VIRGINIA STATE BAR
MANDATORY PROFESSIONALISM COURSE
TABLE OF CONTENTS
A. John Smith
B. Rob Bucks
D. Bank Clerk
B. Fee Dispute
D. Marvin Belly
C. Carl Counsel
A. Larry Lawyer
B. Larry Lowe
B. Justin Case
A. Sam Newton
A. Frieda Jones
B. Roger Lukens
C. Robert Trump
D. Susan Slater
E. George York
F. Steve Black
A. Nancy Nicely
C. Jack Bright
D. Bob Hicks
A. Jean Lightly
B. Larry Zeal
F. Greta Switch
C. Harry Sharp
F. Jane Tookum
H. Sara Gray
B. Bill Rose
A. John Doe
B. City Police
C. Bob Hicks
H. Who is "the Client?"****
I. Fairchild County v. Turner****
C. Joe Eager
The general workshops cover Topics 2 through 6 in the Coursebook. The goals of the workshops are 1) to raise the students’ level of awareness of possible ethical problems in the practice of law so that difficulties might be avoided in the future, and 2) to teach the students the basic concepts contained in the Code of Professional Responsibility.
The highlights are:
1. Client funds must be deposited in an "identifiable trust account."
2. A lawyer may not, for his or her own purposes, maintain a sum of money on deposit in his or her trust account. A general prohibition exists against such commingling except for a lawyer’s funds to cover bank charges or where monies belong in part to both the lawyer and the client.
3. A lawyer must maintain complete records of client funds, securities and other property in the lawyer’s possession.
4. A lawyer must account to the client for funds, securities and other property held and distributed by the lawyer.
5. It is improper for a lawyer to disburse monies from a trust account when the funds on which such check is drawn are uncollected.
6. A lawyer may not earn interest on his or her trust account for the lawyer’s own benefit.
A. Barry Barrister. Following settlement of a personal injury matter, Barry Barrister received $25,000 for his client which he deposited in his trust account. Barry notified his client, who then asked him for $10,000. Barry complied by issuing a trust account check, payable to the client, in that amount. Thereafter, the client asked for a second payment in the sum of $15,000 and Barry complied.
Between the issuance of the first check and the second, the balance in Barry's trust account fell below $15,000. Barry asserts that his bookkeeper made a mistake regarding a deposit and that he has made good the shortfall from his own funds.
All funds of clients paid to a lawyer or law firm, other than advances for costs and expenses, shall be deposited into a bank account meeting the requirements of the Rules of Professional Conduct. No funds of the lawyer may be placed in that account except (1) for the purpose of paying bank charges and (2) those funds which belong in part to a client and in part presently or potentially to the lawyer or law firm. Nonlawyer personnel employed by a lawyer or law firm are required to comply with the Rules of Professional Conduct and the lawyer is required to exercise a high standard of care to assure that compliance. Ultimately, the lawyer is responsible for any misfeasance or malfeasance by nonlawyer personnel.
Has Barry violated any duty to his client?
An attorney is not permitted to commingle his funds with funds in his trust account with the exceptions of sufficient funds to pay bank charges or funds which represent monies belonging in part presently or potentially to the lawyer. Rule 1.15 (a); Comment . He is required to maintain complete records of funds and property belonging to a client, to safeguard them, and to promptly pay or deliver them to the client upon request when the client (or his designee) is entitled to receive them. Rules 1.15 (b) (3)and (b) (4); LEOs 183, 454, 614, 1021, 1248, 1256, 1262/63, 1318, 1372.
Barry has appropriately deposited his client's funds in the trust account, notified the client, and disbursed client's funds. The burden is on Barry to show that in fact a mistake was made with regard to a deposit, causing the account to fall below what actually belonged to the client, and that appropriate trust account procedures were followed as required by Rule 1.15 (d). F. Lee Cogdill v. First District Committee of the Virginia State Bar, 221 Va. 376 (1980). If he cannot carry that burden, then he will be deemed to have violated Rule 1.15. Barry is required to make reasonable efforts to ensure that his nonlawyer personnel comply with the Rules of Professional Conduct. Rule 5.3 (b); LEOs 745, 1132, 1170. Most judges believe the standard set forth in Rule 1.15 is one of strict accountability and that "the attorney's intent, good faith or ability to restore funds" will not form the basis for exculpation. American Bar Association Annotated Code of Professional Responsibility (1979), at page 499, et seq., (emphasis added), quoted in LEO 183.
B. William Prosper. William Prosper has done exceedingly well in the practice of law. He enjoys a busy, thriving and fiscally sound law practice. Recently, his bookkeeper announced that she was leaving and William employed another bookkeeper. Because of the press of time and practice, however, William did not check the new bookkeeper's background with her former employer, nor did he actively oversee her work. Unknown to William, the bookkeeper had been indicted for forgery and theft. While employed by William, she stole more than $30,000 from a client trust account.
The Rules of Professional Conduct mandate periodic reconciliations of the lawyer's accounts containing client funds and property. Such reconciliations are required to identify the preparer and must be approved by the attorney or one of the attorneys in the firm. Nonlawyer personnel employed by a lawyer or law firm are required to comply with the Rules of Professional Conduct and the lawyer is required to make reasonable efforts to assure that compliance. Ultimately, the lawyer is responsible for any misfeasance or malfeasance by nonlawyer personnel.
Has William violated Rule 1.15?
Yes. William is required to maintain complete records of all funds, securities and other properties of a client coming into the lawyer's possession and to render appropriate accounts to his clients regarding them. Rule 1.15 (b) (3). His negligence in failing to check his bookkeeper's history and his failure to oversee her work make him unable to comply with the requirements of rendering accounts to his clients and to safeguard their funds. Further, Rule 5.3 (b) requires him to make reasonable efforts to ensure that the conduct of his nonlawyer personnel is compatible with his own professional obligations under Rule 1.15. The ultimate responsibility rests with William for having permitted such embezzlement to take place and he may be disciplined for his inattention. Matter of Scanlan, 697 P.2d 1084 (Ariz. 1985); LEOs 745, 1132, 1170, 1290, 1329. Disciplinary Counsel v. Ball, 618 N.E.2d 159 (Ohio 1993) (attorney received a six-month suspension for having largely delegated his estate practice to a paralegal over whom he exercised little supervision and who embezzled funds over ten-year period).
C. Alice Playhill. Alice Playhill represents the buyer of a residential property and has just concluded the real estate settlement. She has just received a check for the loan proceeds from the buyer's lender, a nationally recognized and respected financial institution, drawn on its New York office, and the buyer has given the attorney a cashier's check for the difference owed on the purchase price. Alice intends to deposit these two checks in her trust account this afternoon. The loan proceeds are $250,000; the cashier's check is for $50,000.
Funds received by a lawyer may only be disbursed when the sum represents collected funds credited to the lawyer's trust account. Disbursing on one client's uncollected funds actually results in the lawyer's disbursing other client's funds to the client whose funds have not yet been collected.
1. Can Alice now issue checks on her trust account to pay the buyer's real estate agent? the seller's real estate agent? Each is owed $9,000.
Since Alice has not yet deposited the checks in her trust account, she may not disburse any funds until the proceeds are deposited. Once they are deposited (this afternoon), she may draw upon the purchaser's $50,000 cashier's check in order to pay the real estate agents' commissions. Rule 1.15; LEOs 183, 753, 1255.
2. May she issue a trust account check at closing to the seller for proceeds due him of $150,000?
No. Since the lender's check for $250,000 was drawn on a New York bank, located outside the Fifth Federal Reserve District, those funds are not yet available for disbursement under the Wet Settlement Act, Va. Code Ann. §6.1-2.10. The attorney must comply strictly with the provisions of that Act and if the item is not in one of the forms prescribed by the Act, Alice will be in violation of Rule 1.15. LEOs 183, 663, 751, 753, 1116, 1255.
The highlights are:
a. Fees should be reasonable and adequately explained to the client.
b. Written fee agreements are desirable.
c. A lawyer is required to return unearned portion of a retainer fee.
d. Contingent fees are rarely proper in domestic cases and never proper in criminal cases.
e. Attorneys may advances costs for client, but client remains ultimately responsible, unless the client is indigent.
f. Some fees are statutorily limited, such as workers compensation.
g. An attorney may assert a lien on client funds for unpaid fees so long as the assertion of that lien does not prejudice the clients case.
2. Advertising is constitutionally protected and legal so long as it is not false, misleading or deceptive.
3. Examples of deceptive advertising include:
a. Advertising verdict amounts, without a disclaimer that meets the specific requirements of Rule 7.2(a)(3);
b. Using actors in advertisements without disclosing they are actors
c. Using false names to gain advantageous location in the Yellow Pages, such as AAA Accident Attorneys
4. In-person solicitation is fraught with the danger to mislead; it is prohibited outright in personal injury and wrongful death cases.
5. Solicitation by letter or e-mail in an envelope requires a disclosure of "Advertising Material," as specified in Rule 7.2(d).
6. There is a liberalized standard for soliciting clients to vindicate civil rights, NAACP V. Button.
7. Legitimate lawyer referral services are acceptable.
A. John Smith. John Smith was retained several years ago to represent Sally Jones in a divorce action. The representation involved issues of spousal support, child support and custody.
Although Sally had signed a retainer agreement with John and paid an initial retainer of $1,000, she soon fell into necessitous circumstances and was unable to pay John his legal fees as they were earned. John, however, agreed to continue representing her.
Following the entry of a divorce decree, Sally realized that she could not afford to continue to live in the home she and her husband owned and asked John to sell the home. John initiated a partition suit and was successful in selling the home for $250,000. After liens were paid, John received $100,000 and deposited that amount in his escrow account. At this time, Sally’s outstanding legal fee was $25,000, a sum she found exorbitant. When questioned about his fee, however, John became upset and told Sally that not only was his fee $25,000, but he charged a 5 percent commission to sell the house. John then withdrew from his escrow account $40,500 for himself (which included interest on Sally’s unpaid legal fees), issued a check to his client for $9,500 and a second check to Sally’s former husband for $50,000.
Fees must be reasonable and adequately explained to the client. Advance fees must be deposited into attorney trust account and attorney portion may only be withdrawn when earned. Fees which are disputed by the client may not be withdrawn until dispute is resolved; but the disputed sum may be interpleaded into the court. Interest may not be automatically charged on clients’ overdue accounts, but may be imposed where a prior agreement with the client exists; where the client is capable of paying the fee; where the interest rate is not usurious; and where the client retains the right to prepay any balance of the fee without penalty.
1. Has John acted improperly in charging a commission for the sale of Sally’s home?
John is permitted by Virginia Code § 54.1-2103(3) to perform real estate broker/salesman services in the performance of his duties as an attorney-at-law. He has an ethical duty, however, to charge reasonable fees which are adequately explained to the client. He is further required to keep his client reasonably informed about matters in which the lawyer’s services are being rendered. Rule 1.4. The Rules encourage the lawyer to reach a clear agreement with the client as to the basis of fees as soon as feasible after lawyer has been employed. Rule 1.5 (b). Thus, John has acted improperly in waiting until after the sale has been made to demand a commission on the sale of the house. LEOs 1148, 1204, 1228, 1346.
2. What obligations, if any, does John have to explain his fee to Sally?
Under Rule 1.5 (b), John is required to adequately explain his fee to the client and is encouraged to address the factors enumerated in Rule 1.5 (a) in order to determine the reasonableness of his fee. Furthermore, John is required to render appropriate accountings to his client regarding all funds belonging to the client which come into the lawyer’s possession. Rule 1.15 (c) (3); LEOs 214, 248, 992, 1132, 1220, 1246, 1277, 1267, 1322, 1606.
3. May John withdraw his legal fee from the trust account without Sally’s consent?
Under Rule 1.15 (a)(1), John is required to deposit into the trust account funds which belong in part to Sally and in part presently or potentially to John. John may withdraw that portion belonging to him when it is due (i.e. when it is earned), unless his right to do so is disputed by Sally. It is, however, improper for an attorney to withhold trust monies as payment of his fees unless there was an agreement which permits his fees to be paid from the trust. LEOs 988, 1132, 1178, 1187, 1246, 1280, 1322, 1606; Sokoll v. Humphrey, Lutz and Smith, 380 So.2d 840 (Ala. App. 1979).
4. If John may not withdraw his fee from the trust account without Sally’s consent, and Sally refuses to agree to a fee, what can John do to be paid?
If a procedure has been established to resolve such disputes, such as mediation or arbitration, the lawyer should consider using such processes. Comment , Rule 1.5. John may institute suit to recover his fee, but he is cautioned not to sue a current client for a fee unless necessary to prevent fraud or gross imposition upon the lawyer by the client. He may not withdraw his fee from the trust account until the dispute with Sally is finally resolved. John may voluntarily interplead the sum into the court pending the court’s determination of Sally’s liability to him for fees. Va. Code Ann. § 8.01-364; LEOs 974, 1089, 1117, 1246.
5. Has John acted improperly by charging interest on Sally’s unpaid account?
The automatic imposition of an interest or finance charge on clients’ overdue accounts is improper. LEO 186-B. However, an interest charge may be imposed on a client’s unpaid account where the client has agreed to (1) the imposition of such a charge; (2) the amount of the attorney’s fees; (3) is able to pay the fees but desires to defer payment for his own convenience; (4) the interest rate does not violate the laws of the Commonwealth; and (5) the client is not penalized for prepayment. The attorney should take into consideration the client’s financial ability to pay reasonable fees and should attempt to resolve amicably any disputes over attorney’s fees. LEOs 186-B, 426, 642, 650, 1247, 1667.
B. Rob Bucks. Rob Bucks proposes that his standard fee agreement with clients will include a clause that a set fee of $500 will be due if Rob must institute collection proceedings to collect unpaid fees for legal services.
The appropriate and controlling rule is Rule 1.5 (a) which requires that an attorney’s fees be reasonable and adequately explained to the client and Rule 1.8 (a) which provides that a lawyer shall not enter into a business transaction with a client if they have differing interests and if the client expects the lawyer to exercise his professional judgment for the protection of the client, unless the client has consented after full and adequate disclosure and provided that the transaction is not unconscionable, unfair or inequitable when made.
May Rob include such a clause in the fee agreement?
The automatic imposition of a $500 collection fee in all fee agreements, in the event that the attorney has to initiate collection proceedings against the client for unpaid legal fees, violates Rule 1.5 (a). LEO 1667. In some instances, for example, the collection fee itself could well exceed the unpaid balance owed by the client. Such collection fee clauses are used frequently by other professions or businesses. However, our Supreme Court has recognized the unique nature of agreements between attorney and client, and has stated, with regard to fees in general:
It is a misconception to attempt to force an agreement between an attorney and his client into the conventional modes of commercial contracts. While such a contract may have similar attributes, the agreement is, essentially, in a classification peculiar to itself. Such an agreement is permeated with the paramount relationship of attorney and client which necessarily affects the rights and duties of each. Heinzman v. Fine, Fine, Legum and Fine, 217, Va. 958, 962 (1977). Regardless of the agreed terms in a written contract of employment between attorney and client, the lawyer cannot legitimize a fee that is otherwise prohibited under the Rules. LEO 1606. Moreover, a determination of the reasonableness of a fee is not necessarily limited to the circumstances existing at the time of the agreement. The occurrence of events not contemplated by the parties at the outset of the representation may also be relevant to the reasonableness of the fee. In this situation, for example, it would not be known at the outset what, if any, unpaid legal fees are due and owing to the attorney. Therefore it would be improper for an attorney to automatically impose in the initial fee agreement with his clients a clause that imposes a flat fee if collection proceedings are initiated to collect unpaid fees for legal services. However, it is not improper for an attorney to place in the initial fee agreement a clause that permits recovery of reasonable attorney’s fees if collection proceedings are initiated.
C. Howe Fair. Howe Fair proposes that his standard fee agreement will contain a provision obligating the client to submit any claim of legal malpractice by his firm’s lawyers (excluding disciplinary complaints to the Virginia State Bar) to binding arbitration, such provision stating:
By agreeing to this [binding arbitration] provision, you waive your rights to a trial by jury or to a judge. We urge you to seek the advice of independent counsel of your choosing before you agree to this provision.
The pertinent ethics rules are Rule 1.7 (b), which provides that a lawyer shall not represent a client if the representation of that client may be materially limited . . .by the lawyer’s own interests; Rule 1.8 (h) providing that a lawyer shall not prospectively limit his liability to a client for his own personal malpractice; and Rule 1.8 (a) prohibiting business transactions with a client, unless the transaction and terms are fair and reasonable and fully disclosed in writing to the client in a manner which can be reasonably understood by the client, the client is given an opportunity to consult with independent counsel and the client consents in writing.
It is not ethically improper under Rule 1.8 (h) for a lawyer to include a provision in a client retainer agreement requiring binding arbitration, or non-binding but admissible arbitration, of a malpractice claim against the lawyer, provided that (1) the client consents after full disclosure of the effect of the provision, and (2) the client is advised to seek independent counsel regarding the advisability of the provision. LEO 638. The committee cited Massachusetts Legal Ethics Opinion 82-1. In a later opinion, the committee observed that client retainer agreements requiring binding arbitration of malpractice claims do not constitute a limitation of liability in violation of former DR 6-102 [now Rule 1.8(h)] because they merely identify a procedure for the determination of liability and do not specifically limit liability. LEO 1550. See McGuire, Cornwell & Blakey v. Grinder, 765 F. Supp. 1048 (D. Colo. 1991).
LEO 638 did not mention former DR 5-104(A) [now Rule 1.8(a)], governing business transactions between a lawyer and a client in which they have differing interests, and the client expects the lawyer to exercise professional judgment therein for the client’s protection. In LEO 1586 the committee opined that a client engagement agreement provision requiring binding arbitration of fee disputes (but not malpractice claims) is not violative per se of former DR 5-104(A) [now Rule 1.8(a)], provided that (1) before entering into the engagement agreement, the lawyer makes a full and adequate disclosure to the client of all possible consequences of the binding arbitration provision, (2) the client gives an informed consent, and (3) the binding arbitration provision is not unconscionable, unfair or inequitable when made. The committee observed that all doubts about the adequacy of disclosure to obtain informed consent are resolved in the client’s favor. In a more recent opinion, LEO 1707, the committee gave arbitration provisions in attorney engagement contracts a more stringent examination, stating:
Provisions in client engagement agreements requiring binding arbitration of malpractice claims have received considerable attention since LEO 638 was issued in 1984. In a recent article, the Attorneys’ Liability Assurance Society reported that the propriety of such provisions remains questionable, and that the pertinent ethics opinions are about evenly split on whether they are permissible. VIII ALAS, Loss Prevention Journal 13, 14 (Sept. 1997). Judicial recognition of such provisions has been described as giving the lawyer a license to exploit the client. Arbitration Clauses in Retainer Agreements: A Lawyer’s License to Exploit the Client, 1992 Journal of Dispute Resolution 341, discussing Haynes v. Kuder, 591 A.2d 1286 (D.C. 1991).
Generally speaking, arbitration of malpractice claims would be more expeditious and efficient and less expensive than litigation. Those advantages benefit lawyer and client alike. The lawyer’s motive is implicated nonetheless. It has been suggested that the lawyer’s objective in requiring arbitration of malpractice claims is usually to avoid a jury trial in an effort to minimize losses and reduce a client’s recovery for any legal malpractice. Lawrence v. Walzer & Gabrielson, 256 Cal. Rptr. 6, 10 at n. 5 (Ct. App. 1989).
The making of a contract between the lawyer and the client, particularly when it requires the client to forego a right to a judicial adjudication of legal malpractice claims, harbors special problems that entail a heightened ethical scrutiny of fairness and conscionability. An engagement contract between lawyer and client is not tested by the standards of ordinary commercial contracts. Heinzman v. Fine, Fine, Legum & Fine, 217 Va. 958, 962 (1977). The lawyer has an influential and superior position, excepting possibly when the client is a corporation with in-house counsel. See Spilker v. Hankin, 188 F.2d 35, 39 (D.C. Cir. 1951). The lawyer is dealing in an area in which the lawyer is an expert, and the client is not. The client necessarily looks to the lawyer for guidance. See Udall v. Littell, 366 F.2d 668, 675 (D.C. Cir. 1966); In re Will of Tank, 503 N.Y.S.2d 495, 497 (Civ. Ct. 1986).
It is noted that until an engagement agreement is made, the lawyer is dealing with a prospective client. Even so, it is generally recognized, and the committee agrees, that a lawyer’s fiduciary duties extend to preliminary consultation by a prospective client with a view to engagement. E.g., Westinghouse Elect. Corp. v. Kerr-McGee Corp., 580 F.2d 1311, 1316-19 (7th Cir.), cert. den., 439 U.S. 955 (1978); Nolan v. Foreman, 665 F.2d 738, 739 n. 3, reh’g den., 671 F.2d 1380 (5th Cir. 1982); Green v. Montgomery County, 784 F. Supp. 841, 845 (N.D. Ala. 1992). But see McGuire, Cornwell & Blakey, 765 F. Supp. 1048, 1051 (D. Colo. 1991). A lawyer’s fiduciary duties, it has been noted, "arise from his status as a member of the legal profession and are expressed, at least in part, by the applicable rules of professional conduct." ABA/BNA, supra, 31:101 at 21.
There is no consensus among ethics panels that have addressed whether it is ethically permissible for a lawyer to include a provision requiring binding arbitration of malpractice claims in the client engagement agreement. District of Columbia Bar Legal Ethics Comm. Op. 211 (1990) stated that an arbitration provision covering malpractice claims is not ethically permissible unless the client is represented by independent counsel in entering into the agreement. Its rationale was that it is unrealistic to expect lawyers to provide enough information about arbitration in a first meeting to allow the client to make an informed decision. Maryland Ethics Opinion 90-12 (1989) stated that the client must have actually consulted with another lawyer before the client’s consent to binding arbitration of malpractice claims can be effective. See Michigan Informal Ethics Opinion RI-257 (1996).
Other ethics panels have concluded that it is enough if the lawyer makes an adequate disclosure to the client of the effect on the client’s rights of a provision requiring arbitration of malpractice claims and advises the client to consult an independent lawyer regarding the provision. Arizona Ethics Opinion 94-05 (1994); Philadelphia Ethics Opinion 88-2 (1988); see California Formal Ethics Opinion 1989-116. On the other hand, Ohio Ethics Opinion 96-9 (1996) found it unseemly for a client to be admonished that the client needed to "hire a lawyer to hire a lawyer." In the Ohio ethics panel’s view, the admonition to hire another lawyer for advice about a malpractice arbitration provision in the engagement agreement conveyed a chilling caveat to the client: the lawyer you are hiring to protect your interests may be taking advantage of you in the engagement agreement.
In LEO 1707, the committee grappled with this difficult issue and concluded that a client engagement agreement providing for binding arbitration of legal malpractice claims does not constitute a per se violation of the proscription of former DR 6-102 [now Rule 1.8(h)] against a lawyer limiting liability to the client for personal malpractice. The committee cautioned, however, that the ethical propriety of such provisions is tested by the adequate disclosure and informed consent requirements of DR 5-101(A) [now Rule 1.7(b)] and by the paramount principles of fairness and conscionability governing contracts between lawyer and client generally.
Practice Tip: Avoid the practice of including mandatory arbitration of malpractice claims as a matter of routine and reserve the use of such clauses in engagements with sophisticated business clients with in-house counsel to advise them on the consequences of entering into such agreements.
D. Bank Clerk. Bank Clerk is charged with embezzlement and retains Lawyer to defend against these charges for a flat fee of $15,000. The next day another employee confesses to having taken the money, and the prosecutor (not knowing of Lawyer’s retention by Bank Clerk) immediately dismisses the charges against Bank Clerk. Lawyer has done nothing on the case other than speaking to Bank Clerk.
QUERY: May lawyer ethically collect the agreed flat fee of $15,000 from Bank Clerk?
DISCUSSION: A fee that is not earned is per se an unreasonable fee. Thus the retention of an unearned fee would result in the lawyer collecting an unreasonable fee in violation of Rule 1.5(a). The attorney must refund to a client any advanced fee that had not been earned. Rule 1.16(d). Lawyer has done nothing on the case other than speaking to Bank Clerk. In the absence of special circumstances, such as prior discussion of this possibility or Lawyer having rejected another representation offering a comparable fee in reliance upon this engagement, it would be unreasonable for Lawyer to be paid $15,000 for doing so little. Bank Clerk must pay the reasonable value of Lawyer’s services, but more than that is not due and Lawyer must refund the excess if already paid.
If, however, the prosecutor dropped the charges as a result of a plea agreement negotiated by Lawyer, the rapid disposition of the case would not make Lawyer’s flat fee of $15,000 unreasonable and Lawyer may ethically charge and collect his fee. A negotiated disposition without trial is a common event that the parties are presumed to understand may occur when they agree that the lawyer will be paid a flat fee.
See Restatement of the Law Governing Lawyers (3d) at § 34 (2000).
See, e.g., In re Kutner, 399 N.E.2d 963 (Ill. 1979) (flat fee of $5,000 unreasonable under DR 2-106 in criminal defense representation when prosecuting witness asked for dismissal of case at first court hearing)
A. Lawyer Referral Services. A lawyer referral service proposes to contract with participating attorneys who will agree to discount fees in anticipation of volume business. Services will be offered to nonlawyer subscribers through a newsletter, which will include the areas of practice and fees of participating attorneys as well as articles written by those attorneys on legal subjects. The newsletter would not hold the attorneys out as specialists. Subscribers would pay a monthly fee to the referral service for that information. Subscribers would not call the referral service to obtain legal services; that subscribers would contact the attorneys directly, thus, there would be no "screening" of the subscribers’ calls by the referral service.
The referral service plans to have at least five attorneys listed in each geographic area; however, there may be fewer than five attorneys in each practice area. The attorneys would have the opportunity to review all advertising to be used by the referral service. The referral service will not set the lawyers’ fee; rather, the individual lawyers will do so. However, the contract between the referral service and the lawyers does state that the lawyers will provide estimates of the total cost of individual cases in advance whenever possible. The contract also prohibits the lawyers from joining any other lawyer referral service company while affiliated with the service as proposed.
The appropriate and controlling rules are Rule 7.1 and 7.2 which delineate requirements for lawyer advertising; Rule 7.5 which states the requirements for letterheads, lawyer listings, etc; Rule 7.3 which establishes limits on lawyer recommendations and solicitations; Rule 7.4 which sets out the requirements for an attorney to hold himself out as a recognized or certified specialist; Rule 5.6 which prohibits a lawyer from entering an agreement restricting his right to practice law after termination of the agreement (with an exception for retirement arrangements); and Rules 1.8 (f) and 5.4 (e) which establish specific requirements regarding a lawyer’s need to prevent third parties from influencing the attorney/client relationship.
1. Is the referral service’s listing of the practice areas of the attorneys an improper indication of specialization?
Rule 7.4 prohibits attorneys from holding themselves out as a "recognized or certified" specialist, except in certain situations. In the specific context of referral services, it is not improper for a lawyer referral service to list the areas of practice of the participating attorneys. See, LEO 1029. The listing of practice areas for the attorneys participating in the referral service is not improper under Rule 7.4.
2. Must there be not only five attorneys in each region but also five attorneys listed in each practice area?
As to whether there must be a particular number, such as five, of attorneys in each practice area practicing in this referral service, the composition of listed attorneys for this service must not be such that the arrangement would deceive the public in violation of Rules 7.1, 7.5 or 7.3. See LEO 926. Previously, the legal ethics committee stated that two law partners advertising their firm’s phone number as a referral service was improperly deceptive. See LEO 1029. The committee has further opined that for a referral service not to be deceptive, it should have a minimum number of attorneys in each region, with a suggestion of five for that minimum. See LEOs 1348, 1543. For the lawyers participating in this service to avoid a violation of Rule 7.1, the actual configuration of attorneys must be such that subscribing members of the public are not deceived as to the availability of a variety of lawyers.
Lawyers may advertise in on-line legal directories as long as they comply with all the Rules of Professional Conduct. LAO A-0017.
3. Is the non-compete clause regarding other referral services an improper restraint on the contracting attorneys?
As to whether the non-compete clause of the attorney/referral service contract is improper, the contract provision restricts only the right of an attorney to join another referral service during the time such attorney is affiliated with this inquiry’s referral service. In contrast, Rule 5.6 prohibits restrictions of an attorney’s right to practice law after the termination of a relationship created by the agreement. Therefore the restriction imposed in this instance is not improper under this rule since it does not actually limit the right to practice law, nor does it extend beyond the termination of the attorney/referral service relationship. See Legal Ethics Opinion 1689.
B. Sam Newton (solicitation). Sam Newton had just begun to practice law when he read an article in the newspaper about a young woman who had been struck and severely injured by a common carrier. As luck would have it, Sam's former college roommate was an emergency room intern at the hospital where the victim was being treated, so Sam asked his former roommate to mention to the victim (1) that she might need a lawyer and (2) that Sam was available. Sam agreed to pay the intern 10% of any fee generated "as a token of appreciation."
When Sam heard nothing from the victim, he then wrote her to advise that he was a licensed attorney and that he would like to assist her with her claims for injury. He noted in his letter "In my experience as a trial attorney, I have found that most claims can be settled without litigation. Should this happen, I would only charge 20% of the amount recovered. This is significantly less than the fees charged by other attorneys."
Still hearing nothing from the victim, Sam went to her hospital room to discuss employment. The visit came ten days after the accident, four days of which the victim had spent in intensive care.
Direct mail solicitation of potential clients is proper provided that it contains no false, fraudulent, misleading, or deceptive statements or claims. In a case not involving personal injury or wrongful death claims in-person solicitation of legal employment is similarly permissible with the further proviso that it does not involve or have a substantial potential for exerting improper tactics including coercion, duress, compulsion, intimidation, threats or other harassing conduct, particularly in view of the potential client's physical, emotional or mental state at the time of solicitation. However, Rule 7.3 (f) prohibits in-person solicitation in personal injury and wrongful death claims unless a family or prior professional relationship exists. A lawyer may not compensate anyone for his recommendation of the lawyer to potential clients.
1. What ethical violations may Sam have committed by requesting that his intern friend talk to the accident victim about Sam's services?
Rule 8.4 (a) states that "it is professional misconduct for a lawyer to violate or attempt to violate the Rules of Professional Conduct, knowingly assist or induce another to do so, or do so through the acts of another." A lawyer may not initiate an in-person solicitation by another person on the lawyer's behalf in matters involving personal injury or wrongful death claims.
2. Is Sam's solicitation letter proper?
Targeted direct mail solicitation of legal employment is not improper provided that the information is not misleading. Since Sam had just begun to practice law when he wrote the letter, his claims of experience as a trial attorney appear to be false and deceptive and therefore violative of Rule 7.1 (a). Furthermore, LEO 862 opined that only factual assertions should be made in personal communications regarding solicitation. Thus, a statement similar to Sam's that his charges are significantly less than those fees charged by other attorneys is improper. Shapero v. Kentucky Bar Association, 486 U.S. 466, 100 L. Ed 2d 475 (1988); LEOs 447, 470, 508, 579, 862, 904, 1098, 1229, 1297, 1321, 1328, 1342, 1750.
3. Is Sam's visit to the victim in the hospital proper?
Rule 7.3 (f) specifically forbids in-person solicitation in cases involving personal injury or wrongful death claims unless a family or prior professional relationship exists.
C. Sam Newton (advertising) Eager to develop a law practice, Sam began a series of advertisements in the local newspapers.
