as the relevant legal process provides; in particular, in criminal defense representations, the relevant legal process permits criminal defense lawyers to present and contest issues in ways that other lawyers may not. COPYRIGHT: No copyright claim is made regarding the rules, which are principally from Arkansas, Delaware, Idaho, Indiana, and Nebraska, and Maine. John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
TABLE OF CONTENTS I. Regulation of the Legal Profession... 1 A. Who Regulates the Profession?... 1 1. State courts (especially state supreme courts).... 1 2. State bar associations... 1 3. State legislatures... 1 4. Substantive state law... 1 5. Federal law... 1 6. The American Bar Association (ABA) does not formally regulate the legal profession.... 2 B. Admission to the Profession.... 2 1. Truthfulness in admission process... 2 2. Character & Fitness ( C&F ) requirement... 2 3. Valid and invalid considerations in C&F determinations for admission... 3 C. Regulation after Admission... 4 1. Bar Discipline. We need to distinguish the discipline systems from other legal regimes that punish bad lawyers... 4 2. Professional discipline - substantive violations. Lawyers are subject to professional discipline for:... 4 3. Professional Discipline - procedures and law.... 4 D. Peer Responsibility for Regulation of Lawyers... 5 1. Supervisors and subordinates... 5 2. Law firms... 6 3. Mandatory reporting (8.3)... 6 E. Legal Regimes Governing Lawyers... 7 1. Criminal Law. Questions involving criminal law often have to do with theft, bribery, obstruction of justice, and extortion.... 7 2. Disciplinary Process.... 7 3. Civil Law.... 7 4. Disqualification Law.... 7 5. Litigation Sanctions.... 7 II. Lawyers Over-arching Duties to the Legal Profession... 7 A. Obey the Law... 7 1. Do not commit, counsel, or assist criminal conduct. (1.2(d))... 7 2. Do not commit, counsel, or assist fraudulent conduct. (1.2(d))... 7 3. Exceptions:... 7 i John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
B. Maintain Professional Boundaries: Who May Practice Law & Where... 8 1. Lawyers may not engage in or facilitate the unauthorized practice of law ( UPL ) by non-lawyers or by lawyers practicing law outside the jurisdiction where they are licensed. (5.5)... 8 2. Non-legal work ( Law Related Services ) by licensed lawyer.... 8 3. Lawyers shall not practice law where not admitted. (5.5)... 9 C. Maintain Professional Boundaries: Financial Participation in the Legal Profession... 10 1. A lawyer must maintain the independence, including the financial independence, of the legal profession.... 10 2. The general rule is that a lawyer may not share legal fees with a non-lawyer. (5.4)... 10 3. When a non-client pays the lawyer s fees, or when a non-client recommends that the lawyer be hired, the lawyer must not allow that non-client to direct or regulate the lawyer s judgment or interfere with the attorney client relationship. (5.4(c))... 10 4. The practice of law with non-lawyers is not permitted.... 10 5. Contractual restrictions on practice:... 11 6. Selling a law practice is permitted under certain conditions. (1.17)... 11 D. Pro Bono and Public Service (6.1)... 12 1. In general, lawyers are called to participate in efforts to improve the quality of justice and access to justice.... 12 2. Types of public service.... 12 III. Getting Clients: Communications, Advertising, Solicitation, and Referrals... 12 A. The Constitutional Limitations on Regulation of Lawyer Speech... 12 1. Speech seeking pecuniary (i.e., for profit) employment is commercial speech and as such it enjoys intermediate constitutional protection.... 12 2. State governments can, and do, ban false or misleading speech by lawyers... 12 3. State governments can, and do, ban lawyer speech likely to result in coercion, harassment, and duress.... 13 B. Definitions and Rules... 13 1. Communications... 13 2. Advertising... 13 3. Solicitations... 13 C. Firm Names and Letterheads (7.5)... 14 1. Can t be false or misleading... 14 2. Trade names are permitted, but... 14 3. Geographic use of names... 14 4. Lawyer holding public office... 15 ii John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
D. Referrals by Others... 15 1. Basic rule: except as otherwise provided in the rules, lawyers are not permitted to pay others for channeling professional work to the lawyer. (Comment [5] to Rule 7.2)... 15 2. Forbidden referrals... 15 3. Permitted forms of referrals and practices akin to referrals... 16 4. Note that fee splitting sometimes resembles referral fees, particularly when a lawyer refers a matter to a specialist but retains a fee split on the matter. Fee splitting with a lawyer in another firm is discussed below at IVH2e.... 16 IV. Duties between Lawyers and Clients during the Attorney Client Relationship... 16 A. Lawyerly Rights and Duties Before the Attorney Client Relationship ( ACR ) is Created:... 16 1. The lawyer is governed by the rules on advertising and solicitation (see, III.B)... 16 2. Meetings with prospective clients (1.18)... 16 B. Accepting and Rejecting ACRs... 17 1. Must ACRs... 17 2. Should ACRs... 17 3. May Not ACRs. Lawyers may not undertake or continue representations where:... 17 C. Creation of the ACR... 18 1. Tests for creation... 18 2. Definition of the ACR:... 18 D. Client Identity... 18 1. Having natural person clients (i.e., human beings) often raises some ethics issues... 18 2. Organizations as clients. (1.13).... 19 3. Multiple Clients... 21 E. Scope of the Engagement. (1.2)... 22 1. Lawyer and client may reasonably limit the scope of the representation or the tactics used.... 22 2. Client must give informed consent to such limitations.... 22 F. Duties Flowing from Lawyer to Client during ACR (Fiduciary Duties) (1.x)... 22 1. Decision-making and power sharing. ( Abide & Consult ) (1.2)... 22 2. Communication (1.4)... 23 3. Competence (1.1)... 23 4. Diligence/Zeal. (1.3)... 24 5. Confidentiality, Privilege, and Work Product Protection (1.6; common law)... 25 6. Loyalty. (1.7-1.12)... 29 iii John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
7. Independent Judgment. (2.1)... 37 8. Safeguarding Property... 37 G. Duties Related to Attorneys Fees... 39 1. Clients may owe lawyers contractual duties, whereas lawyers owe clients fiduciary duties.... 39 2. Fees... 39 H. Termination of the ACR... 40 1. Tribunal s permission needed after appearance:... 40 2. Termination by Client:... 41 3. Termination by Lawyer: Shall withdraw (1.16(a)) if:... 41 4. Termination by Lawyer: May withdraw 1.16(b)) if:... 41 5. Termination by completion of assigned task... 42 6. Termination by operation of law occurs upon:... 42 7. Procedure for withdrawal:... 42 8. Duties pertaining to termination:... 43 I. Post-Termination Duties (duties surviving termination of the ACR).... 43 1. Rules pertaining to confidentiality survive the ACR. (e.g., MR 1.6; 1.9(a)-(c))... 43 2. Lawyer must forward to client or successor counsel any communications the lawyer receives pertaining to the terminated ACR. (Rest LGL 33(2)(c))... 44 3. The duty of loyalty survives the ACR to the extent the conflict of interest rules turn on the terminated lawyer s receipt or possession of client confidences. (e.g., MR 1.6; 1.9(a)-(c))... 44 4. There are a few cases dealing with unusual fact patterns that suggest that a lawyer has a continuing duty of loyalty that precludes the lawyer from attacking her own work product or the subject matter that was the focus of her prior efforts for the former client.... 44 V. Lawyers Duties to Third Parties and Social Systems during the Attorney Client Relationship... 44 A. Duties to Non-clients during the ACR... 44 1. Duties to All Third Parties... 44 2. Duties to Represented Persons (4.2)(the no contact rule )... 45 3. Duties to Unrepresented Parties (4.3)... 46 B. Role-Based Duties to Social Systems during the ACR... 46 1. Litigator/Advocate... 46 2. Evaluator (2.3)... 49 3. Counselor/Advisor... 49 4. Negotiator... 49 Appendix A Concise Summary of Consents under ABA Model Rules... 51 Appendix B Detailed Summary of Consent, Disclosure, and Notification in the ABA Model Rules and the California Rules of Professional Conduct... 52 iv John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
I. ABA Model Rules of Professional Conduct... 52 A. By Rule... 52 B. By Type... 53 Appendix C Principal Differences between California and ABA Ethics Rules... 55 Appendix D Catalog of Ethics Issues Raised on Recent California Bar Examination Essay Questions... 57 Appendix F A Mnemonic-Driven Model for PR Essay Questions on the Bar Examination... 60 Appendix H Spotting Issues of Fee Sharing, Fee Splitting and Referral Fees... 65 Appendix I Summary of Exceptions to the Duty of Confidentiality... 66 RULES PREAMBLE AND SCOPE... 67 RULE 1.0: TERMINOLOGY... 70 RULE 1.1 COMPETENCE... 72 RULE 1.2: SCOPE OF REPRESENTATION AND ALLOCATION OF AUTHORITY BETWEEN CLIENT AND LAWYER... 74 RULE 1.3: DILIGENCE... 76 RULE 1.4 COMMUNICATIONS... 77 RULE 1.5: FEES... 78 RULE 1.6: CONFIDENTIALITY OF INFORMATION... 81 RULE 1.7: CONFLICT OF INTEREST - CURRENT CLIENTS... 85 RULE 1.8: CURRENT CLIENTS SPECIFIC RULES... 92 RULE 1.9: DUTIES TO FORMER CLIENTS... 97 RULE 1.10: IMPUTATION OF CONFLICTS OF INTEREST GENERAL RULE... 99 RULE 1.11: SPECIAL CONFLICTS OF INTEREST FOR FORMER AND CURRENT GOVERNMENT OFFICERS AND EMPLOYEES... 101 RULE 1.12: FORMER JUDGE, ARBITRATOR, MEDIATOR OR OTHER THIRD-PARTY NEUTRAL... 103 RULE 1.13: ORGANIZATION AS CLIENT... 105 RULE 1.14: CLIENT WITH DIMINISHED CAPACITY... 108 RULE 1.15: SAFEKEEPING PROPERTY... 110 RULE 1.16: DECLINING OR TERMINATING REPRESENTATION... 111 RULE 1.17: SALE OF LAW PRACTICE... 113 RULE 1.18: DUTIES TO PROSPECTIVE CLIENT... 116 RULE 2.1: ADVISOR... 117 RULE 2.2: DELETED... 118 RULE 2.3: EVALUATION FOR USE BY THIRD PERSONS... 118 RULE 2.4: LAWYER SERVING AS THIRD-PARTY NEUTRAL... 120 v John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
RULE 3.1: MERITORIOUS CLAIMS & CONTENTIONS... 121 RULE 3.2: EXPEDITING LITIGATION... 121 RULE 3.3: CANDOR TOWARD THE TRIBUNAL... 122 RULE 3.4: FAIRNESS TO OPPOSING PARTY & COUNSEL... 125 RULE 3.5: IMPARTIALITY & DECORUM OF THE TRIBUNAL... 126 RULE 3.6: TRIAL PUBLICITY... 127 RULE 3.7: LAWYER AS WITNESS... 129 RULE 3.8: SPECIAL RESPONSIBILITIES OF A PROSECUTOR... 130 RULE 3.9: ADVOCATE IN NONADJUDICATIVE PROCEEDINGS... 132 RULE 4.1: TRUTHFULNESS IN STATEMENTS TO OTHERS... 133 RULE 4.2: COMMUNICATION WITH PERSON REPRESENTED BY COUNSEL... 134 RULE 4.3: DEALING WITH UNREPRESENTED PERSON... 135 RULE 4.4: RESPECT FOR RIGHTS OF THIRD PERSONS... 136 RULE 5.1: RESPONSIBILITIES OF A PARTNER OR SUPERVISORY LAWYER... 136 RULE 5.2: RESPONSIBILITIES OF A SUBORDINATE LAWYER... 138 RULE 5.3: RESPONSIBILITIES REGARDING NONLAWYER ASSISTANT... 138 RULE 5.4: PROFESSIONAL INDEPENDENCE OF A LAWYER... 139 RULE 5.5: UNAUTHORIZED PRACTICE OF LAW; MULTIJURISDICTIONAL PRACTICE OF LAW... 140 RULE 5.6: RESTRICTIONS ON RIGHTS TO PRACTICE... 141 RULE 5.7: RESPONSIBILITIES REGARDING LAW-RELATED SERVICES... 142 RULE 6.1: VOLUNTARY PRO BONO PUBLICO SERVICE... 144 RULE 6.2: ACCEPTING APPOINTMENTS... 146 RULE 6.3: MEMBERSHIP IN LEGAL SERVICES ORGANIZATION... 146 RULE 6.4: LAW REFORM ACTIVITIES AFFECTING CLIENT INTERESTS... 147 RULE 6.5: NONPROFIT & COURT-ANNEXED LIMITED LEGAL SERVICES PROGRAMS... 147 RULE 7.1: COMMUNICATION CONCERNING A LAWYER'S SERVICES... 148 RULE 7.2: ADVERTISING... 149 RULE 7.3: DIRECT CONTACT WITH PROSPECTIVE CLIENTS... 151 RULE 7.4: COMMUNICATION OF FIELDS OF PRACTICE & SPECIALIZATION... 153 RULE 7.5: FIRM NAMES & LETTERHEAD... 154 RULE 7.6: POLITICAL CONTRIBUTIONS TO OBTAIN LEGAL ENGAGEMENTS OR APPOINTMENTS BY JUDGES... 154 RULE 8.1: BAR ADMISSION & DISCIPLINARY MATTERS... 155 RULE 8.2: JUDICIAL & LEGAL OFFICIALS... 156 RULE 8.3: REPORTING PROFESSIONAL MISCONDUCT... 157 RULE 8.4: MISCONDUCT... 158 RULE 8.5: DISCIPLINARY AUTHORITY; CHOICE OF LAW... 159 vi John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
A. Who Regulates the Profession? 1. State courts (especially state supreme courts). I. REGULATION OF THE LEGAL PROFESSION a. State supreme courts oversee the legal profession in that state and manage the state bars and discipline process. b. State trial and appellate courts regulate lawyers appearing before them. This includes rules of procedure, discovery rules, and, in federal courts, Federal Rule of Civil Procedure 11, which forbids frivolous and baseless litigation and tactics. 2. State bar associations a. Mandatory bars. (All lawyers who wish to practice law in that state must join the bar association; majority approach in the US.) b. Voluntary bars. (Lawyers decide if they wish to join the bar association; minority approach in the US.) 3. State legislatures a. When a state legislature attempts to regulate the bar, there is a potential separation of powers issue under that state s constitution. States vary in how aggressively they protect the state supreme court s control over the bar. b. California has extensive legislative control over the bar. In the State Bar Act (Cal. Bus. &Prof. Code 6000, et seq.), the legislature has pervasively regulated the formation and operation of the bar. (1) Fee agreements are regulated in the State Bar Act. (2) Due to historical accident, the lawyer s duty of confidentiality was defined by the legislature in the State Bar Act, rather than in the ethics rules (i.e., the California Rules of Professional Conduct). Today, the ethics rules mirror the State Bar Act regarding the duty of confidentiality. (3) The State Bar of California is a public corporation created by statute, and all licensed lawyers are members of the corporation. 4. Substantive state law a. Criminal law governs lawyers. b. Civil law governs lawyers. This includes the law of legal malpractice, breach of fiduciary duty, and fraud. 5. Federal law a. Agency ethics codes. Most federal agencies have promulgated ethics codes for the lawyers appearing and practicing before the agency. For examples, pursuant to the Sarbanes-Oxley Act, the Securities and Exchange Commission, which regulates publicly traded companies, has issued an ethics code for lawyers appearing and practicing before the SEC. b. Legislation. Increasingly, Congress has passed legislation that appears to apply to activity commonly undertaken by lawyers. Because the regulation of lawyering has traditionally been a matter of state law, the ABA and lawyers have asked the federal courts to interpret such laws not to include lawyers. But the 1 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
current US Supreme Court seems inclined to interpret those laws of general applicability to include lawyers. Example: Congress passed a law forbidding all persons from advising people to load up on additional debt just before filing for bankruptcy. The United States Supreme Court held that the law applied to lawyers. c. Agency regulation. Increasingly, federal agencies are seeking to substantively regulate the practice of law. For example, the FTC has attempted to regulate lawyers to the extent that they are creditors of clients. d. Court rules and procedures. Codes of civil procedure often regulate the advocacy of the lawyers appearing before the court. Perhaps the best known example is Rule 11 of the Federal Rules of Civil Procedure, which limits frivolous advocacy. e. Federal treaty obligations. Increasingly, the federal government is entering into trade agreements and other international commitments that regulate legal practice. Because federal law is the supreme law of the land, these regulations may preempt traditional, state-based regulations. Example: Suppose that during a round of international trade talks, the United States agrees that Australian lawyers may represent Australian citizens on legal matters even when the Australian lawyers are located in the United States. Such a federal law would preempt state regulation of the practice of law and the states would not have the power to forbid the Australian lawyers from doing what the federal law permits. 6. The American Bar Association (ABA) does not formally regulate the legal profession. Its ethics rules are simply a model code that states are free to adopt, modify, or reject. But the ABA does exert enormous influence over the regulation of the legal profession at the state and federal level by promulgating standards that are adopted by courts, agencies, and bar associations. B. Admission to the Profession. 1. Truthfulness in admission process a. When applying for admission to the bar, a strong duty of candor is required. b. Applicants can make no false statements when applying for admission. (8.1(a)). c. Applicants have an affirmative duty to respond to questions from admissions authorities. (8.1(b)) d. Applicants have an affirmative duty to correct any factual misapprehension of the authorities (8.1(b)). e. This strong duty of truthfulness also applies when lawyers are being disciplined. Example: Applicant realizes that the state bar s admissions committee mistakenly believes that applicant has no prior arrests. Even if applicant did not create the confusion, lie about arrests, or conceal arrests, applicant has a duty to dispel the committee s misapprehension. 2. Character & Fitness ( C&F ) requirement a. This is a constitutionally permitted requirement. b. Right to due process hearing. 2 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
c. Rehabilitation is considered. (E.g., lawyers who have suffered from mental illness or substance abuse, or who have committed a crime, may offer evidence of rehabilitation.) 3. Valid and invalid considerations in C&F determinations for admission a. Valid considerations in C&F determinations (1) Criminal conduct. (2) Concealment of bad acts. (3) Advocating unlawful or violent overthrow of the government. (Note: a lawyer may not advocate unlawful, violent or illegal overthrow of the government. Lawyers may advocate peaceful or lawful changes in government.) (4) The applicant s refusal/agreement to take an oath of allegiance to laws and constitution may be considered. (5) Acts of moral turpitude (i.e., acts showing lack of honesty), which include: Definition: This unusual term, moral turpitude, is a key term of art in the law of lawyering. Learn it! Although modern legal ethics codes use the term less frequently than in the past, the term refers to conduct that is inherently deceitful and immoral. Getting a parking ticket isn t an act of turpitude. But lying about getting a ticket is. Moral turpitude includes: (a) Dishonesty and fraud. (b) Theft (c) Concealment of improper conduct. (d) Conduct prejudicial to justice. (e) Suggesting that you possess improper influence over judges and officials. (f) Assisting a judge or official violate their ethics and rules. (g) Note: A lawyer may be disciplined for acts of moral turpitude occurring anywhere in their life not just for acts while lawyering. Example: Lawyer, who is licensed to practice in Montana, takes a vacation in Hawaii, enters a fishing contest, and lies about his catch in order to win a trophy. Result: lawyer has committed an act of moral turpitude and may be disciplined by the state bar in Montana. b. Invalid considerations in C&F determinations: (1) Citizenship, state or federal. (2) Residency. (3) Political views. 3 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
C. Regulation after Admission 1. Bar Discipline. We need to distinguish the discipline systems from other legal regimes that punish bad lawyers a. The discipline system is typically run by the state bar or by volunteers working for it. (Discipline can also be administered within a federal agency or a federal court.) Historically, it s usually been considered quasi-criminal and punitive in nature, because it has the power to forbid a person from pursuing his or her occupation. (More recently, some states are trying to make state bar discipline more like any other administrative licensing process and less like a quasi-penal process.) The discipline system cannot impose money damages or incarceration; it can impose disbarment, suspension, probation, and censure (admonishment), and fees and costs of the discipline process. b. Other regimes. As we will discuss below, ( I.D.) lawyers can also be subjected to criminal prosecution; civil law suits for negligence, breach of fiduciary duty, or breach of contract; motions to disqualify the lawyer from further participation in a matter; and discovery sanctions for abusive positions in civil or criminal pretrial discovery. Try to keep these regimes distinct as you discuss and analyze them. They have different purposes and standards. 2. Professional discipline - substantive violations. Lawyers are subject to professional discipline for: a. Criminal conduct. b. Non-criminal acts of moral turpitude. c. Violations of the ethics rules. d. Secondary liability for misconduct. Lawyers may be disciplined for: (1) Assisting other lawyers or judges to commit disciplinable offenses. (2) Using others to commit offenses on their behalf. 3. Professional Discipline - procedures and law. a. The process normally includes a written complaint; an opportunity to respond; a hearing; and an appeal. b. Lawyer owes the duty of candor to the disciplinary authorities. Lawyers being disciplined have the same strong duty of candor toward the disciplinary authorities that applies to people seeking admission to the bar, as discussed above at IB1. (1) The lawyer has no right to refuse to incriminate herself. c. Lawyer has due process rights. d. Disabilities (e.g., alcoholism) are considered and opportunities to attempt rehabilitation should be afforded. e. Choice of law: (1) When the alleged violation occurred before a court or tribunal, the ethics rules of that tribunal govern the lawyer s conduct. 4 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