In one he advertised:
I represent injured persons. If you are in an accident, you need a lawyer with know-how. I have the experience to do your work.
Each print advertisement contained Sam's photograph, a photograph of a judge in a courtroom, a witness in the witness box, or other photographs depicting an actual trial.
In another Sam advertised:
DIVORCE, QUICKIE, DOMINICAN REPUBLIC FROM $275.00 One Day Qualified Attorney Call Sam Newton.
Publicity regarding a lawyer's services is proper provided that it contains no false, fraudulent, misleading, or deceptive statements or claims. A lawyer may not assist his clients in conduct which is illegal or fraudulent.
1. What problems are presented by Sam's advertisement regarding his representation of injured persons?
Since Sam is only currently establishing his law practice, his advertising claim of experience (included in words and trial pictures) in trying personal injury cases violates Rule 7.1(a)’s prohibition against false, fraudulent, misleading or deceptive statements in advertising. Rule 7.1 (a) (1)-(5) provides examples of statements or claims that are considered misleading. See also LEO 1297; LAO-#A-114; Comments - to Rule 7.1; Matter of Zang, 741 P.2d 267 (Ariz. 1987). But see Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626 (1985). Peel v. Attorney Registration and Disciplinary Commission of Illinois, 496 U.S. 91 (1990); LEOs 456, 923, 979, 1098, 1175, 1231, 1292, 1297, 1321, 1348, 1750.
2. What problems are presented by Sam's advertisement relating to "quickie" Dominican Republic divorces?
Sam's advertisement presents problems in that he is offering himself as available to assist in the procurement of foreign divorces which may or may not be valid in Virginia. He may be assisting his clients in conduct which is illegal or fraudulent as well as using advertisements which are misleading and deceptive. Unless the facts upon investigation would demonstrate that he is qualified to practice law in the Dominican Republic, where the divorce would be obtained, and that the divorce would be recognized in Virginia, his advertisement is violative of Rules 7.1 (a) as well as the requirements of Rule 1.1 and Rule 8.4. Attorney Grievance Commission of Maryland v. McCloskey, 511 A.2d 56 (Md. 1986); LEOs 1229, 1297, 1321, 1328.
The highlights are as follows:
1. Conflicts of a Lawyer. A lawyer may not engage in representation when the lawyer’s own interests adversely affect the duty of loyalty or exercise of professional judgment on behalf of a client. Some examples of potential problems are the following:
a. When the lawyer has financial or other self-interests that may affect judgment;
b. Acquisition of a proprietary interest in the cause of action or the subject matter of litigation , other than proper fee liens and contingent fees;
c. Acceptance of gifts from the client, which will be closely scrutinized for fraud, overreaching and undue influence;
d. Dual relationships, such as being attorney for a client and having an interest in the sale of the insurance, without adequate disclosure and consent;
e. Conflicts arising because the representation of opposing sides by a lawyer’s spouse or nuclear family or employment by the tribunal involved in the case;
f. Entering into business dealings with clients, unless the transaction is fair and reasonable, transmitted to the client in writing, understandable to the client, affords the client the opportunity to seek the advice of independent counsel, and unless the client consents (with publication rights of the client’s story subject to particular scrutiny).
2. Conflicting interests of clients. Conflicting interest of clients or potential clients may give rise to ethical violations in the following examples:
a. Concurrent representation of clients with adverse interests without both clients’ consent and after full disclosure or if the lawyer cannot adequately represent the interests of each. These conflicts of members of the same law firm are imputed to one another;
b. Former clients: a lawyer may not represent any person or entity whose interests are adverse to those of a former client in the same or a substantially related matter unless both clients consent after consultation.
c. Multiple representation: multiple representation of clients in the same or substantially related matter is prohibited without consent of all clients after consultation if the lawyer does not reasonably believe the representations will be adversely affected.
d. Aggregate settlement of claims: aggregate settlement of claims may not be made without full specific disclosure and consent.
3. Lawyer as a witness. A lawyer should refuse employment when the lawyer or another lawyer in the firm is likely to be called as a witness, unless the testimony relates to formal or uncontested matters to the nature and value of legal services rendered or if disqualification would be a substantial hardship for the client. If a lawyer learns that he or she ought to be called as a witness on behalf of the client after representation is undertaken, the testifying lawyer must withdraw as counsel of record. If after representation is accepted the lawyer learns that the lawyer may be called as a witness other than on behalf of his or her client, the lawyer may continue representation until it becomes apparent that the testimony is or may be prejudicial to the client.
4. Public employees entering private employment: a former judge shall not accept employment in connection with any matter in which he or she has acted on the merits of a matter in a judicial capacity unless all parities consent after full disclosure; a former government lawyer shall not accept private employment in connection with a matter in which he or she had substantial responsibility unless the public entity by which the lawyer was employed consents after full disclosure.
A. Fraternity Brother. You have represented one of your college fraternity brothers for nearly thirty years, helping him start a business and grow wealthy. He justifiably credits you for at least part of his success. Your fraternity brother never married, and now wants to help put your children through college. He asks that you prepare a trust agreement that will implement his desire. He has signed and had notarized a statement waiving any objection to your preparation of this agreement.
1. May you prepare the agreement?
You cannot prepare the agreement. Under Rule 1.8 (c), a lawyer is precluded from preparing any instrument giving the lawyer or a member of his family a substantial gift from a client, except when the client is a relative.
2. May you prepare the agreement if you are given no gift in the instrument, but you and your law firm are named as Trustee?
The Code does not prohibit an attorney from drafting an instrument in which the client names the attorney as executor or trustee. However, such transactions must be given careful consideration and certain requirements must be met. LEO #1515 (app’d by Virginia Sup. Ct. eff. February 1, 1994). First, the lawyer should be certain that the client is competent and has the capacity to understand the transaction, so as to avoid any claim of undue influence. While a pre-existing relationship with the client is not required, it is preferred since the absence of a prior professional relationship greatly enhances the potential for a finding of undue influence. Therefore, the attorney/draftsman must take care to consider the testator’s/grantor’s mental or physical health before soliciting or accepting future employment as executor or trustee.
Full disclosure of the attorney’s/draftsman’s fee as executor or trustee must be made to the client prior to the execution of the instrument. It is advisable that the disclosure be made in written form, signed by the testator/grantor, either in the will or trust agreement itself or in a separate document. The attorney/draftsman has a duty to suggest that the client investigate potential fees of others who might otherwise provide such services. Disclosure of separate fees for other services such as investments, tax, accounting, etc., must also be disclosed, if the lawyer contemplates using such other services.
The attorney/draftsman may retain his own law firm as counsel for the trust or estate. Such employment, however, creates a conflict under Rule 1.7 (b) which may be cured by the client’s consent after consultation.
B. Michael Planner. Michael Planner has enjoyed a long professional relationship with his client, Charles Melborne. In appreciation for his years of service, Charles told Michael that he wished to give Michael his summer cottage in Newport, Rhode Island and asked Michael to prepare the necessary paperwork.
A lawyer may accept a gift from a client, but should urge his client to secure independent counsel before making the gift. The lawyer can never solicit such a gift under Rule 1.8 (c), the recipient lawyer may not prepare any instrument giving the lawyer or any member of his family a substantial gift from a client, such as the summer cottage described above, unless the client is a relative. A lawyer may enter into a business transaction with a client only after the client has consented in writing after full disclosure, the transaction is fair and reasonable to the client, and the client has had reasonable opportunity to seek the advice of independent counsel. Rule 1.8 (a).
1. Can Michael accept the gift?
The Rules of Professional Conduct do not prohibit Michael from accepting the gift, but because of his own personal interests, Michael must reasonably believe that his representation of the client will not be adversely affected and the client must consent after consultation. Rule 1.7 (b). Furthermore, since he is peculiarly susceptible to the charge that he unduly influenced or overreached the client, he should urge that his client secure disinterested advice from an independent, competent person who is cognizant of all the circumstances. LEOs 810, 1027, 1041, 1126, 1129, 1358.
2. Can Michael prepare a deed of gift for the conveyance?
No. He is absolutely prohibited under Rule 1.8 (c) from preparing the instrument that would give him this substantial gift from the client. Virginia State Bar v. Jaffe, (Circuit Court, City of Richmond, July 10, 1987); LEOs 571, 1041, 1100.
3. Could his law partner prepare the deed of gift?
No. Under Rule 1.8(k), Michael’s personal conflict under Rule 1.8 (c) is imputed to the other members of his firm. In addition, Michael cannot circumvent Rule 1.8 (c) through the actions of another. Rule 8.4 (a); LEOs 848, 948, 1170, 1329.
4. If Michael cannot accept the gift, can he buy the summer cottage at a deflated price?
In order to purchase the cottage at a deflated price, Michael must first conclude that the transaction would be fair and reasonable to the client. Rule 1.8 (c)(1). This requirement alone would seem to bar the transaction. Even assuming that Rule 1.8 (a)(1) would permit the bargain sale to be made at less than a fair market value, Michael would need Charles’ consent, in writing, after full and adequate disclosure and a reasonable opportunity for Charles to consult with independent counsel. LEOs 340, 783.
5. If so, can Michael prepare a deed of bargain and sale?
No. If Michael pays less than fair market value for the cottage, he receives a gift equal to the difference between the amount paid and the fair market value, Rule 1.8 (c) prohibits Michael from preparing the deed of bargain and sale.
6. Could Michael's partner prepare the deed?
No, for the reasons stated in the answer to Question 3.
A relatively new ethics opinion discusses criminal defense attorneys making gifts to their clients of money for the jail commissary while the clients are awaiting trial. The opinion concludes that deminimus and occasional gifts are fine as long as they don’t run afoul of the prohibition in Rule 1.8 (e) for financial assistance with litigation. LEO 1830.
C. Carl Counsel. Carl Counsel represented Dale Global in the formation of Global Enterprises, Inc. Carl's services were limited solely to the formation of the corporation, whose sole stockholder was Dale Global.
Two years after the formation of Global Enterprises, Valerie Smith visited Carl's office to discuss possible sexual harassment and discriminatory practices on the part of Global Enterprises. She complained that after she was hired by Global as a systems analyst, two of Global's managers made passes at her. Rebuffed, the managers then thwarted several promotion opportunities for her within the company.
Although Carl does not represent the company, he does see Dale Global at the local golf club. Last week, Dale happened to remark to Carl, "You really ought to see the good looking gal we've hired in our computer section. Bright as a whip! A real asset! I wish I could promote her, but if I do, all the men who have been with me from the start will be upset."
An attorney may represent a new client adverse to a former client in the same or a substantially related matter only if the former client consents after consultation. Rule 1.9. An attorney/client relationship may have been established even during only minimal contact and irrespective of whether fees have been paid. Even where the new matter is not substantially related to the former client's matter, the lawyer is required to maintain the former client's confidentiality and not use such information to the advantage of the new client. Rule 1.9 (c).
1. Can Carl represent Ms. Smith?
If the matters of formation of Global Enterprises, Inc. and the sexual harassment and discrimination suit by Ms. Smith against Global are deemed to be substantially related, Carl may not represent Ms. Smith without the consent of Dale Global and Ms. Smith after full disclosure of the possible effect of such representation on the exercise of his independent professional judgment on behalf of Dale. Since the formation of a corporation involves the lawyer's possible exposure to financial confidences of the incorporators, Carl could have information relative to Global's liability. Thus, even if the matters are not deemed to be substantially related, if the attorney gained secrets and confidences of Global which may then be used to Global's disadvantage, Carl may only represent Ms. Smith if Global consents. Even if no pertinent secrets or confidences were received during the incorporation, Carl did gratuitously receive incriminating information on the golf course which he is not free to reveal or use absent consent, depending on Dale’s expectation of confidentiality and the reasonableness of that exception. Rules 1.6, 1.9; LEOs 295, 318, 452, 718, 1207, 1225, 1337, 1352, 1354, 1365.
2. If Carl cannot represent Ms. Smith, and Ms. Smith does sue Global, can Carl represent Global?
No. Carl has obtained confidential information from Ms. Smith, he may not defend Global against any suit that Ms. Smith brings. Rules 1.6 and 1.9; LEOs 569, 672, 718, 774, 1139, 1207, 1225, 1279, 1363, 1377.
D. Altman, Able & Newsome. Bob Altman, Jerry Able and Seth Newsome, the owner of a two-seater sports car, are high school classmates. One night Able was joy-riding in Newsome’s car, with Altman as a passenger. Able lost control of the car and Altman died in the resulting accident. Altman’s estate sued Able. Newsome’s insurer, Stonewall Insurance Company, filed a declaratory judgment action against Altman’s estate, Able and Able’s father’s insurer, Die Hard Insurance Company. Stonewall seeks a judgment declaring that it has no obligation to defend Able or to pay any judgment because Able used Newsome’s car without permission. You represent Newsome and Stonewall.
Able, Newsome and his girlfriend are deposed. During his deposition, Newsome denies having anything to drink but testifies that he, his girlfriend, Able and Altman were cruising in his girlfriend’s car the afternoon preceding the accident. According to Newsome, Able had "one or two beers" and his girlfriend also had a beer. Newsome’s girlfriend testifies that everyone that afternoon, including Newsome, was drinking beer. The day before trial, Newsome admits to you that he was drinking beer in his girlfriend’s car on the afternoon before the accident.
1. What are your ethical obligations?
You must disclose Newsome’s false testimony, if Newsome refuses to do so. While it may appear irrelevant to the merits of the case as to whether Newsome was drinking on the afternoon before the accident, the matter does reflect on Newsome’s credibility. If a client gives false testimony at a deposition, this constitutes a fraud on the tribunal which, if acknowledged by the client, must be disclosed to the court. LEO #1451; Rule 1.6 (c)(2).
2. May you continue to represent both Newsome and Stonewall?
As long as Newsome and Stonewall’s interests do not conflict, and Newsome is not claiming that he have Able permission to use his car, you can continue to represent both parties.
E. Sly & Bubba. You had represented Bubba over the years in miscellaneous, misdemeanor stuff - assaults, cursing and abusing, and, of course, urinating in public - nothing significant. Then one day, you are retained (properly) by Sly to represent him in what sounds like a significant heroin/crack cocaine distribution investigation by the feds. You immediately ascertain after talking to your good friends in the U.S. Attorney’s office and the case agent (who you have known for years and respect) that it is Sly’s best interest to "get in the door first," spill the beans, and actively cooperate in the ongoing investigation. One small problem, however. The target of the investigation is good ol’ Bubba who has obviously gone on to bigger and what he apparently thinks to be better things as the top of the food chain in the alleged distribution conspiracy. The feds want to wire Sly up and send him in for those admissions from the horse’s mouth that they are lacking. If Sly is successful, you have been assured that such would constitute "substantial assistance" that would undoubtedly result in a substantial reduction ala’ the Guidelines.
1. Can you continue to represent Sly?
Yes, Maybe Bubba is a former client. Analyzing this potential conflict under Rule 1.9, the representation of Sly is not the same or a substantially related matter to the former representation of Bubba. See Rule 1.9 Conflict of Interest: Former Client
2. Do you have any obligation to get Bubba’s permission?
Not under these circumstances as there is no conflict. A problem in the representation could occur if the feds turn tail and decide to indict Sly and therefore Sly faces the prospect of trial. In the trial Bubba becomes a key witness against Sly and therefore in defense counsel’s representation of Sly he would be forced to cross examine Bubba. Under these circumstances defense counsel may have an incurable conflict because even though he may have gained no information about Bubba and his involvement in drug trafficking during the representation of him on his prior charges, counsel most likely has gained character information about Bubba and that would be protected confidential information that the disclosure of which would be embarrassing or detrimental to Bubba and a violation of Rule 1.6 (a). This conflict could possibly be cured with consent, however, the prospect of getting Bubba’s consent after full disclosure of what the cross examination may reveal as to prior acts, crimes and character, which would be required with full disclosure, makes this improbable. Further, the fact that defense counsel is aware of this information regarding Bubba’s background and character cannot simply be ignored in order to protect Bubba and proceed with the representation. This quandary puts defense counsel in a conflicted position that cannot be remedied without withdrawal from the representation of Sly.
3. What happens if Bubba, suspicious one that he is, contacts you to see if you would be available to represent him in what he hears to be something big coming down?
You cannot represent Bubba, as that would indeed be a conflict, knowing that Bubba is the target of the investigation and that Sly is most likely going to gain information that would allow the feds to indict Bubba on distribution charges. Client loyalty cannot be compromised for the benefit of another client. See LEO 1796 (Lawyer impermissibly represented two criminal defendants concurrently when criminal defendant A’s primary defense should have been his need for self-protection from defendant B, yet attorney represented B for attempted murder of A.) Even if Bubba does not retain you for this new matter, his initial consultation with you is nevertheless confidential under Rule 1.6. An attorney must treat as confidential all information provided by a potential client in an initial consultation, even where that client never retains the lawyer. See LEO 1794.
Lawyer A in Law Firm is asked by PharmCo to write a validity opinion for a biomedical treatment for cancer. The patent for the treatment is held by another client of the firm, BioGen, which is represented by Lawyer A’s partner, Lawyer B, who is prosecuting patents for the other client on entirely unrelated technology–a new generation CT Scanner.
QUERY: May one member of a firm write a validity opinion for one client where the patent in question is currently held by a client represented by another member of the firm in an entirely unrelated patent matter?
Applying Rule 1.7 to these facts, there is a significant conflict of interest which precludes the firm from accepting employment by PharmCo, unless consent is obtained from both PharmCo and BioGen (which is unlikely). Although the firm represents BioGen on patents involving an entirely different technology, assisting PharmCo in having BioGen’s cancer treatment patent invalidated would place the firm in a position directly adverse to an existing client. LEO 1774.
Plaintiff’s Attorney is in the middle of heated litigation with Defense Attorney representing the opposing party. Suddenly, Plaintiff Attorney’s secretary quits. Plaintiff’s Attorney is familiar with the pool of qualified legal secretaries in his community and knows it to be quite small. He hires Super Secretary, who is currently employed by Defense Attorney. Defense Attorney now files a motion to disqualify Plaintiff’s Attorney on the ground that he now has a conflict of interest.
Yes, of course. There is nothing in the Rules of Professional Conduct prohibiting the hire of a particular staff person. The issue, really, is not whether he can hire her, but rather, what are the consequences of that hire.
No. Were Plaintiff’s Attorney to hire an attorney from Defense Attorney’s firm, the conflict would be analyzed under Rule 1.9, regarding loyalty to former clients. However, by its express terms, Rule 1.9 applies to lawyers. Similarly, Rule 1.10, which imputes Rule 1.9 conflicts firm-wide, expressly applies only to lawyers. Thus, the ordinary conflicts rules do not apply to this hiring of nonattorney staff. So long as Plaintiff’s Attorney properly supervises Super Secretary, his hiring of her does not conflict him out of the case. LEO 1800.
Rule 5.3 governs an attorney’s supervisory responsibilities regarding nonlawyer assistants. Those responsibilities include instructing support staff sufficiently regarding their part in maintaining a lawyer’s ethical duties. When Plaintiff’s Attorney hired Super Secretary, he should have instructed Super that the confidentiality of defendant’s information must be protected, including from Super’s new boss and his firm. Any attempt by any lawyer in the hiring firm to elicit such information from Super would be wrongful. In addition, the new hiring firm must effectively screen Super from the matter for the remaining duration of the case. Similarly, Defense Attorney had an obligation under Rule 5.3 to instruct Super regarding the need for confidentiality before she left that firm. LEO 1800.H. “Of Counsel” Relationships Sam Newton is “of counsel” to the Omega Law Firm. Sam has a client that wants to sue Shoddy Products, Inc. for personal injury when her toaster blew up and burned her house down. Omega Law Firm does not defend products liability claims but advises Shoddy Products Inc. on labor and employment issues. May Sam take the products liability case? No, not unless Sam’s client and Shoddy Products consent pursuant to Rule 1.7(c). When a lawyer becomes of counsel to a firm, all conflicts are imputed from the lawyer to the firm and vice versa. This imputation cannot be avoided by screening the lawyer from other cases in the firm or otherwise limiting the information available to him; Rule 1.10(a) provides for an absolute imputation of conflicts between lawyers who are currently associated in a firm. LEO 1866.
The highlights from Topic 5 are the following:
1. Competence. A lawyer shall undertake representation only in matters in which:
a. The lawyer can act with competence and demonstrate the specific legal skill efficiency, thoroughness and knowledge employed in acceptable practice by lawyers undertaking similar matters, or
b. The lawyer has associated with another lawyer who is competent in those matters.
2. Maintaining the Relationship with the Client.
a. Communication with the client. A lawyer has a duty to keep the client reasonably informed about the matters in which the lawyer’s services are being rendered and shall inform the client of the facts pertinent to the matter and of communications which may significantly affect settlement or resolution of the matter. Failure to communicate adequately with the client is a major source of disciplinary complaints.
b. Neglect. Generally neglect is regarded as indifference and the consistent failure to carry out the contract of employment. Typically seen types of neglect involve procrastination, improper supervision of an attorney delegated a task, inadequate preparation, violation of Court rules or orders, failure to perform under a third party entrustment. Leading causes of neglect are overwork, underpayment, laziness and difficult clients.
c. Zealous representation. A lawyer has a duty to seek the lawful objectives of a client within the bounds of the law. In doing so, the lawyer may accede to reasonable requests of opposing counsel, and may exercise discretion in determining whether to pursue an objective which the lawyer believes to be unlawful, repugnant or imprudent. A lawyer may not intentionally prejudice or damage a client.
3. Terminating Employment. The lawyer has three general responsibilities in connection with terminating employment. They are to obtain permission to withdraw from the tribunal, if necessary, to take reasonable steps to avoid prejudice to the client and to return unearned fees. Withdrawal is mandatory where continuing representation will result in conduct that is illegal or inconsistent with the Disciplinary Rules, where a lawyer’s physical or mental condition impairs the Disciplinary Rules, where a lawyer’s physical or mental condition impairs further representation or where the lawyer is discharged by the client.
4. Confidence and Secrets. A "confidence" is that which would be protected by the evidentiary rule known as the attorney-client privilege. Whether something is a confidence is a question of law. A "secret" is a broader term and refers to any information gained in the professional relationship. This might be information that the client has asked to be held inviolate, or which might be embarrassing or detrimental to the client if disclosed. The fact of representation might be a secret under certain circumstances. For example, it might violate a client secret for a lawyer to disclose at a cocktail party that he or she represents a certain named client in domestic matters. There are several rules about disclosure of secrets and confidences:
a. General rule; Absent consent of the client, or unless mandated by other rules, an attorney shall not divulge a confidence or secret of the client.
b. Discretionary exceptions: when the client consents after full disclosure, when required by law or court order, to protect children, to protect third parties from fraud when facts clearly establish fraud has been committed, to prove reasonableness of attorneys fees and to defend against allegations of misconduct made by the client, when the lawyer learns that the client may take actions that present a danger to the client or others.
c. Mandatory disclosure: where the lawyer learns that a client intends to commit a crime and the lawyer is unable to persuade the client not to (note: this does not apply to confessions of past crimes), where the lawyer has information that clearly establishes that the client has committed a fraud upon a tribunal.
5. Substance abuse and the Lawyer’s Responsibility. The "Lawyers Helping Lawyers" program is assured confidentiality under Rule 8.3 (d). Substance and alcohol abuse is a major cause of disciplinary problems.
A. Larry Lawyer. Shortly after her husband died and the estate was settled, Mary Worth came to the conclusion that she should sell her large house, purchase a less expensive home, and invest the remainder so that she could live on the income. She engaged Larry Lawyer to represent her in these real estate deals. Larry had handled many real estate transactions before, and the sale of the large house was completed without any difficulties. When Mary contracted to purchase the small house, Larry told her that he would search the title to be sure there were no defects before she went through with the transaction, and he also suggested that she should have a title insurance policy. Mary agreed, and asked him to obtain the policy for her; Larry said that would be no problem. After hearing nothing from Larry for several weeks, Mary telephoned Larry to find out why there was a delay. Larry said that he was very busy with a number of matters and not to worry, he would take care of everything. Telephone exchanges like this occurred several times a week for the next two months before Larry called and said, "Everything is all set. I will handle the closing for you tomorrow morning." Larry had searched the title and concluded that there were no defects. However, he had not contacted the title insurance company and intended to do that right after he handled the closing. In making the disbursements after the closing, Larry withheld
from Mary the amount of money needed to purchase the insurance, and deposited it in his firm's checking account. Larry remembered on several occasions that he needed to get the title insurance, but something always interfered and, after several weeks, he forgot that he had not obtained it.
All of the above occurred in 1984. In 1986, Mary Worth decided to sell her house and move to Florida. The purchaser's lawyer searched the title and found a fairly obvious and very serious defect in the title that Larry had overlooked. As a result, Mary had to spend $20,000 in order to clear the title so that the house could be sold.
A lawyer must attend promptly to matters undertaken for a client and shall keep a client reasonably informed about matters in which the lawyer's services are being rendered. While a single error or instance of allowing a statute of limitations to lapse may not be per se incompetence or neglect mandating serious disciplinary sanctions, the establishment of a pattern of such occurrences could demonstrate aggravating circumstances surrounding misconduct and necessitate a more rigorous level of sanction.
In what ways has Larry violated the Rules of Professional Conduct?
Clearly, Larry has not acted in accordance with the requirement of the Rules of Professional Conduct to attend promptly to a client’s matters or the similar requirement to keep a client reasonably informed about the matters at hand. Rule 1.3 (a); Rule 1.4; LEO 966. The error of Larry’s title examination was compounded by his failure to secure the title policy for Mary, thus exposing her to additional expenses at the time of sale of her house and exposing himself to liability for his errors.
Assuming that the sum which represented the cost of the title policy was continuously carried in Larry's trust account, in performing the requisite record keeping tasks, he should have been aware that the policy had not been secured. Rule 1.15(b)(3).
Furthermore, even if the necessary reconciliations were being performed for Larry by nonlawyer personnel, Larry retains the ultimate responsibility for compliance with the Rules of Professional Conduct, notwithstanding the delegation of these tasks to others. Rule 5.3. LEOs 757, 954, 1193, 1328, 1600.
B. Larry Lowe. Larry Lowe is a successful sole practitioner with a great reputation in the community for diligence and attention to client matters. Larry is court-appointed co-counsel to file an appeal on behalf of a prisoner facing the death penalty. Larry and the other attorney working on the case are preoccupied with handling other client matters which pay better fees. Both counsel procrastinate writing the petition for appeal. Larry’s co-counsel has just recently suffered a stroke and the petition for appeal is due tomorrow. Larry tells his secretary to hold all calls, closes the door to his office, and spends most of the day writing, and does in fact complete the petition for appeal. Near the close of day, Larry gives the pleading to his secretary and tells her to make sure it gets postmarked for today. Larry fails to instruct the secretary to have the petition mailed by certified mail. Instead, the secretary mails the petition by regular mail and the pleading arrives at the court three days later. Larry was out of the office the following day and did not discover the secretary’s error until the next day. Later, Larry received a terse order from the court denying his client’s appeal.
1. Does Larry’s conduct rise to the level of neglect which constitutes misconduct or simply malpractice?
Larry’s conduct certainly exposes him to disciplinary action. A lawyer must act with reasonable diligence and promptness in handling a client’s matter. Rule 1.3 (a). If Larry had not procrastinated, there would have been sufficient time to correct the problem by refiling the notice of appeal in a proper and timely manner. On the other hand, a single isolated act of inadvertence or neglect, while it might form the basis for a malpractice claim, does not constitute misconduct for which an attorney is subject to discipline. Fifth District Committee v. J. Peter Williamson, VSB Docket No. 79-27 (Disc. Bd. 1980). Thus, changing the facts, if Larry’s secretary had simply miscalculated the deadline for filing, but Larry had been generally diligent in working on the case, a disciplinary tribunal could find that there was no ethical misconduct.
Complaints received by the bar, and the bar’s review of hundreds of dismissal orders, indicate that some very simple shortcomings are the most common causes of the failure, by court appointed counsel, public defenders and retained counsel, to fulfill their ethical obligations to criminal defense clients. These lapses in attorney conduct are not a new development. The bar has disciplined criminal defense attorneys for these lapses for many years. Recent decisions are posted on the bar’s website at www.vsb.org. See, e.g., In the Matter of Jon Ian Davey, VSB Docket No. 04-090-1804 (2004) (public reprimand with terms for negligently failing to perfect three criminal appeals pending before the Virginia Court of Appeals and the Virginia Supreme Court.); In the Matter of Jeffrey Frederick Bradley, VSB Docket No. 03-070-2629 (2004) (Virginia State Bar Seventh District Committee issued an admonition with terms to Jeffrey Frederick Bradley for violating the rule requiring an attorney to act diligently and promptly. Mr. Bradley's client was convicted of a probation violation, and he was appointed to represent her on the appeal. He noted the appeal but failed to perfect it.); In the Matter of Alana Sherrise Powers, VSB Docket No. 07-022-0958 (2007) (VSB 2nd District Committee imposed admonition against Powers for defaulting n a criminal appeal and for failing to take steps to obtain a delayed appeal which would have remedied the default.)
2. Is Larry accountable under the Rules of Professional Conduct for the acts and omissions of his secretary?
Yes, as a general rule, an attorney is responsible for the acts or omissions on non-lawyer staff under his or her supervision. A lawyer or law firm that employs non-lawyer personnel must exercise a high standard of care to assure compliance by the non-lawyer personnel with applicable provisions of the Rules of Professional Conduct. Rule 5.3 (b). The delegated work of the non-lawyer personnel will be merged into the employing lawyer’s completed product. The lawyer must examine and be responsible for all work delegated to non-lawyer personnel. Rule 5.3.
3. May Larry prepare or file on his client’s behalf a petition for a writ of habeas corpus, alleging his own ineffective assistance of counsel?
No. A Lawyer representing a criminal defendant may not prepare or file on his client’s behalf a petition for a writ of habeas corpus alleging his own ineffective assistance of counsel. See LEO #1122 (representation may be materially limited by the lawyer’s own interest). See also Rule 1.7(a)(2). In order for Larry to carry out his duty to exercise his judgment solely for the benefit of his client he would have to assert a position which may expose him to personal liability for ineffective assistance of counsel. Larry must, in order to discharge his duty to keep his client reasonably informed, advise the client of the procedural default, the dismissal of the appeal, the availability of a possible remedy in petitioning for a writ of habeas corpus, and the need for the client to seek independent counsel. Rule 1.4 (a), (b). Under Virginia Code §§19.2-321.1 and 19.2-321.2, when due to an attorney’s error his client’s appeal has never been filed or has been dismissed for failure to adhere to requisite time requirements, that attorney must cooperate with that client by preparing an affidavit to be filed with the client’s motion for leave to pursue a delayed appeal. That affidavit must certify that the attorney, and not the client, is responsible for the error. Id.
A. Gloria Barrister. Gloria Barrister agreed to represent Rolly Sly in a civil claim alleging breach of contract. All throughout discovery depositions and client interviews, Rolly asserted that he had an oral contract with Acme Bearing Company to sell its product at a commission of 35% for 10 years. Rolly also asserts that his sales territory was exclusive, including the entire southern quarter of the United States. Acme denied the existence of the agreement, but has offered Rolly $750,000 to settle. He refused the settlement offer and advised Gloria to proceed with trial.