Example: Lawyer is licensed to practice in Wyoming and then is admitted to practice pro hac vice ( for that matter ) in Colorado, where lawyer engages in fraud during a trial. Lawyer is subject to discipline in both Wyoming and Colorado, and the ethics rules of Colorado will apply in the discipline proceedings in Wyoming and Colorado. (Note: The ethics rules of both states are probably identical on that issue, but that s not true for all ethical violations.) (2) For other violations, the site of bad conduct governs. For the vast majority of discipline matters, that will be a state where the lawyer is licensed and practices laws. f. Collateral use of finding of discipline violation: (1) States make automatic collateral use of discipline imposed by other state bars. Example: A lawyer is licensed in Maryland and California. The State Bar of Maryland finds that the lawyer violated its ethics rules. The State Bar of California would discipline the lawyer without an independent hearing on whether the lawyer violated Maryland s ethics rules. (2) Federal courts undertake independent investigations and do not make collateral use of the discipline findings of other bars. Example: Lawyer is licensed in Maryland and California, including the USDC for the District of Northern California. The State Bar of Maryland finds that the lawyer violated its ethics rules. The USDC for the Northern District of California would not discipline the lawyer based solely upon the findings of the Maryland bar, but rather would open an independent investigation of the lawyer s conduct. D. Peer Responsibility for Regulation of Lawyers 1. Supervisors and subordinates a. The rules (5.1) mention two kinds of bosses: (1) Partners and persons of comparable managerial authority, whether they be in law firms or law departments, must ensure that the firm has measures, that is, internal policies and procedures, giving reasonable assurances that the firm s lawyers are conforming to the ethics rules. (5.1) (a) They must also have measures to ensure that any non-lawyers they supervise behave in a way that is compatible with the lawyer s ethical duties. (5.3) (2) Lawyers with direct supervisory authority over other lawyers shall take reasonable steps to ensure that the supervised lawyer is conforming to the ethics rules. (5.1) (a) They must also take steps to ensure that any non-lawyers they supervise are acting in ways that are compatible with the supervisor-lawyer s ethical duties. (5.3) (3) Both kinds of bosses are responsible for ethical breaches by other lawyers or non-lawyers if the boss orders or ratifies the breach, or fails to mitigate or avoid the breach at a time when the boss could have done so. (5.1; 5.3) b. Subordinates are bound by ethics rules notwithstanding a supervisor s orders. (5.2) 5 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
2. Law firms (1) Exception: In response to disciplinary charges, subordinates can raise an affirmative defense that they were following orders of a supervisor if the supervisor s orders were a reasonable resolution of arguable question of ethics ( RRAQ ). (5.2) Example: Partner and Associate disagree on whether a request for production of documents requires them to produce a particular document. After debating the merits, Associate believes that the rules of ethics and the rules of civil procedure are best read to require production. The Associate also reasonably concludes that a reasonable person could draw the opposite conclusion. The Partner instructs the Associate not to produce the document and she therefore does not produce it. Result: Associate has not breached her ethical duties. Example: Partner failed to finish and serve her opposition to a summary judgment motion by the due date. Partner instructs Associate to backdate the proof of service to make it appear that the opposition was served on time. Associate complies with Partner s instructions. Result: Associate has breached his ethical duties, because this is not a reasonable resolution of an arguable question. a. Definition: under the ABA approach, a firm is any group of lawyers working together as a unit. This would include private practice firms the in-house legal department at a corporation, the group of lawyers working at the City Attorney s office, and other similar groups. (1.0(c)) b. Under the majority approach in the United States, law firms do not have ethical duties. Only individual lawyers do! But, because law firms have partners and supervisory lawyers, as discussed above, those kinds of lawyers within the firm will have an ethical duty to regulate legal practice within the firm. c. Firms cannot be disciplined under ABA scheme. Example: Junior lawyers at a private practice firm are stealing money from a client. A partner learns of the theft but does nothing to prevent it or rectify it. The junior lawyers and the partner would be subject to discipline, but the firm itself would not. 3. Mandatory reporting (8.3) a. Lawyers are required to report to the state bar any breach of the ethics rules that raises a substantial question about a lawyer s honesty, trustworthiness, or fitness to practice. b. Lawyers are required to report to appropriate judicial discipline authorities any judge s breach of the rules of judicial conduct that raises a substantial question as to the judge s fitness for office. Example: A lawyer sees a judge park in a no-parking zone, step out of her car, and take a bribe from a criminal accused. The lawyer has a duty to report the bribe but has no duty to report the parking violation. c. The reporting duty does not require revelation of client confidences. But, if revelation would not prejudice the client, the lawyer should ask the client for permission to reveal the bad conduct. d. The reporting duty doesn t apply to conduct that the lawyer learned through participation in a Lawyer s Assistance Program (such as, Alcoholics Anonymous programs run by the state bar for lawyers suffering from substance abuse or related problems). 6 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
E. Legal Regimes Governing Lawyers (The questions on the MPRE usually indicate the legal regime that is being used to govern the lawyer s conduct. It s important to recognize the different regimes.) 1. Criminal Law. Questions involving criminal law often have to do with theft, bribery, obstruction of justice, and extortion. a. Also, because the United States Constitution guarantees a criminal accused effective assistance of counsel, there is a category of conduct, ineffective assistance of counsel, that applies to inadequate lawyering on behalf of a criminal accused. That category is sometimes called IAC. 2. Disciplinary Process. Questions involving discipline typically involve breaches of the ethics rules and the general prohibition against acts of moral turpitude. 3. Civil Law. Questions involving civil liability often involve claims of legal malpractice, misrepresentation, and breach of fiduciary duty. 4. Disqualification Law. Questions asking whether the lawyer is subject to disqualification primarily involve the ethics rules and law governing conflicts of interest. 5. Litigation Sanctions. Questions involving litigation sanctions often involve discovery abuse and violations of Federal Rule of Civil Procedure 11 (which is, in effect, a mini-code of legal ethics for federal litigation). Such questions often involve fines, fee forfeitures, disqualification, punishment for contempt, and similar sanctions. Note: to the extent that MPRE questions deal with privilege or civil litigation, unless the question states otherwise, you must assume that the governing law is given by the Federal Rules of Evidence and the Federal Rules of Civil Procedure. A. Obey the Law II. LAWYERS OVER-ARCHING DUTIES TO THE LEGAL PROFESSION 1. Do not commit, counsel, or assist criminal conduct. (1.2(d)) 2. Do not commit, counsel, or assist fraudulent conduct. (1.2(d)) 3. Exceptions: a. A litigator may disobey an obligation of a tribunal, but only openly and on an assertion that no valid obligation exists. (3.4(c)) b. A lawyer may counsel a client to break a law for purposes of obtaining standing to challenge the legitimacy of the law, if there is a good faith basis for that challenge. Example: In the 1950s, many municipalities still had laws requiring racial segregation on public transportation such as buses and trains. Lawyer meets with a client and advises her that to gain 7 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
standing to challenge the constitutionality of the laws, the client should refuse to abide by the segregation law. Result: lawyer is not subject to discipline. B. Maintain Professional Boundaries: Who May Practice Law & Where 1. Lawyers may not engage in or facilitate the unauthorized practice of law ( UPL ) by non-lawyers or by lawyers practicing law outside the jurisdiction where they are licensed. (5.5) a. Definition. The practice of law is: (1) Application of legal principles and judgment; (2) Regarding a person s particular situation; (3) As traditionally recognized as practice of law. b. Definition. UPL is any practice of law that is not permitted by the state or federal regulatory scheme. Often, UPL issues involve non-lawyers or lawyers who are acting outside the geographic scope of their license. c. Forbidden behavior; UPL (1) Non-lawyers may not represent other people or organizations on their legal matters. (2) Disbarred or suspended lawyers may not practice law, and licensed lawyers may not assist them to do so. Exception/Example: Suppose a licensed lawyer, with full disclosure to the State Bar and with full permission from the State Bar, hires a disbarred lawyer to work in a law firm as a clerk, away from clients and the court. If the fact pattern explicitly says that a fully informed State Bar approved of that course of conduct, then assume it is lawful. d. Permitted behavior, Not UPL: (1) Handling one s own legal affairs. Example: If you are a licensed lawyer and Mary Jones is not, it is permitted for you to help her represent herself in an upcoming legal matter. But, if Mary Jones says that she plans to represent others in the trial, you may not assist her because that would be assisting her UPL. (2) Non-lawyers (e.g., paralegals, administrative assistants, and secretaries) acting under a licensed lawyer s supervision. (3) Non-lawyers helping others to fill out legal forms or fill in the blanks on legal documents; that is not UPL. (4) Any activities by non-lawyers permitted by state or federal law. Example: A federal law permits non-lawyers to represent other people in hearings about certain administrative benefits. A non-lawyer, Maria, attends such a hearing where she represents her friend Robert. Result: Maria s conduct is not UPL. 2. Non-legal work ( Law Related Services ) by licensed lawyer. 8 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
a. Sometimes, a licensed lawyer provides services that are not the practice of law, but seem related to the practice of law. For example, a litigation attorney might own a copier/messenger business or a real estate attorney may run an escrow company. In that case, the lawyer has some ethical duties. (5.7) b. The lawyer s ethical duties apply to the provision of law-related services if they are not distinct from the provision of legal services, or if the lawyer fails to inform the recipient that the services are not the practice of law and that the protections of the attorney client relationship do not apply. Example: A real estate lawyer owns an insurance brokerage and informs the client that those services are not the practice of law and that when interacting with the brokerage the normal protections of the attorney client relationship, such as confidentiality, do not apply. Result: the ethics rules would not apply to the brokerage business. c. Therefore, if the lawyer wants the law-related services not to constitute legal practice, she should keep the services distinct from her legal services and inform the client that the service is not the practice of law and that, for example, the attorney client privilege does not apply. 3. Lawyers shall not practice law where not admitted. (5.5) a. Usually, this is an issue of geography. States license lawyers and lawyers should not practice outside their licensed state unless an exception applies. This issue can also arise under the rules of an agency. For example, only members of the patent bar may prosecute patents before the U.S. Patent and Trademark Office. There are some exceptions to the general rule. b. A lawyer may be admitted to another jurisdiction for one matter. This is called pro hac vice admission ( for this matter ). (1) Pro hac vice admission must be approved by the relevant tribunal. (2) The lawyer must have a reasonable connection to the matter. (3) The lawyer admitted pro hac vice is typically required to associate with local co-counsel on the matter. c. A lawyer may participate in out-of-state ADR arising from home state lawyering. Example: Iowa lawyer with Iowa clients flies to Miami to represent her Iowa-based client in an arbitration or mediation. This is permitted and is not UPL. d. A lawyer may do legal work in a non-admitted jurisdiction when such work is reasonably related to lawyer s practice in an admitted jurisdiction, but only so long as the lawyer does not open an office or maintain a systematic and continuous presence in the non-admitted jurisdiction. (5.5(b)) Example: Once or twice a year, lawyer visits the out-of-state office of a corporate client for a day or two of meetings. Result: this is not a systematic and continuous presence in the other state; the lawyer has not committed UPL. Example: Because lawyer s in-state corporate client has a satellite office out-of-state, lawyer rents an office suite near the client s satellite office and spends many weeks doing legal work in the suite. Result: lawyer has committed UPL. e. In-house, employed lawyers who have a valid license of admission from some state may represent their employer in a non-admitted state where they do not have a license. 9 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
Example: Lawyer is licensed only in Kentucky and works in-house for her sole client, the Corporation. Corporation opens a new office in Idaho and lawyer relocates to that location, still working only for her corporate employer. Result: Lawyer s conduct is permitted and is not UPL. Note: if Lawyer acts unethically, she may be disciplined in both Kentucky and Idaho. f. A lawyer may do any legal work anywhere as permitted by state or federal law. C. Maintain Professional Boundaries: Financial Participation in the Legal Profession 1. A lawyer must maintain the independence, including the financial independence, of the legal profession. Often this rule is intended to prevent legal matters from becoming commodities, from giving lawyers improper financial incentives, and from sharing legal fees with non-lawyers. (5.4) 2. The general rule is that a lawyer may not share legal fees with a non-lawyer. (5.4) The traditional rationale is that once a lawyer is sharing legal fees with non-lawyers, the lawyer will have a financial incentive other than the best interests of the client. There are some behaviors that appear to involve sharing fees with non-lawyers, but that are permitted. Some examples: a. An agreement to pay a lawyer s estate after her death is permitted. b. An agreement to purchase another lawyer s practice, if done appropriately under 1.17 as discussed below, often results in a permitted payment to a retired lawyer. c. A lawyer may use her legal fees for a compensation or retirement plan including non-lawyers, even if the plan is in whole or in part a profit-sharing arrangement. Example. Suppose a plaintiff s lawyer has a regularly established compensation plan, including profit-sharing retirement benefits, for her employees. That is permitted under 5.4(a)(3). But suppose the lawyer wins a big fee and decides to give $50,000 of the fees to each paralegal and secretary. That would be improper fee sharing. d. Sharing court awarded legal fees with non-profit organization that employed or recommended lawyer is OK. Example. Suppose organization Citizens for Greener Laws recommends that some citizens hire you, and you win a test case for them, and are awarded statutory attorneys' fees. If the organization is a non-profit, you may turn over the court-awarded attorneys' fees to the organization. (5.4(a)(4)) 3. When a non-client pays the lawyer s fees, or when a non-client recommends that the lawyer be hired, the lawyer must not allow that non-client to direct or regulate the lawyer s judgment or interfere with the attorney client relationship. (5.4(c)) 4. The practice of law with non-lawyers is not permitted. a. Forbidden: forming a for profit partnership with non-lawyers where any of the partnership practices law (5.4(b)) 10 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
Examples: Under the ABA approach, a law firm partnership may not admit a non-lawyer partner who is, for example, a lobbyist. A lawyer may join a real estate investment partnership with nonlawyers so long as none of the partnership s business is the practice of law. b. Forbidden: forming a corporation or association where non-lawyers have managerial responsibility over the lawyer s professional judgment. (5.4(d)) Example: A large law firm organized as a professional corporation may have a non-lawyer Chief Financial Officer if the CFO neither manages the professional judgment of the lawyers nor interferes in the lawyers exercise of professional judgment. 5. Contractual restrictions on practice: a. The general rule is that a lawyer may not contract away her ability to practice law unless an exception applies. b. A lawyer may not agree to restrict her practice as part of a settlement agreement. (5.6(b)) Example: Defendant offers plaintiff a $5 million settlement, so long as plaintiff s attorney agrees not to represent any clients adverse to defendant for the next five years. That agreement is forbidden under Rule 5.6(b). c. A lawyer may covenant not to compete in exchange for benefits upon retirement. (5.6(a)) d. As discussed below, a lawyer may agree to restrict her practice as part of the lawful sale of a law practice. 6. Selling a law practice is permitted under certain conditions. (1.17) a. The selling lawyer must altogether cease to practice in their current area of law or in their current geographical area; Example. A 65-year-old lawyer maintains a business litigation practice and a trusts and estates practice in both San Francisco and Los Angeles. He may sell his entire law practice; may sell just the trusts-and-estates practice or just the litigation practice; or may sell one of his two geographical areas. b. The entire practice (or area of practice) must be sold; and c. Clients must be given written notice of: (1) The proposed sale; and (2) The client s right to retain other counsel and/or take possession of the client file; and (3) The fact that the client s consent to transfer will be presumed if the client takes no action or does not object within 90 days of receipt of the notice. d. Fees may not be increased by reason of the sale. 11 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
D. Pro Bono and Public Service (6.1) 1. In general, lawyers are called to participate in efforts to improve the quality of justice and access to justice. (I use the phrase called to, because as explained below, these duties are aspirational and cannot be used as grounds for professional discipline.) a. Lawyers are called to engage in, and to financially support, such efforts. b. Often, a lawyer s pro bono and public service work takes place in organizations other than the lawyer s law firm or place of employment. For that reason, as discussed below in IV.F.6.e, special rules apply to conflicts of interest arising from public service work. 2. Types of public service. a. Traditional pro bono service: work for free or reduced fees for persons of limited means. (1) Lawyers should aspire to do 50 pro bono hours annually. Note that the phrase should aspire is aspirational and failure to do so cannot result in professional discipline. (2) Free legal work (and reduced fees work) for the poor is the core of the pro bono aspiration. In addition, a lawyer should aspire to participate in the other kinds of public service discussed below. b. Appointments. Sometimes the court will appoint a lawyer to do such work. As discussed below at IV.B., lawyers shall accept appointments unless there are adequate grounds for declining the work. (6.2) c. Legal Services Organization. (6.3) Across the country, legal services organizations provide legal services to persons of limited means. These organizations typically have boards and staff lawyers, and other lawyers may elect to serve as volunteers. d. Law Reform Organizations. (6.4) Lawyers may become involved in organizations seeking the reform of law, such as tort reform, environmental reform, etc. e. Non-profit and Court-annexed legal service programs. (6.5) Sometimes, a court, county bar association, or non-profit will organize programs where lawyers are sought to participate and dispense legal advice in short-term representations. For example, a county bar association might run a Tenant s Rights Clinic once a month at a local community center. III. GETTING CLIENTS: COMMUNICATIONS, ADVERTISING, SOLICITATION, AND REFERRALS A. The Constitutional Limitations on Regulation of Lawyer Speech 1. Speech seeking pecuniary (i.e., for profit) employment is commercial speech and as such it enjoys intermediate constitutional protection. 2. State governments can, and do, ban false or misleading speech by lawyers. a. All false and misleading communications by lawyers are forbidden, regardless of the type of communication. b. The lawyer may truthfully communicate fields of law the lawyer practices, if the lawyer is a patent agent, proctor in admiralty, or if the lawyer is officially a certified specialist in a field. 12 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
(1) Note: California is one of the states that has extensive procedures for becoming a certified specialist in certain fields. 3. State governments can, and do, ban lawyer speech likely to result in coercion, harassment, and duress. a. All communications by lawyers causing coercion, harassment, and duress are banned. b. The government s right to ban coercive communications justifies the ban on in-person solicitations, discussed below. ( III.B.3) B. Definitions and Rules 1. Communications Example: Lawyer is permitted to personally solicit a former client. After telephoning the former client twice and leaving voicemails asking to be hired, the former client asks the lawyer to stop calling her. Lawyer calls the former client again, asking to be hired. Result: Lawyer has violated the ethics rules because lawyer is engaging in harassing and coercive communications. is the broadest term and includes any form of exchange of information whatsoever about the lawyer s availability for for-profit employment. Exception/Example: A lawyer for the NAACP wants to find a test plaintiff for a case to enforce voting rights. The lawyer actively telephones possible plaintiffs. If the client is successful, the NAACP will receive attorneys fees, which could amount to a substantial sum. Result: because this form of communication is in furtherance of first amendment rights (such as petitioning the government for redress of grievances) the below rule prohibiting in-person solicitation of clients for for-profit purposes will not apply. 2. Advertising includes broadcasted communications about the lawyer s availability for for-profit employment. Being broadcast means the communications are presumably heard or seen by persons who might need the lawyer s services and those who might not. A television advertisement for a personal injury lawyer is a classic example. (7.2) a. Advertising cannot be false or misleading. b. The advertising must include the name and address of the lawyer or firm responsible for the content of the advertising. c. Although the Model Rules are silent on this point, many states require lawyers to maintain copies of their advertising for several years, so that the state bar can audit or investigate as needed. 3. Solicitations include communications where the lawyer is directly communicating the lawyer s availability for pecuniary employment to a person who the lawyer believes might need the lawyers services. Solicitations come in two types: a. In person solicitations include direct communications, where the lawyer speaks directly to the potential client in person, or on the telephone, or in real time electronic contact (e.g., internet chats). 13 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
(1) The basic ban: lawyers shall not solicit in-person for profit professional employment except from (i) a lawyer, or (ii) a person with whom the lawyer has a family, personal, or professional connection. Example: A personal injury lawyer sees a truck run a red light and smash into a car full of people. In the car are the lawyer s brother, another lawyer in town, a former client, the lawyer s best friend, and a complete stranger. The lawyer may solicit all the victims except the last one. (Note, however, if the solicitation is done while the victims are still trapped and in agony, the state bar is likely to assert that the solicitation was coercive!) (2) The ban on in-person solicitation applies to live conversations, telephone conversations, and real time electronic communications (e.g., internet chats, texting, and instant messaging). It does not apply to email solicitations, because email is deemed not to be in-person. b. Written and recorded solicitations (e.g., robo-calls ) that are not in person are often called targeted mailings and recordings. For example, the lawyer might obtain a list of homeowners whose homes were recently foreclosed and then send them a letter or a recorded phone call; that is not forbidden by the ban on solicitation. (Note, however, that the targeted mailing cannot be false or misleading.) (1) The basic ban does not apply to targeted mailings and recordings. (The recipient can always hang up or throw away the mail.) (2) Targeted solicitations must say Advertising Material. C. Firm Names and Letterheads (7.5) 1. Can t be false or misleading a. May state it s a partnership or organization, but only when true. Example: A new lawyer, working alone, may not name her law firm Mary Smith and Associates if there are no associates working with her. b. May use the names of deceased partners. 2. Trade names are permitted, but a. Trade names may not imply any connection with a government agency. b. Trade names may not imply any connection with a public or charitable legal services organization. Examples: You may name your firm, I Can t Believe It s a Law Firm! or Lawyers for Tenants. You may not name your private practice firm, Alameda County Superior Court Advocates. 3. Geographic use of names a. Firms may use the same name across geographic jurisdictions. b. The firm must indicate when lawyers in an office aren t licensed in that jurisdiction. Example: If you visit the website for any major firm s office in Washington, D.C., you will see many lawyers biographies with disclaimers, Not licensed to practice in Washington, D.C. or Practice limited to federal agencies. ) 14 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
4. Lawyer holding public office a. The firm may not use the name of a lawyer holding public office if the lawyer is not practicing there. Example: Mary Jones, a partner in the firm, Smith, Jones & Garcia, wins an election for a judge s seat in the local court and leaves the firm. The firm must drop the Jones from the firm s name. Example: Mary Jones, a partner in the firm, Smith, Jones & Garcia, wins an election for district attorney in a county where DAs are part-time and are permitted to maintain a private practice. Jones serves as DA and also works at the firm. The firm may keep Jones as part of the firm s name. b. The firm may use the name of lawyer not practicing there if lawyer is now providing free legal services in the public sphere. Example: Mary Jones, a senior partner in the firm, Smith, Jones & Garcia, retires from the firm and offers her services for free to the County Art Commission. The firm may keep using Jones in the firm name. D. Referrals by Others 1. Basic rule: except as otherwise provided in the rules, lawyers are not permitted to pay others for channeling professional work to the lawyer. (Comment [5] to Rule 7.2) The traditional rationales for the rule are that paying for referrals creates an incentive that steers the lawyer away from the client s best interests and that legal matters should not be treated as commodities to be bought and sold. 2. Forbidden referrals a. Forbidden: Utilizing cappers and runners or persons paid for steering clients to the lawyer. (Most these unethical agreements include a per head fee for sending personal injury clients to the lawyer). b. Forbidden: Taking government legal engagement or appointment by a judge after a political contribution made for the purpose of obtaining that work. This practice is sometimes called pay to play. (7.6) Example: A lawyer donates to the re-election campaign of the County Executive for the purpose of obtaining legal work from the County. That is a violation of the rule. Example: A lawyer routinely donates to the reelection campaign of county judges and challengers, including to judges who have the power to steer work to local lawyers. If the lawyer s donation is not for the purpose of obtaining that work, the donation is permitted and the lawyer may still apply for that work. c. Forbidden: A lawyer must not permit a person referring business to the lawyer to direct or regulate the lawyer s personal judgment in rendering the services. (5.4(c)) d. Forbidden: Bare referral fees where the referring lawyer is paid a fee that is not proportional to the amount of work done by the referring lawyer. (1.5(e)) (Note: in contrast, some states like California, do permit the referring lawyer to do no work other than the referral itself and still split the fee.) Example: A business lawyer refers a personal injury matter to a lawyer who practices those kinds of cases. The personal injury lawyer pays the referring lawyer $1,000. Result: under the ABA approach, both lawyers are subject to professional discipline. 15 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
3. Permitted forms of referrals and practices akin to referrals a. Lawful purchase of another lawyer s law practice is permitted. (1.17) (See II.C.6). b. Lawful non-profit referral. c. Legal services plans approved by appropriate regulatory authorities (typically, the state or county bar association) are permissible. (7.2(b)(2)) d. Non-exclusive, fully-disclosed cross-referrals with lawyers or other professionals are permitted. (7.2(b)(4)). (1) Cross-referral agreement cannot be exclusive. (2) Client must be informed of existence and nature of agreement. (3) Note: the fees are not being split; referrals are exchanged. Example: A trusts and estates lawyer and an accountant agree to cross-refer clients to each other. The agreement isn t exclusive (i.e., each remains free to refer clients to other professionals) and the lawyer informs her client about the arrangement. Result: the lawyer s conduct is permitted. 4. Note that fee splitting sometimes resembles referral fees, particularly when a lawyer refers a matter to a specialist but retains a fee split on the matter. Fee splitting with a lawyer in another firm is discussed below at IVH2e. IV. DUTIES BETWEEN LAWYERS AND CLIENTS DURING THE ATTORNEY CLIENT RELATIONSHIP A. Lawyerly Rights and Duties Before the Attorney Client Relationship ( ACR ) is Created: 1. The lawyer is governed by the rules on advertising and solicitation (see, III.B) 2. Meetings with prospective clients (1.18) a. The duty of confidentiality and privilege already apply even though the lawyer and prospective client have not yet formed an attorney client relationship. b. Lawyer must protect the prospective client s property (e.g., files, evidence, etc.). c. Disqualification of lawyers who received the prospective client s confidences: (1) Lawyers who received confidences from the prospective client are disqualified from taking on related matters adverse to prospective client. (2) The disqualification of the lawyers who received the prospective client s confidences is not imputed to other lawyers in that firm if: (a) The lawyers who learned prospective clients confidences only learned enough to weigh taking on the client; and (b) The lawyers who learned prospective clients confidences were timely screened; and 16 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
(c) The lawyers who learned prospective clients confidences don t share in the fees from the matter adverse to the prospective client; and (d) Written notice is given to the prospective client. B. Accepting and Rejecting ACRs 1. Must ACRs a. Court appointments must be accepted (6.2) unless: (1) The appointment will cause undue financial hardship to the lawyer. Example: A lawyer is appointed to represent an indigent person facing a mental health commitment hearing. The lawyer could make more money doing litigation for businesses but the appointment will not cause financial hardship. The lawyer may not reject the appointment. Example: A new lawyer who is having great trouble getting her practice off the ground is appointed to handle a matter that will take a great deal of time to complete. The lawyer may reject the appointment. (2) The client or matter is repugnant to the point of affecting the lawyer s performance. Example: A lawyer is appointed to represent a child molester. The lawyer finds the client and the matter repugnant, but is still able to fully represent the client. The appointment may not be rejected. (3) Representing the client likely leads to breach of ethics or law. 2. Should ACRs Example: A lawyer is appointed to represent an indigent client but to do so she must act adversely to the interests of one of her current clients who does not wish to waive any conflicts. This presents a conflict of interest and the lawyer must reject the appointment. a. Pro bono representations (see II.D. above) (6.1). b. Representing the defenseless, oppressed and unpopular is a form of pro bono work. (Note: This is a traditional, aspirational norm.) 3. May Not ACRs. Lawyers may not undertake or continue representations where: a. The representation requires unethical conduct by the lawyer, such as: (1) Suits purely to harass. (4.4) (2) Frivolous matters. (3.1) (3) Unconsented conflicts (discussed further below) (a) Conflicts can include lawyer s personal interests and commitments. (1.16; 1.7) b. The lawyer would counsel or assist the client to commit crime or fraud. (1.2) 17 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
(1) Distinction: the lawyer may assist the client to understand what s lawful and the consequences of breaking the law. (1.2) c. The lawyer would be incompetent C. Creation of the ACR (1) As to skill or subject matter (discussed further below, IV.F.3); or (2) Mental or physical incompetence. 1. Tests for creation a. The ABA Model Rules do not define the test for the creation of an attorney client relationship; most states look at the reasonable expectations of the putative client. b. Contract approach: Some state law provides that an ACR is formed when client signals assent to form ACR and the lawyer agrees or doesn t disagree. c. Some state law provides that an ACR is formed when the lawyer should know that the client is reasonably relying on the lawyer. d. Court appointments (see IV.B. above). 2. Definition of the ACR: a. The ACR is a fiduciary relationship from lawyer to client. The client is the principal and the lawyer is the agent. b. Usually, the ACR is a contractual relationship from client to lawyer. c. To properly define an ACR you must ascertain the client s identity. ( D below) d. To properly define an ACR you must ascertain the scope of the representation. ( E below) D. Client Identity 1. Having natural person clients (i.e., human beings) often raises some ethics issues a. Non-client payors of the legal fees ( Third party payors, discussed further below, IV.F.6.d ) (1) Paying the legal fees doesn t automatically make one a client. (2) Non-client payors create conflicts that can be waived. (3) This issue often arises with insurers and insureds (discussed below). b. Clients under a disability (1.14) (1) There are various types of disability (minors, mentally ill, etc.). (2) Lawyers must treat the client as normally as possible under the circumstances. 18 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
(3) Disability isn t all or nothing. Clients may be disabled for some decisions and at some times, yet be fully competent for other decisions and at other times. (4) In extreme cases, the lawyer may reasonably protect client by seeking appointment of conservator or guardian. (a) If client has an appointed conservator, the lawyer shall take direction from the conservator. c. Friends and family (1) Make sure to protect privilege and maintain confidentiality. The presence of a non-client during attorney client communications may waive privilege and breach the duty of confidentiality. Example: Lawyer meets with a fully competent, adult client. During the meeting with client, the client s friend is present and lawyer does not obtain the informed consent of the client regarding the probable loss of privilege and breach of the duty of confidentiality. The friend listens to what the lawyer and client discuss. Result: The conversation is not protected by the attorney client privilege; the lawyer has probably breached the duties of confidentiality and competence to the client. 2. Organizations as clients. (1.13). This is a major, often-tested issue. In the real world, this is an area where decent, good lawyers frequently make mistakes! a. The Entity Theory. A representation of an organization (e.g., a corporation) is the presentation of the entity itself and not of its constituents (officers, directors, employees, shareholders). (1) Lawyers should prevent and correct confusion over the lawyer s role. If the lawyer senses that one of the entity s agents believes the lawyer represents him/her personally, the lawyer must clear up the confusion. Also, the lawyer shall explain the identity of the client when the lawyer reasonably knows that the organization s interests are adverse to the constituent with whom the lawyer is dealing. (1.13(f)) Example: An in-house lawyer at Acme, Inc., is asked to interview a Vice President who is suspected of theft from the company. Lawyer, who knows that the organization s interests are adverse to the interests of the VP, must explain to the VP that the organization is the client and that the VP is not. (This warning is sometimes colloquially called the Upjohn Warning, or the Corporate Miranda Warning. ) Example: An in-house lawyer for a corporation meets with a Senior Vice President about an ordinary legal matter for the corporation. The matter is not adverse to the interests of the SVP, but the lawyer realizes that the SVP believes the lawyer represents her personally on the matter. The lawyer, who represents only the entity, has an ethical duty to dispel that confusion. (2) Representing the entity does not always preclude the lawyer from representing the entity s agents, but that decision to add a second client (e.g., the corporate Vice President) may create a conflict of interest with the lawyer s representation of the entity, and so undertaking to represent the agent should be carefully considered and clearly documented, with a conflict waiver letter if necessary. 19 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
Example: An in-house lawyer for a corporation meets with a Senior Vice President about a legal matter for the corporation. The SVP asks, how does this affect me personally? If the lawyer gives personal advice to the SVP, the lawyer has created an ACR with the SVP which probably conflicts with the lawyer s representation of the corporation. The lawyer should either clarify to the SVP that the SVP is not a client or should carefully consider whether to take on the SVP as a second client, with the informed consent of the SVP and the organization to the conflicting representations. b. Organizational Clients--Additional Duties and Rules: (1) When representing an organizational client, the lawyer turns to the rules of the organization (e.g., bylaws and articles of incorporation) or to governing law (e.g., the corporate law of that state) to determine who at the entity client has the authority to make decisions. (1.13) (2) When the lawyer becomes aware of legal violations that may be attributed to the organization, the lawyer must act reasonably in the interests of the organization. Normally, that requires the lawyer to report the situation to appropriate authorities at the organization and, if the matter is not resolved, to report the matter to higher authorities within the organization, including, if appropriate, the highest authority within the organization. (This is sometimes called reporting up the org chart, or reporting up the chain of command. ) (1.13(b)) Example: Lawyer learns that her corporate client has mislabeled a small number of products for export. There is no substantial penalty for the mislabeling and the situation is unlikely to re-occur. Result: lawyer should report the situation to some appropriate officer or employee at the corporation. Example: Lawyer learns that some members of the sales force have offered bribes to public officials, in violation of criminal law. Lawyer should report this matter to high ranking authorities in the organization (which often is the Board of Directors). (3) As long as the lawyer is reporting the news up the chain of command within the entity client, the lawyer is still fulfilling her duty of confidentiality to the client, because the lawyer is only disclosing information to the authorized agents of the entity client. (4) When the lawyer is interacting with and communicating with the organization s agents (e.g., employees, officers, directors), attorney client privilege applies to the communications, but the entity owns the privilege and can decide whether to waive it or not. Example: Lawyer representing corporation interviews a division manager who had been involved in a disagreement with a customer over the interpretation of a contract. Lawyer prevented any confusion from arising about the identity of the client; the manager knows that she is not personally the lawyer s client. The conversation is privileged and the entity can decide whether to waive the privilege and disclose to the customer what the manager said in the interviews. Manager will not be able to assert a personal attorney client privilege and prevent the disclosure. (Note, however, that if the lawyer handles the interview poorly and leaves the manager with a reasonable expectation that the manager is personally a client, then the lawyer will have created a real conflict about what or who controls the privilege!) (5) If, after the lawyer reports a clear violation of law up the chain of command, the organization fails to address the issue in a timely and appropriate matter, and if the lawyer believes that the violation will result in substantial injury to the organization, then the lawyer may, but is not required to, reveal information relating to the representation to the extent permitted by Model Rule 1.6 and as is necessary to prevent substantial injury to the organization. (1.13(c)) 20 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