Rolly testified well the first day of the trial and at the end of the day, Acme increased its offer to $900,000. Rolly and Gloria met to discuss the offer at dinner. Following three vodka martinis and two bottles of wine, Rolly leaned back in his chair and observed "I sure have to hand it to you, Gloria. You really put one over on Acme." The flush of success in Gloria's face paled as Rolly said there never was a ten-year agreement. It was, instead, at will.
When a client acknowledges having perpetrated a fraud upon a tribunal during and related to the lawyer's representation, the lawyer is obliged to reveal that information after first having requested that the client advise the tribunal of the fraud. Rule 1.6 (c)(2); Rule 3.3 (a)(2). Where the client indicates to the lawyer that he intends to commit a crime, the lawyer is similarly required to reveal the intention and information necessary to prevent the crime, again after having first advised the client of the lawyer's obligation to disclose the intended crime and having urged the client to abandon his intent. Rule 1.6 (c)(1). In the instance of the intended crime, where the crime involves perjury by the client, the attorney shall also seek to withdraw as counsel. To do otherwise, would involve the attorney assisting the client in illegal or fraudulent conduct. Rule 1.2 (c).
1. What obligation, if any, does Gloria have to Acme? to the court?
Having learned that material evidence which was offered at trial and which she believed was true, was in fact false, Gloria is required to take reasonable remedial measures. Rule 3.3 (a)(2). First, Rolly's admission of fraud mandates that Gloria reveal it to the court, having first requested that Rolly advise the court himself. Rule 1.6 (c)(2); LEOs 730, 1079, 1093, 1140, 1270, 1272, 1296, 1347, 1362, 1367, 1451, 1490, 1643. Second, Gloria may notify Acme. Rule 1.6 (b)(3).
2. Suppose Gloria told Rolly she could no longer represent him and advised him to engage new counsel. Rolly goes to Jim Friendly, Esquire, asks Jim to represent him in the Acme matter, and Jim asks Rolly why he discharged Gloria. Rolly tells Jim exactly what he had told Gloria at dinner following the first day of trial and tells him further that Gloria said she could no longer represent him based upon his actions. Must Jim reveal Rolly's fraud? May he do so?Since Rolly’s actions took place outside the scope of Jim’s representation of him, and involved a past fraud or crime, Jim is obliged to preserve Rolly’s secret, rather than disclose it, unless and until Rolly consents to the disclosure or Jim is required to reveal it by law or a court order. Thus Jim is neither required nor permitted to reveal Rolly’s actions. Rule 1.6 (a), (b) and (c). LEOs 1087, 1316, 1643.
3. Can Gloria remain silent and accept Acme's offer?
Since Rolly has acknowledged to Gloria that he has perpetrated a fraud on Acme, she may reveal that information to Acme; she is not obliged to do so. Rule 1.6 (b)(3). However, Gloria may not participate in the acceptance of any outstanding offers because she now knows that it has been based, at least in part, upon fraudulent representations. Rules 1.2 (c) and 8.4; LEOs 730, 1079, 1093, 1140, 1270, 1272, 1296, 1347, 1362 2, 1367, 1451.
2 Overruled in part by LEO 1528 (standard in duty to report attorney misconduct is now a two-prong, objective standard, not a subjective standard as stated in LEO 1362).
4. Is it significant that no judgment has yet been reached?
No, it is not. National Airlines Inc. v. Shea, 223 Va. 578 (1982); LEOs 200, 350, 1331, 1362 3, 1622.
3 Overruled in part by LEO 1528.
5. Suppose this was a criminal case and Rolly had already testified. What questions arise?
There is a tension between Gloria's responsibility to the court and Rolly's sixth amendment right to effective assistance of counsel. His right to effective assistance of counsel, however, does not include or extend to the lawyer's assistance in committing perjury. Rule 1.6 (c)(2). Gloria must seek to withdraw, and she must disclose the perjury to the court. Rule 1.16; Rule 3.3 (a)(2). It will then be the court's decision as to an appropriate course of action. Nix v. Whitside, 106 S.Ct. 988 (1986); LEOs 727, 730, 1361, 1378, 1451.
6. Suppose Rolly told Gloria he intended to lie under oath. What are her obligations? In a civil case? In a criminal case?
If Rolly informed Gloria of his intent to commit the crime of perjury, she is required to advise him of the legal consequences of such an action, urge him not to commit perjury, and tell him that unless he abandoned his intent to do so, she would be required to reveal his intention. Rule 1.6 (c)(1). Since the specific crime involved is perjury, Gloria is also required to seek permission from the court to withdraw as counsel. Rule 1.16 (c). Should she withdraw with the court's permission, she would be required to take reasonable steps for the protection of Rolly's interests, including allowing time for employment of other counsel, delivering all papers and property to which Rolly would be entitled, and refunding any advance fee payment which had not been earned. Rule 1.16 (d), (e); LEO 1362 4, 1451, 1650.
4 Overruled in part by LEO 1528.
In a civil case, she would be required to follow the same mandates as for a criminal case; however, having obtained his assurance that he had abandoned his intent to commit perjury, she could avoid his being called as a witness or settle the case prior to trial in order to avoid his perjured testimony.
B. Justin Case. Justin Case represents Mike Hammer in a personal injury case against Rusty Nail. Nail is represented by Duke Nukem whose secretary, Miss Direct, inadvertently sends, via fax to Justin’s office, a confidential memorandum written by Nukem and intended for his client, Rusty Nail. The memo outlines for Nail an evaluation of Hammer’s case, its strengths and weaknesses, and recommends a settlement range. The memo also contains other work product, including some trial strategy and possible defenses. Justin’s secretary, Felicity Finder, immediately recognizes from the fax cover sheet that the communication is misdirected and, upon cursory examination, appreciates the confidential nature of the memo. Felicity reports this matter to Justin and places the memo on his desk. Justin ponders the situation wondering: "Should I read this memo?" Should I call opposing counsel, Nukem, and tell him we have this?" Can my client and I use the information in this memo?" "Should I destroy it?"
What are Justin’s ethical obligations concerning this misdirected fax?
Ethics panels in other jurisdictions have expressed divergent opinions regarding the use or return of inadvertently transmitted confidential documents. District of Columbia Legal Ethics Opinion 256 (1995) advised that a lawyer who receives inadvertently sent confidential documents from opposing counsel may use them if he read them before discovering they were inadvertently sent to him. However, if the receiving lawyer knew the documents were inadvertently sent before reading them, then he was obligated to return them and not use them.
Maine Ethics Opinion 146 (1984) advised that a lawyer who received confidential documents inadvertently included in a discovery response was permitted to use them as permitted by the rules of procedure and evidence. Kentucky Ethics Opinion E-374 (1995) advised that a lawyer who uses inadvertently sent privileged documents will not be disciplined for using them.
Most ethics panels agree on one point: a lawyer who receives inadvertently transmitted confidential documents from the opposing lawyer has a duty to notify the opposing lawyer promptly. Florida Ethics Opinion 93-3 (1994); Maine Ethics Opinion 146 (1994); Ohio Ethics Opinion 93-11 (1993).
The Virginia Standing Committee on Legal Ethics, in LEO 1702, was influenced by ABA Formal Opinion 92-368 (1992) and concluded:
A lawyer who receives materials that on their face appear to be subject to the attorney-client privilege or otherwise confidential, under circumstances where it is clear they were not intended for the receiving lawyer, should refrain from examining the materials, notify the sending lawyer and abide the instructions of the lawyer who sent them.
A number of cases have addressed inadvertent waiver of attorney-client privilege and work product privilege based on evidentiary rules. See generally Bank Brussels Lambert v. Credit Lyonnais (Suisse) S.A., 160 F.R.D. 437 (S.D.N.Y. 1995); ABA/BNA Lawyers’ Manual on Professional Conduct 55:417 (1996). Resolution Trust Corp. v. First of America Bank, 868 F. Supp. 217, 220 (W.D. Mich. 1994), is one of few inadvertent disclosure cases that includes ethics in its analysis:
[C]ommon sense and a high sensitivity toward ethics and the importance of attorney-client confidentiality and privilege should have immediately caused the plaintiff’s attorneys to notify defendant’s counsel of his office’s mistake. The lawyers who received the document must have known by the markings and the contents of the document that a clerk or secretary in the defendant’s lawyer’s office mistakenly included the privileged letter within the documents intended for the plaintiff’s lawyers. . . . While lawyers have an obligation to vigorously advocate the positions of their clients, this does not include the obligation to take advantage of a clerical mistake in opposing counsel’s office where something so important as the attorney-client privilege is involved.
Emphasizing professionalism and the importance of preserving the confidentiality of privileged information over a lawyer’s duty of zealous representation, the committee in LEO 1702 observed:
The theme of professionalism in the practice of law, notwithstanding the absence of an applicable black letter Disciplinary Rule, is articulated in EC 9-2 and EC 9-6. Legal ethics, like ethics generally, is fraught with gray areas that do not fit under an explicitly applicable Disciplinary Rule. In that circumstance, the ethical polestar is conduct that reflects credit on and inspires public confidence in and respect for the integrity of the legal profession.
It is the committee’s opinion that the conclusion reached in ABA Formal Opinion 92-368 correctly states the ethical duties of a lawyer who receives inadvertently transmitted confidential documents from opposing counsel or opposing counsel’s client. Those ethical duties foster the bedrock ethical principle of safeguarding client confidences and secrets. See LEO No. 1643. Just as a lawyer may not take and use documents from opposing counsel’s briefcase inadvertently left behind (LEO No. 651), it is not ethically permissible for a lawyer to keep and use documents inadvertently transmitted to him by opposing counsel. The situations are factually different, yet the sense of the Committee is that no difference exists in principle. Safeguarding client confidences and secrets is a categorical imperative that should not hinge on someone pushing the wrong number on a facsimile machine, or putting documents in the wrong envelope.
The committee is mindful of cases adopting a doctrinaire rule that even an inadvertent transmission of confidential documents causes a loss of attorney-client privilege and permits the receiving lawyer to use the documents. The rules of evidence do not, however, displace ethical standards governing lawyers. See Gunter v. Virginia State Bar, 238 Va. 617, 621 (1989), rejecting the argument "if it’s legal, it’s ethical," as far too restrictive under the Code of Professional Responsibility:
The lowest common denominator, binding lawyers and laymen alike, is the statute and common law. A higher standard is imposed on lawyers by the Code of Professional Responsibility, . . . . [W]e emphasize that more is required of lawyers than mere compliance with the minimum requirements of that standard. The traditions of professionalism at the bar embody a level of fairness, candor, and courtesy higher than the minimum requirements of the Code of Professional Responsibility.
In 2002, the ABA adopted ABA Model Rule 4.4 (b) which states: “A lawyer who receives a document relating to the representation of the lawyer's client and knows or reasonably should know that the document was inadvertently sent shall promptly notify the sender.” Comment  to the ABA Model Rule states: “Where a lawyer is not required by applicable law to do so, the decision to voluntarily return such a document is a matter of professional judgment ordinarily reserved to the lawyer.”The Virginia State Bar has not retreated from its position stated in LEO 1702 that the receiving attorney must abide by the sender’s instructions regarding the disposition of the missent material
Law firm A handles personal injury cases and maintains a website through which a prospective client, if he/she is a victim of an accident, is invited to fill out an online form giving the factual details of their accident and injuries. Upon receipt of this information, the law firm’s website offers to provide the prospective client a free evaluation of their claim. Mrs. X, an accident victim, provides information about her accident involving a two-car collision, including the fact that she consumed three glasses of wine in about one hour before getting behind the wheel. One of the lawyers, after reviewing Mrs. X’s online information, has his legal assistant do a conflicts check. The legal assistant does so and advises the lawyer that the firm is currently representing a client who was the guest passenger in Client X’s vehicle at the time of the accident. The lawyer tells the legal assistant “that’s not a problem—I’ll just tell Mrs. X we can’t take her case.”
1. Does Law Firm A have a conflict of interest and a duty to withdraw from handling the guest passenger’s case?
Yes. The website specifically invites Mrs. X to submit the information in exchange for an evaluation, thereby inviting the formation of an attorney-client relationship for the purpose of providing a case evaluation. Even if the lawyer ultimately declines representation of Mrs. X, Rule 1.6(a) imposes upon that lawyer a duty of confidentiality with respect to the information received. This was the opinion of the Virginia State Bar’s Standing Committee on Legal Ethics in LEO 1842, issued in 2008.
Even under Rule 1.18, in Hypothetical C, the lawyer must not only decline the representation of Mrs. X but must actually go so far as to withdraw from the representation of an existing client whose interests are adverse to those of Mrs. X. The information Mrs. X provided “could be significantly harmful” to Mrs. X and could not be used or disclosed to her detriment. Not doing so then materially limits the lawyer’s ability to represent the current (adverse) client. Rule 1.18(c) disqualifies both the lawyer receiving the information and the rest of the firm.
2. Suppose Law Firm A simply has a passive website which does not invite consumers to contact members of the firm by e-mail, but nonetheless provides contact information for every lawyer in the firm, including their e-mail address. Would Mrs. X’s information still be protected as confidential under Rule 1.6 if she sent an unsolicited e-mail to one of the lawyer’s in the firm outlining the facts relating to her claim?
No. This precise issue was addressed by
Virginia’s Standing Committee on Legal Ethics in LEO 1842 (2008).
The Committee concluded that the law firm does not owe a duty of
confidentiality to a person who unilaterally transmits unsolicited
confidential information via e-mail to the firm using the lawyer’s
e-mail address posted on the firm’s website. The person is using
mere contact information provided by the law firm on its website and
does not, in the Committee’s view, have a reasonable expectation
that the information contained in the e-mail will be kept
A. Sam Newton. Abner Slipfoot fell in the parking lot of a local grocery store following an unexpected ice storm. With a broken hip, lost wages of $5,000 and medical expenses of $12,000, Abner was convinced that the store should pay him something. He consulted Sam Newton after reading his advertisement in the local paper.
Sam began investigating the accident and learned that it occurred 23 months ago. The store, self-insured, denied liability, advising Sam that the storm was a freak occurrence, that its employees were clearing the lot during the storm, and that one of its employees observed Abner drinking in his car and falling as he got out of the car. Wondering about the validity of Abner's claim, Sam called to discuss the weakness of the case. Sam was advised by Abner's landlady that he had decided to "see the world" and had gone to Tibet. She had no idea when, if ever, Abner might return. Sam then decided to close his file.
A lawyer may not always unilaterally terminate an attorney/client relationship. In order to protect an absent client's rights in his cause of action, it may be necessary for an attorney to file pleadings for his client and simultaneously move the court to permit him to withdraw from representation.
1. What obligation, if any, does Sam owe Abner?
Since Abner's departure for Tibet has rendered Sam's representation of him unreasonably difficult, Sam may withdraw from representation. Upon terminating the representation, however, Sam has a duty to take reasonable steps for the continued protection of Abner's interests. Rule 1.16 (d); LEOs 491, 525, 757, 841, 872, 897, 974, 1088, 1132, 1173, 1207, 1270, 1294, 1305, 1403, 1418, 1432, 1483, 1485, 1506, 1519, 1530, 1544, 1591, 1631.
2. Has Sam acted unethically by simply "closing his file"?
By simply closing his file, Sam has violated Rule 1.16 (d) which requires him to take reasonable steps for the continued protection of Abner's interests. See also EC 2-34. Rather than simply closing the file, in order to preserve Abner's right of action, considering that the statute of limitations may have only one month to run on the personal injury claim, Sam should file suit on Abner's behalf and simultaneously file a motion to be permitted to withdraw from representation since Abner has rendered the representation unreasonably difficult. Rule 1.16 (d); LEOs 757, 897, 1088. If, however, Sam is concerned that filing the suit might be deemed a violation of F.R.C.P. 11 and Va. Code Ann. §8.01-271.1 since his investigation resulted in a determination that Abner might not have a meritorious claim, Sam should document for his files the results of his investigation as well as the statement from Abner's landlady about his whereabouts before closing the file. Rule 3.1; LEOs 760, 1005, 1166, 1445, 1476, 1530, 1580, 1603.
B. Cynthia Smart. Attorney Cynthia Smart has been contacted by a former client who has requested his file which is still in Cynthia's possession. The client has engaged a new attorney and has a scheduled court appearance in three weeks. Cynthia and the client had agreed on an hourly rate and Cynthia has now spent about thirty-five hours in preparing the case. No fees have been paid.
Upon termination of representation, a lawyer must continue to protect the client's interest and may not prejudice the client's cause. The lawyer must deliver all papers and property to which the client is entitled. Even if applicable law permits the attorney to retain client's papers, under certain circumstances retention of papers may be inconsistent with taking reasonable steps for the continued protection of a client's interest.
1. May Cynthia retain the client's file until her fee for professional services is paid?
No, Rule 1.16(e) governs and sets a clear directive, rather than the previous rule under which you had to apply the “prejudice” standard. Rule 1.16(e) clearly states the client is entitled to file upon termination of the representation. As the rule states, the lawyer can charge for copying those parts of the file the client did not provide, however, he cannot hold the file pending the receipt of copying charges. This is a very clear standard and should be adhered to by lawyers without question.
The lawyer has met his or her obligation under this paragraph by furnishing these items one time at client request upon termination; provision of multiple copies is not required. The lawyer has not met his or her obligation under this paragraph by the mere provision of copies of documents on an item-by-item basis during the course of the representation.
2. What materials must be returned to the client?
All original client-furnished documents and any originals of legal instruments or official documents which are in the attorney’s possession (will, corporate minutes, etc.,) are the property of the client and shall be returned to the client upon request, whether or not the client has paid the fees and costs owed the lawyer. If the lawyer wants to keep a copy of such original documents, the lawyer must incur the cost of duplication. Upon request, and regardless of whether the client has paid the fees and costs owed the lawyer, the client must also be provided copies of the following documents from the lawyer’s file: lawyer/client and lawyer/third-party communications; the lawyer’s copy of client-furnished documents (unless the originals were returned to the client); transcripts, pleadings and discovery responses; working and final drafts of legal instruments, official documents, investigative reports, legal memoranda, and other attorney work product documents prepared for the client during the course of the representation; research materials; and bills previously submitted to the client. Although the lawyer may seek to collect from the client the costs of reproducing these materials, the lawyer may not use the client’s refusal to pay the copying costs as a basis to withhold such materials. Rule 1.16 (e).
3. What constitutes attorney work product?
Everything prepared by the attorney for the client in the course of the representation, other than those items originally provided by the client, whether in the tangible documentary form or in the intangible provision of the attorney's expertise: working copies, preliminary drafts, notes, final documents and anything else placed in the file by the attorney. LEO 1101, 1366; Scroggins v. Powell, Goldstein, Frazier and Murphy, 15 B.R. 232, 240-241 (Bankr. N.D. Ga. 1981), Rev'd on other grounds, 25 B.R. 729 (N.D. Ga. 1982).
4. May Cynthia condition the release of the client's file upon payment of copying fees?
Cynthia is not entitled to charge the client for the cost of reproducing materials which the client furnished to her, nor for copying any official documents or original legal instruments in Cynthia’s possession. Such material is deemed property of the client and must be delivered unconditionally to the client upon request. Cynthia must bear the costs of copying such material is she desires to retain a copy. Rule 1.16 (e). As to other materials in the file which constitute attorney work product, pleadings, discovery responses, research, lawyer/client communications and lawyer/third-party communications, etc., Cynthia may charge a reasonable copying fee. See Answer to Question 2 above. However, if the client is unwilling or unable to pay the costs immediately, Cynthia may still not refuse to deliver such materials. Rule 1.16 (e).
Topic 6 presents some of the most difficult ethical issues. At the heart of this topic is the tension often present between an attorney’s obligations to act in the best interests of the client and the attorney’s obligations to act in good faith in dealing with tribunals. Attorneys have at all times a duty to assist tribunals in the operation of the court system and administrative justice. An attorney’s oath as an officer of the court requires absolute honesty with the court, even though the client’s interests may seem to require a contrary result.
1. A lawyer’s duty to preserve client confidences and secrets must be balanced with the lawyer’s duty of absolute honesty with the court. See Topic 6.
2. Conduct towards the court: ex-parte communications as a general rule are not allowed in litigation, except that written communications to the court, with a copy to opposing counsel, is permitted, as are ex-parte communications contemplated by law, such as patent applications, default judgments, temporary injunctions and temporary restraining orders.
3. General obligations of an attorney as an officer of the court:
a. To reveal a fraud upon a tribunal;
b. To not threaten disciplinary or criminal charges solely to gain advantage in a civil matter;
c. To have general knowledge of the rules of court and respect the court’s rulings;
d. To avoid pre-trial, extra-judicial statements in a criminal case that present a substantial likelihood of interfering with the fairness of the trial. (Note that Virginia rules no longer address comments about civil matters.)
e. To avoid contact with jurors or venireman prior to and during trial. Jurors may be contacted after trial, and after expiration of their terms as jurors, as long as they are not harassed, and as long as the questions or comments are not calculated to influence their actions in future jury service; except in the Eastern District of Virginia, where local federal rules prohibit contact at any time.
f. With respect to contacting witnesses, a lawyer shall not suppress evidence or advise or cause a person not to be available for trial, nor contact a witness known to be represented by counsel without other counsel’s consent, nor compensate a witness on a contingent basis for testimony (except for experts under certain circumstances), nor contact opposing party’s treating physician without consent.
g. To avoid the implication of improper influence.
4. Conflicts between diligent representation of client and being officer of the court. A lawyer shall not:
a. File suits, motions and defenses merely to harass or delay;
b. Advance unwarranted claims and defenses;
c. Conceal or fail to disclose what is required by law to reveal;
d. Use perjured testimony or false evidence;
e. Make false statements of law or fact;
f. Participate in the creation or preservation of false evidence.
G. Fail to respond to lawful discovery requests or interpose unfounded objections to such lawful discovery requests.
A. Frieda Jones. Frieda Jones confines her practice to criminal defense in Richmond. One of her former law school classmates, Julia Smith, has a civil practice in Alexandria. Julia has been called by Pam Barnes, a woman who was arrested for solicitation to commit prostitution and who says that she is not guilty of any offense except maybe dressing provocatively. Julia calls her friend Frieda, who is unknown to the judges in Alexandria, and asks her to take the case.
Frieda meets Pam and listens to her story. Frieda is convinced that Pam was arrested for the way she looked and not for any other reason. Noticing that Pam is approximately the same size as she is, Frieda decides that when they go to court the next morning for a hearing they will wear each other's clothing.
In court the next day, the case is called and the judge sees two women before him: one dressed conservatively and carrying a brief case, the other dressed provocatively. He addresses his remarks to the woman he thinks is the defendant, Pam Barnes, and states: "Ms. Barnes, you are charged with solicitation to commit prostitution; you do not have to enter a plea at this stage of the proceedings. I see that you have counsel with you." At this point, the judge turns to the woman who is dressed conservatively and carrying a brief case, and says, "Counsel, what is your name?" At this point, Frieda [dressed provocatively] interjects and says, "Judge, my name is Frieda Jones and I am a member of the Virginia State Bar. You thought that I was the defendant just because of the way I looked. I hope you will remember that my client was arrested for the way she looked and not because of anything she did."
In his representation of a client, a lawyer may not knowingly use false evidence, knowingly make a false statement of law or fact, and, in appearing in his professional capacity before a tribunal, may not state or allude to any matter that will not be supported by admissible evidence. Further, a lawyer may not intentionally violate any established rule of procedure or evidence, where such conduct is disruptive of the proceedings. Although a lawyer has the duty to represent his client zealously, he should not engage in any conduct that offends the dignity and decorum of proceedings.
1. Has Frieda acted improperly?
Yes. Although the proceeding did not progress to the point where any actual false evidence or testimony was given, and although Frieda clarified the identities of the individuals involved prior to actual trial, the propriety of Frieda's actions is questionable since she has alluded to a misidentification which would not be supported by admissible evidence. Rule 3.4(f). Apparently, Frieda's "grandstanding" was designed to demonstrate the danger of misperceptions, but also had the result of embarrassing the judge. Although a lawyer has the duty to represent his client diligently (and cleverly, when acceptable), she should not engage in any conduct that offends the dignity and decorum of the proceedings. Rules 3.3(a), 3.4(j) and 4.4; LEOs 1331, 1490.
2. Suppose Pam introduced Frieda to a friend who bore a remarkable resemblance to Pam and was dressed similarly. May Frieda substitute the friend for Pam and seat the friend at counsel table during the proceeding?
No. Substituting a "look-alike" for defendant at trial is violative of the lawyer's duty not to use false evidence, allude to matters which cannot be supported by admissible evidence, make a false statement of fact, or participate in the creation of false evidence. Rule 3.3(a); Rule 3.4(f); Rule 3.4(j); Rule 3.4(c). Additionally, should Frieda substitute the friend for Pam, Frieda would have participated in a misrepresentation to the court which most likely could be determined to reflect adversely on her fitness to practice law. The misrepresentation was intended to cause misidentification resulting in misleading all concerned, causing a delay in the proceedings, and basically interfering with the administration of justice. Rule 3.4(g); Rule 8.4(a); ABA Informal Opinion 914 (February 24, 1966).
3. What if Pam's friend sat immediately behind counsel table?
The same misrepresentation and resultant misidentification, delay and disregard for the customs and rules of the court would have taken place. The violations are the same.
4. What if the friend sat at counsel table along with Pam and Frieda?
Without advance permission from the court, the same effect would have occurred, with the same resultant violations.
5. What if Frieda had advised the court of the substitution prior to a jury trial?
Since identification of Pam would have been an issue in the case, Frieda could have tested any witness' credibility by notifying the court and opposing counsel of that, and by seeking the court's permission to (1) seat two or more persons at counsel table without identifying the defendant; (2) have no one seated at counsel table; or (3) hold an in-court line-up. United States v. Thorseen, 653 F.2d 1332, 1342 (9th Cir. 1981).
B. Roger Lukens. Roger Lukens represents the plaintiff in a medical negligence action. He is convinced that the defendant physician has destroyed a particular document and replaced it in the plaintiff's medical records with a different document that recites the plaintiff's medical history in a manner more favorable to the doctor's defense. Roger has no proof that this has happened, but is convinced by his unfailing intuition that the defendant physician has falsified the medical record.
On cross-examination, Roger seizes upon a plan to make an honest man out of this doctor. Roger reaches into his file and pulls out a blank piece of paper. After dramatically perusing it in front of the jury, Roger looks condemningly at the doctor and says, "Doctor, when you first took down the medical history of the plaintiff, you wrote something entirely different from what is revealed in your medical file today. Isn't that correct, doctor?" As the doctor squirms, Roger looks at the paper in his hand, then back at the doctor, and the doctor confesses to his alteration of the records.
A lawyer shall not state or allude to any matter that he has no reasonable basis to believe is relevant to the case or that will not be supported by admissible evidence. Nor shall a lawyer ask any question that he has no reasonable basis to believe is relevant to the case and that is intended to degrade a witness or other person. Rule 3.4(f).
Is Roger's conduct proper?
No. Although Roger has not offered any document or testimony which is false into evidence, it is questionable whether his attempt to gain the doctor's confession would be supportable by admissible evidence, since it is apparently based purely on his intuition. Rule 3.4 (f). Although his line of questioning is obviously intended to impeach the doctor's credibility, under Rule 3.4 (f), that is not improper unless Roger also has no reasonable basis to believe that the question is relevant to the case. Clearly, although the questioning was intended to elicit a confession, such a confession would be integral to the case. See also, Comment 7 to Rule 3.4.
At the same time, a lawyer should not by subterfuge put before a jury matters which it cannot properly consider.
C. Robert Trump. In a bitter custody proceeding, the mother confides in her lawyer, Robert Trump, that her husband, a prominent clergyman in the community, kept a pornography collection in his library at home. She had kept this information from Lawyer Trump because she did not want the community to know, but, in the heat of battle over custody of the children, she asks Trump to use this information in court. Trump asks if she has any examples of this offensive material and the client replies that it has been hidden or destroyed.
Lawyer Trump brings a box full of old magazines to court with him and places the box on counsel table as he begins his cross examination of the husband. The clergyman doesn't know that the box contains only back issues of Time and Newsweek. The lawyer skillfully examines the clergyman about his aspirations for the moral development of his children and then drops the "bombshell": "Tell me, Reverend, do you still have that pornography collection in your home library?" The entire courtroom becomes still as Trump and everyone else in the courtroom fixes his eyes first on the box and then on the clergyman. "Well, what is your answer," the lawyer insists. Worried that his wife might have removed some of the items from his library, the clergyman breaks down and says, "No, I do not have it anymore. I destroyed what was left of the collection last week."
Where no false evidence is created and the line of questioning is intended to elicit information directly relevant to the issue of the case, perceptions and conclusions drawn by the party being cross-examined are beyond the province of the Rules of Professional Conduct.
Does Trump's conduct violate the Rules of Professional Conduct?
Probably not, since there is no applicable rule that prohibits this conduct. Trump has taken no affirmative step to create or use false evidence, and, furthermore, his own client is prepared to testify concerning the truth of the matter. At the same time, a lawyer should avoid tricks, ruses and subterfuges. Such tactics have no place in the courtroom.
D. Susan Slater. Mrs. Unfortunate sustains personal injuries allegedly because of the negligence of Reckless Randy. She sues Reckless Randy in the Circuit Court of Arlington County, claiming he is liable to her for $1 million. Susan Slater represents Mrs. Unfortunate. Susan knows that at trial Mrs. Unfortunate's economist will be prepared to testify that one major component of her damage has a value of $500,000. Thus, Susan fears the defendant will make a motion in limine to exclude that evidence. While there is no Virginia case on point, she anticipates that crafty counsel for Reckless Randy will cite a Maryland case that excluded such evidence. To her surprise, the attorney for Reckless Randy does not mention the case.
Where a lawyer knows of legal authority in the controlling jurisdiction directly adverse to the position of his client, he shall inform the tribunal of its existence unless his adversary has done so; but, having made such a disclosure, he may proceed to challenge its soundness in whole or in part. Rule 3.3 (a)(3).
1. Should Susan cite the case?
Probably not. The Rules of Professional Conduct require the disclosure of adverse authority within the subject jurisdiction. Since the case is being heard in a state court and the adverse authority is not within the controlling jurisdiction, disclosure is not required by the Rules of Professional Conduct. Rule 3.3 (a)(3).
E. George York. George York has just represented a defendant in a personal injury suit in which the jury returned a verdict for the plaintiff in the amount of $100,000. Since George does extensive defense representation in personal injury cases, he is most interested in discussing their deliberations with members of the jury.
In Virginia court proceedings, a lawyer who was connected with the case may communicate with jurors after expiration of their term as jurors (LEO 1549) so long as the lawyer refrains from asking questions or making comments that tend to harass or embarrass the juror or to influence actions of the juror in future cases. Where proceedings have taken place in U.S. District Court for the Eastern District of Virginia, however, no contact with jurors is permitted with respect to the jury's verdict or deliberations except with leave of court.
1. May the lawyer ask the juror how the jury reached such a "ridiculous and unfair verdict?" May the lawyer tell the juror that verdicts like the one returned will increase everyone's insurance premium?
No. When a lawyer communicates with a juror following the conclusion of a trial, the lawyer shall not ask questions of or make comments to a member of that jury that are calculated merely to harass or embarrass the juror or to influence his actions in future jury service. Furthermore, such communication should be made considerately and with deference to the personal feelings of the juror. Rule 3.5 (a)(2)(i); See also LEOs 416, 417, 1549.