(6) The may reveal exception contained in 1.13(c) does not apply to lawyers who are hired to investigate or defend an alleged violation of law. Example: The Department of Justice informs Acme, Inc., that it is being investigated for allegedly bribing foreign officials. In response, Acme hires some lawyers from a white collar criminal law boutique to investigate the allegations and defend the company from any actions brought by the DOJ. Result: those lawyers may not invoke the may reveal exception under 1.13(c). They must report information up the corporate chain of command, but may not reveal what they ve learned to persons outside their client, Acme, Inc. (7) For publicly traded companies, the regulation of the reporting up the chain of command function is governed not by rule 1.13, but rather by a federal law called Sarbanes-Oxley. (Being federal law, it preempts any state ethics code.) The provisions are similar to rule 1.13. (a) A reporting lawyer for an organization will report a violation of law to the Chief Legal Officer (CLO) (typically, the General Counsel of the company) or to the CLO and the CEO of the company. If such a report is futile for example, if the CLO and CEO have committed the violation and are covering it up then the reporting lawyer reports the matter to the Board of Directors or to an authorized committee of the Board. (b) As is the case with rule 1.13, if the violation of law is not adequately addressed by the entity client, the reporting lawyer may disclose information to the Securities Exchange Commission in order to prevent or rectify the violation of law. c. Government Entity as Client. The foregoing comments about organizational clients also apply when the lawyer represents a government agency or entity. But, as comment [9] to MR 1.13 makes clear, representation of government agencies is complicated and can be difficult. It can be hard to define the precise government agency that is the client (e.g., an agency, a branch of government, or the entirety of a state or federal government). Government lawyers are more likely than other lawyers to be governed by specific statutes, rules, and policies. And there may be situations where the duty of confidentiality is more flexible for government lawyers, allowing them to release client confidences to prevent malfeasance. In addition, there are special conflict of interest rules, discussed below, dealing with current and former government attorneys. 3. Multiple Clients a. In some situations, a lawyer undertakes to represent two or more clients on the same matter. These are called joint representations. Joint representations raise some ethical issues: (1) Conflicts of interest. If the lawyer s representation of either jointly represented client might materially limit the lawyer s responsibilities to the other jointly represented client, the lawyer has a conflict of interest and must consider if the conflict can be waived and, if so, how it can be waived. (2) Confidentiality and privilege. The general rule in the United States is that when a lawyer jointly represents multiple clients on a matter, the lawyer must share material information with all the clients and must protect confidentiality and assert privilege against any non-client. Further, if the joint clients later commence a dispute between or among themselves, none of the jointly represented clients may assert privilege against the other(s) regarding communications that were made during the joint representation. b. Representation of Insurer and Insured ( Tri-partite representations). Many insurance policies provide for the costs of legal defense and provide that the insurer may select counsel for the insured. Broadly speaking, there are two approaches in the United States to the definition of the client in such cases. In some states, if there is no conflict between the position of the insurer and the insured, the attorney client relationship is considered tri-partite. That is, the lawyer represents the insurer and the insured. In 21 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
other states, the lawyer is deemed to represent only the insured. These situations can raise subtle and complicated conflicts situations. More detail is provided in Appendix XXX. E. Scope of the Engagement. (1.2) 1. Lawyer and client may reasonably limit the scope of the representation or the tactics used. Examples: Client might forego costly tactics; might decline to utilize repugnant tactics; might agree to limited objectives. 2. Client must give informed consent to such limitations. Example: A family lawyer realizes that his clients often cannot afford his services. So the lawyer draws up an engagement letter for an unbundled or limited scope representation. The lawyer and the client go over the various tasks that must be accomplished and assign some to the lawyer and rest to the client. Client signs the letter. For most hearings, the lawyer advises the client on what arguments to make and does some role playing to help the client make an appropriate argument. Result: if the limitations inherent in the unbundled representation are reasonable (and these are reasonable) and if the client gives informed consent to the limitation, the lawyer has complied with the ethics rules. F. Duties Flowing from Lawyer to Client during ACR (Fiduciary Duties) (1.x) 1. Decision-making and power sharing. ( Abide & Consult ) (1.2) a. Client decides lawful & ethical objectives. That is, the lawyer must abide by the competent client s choice of lawful objectives. (1) The objectives must be lawful and ethical. (2) In civil cases, whether to settle is a choice that belongs to the client, not to the lawyer. (3) In criminal cases, the client controls: (a) The plea to be entered; (b) Whether to waive jury trial; and (c) Whether to testify. Exception: as discussed below, if the client intends to commit perjury, the lawyer may not permit the client to take the stand. (3.3) (4) As noted above ( IV.D.2.b.), with organizational clients, the right to determine the objectives of the representation lies with the authorized agents of the client (e.g., officers, directors). b. The lawyer decides the tactics or means after client consultation (1.2). (1) The lawyer must still consult about the means and tactics to be used. (2) The lawyer may take whatever steps the lawyer is impliedly authorized to take. (3) Tactics, or means, include what witnesses to call, exhibits to use, arguments to make, etc. 22 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
2. Communication (1.4) a. The lawyer must communicate so client can make informed decisions that belong to the client. b. The lawyer must keep client reasonably informed about the status of the matter. c. The lawyer must respond timely to reasonable requests for information. d. Answer those phone calls! e. If the lawyer is too busy to respond immediately to the client, the lawyer may have a subordinate (secretary, paralegal) inform the client that the lawyer will respond once she has an opportunity to do so. f. The lawyer must inform the client about limitations on the lawyer s conduct when the lawyer knows that the client expects assistance that is unethical or illegal. (1.4(a)(5)) Example: Client hires lawyer in a marital dissolution proceeding. Client asks lawyer how they can hide financial documents from the other side and asks lawyer to use tactics designed to harass the other side. Result: Lawyer has an ethical duty to communicate to client that the lawyer may not engage in those behaviors. g. Withholding information from the client. (1) Lawyers may sometimes delay communications to the client if the client is likely to act imprudently. (1.4, comment [7]) Example: The court issues a major ruling in a case, but the lawyer knows that the client s mother has just undergone emergency surgery. The lawyer feels that the client is not emotionally prepared to handle the news of the court ruling. The lawyer may delay telling the client until the crisis has passed but must still inform the client of the ruling. (2) Lawyer may be under a court order not to share certain information with the client. If so, the order trumps the duty of communication. Example: In a commercial litigation, the judge rules that certain business information of the parties is subject to discovery but may not be shared with the business people at the opposing party. The lawyer may not share that information in violation of the judge s order. h. Lawyers must communicate reasonably with disabled clients. (see IV.D.b.) 3. Competence (1.1) a. Lawyers are required to exhibit/possess legal knowledge, skill, thoroughness, and preparation. b. Lawyer may acquire competence through study or associating co-counsel. (Note: the concept of the incompetent newbie is often tested; know the two ways to acquire competence!) c. In an emergency, a lawyer may give assistance as needed and then either gain competence or turn the matter over to a competent lawyer. Example: Lawyer, who has little or no criminal defense experience, receives a call late Friday night from a friend who has been arrested. Lawyer unsuccessfully tries to reach several criminal practitioners by phone. Lawyer may assist the client in the emergency over the weekend, but should transfer the matter to a competent criminal lawyer on Monday. 23 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
d. Lawyers must maintain competence. (e.g., CLE and study) e. Malpractice claims against lawyer: (1) Can be based on any substandard lawyering (not just incompetence) (2) Tort elements: duty, breach, causation, damages (a) Use of Rules to Determine Duty and Breach. Under the majority approach in the United States, and under the approach on the MPRE, the ethics rules are relevant to defining duty and breach but do not absolutely define them. (Under the two minority approaches, the ethics rules are (i) irrelevant and excluded from the malpractice trial, or (ii) are absolutely determinative of duty and breach and the jury is so instructed.) (b) But for causation. To succeed, the plaintiff must show what would have happened if the lawyer had performed competently and ethically. This is called proving the case within a case. For example, the plaintiff might try to prove what contract she would have entered into had her lawyer performed competently. It is not enough for the plaintiff to show that some substandard lawyering had some substantial effect on the negative outcome. (c) In a case for malpractice in a criminal defense matter, the majority approach in the United States provides that the client must prove actual innocence before proceeding against the lawyer. (d) A client who agrees to settle a matter may still allege malpractice against the lawyer who represented her. The fact that she agreed to the settlement does not bar her from alleging, for example, that the lawyer s malpractice prompted her to settle the case on bad terms. (e) A lawyer may ask the client to prospectively waive negligence and malpractice claims if the client is advised by an independent lawyer while agreeing to waive those claims. (1.8) (Note: although this is permitted in the Model Rules, it is rarely permitted in the real world.) (f) A lawyer may negotiate a release of a client s malpractice claims against the lawyer after the malpractice has occurred if the lawyer advises the client to seek independent advice of counsel regarding the release. (1.8) f. The duty of competence is owed to the client and, in rare situations, to intended third party beneficiaries of the legal services. (1) Clients and a narrow class of intended third party beneficiaries of the legal work are the only persons who can sue the lawyer for malpractice. (2) The classic case of the intended third party beneficiary is the person to whom the client wanted to leave her money in a will or trust. Example: Ms. Smith hires Lawyer to draft a will that leaves Smith s money to Ms. Jones, and the Lawyer commits malpractice resulting in Ms. Jones not receiving the inheritance, Ms. Jones may sue Lawyer for malpractice even though she is not a client. Note: this is an exception to the general rule that only clients can sue lawyers for malpractice. 4. Diligence/Zeal. (1.3) a. The lawyer must timely pursue client s objectives and fight obstacles. b. No procrastination! 24 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
c. Personal crises are irrelevant. Example: The lawyer is suffering from mental anguish because his father is dying from cancer. If the anguish causes the lawyer to fail to act diligently, the lawyer has breached his ethical obligation. The lawyer should have overcome the anguish or transferred the matter to another lawyer. d. Unless relationship is terminated, the lawyer must actively carry on the relationship. e. Solo practitioners should have contingency plan for disability or death (e.g., referrals to other lawyers). 5. Confidentiality, Privilege, and Work Product Protection (1.6; common law) a. Privilege defined: communications between a client (or client s agent) and a lawyer (or lawyer s agent) made in confidence, for the purpose of securing legal advice, and not for the purpose of furthering a crime or fraud, are privileged from compulsory testimony or production. (1) Crime-fraud exception defined: If the communication was for the purpose of furthering a crime or fraud, the communication is not privileged, even if the lawyer was unaware of the client s nefarious purpose and if the lawyer s advice took the form of perfectly legal advice. Example: Corporate client is secretly running an ongoing stock fraud and asks Lawyer for some advice about Delaware corporate law so that the client can send out some routine (but false) business notices to the investors who are being defrauded. Lawyer assumes that Client is lawful. Lawyer s advice is routine and appears to be perfectly lawful. Result: because the Client is using the communication to further the fraud, the communications are not privileged ab initio (from the start). Notice that Lawyer s good intentions and lack of fraudulent intent do not prevent the crime-fraud exception from applying. (2) The presence of non-agent, third party destroys the privilege. Example: Lawyer wants to interview client, but client does not speak English well. At the client interview, lawyer is accompanied by her administrative assistant, a paralegal, and a translator. Result: privilege is not lost, given that the others in the room are agents for the lawyer. (3) Privilege applies to communications with prospective clients. (4) As discussed above, IV.D.2, privilege applies to communications with organizational clients, but the organization holds the privilege and controls the decision to waive or not waive privilege. (5) Waiver of privilege. (a) Client s choice generally. Note that in representations of an entity client, the decision to waive would belong to the entity and not to, for example, the Senior VP who had the privileged communication with the entity s lawyer. (b) Waiver by raising issues (e.g., if client alleges as an affirmative defense that it relied upon the advice of counsel, then the privilege is waived as to that advice). (c) Waiver by claim against lawyer. If the client sues the lawyer for malpractice or other grounds that implicate the lawyer s work for the client, the privilege is waiver to the extent that the lawyer needs to defend herself. 25 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
(6) Joint Privilege. When a lawyer represents two clients on the same matter, it is called a joint representation. In those situations, the lawyer s communications with each client are privileged as against non-clients. (a) Either client may assert the privilege as to its own communications with the lawyer and as to the other client s communications as well (unless the other client has waived its privilege regarding its communications with the lawyer). (b) If the two clients later having a falling out and commence legal proceedings against each other regarding that matter, then neither of the former co-clients may assert privilege against the other regarding communications made during the course of the joint representation. Example: Plaintiff sues Ann and Betty, who jointly hire Lawyer to represent them. Each of the co-clients engages in privileged communications with Lawyer. Plaintiff seeks to learn what Betty told Lawyer. Unless Betty has waived privilege as to her communications with the lawyer, both Ann and Betty can assert privilege as to Betty s communications with the jointly retained lawyer. Later, Ann and Betty begin to squabble and they each fire Lawyer and hire new, independent lawyers. Ann s new lawyer seeks to learn the content of all of Betty s communications with the prior lawyer when Ann and Betty were joint clients. Betty s new lawyer tries to assert privilege as to those communications, but the judge correctly rules that Betty may not assert privilege against Ann for those communications. (Note, however, that Betty is now a single client with her own independent lawyer and hence Betty may assert privilege against Ann regarding Betty s communications with her new lawyer.) (7) Privilege survives death of client. b. Confidentiality defined. The duty of confidentiality has a very broad scope! It pertains to all information relating to the representation. It s not limited to the client s secrets; it can include publicly available information. California emphasizes that it includes all information that could be embarrassing or detrimental to the client. Example: Plaintiff sues defendant and defendant hires lawyer. Plaintiff s lawyer tells defendant s lawyer some information about the defendant. Although the conversation between the two lawyers was not a privileged conversation, and although the information transmitted to the defendant s lawyer is already known by the plaintiff and the plaintiff s lawyer, that information is still a confidence under the ethics rules because it is information relating to the representation of a client. (1) The duty of confidentiality applies to information learned from prospective clients. (1.18) (2) Under 1.6(a), a lawyer may disclose confidences to the extent the lawyer is expressly or impliedly authorized to do so. (3) The ABA and MPRE approaches provide for certain exceptions to the duty of confidentiality C, I under which the lawyer may reveal a client confidence even when the client has not given express or implied authorization. Indeed, the rules sometimes permit the lawyer to reveal client confidences even over the objection of the client. (4) The following exceptions are found under MR 1.6(b) and when they apply, the lawyer may reveal client confidences: (a) Under 1.6(b)(1), to prevent reasonably certain death or substantial bodily harm. 26 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
Example: Lawyer represents Husband in a marital dissolution matter. Lawyer learns that Husband has obtained a handgun and is driving to his spouse s house with the intent of shooting her. Lawyer may reveal client confidences as is reasonably necessary to prevent the death or substantial bodily harm to the spouse. Example: In the course of a representation of a corporate client, Lawyer learns that her client has just purchased a piece of land that is polluted with toxins that over time are likely to cause death or substantial bodily harm. Even if the client did not create the situation, the lawyer may reveal client confidences to the extent reasonably necessary to prevent death or substantial bodily harm to others. (Note: the comments to the rule suggest that in these situations, the lawyer should first raise the issue with the client before the lawyer decides to reveal the confidence.) (b) To prevent or rectify substantial financial injury through the client s crime or fraud where the lawyer s services were used in furtherance of the crime or fraud. (1.6(b)(2-3)) Example: A corporate lawyer has helped a client make private offerings in a real estate investment partnership. After nine months of working for the client, the lawyer realizes that the client is really a ponzi scheme that is defrauding the existing partners and is seeking to defraud new partners. Because the client has used the lawyer s services in carrying out the fraud, and because disclosure of client confidences would help the existing partners rectify the fraud and help the potential partners prevent being defrauded, the lawyer may reveal client confidences for those purposes. Example: Similar facts to the prior example, except that the person running the investment partnership (i.e., the person conducting the fraudulent scheme) retains a lawyer because the he is now being investigated by state and federal authorities for financial fraud. He needs to hire a white collar criminal defense lawyer. Note that in this case, the lawyer s services have not been used in the carrying out of the fraud. They are being sought only for defensive purposes. In this case, there is no may reveal exception under 1.6(b)(2-3). Exception/Distinction: California s ethics rules do not permit a lawyer to reveal a client confidence to prevent or rectify a financial fraud. A California-licensed lawyer who discovered that the client was committing fraud would remonstrate with the client to stop committing fraud and would withdraw from representation of the client. (CRPC 3-100) (c) When the lawyer seeks legal advice about the scope of her ethical duties. (1.6(b)(4)) Example: Lawyer faces a difficult conflict of interest issue and seeks legal advice from an ethics specialist. Lawyer may reveal client confidences in order to obtain that legal advice. (d) When the lawyer needs to reveal the confidence to defend the lawyer from civil or criminal claims against lawyer or in a dispute between the lawyer and the client. (1.6(b)(5)) Examples: If the client sues the lawyer for malpractice or if the District Attorney files criminal charges against the lawyer, the lawyer may defend herself including by revealing client confidences to the extent necessary to mount the defense. But note that the comments to MR 1.6 provide that even if the lawyer is accused less formally, for example in an accusation made by telephone or in a letter before the filing of any complaint or charges, she may still defend herself by revealing client confidences. 27 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