2. May the lawyer ask the juror what parts of the presentation of the case impressed him either favorably or unfavorably?
Yes, in Virginia courts, if done with deference and without any attempt to influence the juror's actions in future jury service. Rule 3.5 (a)(2)(i). Conversely, a lawyer may not gratuitously offer thanks for the manner in which the members of a jury carried out their duties. LEOs 416, 417, 1549.
However, no contact with jurors regarding the verdict or deliberations is permitted in U.S. District Court for the Eastern District of Virginia except with leave of court. U.S.D.C. (E.D. Va) R. 47(C)
F. Steve Black. Attorney Steve Black, after notice to all parties, schedules a hearing before Judge Kate Hampton. Opposing Attorney Fred Gold is unprepared for the hearing. Instead of moving for an adjournment of the hearing, Attorney Gold contacts Judge Hampton, tells her of his intent to secure specific evidence related to the cause, describes the evidence he seeks, and requires a continuance of the hearing to a later date. Gold presents an ex parte order to the Judge extending the hearing upon representation that Attorney Black has no objection to the continuance. In fact, Attorney Black has legitimate objections to the continuance and is seriously inconvenienced by it. Nevertheless, Attorney Black makes no complaint, but simply accepts the new date.
In an adversary proceeding, a lawyer should not communicate with a judge relative to a matter pending before a tribunal over which the judge presides in circumstances which might have the effect or give the appearance of granting undue advantage to one party. A lawyer shall not engage in conduct involving dishonesty, fraud, deceit, or misrepresentation which reflects adversely on a lawyer's fitness to practice law. A lawyer has an obligation to report another lawyer's misconduct when that violation raises a substantial question as to the second lawyer's fitness to practice law in other respects.
1. Is Attorney Gold's conduct permissible?
No. In an adversary proceeding, a lawyer shall not communicate as to the merits of the cause with a judge before whom the proceeding is pending, except in writing if he promptly delivers a copy of the writing to opposing counsel. Rule 3.5 (e)(2). Furthermore, Attorney Gold's indication to Judge Hampton that Attorney Black had no objection to the continuance was clearly an intentional misrepresentation. Rule 8.4 (c). In fact, Gold had an affirmative obligation to inform the court that Black had an objection to the continuance. Rule 3.4 (c). Arguably, if the communication to the judge did not discuss the evidence and did correctly represent Attorney Black's position, the request for a continuance may not have been improper. LEO 1054. But see LEO 1462, which provides that if the information will not be admissible in court, will assert only personal opinions, or would violate an established rule of evidence or procedure which would be disruptive of the proceedings, . . . an attorney’s practice of sending to the court copies of letters to a witness and to opposing counsel would be improper and violative of DR’s 7-105(C) 1, 4 and 5 [Now Rule 3.4 (f) and (g)].
2. Has Attorney Black acted properly?
Since Attorney Black has knowledge of Attorney Gold's improper communication with Judge Hampton and, more critically, of Gold's misrepresentation to Hampton, he is obligated to report Gold's misconduct to the proper authorities should he determine that Gold's misconduct raises a substantial question as to Gold's fitness to practice law in other respects. Rule 8.3 (a); LEO 1528. In addition, by not having addressed Gold's conduct, Black may have compromised his duty to diligently represent his client. Rule 1.3 (a); LEOs 1133, 1214, 1262, 1263, 1291.
G. Obligation to Cite Adverse Authority. During discovery in a civil matter in a Virginia Circuit Court, plaintiff asks in an interrogatory for defendant’s financial worth. Defendant objects and plaintiff files a motion to compel. Defendant’s counsel discovers a Virginia case supporting plaintiff’s request, but plaintiff’s counsel fails to cite the authority in support of her motion. During oral argument, the judge asks plaintiff’s counsel if she has any Virginia authority supporting her position; she responds there is not. The judge does not ask defendant’s counsel to argue against the motion to compel nor does the judge ask any questions of defense counsel. The judge denies the motion to compel.
1. Does defense counsel have a duty to disclose potentially damaging or adverse legal authority?
Yes. Rule 3.3 (a)(3) provides that a lawyer shall not knowingly fail to disclose to the tribunal controlling legal authority in the subject jurisdiction known to the lawyer to be adverse to the position of the client and not disclosed by opposing counsel. A better question is whether it was proper for defense counsel to have objected to the discovery request in the first place. Va. S. Ct. R. 4:1 (g) states that no objection to discovery shall be made "unless warranted by existing law." In this case, defense counsel objected to a written discovery request sitting on a Virginia case which says that his objection is not valid. Rule 3.4 (e) provides that a lawyer shall not fail to make a reasonably diligent effort to comply with a legally proper discovery request by an opposing party.
2. Would your answer be different if you were in federal court as opposed to a Virginia Circuit Court?
No. Local Rule 83.1 (I) of the Eastern District of Virginia requires practitioners to comply with the Rules of Professional Conduct, as published in the version effective January 1, 2000. Rule III. C.1, Rule IV(1) of the Western District of Virginia require practitioners to comply with the Virginia Code of Professional Responsibility adopted by the Virginia Supreme Court, as amended and not in conflict with federal law. Presumably, these local rules intend that the Virginia Rules of Professional Conduct will govern.
A. Nancy Nicely. Attorneys Nancy Nicely and Deborah Badd are opposing counsel in an acrimonious and heated divorce proceeding. Nancy has been trying desperately to get Deborah and her client to reach a Property Settlement Agreement. Nancy, on behalf of the Wife, has sent numerous letters and draft agreements to Deborah without reply. Suspicious that Deborah is not informing her client of these settlement proposals, Nancy discusses the matter with Wife. Wife tells Nancy that recently Wife and Husband have been "quite friendly" but both see no prospect of salvaging the marriage. Wife says that she and Husband have been discussing property issues privately because the lawyers can’t seem to bring the parties together. Wife tells Nancy that actually they are "close to an agreement" on most of the contested issues and that Husband is frustrated in not hearing from his lawyer, who won’t return his telephone calls. Nancy gives Wife a copy of the proposed settlement agreement and tells Wife: "How about giving this to your Husband and see if he’s willing to come to terms." Wife returns the next day with the agreement, fully executed and notarized by the parties.
Deborah is outraged when Husband shows her the executed agreement. Deborah calls Nancy to complain. "Listen," Deborah said, "you’ve really breached your ethics. Your client got my client drunk last night and tricked him into signing the agreement. You either get your client to rescind the agreement, or I’m reporting you to the Bar!" Nancy responded with several unprintable comments and hung up the phone.
1. Has Nancy breached any duty to Deborah?
Yes. It is improper for Nancy to communicate, directly or indirectly, with Deborah’s client without Deborah’s prior consent to do so. Rule 4.2; EC 7-15. Nancy cannot circumvent this rule by using her client, Wife, to persuade the opposing party, Husband, to execute the property settlement agreement. Rule 8.4 (a). LEOs 501, 507, 521, 963, 1149, 1273, 1323, 1375. While opposing parties are free to communicate with each other without the consent of their lawyers, lawyers may not actively use their clients to communicate with opposing parties. San Francisco Informal Ethics Op. 1985-1; In re Marietta, 569 P.2d 921 (Kan. 1977)(lawyer publicly reprimanded for causing his client, the ex-husband, to communicate with the opposing party, the ex-wife, without the consent of her lawyer. The Respondent prepared a release of liability for back child support on behalf of the ex-husband for him to take the ex-wife for execution).
2. Has Deborah acted improperly?
Yes. Threatening Nancy with disciplinary charges in order to obtain an advantage in the divorce action violates Rule 3.4 (i). LEOs 1166, 1309. Further, if Deborah in fact is not informing her client of facts pertinent to the matter and of communications from Nancy affecting the settlement of the matter, she has breached her duty to keep her client reasonably informed. Rule 1.4 (a), (c); LEOs 776, 1036, 1233.
3. Should either Nancy or Deborah consider withdrawing from the case?
If either attorney believes the other is guilty of misconduct which raises a substantial question as to that lawyer’s fitness to practice law in other respects, she is obligated to report that misconduct. Rule 8.3 (a). If Nancy believes she may become a witness to the offer which was not communicated, since none of the three exceptions to Rule 3.7 (a) apply, she may need to withdraw unless her withdrawal would cause a substantial hardship to her own client. LEO 976, 1144.
Critically, each lawyer is obliged to remain impartial and objective in carrying out the representation of a client. If there comes a time when the lawyers’ objectivity is clouded by personal identification with the client, the lawyer is no longer capable of fulfilling her duty of independent professional judgment to the client. In that event, Rule 1.7 (a) suggests the lawyer might consider withdrawing from the matter.
B. Sharon Sommers. Sharon Sommers is an aggressive defense lawyer who likes to "turn over every stone" in her discovery. She is currently defending a case involving an automobile accident, in which plaintiff's treating physician and experts will be key witnesses at trial. Sharon wants to call the plaintiff's experts and treating physician without notifying the plaintiff or his lawyer.
Representing the plaintiff is Fred Moon, who is a cautious lawyer and likes to stay well within the bounds of permissible ethical behavior. He believes that some employees of the corporate defendant may have useful evidence, but is reluctant to call any of the employees because he knows that the defendant is represented by Sommers.
Under the Rules of Professional Conduct, a lawyer may contact both her opponent's expert and fact witnesses without the permission of the opposing attorney. Courtesy would suggest, however, that the opposing attorney be notified. Witnesses who are employed by a corporate defendant may be contacted without the corporate defendant's authorization if the employees are not in a position to bind the corporation on the subject matter of the litigation. While the Rules of Professional Conduct do not specifically bar ex parte contacts with an opponent’s experts and fact witnesses, a lawyer must also review applicable statutes and procedural rules regarding discovery which may bar such contacts.
What guidance can you give Sharon and Fred?
1. Based upon the requirements of the Va. Code § 8.01-399(D), Sharon may not call the plaintiff's treating physician except with the consent of the plaintiff or through the applicable discovery rules. Rule 4.2; LEO 1639.
2. It is not a violation of Rule 4.2 if Sharon contacts the plaintiff's experts (non-treating physicians) without the authorization of the plaintiff's counsel. LEO 1076. However, it may be a violation of a standing rule or order of court to obtain ex parte discovery from an adversary’s expert. In civil litigation, discovery of facts known and opinions held by an adversary’s experts may only be obtained through written interrogatories or such other means as agreed to by the parties or directed by the court. Va. S. Ct. R. 4:1 (b)(4). See also Rule 3.4 (d) (improper for lawyer to knowingly disregard standing rule of tribunal or order of court)
3. Authorities disagree as to whether Rule 4.2 permits a lawyer to contact non-managerial employees of a corporate party that is represented by counsel. According to prior ethics opinions and the commentary to Virginia’s Rule 4.2, Fred may call and interview any of the defendant's employees who are not in the "control group" or could otherwise bind the corporation on the subject matter in litigation. Fred must, however, disclose his adversarial role. Rule 4.2, Comment ; LEOs 347, 533, 777, 795, 801, 905; Upjohn Corporation v. United States, 101 S.Ct. 667 (1981). Still, some courts have nevertheless concluded, applying the ABA Model Rules approach, that ex parte contacts are prohibited not only where the control group or alter ego theory applies, but also where the activities or statements of an employee are part of the focus of litigation or would make the employer vicariously liable as a result of the employee’s statements or activity. Queensberry v. Norfolk & Western Ry., 157 F.R.D. 21 (E.D.Va. 1993); Nila Sue DuPont v. Winchester Medical Center, Inc., 34 Va. Cir. 105 (City of Winchester 1994). Thus, in some jurisdictions, the employee’s status with the corporation is not dispositive, and lawyers must research the law on this subject before undertaking to communicate ex parte with employees of a party represented by counsel.
A. Marilyn Lawyer. Marilyn Lawyer agreed to represent Mason Knightly on federal charges of possession of cocaine with intent to distribute. From all apparent indications, Mason was an impoverished individual and yet he readily paid the $50,000 fee Ms. Lawyer requested. The case was tried and Mason was acquitted.
Following the acquittal, the United States Attorney convened a special grand jury to investigate drug trafficking. With much publicity, the government announced that it wanted to learn who the principals were who would pay such expensive defense fees to counsel such as Ms. Lawyer. Ms. Lawyer was subpoenaed to appear before the grand jury with her files on the Knightly matter.
A lawyer may reveal a client's confidences and secrets when required by law or a court order, but should not do so until subpoenaed and compelled to by a court and after the subpoena has been challenged in court.
1. May Ms. Lawyer identify the source of her fee? The amount of her fee?
Under federal statute, a lawyer is required to report the receipt of a cash fee over $10,000, as well as report the source of that fee. 18 U.S.C. § 2371, 1956; 31 U.S.C. § 5322, 5324. Since she is required to reveal it by law, she may do so without violating client confidentiality obligations under Rule 1.6 (b)(1). If Marilyn has not reported it as required, she is in violation of Rule 8.4(b) for having committed a crime or deliberately wrongful act. If the attorney-client relationship was entered into in furtherance of a crime, i.e. a distribution scheme, even though the attorney was unaware of the scheme, the ethical responsibilities do not attach to the confidences and secrets of the client. In addition, an attorney must be careful to not assist a client in conduct which is criminal or fraudulent. Rule 1.2(c).
Generally, the weight of authority indicates that the identity of a client, most particularly when the client has been party to a public proceeding, is not considered a secret or a confidence unless the client has requested that it be so. Furthermore, fees and expenses are similarly not usually protected except where a showing can be made that disclosure would implicate the client in criminal activity. LEOs 782, 1049, 1079, 1084, 1093, 1095, 1103, 1121, 1127, 1202, 1205, 1222, 1224, 1233, 1296, 1300, 1362, 1367, 1378.
2. Is it proper for the United States Attorney to subpoena the lawyer?
Yes, prior judicial approval in federal court is not required. Local Rule 83.1 (I) (E.D. Va.). As of January 1, 2000, prior judicial approval in state court is not required to subpoena a lawyer in any criminal proceeding, including a grand jury. See Rule 3.8 (Committee Commentary and Virginia Code Comparison). The propriety of such a subpoena will be considered on a motion to quash.
3. If the lawyer is served with a subpoena, what are the lawyer's duties to the client?
To avoid revealing her client's secrets and confidences contained in the client's files, Ms. Lawyer should move to quash the government's subpoena. In order to sustain the subpoena, the government must show the relevance of the information sought to the investigation at hand. If the motion to quash is denied, Ms. Lawyer may then deliver the file without violating Rule 1.6 since its production has now been required by a court order. Rule 1.6 (b)(1). LEOs 439, 787, 967; In re Grand Jury Investigation, 640 F.Supp. 1047 (S.D.W.Va. 1986); In re Special Grand Jury No. 81-1 (Leon D. Harvey), 676 F.2d 1005 (4th Cir. 1982).
B. Brian Litigate. Freddie Lightfingers was arrested for breaking and entering the home of Reginald Richly and removing a priceless 12 piece silver place setting. In discussing the case with his lawyer, Brian Litigate, Freddie mentioned other homes he had visited. "I've stolen so much, I had to rent a warehouse to hold it all," Freddie bragged. "If you don't believe me, see for yourself. I know you can't tell anybody." Freddie then pulled a key from the heel of a shoe and told Brian where the warehouse was located.
Suppose Freddie had visited Brian's office with Reginald's silverware. "Brian," Freddie says, "the cops are looking for this stuff. They got me on a b & e charge, but if they can't find this, they'll have a tough time proving it. Of course, I want you to represent me."
A lawyer has a legal duty to turn over to the authorities' fruits and instrumentalities of a crime while not disclosing information which would link his client to the crime, since to do that would be tantamount to disclosing the client's secret or confidence as to any involvement he may have had in the past crime.
1. Can Brian tell someone about the warehouse?
As a general rule, Brian may not reveal his client's confidence or secret and may not use that confidence or secret to the disadvantage of the client. Rule 1.6 When dealing with stolen property, Brian can do nothing which might be construed as claiming dominion or control over the property. If he accepts the key, Brian may be presumed to have control over the stolen property and is then obligated to give the key, and may be obligated to give the location of the warehouse, to the authorities. The dilemma is that, in doing so, Brian may implicate his client in the theft. The better course, therefore, is for Brian to refuse acceptance of the key. LEOs 386, 551, 953, 1087, 1141, 1202.
2. What obligation does Brian have to Freddie regarding the silver? ?To the police? To Reginald?
Brian is obligated by the Rules of Professional Conduct not to counsel or assist Freddie in conduct that Brian knows to be illegal or fraudulent. Rule 1.2 (c). Before he turns the silver over to the authorities, Brian is required to inform Freddie that he will be doing so. LEO 1222.
Brian has a legal duty to turn over fruits and instrumentalities of a crime to the authorities. Rule 1.2 (c), Rule 3.4 (a); LEOs 551, 709, 1049. If indicating how it came to be in his possession would violate the confidence of a client, he may simply turn it over anonymously without further information.
Brian is under no legal or ethical duty to Reginald, assuming that Brian's complying with turning over the fruits of the crime to the authorities will protect Reginald's rights.
3. Can Brian put the silverware in his safe deposit box until the trial is over?
No. To do so would violate the law prohibiting an individual from concealing stolen property and would actively assist Freddie in secreting evidence. Rule 3.4 (a); LEO 386; In re Richard R. Ryder, 263 F.Supp. 360 (E.D. Va. 1967), aff'd per curiam, 381 F.2d 713 (4th Cir. 1967).
C. Jack Bright. Jack Bright represents Allen Driver on charges of driving with a revoked license. Outside the courtroom Jack saw Allen and asked him how he got to court. "I rode my bike, man!" he replied. They then walked into court and Allen was sentenced.
As they turned from the Judge's bench after sentencing, the judge remarked, "By the way, Mr. Driver, how did you get here today? Allen replied, "I rode my bike" and he and Jack departed. On reaching his car, Jack observed Allen traveling down the highway on his bike - a 650 cc Harley Davidson.
A lawyer is required to reveal a client's secret only when it relates to the client's intention to commit a crime or when the lawyer has information which clearly establishes that his client has, in the course of the representation, perpetrated a fraud related to the subject matter of the representation upon a tribunal. When the lawyer only suspects the fraud, when the client has not acknowledged the fraud, or when the putative fraud has taken place outside the course of the representation, the lawyer may not reveal the client's secret.
Does Jack have any obligation to report Allen to the court?
No, there was no perjury because the comments were not made under oath. There is no fraud subject to Rule 1.6 (c)(2) because the comments did not relate to the subject of the representation. Rule 1.6 (c)(2); Rule 3.3 (a)(2); Rule 3.4 (c); LEOs 1215, 1270, 1496.
D. Bob Hicks is a prominent defense attorney in a very small town. Bob gets arrested for speeding by a state trooper who caught Bob going 67 miles per hour where the posted speed limit was 55 miles per hour. The local judge recused himself and Judge Bean was brought in from out of town to hear the case in traffic court. The Commonwealth’s Attorney likewise disqualified himself because he and Bob Hicks are good friends. Nevertheless, in an effort to help out his friend, and uncertain whether the substitute judge was aware of local standing policies, the Commonwealth’s Attorney wrote the following in a letter to the judge:
Though I have declined to personally try this matter, I think you should know that the policy in this jurisdiction, for first time offenders in simple speeding cases, is to continue the matter over for six months. If the defendant has a clean driving record and has not been charged with any other violations during that time, that case is dismissed.
Has the Commonwealth’s Attorney acted properly?
No. A District Committee found that such conduct by the Commonwealth’s Attorney violated DR 8-101(A)(2) [now Rule 1.11 (a)(2)] which provides that a lawyer who holds public office shall not:
Use his public position to influence, or attempt to influence, a tribunal to act in favor of himself or a client.
The Respondent attorney appealed and the Disciplinary Board affirmed the District Committee’s determination.
You are court-appointed to represent a criminal defendant charged with murdering a victim as a result of a drug deal that went bad. During the initial interview, your client confesses to the murder and explains that he just "lost his cool and blew the dealer [victim] away." As you prepare for trial your client changes his account of what occurred and tells you that the shooting was in self-defense because he thought the victim had pulled a gun on him. Your client wants to take the stand and testify to this. You tell your client "But that’s not what you told me before." Your client responds "yeah, but what I told you before is not going to get me acquitted, is it?" "Just do your job and I’ll do mine, O.K."
1. May you permit the defendant to testify falsely at trial that he thought the victim had pointed a gun at him?
No. You may not put your client on the stand to testify about a matter which you know to be false. Rule 3.3 (a)(4).
2. May you refuse to call your client to the stand to avoid the contemplated perjury?
No. You may not refuse to call your client to the stand if he desires to testify in his case since the accused has a constitutionally protected right to testify on his own behalf. Instead, counsel should seek to control the client and his testimony to try and prevent the perjury from occurring.
3. Must you move to withdraw from the case?
Yes, if your client refuses to abandon his stated intent to commit perjury you must seek leave of court to withdraw. Rule 1.6 (c)(1).
4. If the court insists, must you advise the court of your client’s intended perjury as a basis for your motion to withdraw?
Probably yes, otherwise you risk contempt of court or denial of your motion to withdraw which leaves you stuck with the duty to report your client’s perjury if he actually takes the stand and lies.
5. What are your duties if the court denies your motion to withdraw and your client refuses to abandon his plan to commit perjury?
Your duty is to continue to represent your client effectively and diligently within the bounds of the law and comply with the requirements of Rule 1.6 (c)(2) if your client insists on taking the stand and committing perjury.
The controlling disciplinary rule for this problem is Rule 1.6 (c) which specifies two specific situations where a lawyer must reveal information that would otherwise be privileged or kept confidential: (1) the client’s stated intent to commit a crime; and (2) the client has perpetrated a fraud on the court. Although the United States Supreme Court has addressed in dicta the issue of client perjury in Nix v. Whiteside, 475 U.S. 157 (1986), the problem of dealing with client perjury poses one of the most difficult ethical dilemmas. The problem is complex because a number of conflicting ethical precepts will collide, or at least intersect. These duties include effective assistance of counsel, the protection of client confidences and secrets, the lawyer’s duty to zealously represent the client, candor toward the tribunal, and the law regarding subornation of perjury and obstruction of justice.
Nix v. Whiteside came to the Supreme Court as an ineffective assistance case. Whiteside stabbed his victim in an altercation over a drug deal that went bad. Whiteside wanted to testify that he saw a gun to justify a plea of self-defense, but there was no gun. His lawyer threatened to tell the court, and maybe even testify, that it was a lie. Whiteside went to trial and testified that he thought that the victim had a gun, and was convicted. Whiteside sought habeas relief alleging that his counsel was ineffective at trial. The Iowa court commended the defense lawyer for derailing the potential perjury and reminded the bar that a lawyer who participates in perjury may be prosecuted also. The Eighth Circuit ruled that defense counsel destroyed the attorney-client relationship and violated the defendant’s right to due process by interfering with his constitutional right to testify. The Court held that counsel had become an adversary to his client and the defendant’s right to a fair trial was lost.
The state petitioned for rehearing en banc claiming that the decision promoted client perjury. The Court denied the petition by a 5 to 4 vote producing four separate opinions, demonstrating the controversial nature of the issue. The United States Supreme Court granted certiorari and unanimously reversed the Eighth Circuit in four opinions. The majority concluded that the defense lawyer’s threat to withdraw from representation and make disclosure to the court if the client persisted in giving false testimony did not deprive the defendant of the effective assistance of counsel guaranteed by the Sixth Amendment. A criminal defendant has no constitutional right to expect his lawyer to participate in or assist the client’s perjury.
Lawyer’s duty to advise client not to commit perjury: All authorities agree that a lawyer must, at a minimum, advise the client not to commit perjury. See, Rule 1.6 (c)(1); LEO 1362. While authorities are not specific on precisely what to tell the client, here are the essential components:
1. Giving false testimony is a crime.
2. There may be strategic risks associated with giving false testimony, or by not making prompt disclosure of false testimony previously given.
3. The client should be urged to testify truthfully or make full disclosure of true facts where false testimony has already been given.
4. The attorney will have to withdraw from representation unless the client corrects the past perjury or abandons their plan to testify falsely.
5. The attorney will be required to disclose the client’s perjury if it goes uncorrected.
Seeking Leave of Court to Withdraw: If withdrawal is used by counsel as an option, it must be done in such a way as to minimize the prejudice to the client. What happens if the court insists on disclosure of the specific grounds for withdrawal, thus risking the disclosure of the client’s intended perjury? A court may require a factual basis for the lawyer’s belief that the client intends to commit perjury. United States v. Long, 857 F.2d 436 (8th Cir. 1988) (lawyer may withdraw only on showing "a firm and factual basis for believing" that false testimony has or will be presented; court commented that "it will be a rare case in which this factual requirement is met"). On the other hand, at least one court has held that counsel should object to disclosure and risk contempt rather than reveal the client’s confidence. Sanborn v. State, 474 So.2d 309 (Fla. App. 1985). Under the Virginia Rules, a lawyer may reveal confidences and secrets when required by law or court order. Rule 1.6 (b)(1). Thus, it would appear that the Virginia rules would permit the disclosure of the client’s intended perjury, if directed by the court. However, this option does present a risk of a claim that the lawyer was ineffective as counsel. On the other hand, if the court is unsatisfied with counsel’s grounds for the motion to withdraw, the court may simply deny the motion to withdraw, leaving counsel with the duty to report if the client actually takes the stand and commits perjury. If the court refuses the motion to withdraw and the client insists on taking the stand, the lawyer must proceed and deal with the perjury anyway. Rubin v. State, 490 So.2d 1001 (Fla. Dist. Ct. App. 1986) cert. denied 493 U.S. 1005 (1987) (if withdrawal motion is denied, the lawyer must proceed or risk contempt). D.C. Ethics Op. 234 (1993) states that withdrawal is not required when trial is imminent; lawyer cannot argue the perjured testimony but can argue that guilt was not proved beyond reasonable doubt; lawyer cannot elicit the false testimony, but a general question could end up eliciting it anyway.
Narrative Approach: The U.S. Supreme Court, in dicta, in Whiteside, supra, and the ABA Model Rules, Comment to Rule 3.3, disapprove of the tactic of permitting the client to give a narrative testimony that may contain false testimony. Before Whiteside, the narrative approach was widely accepted. This approach allows the criminal defense lawyer whose client intends to commit perjury to ask the client to testify in a narrative fashion without the assistance of direct examination and without the lawyer arguing the false testimony in summation. Standard 4-7.7, ABA Standards of Criminal Justice. Several courts have specifically approved this approach. People v. Gadson, 24 Cal. Rptr.2d 219 (Ct. App. 1993); People v. Guzman, 755 P.2d 917 (Cal. 1988), cert. denied 488 U.S. 1050 (1989); Pennsylvania v. Jermyn, 652 A.2d 821 (Pa. 1995). In ABA Formal Op. 87-353 (1987), the ABA takes the position that the narrative approach can no longer insulate the lawyer from a charge of assisting the client’s perjury.
Disclosure of Client Perjury During Trial: The most difficult situation arises in a criminal case where the accused insists on testifying when the lawyer knows that the testimony is perjurious. The lawyer’s effort to rectify the situation can increase the likelihood of his client being convicted, or dealt with more harshly in sentencing. In addition, it will open the possibility of a prosecution for perjury. On the other hand, if the lawyer does not exercise control over the proof, the lawyer is vulnerable to a complaint that he participated in the deception of the court. Three resolutions of this dilemma have been proposed. One is to permit the accused to testify by a narrative without guidance through the lawyer's questioning. This compromises both contending principles; it exempts the lawyer from the duty to disclose false evidence but subjects the client to an implicit disclosure of information imparted to counsel. Another suggested resolution, of relatively recent origin, is that the advocate be entirely excused from the duty to reveal perjury if the perjury is that of the client. This is a coherent solution but makes the advocate a knowing instrument of perjury. The ultimate resolution of the dilemma, however, is that the lawyer must reveal the client's perjury if necessary to rectify the situation. A criminal accused has a right to the assistance of an advocate, a right to testify and a right of confidential communication with counsel. However, an accused should not have a right to assistance of counsel in committing perjury. A defendant does not have the constitutional right to give perjured testimony. Nix v. Whiteside, supra; United States v. Curtis, 742 F.2d 1070 (7th Cir. 1984), cert. denied, 475 U.S. 1064 (1986); People v. Malcolm, 612 N.Y.S.2d 746 (N.Y.Crim. Ct. 1994). See also United States v. Henkel, 799 F.2d 369 (7th Cir. 1986) cert. denied 479 U.S. 1101 (1987) (defendant not denied due process or right to effective assistance of counsel when counsel implicitly disclosed client’s intention to commit perjury by seeking to withdraw at trial when defendant wished to testify). Furthermore, an advocate has an obligation, not only in professional ethics but under the law as well, to avoid implication in the commission of perjury or other falsification of evidence. See Rule 1.2(c). See also United States v. Litchfield, 959 F.2d 1514 (10th Cir. 1992)(criminal defense lawyer who, in ex parte discussion with court, expressed concern about probable falsity of client’s impending testimony, not guilty of unethical behavior and did not create conflict of interest); People v. LaVearn, 528 N.W.2d 721 (Mich. 1995) (client does not have constitutional right to present defense known to be perjurious). A lawyer’s duty to refrain from offering false evidence extends to any witnesses called in support of a client’s case. Tibbs v. United States, 628 A.2d 638 (D.C. 1993) (as a matter of law, lawyer not ineffective for refusing to present witness whose testimony lawyer knows to be false).
When Does A Lawyer "Know" That Client Intends to Commit Perjury?
The lawyer must be convinced that the client intends to commit perjury. A lawyer rarely "knows" that the client intends to commit perjury. Nix v. Whiteside, supra; State v. James, 739 P.2d 1161 (Wash. Ct. App. 1987) (lawyer must have firm belief; suspicion without evidence or factual finding not sufficient); ABA Formal Op. 87-353 (1987) (unusual case when lawyer does "know" but client clearly stating intention to commit perjury establishes knowledge). A lawyer’s reasonable belief that a client intends to testify falsely must be based on independent investigation of the evidence or on distinct statements made by the client. Nix v. Whiteside, supra. The ethics rules that lawyers must follow in Virginia, and the opinions interpreting them, require that the attorney must know that the client intends to commit perjury. The only way an attorney knows that his client intends to commit perjury is where the client tells the attorney of his contemplated perjury, or the attorney has other evidence which clearly establishes that the client intends to commit or has committed perjury. See LEO 1362 (client’s testimony at trial completely opposite of testimony given in prior civil case); LEO 1451 (party’s expert lies about qualifications). See also State v. McDowell, Wis. Ct. App. 1st Dist., No. 02-1203-CR, 19 Law. Man. Prof. Cond. 443 (July 22, 2003) (lawyer cannot "know" client will testify falsely unless client says so expressly).
You are a criminal prosecutor. You and the case agent have been working on a very complex, white collar fraud case for months. Charges include everything from mail and wire fraud to RICO to obstruction, to whatever else. The indictment is, as usual, several dozen counts long and there is literally a roomful of documents involving dozens of alleged victims who were bilked out of their life savings. You have dutifully gotten the court to freeze all assets so as to insure, among other considerations, that you won’t have to put up with high priced, out-of-state defense counsel who are typically a pain. However, at the same time, local counsel has been appointed who you highly respect and with whom you have had an excellent working relationship in cases over time. Pursuant to your standard procedure which, coincidentally, coincides with the court’s stated preference, you have invited counsel to meet you and the case agent at the storage facility to review what counsel wants to see from the documents. Out of the thousands of pages, there is but a small handful that are the focus of attention and which you intend to focus on at trial. The remainder is essentially useless. The court has set a trial date within its usual quick time frame and you know that any attorney would be hard-pressed to shuffle through everything to find the good stuff. There is no pretrial order in place requiring any designation of proposed exhibits until the eve of trial and counsel has made several specific discovery demands informally to which you have simply responded that "it’s all in there somewhere."