Example: Lawyer concludes a business transaction for client. One month later, during a phone call, the opposing party in the transaction accuses lawyer of having committed a fraud during the transaction. Lawyer may reveal client confidences to defend herself. (Note: this exception may not strike you as intuitive, because of how informal the accusation against the lawyer is. (See 1.6, comment [10].)) (e) If a court order or other law requires disclosure. (1.6(b)(6)). Specifically, three other rules provide that if a lawyer may reveal a confidence under 1.6(b), then the lawyer must reveal the confidence under the other rule. That is, there are three rules where a 1.6(b) may reveal becomes a must reveal. (i) As discussed below in the sections on the ethics of dealing with third parties and on the ethics of negotiations, because a lawyer must prevent assisting in a criminal or fraudulent act by a client, in some situations the lawyer must reveal client confidences by disaffirming prior representations and in rare situations must reveal client confidences to third parties., I (See, IV.G ) (MR 1.2(d) & 4.1) (ii) Under MR 8.1, if the lawyer may reveal under 1.6(b), then the lawyer must reveal as required by 8.1. (1.6[15]). (iii) Under MR 8.3, if the lawyer may reveal under 1.6(b), then the lawyer must reveal as required by 8.3. (f) As noted above, when a lawyer representing an organization has reported a violation of law all the way up to the highest authority, the lawyer may reveal client confidences to prevent harm to the client. (See IV.D.2.b)(1.13(c)) (g) As discussed below in the section about the ethics of litigators, a lawyer must remedy any false testimony she has offered to a tribunal, including, if necessary, revealing client confidences to the tribunal. (3.3)(See V.A.1) c. Work Product defined: A series of court cases has created a right by which a lawyer may withhold certain materials that were created in anticipation of litigation (i.e., work product). (1) Core Work Product or Opinion Work Product. Depending on the jurisdiction, the lawyer s mental thoughts, impressions, strategies, etc., are either absolutely immune from discovery or can be compelled only upon a showing of extraordinary need. (Jurisdictions vary on whether core/opinion work product may be withheld from the client itself.) (2) Qualified Work Product. Other forms of work product, such as a list of witnesses generated by the lawyer, may be subject to discovery if the party seeking the work product can establish a substantial need for the information or that obtaining it in other ways will cause undue hardship. Example: Lawyer meets with a group of witnesses who saw an accident, generates a list of the witnesses names, and also includes the lawyer s mental impressions about which witnesses would make good witnesses at trial. The list of names is qualified work product and may be ordered to be produced if the other side can show substantial need or undue hardship. The lawyer s mental impressions are core work product and, depending on the jurisdiction, cannot be ordered to be produced or will be ordered to be produced only upon a showing of extraordinary need. (3) Sometimes the lawyer plays the role of evaluator and factually evaluates the client for the benefit of a non-client. The most common situation is when an acquiror in a merger demands that the acquiree s lawyer provides an opinion letter that makes factual representations about the acquiree. That role is discussed in section V below. When a lawyer evaluates a client for the benefit of a non- 28 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
6. Loyalty. (1.7-1.12) client, the lawyer is likely to reveal client confidences. The lawyer must obtain proper consent, after proper disclosure to the client, before doing so. (2.3) a. Definition: Conflicts of interest. Conflicts of interest include any incentive or interest that might substantially impede the lawyer s discharge of her duty to the client. (These are found in rules 1.7-1.12.) b. General analysis: (1) Is it a conflict? (2) What lawyers in a firm are affected by the conflict ( imputation of the conflict)? (3) Can the conflict be waived? (4) How can the conflict be waived? c. Conflicts with other current clients (1.7) (1) Conflict: direct adversity to current client (a) Classic direct adversity : suing or negotiating against current client. Example: Lawyer represents both Acme and Bravo on different matters. Acme asks lawyer to draft and file a lawsuit against Bravo. Result: undertaking that representation would create a direct adversity conflict under 1.7. Example: Lawyer represents both Acme and Bravo on different matters. Acme asks lawyer to represent it in friendly contract negotiations against Bravo. Result: undertaking that representation would create a direct adversity conflict under 1.7(a)(1). (2) Conflict: lawyer s representation of current client will be materially limited by lawyer s duty to someone else. (1.7(a)(2)) Example: Lawyer represents several persons forming joint venture and hence cannot represent any one of them on how to structure the corporation to maximize his or her ownership vis-à-vis the other founders. Example: Lawyer is asked by Acme to file a suit against Bravo (which is not a client.) But a key witness for Bravo is a close friend of the lawyer. Result: undertaking the representation would be materially limited by the lawyer s relationship to the key witness and hence is a conflict of interest under 1.7(a)(2). (3) It s a conflict to be adverse to a current client even if the adversity is unrelated to what you do for the client. That is, the matters are unrelated! is not a defense to current client conflicts! (4) Representing two economic competitors in non-adverse matters is not by itself a conflict. Representing one economic competitor on how to compete against the other is a conflict if both are current clients. Example: Lawyer represents Coca-Cola on some real estate lease matters and represents Pepsi regarding its foreign tax liabilities. Result: Although the two companies are economic 29 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
competitors, because it appears that neither representation entails adversity toward the other client, there is no conflict of interest. (5) In some situations, taking inconsistent positions for two different clients may raise a conflict of interest. (a) Conflict exists if conduct for one client will materially limit the lawyer s effectiveness in representing another client in a different case. (1.7[24]) (6) Consent -- Current Client Rule (a) There is a small category of always non-consentable conflicts: representing opposing sides in same litigation. Example: Acme sues Bravo and both companies ask Lawyer to represent. Lawyer may not represent the opposing sides in the same litigation. Example: Acme sues Bravo and Charlie as co-defendants. Result: If the defenses of Bravo and Charlie are compatible and if both companies consent to the joint representation, Lawyer may represent the co-defendants. (b) The lawyer must reasonably believe she can competently represent each client. (c) Each affected client must give informed consent, confirmed in writing. (ICCW; discussed below) (7) Hot Potato Rule. A lawyer may not fire a client or terminate an ACR for the purpose of taking on a matter adverse to the client. The act of dropping a client like a hot potato for that purpose does not negate the conflict. Example: Client represents Acme, Inc., on some small matters. Bravo, Inc., asks the lawyer to represent it on a huge lawsuit against Acme. Lawyer may not terminate the ACR with Acme for the purpose of taking on the matter adverse to Acme. d. Conflicts with lawyer s own interests. (1) Liens and other doing business with client issues. (1.8(a)). (a) Liens. A lien is a property right to possess something that the lien holder does not own. When lawyers obtain liens, they are usually liens against the recovery in the case or liens against the client s assets (e.g., the client s house) to ensure payment of the legal fees. Example: To protect her interest Lawyer asks client to agree that the lawyer may have a lien on any recovery in the case. Result: if lawyer complies with the technicalities of 1.8(a), the lien is permitted. Example: To protect her interest in recovering fees from the client, lawyers add a provision to the fee agreement by which lawyer takes a lien on the client s house. Result: if the lawyer complies with the technicalities of 1.8(a), the lien is permitted. (b) Business transaction with client. If the lawyer will be entering into a business relationship with the client, the provisions of 1.8(a) apply. 30 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
Example: Lawyer advises client on real estate investment partnerships. Client offers to let lawyer join one of the partnerships. Result: lawyer may do so if the lawyer complies with 1.8(a). Example: Lawyer represents start-up companies and offers that in lieu of cash payments, the client may pay the lawyer with shares of stock in the client. Result: lawyer may do so if the lawyer complies with 1.8(a). (c) All of these relationships are prohibited unless (i) the transaction is fair and reasonable ; (ii) is disclosed in writing; (iii) the client is advised of the desirability of seeking independent counsel about the relationship; (iv) client is given a reasonable opportunity to seek the advice of independent counsel; and (v) client gives informed consent in a writing signed by the client (IC, WSC). (2) Gifts and inheritances from clients (1.8(c)). (a) A lawyer should not solicit any substantial gift from a client unless the client is related to the lawyer. (Note: the rule bars solicitation of gifts. It does not absolutely bar lawyers from accepting unsolicited gifts from non-related clients. ) Example: Lawyer asks elderly client to give lawyer a silver vase that lawyer has long admired. Client is not a relative of lawyer. Result: Lawyer has violated 1.8(c). Example: As a token of appreciation, Client gives Lawyer a silver vase that Lawyer in no way solicited from client. Lawyer may accept the vase without violating 1.8(c). Note, however, that most states have common law rules providing that the client may rescind such gifts or that if the client wishes the gift returned then the lawyer bears the burden of proving that the gift was not obtained through undue influence. (b) The lawyer may not prepare on behalf of a non-relative client any instrument (e.g., will or trust) that gives the lawyer or any related persons to the lawyer any substantial gift. ( Related persons include spouses, children, grandparents, grandchildren or other person or relative with whom the lawyer maintains a close, familial relationship.) Example: Lawyer writes a will for client leaving an antique car to Lawyer. Client is not related to Lawyer. Result: lawyer has violated 1.8(c). Example: Lawyer writes a will for client leaving $10,000 to the lawyer s child. The client is not a relative of Lawyer. Result: Lawyer has violated 1.8(c). Example: Lawyer s mother asks lawyer to draft a will by which lawyer and her two sisters will equally share the mother s estate. Result: lawyer has not violated 1.8(c). (Note, however, that under most states common law, it may be possible to void the inheritance by the lawyer if it can be proven that the inheritance was obtained through coercion or undue influence.) (3) Literary rights from client (1.8(d)). Prior to the conclusion of the matter, a lawyer shall not make or negotiate an agreement giving the lawyer literary rights in the client s matter. Example: A criminal defense lawyer is engaged by a client who lacks money. Because the case is sensational and has been in the news, the lawyer bargains with the client at the outset of the matter to obtain the right to literary rights about the case. Result: lawyer has violated 1.8(d). 31 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
(4) Financial assistance to clients (1.8(e)). Generally, lawyer shall not provide client financial assistance (e.g., pay rent, medical bills). (a) Rationale: gives lawyer too much power and influence over client. (b) Lawyer may advance court costs and litigation expenses and repayment may be contingent on litigation success. (c) Lawyer may outright pay court costs and expenses of indigent clients. (5) Third party payors. (1.8(f)) If someone other than the client is paying the legal fees, lawyer must obtain the client s informed consent; must prevent interference with lawyer s independent judgment for the benefit of the client; and must protect client confidences. (a) Frequently tested fact pattern: Lawyer represents the insured but the legal fees are paid by the insurer. Lawyer must serve only the interests of the client-insured, must protect the client s confidences, and must obtain the client s informed consent to the payments by the insurer nonclient. (6) Aggregate settlements. (1.8(g))A Lawyer shall not participate in making an aggregate settlement unless (i) each client gives informed consent in a signed writing and (ii) lawyer s disclosure states existence and nature of the claims and settlements for all participants. (a) Exception: where aggregate settlement in criminal case doesn t involve guilt or nolo contendere. (7) Malpractice liability, limiting liability, and settlements. (1.8(h)) (a) Lawyer shall not prospectively limit malpractice liability unless client is independently represented by counsel regarding the limitation. (b) Lawyer shall not settle malpractice liability unless the client is advised in writing of the desirability of seeking independent counsel regarding the settlement and is given a reasonable opportunity to obtain independent counsel regarding the settlement. (8) Acquiring proprietary interest in litigation. (1.8(i)) This is forbidden, except that lawyer may obtain lien (discussed above) or reasonable contingency fee (discussed below). (9) Sexual relationship with clients. (1.8(j)) Sexual relationships with clients are forbidden unless the relationship pre-existed attorney client relationship. e. Conflicts arising from public service. (6.1 6.5) (1) For lawyers involved with a Legal Services Organization, the lawyer shall not knowingly participate in decisions that involve adversity to the lawyer s client. (6.3) Example. Lawyer sits on the board of a legal services organization deciding whether to sue a residential landlord in town. The landlord is a client of Lawyer s firm. Lawyer shall not participate in the decision. (2) For lawyers involved with law reform activities, if the organization is making a decision that might materially benefit a client, the lawyer shall disclose that fact, but does not need to identify the client, and may participate in the decision. (6.4) 32 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
Example. Lawyer sits on the board of Riverside Environmental Alliance, which is involved in lobbying, legal reform, etc. The Alliance is considering a proposal that, if passed, would benefit several of Lawyer s clients. Lawyer shall disclose that fact, but need not identify the particular clients, and may then participate in the decision without violating the ethics rules. (3) For lawyers involved in non-profit and court-annexed limited legal services, the lawyer shall abide by the conflicts rules to the extent the lawyer actually realizes that there is a conflict issue while participating in the service, and if the representation will be continued the lawyer will do a full conflicts check. (6.5) Example. Associate participates in a court-annexed program called Tenant s Rights Clinic, that educates tenants about their legal disputes. As Associate fields questions from tenants, if the Associate realizes that the question is adverse to a firm client the Associate should not participate but Associate does not have to run a conflicts check and if it turns out that the question was adverse to a firm client the Associate has not breached the ethics rules. If the legal representation does not terminate at the end of the conversation, the Associate will run a full conflicts check. f. Conflicts with former clients. (1) Adversity by lawyer who formerly represented a client. (1.9(a)) (a) It s a conflict if the new matter adverse to the former client is the same or substantially related to the matter the lawyer previously handled for the former client. ( SOSRM ). (b) The term of art, same or substantially related to the matter (SOSRM) enables the court to weigh the danger that the former client s confidences will now be used against the client. (c) SOSRM can be based on the similarity of legal issues in the previous matter for the former client and the new adversity to the client. But SOSRM can also be present if the facts disclosed in the previous matter are the kinds of facts that would be useful in the adversity to the former client. (2) Adversity by lawyer whose prior firm represented a client (1.9(b)) (a) It s a conflict for a lawyer to undertake a matter adverse to prior firm s client if the matter is SOSRM to what the prior firm did for client and if the lawyer acquired material confidences from prior firm s client. Example: While Lawyer was at the firm of Able & Baker, lawyers at that firm represented Consolidated, Inc., on securities law issues. Lawyer did not represent Consolidated on those matters. Lawyer then moves to firm of Delta & Echo. Financial Services, Inc., wants to hire Lawyer and Delta & Echo to sue Consolidated Inc. for securities law fraud. If Lawyer acquired any material confidences of Consolidated while at prior firm, then it would be a conflict for Lawyer to undertake the adversity to Consolidated, even if Lawyer herself did not represent Consolidated while at Able & Baker. (1.9(b)) (3) Use or revelation of information relating to the lawyer s prior representation of a client, or relating to the lawyer s firm s representation of a client. (1.9(c)) (a) Cannot use such information to the disadvantage of the former client except as permitted in the rules or when such information has become generally known. (b) Cannot reveal such information except as permitted by the rules. 33 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
(c) Notice how broad that definition of information is: any information relating to the representation. Example: Lawyer helps Real Estate Investors, Inc., plot strategy for the purchase and redevelopment of land in various parts of town. In doing so, Lawyer learns (i) how the zoning process works in that town; and (ii) which properties the client thinks are undervalued in the market. Both are information relating to the representation. Lawyer can make use of (i) for other clients and to build her book of business, so along as the matters are not to the detriment of Real Estate Investors, Inc. Lawyer cannot make use of (ii) to purchase the land that Lawyer knows that Real Estate Investors wants to buy. (4) Special case: government lawyer. (a) Must follow government s own conflicts rules and statutes (b) Current government lawyer cannot participate in matter in which lawyer personally and substantially worked before government service. (1.11(d)) (c) Current government lawyer cannot negotiate for private employment with party or lawyer in matter in which government lawyer is participating personally and substantially. (1.11(d)) Example: Government lawyer is personally and substantially negotiating for City a lease on City property under which Acme Inc., may become be a lessee. The law firm of Able & Baker is representing Acme on the lease negotiations across from Government lawyer. Government lawyer may not negotiate for employment with Able & Baker while the matter is ongoing. (d) Former government lawyer can t participate in matters in which she participated personally and substantially as a government lawyer. (1.11(a)) (i) Former government lawyer s disqualification is imputed to others at the firm unless lawyer is timely screened, prompt written notice is given to government agency so it can ascertain compliance, and the former government lawyer receives no part of the fees in the matter. (1.11(b)) (e) Former government lawyer cannot be adverse to person when lawyer obtained material confidences about that person while as a government lawyer (1.11(c)) (i) Former government lawyer s disqualification under this rule is imputed to others at firm unless lawyer is timely screened, the former government lawyer enjoys no portion of fees from matter, and the former client is given notice. (1.11(c)) (5) Special case: former judges, neutrals, and law clerks. (a) Special rules apply to judges & adjudicative officers (and their law clerks); and to third party neutrals (arbitrators and mediators) ( Neutrals ). (1.12(a)) (b) Former neutral shall not represent anyone in connection with a matter in which they participated personally and substantially in neutral role. 34 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
(i) But may do so if all parties consent, confirmed in writing. (c) A neutral shall not negotiate for employment with party or lawyer appearing in a matter in which the Neutral is personally and substantially participating. (1.12(b)) (i) Exception: law clerks can, after notice to supervisor Neutral. (d) Former Neutral s disqualification is imputed to other lawyers at firm unless timely screened, enjoys no portion of fees; timely notice is given to parties and the appropriate tribunal. g. Conflicts with third parties. Conflicts can arise out of the lawyer s relationships with persons other than clients. (1) Third party payors. When a non-client pays the client s legal fees, the conflict is that the lawyer may reveal client confidences to the payor or may let the payor make decisions that belong to the client. (1.7; 1.8; 5.4) (2) Opposing lawyer. The lawyer may have a personal or professional relationship with the lawyer on the opposing side. If that relationship is likely to materially limit the lawyer s representation of the client, it is a conflict of interest. (1.7) (3) Witnesses. h. What lawyers are affected by the conflict ( imputation )? Once we determine that any lawyer has a conflict of interest, we must ask if that conflict applies to other lawyers that is, if the conflict is imputed to other lawyers. ( Imputation is the ABA term of art, and it s discussed mostly in MR 1.10. Under the California approach, we ask if there is a vicarious imputation of other lawyers. As of Fall 2011, California has no ethics rule that directly addresses the issue; the issue is addressed by California case law.) (1) Definition: Firm. When applying imputation rules, it s important to remember that the term firm includes a wide variety of scenarios where lawyers are working in a cohesive work setting, including private practice firms, in-house corporate law departments, legal services organizations, etc. (1.0(d)) (2) Conflicts arising under MR 1.8: imputation is governed by 1.8(k) (a) You will recall that 1.8 regulates a series of specific conflicts scenarios. ( IV.f.6.d.) Rule 1.8(k) provides that whenever a lawyer in a firm has a conflict under 1.8-- except for the prohibition regarding sexual relations with a client--then the conflict is imputed to all the lawyers at the firm,. (3) Rule 1.10(a) governs imputation of conflicts arising under 1.7 (current client conflicts) and 1.9 (former client conflicts). (4) Old Rule 1.10(a). (a) Rule 1.10(a) was amended in August 2009. Under the old version of rule 1.10(a), which is still the dominant approach in most states, when a lawyer in a firm has a conflict under 1.7 or 1.9 arising from the private practice of law, then the conflict is imputed to all the lawyers at the firm. (b) Under the old 1.10(a), and under the current rule as well, when a lawyer has a conflict arising from previously serving as a government lawyer or third party neutral (judge, arbitrator, 35 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