QUERY: Are you obligated to show defense counsel where the real goods are? Or, stated another way, do you fulfill your obligation by simply taking the position that "it’s all in there somewhere?"
The real issue deals with the exact parameters of what is considered the exculpatory evidence in the case. A very clear argument could be made that only the small handful of documents that are the focus of the prosecution’s case are the exculpatory evidence and therefore those documents need to be so designated to defense counsel. In reality the rest of the thousand of pages are also evidence that defense counsel should have access to, but are not truly the exculpatory evidence to which Rule 3.8(d)’s requirement of timely disclosure pertains. No doubt defense counsel is entitled to access to these documents as well, but because the specific documents the prosecution knows involve exculpatory evidence are buried so deep in the thousands of pages defense counsel would not be able to sift through them all and extract the pertinent documents in a timely fashion. Timely production of exculpatory evidence means that the prosecutor must produce the material as soon as practicable and may not willfully withhold the documents on the basis that the Brady rule might allow the prosecutor to do so. The constitutional requirements of Brady and the prosecutor’s ethical duty under Rule 3.8(d) are separate and distinct. LEO 1862.
Defendant, who is represented by counsel, is found guilty of a criminal offense in the General District Court. Just after sentencing, Defendant asks the court about his right of appeal. The Commonwealth Attorney then informed the court that if the defendant appeals, he will be tried by a jury and requests that the clerk of court note that on the warrant. In this jurisdiction, it is commonly known that a jury will usually impose a longer sentence than the judge for this offense. Defendant subsequently chose not to exercise his right of appeal.
Has the Commonwealth's Attorney violated any Rules of Professional Conduct?
No. The Rule that specifically addresses conduct of a prosecuting attorney is Rule 3.8. That provision places special restrictions on the activities of a prosecutor; however, none of those apply here. Those provisions deal with probable cause, unrepresented defendants, communication with witnesses, disclosure of exculpatory evidence, and extrajudicial statements. The statements made by this prosecutor in court regarding a jury trial are not prohibited by any of the provisions in Rule 3.8.
As the specific rule regarding prosecutors does not preclude the statements made by the Commonwealth's Attorney, the permissibility of those statements is governed by the Rules' general provisions regarding restrictions on an attorney's professional communications.
Nothing in the provisions of broad application governing attorney communications, nor the specific provisions directed at prosecutors prohibit the remarks of this Commonwealth's Attorney in the presence of this represented defendant. See Legal Ethics Op. 1768 (2002).
Attorney represented a client in a criminal matter. The client was convicted in a Virginia circuit court. The trial judge set a sentencing hearing and ordered a probation officer to prepare a pre-sentence report for use at that hearing. The officer forwards a copy of the report to the attorney, who reviews it with his client. One day after the sentencing hearing, the client informs the attorney that the client will be petitioning the Supreme Court of Virginia for a writ of habeas corpus. The client requests that the attorney provide the file to the client, including the pre-sentence report.
Query: Does Rule 1.16 (e) require Attorney to produce a copy of the Pre-Sentence Report if the report is in the former client's file?
No. Rule 1.16(e) specifically governs the lawyer's duty to transmit the client's file upon termination of the relationship and at the request of the client. Whether the attorney must provide a copy or an original of the contents depends on the nature of each document; however, paragraph (e) does require provision of the client's entire file, except for one narrow category:
Billing records and documents intended only for internal use, such as memoranda prepared by the lawyer discussing conflicts, staffing considerations, or difficulties arising from the lawyer-client relationship.
A pre-sentence report is not the sort of internal document described by the exception. Therefore, the general requirement from this provision would apply: that the lawyer provide file contents or, in many instances, copies of those contents, to the client. Comment 11, however, sets forth an important limitation:
The requirements of paragraph (e) should not be interpreted to require disclosure of materials where the disclosure is prohibited by law.
Attorney General Jerry W. Kilgore's Advisory Opinion, dated March 31, 2003, interprets Virginia Code §19.2-299, as prohibiting the disclosure of pre-sentencing reports by attorneys to their clients. See Va. Legal Ethics Op. 1790 (2004).
A defense attorney defends two criminal defendants in separate cases. Defendant #1 retained the attorney to represent him on a charge of possession of a firearm as a convicted felon in state court. Defendant #1 told the police at the time of his arrest that he had a gun solely to protect himself from Defendant #2, who had shot his brother, murdered his step-father, and placed a contract on Defendant #1's life. The state weapons charge was dismissed against Defendant #1. He was then charged with a federal weapons charge for the same firearm. Defendant #1 again hired the attorney for the federal case. Defendant #2 then hired that same attorney to represent him in state court on charges of first degree murder, abduction, conspiracy to commit murder, possession of a firearm by a convicted felon, and use of a firearm in the commission of a felony. Defendant #1 told the attorney he did not want to plead guilty to the firearms charge because he had the gun solely to protect himself from Defendant #2. The case was set for trial. The attorney reviewed discovery materials which identified Defendant #2, his client, as the person Defendant #1 feared. The attorney did not disclose to either client or either court that he represented both Defendant #1 and #2. The attorney persuaded Defendant #1 to plead guilty, forego raising the self-defense issue, and forego implicating Defendant #2. Defendant #1 was sentenced to fifteen years imprisonment. Defendant #2 was sentenced to 105 years imprisonment. The attorney accepted the court appointment to represent Defendant #1 in his appeal; he again did not disclose to clients or the court that he represented each of these defendants. Defendant #1's conviction and sentence were affirmed.
Does Defense Attorney have an impermissible conflict of interest by representing both Defendants?
Yes. The pertinent legal authority regarding this issue is Rule 1.7, which addresses conflicts between current clients. Rule 1.7 has two paragraphs. Paragraph (a) deals with conflicts between clients who are directly adverse to each other or if there is “significant risk that the representation of one or more clients will be materially limited by the lawyer’s responsibilities to another client …” Rule 1.7(a)(2).
The defense attorney's multiple representations in this hypothetical are within the reach of this provision. Specifically, each representation could be "materially limited by the lawyer's responsibilities to another client." In considering Defendant #1's claim of self protection, the attorney had a competing duty to Defendant #2 to present him in the best light and to develop no testimony supporting the charges against him. The two perspectives are irreconcilably at odds; thus, this attorney, upon realizing that Defendant #2 was the source of his other client’s fear, should have known that his representation of Defendant #1 may be materially limited by his representation of Defendant #2. Therefore, his representation of the two clients would only have been appropriate if he had also met the criteria for exception in paragraph (b), those being that the lawyer reasonably believes that they will be able to provide competent and diligent representation to each affected client and there is client consent memorialized in writing.
In addressing these criteria, first the lawyer must "reasonably believe" he or she will be able to provide “competent and diligent representation to each affected client.” There is nothing in these facts to support the reasonableness of such a belief. Defendant #1 had his charges dismissed in state court by presenting the evidence of the threat against him; yet this attorney dissuaded him from presenting the same defense for the federal charges - a dissuasion that stood to benefit his other client. The adverse affect of these simultaneous representations is too clear to have reasonably been believed otherwise.
This attorney failed to meet the second criterion that could support this simultaneous representation. He did not consult with either of his clients, nor did he seek their consent. Each client, as well as the appointing court for the appeal, operated in a vacuum regarding the attorney's loyalty.The nature of the conflict of interest in the hypothetical is articulated in Comment 4 to Rule 1.7:
Loyalty to a client is also impaired when a lawyer cannot consider, recommend or carry out an appropriate course of action for the client because of the lawyer's other responsibilities or interests. The conflict in effect forecloses alternatives that would otherwise be available to the client.
The defense attorney in this hypothetical had an impermissible conflict of interest in representing these two defendants in the circumstances outlined in this hypothetical. See Va. Legal Ethics Op. 1796 (2004) and Rule 1.7 amendments effective June 30, 2005.
A. Jean Lightly. Ernie Shadow was seriously injured in an automobile accident and requested Jean Lightly to represent him both with regard to his injuries and an application for Medicaid payments through the state's welfare department. Crucial to a successful application for Medicaid benefits was a determination that the applicant's assets were below a specified amount. Ms. Lightly assisted Ernie in completing the application for Medicaid and thereafter remained in contact with the Medicaid office to follow the application's progress. During this time, Ms. Lightly inquired as to the effect settlement of the pending litigation might have on the Medicaid application and was told that the application might require reevaluation. Subsequent to this conversation and prior to the approval of Medicaid benefits, Ms. Lightly settled Ernie's personal injury claim for $27,000.
Where an attorney possesses secret information relative to the matter being handled for a client, and where the law requires the information to be shared in order for the client to qualify for public benefits, the attorney is permitted to reveal the information. In representing his client, the attorney may not conceal or knowingly fail to disclose that which he is required by law to reveal. Furthermore, the attorney may not assist his client in conduct that the lawyer knows to be illegal or fraudulent.
1. May Ms. Lightly disclose the settlement to the state welfare office? Must she disclose?
Under Rule 1.6 (b)(1), Ms. Lightly may reveal the settlement since it is required by Va. Code Ann. §63.1-124. She may not conceal the settlement information on her client's application for Medicaid assistance or counsel him to conceal it, since to do so would violate Rules 3.3 (a) and (d); LEOs 782, 833, 1049, 1079, 1084, 1093, 1103, 1121, 1127, 1202, 1205, 1222, 1224, 1233, 1296, 1362, 1367, 1643.
2. May Ms. Lightly evaluate the Medicaid application on her own before deciding if disclosure is required?
Determinations of eligibility for Medicaid are made as required by law; Ms. Lightly's evaluation of the application does not mitigate her legal responsibility to reveal the settlement. She may evaluate the application to determine whether or not she can appeal a potential denial of Medicaid benefits if that appeal would be supportable by a good faith argument for a modification of the determination process. LEOs 224, 435, 525, 1005, 1071, 1121, 1190, 1224, 1308.
B. Larry Zeal. Larry Zeal represents Defendant in a dispute concerning the right to goods. Defendant bought the disputed goods from Seller, who contends that Plaintiff released its lien prior to the sale to Defendant. Plaintiff says the lien was not released. Officer, an employee of Plaintiff, signed documents which Seller says were intended to release the lien. Seller says Officer’s subsequent actions were consistent with a release of the lien, and Seller believes Officer’s testimony would be favorable to Defendant. Officer no longer works for Plaintiff and is not represented by counsel.
The appropriate and controlling standard is Rule 4.2 which states that during the course of representation of a client, a lawyer shall not communicate or cause another to communicate on the subject of the representation with a party he know to be represented by counsel in that matter unless he has the prior consent of the lawyer representing such other party or is authorized by law to do so.
May Larry Zeal communicate ex parte with Officer to determine Officer’s recollections concerning matters at issue in a law suit pending in a Virginia Circuit Court? Comment 4 to Rule 4.2 states that a lawyer is prohibited from communicating with employees of an organization represented by counsel in a matter if those employees, because of their status or position, have the authority to bind the organization. They are considered to be in "the control group" or the "alter ego" of the organization. This prohibition does not apply to former employees, even if they were members of the "control group." Rule 4.3 states that in communication with unrepresented persons, a lawyer shall not state or imply that the lawyer’s disinterested and shall make certain that the unrepresented person understands the attorney’s role. A lawyer shall not provide legal advice to an unrepresented person other than to seek advice of counsel.
In the situation described, it would not be improper for Larry Zeal to communicate with Officer since Officer is no longer an employee of Plaintiff. LEO 1670. A corporation acts through its employees. However, once an employee who is also a member of the control group separates from the corporate employer by voluntary or involuntary termination, the restrictions upon direct contact cease to exist because the former employer no longer speaks for the corporation or binds it by his or her acts or admissions. The Legal Ethics Committee has previously held that it is ethically permissible for an attorney to communicate directly with the former officers, directors and employees of an adverse party unless the attorney is aware that the former employee is personally represented by counsel. See LEOs 533, 905 and 1589. Counsel for the corporation represents the corporate entity and not individual corporate employees. See Rule 1.13. Where it is necessary to contact unrepresented persons, a lawyer should not undertake to give advice to the person, except to advise him or her to obtain a lawyer. See Rule 4.3(b).
Be aware that some circuit courts and federal courts in Virginia have interpreted Rule 4.2 differently. Some courts have applied the ABA Model Rules approach 5 and prohibited ex parte contacts not only where the control group or alter ego theory applies, but also where the activities or statements of an employee are part of the focus of litigation or would make the employer vicariously liable as a result of the employee’s statements or activity. Queensberry v. Norfolk & Western Ry., 157 F.R.D. 21 (E.D.Va. 1993); Nila Sue DuPont v. Winchester Medical Center, Inc., 34 Va. Cir. 105 (City of Winchester 1994).
A Virginia state court recently followed the Virginia ethics rules in allowing ex parte contacts with a company’s former employees. Pruett v. Virginia Health Services., Inc., 69 Va. Cir. 80 (2005) (declining to prohibit a plaintiff’s lawyer from ex parte contacts with any former employees of the defendant nursing home).
The Virginia court in Pruett acknowledged but declined to follow an earlier opinion by the Western District of Virginia federal court that expressly prohibited such ex parte contacts with former employees. Armsey v. Medshares Mgmt. Servs., Inc., 184 F.R.D. 569, 574 (W.D. Va. 1998) (“I agree with the committee that former employees may no longer bind their corporate employer by their current statements, acts or omissions. Yet, this does not prevent liability being imposed upon their former employer based on the statements, acts or omissions of these individuals which occurred during the course of their employment. In fact, Plaintiff’s counsel in this case has informed the court that it seeks to speak to each of these former employees because Plaintiffs believe that they can impute liability upon Medshares through the statements, actions or omissions of these former employees. Under these facts, I do not believe ex parte communications with these former employees is proper.” (citations omitted)).
The Eastern District of Virginia has not spoken, so it would be difficult to guess its approach. Thus, Virginia practitioners apparently may conduct ex parte communications with former employees if they are litigating in state court, may not engage in such ex parte communications if they are litigating in western Virginia federal courts, and will have to guess what they can do if they are litigating in eastern Virginia federal courts.This issue was recently addressed in Bryant v. Yorktowne Cabinetry, Inc.,6 which may signal a sea change in the Western District of Virginia regarding ex parte contacts with former employees of a represented party. The defendant company filed a motion for a protective order, seeking to prohibit plaintiff’s counsel from interviewing former employees of the company.7 Federal Magistrate Judge Michael Urbanski adopted the approach taken by the Virginia State Bar’s Standing Committee on Legal Ethics that Rule 4.2 generally does not prohibit an ex parte interview of a represented company’s former employee that is represented by counsel, unless the interviewing lawyer inquires into matters that involve privileged communications by an between the former employee and the company’s counsel related to the subject of the representation.8
Therefore, communicating with employees of a represented corporate party requires careful reflection and research before undertaking to do so. ABA Model Rule 4.2 does not prohibit ex parte contacts by opposing counsel with former employees, including persons who occupied corporation may be contacted without consulting the corporation’s counsel as they are no longer in position of authority and, therefore, cannot bind the corporation. ABA Formal Op. 91-359 (1991); LEOs 1589, 1670.
5ABA Model Rule 4.2 states:
In representing a client, a lawyer shall not communicate about the subject of the representation with a party 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 do so.
The Comment under ABA Model Rule 4.2 provides that where the represented party is an organization, the Rule prohibits communications by opposing counsel with persons having managerial responsibility and with any other person whose act or omission in connection with that matter may be imputed to the organization for purposes of civil or criminal liability or whose statement may constitute an admission on the part of the organization. (Emphasis added).
6Bryant v. Yorktowne Cainetry Inc., 538 F. Supp. 2d 948 (W.D. Va. 2008).
7 Id. at *1
8 Id. at 16-17.
C. Sharon Makepeace - Mediation. Sharon Makepeace, an attorney, acts as a mediator between an individual investor (Investor A) and an investment brokerage firm (Firm). During mediation, Sharon acquires information concerning internal rules and operations of Firm, which information is disclosed subject to the obligation of confidentiality under the mediation rules. After completion of the mediation, Sharon is approached by another investor (Investor B) seeking representation against the same Firm. Investor B knows nothing of Investor A or the prior mediation. Investor B’s allegations concern different securities purchased through a different registered representative of the Firm. However, information about the Firm learned by Sharon during the mediation applies to Investor B’s case.
The appropriate and controlling disciplinary rules are Rule 1.9, Rule 1.6 and Rule 1.8(b). Rule 1.9 states that a lawyer who has represented a client in a matter shall not thereafter represent another person in the same or substantially related matter if the interest of that person is adverse in any material respect to the interest of the former client unless the former client consents after disclosure. Rules 1.6 and 1.8(b) prohibit an attorney from knowingly using a confidence or a secret of his client either to the disadvantage of his client or to the advantage of the attorney or a third person, unless the client consents after full disclosure.
May Sharon accept employment by Investor B against the Firm after having obtained relevant information about the Firm during prior mediation?
The legal ethics committee has previously opined that attorneys are permitted to engage simultaneously in the practice of law and related endeavors. LEO 1368. Once involved as a mediator, an attorney is prohibited from representing either party as an advocate in the subject matter of the mediation. Rules 2.10(e); LEOs 511, 544, 849 and 1759. The committee has also opined that mediation is not the per se practice of law, however, the activities involved and the subject matter to which they apply closely resemble the practice of law. LEO 1368. The legal ethics rules apply to attorneys acting in a fiduciary relationship even where no attorney-client relationship exists. LEOs 1301 (trustee), 1335 (trustee), 1442 (lender’s agent) and 1617 (executor, trustee, guardian, attorney-in-fact or other fiduciary). The Virginia Supreme Court also anticipated that mediators would be members of other professions and provided that the Court’s standards for professional responsibility would not limit the responsibilities a mediator may have under codes of ethics promulgated by any other profession to which the mediator belongs. Va. Sup. Ct., Standards of Ethics and Professional Responsibility for Certified Mediators, Para. J (March, 1993).
The Rules of Professional Conduct apply to the conduct of the attorney serving as a mediator and requires an analysis of whether the representation of Investor B is substantially related to the matter the attorney mediated for Investor A and the Firm. The committee has previously declined to define "substantially related" since it is a fact-specific inquiry requiring a case-by-case determination. LEO 1652. Although no precise test for "substantial relatedness" under Rule 1.9 has been established, the committee has previously declined to find substantial relatedness in situations that did not involve either the same facts (LEO 1473), the same parties (LEOs 1279, 1516), or the same matter (LEOs 1399, 1456). However, the federal courts have ruled on this subject using the test of whether an attorney could reasonably have been exposed to client confidences and secrets in the former matter. Rogers v. Pittston Company, 800 F. Supp. 350 (W.D. Va. 1992), aff’d. without op., 996 F.2d 1212 (4th Cir. 1993). It is not necessary to demonstrate that confidences were actually received by the attorney, since such a standard would place an unreasonable burden on the moving party. Id. at 353, citing Westinghouse Elec. Corp. v. Gulf Oil Corp., 588 F.2d 221, 224 (7th Cir. 1978). Where matters are determined to be substantially related, and there was a reasonable chance that the attorney received confidences in the first matter, an irrebuttable presumption arises that confidences were exchanged. Id. at 353, citing Duncan v. Merrill Lynch, 646 F.2d 1020, 1028 (5th Cir. 1978), cert. denied, 454 U.S. 895, 70 L. Ed. 2d 211, 102 S. Ct. 394 (1981).
A confidence refers to information protected by the attorney-client privilege under applicable law. A secret is defined as other information gained in the professional relationship that the client has requested to be held inviolate or the disclosure of which would be embarrassing or would be likely to be detrimental to the client. Rule 1.6 (a). In the instant case, the mediator learned information about the internal rules and operations of the Firm having a bearing on the quality of the Firm’s supervision of its agents. This information was disclosed by the Firm subject to the confidentiality requirement under the mediation rules. See, Va. Sup. Ct., Standards of Ethics and Professional Responsibility for Certified Mediators, Para. F(1)(b) (March, 1993); Va. Code Ann. Section 8.01-581.22. It is clear that the Firm would not want any information disclosed under a confidentiality requirement used against it on behalf of a future claimant, particularly when it may be detrimental to the Firm’s defense of another claim.
Since the attorney received confidences of the Firm during the mediation with Investor A, it is necessary to determine if the nature of the confidence is sufficient to merit the attorney’s disqualification. Mere familiarity with a corporation’s workings or personality of its representatives is not enough, when standing alone, to disqualify an attorney where it cannot reasonably be said that in the course of the former representation the attorney might have acquired information related to the subject of the present litigation. Chantilly Constr. Corp. v. John Driggs Co., 39 Bankr. 466 (Bankr. E.D. Va. 1984).
In this case, the information disclosed during the mediation was specifically given subject to the mediator’s duty to keep it confidential and it involves the same subject matter at issue in Investor B’s case. Therefore, the matters are "substantially related" and the attorney is precluded from undertaking representation in Investor B’s case. Confidentiality is critical to maintaining a mediator’s ability to work impartially and neutrally with both parties to resolve their differences. Similarly, the confidentiality required of attorneys under Rule 1.6 also exists to encourage complete candor and truthfulness between attorneys and their clients without fear of later repercussions. Moreover, the confidentiality statute for mediators (Va. Code § 8.01-581.22) specifically prevents the use of information disclosed and used during mediation from subsequently being used in litigation between mediating parties. Therefore, it would be improper to permit the same attorney to use this information against a party on behalf of a future client simply because the attorney acquired the information while serving as a mediator when the attorney would not be permitted to use it if it had been acquired while the attorney was serving as an advocate. See LEO 1684.
The Rules of Professional Conduct permit the consent of a client after full disclosure to cure this conflict. However, be aware that there are circumstances in which consent may be withdrawn at a later time. LEOs 1354 and 1652; Commercial & Sav. Bank v. Brundige, 5 Va. Cir. 33, 34 (1981).
D. Gary Greene - Personal Injury. Gary Greene a personal injury lawyer, approached you for ethics advice concerning his proposed fee agreement for Med Pay cases and wants to know which of three forms of payment, if inserted in the proposed fee agreement, is ethically acceptable. The three forms of payment, only one of which will be adopted by his law firm for inclusion in its retainer agreements are:
(a) a Ten Percent (10%) Administrative fee charged to the client consisting of Ten Percent of any medical expense proceeds collected by the firm on the client’s behalf;
(b) a flat fee based on the estimated actual cost of having a paralegal assist the client; or
(c) an hourly fee based on the paralegal’s standard hourly rate of $65.00.
Gary proposes to insert one of these three payments provisions into the following paragraph of the retainer agreement:
"Med Pay: In addition to your personal injury claim, you may be entitled to reimbursement of your medical expenses under a medical expense reimbursement provision of your automobile insurance policy, or any other applicable policy. Very often, the application process for this reimbursement is ministerial and payment is automatic. You are encouraged to apply for and receive those funds without the assistance of this office. In the event you desire the firm to collect for you those funds: [INSERT EITHER A, B OR C AS LISTED ABOVE]
In the event it becomes necessary to appeal any denial or partial denial of benefits under a med pay provision, then the firm will charge a total amount of 33 1/3% of any monies collected on your behalf after an appeal is initiated, whether collected by settlement, compromise or litigation."
Please advise Gary which, if any, of the three proposed insertions is acceptable under the Code of Professional Conduct. Only one of the proposed forms of payment will be offered to the client and the client will not have the option of selecting which of the three forms of payment he or she desires.
The appropriate and controlling ethical standards are Rules 1.5 (a), (b) and (c). Rule 1.5(a) states that "[a] lawyer’s fee shall be reasonable." Rule 1.5(b) states that "the lawyer's fee shall be adequately explained to the client." Rule 1.5(c) allows that:
A fee may be contingent on the outcome of the matter for which the service is rendered, except in a matter in which a contingent fee is prohibited by paragraph (d) [criminal and domestic relations cases]. A contingent fee arrangement shall state the method by which the fee is to be determined, including the percentage or percentages that shall accrue to the lawyer in the event of settlement, trial or appeal, the expenses to be deducted from the recovery and whether expenses are to be deducted before or after the contingent fee is calculated. Upon conclusion of a contingent fee matter, the lawyer shall provide the client with a written statement stating the outcome of the matter and, if there is a recovery, showing the remittance to the client and the method of its determination.
In LEO 1461, the legal ethics committee considered the propriety of charging a contingency fee in the collection of medical payments under standard medical reimbursement provisions of insurance policies such as the ones to which the above fee agreement would apply. The committee opined that it is improper to charge a contingency fee in purely ministerial cases. Ordinarily Med Pay cases are purely ministerial. While the facts presented in Gary’s situation are somewhat different from those presented in LEO 1461, that opinion appears controlling as to the ten percent administrative fee.
Though denoted an administrative fee, the fee of 10% of all med pay funds recovered is still a contingent fee raising the same issues and concerns addressed in LEO 1461. In some instances, such a fee may well exceed any reasonable overhead incurred by the law firm in collecting med pay proceeds.
An attorney charging a contingent fee for collecting medical expense payments may fail to consider the elements necessary to determine a proper fee and the reasonableness of a fee listed in Rule 1.5 (a). The primary justification for a contingent fee is that it allows a client an opportunity to seek justice without having to spend substantial amounts of his own resources to cover legal fees. A second factor justifying a contingent fee arrangement is that the attorney assumes some risk of loss in earning no fee at all. If there is no risk of loss in a proceeding, it would ordinarily be improper to charge a percentage fee on a contingency of recovery basis. Therefore, the ten percent administrative fee which Gary proposes at insertion (a) of the above proposed fee agreement would clearly be improper. LEO 1641.
However, a fee calculated pursuant to an hourly rate or a flat fee similar to examples (b) and (c) would not be per se improper provided that these payment provisions include appropriate language indicating that all paralegal activity will be under the supervision of an attorney in the law firm. See Rule 5.3.
E. Contacting Plaintiff’s Treating Physician. As plaintiff’s counsel, you learn that defense counsel, or a legal assistant at defense counsel’s direction, during the course of a pending personal injury action, contacts ex parte (by phone or in writing), the plaintiff’s treating physician, without the consent of the plaintiff/patient, to advise the treating physician that:
a. the attorney represents the patient’s adversary in the lawsuit to which the physician’s patient is a party;
b. the physician will soon be served with a subpoena duces tecum for the patient’s medical records;
c. the subpoena (which has not yet been issued) will request the physician to produce the records at the defense attorney’s office at a specific date and time;
d. if the doctor has any questions, please do not hesitate to contact the lawyer or his paralegal at the given number.
You now question the ethical propriety of the defense counsel’s unauthorized ex parte communication with your client’s treating physician, in advance of the physician’s receipt of the subpoena, to the extent that such contacts might foster or encourage ex parte contact between the physician and attorney in violation of Virginia Code § 8.01-399, as amended and effective July 1, 1993. You are also concerned that such communication might cause the physician to produce the patient’s records before the return date on the subpoena and before the patient’s attorney can file or be heard on a motion to quash the subpoena, or move the court to require that the records be returned to the Clerk’s Office, pursuant to Va. S. Ct. R. 4:9(c), so that the patient’s attorney may withdraw them for copying.
The pertinent statutory provision is Va. Code § 8.01-399(D) which states:
"Neither a lawyer, nor anyone acting on the lawyer’s behalf, shall obtain, in connection with pending or threatened litigation, information from a practitioner of any branch of the healing arts without the consent of the patient except through discovery pursuant to the Rules of the Court as herein provided."
Has defense counsel violated the Rules of Professional Conduct?
The appropriate and controlling rules are Rules 3.4 (d) and 3.5 (f) prohibiting an attorney from intentionally violating any established rule of procedure or evidence, or engaging in conduct intended to disrupt of the proceedings.
The Legal Ethics Committee had previously opined in LEOs 204, 1042, 1158 and 1235 that the ex parte communication by defense counsel with the plaintiff’s treating physician in order to obtain factual information as to the patient’s treatment, physical condition, and anticipated future damages was not improper, provided such communication does not violate the Rules of Court or trial court rulings regarding discovery. These prior opinions were issued well before the 1993 amendment to Va. § 8.01-399 which now prohibits an attorney from obtaining nonconsensual ex parte informal discovery of information from an adversary’s treating physician. Those LEOs therefore, have been overruled by this material change in the law regarding discovery.
Given the cited statute, it would be improper for an attorney to obtain information from an adverse party’s treating physician in violation of § 8.01-399(D). Such conduct would violate the cited disciplinary rule. See e.g., ABA Formal Opinion 93-78 (lawyers must abide by statutes prohibiting unauthorized ex parte communications with a party’s treating physician); Harlan v. Lewis, 982 F.2d 1255 (8th Cir. 1993) (lawyer sanctioned for violating Arkansas law prohibiting unauthorized ex parte communications between defense counsel and a nonparty treating physician).
It appears that the ex parte contacts with the plaintiff’s physician initiated by defense counsel, or defense counsel’s legal assistant, were intended to provide information, and as a courtesy, rather than to obtain information from the physician. As a legal issue, counsel has not violated the statute as a result of these communications. Whether the communications or any similar contacts between a lawyer or his staff and a practitioner of any branch of the healing arts constitute a violation of § 8.01-399 is a question of law rather than ethics. LEO 1639.
After LEO 1639 was issued, the General Assembly amended Va. Code § 8.01-399 (D), effective July 1, 1998, to provide that the following communications do not violate the statute:
Contact between a lawyer or his agent and a nonphysician employee or agent of a practitioner of the healing arts for any of the following purposes: (1) scheduling appearances; (2) requesting a written recitation by the practitioner of handwritten records obtained by the lawyer or his agent from the practitioner, provided that the request is made in writing and, of litigation is pending, a copy of the request is provided simultaneously to the patient or his attorney; (3) obtaining information necessary to obtain service upon the practitioner in pending litigation: (4) determining what patient records the practitioner possesses in order to summons records in pending litigation; (5) explaining any summons which the lawyer or his agent caused to be issued and served upon the practitioner; (6) determining when records summoned will be provided by the practitioner or his agent; (7) verifying dates the practitioner treated the patient, provided that if litigation is pending the information obtained by the lawyer or his agent is promptly given, in writing, to the patient or his attorney; (8) determining charges by the practitioner for appearance at a deposition or to testify before any tribunal or administrative body, or (9) providing to or obtaining from the practitioner directions to a place to which he is or will be summoned to give testimony.
F. Greta Switch. Attorney Greta Switch was a partner in Firm D when she interviewed Jeannie Lewis and drew her will, which was subsequently signed by Jeannie, with Firm D employees, Will and Sally, witnessing the signing and attesting to Jeannie’s sound mind and disposing memory. Betty, also an employee of Firm D, notarized the will. Greta has since left Firm D.
Several years later, Jeannie died. Suit has been filed challenging the validity of Jeannie’s will, and the beneficiaries have been named as defendants. Plaintiff claims undue influence by the defendants and that Jeannie lacked testamentary capacity. Defendants/beneficiaries have come back to Firm D and hired Sally, the associate who witnessed the will, to represent them in this action. In reviewing the matter, Sally determines that it is likely that Greta will need to be called as a witness for the defense to testify concerning her interview with Jeannie. Sally also realizes that Will, who is still employed with the firm, and Sally, herself, will need to be called to testify concerning Jeannie’s mental capacity at the time of the execution of the will.