mediator), imputation is regulated by 1.11 (government lawyers) or 1.12 (former third party neutrals). (5) New Rule 1.10(a) (As of August 2009) (a) A lawyer s conflict is not imputed to others at the firm if it arises from a personal interest of the disqualified lawyer and does not present a significant risk of materially limiting the representation of the client by the other members of the firm. (1.10)(a)(1)). Example: Suppose that a partner at Able & Baker formerly served on the board of directors of a local college where she is a loyal and devoted alum. Her firm is asked to file a suit against that college. The individual partner may well have a personal interest conflict under 1.7(a)(2), but that conflict probably will not be imputed to other lawyers at her firm. (b) A lawyer s conflict arising under 1.9(a) or (b), resulting from legal work at a pervious place of employment will not be imputed to others at the lawyer s current firm if these conditions are met: (i) The disqualified lawyer is timely screened from participation in the matter, including from participating in the fee; and (ii) Written notice is promptly given to any affected former client, including a description of the screen, a statement that the lawyer and firm are complying with the screen, a statement that review may be available before a tribunal, and an agreement to respond to written inquiries about the screen. **(1.10(a)(ii)) [should it be 1.10(a)(2)(ii)?]; and (6) Certificates of compliance are provided to the former client upon request and at the conclusion of the screen. Example: Lawyer formerly worked at the firm Able & Baker, where she represented Cargo, Inc. on a patent litigation matter. Lawyer moved to the firm of Delta & Echo, which wants to undertake a patent litigation matter adverse to Cargo on the very same subject matter that Lawyer worked on for Cargo. Lawyer clearly has a former client conflict under 1.9 and cannot work on the matter without the consent of Cargo which is unlikely to give consent. But, if her new firm complies with all the provisions of the new version of 1.10, then Lawyer s disqualification is not imputed to the other attorneys at her new firm and other lawyers at her new firm can undertake the matter adverse to Cargo. (a) If a lawyer leaves a firm, and the departed lawyer s client is no longer a client of the firm, then under 1.10(b) the firm may commence representations adverse to the former client unless: (i) The new matter is the same or substantially related to that in which the firm formerly represented the client; and (ii) Any lawyer remaining in the firm has confidential information material to the new matter. Example: While at the firm of Able & Baker, Lawyer represented Cargo, Inc. Then she left that firm and Cargo was no longer a client of Able & Baker. Six months later, a potential new client wants to hire Able & Baker to sue Cargo. Result: Able & Baker can ethically take on the new matter adverse to Cargo unless the new matter is the same or substantially related to the matter in which the firm represented Cargo and any lawyer at Able & Baker has confidential information material to the new matter. 36 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
(b) Imputed conflicts may be waived as provided in 1.7 (Informed Consent, Confirmed in Writing, ICCW ). (c) The imputation of the conflicts of a lawyer who formerly worked in a government setting is governed by 1.11; imputation of conflicts of former third party neutrals (including former judges) is governed by 1.12. i. What conflicts are consentable: (1) Only if the lawyer reasonably believes she can fulfill her duties to the client. (2) Cannot represent opposing parties in the same lawsuit (automatically not reasonable). j. How can consent be obtained ( basic waiver ). (1) Informed consent, confirmed in writing. (2) Informed consent requires informing the client of implications, disadvantages, etc. of the waiver (3) Confirmed in writing. (a) The consent may be confirmed in writing by obtaining the client s signature (or other writing) on a consent waiver. (b) The consent may be confirmed in writing by having the lawyer obtain an oral consent and then promptly sending the client a written confirmation of the consent. (Note: when the lawyer uses this option for confirming the consent in writing, there is no writing obtained from the client.) (4) This formula works for current client (1.7) and former client conflicts (1.9) but some of the subparagraphs of MR 1.8 do require specific disclosures and writings signed by the client. 7. Independent Judgment. (2.1) a. Lawyer must give candid assessment. b. Advice must be independent of outside influences. c. Lawyer may, but is not required to, refer to social factors such as morality in addition to providing legal analysis. d. Lawyer may seek out advice from other specialists. 8. Safeguarding Property a. Trust Fund Account (1) Must keep lawyer s money and client s money separate! To the penny! (a) Advance fees. When the client pays the lawyer fees in advance (what lawyers sometimes call advance retainers ), the fees remain in the trust account until they are earned, after which they must be promptly moved out of the trust account. 37 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
(b) Advanced costs. When the client pays the lawyer costs in advance (e.g., a $25,000 check for the anticipated costs of an expert witness) the advance costs remain in the trust account until they are incurred, after which they must be promptly used to pay the costs incurred. (c) Distinguish: non-refundable retainers (2) IOLTA (Interest on Lawyers Trust Account) vs. Interest-bearing account: (a) When to use IOLTA or separate trust account: (i) If the money is so little and will be in the account for so short of a time that it will not generate interest that can cover the costs of opening the account and then paying interest to that client, then the lawyer must deposit the money in an IOLTA account. The interest goes to the state bar and is typically used to fund legal services for the poor. (ii) If the interest on the money will exceed the cost of the setting up the account (because the amount is large or will be in the trust account for a longer period of time), then the funds should be set up in a separate trust account so that the interest can be paid to the client. Example: Lawyer asks client for $1,000 in advance costs that lawyer expects to spend in the first three weeks of the engagement. The $1,000 should be placed in an IOLTA trust account. Example: In preparation for a major patent infringement and antitrust suit, law firm asks client to pay advance fees of $1,000,000 and advance costs of $500,000. Firm expects that most of these fees and costs will not be incurred for several months. Result: the money should go in a separate account that bears interest that is paid to the client. (b) Requirements that lawyer place certain funds in IOLTA accounts are constitutional. (It is a taking, but because there would be no interest paid on such small, short-term accounts, no compensation is owed.) (3) Disputed funds (a) Disputed funds remain in the trust account. The lawyer must get the dispute resolved promptly and if necessary initiate a legal proceeding to determine who owns the funds. (b) This is a commonly tested fact pattern! Even if the client unfairly and unreasonably contests ownership of funds that appear to clearly belong to the lawyer, the lawyer shall not pay out the disputed funds to herself. Example: Lawyer enters into a contingency fee agreement with client-plaintiff by which lawyer earns 33% of all recovery. Defendant pays $300,000 to settle the matter. Lawyer places the $300,000 in the IOLTA trust account because she expects the funds to be paid out in the next few days. Client unexpectedly and unfairly reneges on the fee agreement and asserts that lawyer deserves only $5,000 in fees. The lawyer promptly pays the client $200,000 from the trust account because there is no dispute as to the client s ownership of 66% of the money. Lawyer promptly withdraws $5,000 from the trust account and pays herself because there is no dispute over her ownership of that money. Lawyer leaves the remaining money ($95,000) in the trust account, because they are disputed funds. Lawyer promptly initiates negotiations and if necessary a legal process to determine if she or the client is entitled to the remaining funds. Result: lawyer has correctly handled the situation. 38 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
b. Other property not belonging to the lawyer. (1) The lawyer must keep the property safe and separate from the lawyer s own property. (2) Placing the property in a safe deposit box or a safe is a classic method for keeping property safe and separate. (3) If the lawyer undertakes to act as an escrow agent, the lawyer assumes a fiduciary duty to others, possibly including non-clients. The lawyer s desire to benefit a client does not permit the lawyer to violate her duties as escrow agent. G. Duties Related to Attorneys Fees 1. Clients may owe lawyers contractual duties, whereas lawyers owe clients fiduciary duties. 2. Fees a. Under the ABA approach, all fees must be reasonable. Reasonableness turns on time and labor required; novelty required; skill required; customary fees in that market; results obtained, experience, reputation and the ability of the lawyer. (1.5(a)) (1) California uses a test of unconscionability rather than reasonableness for legal fees. But the factors are similar. (CRPC 4-200) b. Under the ABA approach, the scope of the representation and basis for fee shall be communicated to client, preferably in writing. (1.5(b)) (1) The lawyer may charge regularly represented clients the same rate as was charged on previous matters. (2) Changes in the basis or the rate shall be communicated as well. c. In California, the State Bar Act (Cal. Bus. & Prof. Code 6000, et seq.) extensively regulates fee agreements (Cal. Bus. & Prof. Code 6146, et seq.). (1) When it s foreseeable that fees and expenses to the client will exceed $1,000, the lawyer is required to obtain a written fee agreement signed by the lawyer and the client. (2) Among other things, the fee agreement shall contain the nature of the services to be rendered, the rates, fees, and charges. (3) Bills must state the basis for the charges. (4) Failure to comply with the rules about fee agreements and bills renders the agreement voidable at the client s choice; whereupon the lawyer is entitled to a reasonable fee (i.e., quantum meruit). d. Fees may be contingent upon the result obtained. (1) Shall be in writing and signed by client. (1.5) (2) Shall state basis for fee; shall state if expenses deducted before or after the contingent fee calculated (3) At conclusion of the representation a writing shall set forth the final dispersal of fees and recovery. 39 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
(4) No contingent fees permitted for representing defendant in criminal matters; or in domestic relations matters for securing divorce or upon the amount of alimony or the property settlement. (1.5(d)) (5) Note: California has extensive regulation of contingency fee agreements in the State Bar Act (at Cal. Bus. & Prof. Code 6146, et seq.) e. Division of fees ( Fee splitting ): ABA and California approaches. (1) When we discussed fee splitting we usually mean that the fees paid to one lawyer will be shared (or split) with another lawyer at a different firm. (2) As discussed above ( II.C) lawyers shall not split fees with a non-lawyer. (3) Under the ABA approach, a lawyer can split fees with another lawyer in a different firm if client agrees; the client s agreement is confirmed in writing; total fee is reasonable; and each lawyer s fee is in proportion to the services performed or if each lawyer assumes joint responsibility for the representation. (1.5(e)) Example: Lawyer ( first lawyer ) is retained in a personal injury matter and quickly realizes that it requires legal skills she does not possess. She decides to have a lawyer who is experienced in that field work on the matter ( second lawyer ). First lawyer and second lawyer agree that first lawyer will do very little work on the matter and will not assume responsibility for the entire matter and that first lawyer will split the fees 50/50 with the second lawyer. Result: both lawyers have violated 1.5. Example: Same as the prior example, except that first lawyer will split the fees with second lawyer in a way that reflects the amount of work each has done on the matter. Result: if the client s consent is properly obtained, the two lawyers have not violated 1.5. Example: Same as the prior example, except that first lawyer and second lawyer agree that first lawyer is jointly responsible for the representation. Result: if the client s consent is properly obtained, the two lawyers have not violated 1.5. (4) Under the California approach, a lawyer may split fees with a lawyer in another firm if (i) the client has consented in writing after a full disclosure in writing that a division of fees will be made and the terms of the division, and if (ii) the total fee charged by all lawyers is not increased solely by the division and is not unconscionable. H. Termination of the ACR Note that California s rule does not require that lawyers be compensated in accordance to the work they perform or that all lawyers receiving a division assume responsibility for the matter. California therefore follows the minority approach in allowing bare referral fees or raw fee splitting. Example: Same as the prior examples, except that California law governs. First lawyer and second lawyer agree that first lawyer will do no work on the matter but will receive 1/3 of all the fees that the second lawyer earns on the matter (i.e., a third of a third ). Result under California law: if the client s consent is properly obtained, the two lawyers have not violated California s ethics rules. This arrangement is one that is often called a bare referral fee. 1. Tribunal s permission needed after appearance: 40 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
a. Once a lawyer has made an appearance before a tribunal, the tribunal s permission is needed before the lawyer can withdraw. (1.16(c)) b. A competent client s right to terminate an ACR is so strong that a tribunal will ordinarily prohibit a client s request to terminate the ACR only if the matter is in mid-trial. (case law) c. If the tribunal orders a lawyer to continue the ACR, the lawyer shall obey the order even if the ethics rules otherwise suggest that the lawyer must withdraw. (1.16(c)) 2. Termination by Client: a. Subject to any requirement that a tribunal approve the termination of the ACR, a competent client has a nearly absolute right to terminate the ACR. b. Termination of the ACR generally terminates the lawyer s authority to bind the client. However, the lawyer may have continuing duties to the client and the court upon termination. (See below) c. There is a body of case law to determine what compensation, if any, the client owes the lawyer following termination. d. Government lawyers may be protected from termination by various laws (e.g., whistle-blower statutes) or by collective bargaining agreements. e. Corporate employee lawyers may or may not have the right to seek damages for wrongful termination. This is an emerging issue under state law. 3. Termination by Lawyer: Shall withdraw (1.16(a)) if: a. Continuing the ACR would breach ethics rules or other governing law (MR 1.16(a)(1)); or b. The lawyer s physical or mental condition materially impairs the lawyer s ability to carry out the representation (MR 1.16(a)(2)); or c. The lawyer is discharged. (MR 1.16(a)(3)) d. The CRPC on mandatory withdrawal, at 3-700(B), is substantially similar to the ABA rules, at 1.16(a). 4. Termination by Lawyer: May withdraw 1.16(b)) if: a. Can be done without material adverse effects on the interests of the client. (1.16(b)(1)) b. Client persists in conduct the lawyer reasonably believes is criminal or fraudulent conduct. (1.16(b)(2)) c. Client has used lawyer s services to perpetuate a crime or fraud. (1.16(b)(3)) d. Client insists upon taking action that is repugnant to the lawyer and with which the lawyer has a fundamental disagreement. (1.16(b)(4)) e. Client has breached an obligation or duty to the lawyer and the client was given reasonable warning that the lawyer would withdraw if the breach was not remedied. (1.16(b)(5)) (1) This usually involves the client s failure to pay legal fees. 41 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
f. Representation will unduly burden the lawyer financially or the client has rendered the ACR unreasonably difficult. (1.16(b)(6)) g. Other good grounds. (1.16(b)(7)) h. The CRPC, at 3-700 (C), provide similar grounds for permissive withdrawal, and also provide for permissive withdrawal if an inability to work with co-counsel renders withdrawal in the client s best interests. (3-700(C)(6)) 5. Termination by completion of assigned task a. If the A-C engagement contract or the client s reasonable expectations so provide, the ACR is terminated by the lawyer s completion of the assigned task. (MR 1.3(4); Rest. LGL 31) b. If the lawyer has represented the client on a number of matters over time or if the client s reasonable expectations are that the ACR continues even after completion of an assigned task, the ACR may be found to continue. (MR 1.3(4); Rest. LGL 31) c. The lawyer should prevent confusion, and clarify confusion, by use of a writing. d. This is a major risk management issue for private practice lawyers. The recommended course is to send a friendly termination letter at the conclusion of each matter. 6. Termination by operation of law occurs upon: a. Death or incapacity of lawyer. (Rest LGL 31(2)(d)) (1) Lawyer s incapacity includes loss of law license. b. Death or incapacity of client. (Rest LGL 31(2)(b)) c. Court orders terminating the ACR. (1) Typically, this results from an order granting disqualification. d. When a lawyer changes firms: (1) When a lawyer representing a client changes firms, the client has the right to decide who will continue with the ACR. (2) Many ethics authorities recommend that the departing lawyer and the prior firm write a joint letter asking the client to decide who will represent client going forward. 7. Procedure for withdrawal: a. Where no appearance has been made before a tribunal, no formal procedure is required; provided, however, that the terminated lawyer must fulfill the duties upon termination discussed below. b. In cases pending before a tribunal, where the terminated lawyer and client agree upon withdrawal, it may be sufficient under local rules to file a substitution of counsel. c. Some tribunals require a motion to substitute counsel even if the terminated lawyer and client agree upon the withdrawal. (This is typically required in federal courts.) 42 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
d. If the terminated lawyer and client do not agree upon withdrawal, it is generally necessary to file a contested motion to withdraw. In doing so, the lawyer has a duty to bring the motion in such a way as to avoid prejudicing the client s interests. Depending on the situation, that may include informing the court that the withdrawal is premised upon a rule of professional responsibility but while simultaneously omitting the specific details that led to the motion. Sometimes the withdrawing lawyer may offer to reveal some pertinent facts under seal for in camera review. The lawyer should carefully follow the procedures in that jurisdiction regarding contested motions to withdraw. 8. Duties pertaining to termination: a. The lawyer must comply with tribunal s rules b. The lawyer must withdraw without prejudice to client: generally shall not withdraw on the eve of deadlines where client cannot obtain alternative services. (1) The duty of communication generally requires the lawyer to inform the client of deadlines that it or successor client counsel must meet. (2) It is prudent for the lawyer to inform the client of the consequences of failing to meet those deadlines and of the fact that the lawyer will not be calendaring those deadlines or further warning client of the deadlines. c. The lawyer has a duty to return or surrender the client s file: (1) Depending upon local law, the file may actually be the property of the client. (2) Generally, the lawyer must promptly deliver the file to the client upon termination of the ACR. (a) Under California law, the file must be returned if the client demands it. (b) The ABA rule provides that the lawyer shall surrender paper and property to which the client is entitled. (1.16(d)) (c) Increasing numbers of jurisdictions require the lawyer to deliver any existing electronic documents in the client s file. That would include emails and e-copies of papers and documents in the file. (d) The California, ABA, and majority approach is that it is an ethical violation to refuse to surrender the file until the client has paid legal fees to the lawyer. (In a minority of states, this is ethically permitted either if the lawyer contracts for a lien on the file or if the law in that state automatically provides for a lien on the file.) (e) In California and many other jurisdictions, the lawyer may keep a copy of the client file at the lawyer s own expense. (Often, lawyers do this when they fear that a malpractice or liability suit may ensue from the representation.) d. The lawyer has a duty to return unearned fees, other funds to which the client is entitled, and any other property belonging to the client. I. Post-Termination Duties (duties surviving termination of the ACR). 1. Rules pertaining to confidentiality survive the ACR. (e.g., MR 1.6; 1.9(a)-(c)) 43 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