The applicable rule is Rule 3.7(a) which states that:
A lawyer shall not act as an advocate in an adversarial proceeding in which the lawyer is likely to be a necessary witness except where: (1) the testimony relates to an uncontested issue; (2) the testimony relates to the nature and value of legal services rendered in the case; or (3) disqualification of the lawyer would work substantial hardship on the client.
Rule 3.7 personally disqualifies the lawyer who will testify. Unlike its predecessor, DR5-102(a), Rule 3.7 does not disqualify the other attorneys in the firm so long as they are not otherwise precluded from doing so by Rules 1.7 or 1.9 (See Rule 3.7(c)). The result for Sally is that she cannot take on this representation, but another attorney in the firm can serve as counsel and she can go forward as a necessary witness.
The facts that the will was drafted by a former partner of Firm D and that former partner will likely also be a material witness, will not impede the firm from representing the beneficiaries because the position of the beneficiaries is not to challenge the will or challenge the former partner’s work or to take an adverse posture to the former client, but rather, to see that the will is upheld and to prove the client’s testamentary capacity. See Rules 1.9 and 1.7. See also LEO 1668. Neither does the fact that a current staff employee may also be a witness prevent the firm from going forward with the representation. Id. The firm may want to consider whether representing the beneficiaries in this matter and all the necessary witnesses being employed or somehow associated with the firm and the drafting of the will at issue is in any way detrimental to the client(s). That is, these witnesses will be called to advance their employer’s/former client’s position at trial. Impeachment of such witnesses for bias can be expected and if their credibility would be so damaged that their testimony is disbelieved, it may be in the client’s interest to consider independent counsel.
G. William Britt. Lawyer William Britt has been engaged by an insurance company on an hourly basis to defend civil claims brought against the company's insureds. Insured Fast Eddie is charged with running a red light while speeding, bearing to the right, and hitting a pedestrian at the edge of the curb. In conference, Eddie tells Britt that he knew and hated the pedestrian. Without remorse, Eddie confesses that he deliberately and successfully hit the victim with his car. He then tells Britt that at the trial of the traffic charge, he testified under oath that he was momentarily inattentive when he ran the red light and hit the pedestrian. He also testified that he did not know the victim and was "deeply sorrowful" that the "accident" had occurred.
A lawyer who receives information clearly establishing that his client has, in the course of the representation, perpetrated a fraud related to the subject matter of the representation upon a tribunal must reveal the fraud. Information is only clearly established, however, when the client acknowledges to the attorney that he has perpetrated such a fraud. Before revealing the information, the lawyer shall request that his client advise the tribunal of the fraud. Rule 1.6(c)(2)
1. What are Attorney Britt's ethical duties?
If he did not represent Eddie in the traffic matter, the information Eddie has disclosed is a secret as to a past crime, committed outside the parameters of Britt's representation of Eddie, and thus may not be revealed. A lawyer has an ethical obligation to guard the confidences and secrets of his client, including communications about past crimes which have been committed. Rule 1.6. The underlying principle is that a client must feel free to discuss whatever he wishes with his lawyer. Rule 1.6, Comment  and . If, however, Britt represented Fast Eddie during the trial of the traffic charge, and assuming he was then aware of Eddie's actual intent in hitting the pedestrian, Britt would be required to reveal the fraud to the court, after first asking Eddie to personally reveal the fraud. Rule 1.6(c)(2); LEOs 200, 341, 350, 390, 444, 506, 693, 699, 727, 730, 1074, 1093, 1140, 1272, 1331, 1362, 1367, 1378, 1451, 1650.
2. Does Britt, at this point, have any obligation to withdraw from representation?
3. Suppose Eddie indicates that he will deny both that his act was intentional and that he told Britt it was. He also indicates that he will deny having committed perjury in traffic court and will resist any attempt by his lawyer to withdraw from representation. He will testify at the civil trial consistent with his testimony in traffic court. What are Attorney Britt's options?
If Fast Eddie indicates that he intends to perjure himself again during the course of Britt's representation of him, Britt is required to reveal the intended crime and the information necessary to prevent it from occurring, after first urging him to abandon his attempt. Since the intended crime entails perjury, after revealing Eddie's intent, Britt must move the court to permit him to withdraw as counsel. Rule 1.6(c)(1); Rule 1.16 (b); LEOs 542, 727, 833, 929, 965, 983, 1087, 1140, 1355, 1362.
You are a litigator handling a relatively small case. Your adversary has a justified reputation for being too aggressive, and all of your settlement offers have been rejected. You believe that your adversary is not passing your settlement offers along to her client.
(a) May you call or write your adversary's client directly? NO
(b) May you send your adversary a settlement proposal and a copy of the letter to her client? NO
(c) May you instruct your client to call the other client directly? NO
(d) May you suggest that your client call the other client directly? NO
(e) If the adverse party consents to your talking with him, is such communication permitted without the adverse party's lawyer's consent? NO
Under Rule 4.2, a lawyer cannot
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 do so.
The Ethics Committee ("Committee") takes this rule very seriously, and applies it with surprising strictness.
(a) The general rule would prohibit this communication. See LEO 1524; LEO 687. In LEO 1431, the Committee held that a lawyer could not communicate directly with an adversary, even if the adversary was a lawyer acting as a bankruptcy trustee. More recently, in LEO 1525, the Committee held that a lawyer representing a tenant in a landlord-tenant dispute who was unsuccessful in having opposing counsel return telephone calls may not even leave a message on the landlord's voice mail.
(b) In LEO 523, the Committee held that a lawyer could not even send copies of pleadings to his adversary's client, even if the lawyer believed that the other client was being misinformed. See also LEO 1323 (a prosecutor may not, without the defense lawyer's consent, send the defendant a copy of a letter the prosecutor sends the defendant's lawyer, even if the prosecutor believes that the lawyer has not communicated a plea agreement offer to the defendant); LEO 501.
(c) In LEO 233, the Committee held that a lawyer could not instruct a client to communicate with an adverse party without obtaining the other party's lawyer's consent.
(d) This is a closer question, but probably would be governed by LEO 233 (discussed above). It would be a more difficult question if the lawyer told the client: "I cannot instruct or suggest that you call your adversary, but I also cannot stop you."
(e) In LEO 1326, the defendant in a personal injury action is an uninsured motorist. Counsel (A) has noted for the uninsured motorist carrier and has filed an answer in the name of the carrier only. Counsel A has also indicated his intention at trial to identify himself as counsel for the defendant/uninsured motorist and has advised counsel for plaintiff, Counsel B, that Counsel B cannot contact defendant directly, but must communicate through Counsel A only. In this opinion the Committee found that if a determination was made that an attorney-client relationship did exist between defendant and Counsel A, then Counsel B would be restricted from communicating with defendant without Counsel A’s consent. The actual determination of whether the attorney-client relationship existed, the Committee held, was a legal question beyond its purview.
You are representing the wife in a bitter custody battle. Although your client has repeatedly told you that her former husband has abused her two children when they have been in the former husband's care, you did not believe her until yesterday. After you saw bruises on the children and interviewed them in some detail, it is now beyond question that the former husband abused both of his children while they were in his care last weekend.
Must you report the former husband's child abuse?
A specific Virginia law requires that certain people report child abuse. Va. Code § 63.1-248.3. The law does not include lawyers among those with a duty to report the abuse.
Therefore, the best answer to this hypothetical is NO.
You represent an employer defending a sexual harassment suit. During the course of discovery, you learn that the plaintiff/employee habitually stole office supplies from your client. Your client is outraged that she would be sued by someone who has stolen from the company, and she also sees this as providing some "leverage" to work out a favorable settlement of the sexual harassment claim. Your client has suggested that you threaten to report the thefts to the authorities if the case does not settle.
May you threaten to report the plaintiff/employee's thefts unless she accepts your latest settlement offer?
Rule 3.4(i) prohibits threatening or presenting criminal charges "solely" to gain an advantage in a civil matter. Since every citizen presumably has an interest in upholding the law, one might suspect that there is always another reason to report possible criminal conduct -- meaning that a report would never be made "solely" to gain an advantage in a lawsuit.
The Ethics Committee has struggled with this issue. For instance, in LEO 1635 (February 7, 1995), a company officer (who was also a lawyer) tape recorded a telephone conversation he had with a terminated corporate employee. The Committee indicated that such conduct was improper. It concluded that the officer's activity "may" require reporting. However, the Bar cautioned that the reporting lawyer must be "vigilant" to avoid such reporting "solely to obtain an advantage in a civil matter" (without offering any guidance on how to determine as a factual matter whether gaining an advantage was the "sole" reason for reporting the other lawyer).
More recently, in LEO 1646 (September 8, 1995), the Committee indicated that one lawyer's report of another lawyer's possible misconduct would be "rendered suspect" if it were made during the pendency of a related malpractice action. The Committee added the comment that determining whether the reporting lawyer's motives were improper "requires a factual case-by-case determination." See LEO 1555 (October 20, 1993) (finding that a lawyer's letter alleging that a witness perjured herself was "suspect as long as there is a possibility that an advantage to the employer [the lawyer's client] would result in a simultaneously pending civil suit").
Obviously, it is unclear exactly how one can determine whether the reporting of possible criminal conduct by a non-client is motivated "solely" by the hope to gain an advantage in a civil matter. Nevertheless lawyers should heed the Committee's repeated warnings that reporting misconduct during the pendency of a civil suit would be "suspect."
Therefore, the best answer to this hypothetical is NO.
Two weeks ago you settled a large intellectual property case on the courthouse steps. You attribute the favorable settlement in large part to the impressive work and testimony by your expert. You were out of town when the plaintiff's lawyer deposed your expert, so one of your partners defended the deposition. She prepared a summary of the important parts, but you did not have a chance to read the entire deposition until after the case settled.
When you read the deposition, you realize that the expert provided false deposition testimony about the number of times you and he met to discuss his opinion (you actually met five times, but he testified that he met with you only once). When you confront the expert, he acknowledges the false deposition testimony. He explains that he "got caught up" in the case and did not want to make it appear that you had influenced his opinion -- so he "downplayed" the number of times you met.
Must you report the expert's false deposition testimony?
This hypothetical raises two questions.
The first is whether deposition testimony amounts to "fraud upon a tribunal" for purposes of the reporting mandate of Rule 3.3(d). The Bar has repeatedly indicated that false deposition testimony amounts to fraud on a tribunal. LEO 1650 (September 8, 1995). Accord LEO 1451 (March 13, 1992).
The second question is whether there is a "materiality" requirement underlying the mandatory obligation rule. The Bar has indicated that there is a materiality requirement. In LEO 1650 (September 8, 1995), the plaintiff had settled a case based at least in part on the plaintiff's expert's deposition testimony. After the settlement, lawyers for both sides learned that the expert had lied about his professional qualifications "that formed the basis of his expert opinion." The Committee reiterated its historic position that false deposition testimony is fraud on a tribunal. However, the Bar indicated that not every false statement made by a deposition witness amounts to "fraud upon a tribunal." The Committee explained that disclosure of false deposition testimony was required only "to prevent a judgment from being corrupted" by the "unlawful conduct." The Committee indicated that if the false testimony about the plaintiff's expert's qualifications was "material to the opinion rendered by such expert" and therefore "corrupts the opinion," the fraud must be revealed to the tribunal "regardless of whether the case proceeds to trial or is settled."
The Committee repeated this explanation in LEO 1663 (April 1, 1996). In that situation, a lawyer representing a wife in a domestic relations case learned that someone had forged the husband's signature on a motion. The Committee explained that the "determinative factor" in assessing the duty to disclose a third party's fraud on a tribunal is:
whether disclosure is necessary to prevent the court's judgment from being corrupted by a party's unlawful conduct.
LEO 1663 (April 1, 1996).
The Committee has given no guidance for determining whether a matter is material enough to "corrupt" the court's judgment. In this case, a good argument could be made that the number of meetings is immaterial. Although your adversary might argue that any false testimony is material enough to "corrupt" the judgment, so far the Bar has eschewed such a per se rule. However, the best answer to this hypothetical is YES.L. Settlement of Personal Injury Claim—Indemnification of Insurance Company for Unreimbursed Medical Liens A lawyer represents a plaintiff in a personal injury suit. The defendant is represented by her insurance company’s staff counsel. After all other aspects of a settlement offer were negotiated, the defendant’s lawyer notified the plaintiff that the insurance company requires plaintiff’s lawyer to agree to indemnify the insurer against liens in the event that they are not paid from the settlement proceeds or the plaintiff. Plaintiff’s lawyer refuses to agree to indemnify the insurer, arguing that to do so would violate the Rules of Professional Conduct by making him personally responsible for the debts of his client. The defendant’s lawyer refuses to finalize the settlement without this agreement and is willing to proceed to trial if plaintiff’s lawyer refuses to accept the indemnification provision. 1. May a plaintiff’s lawyer agree to indemnify a defendant and/or his insurer for any third-party lien claim against settlement proceeds received by the plaintiff? NO. 2. May the defendant’s counsel request or demand such an indemnification agreement as a condition of settlement? NO. DISCUSSION: This situation was presented in LEO 1858. The Committee agreed that the plaintiff’s lawyer may not agree to indemnify the defendant’s insurer for future claims resulting from the plaintiff’s failure to pay liens which he was obligated to pay from the settlement proceeds. First, the proposed agreement violates Rule 1.8(e). Because the indemnification agreement would obligate the lawyer to pay the client’s debts, the agreement constitutes improper financial assistance to the client. Secondly, the proposed agreement creates a conflict of interest between the plaintiff and his lawyer pursuant to Rule 1.7(a). Because the insurer will not agree to the settlement in the absence of an indemnification agreement, the lawyer’s personal interest in avoiding liability for the debts of his client may be at odds with his client’s desire to settle the case. The lawyer cannot reasonably be expected to provide an objective evaluation of whether the settlement is in his client’s best interests when a settlement of any amount could result in personal liability for the lawyer, while any outcome of trial ensures that the lawyer will not be personally liable. It is a violation of Rule 8.4(a) for the insurer’s lawyer to include this provision in settlement agreements. According to the hypothetical, the insurer, through its counsel, refuses to offer a settlement that does not include this provision. The insurer’s lawyer’s insistence that the plaintiff’s lawyer enter into this indemnification agreement, as a condition to settlement, is an inducement to the plaintiff’s lawyer to violate Rules 1.7(a) and 1.8(e).
A. Tom Davis (Trusts and Estates). Bertha and Harry Piel appear at Tom Davis' office on Monday to have their wills drawn. During the course of his meeting with them, Harry directs Tom to leave everything to Bertha, if she survives him, otherwise to the children. Bertha gives Tom similar instructions as to her estate in that she directs him to leave everything to Harry, if he survives her, otherwise to the children. Tuesday morning Harry calls and directs Attorney Davis to assist in making an inter vivos gift of a substantial sum of money to his mistress. Therefore, on his death there will not be nearly the estate that his wife might have inferred from the joint meeting with Tom on Monday. He further informs Tom that he is terminally ill and does not expect to live more than another six months.
The controlling rules are found in Rule 1.6, Comment  and Rule 1.7. Rule 1.6, Comment  provides that there is no time limit to the period in which a lawyer is required to preserve his client's confidences and secrets; such preservation survives the termination of the attorney/client relationship and, beyond that, survives the death of the client. Rule 1.7 states that a lawyer shall not represent a client if the representation of that client will be or is directly adverse to another existing client, or if the lawyer’s relationship with the existing client would materially limit the representation of the new client except (1) if the lawyer reasonably believes that the representation will not adversely affect the relationship with the other client, and (2) if each consents to the representation after consultation.
1. Is it proper for the lawyer to prepare both wills?
It is not improper for an attorney to represent both husband and wife in the preparation and execution of reciprocal wills if the attorney reasonably believes that his representation will not adversely affect the relationship with the other; and, if both consent to the dual representation after consultation (i.e., full disclosure of the possible effect on the attorney's independent professional judgment on behalf of each). Rule 1.7; LEOs 708, 728. However, under the circumstances of this hypothetical, the lawyer should refuse to assist Harry because Harry’s plan is directly adverse to the interests of Bertha, a former client, and the matters are substantially related. Rule 1.9. Davis cannot cure this conflict because he is not a liberty to disclose what Harry intends to do and therefore Bertha cannot waive the conflict. See answer to Question 2.
2. What are the lawyer's duties to Harry?
The lawyer is required to maintain the client's confidence, may not inform the wife of any information divulged individually by the husband, and may not use the husband's secret to the disadvantage of the husband for the advantage of a third person. Rule 1.6(a). The lawyer's duty to maintain the husband's confidences survives even the death of the husband unless, in the attorney's professional judgment, to reveal the secret would be in the best interest of the deceased client who would have wanted the information revealed if he were alive. LEOs 1207, 1296. However, an argument could be made that Rule 1.6(b)(3) permits (but does not require) an attorney to reveal information about a client’s fraudulent conduct affecting a third party. In this situation, if the Husband’s conduct is clearly fraudulent, the attorney may reveal the Husband’s intent to the Wife if he believes it is necessary.
3. What are the lawyer's duties to the wife?
It is ethically impermissible for the lawyer to reveal the contents of the client's will to anyone including another client whose interest may be affected by that will. LEO 378. If the lawyer does not reasonably believe he is able to provide adequate representation to both husband and wife, he should withdraw from representing both. Rule 1.7.
B. Missing Client Trust Funds. A law firm has in trust monies that belong to clients whom the firm is unable to locate. Virginia Code § 55-210.1 permits unclaimed funds to be turned over to the Commonwealth after five years of not being able to locate the funds’ owner. See LEOs 832, 1644, 1673. However, the firm would like to hire an investigator to try to locate the clients. Additionally, the law firm would like to pay for the investigator from the monies held in the trust.
May the law firm use monies from a trust to locate the owner of those monies?
Rule 1.15 governs the handling of trust funds by a lawyer. The legal ethics committee has previously opined that it is not improper for an attorney, who has maintained in his trust account funds for clients whom the attorney has no means of contacting, to dispose of the funds through The Uniform Disposition of Unclaimed Property Act. See LEO 832 and Va. Code § 55-210.1 et seq. The committee has also opined that it is not improper for an attorney to deduct from a client’s funds held in trust the reasonable costs incurred for postage and telephone calls to locate that party so long as the amount of money in trust justifies the amount expended. See LEO 1644.
Rule 1.15 (b)(1) requires that an attorney promptly notify a client of the receipt of the client’s funds or property. Thus, it is not improper to use monies from a trust to pay an investigator to locate promptly clients whose whereabouts are unknown. However, the amount paid out of the trust to an investigator must be reasonable and must not deplete the client’s funds held in the trust itself, lest the purpose of finding the client be defeated. Additionally, the reasonableness test should also be applied by the law firm evaluating the chance that the client will be located through this method. Since an attorney unable to locate clients with unclaimed trust account monies must turn the monies over to the Department of Treasury, the attorney may also use a reasonable amount of the trust monies to locate clients to give them the money that is in the trust. LEO 1673; see also LEOs 818 and 832 and Va. Code § 55- 210.1 et seq.
Furthermore, the law firm must explain to the located client why and how any of the funds were used in the search, pursuant to Rule 1.5 (a) which requires that a lawyer’s fee shall be reasonable and adequately explained to the client. Note that the use of an investigator as a method of locating a client is not required. Due diligence is all that is required of an attorney trying to locate a client. See LEO 1644 and § 55-210.2 Va. Code. But using a reasonable amount of trust monies to find clients would not be improper.
C. Harry Sharp. Harry Sharp represented the buyer of a home in an exclusive subdivision. At the closing, the buyer pointed out that the seller had not quite completed construction. The home, however, was habitable, so, rather than postpone settlement, the buyer and seller agreed to escrow $15,000 of the sales price and asked Harry to serve as the escrow agent. Harry agreed, with the understanding that, upon satisfactory conclusion of construction, he would disburse the $15,000 to the seller/builder.
Several weeks later, the seller advised Harry that he had completed construction and asked for $15,000. To his surprise, however, the buyer asserted that the seller had not finished the work in satisfactory fashion and that an independent appraisal revealed that it would cost $20,000 to complete the home. The buyer then demanded payment of the $15,000 and asked Harry to file suit for an additional $5,000.
A lawyer must promptly pay or deliver to the client or another as requested by such person the funds, securities, or other properties in the possession of the lawyer which such person is entitled to receive. Rule 1.15 (b)(4). Where there is a dispute as to such an entitlement, the funds may not be disbursed until the dispute is resolved. A lawyer may not accept or continue employment if it becomes obvious that he will be or ought to be called as a witness, except in certain limited circumstances. Rule 3.7. The roles of an advocate and of a witness are inconsistent and cannot be reconciled. See Id. at Comments  and .
What are Harry's obligations? To whom?As an escrow agent, Harry must determine whose funds he holds and at what point others become legally entitled to the funds. He is required to comply with any requirements placed on him by the owner of the funds placed in escrow. Rule 1.15 (a).
The terms of the escrow release, “satisfactory conclusion of construction,” requires legal determination which, absent an agreement by the buyer and seller as to the satisfactory conclusion, must be made by a court in a legal proceeding. Pending that determination, Harry may deposit the funds with the court. Va. Code Ann. §8.01-364; LEOs 813, 1335, 1373.
Since Harry represented only the buyer in the transaction, he may represent the buyer in a suit against the seller under ordinary circumstances. LEOs 414, 656. However, since he will likely be called as a witness as to a matter in dispute in any such suit, Harry ought not to accept employment representing the buyer, unless his refusal to do so would work a substantial hardship on the buyer because of the distinctive value of the lawyer as counsel in the particular case. Rule 3.7 (a); LEOs 462, 553, 976, 1136, 1240, 1252, 1301.
D. Perry Bradley. Theresa and Jerry Blanton were injured while riding in a car driven by Jerry. Both she and her husband filed suit against the driver of the other car and Theresa's counsel has also named her husband as a defendant. Perry Bradley, a newly admitted lawyer, was employed on an hourly basis by Acme Insurance Company, the Blantons' insurance carrier, to defend Jerry. The insurance company's claims manager has seen his budget severely reduced and he tells Perry that he must be austere in his defense approach. Although Perry believes that some of his defense efforts should be concerned with issues or claims not covered by the policy, he is told by the claims manager that his efforts should concentrate primarily, if not entirely, on insurance-covered claims and not on claims such as intentional conduct, which is not covered. Perry has advised Jerry that he intends to file a motion for summary judgment. After learning what that motion was, Jerry instructs Perry not to file it. "Perry," Jerry says, "Theresa was really hurt in that accident and maybe I was somewhat at fault. I had just finished working two shifts at the plant when the accident happened. I was tired; not as alert as I should have been."
Notwithstanding Jerry's statement, all independent evidence indicates that Jerry Blanton was not at fault. Perry is convinced he can prevail on behalf of Jerry by filing a motion for summary judgment.
A lawyer may not permit an organization which employs or pays him to render legal services for another to direct or regulate his professional judgment in rendering such legal services. When so employed, the lawyer's client is the person for whom he is rendering legal services and his loyalty may not be divided between the organization employing him and the actual client, nor may he reveal his client's confidences and secrets to the employing organization.
1. What duty does Perry have to the insurance company?
Although the insurer has employed Perry to defend the insured, Jerry, Perry may not permit Acme Insurance Company to direct or regulate his professional judgment in representing Jerry. Perry's loyalty is to Jerry only. Rules 1.8(f), 5.4(c); LEO 598, 1723. Unless Perry uncovers fraud or collusion, he may not reveal to the insurance company any information gained from Jerry. Rule 1.6(b)(3); ABA Informal Opinion 1476 (August 11, 1981); LEOs 598, 609, 616, 1223, 1276, 1310.
2. What is Perry's duty to Jerry Blanton?
Since Perry is representing Jerry Blanton, Jerry is entitled to the loyalty of Perry and Perry's preservation of Jerry's confidences and secrets, as well as competent and zealous representation. Rules 1.1, 1.3, 1.6, 1.7(b); LEOs 598, 616, 1723. See also Norman v. Insurance Co., 218 Va. 718, 239 S.E.2d 902 (1978) (attorney hired by insurance company to defend insured is bound by same high ethical standards as if privately retained by insured).
3. What action should Perry take if the insurance company claims manager tells him not to spend any money on depositions, transcripts, legal arguments, and the like, designed to defeat the claims which are not covered under the policy?
A lawyer subjected to outside pressures and instructions as to the conduct of his representation of his client should make full disclosure of those circumstances to his client. If he or his client then believes that the effectiveness of his representation has been or will be impaired thereby, the lawyer should take proper steps to withdraw from the representation of his client, including the protection of his client's interests in the matter. Rule 1.16 (d); LEO 1723.
E. Richard Stands. Upon passing the bar examination, Richard Stands has just become employed as an associate in a ten person law firm. On his first day there, a potential client is referred to Richard by a mutual friend. He asks Richard to draw a contract for the sale of his house: an $85,000 transaction. Richard has never drawn such a contract before.
A lawyer may undertake representation only in matters in which he is competent; or in good faith expects to become competent through study and investigation, so long as such preparation would not result in unreasonable delay or expense to the client; or by associating with another lawyer who is competent in those matters. The client has implicitly consented to the lawyer's association with other lawyers within his firm; however, any association with lawyers outside the firm requires the client's consent both to the association and to any division of fees, and requires that all lawyers so associated expressly assume responsibility to the client. Under no circumstances may a lawyer limit his liability to his client for the lawyer's professional activities.
1. Can Richard ethically accept employment or should he turn it down because he is not competent to handle it?
Lawyer Stands may accept employment provided that he can act competently and demonstrate specific legal knowledge, skill, efficiency and thoroughness as is acceptable by lawyers undertaking similar matters. Lacking the requisite experience, a lawyer may accept such employment if in good faith he expects to become qualified through study and investigation, provided that such preparation does not result in unreasonable delay or expense to the client. Proper preparation and representation may require the association by Stands with another lawyer who is competent in matters such as sales contracts. Rule 1.1, Comment . Although the lawyer is required to preserve the secrets and confidences of his client, unless the client otherwise directs, a lawyer may disclose the affairs of his client to partners or associates of his firm. Thus, in the present case, Stands' association with a 10 person law firm probably gives him adequate access to other lawyers who are proficient in residential real estate contracts. Rule 1.6. If the lawyer chooses to associate with a lawyer not affiliated with his firm, he may do so only with the client's consent to both the association and any fee division. Rule 1.5 (e). The lawyer's fee for the transaction must be reasonable based upon a variety of factors including the time required; the lawyer's experience, ability, and reputation; the nature of the employment; the responsibility involved and the results obtained. Rule 1.5 (a); LEOs 381, 844, 1283, 1328, 1142, 1461, 1509, 1562, 1571, 1588, 1595, 1620, 1645.
2. Suppose the contract was for the sale of a $500,000 home rather than an $85,000 home: would there be any differences?
No. The principles of competence remain the same: the lawyer must meet the standard of sufficient legal knowledge, skill, efficiency and thoroughness of lawyers engaged in similar undertakings. However, owing to any increased difficulty and additional time involved, the fee arrangements may differ from those for the $85,000 transaction.
3. Suppose the contract was for the sale of a $50,000,000 industrial site and existing buildings on that site: would there be any differences?
The more complex nature of the transaction and the entities involved may require the new lawyer's association with more experienced lawyers. Richard probably should not accept such representation without the close supervision or direction of a lawyer experienced in the complexities of such transactions.
4. Suppose Lawyer Stands has just hung up his shingle as a solo practitioner and has been given the opportunity to handle the $50,000,000 transaction. Can he hire an experienced lawyer to work with him?
He may hire an experienced counsel who is not affiliated with his practice only with the client's consent, preferably in writing, to both the employment of outside counsel and the terms of any division of fees. Rule 1.5(c); LEOs 945, 1488.
5. If his professional liability insurance has a $5,000,000 limit, can Stands ask his client to limit his responsibility to $5,000,000?
No. A lawyer shall not limit prospectively his liability to his client for his personal malpractice. A lawyer who is associated with a professional legal corporation may, however, limit his liability for the malpractice of his associates in the corporation, but only to the extent permitted by law. Rule 1.8 (h); LEOs 638, 877, 1127, 1211, 1364, 1412, 1487, 1550.
F. Jane Tookem. You represent Jane Tookem in a divorce and prepare a lengthy separation and property settlement agreement which is later affirmed, ratified and incorporated into the final decree of divorce entered by the local Circuit Court. A dispute arises between you and Jane regarding the interpretation of the child custody and visitation and support provisions of the agreement and she fires you and decides to represent herself. Jane fails to pay your final bill for services rendered before the termination. Shortly thereafter, she meets with financial disaster and seeks protection from the bankruptcy court. You are listed as a creditor and consult her list of assets filed with the Court to determine whether you will get paid. While reviewing the file, you discover that Jane had failed to list the boat and some retirement assets she was awarded in the divorce as described in the agreement you prepared. This property settlement agreement is now a part of the Circuit Court’s order, which is not under seal, and therefore, a matter of public record. You inquire further and determine that the boat is still moored at the same marina and titled in your former client’s name. Do you advise the Bankruptcy Court of your former client’s misrepresentation since it amounts to a fraud?
No. LEOs 1643 and 1378 have nearly identical fact patterns to this hypothetical. Rule 1.6 of the Rules of Professional Conduct controls. This attorney has divided loyalties since a fee is owed and assets exist which were not disclosed and are therefore not available to pay creditors. Usually the duty to reveal a fraud on the Court outweighs other issues of client confidentiality, but in this example, the representation has ended and the current matter (bankruptcy) is not related to the earlier representation (divorce). The duty to reveal a fraud on the Court under Rule 1.6 applies only to fraud perpetrated by a current client, during the course of the representation, which is related to the subject matter of the representation.
Also, the requirement under Rule 3.3 (d) that a lawyer most promptly reveal fraud on a tribunal perpetrated by someone other than her client is overshadowed here by the duty to preserve client confidences and secrets. The duty to preserve client confidences and secrets survives the representation. Swidler & Berlin v. United States, 524 U.S. 399 (1998) (Office of Independent Counsel not entitled to attorney James Hamilton’s notes of interview with Vincent Foster, his deceased client). Comment , Rule 1.6. A document (like the property settlement agreement described) or other matter of public record may still be a "secret" if it was information gained in the professional relationship that the client has requested be held inviolate or the disclosure of which would be embarrassing or would be likely to be detrimental to the client. The revelation of Jane Tookem’s fraud on the Bankruptcy Court under these circumstances is improper.
G. John and Carol. You attempt to mediate a dispute between a brother (John) and a sister (Carol) concerning their joint ownership in a computer software company. The negotiations break down and you refrain from representing either one in the subsequent litigation that ensues. Carol’s lawyer sits next to you at your monthly local bar lunch meeting. The conversation turns to your prior work with this family and Carol’s attorney tells you that his client’s bookkeeper, sympathetic to Carol’s situation, used his computer expertise to download all the files from her brother’s home computer via modem. The bookkeeper delivered the surreptitiously obtained information on diskettes to Carol, who in turn delivered the diskettes to this attorney. Carol’s attorney explains that the activity of the bookkeeper occurred without his client’s knowledge, and that Carol was surprised when the bookkeeper showed up at her house with the diskettes. The computer diskettes contain copies of correspondence between the brother and his attorney. These documents indicate that the brother has been keeping a separate set of financial records throughout the period of this dispute involving their jointly owned business and has secreted documents related to the finances of the business at another location to keep them out of Carol’s possession. Carol is concerned that her brother John will file criminal charges against the bookkeeper if he discovers the circumstances under which the documents were obtained. Therefore, Carol insists that both the existence of the computer diskettes and the manner in which the information was obtained be kept confidential. Carol’s lawyer informs you that he has not read the documents, but it aware of their general import based upon his discussions with Carol. The diskettes have been placed in the firm’s safe until he can figure out what to do. Carol’s lawyer seeks your advice and asks:
1. May he load the computer diskettes in his computer and read the files? Is he obligated to review this information in order to competently or zealously represent Carol?
2. Should he return the diskettes to his client?
3. May he advise his client to destroy the diskettes?
4. Is he required to notify opposing counsel (John’s attorney) of the existence of these diskettes?
5. May he reveal the existence of these disks to John’s attorney?
6. If he reads the computer documents, may he ethically use the information in his representation of Carol?
A substantially similar problem was addressed in LEO 1688. The Rules of Professional Conduct still apply to an attorney who serves as a mediator. LEO 1684. Both the existence and the contents of these diskettes, as well as the circumstances regarding their acquisition, are client secrets under Rule 1.6 (a). An attorney must always seek the legal objectives of her client as part of her duty to diligently represent the client. Rule 1.3, Comment . In this instance, Carol’s objective is to protect the bookkeeper from being fired or having to defend against possible criminal charges. Therefore, the attorney need not view the contents of the diskettes in order to diligently represent this client. Since the information is a client secret, the attorney must honor the client’s instructions not to reveal it, unless its existence is evidence of an on-going crime of fraud, which would trigger an exception to this rule. No such exception exists here since the bookkeepers’ act, even if originally criminal, is not continuing.
The attorney should abide by Carol’s wishes and return the diskettes to her if she wants them. It would to be improper for the attorney to counsel Carol to destroy the diskettes, to further her original goal of protecting the bookkeeper. Note that the documents in question here are copies and not originals. If this was the only original source of this information, it would be improper to counsel Carol to destroy it.
The attorney should not reveal the existence of the diskettes to John’s attorney, since they were earlier characterized as a secret that her client desired be held inviolate. Also, should John get suspicious of this and issue a discovery request while the documents are in Carol’s attorney’s custody, the attorney must not deny the existence of the diskettes. Instead, the attorney should resist disclosure under the attorney-client privilege and move to quash any subsequent subpoena. However, if the Court orders the attorney to comply with the discovery request, then the attorney may obey the Court’s order pursuant to Rule 1.6 (b)(1) or suffer the legal consequences. See also LEOs 300, 334, 645, 967, and 1628, 1688.
It would be prudent to discourage acceptance of further information from the bookkeeper. However, should the attorney decide to view the diskettes and issue discovery requests targeting the additional financial records, the attorney must first secure Carol’s consent to avoid thwarting her original objective of protecting the bookkeeper. Given the delicate and complex nature of this scenario, it would be wise to secure Carol’s consent in writing.
H. Sara Gray. A member of your church tells Attorney Sara Gray that he has recommended her to his preacher for the purpose of drawing the preacher’s will and trust agreement. The congregant wants to pay Sara for her services without letting the preacher know. Attorney Gray decides that she will charge $750, but will bill the preacher for only $50 and will bill the balance of $700 to the congregant who came to her. She assures the member of the church that she will not disclose the arrangement to the preacher, but she also makes clear that she will not tell the member anything about what the preacher wants done with his estate.
Under some circumstances, even the fact of a client’s identity may be deemed a secret which may not be disclosed without the client’s consent or absent any of the exceptions to the rule requiring preservation of the client’s secrets. A lawyer should not accept compensation from one other than his client without the knowledge and consent of his client after full disclosure.
Is the arrangement permissible as described?
No. Absent the client’s consent, the lawyer may not reveal to the congregant that the preacher is, in fact, a client. Rule 1.6 ; LEO 1147. A lawyer may not accept compensation from one other than his client without the knowledge and consent of his client after full disclosure. Rule 1.8 (f); LEOs 385, 563, 1188, 1306, 1344, 1373, 1374, 1631.
You and two of your friends founded your law firm 10 years ago. Thanks to your hard work, you now employ 15 other lawyers. Yesterday you learned that one of your young partners has been planning to leave your firm and begin practicing at a new law firm just a few blocks away. Among other things, she has: (a) rented another office; (b) opened a bank account; (c) spoken with a few other lawyers about hiring them at her new firm; (d) called the clients with whom she works to advise them of her plans; (e) asked that they leave your firm and hire her; (f) planned to deny any intent to leave if asked by anyone else at the firm; and (g) made arrangements to take pertinent files with her when she leaves the firm.
You and your colleagues naturally resent these actions, and you have taken it upon yourself to analyze the propriety of your partner's conduct.
Has your partner acted properly in:
Renting another office?
Opening a bank account?
Calling the clients with whom she works to advise them of her plans?
Asking that the clients leave your firm and hire her?
(e) Planning to deny any intent to leave if asked by anyone else at the firm?
(f) Making arrangements to take files with her when she leaves the firm?
This hypothetical implicates two fiduciary duties lawyers owe - to their clients and to their fellow partners. While a lawyer's duties to clients obviously come first, the lawyer may not ignore the common law fiduciary duties the lawyer owes to others in the law firm.
Virginia Legal Ethics Opinions
The Virginia State Bar has issued multiple LEOs addressing these situations and the issues associated with them. As might be expected, the Bar has emphasized the client's right to be fully informed of all choices. For instance, in LEO 1332, the Bar indicated that a firm contacting clients of lawyers who had withdrawn must advise those clients of all of the choices - including retention of the departed lawyers. Similarly, the Bar held in LEO 1403 that a law firm could not prohibit a withdrawing associate from contacting the firm's clients. This theme also appears in Legal Ethics Opinion 1506, in which a law firm fired an associate and discontinued practice in the area in which the associate had specialized. The law firm recommended that all of its former clients in that area of specialization retain a new firm, and refused to provide the former associate’s new address even when asked. The Bar held that the firm acted improperly. It should have informed the clients of all possible choices, including retaining the firm's former associate. The firm should have provided its former associate's address to clients, and provided a list of clients to the former associate. In the Bar’s most recent opinion on this topic, LEO 1822, the question is raised as to whether a departing attorney must provide to the firm he is leaving copies of letters sent to clients advising of his departure and a list of clients to whom these letters were sent. The Bar opined that LEO 1556 addresses several issues regarding the provisions of employment / shareholder / partnership agreements that deter a lawyer from leaving his firm because of the imposition of payment of post-withdrawal fees to the old firm, the payment of earned but unpaid fees to departing lawyer by old firm, and other financial disincentives associated with leaving the firm. The opinion basically upholds the fundamental premise that a client should be free to choose counsel of his choice which thereby protects the autonomy of that counsel. If counsel is not free to represent clients because of a disincentive either as to his practice choices or a financial disincentive that would discourage a lawyer from accepting a representation then the fundamental premise of client’s choice is undermined. The opinion finds that it is improper to contractually obligate a departing attorney who takes clients of the firm with him to share his post-withdrawal fees collected from such clients with the old law firm. LEO 1732 further substantiates this by stating that this creates an improper financial disincentive that would have the effect of penalizing the attorney for leaving and competing with the old firm and impairs the client’s right to select counsel of his own choice. LEO 1760 takes this issue a little further to state that even though the Rules of Professional Conduct require client consent to all sharing of fees when lawyers are not in the same firm, that rule does not preclude a court order that may distribute fees with attorneys not in the same firm. See also Rule 1.5(f).In a related issue regarding client files, LEO 1757 addresses the aspect of ethical responsibilities of confidentiality to clients when a lawyer leaves a firm. The opinion reiterates the imputation of confidential client information gained during a representation or review of the client file whether or not an attorney-client relationship ensued. Any information that a lawyer is ever privy to is imputed to them and serves as a potential conflict for their entire legal career. When a lawyer leaves a firm he carries these conflicts with him and is entitled to access to client files and a client list in order to preserve the aspect of client confidences in the future. It is only through the sharing of actual client’s lists and information from his prior firm that client interests and confidences can, through conflicts avoidance, ultimately be protected.
Since a lawyer's withdrawal from the firm implicates common law duties as well as ethical duties, such matters often wind up in court. A recent New York decision presented possible scenarios in which a lawyer's fiduciary duties might be implicated. In Graubard Mollen Dannett & Horowitz v. Moskovitz, 653 N.E.2d 1179, 1181 (N.Y. 1995), a relatively small firm adopted a phase out and retirement program that encouraged partners to "institutionalize" their clients as they reached retirement age. About six years later, one of the firm's founding partners (Moskovitz) and a number of others decided to leave the firm and join LeBoeuf Lamb. Before committing to leave, Moskovitz arranged for representatives of LeBoeuf to meet with representatives of his largest client, F. Hoffman La Roche & Co. and affiliates, a worldwide pharmaceutical company.
After satisfying himself that Roche would move with him to LeBoeuf Lamb, Moskovitz announced the group's intention to leave their firm. They intended to stay for two months, but the firm locked them out of their offices one week later. The firm sued the defecting group for $10 million in compensatory damages (based on lost revenues from the Roche account), and $30 million in punitive damages. Id. at 1182.
Moskovitz moved for summary judgment, arguing that as a matter of law a lawyer's fiduciary responsibilities to his client outweigh any fiduciary duties to his partners in circumstances where the client would be best served by the lawyer leaving his firm. Id. After a lengthy appellate history, the New York Court of Appeals (that state's highest court) denied Moskovitz's motion for summary judgment. Id. at 1183-84. While remanding for a further factual determination, the court provided some -- but not much -- guidance in the delicate issue of drawing lines between the possibly countervailing fiduciary duties a lawyer owes to his partners and to his clients. The court described different ends of the "spectrum" of conduct in which a lawyer leaving a firm might engage. On one hand,
departing partners have been permitted to inform firm clients with whom they have a prior professional relationship about their impending withdrawal and new practice, and to remind the client of its freedom to retain counsel of its choice. Id. at 1183.
The court indicated that "[i]deally" such approaches "would take place only after notice to the firm of the partner's plans to leave." Id. The court then characterized the "other end of the spectrum."
[S]ecretly attempting to lure firm clients (even those the partner has brought into the firm and personally represented) to the new association, lying to clients about their rights with respect to the choice of counsel, lying to partners about plans to leave, and abandoning the firm on short notice (taking clients and files) would not be consistent with a partner's fiduciary duties. Id. at 1183-84.
Unfortunately, the court did not offer any suggestions about where the line should be drawn between these two extreme scenarios.
Some earlier cases provide more helpful guidance. In Meehan v. Shaughnessy, 535 N.E.2d 1255 (Mass. 1989), for instance, a law firm squabbled with withdrawing lawyers. The court held that withdrawing lawyers could make "logistical arrangements to establish a physical plant for the new firm" without violating any fiduciary duties. Id. at 1264. However, the court found that the withdrawing lawyers had violated their fiduciary duty by sending a "one-sided announcement" of their withdrawal and refusing to provide the law firm with a list of clients the withdrawing lawyers were contacting. Id. at 1265. The court likewise found a breach of fiduciary duty by two lawyers who had aided the withdrawing lawyers by providing lists of clients and cases they could bring with them (and eventually joining them). Id. at 1257-58. The court also implied that the withdrawing lawyers violated their duties by inducing associates to leave with them (the court did not address the issue because the law firm had not identified any "specific loss" resulting from the claimed breach -- such as the costs of retraining new employees). Id. at 1264 n.14.
One year later, another court reached the same conclusion in a somewhat similar case. In Joseph D. Shein P.C. v. Myers, 576 A.2d 985, 986 (Pa. Super. Ct. 1990), three withdrawing associates arrived at their firm at 6:00 a.m. with a rental truck, entered the offices and removed approximately 400 case files. The breakaway lawyers then wrote their clients, announced the opening of their new firm and enclosed the documents necessary for their clients to transfer the representation to their new firm. The trial court awarded $10,000 in punitive damages against each of the three breakaway associates for the wrongful removal of the files, but declined to award any compensatory damages. Id. at 986-87. The appellate court reversed, noting that the three withdrawing associates had violated their fiduciary duties by the surreptitious removal of four hundred files from Shein's offices, scurrilous statements about the Shein firm and misleading letters to clients accompanied by forms to be used by clients to discharge the Shein firm. Id. at 989. The appellate court remanded for a determination of damages, noting that the firm must be awarded a money judgment reasonably equivalent to the anticipated revenue protected from outside interference that [it] would have received pursuant to the contracts had the cases remained in [the] firm. Id. This case obviously involved conduct at the "bad" end of the spectrum, but it highlights the fiduciary duty all lawyers have to their colleagues.
In a similar case, In re Smith, 843 P.2d 449 (Or. 1992), an associate in an Oregon firm decided to leave his firm. In the next two and a half months, he met with thirty-one new clients in his office and arranged for them to sign individual retainer agreements. He did not open files for these clients at his old firm. When the associate left, he took his secretary, the files pertaining to the thirty-one new clients who had retained him and files relating to fifty to seventy-five older cases. He then sent letters to other firm clients announcing that "we have changed the name and address of our law firm." Id. at 451. The Oregon Supreme Court found this conduct egregious enough to suspend the associate for four months.
Although the answers to this hypothetical are not crystal-clear, it is possible to derive some principles from the Virginia Legal Ethics Opinions and case law.
(a) (b) It seems likely that a court or the Bar would not condemn the sort of logistical arrangements a withdrawing lawyer would have to make ahead of time -- such as renting space and opening a bank account.
(c) (d) The Virginia State Bar and courts apparently have not indicated when a withdrawing lawyer may ethically contact firm clients. However, ABA Informal Opinions 1457 (1980) and 1466 (1981) state that a lawyer leaving a firm should not contact the firm’s clients about switching their representations until after the lawyer leaves the firm. Similarly, the ABA/BNA Lawyers’ Manual on Professional Conduct, at 91:720-721 (1993) indicates that the following steps "are generally in harmony with the ethics rules and opinions."
(1) Use a joint announcement of the separation of practices if that is possible.
(2) Otherwise, whether you are a partner or an associate, wait until after you leave the firm before contacting prospective clients.
(3) Then use the mail, not the telephone or personal visits, to announce your new practice. ABA Informal Opinion 1457 gives you an idea of what you can say.
(4) When soliciting clients of your former firm, limit your mailings to those clients on whose matters you personally worked and whose names you know from memory.
(5) Be sure to inform the recipients of their right to remain with the firm as well as their right to switch lawyers.
(6) Don’t make any disparaging comments about the firm.
(7) Don’t make comparisons between the firm and yourself unless you have the objective facts to back them up.
(Emphasis added). Given this guidance, it would not be acceptable for the withdrawing lawyers to contact clients before they announce that they are leaving the firm. As indicated above, a withdrawn lawyer must always advise clients of their option to stay with the old firm.
(e) (f) It clearly is improper for a lawyer to lie to his colleagues about her future plans or take files with her without advising the firm and obtaining the clients' consent.
A. Marvin Stockman. Attorney Marvin Stockman represented a corporation in the past. Stockman’s work for the corporation included preparation of minutes, mechanic’s lien litigation, collections and landlord matters. Stockman did not perform any work necessitating an evaluation of the corporation or any review of financial records of the corporation. The corporation now has one remaining stockholder, Lucas Lucky who has never been represented by Stockman as an individual. Lucky’s spouse, Lisa, has approached Attorney Stockman regarding representation in a divorce.
The appropriate and controlling rule is Rule 1.6 (a) which provides that, except with client consent, a lawyer shall not reveal information protected by the attorney-client privilege under applicable law, or other information gained in the professional relationship that the client has requested be held inviolate or the disclosure of which would be embarrassing or likely to be detrimental to the client; Rule 1.9 (a) which provides that a lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or substantially related matter in which that person’s interests are materially adverse to the interests of the former client unless both the present and the former client consent after consultation. Further guidance is available through Rule 1.13 which provides that the lawyer employed or retained by an organization represents the organization acting through its duly authorized constituents. Thus, a lawyer employed or retained by a corporation or similar entity owes his allegiance to the entity and not to a stockholder, director, officer, employee, representative, or other person connected with the entity.
Does Stockman have a conflict of interest in representing Lisa, the wife of a stockholder in a corporation previously represented by Stockman, if Stockman has no knowledge of the financial status of the corporation and has never represented the stockholder individually?
The legal ethics committee has previously opined that an attorney who had represented a partnership may represent one partner in bringing a suit on behalf of the partnership against other partners so long as the attorney neither represented the defendant partner individually and provided that the attorney never obtained confidences or secrets from the defendant partner during the course of the attorney’s representation of the partnership. See LEO 1458. Also, the committee previously opined that an attorney who had represented a corporation may represent a plaintiff shareholder against a fellow shareholder in a derivative action as long as the attorney had not represented the defendant shareholder individually and so long as the attorney had never obtained confidences or secrets from that defendant shareholder during the course of the representation of the corporation. See LEO 1517.
The Committee opined in LEO 344, however, that it was not ethically permissible for a lawyer to represent a party against a corporation when one person owned all of the stock and the lawyer represented the sole shareholder in other matters. In that circumstance, there may be an imputed identity between the corporation and the sole stockholder. See ABA Formal Op. 95-390. The facts presented here, however, do not suggest an imputed attorney-client relationship with the remaining stockholder of the corporation.
Therefore, Stockman may represent the shareholder’s spouse in the divorce, as he never represented the shareholder individually, provided no confidences or secrets were obtained from the shareholder or the corporation during Stockman’s representation of the corporation that would be pertinent to the divorce action. See LEO 1685.
B. Bill Rose. The firm of Green and Rose has been counsel to Acme Widget Company for many years and Bill Rose has become one of the primary lawyers responsible for the corporate representation of this client. As often happens, Bill has become close friends with a number of the key executives of the corporation. He has recently learned that one of those friends who is a vice president of the corporation is going through a rather difficult and unpleasant divorce. The Vice President calls Bill on the phone and says that he would like to have lunch with Bill and "discuss a personal matter in strict confidence." Of course, Bill Rose agrees to join him.
At lunch, much to Bill's surprise, the domestic relations matter is not what was bothering the vice president. He confides in Rose and states: "I have been involved in price-fixing discussions with my counterparts at our three largest competitors. For the last three years, we have managed to keep prices at a level that is at least 30% higher than it would have been otherwise. What can I do to keep myself out of trouble?"
A lawyer employed or retained by a corporation owes his allegiance to the entity and not to any particular individual connected with the entity. Where the interests of the entity and those of one of its officers, directors or employees differ, the attorney may not represent both. Confidences and secrets imparted with the expectation of a professional relationship must be preserved. When conflicts arise between the interests of the organization and one of its employees, the lawyer must clarify his role as counsel and encourage such an employee to seek independent counsel. Rule 1.13.
1. Can Attorney Rose give the Vice President any advice concerning this matter?
2. Can he remain completely silent or must he give some counsel in this situation?
In this situation, given that the corporation may be held liable for antitrust violations, the interests of the vice president and the corporation may differ. Rule 1.13 provides:
If a lawyer for an organization knows that an officer, employee or other person associated with the organization is engaged in action, intends to act or refuses to act in a matter related to the representation that is a violation of a legal obligation to the organization, or a violation of law which reasonably might be imputed to the organization, and is likely to result in substantial injury to the organization, the lawyer shall proceed as is reasonably necessary in the best interest of the organization. In determining how to proceed, the lawyer shall give due consideration to the seriousness of the violation and its consequences, the scope and nature of the lawyer's representation, the responsibility in the organization and the apparent motivation of the person involved, the policies of the organization concerning such matters and any other relevant considerations. Any measures taken shall be designed to minimize disruption of the organization and the risk of revealing information relating to the representation to persons outside the organization. Such measures may include among others:
(1) asking reconsideration of the matter;
(2) advising that a separate legal opinion on the matter be sought for presentation to appropriate authority in the organization;
(3) referring the matter to higher authority in the organization, including, if warranted by the seriousness of the matter, referral to the highest authority that can act in behalf of the organization as determined by applicable law.
(c) If, despite the lawyer's efforts in accordance with paragraph (b), the highest authority that can act on behalf of the organization insists upon action, or a refusal to act, that is clearly a violation of law and is likely to result in substantial injury to the organization, the lawyer may resign or may decline to represent the client in that matter in accordance with Rule 1.16.
In dealing with an organization's directors, officers, employees, members, shareholders or other constituents, a lawyer shall explain the identity of the client when it is apparent that the organization's interests are adverse to those of the constituents with whom the lawyer is dealing.
(e) A lawyer representing an organization may also represent any of its directors, officers, employees, members, shareholders or other constituents, subject to the provisions of Rule 1.7. If the organization's consent to the dual representation is required by Rule 1.7, the consent shall be given by an appropriate official of the organization other than the individual who is to be represented, or by the shareholders.
The facts do not indicate that the vice president was acting pursuant to corporate instructions. The vice president's actions may lead to a suit against the corporation. In an attempt to avoid liability, the corporation may want to show that the vice president was acting independently and not on behalf of the corporation. Thus the interests of the corporation and the vice president differ. As such, Attorney Rose cannot provide any substantive advice to the vice president except that he may advise the vice president to seek competent counsel and to refrain from committing any further illegal acts. LEOs 256, 384, 718, 990, 1256, 1344, 1347, 1352.
3. Should Bill disclose the information he has received to appropriate corporate officers? Is he permitted to disclose this information? Is he required to disclose this information?
Bill must properly warn the vice president of his role as counsel for the organization and that whatever information the vice president provides may be revealed to the corporation. Rule 1.13 (d). Bill may then proceed, as directed under Rule 1.13 (b) to take steps necessary to protect the interests of the organization, which may include informing the organization’s governing body of his conversation with the vice president.
However, if Bill fails to clarify his role with the vice president, gives the vice president legal advice or a reasonable belief that Bill is acting as his individual attorney, Bill may become conflicted out and disqualified from representing either the organization or the vice president
LEOs 256, 384, 718, 990, 1347, 1352.
4. Would the responses change if, instead of having been involved in price-fixing discussions with his counterparts at the corporation's three largest competitors, the vice president confided that he has been and continues to be involved in making disguised payments as a bribe to an official of a foreign government, in violation of the Foreign Corrupt Practices Act?
Under the old Code of Professional Responsibility, the disclosure of such ongoing criminal activity would be required. LEOs 1325, 1367. Under the new Rules of Professional conduct, Bill would be expected to follow the steps set out in Rule 1.13 (b) as described above.
You are corporate counsel for a large publicly held health care management company, WELLCO, and have enjoyed a 20-year career with this outstanding company. WELLCO’s stock, during the "bull market" of the 1990s was considered a "darling" on Wall Street, yielding returns in excess of 20% annually. Even during the "bear market" of the past four or five years, WELLCO’s stock has held its own, falling only as any other well managed company’s stock would during market downturns.
One day, you receive a phone call from Marty Plotkin, an employee in WELLCO’s Accounting Department, who asks if he can meet with you "in private" to discuss "a situation" that has been troubling him for quite some time. Marty shows up at your office extremely nervous and tells you that he has not been able to sleep for months. Before Marty begins, his bloodshot eyes focus on your law school diploma behind you, then he says: "I hop you can keep what I have to say in confidence, ‘cause what I am about to say could get some people in the company in trouble."
You respond, "Marty, that depends on what you tell me. I can’t make any promises to you. I represent the company, not you. If you’d rather consul with a lawyer before you talk to me, that’s O.K., I will understand."
Marty replies, "Aw, hell, I gotta get this off my chest before I jump out a window."
He advised you that since 1997, he has been instructed by the President/CEO, Sly Dirtbag, to overvalue the company’s assets on its financial reports (K-8s) filed with the SEC. A lump forms in your throat as you realize that you have been signing off on these annual reports, trusting that the information reported was correct. You ask Marty, "how has this been done?" Marty replies that, for example, last year WELLCO purchased an office building in Wellford Park at a cost of $2 million, but stated on the financial report that its fair market value was $10 million. "We paid top dollar for that building, which was a mistake. In fact, since the company has been downsizing, it has tried to sell that building. We can’t get anyone to bid even $1 million."
As you chug the entire bottle of Pepto-Bismol on you desk, Marty gives you other examples of how the company has "cooked the books." Marty explains that Sly Dirtbag has been criticized by some members of the Board, but Sly has kept them at by, reminding them that their own investments in the company’s stock have flourished only because he has been able to keep the price of the stock up. Marty tells you that Sly and the other officers and board members in on this refer to each other as "members" of the "family" and that when they meet in private (you were not invited or informed of these meetings) they refer to them as "family gatherings." Discussions come up about how to "fill" the "hole." The "hole" is the difference between the stated value of the company on its financials and its actual worth. Sly just tells everyone to "forget about it" and "let the good times roll."
You ask Marty how he has learned these things. Marty answers, " I am a member of the ‘family.’ Geez, I hope I am not in any trouble with the law. I hope you can keep all this stuff I told you under your hat."
You reply, "Now wait a minute, Marty, I told you that I am counsel for the company and I have an obligation to take this matter up with the "powers that be." Marty responds, "I came to you in confidence! I thought you were my lawyer. If you discuss this with the Board or Sly, they’ll want to know who tipped you off. I could lose my job."
You explain to Marty, "my duty is to the company, Marty, not you. You don’t want the company involved in a corporate scandal like Enron, do you?"
Marty replies, "Look, I don’t care about all of that, man. If you are going to ‘blow the whistle’ on us, I am going to dump my stock now and take my profits. If the feds come after me, I am going to file a bar complaint against you for breaching confidentiality. Then I am going to sue you for malpractice and take every penny you own. No wonder everyone hates lawyers! You can’t trust them."
Marty storms out of the office as you call your secretary and tell her to hold all calls for the rest of the day.
Independent investigation confirms the information Marty has given you. You have located the company’s schedules of assets and have found all the closing statements, appraisals and other supporting documentation. You have solid evidence that the company has grossly overstated its assets on its financial reports and corporate balance sheets. You are certain now that criminal violations of the federal securities laws have occurred. You meet with Sly Dirtbag who denies everything and instructs you to quit wasting company time and money pursuing these issues. You tell Sly that the evidence is clear and convincing. You exhort Sly, "if this scheme you are involved in continues, millions of investors are at risk. When the truth gets out-and it will- investors will lose millions of dollars. You will go to prison. You remember Enron, WorldCom, Global Crossing and Adelphia Communications, don’t you? You don’t want that to happen. The company might have to ‘bite the bullet’ and restate earnings, but I think I can negotiate things out with the SEC and reduce our exposure here." Sly tells you to "keep your mouth shut or clean out your desk."
1. What ethical duty, if any, do you owe to Marty to keep the information he has given you confidential?
A lawyer employed or retained by a corporation owes his allegiance to the entity and not to any particular individual connected with the entity. When the interests of the entity and those of one of its officers, directors or employees differ, the attorney represents the entity. The lawyer must clarify his role as counsel and encourage such an employee to seek independent counsel. The lawyer must remember that the corporation is his client and follow the guidelines set forth in Rule 1.13 (b).
2. Which course of action should you take?
SEC Rules of Professional Conduct, promulgated pursuant to Section 307 of the Sarbanes-Oxley Act were adopted in January 2003. These rules provide guidance to lawyers caught in the conundrum of these circumstances. The rules set certain steps a lawyer needs to take and considerations along the way.
First, the attorney must report evidence of a material violation (here the violations of securities laws and overstatement of the assets) up the corporate ladder to either the chief legal counsel or the chief executive officer or equivalent. If there is not an appropriate response involving investigation and an appropriate remedy/correction then the attorney must report the evidence to the audit committee or full board of directors. The attorney needs to clarify that the rules cover attorneys providing legal services to an issuer where they have an attorney-client relationship and they have notice of or assist in preparing documents that will be filed with the SEC.
The attorney, in counseling either the CEO or board of directors of alternative qualified authority figure, must allow them to establish a Qualified Legal Compliance Committee (QLCC) as an alternative procedure for reporting evidence of a material violation. Such a QLCC would consist of at least one member of the corporation’s audit committee, or an equivalent committee of independent directors, and two or more independent board members, and would have the responsibility, among other things, to recommend that the corporation implement an appropriate response to evidence of a material violation. One way in which the attorney could satisfy the rule’s reporting obligation is by reporting evidence of a material violation to a QLCC.
There is no requirement under the Sarbanes-Oxley Act or the Rules of Professional Conduct for the lawyer to go any further. The Act does not require "whistle-blowing" on the part of the attorney, but it allows the attorney, without the consent of the corporate client, to reveal the confidential information related to his or her representation to the extent the attorney reasonably believes necessary (1) to prevent the corporation from committing a material violation likely to cause substantial financial injury to the financial interests or property of the corporation investors; (2) to prevent the corporation from committing an illegal act; or (3) to rectify the consequences of a material violation or illegal act in which the attorney’s services have been used. This "whistle-blowing" aspect of the Act is completely voluntary, however, if there is probable or existing public harm, the attorney is encouraged to reveal this fraudulent conduct if there is no one in the corporate entity willing to reveal or correct the fraudulent misdeeds that have and continue to occur. This is referred to as the "noisy withdrawal" because as the attorney makes this revelation, he or she also must withdraw from any further representation. The corporation should be informed that the attorney intends to take this action as another potential effort to encourage their internal correction of fraudulent conduct. The attorney is protected in his "whistle-blowing" conduct here as Rule 1.6(b)(3) allows the lawyer to reveal information that clearly establishes that the client has perpetrated a fraud upon a third party during the course of the representation of the lawyer.
Virginia Rules of Professional Conduct that deal with confidentiality do provide that if the fraud is of a continuing nature and the client/corporation/board does not abandon their scheme or course of conduct then the lawyer must reveal this to the appropriate authority. Rule 1.6(c)(1). So if the lawyer has proceeded through this whole course of due diligence and counseling and advising all appropriate entities and the organization/client refuses to abandon or correct a fraudulent and criminal course of conduct, the lawyer has a duty in Virginia to reveal this under Rule 4.1(b). See Rule 1.13(c). The lawyer cannot be party to the course of criminal or fraudulent conduct. This is what is referred to as the "noisy withdrawal."
D. Hidden Tape Recorder. An employer receives complaints from an employee regarding threats made by one employee against the complaining employee. The threats include acts of violence to be committed at the workplace. Because the two employees work together usually without anyone around, the employer seeks legal advice on methods to protect itself from a lawsuit should something happen to the complaining employee. Corporate counsel advises the employer to encourage the complaining employees to wear a hidden tape recorder to record the threats in hopes that the employer would then have sufficient justification for terminating the employee who is making the threats.
Was Corporate Counsel’s advice to the employer proper?