2. Lawyer must forward to client or successor counsel any communications the lawyer receives pertaining to the terminated ACR. (Rest LGL 33(2)(c)) 3. The duty of loyalty survives the ACR to the extent the conflict of interest rules turn on the terminated lawyer s receipt or possession of client confidences. (e.g., MR 1.6; 1.9(a)-(c)) Additional aspects of the duty of loyalty to former clients are somewhat vague. For example, some cases suggest that a lawyer should not attack its prior work product, even when the attack does not implicate the lawyer s duty of confidentiality to terminated clients. 4. There are a few cases dealing with unusual fact patterns that suggest that a lawyer has a continuing duty of loyalty that precludes the lawyer from attacking her own work product or the subject matter that was the focus of her prior efforts for the former client. These cases suggest that there may be a residual duty of loyalty to former clients that is not tied to the former client s confidences. (See, e.g., Oasis West Realty, LLC v. Goldman, 51 Cal.4th 811 (2011)) A. Duties to Non-clients during the ACR 1. Duties to All Third Parties V. LAWYERS DUTIES TO THIRD PARTIES AND SOCIAL SYSTEMS DURING THE ATTORNEY CLIENT RELATIONSHIP a. Lawyers have a duty not to make false statements of fact or law to third persons. (4.1) (1) Misrepresentations to non-clients are forbidden. Such misrepresentations include false or misleading statements. ( Misleading statements include those that are partially true but intended to create in the listener a false factual apprehension.) (2) Under generally accepted norms of negotiation, certain statements are deemed not to be factual representations. (4.1[2]) For example, (i) statements about the price or value place on the subject of a transaction or the amount that would be an acceptable settlement and (ii) the use of an undisclosed principal are generally deemed not to be material factual representations. Example: Plaintiff tells her lawyer that she will accept any settlement offer of $100,000 or greater. Plaintiff s lawyer gets on the phone and says to defendant s lawyer, My client will not accept less than $300,000 for her claim. Result: Lawyer has not violated MR 4.1. Example: The Walt Disney Company has decided to build a new theme park in a rural region of Indiana and needs to buy several parcels of land. Walt Disney s lawyer fears that if she reveals that the potential buyer is Walt Disney, the price of the land will sky-rocket. So she forms a half dozen companies with non-descript names like Jones Family Farm Corporation, and approaches the farm owners to buy their land. Result: By itself, the use of undisclosed principals is not a violation of MR 1.4. (Note, however, that in other contexts, use of undisclosed principals and proxies might violate substantive law and, if so, the lawyer would not be permitted to facilitate that use.) b. Duty to Disclose Material Facts to Avoid Assistance in a Crime or Fraud. (4.1(b)) (1) When it is necessary to prevent the lawyer from assisting a crime or fraud, and when disclosure is permitted under MR 1.6(b), the lawyer must prevent the assistance, even if prevention results in a disclosure of client confidences. (Recall that may reveal situations under 1.6(b) can become must 44 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
reveal situations under the conditions set forth in MR 4.1, 8.1 and 8.3.) The comments to MR 4.1 describe three ways that the lawyer may avoid assisting the crime or fraud. (a) The lawyer might simply withdraw from the representation and no longer assist the client who intends to commit a crime or fraud. (b) The lawyer might make a noisy withdrawal and disaffirm any prior express or implied representations made to the third person or opposing party. Example: Lawyer is assisting client to sell a large apartment building. Based upon representations from her client, lawyer has told the potential purchaser during negotiations that the building contains no asbestos. Lawyer recently learned from her client that asbestos is present in the building, although client hopes to have it removed before the transaction is consummated. The seller s lawyer telephones the potential buyer s lawyer, announces that lawyer is no longer assisting the seller, and disaffirms any prior representations she may have made to the potential buyer. (Note that in this scenario, the lawyer for the potential buyer will almost certainly deduce that a misrepresentation has been made to the buyer.) (c) The lawyer may reveal the specific client confidence itself when necessary to prevent assisting a crime or fraud. c. Respect for rights of all third persons. (4.4) (1) The lawyer shall never use means that have no substantial purpose other than to embarrass, delay, or burden a third person (4.4(a)); (2) A lawyer shall never use methods of obtaining evidence that violate the legal rights of a third person (4.4(a)); (3) A lawyer who receives a document relating to the representation of the lawyer s client and knows or should reasonably know that the document was inadvertently sent shall promptly notify the sender (4.4(b)). 2. Duties to Represented Persons (4.2)(the no contact rule ) a. In representing a client, a lawyer shall not communicate about the subject of the representation with a person the lawyer knows to be represented by another lawyer in the matter, unless the lawyer has the consent of the other lawyer or is authorized by law to make the communication. b. Note that the ABA version of the rule refers to persons represented by counsel. That means that the rule applies even if the person is not, strictly speaking, a party in the matter. This distinction often arises when a lawyer wishes to communicate with a witness who is not a party in the matter. c. Note that consent from the other lawyer is required. Consent from the third person is not enough. d. The correct application of this rule to prosecutors who wish to contact witnesses has been a matter of debate and disagreement. e. The correct application of this rule has been difficult when lawyer know that an organization is represented by counsel in a matter but the lawyer nonetheless wishes to communicate with current or former agents (officers, directors, shareholders, employees) of that organization. (4.2[7]) 45 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
3. Duties to Unrepresented Parties (4.3) a. When dealing with unrepresented non-clients, the lawyer shall not state or imply that the lawyer is disinterested. Example: Lawyer, who represents a victim of a car crash, is investigating the matter and meets with a witness. Lawyer says to the witness, I m just to make sure this thing works out well for everybody. Result: Lawyer has violated 4.3. b. If the lawyer knows that the third party misunderstands the lawyer s role, the lawyer shall take reasonable steps to correct the misunderstanding. Example: Lawyer is representing the victim of a car crash and meets with a witness. The witness says, Gee, I ve never had my own lawyer before. Lawyer immediately says, Let me explain. I am not your lawyer. I do not represent you. I represent only my client, who was rear-ended in the crash. Result: Lawyer has complied with 4.3. c. If the lawyer knows that the interests of the unrepresented non-client are possibly adverse to the lawyer s client, the lawyer shall not give legal advice to the unrepresented non-client other than the advice to secure counsel. B. Role-Based Duties to Social Systems during the ACR 1. Litigator/Advocate a. Meritorious claims. (3.1). The lawyer may not bring frivolous claims or defenses or assertions. (1) In federal courts, this duty is captured in Federal Rule of Civil Procedure 11. (2) Fed. R. Civ. P. 11 provides that a lawyer s signature on a paper or pleading is an affirmation that: (a) After reasonable inquiry the asserted position is grounded in law and facts that are known or that may develop during the litigation; and (b) The filing is not brought for an improper purpose such as delay or to harass. (3) Fed. R. Civ. P. 11 does not forbid a lawyer from bringing a claim, defense or assertion that would amount to a change in existing law if the argument for change is not frivolous. (4) Violation of Fed. R. Civ. P. 11 justifies the imposition of sanctions. b. Expediting matters, consistent with client interest. (3.2) The lawyer must expedite litigation, consistent with the client s interests. c. Candor to the tribunal. (3.3)C (1) Lawyer must reveal governing law in that jurisdiction even if the law is not favorable to the client. (2) The lawyer shall not offer evidence that the lawyer knows to be false. (a) With respect to evidence other than the testimony of the criminal defendant client, under the ABA, California, and majority approach, the lawyer cannot offer false evidence even for a criminal defendant client. 46 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
(b) With respect to the testimony of the criminal defendant client that the lawyer knows to be false, the ABA takes the majority approach and California takes the minority approach. (i) The ABA/majority approach is that the lawyer shall not offer false evidence even if that is the testimony of the criminal defendant client. (3.3) (Note: the Bill of Rights does not guarantee the criminal defendant the right to offer false testimony. Nix v. Whiteside, 475 U.S. 157 (1986).) (ii) California takes the minority approach. The criminal defense lawyer should remonstrate with the client not to commit perjury, should attempt to withdraw if feasible (should not reveal the cause of the attempted withdrawal except to say that it involves duties of professional responsibility), and then, if cannot withdraw?, offer the testimony through narrative questioning that does not involve or implicate the lawyer. The lawyer shall not argue the false testimony in the closing argument. (3) The lawyer may refuse to offer evidence that the lawyer does not know to be false but does reasonably believe to be false. (a) Exception: the lawyer must offer the testimony of a criminal defendant client, even if the lawyer reasonably believes the testimony is false, if (i) the lawyer does not know that the testimony is false, and (ii) the client chooses to testify. (4) Lawyer who has offered false evidence must remedy those falsehoods. (3.3) (a) Until conclusion of tribunal. (b) Duty to remedy trumps duty of confidentiality. (c) Note: California does not permit revelation of client confidences except to prevent a crime leading to death or substantial bodily harm. Hence if a California lawyer offers false evidence the lawyer must remedy it unless it would reveal a client confidence. If it would reveal a client confidence, the lawyer should remonstrate with the client to grant the lawyer permission to remedy the false evidence and, if the client refuses, the lawyer must carefully consider the duty to withdraw from the representation. If the lawyer does withdraw, she must be careful not to reveal the client confidence as she withdraws. d. General fairness to opposing party and counsel. (3.4) (1) A lawyer shall not alter or obstruct access to evidence or material having potential evidentiary value. (2) Shall not falsify evidence, assist a witness to testify falsely, or offer witnesses forbidden inducements. (3) Shall not disobey the tribunal, except openly and for good cause. (4) Shall not make or oppose discovery demands frivolously. (5) Shall not allude at trial to matters the lawyer does not believe are supported by admissible evidence. (6) A lawyer shall not request a person to refrain from voluntarily giving relevant information to another party unless (i) the person is a client, relative of a client, or agent of a client and (ii) the lawyer believes that that person s interests will not be adversely affected by refraining from giving such information. 47 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
e. Preserving the tribunal s impartiality and decorum. (3.5) (1) Shall not engage in acts intending to disrupt the courtroom. (2) Shall not engage in improper contacts with, or attempt to inappropriately influence, anyone associated with the tribunal (e.g., judge, judge s staff, court room personnel, jurors.) f. Trial Publicity. (3.6) (1) Shall not disseminate by means of public communication statements that will have substantial likelihood of materially prejudicing an adjudicative proceeding. (2) May state basic facts such as claim, information in public record; scheduling; time and place of arrest; etc. g. Lawyer as Witness. (3.7)C (1) Shall not act as advocate at a trial where the lawyer is a necessary witness unless the lawyer s testimony concerns: (a) An uncontested issue; or (b) The nature or value of legal services provided; or (c) Disqualification would work a substantial prejudice to the client. (2) Note: another lawyer at the same firm can be the advocate at trial. h. Prosecutor. (3.8) (1) A prosecutor is a minister of justice and must do justice. (2) Shall refrain from prosecuting claim prosecutor knows is not supported by probable cause. (3.8(a)) (3) Shall make reasonable efforts to ensure that an accused has been advised of the right to counsel. (3.8(b)) (4) Shall not seek to obtain from unrepresented accuseds any waivers of important rights such as the right to a preliminary hearing. (3.8(c)) (5) Shall make timely disclosure of exculpatory materials. (3.8(d); U.S. v. Brady) (6) Shall not heighten public condemnation of the accused. (3.8(f)) Example: The US Attorney who announced the indictment of former Illinois governor Rod Blagojevich stated the nature of the charges and added that Abraham Lincoln would be rolling over in his grave at the thought of what Blagojevich had done. Result: the statements about the nature of the indictment were ethical; the comments about Abraham Lincoln violated 3.8(f). (7) Prosecutor s Post-Conviction Duties: (a) If a prosecutor learns of new, material evidence creating a reasonable likelihood that a convicted defendant did not commit the offense for which he was convicted, the prosecutor shall disclose 48 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
that evidence to an appropriate authority and, if the conviction was obtained in the prosecutor s jurisdiction, shall disclose the information to the defendant and undertake further investigation into the conviction. (b) If the prosecutor knows of clear and convincing evidence establishing that a defendant in the prosecutor s jurisdiction was convicted of an offense that the defendant did not commit, the prosecutor shall seek to remedy the conviction. i. Lawyer as advocate in non-adjudicative proceeding. (3.9) (1) When a lawyer representing a client is participating in a non-adjudicatory proceeding (e.g., legislative hearings), the lawyer shall disclose to the non-adjudicatory body that she participates in a representative capacity and owes a duty of candor to the non-adjudicatory body. 2. Evaluator (2.3) a. This unusual role applies when the lawyer undertakes to evaluate the client for the benefit of a nonclient. Classically, in business transactions, the acquiror requests that the acquiree s lawyers make factual assurances to the acquiror about the acquiree. b. If evaluation will materially and adversely affect client, lawyer must obtain client s informed consent. c. Lawyer must receive client s authorization to reveal confidences when evaluating the client. Example: In a merger transaction, the acquiror demands an opinion letter running from the acquiree s lawyer to the acquiror, accurately stating whether the acquiree is duly incorporated, who owns the shares in acquiree, etc. Acquiree s lawyer shall obtain consent from the acquiree to offer the evaluation to the opposing party after disclosing any potential adverse effects on the acquiree-client. 3. Counselor/Advisor a. This role was discussed above, at IV.F.7, when we discussed the duty of independent judgment. b. Notice that sometimes the counselor/advisor does not interface with the public and in some sense remains hidden. But the role is always done with an eye towards the client s interaction with society. For that reason, the counselor role can be seen as part of the lawyer s duty to the client (i.e., the duty to render independent judgment), but can also be seen as part of the lawyer s duty to larger social systems (i.e., the lawyer s duty to the social systems with which the client is participating after receiving the lawyer s advice). 4. Negotiator a. This role was discussed above, at V.A.1, when we discussed the duty of truthfulness to third persons. Those rules apply in this context as well. b. Note that when participating as a direct negotiator in a business setting, the law of fraud governs the lawyer. If the lawyer makes a false statement, or a materially misleading omission, or knowingly fails to disclose a fact that the client is legally required to disclose, the lawyer may be held accountable for money damages for fraud. c. Note also that if the negotiation involves certain regulated subject matters, such as securities governed by state or federal law, the lawyer/negotiator may be held to a very high standard of candor to the opposing party in the negotiation. 49 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
d. One recurring fact pattern that causes trouble for lawyers is a negotiation where the client does not wish to reveal some significant fact to the other party in the negotiation. In that case, the lawyer might wish to rely upon the common law rule of caveat emptor that is, the rule of buyer beware that typically does not require sellers to make full disclosure of all material facts. But note that the reverse rule may apply that is, full truth in context may be required because of a statute; because the seller has decided to make factual disclosures and hence must make complete disclosures to avoid being misleading; or because the contract requires certain forms of disclosure. 50 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
Appendix A Concise Summary of Consents under ABA Model Rules The ABA Model Rules contain about a dozen formulations for obtaining consent and making disclosure, but this summary focuses on just three: (1) Informed consent, confirmed in writing, (2) a Writing signed by the client, and (3) what I call Magic words plus opportunity advising the client of the desirability of seeking the advice of independent counsel and giving a reasonable opportunity to do so. A few of the rules require a combination of those formulas. Informed Consent, Confirmed in Writing (ICCW) Current client conflicts (1.7) Former client conflicts (1.9) (Old Version!) Conflicts from imputation of lateral lawyer s conflicts ( old 1.10(a)) Lateral movement conflicts for government lawyers (1.11) Lawyer as adverse witness to client (3.7, cmt. 6) Writing signed by client (WSC) or Informed Consent, in Writing Signed by Client (IC, WSC) Doing business with client; obtaining liens, etc., from client (1.8(a)) (Note: IC plus WSC) Aggregate settlements (1.8(g)) (Note: IC plus WSC) Contingency fees (1.5(c)) (just WSC) Magic words plus Opportunity Doing business with client; obtaining liens, etc., from client (1.8(a)) (Note: plus IC, WSC!) Settling or resolving client s malpractice claim against lawyer (1.8(h)(2)) 51 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
Appendix B Detailed Summary of Consent, Disclosure, and Notification in the ABA Model Rules and the California Rules of Professional Conduct A. By Rule 1.0(b): Defines confirmed in writing 1.0(e): Defines informed consent 1.0(n): Defines writing and written I. ABA MODEL RULES OF PROFESSIONAL CONDUCT 1 1.2(c): Requires informed consent before lawyer may limit the scope of the representation. 1.5(b): Requires that scope of representation, basis for the fee, and the expenses be communicated to the client, preferably in writing and that changes in the basis or rate of the fees or expenses shall also be communicated to the client. 1.5(c): Contingent fee agreement shall be in a writing signed by the client. Must clearly notify the client of any expenses for which the client will be liable. Upon conclusion of a contingent matter, lawyer shall provide a written statement stating the outcome, remittance to the client, and the method of determination. 1.5(d): The client s agreement to a lawful division of fees among lawyers not in the same firm shall be confirmed in writing. 1.7(b): Requires that each affected client gives informed consent, confirmed in writing. 1.8(a): Client must be advised in writing of desirability of seeking advice of independent legal counsel and client must give informed consent, in a writing signed by the client. 1.8(f): Where lawyer receives compensation from non-client (e.g., third party payor), client must give informed consent. 1.8(g): In case of aggregate settlement, clients must give informed consent, in a writing signed by the client. 1.8(h): When settling malpractice claim, unrepresented clients and former clients must be advised in writing of the desirability of seeking... independent legal counsel. 1.8(j): Sexual relationship between lawyer and client forbidden unless consensual and already in existence when the attorney client relationship commenced. 1.9(a); 1.9(b): Informed consent, confirmed in writing required for certain adversities to former clients. 1.10(c): Refers back to the informed consent, confirmed in writing requirement of 1.7(b). 1.11(a): Requires informed consent, confirmed in writing. 1.11(b): Requires that written notice is promptly given. That notice is defined at 1.11[7] as including a description of the screened lawyer s prior representation and of the screening procedures employed. 1.11(d)(2)(i): Lawyer cannot participate unless the government agency gives its informed consent, confirmed in writing. 1.12(c)(2): Former judge neutral cannot participate unless written notice is promptly given to the parties. 1.15(d): Upon receiving any property in which a client or third person has an interest, lawyer shall promptly notify that person. 1.17(c): Requires written notice to each client of the proposed sale of law practice and other factors. 1 Note: this outline will not address the general duty of communication found in ABA MR 1.4. 52 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
1.18(d)(1): 1.18(d)(2): Permits adversity to prospective client where affected client and prospective client give informed consent, confirmed in writing. Permits adversity to prospective client under certain conditions, including that written notice is promptly given. 2.3(b): Where evaluation is likely to materially and adversely affect client, lawyer cannot proceed without obtaining client s informed consent. 2.4(b): Lawyer serving as neutral shall inform unrepresented parties of lawyer s role and if lawyer knows that party is confused about the lawyer s role, the lawyer shall explain the difference between a representative role and a neutral role. 3.7[6]: When lawyer-advocate s dual role as witness creates a conflict under 1.7 or 1.9, the lawyer must obtain informed consent, confirmed in writing. 4.2: When communicating with person represented by counsel, lawyer must obtain consent of other lawyer. 5.7(a): Lawyer providing law-related services is subject to Model Rules unless lawyer takes reasonable measures to assure that recipient of services knows the services are not legal services and that protections of attorney-client relationship do not exist. 6.4: Lawyer providing service for law reform organization, who will participate in organization s decision that will materially benefit lawyer s client shall disclose that fact to the organization. 7.2(b)(4): Lawyer in cross-referral agreement shall ensure that client is informed of the existence and nature of the agreement. B. By Type Informed Consent, Confirmed in Writing (ICCW) 1.7(b) Current client waivers 1.9(a) Former client waivers 1.9(b) Former client waivers 1.10(c) Imputation rule refers back to 1.7 formula 1.11(a) Government lawyers 1.11(d)(2)(i) Government lawyers 1.18(d)(1) Adversity to prospective client 3.7[6] Lawyer as adverse witness to client Writings Signed by Client Either writing signed by client (WSC) or informed consent in writing signed by client (ICWSC). 1.5(c) (WSC) Contingency fee 1.8(a) (ICWSC) Liens/Doing business with client 1.8(g) (ICWSC) Aggregate settlements Other requirements of writings Advised in writing 1.8(h) Magic words advising the client of the desirability of seeking advice of independent counsel required when settling malpractice claim with unrepresented client Confirmed in writing 1.5(e) Division of fees with lawyer not in same firm 53 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
Written notice promptly given 1.11(b) Government lawyer 1.12(c) Former judge/neutral 1.18(d)(2) Adversity to prospective client Written statement 1.5(c) Conclusion of contingency matter Other Formulas Communicated to client, preferably in writing 1.5(b) Scope of representation and basis of fee Communicated to client 1.5(b) Changes in basis or rate of fee or expenses. Informed consent 1.8(f) Non-client payor 2.3(b) Materially adverse evaluation Consensual 1.8(j) Sexual relationship with client Promptly notify 1.15(d) Receipt of property Written notice 1.17(c) Sale of law practice Shall inform 2.4(b) Inform unrepresented parties that lawyer-neutral not representing them Shall explain 2.4(b) Explain to party when it misunderstands lawyer-neutral s role Consent 4.2 From other lawyer when communicating with represented party Reasonable measures to assure person knows 5.7(a) Law related services Shall disclose 6.4 Law reform beneficially affecting client Inform client 7.2(b)(4) Cross referral agreement 54 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
Appendix C Principal Differences between California and ABA Ethics Rules These are not the only differences between the California Rules of Professional Conduct and the ABA Model Rules of Professional Conduct, but in my opinion these are the differences most likely to arise in essay questions on the California bar examination. Fee Agreements Under the ABA approach, it is preferable but not required that non-contingency fee agreements be in writing. (1.5) Contingency fees must be in a writing signed by the client (1.5(c)). Under the California approach, if the representation is likely to exceed $1,000 the fee agreement must be in a writing signed by the lawyer and client. (Cal. Bus. & Prof. Code 6148)(Exception: if the client is a corporation, there is no requirement for a written or signed fee agreement.) Legal bills shall include the amount, rate, basis for calculation, or other method of determining the fee ( 6148). California extensively regulates how contingency fee agreements must be in a writing signed by the client and lawyer ( 6147). Fees (Unreasonable vs. Unconscionable) Under the ABA approach, fees cannot be unreasonable (1.5). Under the California approach, fees cannot be unconscionable (4-200). Referral Fees Under the ABA approach, it is not proper to give a referring lawyer a fee for the act of referring the matter. (Note that under the ABA approach, the referring lawyer could still share in the legal fee by either assuming joint responsibility for the matter or by doing some of the work on the matter. See MR 1.5 for details.) Under the California approach, a lawyer may receive a referral fee if the division of fees is fully disclosed in writing to the client; if the total fees are not thereby increased; and if the client consents in writing. See CRPC 2-200 for details. (This is sometimes called a bare referral fee.) Contracting to Limit Malpractice Liability Under the ABA approach, a lawyer may contract with the client to limit the lawyer s exposure and liability for malpractice, if the client is actually represented on that contract by independent counsel (1.8(h)). Note, however, that few jurisdictions follow the ABA s rule on this point; most ban such limitations on liability. Under the California approach, such contracts are prohibited. (3-400) Confidentiality Under the ABA approach, there are six may exceptions to the duty of confidentiality in the rule on confidentiality (1.6). In addition there is a may reveal exception in the rule on representing organizations (1.13); a must reveal exception if the lawyer has offered false evidence or is aware of corruption of the tribunal (3.3); and a type of must reveal exception if revelation is the only way to prevent assisting the client in a fraudulent or criminal act (4.1, which covers so-called noisy withdrawals and in extreme cases outright revelations of client confidences). Under the California approach, the only exception in the State Bar Act ( 6068(e)) and the rules (3-100) is a may reveal exception to prevent a crime leading to death or substantial bodily harm. Notice the requirement of a crime, which is not part of the ABA s similar exception on this point. Notice, too, that under case law the lawyer has 55 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
a limited exception to reveal confidences to the extent necessary to sue to collect a fee, to defend against claims by the client, or to defend the lawyer against criminal charges. Conflicts Under the ABA approach, there are two kinds of current client conflicts: direct adversity conflicts under 1.7(a)(1), and material limitation conflicts under 1.7(a)(2). Both kinds require client consent. Client consent must be informed consent, confirmed in writing (ICCW), but that written confirmation may be of two types: (1) a writing signed by the client; or (2) an oral consent promptly followed by a written confirmation from the lawyer to the client. Under the California approach, there are two types of adverse interests: (1) the kinds of direct adversity to current and former clients that normally count as conflicts [3-310(C) & (F)]; and (2) relationships (personal, business, professional, or legal) that the lawyer may have or had with persons affected by the legal matter [3.310(B)]. The former can be consented only in a writing from the client. Normally that is accomplished by sending the client a writing laying out all the relevant circumstances and reasonably foreseeable adverse consequences and asking the client to sign the writing if they consent. The latter may be resolved note that client consent is not required by sending the client written disclosure, which must contain the relevant circumstances and reasonably foreseeable adverse consequences. (3-310(A)) But in the case of written disclosure, no writing from the client is required. Sexual Relationships with Clients Under the ABA approach, lawyers shall not have sexual relationships with clients unless a consensual sexual relationship existed when the ACR commenced. (1.8(j)) Obviously, coercing a client to have a sexual relationship is a severe breach of fiduciary duty. Under the California approach, the ethics rules do not forbid such relationships between spouses or if the relationship predated the ACR. (3-120) Otherwise the rules forbid such relationships if they interfere with the lawyer s competence. Obviously, coercing a client to have a sexual relationship is a severe breach of fiduciary duty. Lawyer as Witness (the Lawyer-Advocate Rule) Under the ABA approach, leaving aside uncontested matters and testimony about the nature and value of legal services rendered (when the advocate may testify), even if the client consents the court may order disqualification in order to protect the fact finder from confusion or protect the opposing side from prejudice. (3.7) The rule requires a balancing of interests among the client, the opponent, and the tribunal. Under the California approach, leaving aside uncontested matters and testimony about the nature and value of legal services rendered (when the advocate may testify), the rule applies only to jury trials and the issue can be resolved by obtaining the informed, written consent of the party whose lawyer will be a witness. The rule involves focusing only on the advocate and her client. Reporting Misconduct by other Lawyers and Judges Under the ABA approach, lawyers and judges have a duty to report other lawyers and judges if they know about facts that raise a substantial question about the other s honesty, trustworthiness, or fitness to be a lawyer (or judge). (8.2; Judicial Rule 2.15) Under the California approach, there is no duty to report misconduct by other lawyers or by judges; there is, however, a duty to self-report various information to the Bar. (Cal. Bus. & Prof. Code 6068(o)) 56 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
Appendix D Catalog of Ethics Issues Raised on Recent California Bar Examination Essay Questions February 2010 July 2009 February 2009 July 2008 February 2008 July 2007 100% of essay question: sharing fees with non-lawyer; inadvertently revealing client confidence; responsibility for malpractice of other lawyer working from the common office; failure to supervise non-lawyer subordinate. 50% of essay question; malicious prosecution; litigation with the intent to harass. 100% of essay question; criminal prosecutor's ethics; criminal defense attorney ethics; trial publicity rule; obstructing access to witnesses; destruction and alteration of evidence (Michael Nifong fact pattern); California and ABA 33% of essay question; California and ABA duty of confidentiality; ( Death or substantial bodily harm exception). 33% of essay question; motion for new attorney (withdrawal and termination). 100% of essay question; ABA and California; attorneys' fees; taking stock in client s company in lieu of fees; duty of confidentiality. 100% of essay question; California and ABA; competence of lawyer; hiring suspended lawyer; fee splitting. 100% of essay question; California & ABA; conflict with personal feelings of lawyer; duty of confidentiality & whistle blowing for safety reasons; withdrawal due to repugnance toward client. 50% of essay question; California & ABA; assisting Unauthorized Practice of Law (UPL); partnership with non-lawyer; sharing legal fees with non-lawyer. None! February 2007 50% of essay question; California & ABA; conflicts of interest in business formation; conflicts of interest in entity representation. 57 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
July 2006 February 2006 July 2005 February 2005 July 2004 February 2004 July 2003 February 2003 100% of essay question; California & ABA; contingency fee formalities; advancing money to the client; undisclosed financial terms; sex with client; coercive settlement. 50% of essay question; no jurisdiction specified; providing non-legal services; doing business with client; adversity to client. 50% of essay question; no jurisdiction specified; lawyer serving on client's corporate board; lawyer conflict of interest representing director against corporate client. 100% of essay question; no jurisdiction specified; lawyer getting contingency fee in divorce case; solicitation; sexual relations with client; not communicating settlement offer to client; reasonableness of 50% contingency fee. 100% of essay question; no jurisdiction specified; no-contact rule; inadvertent production of privileged document; work product; attorney client privilege. 100% of essay question; no jurisdiction specified; cappers and runners - cash for solicitation; solicitation through others; no contact rule; plaintiff's personal injury lawyer. 50% of essay question; no jurisdiction specified; malpractice; causation is but for, or case within a case ; allowing statute of limitations to run. 100% of essay question; no jurisdiction specified; representation of elderly father; conflict with former client (father's daughter); waiver of privilege by not meeting with client alone; payment of legal fees by non-client. 50% of essay question; no jurisdiction specified; represented corporation but personally traded on insider information. 100% of essay question; no jurisdiction specified; in-house lawyer meets with corporate client's employee, learns of toxic dumping; duty of confidentiality. 100% of essay question; no jurisdiction specified; government lawyer moves to private practice and opposes law she help shaped while government lawyer; represents two private clients in challenging the law. 58 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
July 2002 February 2002 July 2001 100% of essay question; no jurisdiction specified; competence where lawyer had never done a criminal case before; conflict between non-client parent paying bill and 18-year-old client; coercing settlement; fee splitting. 50% of essay question; no jurisdiction specified; lawyer coercively drafts trust instrument for family member in a manner that benefits the lawyer. 50% of essay question; no jurisdiction specified; lawyer added tort claim to complaint based on unsubstantiated statement from client; client later informed lawyer the claim was false; lawyer let claim lapse but did not correct it or dismiss it. 59 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
Appendix F A Mnemonic-Driven Model for PR Essay Questions on the Bar Examination I will offer three mnemonics: one for duties lawyers owe clients; one regarding legal fees; and one for the roles that lawyers play. Note that the mnemonics don t cover all the substantive rules. But, for test takers who prefer a mnemonic approach, they can be used to generate an outline of issues to discuss. AC at the CDC to fight CLISP CRAWLS CLAPDANCES What is the Attorney Client Relationship? In the attorney client relationship, fiduciary duties (e.g., loyalty) run from the lawyer to the client, contractual duties (e.g., the duty to pay legal fees) run from client to lawyer, and the authority for decision-making is shared. Graphically: What are the fiduciary duties running from Attorney to Client? Here s my cheesy mnemonic. Suppose a tropical disease called CLISP was running wild. We d expect the CDC (Center for Disease Control) to fight the epidemic. Because CLISP is a tropical disease that flourishes in warmer temperatures, the CDC laboratories fighting CLISP make heavy use of AC (air conditioning) to keep the labs cools. AC at CDC to fight CLISP. AC = Abide & Consult. Abide by the competent client s decisions regarding objectives; and Consult with the client about tactics. CDC = Competence, Diligence, and Communication. These are basic duties you owe the client. 60 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
CLISP = Confidentiality Loyalty (conflicts of interest) Independent judgment Safeguarding Property of the Client What about fees? Here s a mnemonic for commonly tested issues regarding fees: CRAWLS. I am not giving a complete set of rules under each issue, but am touching on highlights. Contingency fees. I won t cover all the rules regarding contingency fees, but they must be in writings signed by clients; are not permitted in criminal defense or for securing a divorce or for securing property in a divorce; and must be reasonable (ABA) or not unconscionable (California). Reasonable/Unconscionable The general benchmark for fees in the ABA approach is reasonable, but in the California approach is not unconscionable. The factors for determining that are basically identical and are commonsense: difficulty, effort required, how specialized it was, results obtained, market rate for similar services, etc. Accounts (Trust and General) Advance payments of fees and costs remain in the trust account until earned (fees) or spent (costs). Any disputed funds remain in the trust account until the dispute is resolved. Writings Under the ABA approach, a written fee agreement is preferred but not required. Under the California approach, if the fees will exceed $1,000 then a written agreement is required for clients other than corporations. Under both approaches, contingency fees must be signed by the client. Liens and Doing Business with clients. Whenever you take a possessory interest (e.g., lien) from a client, or go into business with a client, the transaction must be reasonable (ABA & California); you must get a WSC (writing signed by client); and you must put the magic words in writing (i.e., advise the client of the desirability of seeking independent counsel and give the client a reasonable opportunity to do so). Sharing fees with lawyers and non-lawyers. You can t share legal fees with non-lawyers; although you may pay non-lawyer employees their salaries, benefits, and profit-sharing plans. Under the ABA approach, you cannot share fees with lawyers at other firms unless they assume responsibilities for the entire matter or do a portion of the work for a portion of the fees. (1.5(e)) You need ICCW (informed consent, confirmed in writing) for the arrangement. 61 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
Under the California approach, you can offer a lawyer not at your firm a bare referral fee simply for referring you the matter, and you may shares fees with lawyers from other firms actually working on the matter, if the client consents in writing and the total fees are not increased. (2-200) What are professional roles? The word role is used many ways when talking about lawyers. I m using it in a specific way: roles are sets of ethical rules that apply when lawyers are performing particular functions. For example, special ethical rules regulate the role of criminal prosecutor. When we define any particular role, we specify the duties that the lawyer owes to larger social systems such as the courts or the public markets. Let s look at the roles that lawyers play when representing clients. When a lawyer is representing a client, she is literally re-presenting the client to a tribunal or in another social setting. While doing so, a lawyer typically acts in one of various sub-roles. The lawyers main roles are CLAPDANCES. Corporations and organizational client (client is the entity, not the officers; report bad news up the chain of command of org, etc.) Litigators: Advocates (general rules for litigators) Prosecutors (ministers of justice; must fight fair) Defense lawyers criminal. May put state to its burden of proof A (filler letter! Ignore!) Negotiator (can t commit fraud; no false statements to 3rd parties) Counselor (honest, candid, independent advice to the client) Evaluator (when making factual description of client for benefit of non-clients, get client consent re. confidences and tell no lies!) Supervisors & Subordinates (reasonably insure ethics below you; subordinates can follow orders if it s a reasonable resolution of an arguable question (RRAQ). Hence lawyers have duties running in two directions to clients and to society. 62 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014
How could I use the model to answer essay questions on the bar examination? First, if you reach a PR essay question, ask yourself, What duties does this lawyer owe to the client? For that, work down your AC at CDC to fight CLISP mnemonic and decide what duties are implicated by the fact pattern. When you address each duty that seems applicable to the fact pattern, underline the key word so that the grader will see that you re addressing an important issue. Suppose your believe that the fact pattern calls for discussion of diligence, communication and safeguarding property. Start consecutive paragraphs like this: Lawyer owes Client the duty of Diligence. Here,... [discussion of facts relevant to diligence] Lawyer owes Client the duty of Communication. Here, [discussion of facts to communication] Lawyer owes Client the duty of Safeguarding Property. Here, [discussion of facts to safeguarding property] Second, look hard at fees and money issues, using the CRAWLS mnemonic. These are frequently tested! Third, do the same thing about the duties that run from the Attorney to society. Use your CLAPDANCES mnemonic and underline key duties. For example: As a litigator, Lawyer owes the duty of candor to the tribunal... As a negotiator, Lawyer owes the opposing party a duty not to commit fraud... As a criminal defense lawyer, Lawyer may put the state to its proof even if Lawyer knows that client really did commit the crime... As a subordinate lawyer, Mary must act ethically but may follow a superior s instructions if it s a reasonable resolution of an arguable question (RRAQ). 63 John Steele (2012-2014) John Steele s students are permitted to use this document to make their own noncommercial outline solely for their own educational purposes. Version Date: January 2014