Before 2010, the Standing Committee on Legal Ethics had consistently opined that it is unethical for a lawyer to secretly record, or advise a client to secretly record a telephone or in-person conversation with another. LEOs 1324, 1448, 1635, 1738, 1765, 1786. Citing Gunther v. Virginia State Bar, 238 Va. 617 (1989), the Committee opined that a lawyer’s participation in the surreptitious recording of another’s conversation is conduct involving deceit which reflects adversely on a lawyer’s fitness to practice law. Rule 8.4 (c). Moreover, a lawyer may not advise his client to do that which the lawyer is enjoined from doing under the Rules of Professional Conduct. Rule 8.4 (a) (a lawyer shall not violate or attempt to violate a rule through the actions of another). Certain conduct may be improper under the Rules even though legal under criminal statutes. Lawyers are expected to adhere to a higher standard of conduct than the minimum requirements of the criminal law. Gunter, supra. In LEO 1738, the Committee set out two exceptions to the prohibition against an attorney participating in a surreptitious tape recording: law enforcement lawyers engaged in criminal investigations or housing discrimination investigations. In LEO 1765, the Committee identified another exception: an attorney employed by the federal government, using lawful methods, such as the use of “alias identities” and non-consensual tape-recording, as a part of his intelligence or covert activities.The Committee recently reconsidered its prior position on undisclosed recording, which led to LEOs 1802 and 1814. In both opinions, the Committee found that its prior opinions were overbroad in their interpretation of Gunter and that the opinions failed to balance the lawyer’s duty to diligently pursue the objectives of his client against concern for fairness to third parties. Thus, in LEO 1802, the Committee concluded that a lawyer may advise, suggest or recommend that her client create a lawful undisclosed recording of a conversation to which the client is a party in order to obtain information that is important to addressing the client’s legal issue. In LEO 1814, the Committee applied the same analysis to conclude that a criminal defense lawyer or his agent could use undisclosed recording when dealing with a witness who, while currently favorable to the lawyer’s client, was likely to change his statement and testify against the client at trial. Both opinions emphasize that the lawyer must balance his duties to his client against his duties to the third parties involved, and where the duty to pursue lawful objectives for the client is not outweighed by other duties, the lawyer should advise the client about the available means by which he can pursue those objectives.
You are interested in hiring an associate from another medium-sized firm in your town. However, you are currently representing a client in merger negotiations with a large company represented by the associate's current firm. You have determined that the associate is not working on the merger transaction.
If you hire the associate, may your firm continue to represent your client in the merger negotiations without the consent of its adversary?
This hypothetical addresses the balance between conflicts of interest and lawyer mobility.
The Rules generally presume that lawyers share knowledge within their firm. Thus, one might expect that all knowledge possessed by any lawyer in the medium-sized firm would be imputed to the associate. If the associate moved to your firm, you would think that this knowledge would in turn be imputed to everyone in your firm, requiring disqualification unless the medium-sized firm's client consented to your hiring of the associate. This is sometimes called the "Typhoid Mary" effect.
However, the Rules also favor lawyer mobility because it frees clients to hire lawyers they like. This principle undergirds the prohibition on non-compete clauses.
Bars have struck the balance between these two competing principles in what might be a surprising place. The Bar has repeatedly ruled that a lawyer who is not personally engaged in his firm's representation of a client may safely move to another firm taking a position adverse to that client. 9
There is one possible exception to this general rule. If the lawyer actually learned material confidential information about his firm's client, he might be disqualified -- even if he did not work on that client's matter. The possibility of this scenario increases if the associate comes from a small firm. It is reasonable to assume that lawyers in a small firm talk to one another about their cases. A lawyer leaving such a firm therefore might face disqualification because the lawyer would have potentially useful confidential information, even if he had not worked on the matter at the old firm.
9 See, eg., LEO 1428 ( a lawyer from a medical malpractice defense firm could join a plaintiff’s firm and work on cases against his former firm’s clients without their consent if the lawyer had not been “actively participating” in cases brought by the plaintiffs while at the defense firm). Accord, LEO 993, LEO 240. See also LEO 1810 (attorney can serve as GAL in custody matters in which attorney from GAL’s former firm represented father in divorce when GAL was still with firm but had no involvement in that representation).
10See, e.g., Richmond Redevelopment & Housing Auth. v. Joseph S. Terrell, Inc., 9 Va. Cir. 145 (1987).
In this hypothetical, your firm probably would be able to continue representing your client because the associate is moving from a medium-sized firm and was not personally working on the merger transaction.
Boris Goodheart is a lawyer who lives and works in Northern Virginia and wishes to fulfill his pro bono obligations by providing legal assistance to low and middle-income persons. Boris is a government lawyer in the Patent and Trademark Office in Crystal City and is admitted to practice in Pennsylvania. The services that he anticipates providing on a pro bono basis include: reviewing leases, real estate sales contracts, deeds and deeds of trust; conducting real estate settlements; helping with zoning variances; mediating marital and landlord-tenant disputes; representing people in court on lemon law claims and other consumer protection claims and handling bankruptcies. All of the legal work would be performed by Boris from his place of employment (with the explicit consent of the employer) in Virginia or at his residence in Virginia.
1. May a non-Virginia attorney review legal documents such as leases, real estate contracts, deeds and deeds of trust and give legal advice to persons about them if such services are provided pro bono? YES
If the activity only involves the giving of legal advice and there is no compensation, direct or indirect, for such service, then the activity is not the "practice of law" as defined by the Supreme Court of Virginia:
Specifically, the relation of attorney and client exists, and one is deemed to be practicing law whenever–
(1) One undertakes for compensation, direct or indirect, to advise another, not his regular employer, in any matter involving the application of legal principles to facts or purposes or desires.
Therefore, Boris should be able to give legal advice to clients since he would be working pro bono.
2. May a non-Virginia lawyer conduct a real estate settlement in the Northern Virginia office on a pro bono basis? NO
In order to close a residential real estate transaction in Virginia, the settlement agent must be registered and meet the requirements under the Consumer Real Estate Settlement Protection Act (CRESPA). Va. Code §§ 6.1-2.19-6.1-2.29 (1997).
3. What if Boris set up an office in D.C. and conducted real estate closings affecting Virginia property only in the D.C. office on a pro bono basis? May they conduct the closings from the D.C. office? NO
Prior to July 1, 1997, the answer would have been "YES" since the UPL rules require that a nonlawyer be physically present in Virginia when conducting an activity that constitutes the practice of law. UPL Op. 93 (1986) (it is not UPL for a non-Virginia attorney to prepare recordable documents, conduct a closing and render advice on applicable Virginia law, all from his office outside of Virginia). See also UPL Op. 99 (1986) (absent any actual activity by the attorney in Virginia, the activity does not constitute the practice of law in Virginia).
However, CRESPA became effective July 1, 1997 and the Act applies to all transactions affecting real estate in Virginia containing not more than four residential dwellings. Thus a transaction-based test is substituted for the situs test used in UPL enforcement. As stated in problem 2, supra, the attorney would still need to register as a settlement agent under CRESPA even if the closing were conducted outside of Virginia, if the transaction involved residential real estate located in Virginia.
4. May Boris simply prepare for the seller a deed or deed of trust on a pro bono basis? NO
A non-Virginia attorney may not prepare legal instruments for another even if there is no charge for the services. According to the Virginia Supreme Court, one is deemed to be practicing law whenever:
(2) One, other than as a regular employee acting for his employer, undertakes, with or without compensation, to prepare for another legal instruments of any character, other than notices or contracts incident to the regular course of conducting a licensed business.
Non-lawyers (which include non-Virginia attorneys) cannot prepare the legal instruments incident to a closing such as the deed, deed of trust on behalf of a buyer or seller. UPL Op. 76 (1985). 11
11 Non-lawyer settlement agents registered under CRESPA may prepare or complete form documents in accordance with the directions of the parties to the transaction. Va. Code § 6.1-2.20. See also Unauthorized Practice Rule 6, Part 6, Section I, of Rules of Supreme Court of Virginia.
Since the rule prohibits a non-lawyer from drafting legal instruments, with or without compensation, Boris may not perform this activity in Virginia. However, if they opened a D.C. office and drafted the deeds in D.C., this would not violate Virginia’s UPL rules. See UPL Ops. 93, 99, supra. See also UPL Op. 119 (1988) (pro bono work for church organization by foreign attorneys is UPL).
5. What activities may Boris perform relative to assisting pro bono clients in zoning variance matters?
As stated above, Boris can advise clients on matters involving zoning ordinances since he is not receiving compensation for such work. A more difficult question is whether he may represent pro bono clients before a planning commission and board of zoning appeals on an application for a zoning variance. Are these public bodies "tribunals" for purposes of UPR 1-101, which generally prohibits a nonlawyer from representing another, with or without compensation, before a "tribunal?" The UPL Rules and committee opinions do not address this specific issue. The definition of "tribunal" includes any agency, authority, board, commission or other body that determines the rights and obligations of the parties that appear before it. UPC 1-1. But a planning commission does not adjudicate the rights and obligations of the parties that appear before it. The role of a planning commission is to make recommendations as to any variance or amendment of plan to the locality’s governing board, i.e., board of supervisors, which the board may accept or reject. Board of Supervisors v. Machnick, 242 Va. 452, 410 S.E.2d 607 (1991). Applications for variances are heard on public notice and hearing. This function is more legislative and administrative, rather than judicial. Since "tribunal" is a defined term in the UPL rules, there is no prohibition against a nonlawyer appearing before the planing commission on behalf of someone seeking a zoning variance. See e.g., UPL Op. 155 (1992) (local board of tax equalization is not a "tribunal" as anticipated in UPR 1-101 since the board’s duties are administrative). Therefore Boris can represent pro bono clients before a planning commission or board of zoning appeals on applications for zoning variances without violating the UPL rules.
6. May Boris serve as a mediator for parties in landlord-tenant and marital disputes? YES
In Virginia, one does not have to be licensed to practice law to provide mediation services. Indeed, most mediators certified for court referred mediation by the Supreme Court of Virginia’s Office of Dispute Resolutions Services are not lawyers. By statute, nonlawyers are authorized to mediate. Va. Code §§ 8.01-581.21 and 8.01-576.4 ("neutral" means an individual who is trained or experienced in conducting dispute resolution proceedings and in providing dispute resolution services). Therefore, Boris need not be admitted to practice in Virginia to provide dispute resolution services.
7. May Boris represent pro bono clients in state court in Virginia on lemon law or other consumer protections cases? NO
One who undertakes, with or without compensation, to represent the interest of another before any tribunal–judicial, administrative or executive, is generally deemed to be practicing law, although some state and federal agencies permit lay advocates. However, foreign attorney practice is prohibited in state courts in Virginia unless the attorney is admitted on motion pro hac vice and associates local counsel admitted to practice in Virginia. Local counsel must sign all pleadings filed with the court. Va. S. Ct. R. 1A:4. See also UPL Op. 102 (1989) (foreign attorney practicing in Virginia court governed by Rule 1A:4 Va. Code §54.1-3900 and Rule 5.5).
8. May Boris prepare petitions for filing in bankruptcy court on behalf of pro se clients? NO
Federal law seems to authorize non-lawyer bankruptcy petition preparers. 11 U.S.C. §110. However, paragraph (k) of the statute provides: "Nothing in this section shall be construed to permit activities that are otherwise prohibited by law, including rules and laws that prohibit the unauthorized practice of law."
In order to be qualified to practice in the United States Bankruptcy Court for the Eastern District of Virginia, one must be a member of the bar of the Supreme Court of Virginia. U.S. Bankruptcy Court (E. D. Va.), Rule 2090-1 (B). Otherwise, a foreign attorney may move for admission pro hac vice in a particular case provided an admitted member of the bankruptcy court is associated. Rule 2090-1 (E)(2). All pleadings must be signed by a member of the bar of the bankruptcy court. Rule 2090-1 (F).
Therefore, Boris is not authorized to prepare and file pleadings in bankruptcy court unless they have associated a member of the bankruptcy bar, who must be admitted to practice in Virginia.
9. May Boris assist pro se litigants by preparing pleadings to be signed and filed by the pro se litigant? Only if related to patent/trademark matters or other exclusively federal practice matters.
The practice of "ghostwriting" pleadings for
pro se litigants is unethical and has been disapproved in
several federal decisions. Virginia Legal Ethics Opinion 1592
(1994); ABA Informal Op. 1414 (1978) (undisclosed counsel who
renders substantial assistance to pro se litigant is an
accessory to the pro se litigant’s misrepresentation of status
to the court); Laremont-Lopez v. Southeastern Tidewater
Opportunity Center, 968 F. Supp. 1075 (E. D. Va. 1997);
Clarke v. United States, 955 F. Supp. 593 (E.D. Va. 1997);
Johnson v. Board of Commissioners, 868 F. Supp. 1226 (D.
Colo. 1994) aff’d as modified 85 F.3d 489 (10th
In Virginia, a lawyer may advise, prepare or assist in preparing pleadings for a pro se litigant, however, undisclosed participation may constitute a misrepresentation to the court or opposing parties or counsel. ABA Informal Ethics Op. 1414; Va. Legal Ethics Op. 1592 (1994). A lawyer may limit the representation, but in preparing pleadings for a pro se litigant, the lawyer must make a sufficient inquiry into the law and facts in order to provide competent representation (Rule 1.1) and avoid having the client file a frivolous lawsuit (Rule 3.1). Again, the unbundling lawyer should disclose his or her participation to the court and opposing counsel. A lawyer may not provide unbundled legal services in a jurisdiction in which he or she is not authorized to practice. Rule 5.5. Boris is only authorized to engage in patent/trademark practice in Virginia and perhaps other exclusively federally law practice before tribunals in which he is authorized to practice. He could assist pro se litigants in these matters, but not with regard to Virginia law matters.
A lawyer who undertakes to enter a limited appearance on behalf of an an unbundled client runs the risk that the court may require the lawyer to remain and appear in the case until its conclusion. See LEO 1592. Some jurisdictions such as Colorado, Maine and Florida have addressed this problem by adopting rules that say that although the lawyer must sign or disclose that he or she assisted the pro se litigant in the preparation of a pleading, they do not appear as counsel by doing so.
In September 2002, the Supreme Court of Virginia requested that the Virginia State Bar form a committee to explore the issue of “unbundling,” or limited representation in Virginia. The Virginia State Bar’s Special Committee on Access to Legal Services formed a subcommittee to consider amendments to the Rules of Professional Conduct that would allow the “unbundling” of legal services; in particular, allowing a lawyer to prepare pleadings for a pro se litigant to file in court.
The purpose of the amendments to all three rules (Rules 1.2, 4.2 and Va. S. Ct. R. 1:5) is to permit an attorney to provide discrete task representation to a client when both the client and lawyer have agreed that the lawyer will only perform discrete tasks and the client will perform the remaining tasks. Often a client cannot afford a full representation by a lawyer but wants to have the lawyer provide limited legal assistance. A typical example is the lawyer who is asked to prepare pleadings for a pro se litigant.
The proposed amendments to Rule 1.2 (Scope of Representation) explicate and expand the current provision in the rule allowing the lawyer, with the client’s informed consent, to limit the goals and objectives of the representation in the context of “unbundling” legal services.
The proposed amendments to Rule 4.2 (Communication with Persons Represented by Counsel) address when the lawyer may communicate directly with a pro se litigant who is receiving or has received limited representation by an attorney.
The proposed amendments to Va. S. Ct. R. 1:5 (Counsel) would permit an attorney to sign a pleading that the attorney prepared for a pro se litigant simply to inform the court that the litigant received substantial assistance from the lawyer. However, by signing the pleading to provide that disclosure to the court, the attorney is not deemed to have entered an appearance of record. The amendment is driven in part by ethics opinions and court cases that prohibit an attorney from “ghostwriting pleadings” for a pro se litigant and a countervailing concern that the assisting attorney may be forced to conduct a case in court when the person assisted wants to proceed pro se.
The Virginia State Bar Council approved these rule amendments at its meeting in June 2005. In July 2005 the Bar submitted the amendments to the Virginia Supreme Court for review and approval.
10. Could Boris leave his employment with the Patent and Trademark office and accept a position as in-house counsel for a Virginia Corporation?
As of September 1, 2003, any foreign attorney who wants to serve as in-house counsel for a corporation in Virginia may only do so pursuant to Rule 1A:5 of the Rules of Virginia Supreme Court. Under that Rule, Boris would need to either register with the Virginia State Bar or receive a corporate counsel certificate from the Bar. If Boris wishes to represent the corporation in the courts of Virginia, he would need to obtain the more involved certificate; mere registration would not permit court appearances.
1. Lawyer is admitted to practice in Pennsylvania and accepts a position with a Virginia employer as General Counsel. Must Lawyer be licensed by the Virginia State Bar to serve as General Counsel for the Virginia employer? YES
Effective July 1, 2004, any non-Virginia attorney who intends to work in Virginia as an in-house counsel for a Virginia employer must apply for a corporate counsel certificate or registration pursuant to Rule 1A:5. Lawyers who are not admitted in Virginia and are serving as in-house counsel will be practicing law without authority unless they have applied for a certificate or registration under this new rule. They are subject to investigation and prosecution of unauthorized practice of law (UPL) which is a Class 1 misdemeanor. Va. Code § 54.1-3904 (Repl. Vol. 2002). In addition, it is an ethical violation to practice in a jurisdiction where one is not authorized to practice. See Virginia and ABA Model Rule 5.5.
To apply a lawyer must produce a certificate from the state where he or she is admitted to practice showing that the lawyer is active and in good standing with the bar of that state. The applicant must also produce an affidavit from the employer evidencing the lawyer's intent to be employed as corporate counsel in Virginia for that employer. The new rule requires the lawyer to choose between two tracks: (1) a certificate in which the corporate counsel will be deemed an active member of the Virginia State Bar; or (2) a registration in which the corporate counsel may serve as in-house counsel but will not handle any matters involving Virginia law.
Lawyers who are not admitted in Virginia and are serving as corporate counsel under this rule may not provide legal advice or legal services to anyone other than their employer in Virginia.
Under both regulatory tracks, the corporate counsel will pay annual dues and be subject to the professional regulations of the Virginia State Bar.
2. May Lawyer provide legal services to a subsidiary entity under Rule 1A:5? YES
Although the scope of practice under Rule 1A:5 is limited to representing only the Virginia employer, the rule expressly authorizes corporate counsel to also represent subsidiaries of the employer.
The ABA addressed the issue of in-house lawyers representing corporate affiliates in ABA Informal LEO 973 (8/26/67). In what was among the first analyses of the propriety of an in house lawyer representing those other than the immediate client, the ABA addressed the following question:
May an attorney employed by a corporation render legal services to a subsidiary thereof or to other corporations interrelated therewith through interlocking directorates without direct lawyer client relationship with said subsidiaries or interrelated corporations, and without additional consideration from said sources?
The ABA concluded that "there is no real problem" with such representation as long as "there is substantial identity of underlying ownership of both the employer corporation and the other corporation for which the staff attorney of the employer is requested to perform legal services." The ABA explained that "substantial identity of underlying ownership" exists in such situations as where the other corporation is a wholly owned subsidiary of the employer, or the employer is a wholly owned subsidiary of the other corporation, or the stock of both the employer and the other corporation is owned by substantially the same shareholders in substantially the same proportions.
The ABA indicated that under those circumstances "we would as a matter of reality and practicality ignore, for purposes of ethical considerations, the separate legal identities of the employer and the other corporation," so that there "would in substance be only one 'client' involved." Id. (emphasis added). Of course, this conclusion would allow in house lawyers practicing in states that do not require them to be licensed in those states to represent related companies, because those lawyers would be seen as limiting their representation to the one "client" employing them. The ABA warned such lawyers not to allow what the ABA calls their "basic client" to direct their judgment while representing the related entities. In discussing the lawyer's salary, the ABA explained that the payment of anything more than the "precise cost" of the lawyer's services by those related corporations would be impermissible. Virginia’s Standing Committee on Legal Ethics addressed this issue in LEO 1838 (2007). LEO 1838 – In house Counsel providing Services to Sister Corporation and Collecting Reimbursement. The question posed in this opinion involved whether a corporation can lend its in-house counsel to a sister corporation to provide legal services, when both corporations are owned by the same parent corporation. If so, can the corporation bill the sister corporation for those legal services and to what extent? The opinion concludes that the lawyer can do legal work for the sister corporation as long as he preserves the confidentiality of each and does the proper conflict analysis. As to his fees, the corporation can only collect from the sister corporation remuneration for the “actual costs” the corporation incurs in employing the lawyer. The opinion noted that under Rule 1A:5, a lawyer would be authorized to undertake the representation of the clients described in this opinion under Part I or Part II of the Rule.
A. John Doe. John Doe is presently an Assistant County Attorney for a Virginia jurisdiction. He has been offered a job by the firm of Smith and Day, which has acted as outside special counsel for the County in ongoing litigation. The County Attorney’s office and the law firm have worked closely together as advocates for the county for the past year and expect the case to continue another year.
1. If John Doe joins Smith and Day, can he continue to work on the case?
YES. Since there is no private client being represented by Smith & Day, Rule 1.11(b) does not apply.
2. Assume that rather than working together, the County Attorney’s Office and Smith and Day are adversaries in the matter. John Doe joins Smith and Day, but avoids all contact with other firm members about the matter in which he and his new firm were former adversaries. Can Smith and Day continue in the case?
MAYBE. Assuming John Doe participated personally and substantially in the matter as an Assistant County Attorney, Smith and Day could remain in the case only if both the County Attorney and the Smith & Day’s client consent and John Doe is "screened from any participation in the matter and is apportioned no part of the fee therefrom." Rule 1.11 (b).
Moreover, it was improper for John Doe to negotiate employment at Smith & Day while he was participating personally and substantially in matter in which Smith & Day were adversaries. Rule 1.11 (d)(2). Thus, the better course of action would be for John Doe to wait until the pending case is concluded before negotiating employment at Smith & Day. Alternatively, John Doe could resign from his position as Assistant County Attorney before undertaking to negotiate employment at Smith & Day.
3. Assume that as an Assistant County Attorney John Doe was involved not in litigation but in supervising a section of attorneys drafting public ordinances. Assume Doe’s section is drafting a public ordinance and, after a proposal is published, begins receiving public comment. Prior to enactment of a final ordinance, Doe leaves the County Attorney’s Office to join Smith and Day. Thereafter, the proposed ordinance is redrafted, adopted and promulgated. Smith and Day is hired to challenge the constitutionality of the ordinance. Can John Doe handle the case?
NO. Since John Doe had supervisory authority over the lawyers who worked on the ordinance, he is personally disqualified from representing a private client seeking to challenge the work product for which he participated personally and substantially as a government employee. Rule 1.11 (b).
4. Assume the same facts as Question 3, but instead Smith and Day are hired by the County to defend the ordinance. Can John Doe handle the case? YESSince Smith and Day are representing the County, not a private client, the requirements of 1.11(b) do not apply. Further, since John Doe resigned before contacting Smith and Day, the requirements of 1.11(d) do not apply.
B. City Police. A City police officer was involved in an incident arising from his arrest of a suspect who turned out to be the wrong person. The possibility exists for a civil rights law suit to be filed against the police officer for compensatory and punitive damages. The officer has asked the City Attorney to represent him in this matter. An internal affairs investigation cleared the officer of any impropriety and the City Attorney’s initial assessment is that the officer was acting properly within the scope of his employment at the time of the incident. The City Code provides that the City is self-insured and that the City Attorney will defend employees and cases arising from their actions as City employees. Although the City Code provides for payment of judgments against employees, the Code provides that the City will not pay punitive damage claims or awards.
1. May the City Attorney represent the police officer when the City does not have a duty to pay all or part of a judgment that may be entered against the police officer?
Yes, it would not be improper for the City Attorney to represent the police officer under these circumstances. Rules 1.6 (a), 1.7, 1.8 (f), 5.4 (c); LEO #1661. In this case it appears that the City and the police officer agree on the essential facts and believe they will advance consistent defenses. However, before undertaking the representation of the police officer, the City attorney should advise the police officer in writing that the suit may seek punitive damages outside of the City’s available coverage and that the officer may want to consider hiring independent counsel, at the City’s expense, to defend the punitive damages claim.
2. If the City Attorney does represent the police officer, what role may the City Attorney take in settling the case? What if the police officer wants to settle and the City wants to go to trial or vice versa? What if the plaintiff’s settlement demands are based upon payment of punitive damages?
If the police officer and the City have differences about how the case is to be settled or resolved, and those differences cannot be reconciled, then the City Attorney would be required to withdraw from the representation. LEOs #1661 and #616. Rule 1.7.
3. What if the City Attorney discovers later some evidence which tends to prove that the officer may have acted outside the scope of his authority? May he continue to represent the police officer? May he continue to represent the City?
The City Attorney would be required to withdraw from representation of both the City and the police officer if discovery or investigation subsequently reveals the appropriateness of antagonistic defenses or that the police officer acted contrary to City policy or outside the scope of his authority. Rule 1.7.
C. Bob Hicks is a prominent defense attorney in a very small town. Bob gets arrested for speeding by a state trooper who caught Bob going 67 miles per hour where the posted speed limit was 55 miles per hour. The local judge recused himself and Judge Bean was brought in from out of town to hear the case in traffic court. The Commonwealth’s Attorney likewise disqualified himself because he and Bob Hicks are good friends. Nevertheless, in an effort to help out his friend, and uncertain whether the substitute judge was aware of local standing policies, the Commonwealth’s Attorney wrote the following in a letter to the judge:
Though I have declined to personally try this matter, I think you should know that the policy in this jurisdiction, for first time offenders in simple speeding cases, is to continue the matter over for six months. If the defendant has a clean driving record and has not been charged with any other violations during that time, that case is dismissed.
Has the Commonwealth’s Attorney acted properly?
No. A District Committee found that such conduct by the Commonwealth’s Attorney violated DR 8-101 (A)(2) [now Rule 1.11 (a)(2)] which provides that a lawyer who holds public office shall not "use his public position to influence, or attempt to influence, a tribunal to act in favor of the lawyer or a client." Although the Commonwealth’s Attorney did not represent his friend as a client in the traffic case, he used his public position for his own personal benefit (i.e., furtherance of a personal friendship).
Your firm has an active practice representing local governments. You have been working for several months on a particularly difficult zoning case. Your main contact at the county has been an assistant county attorney. Last week she told you that she had resigned her position and wanted to apply to your firm for a job. You would like to hire her, since she could be of great assistance to you in the ongoing zoning matter. She would not be working adverse to the county’s interests, since you are representing the county in the zoning matter.
If the assistant county attorney joins your firm, may she work on the zoning matter without the county’s consent?
YES. Again, since Smith & Day are representing the County, not a private client, the requirements of Rule 1.11 (b) do not apply. Further, since the assistant county attorney resigned before contacting Smith & Day about possible employment, Rule 1.11 (d) has not been breached.
You represent the state in condemnation cases that arise in Southwest Virginia. You would like to hire an Assistant Attorney General to help in this condemnation practice. You interview one promising candidate who has been working with you in a large condemnation case that will be tried in two months. You would not intend to have the Assistant Attorney General work on the condemnation case going to trial.
If you hire the Assistant Attorney General, may your firm continue to represent the state in the condemnation case without the state’s consent?
In this situation, you and your firm are representing the state, not a private client, in the condemnation cases. Therefore, the requirements of Rule 1.11 (b) do not apply.
The next issue is whether the Assistant Attorney General should even be negotiating employment with a private law firm while he or she is participating personally and substantially in a condemnation matter in the Attorney General’s office. Rule 1.11 (d) (2) prohibits the Assistant Attorney General from negotiating with any person who is involved as a party or as attorney for a party in a matter in which the Assistant Attorney General is participating personally and substantially. Your firm is representing a "party" in the condemnation–the state. However, because your law firm and the Attorney General’s Office are representing the same party, the concerns about sharing confidential information are not present. Nor is there any concern about any special advantage to a private client. Under these circumstances, one could conclude that Rule 1.11 (d) should not apply so as to prohibit the Assistant Attorney General from negotiating employment with your firm. Indeed, application of Rule 1.11 (d) in this context does not appear to advance Rule 1.11's purposes. Nevertheless, a plain reading of the rule seems to make it improper for the Assistant Attorney General to negotiate employment with your firm even under these circumstances. Given the language of the rule, the Assistant Attorney General would need to resign first before attempting to negotiate employment with your firm, or the condemnation proceeding must be concluded.
A commonwealth’s attorney participates with state and local law enforcement on a drug task force in which it is decided that an undercover "sting" operation is necessary to infiltrate a narcotics distribution operation. The commonwealth’s attorney supervises an investigation in which undercover agents are to wear a "wire" so that their conversations with members of the target organization can be monitored and recorded. The commonwealth’s attorney is aware of Virginia and ABA ethics opinions which say that an attorney cannot counsel or advise a client to surreptitiously tape record the conversations of another. Nevertheless, he believes that the only means by which the investigation and prosecution of these drug dealers can succeed is through an undercover operation which by necessity involves deception and surreptitious recording.
Is it ethical for a prosecuting attorney to participate in an investigation in which agents will be tape-recording their conversations with third parties who are unaware that their statements are being recorded? YES
In LEO 1738, the Legal Ethics Committee opined that lawyers or agents acting under their supervision or control may secretly record telephone conversations in which they are participants, as long as the recordings are legal and are made in connection with criminal or housing discrimination investigations, or involve "threatened or actual criminal activity when the lawyer is a victim of such threat." This opinion creates a narrow exception to what was otherwise a blanket prohibition of secret tape recording.
The committee identified an additional exception in LEO 1765 for an attorney employed by the federal government, using lawful methods, such as the use of “alias identities” and non-consensual tape-recording, as a part of his intelligence or covert activities. In 2010 the committee revisited the issue of non-disclosed/non-consensual tape-recording in two opinions, LEOs 1802 and 1814. In these opinions, the committee expanded the scope of when it is appropriate for lawyers to use or advise regarding the use of undisclosed recording. See full analysis in paragraph D of “Corporate” section, supra.
The Department of Management, Budget and Inverse Accountability is a department of city government. The City Attorney has represented that department in various matters including in contract negotiation, litigation and grievance proceedings. The Director of MBIA, Bob Diddit, is charged with an administrative violation by a State agency which has the potential to result in a suspension of the operations of one of the agency's facilities. It is unclear whether the Department/City is also charged with the violation. The City Attorney calls in Director Diddit to discuss the matter and determine whether he can undertake representation of the Director as head of the agency pursuant to the City Council's indemnification policy. At the meeting the City Attorney clearly states that one of the chief purposes of the meeting is to determine whether he can undertake representation of the Director in a personal capacity as well as the agency. Director Diddit indicates that he has personal counsel who has advised him to file an appeal to the administrative action to preserve his rights, which he has done.
The City Attorney and the Director discuss the incident which is the subject of the state agency's investigation. During the conversation Director Diddit indicates the specific action which he took during the incident that precipitated the investigation and why he took that action. The Director also states that he has conveyed the same information to his superiors in the City government prior to discussing the matter with the City Attorney.
The City Attorney subsequently learns information which leads him to conclude that Director Diddit's actions are not defensible and that the Director has engaged in other activity which conflicts with state and county regulations. He advises the Director in writing that, based on his investigation, he cannot represent the Director. Director Diddit proceeds to obtain legal counsel.
The City Attorney meets with Mayor Cliff Bedunne to advise him of the matter. The City Attorney tells the Mayor that he has assisted the City government with its investigation of the Director. The investigation included an interview by City staff and the City Attorney. Pursuant to City procedures, Director Diddit is not permitted to have counsel present during the interview. Subsequently, the City determined that the Director should be terminated from employment. Director Diddit filed a grievance.
The Director claimed as part of his defense to the grievance that he understood that the City Attorney would represent him with respect to the State proceeding and then failed to do so. Director Diddit also indicated that his attorney/client privilege may have been violated and asked the City Attorney to remove himself from representation of the City in the grievance proceeding. The City Attorney refused to do so.
The City Attorney also tells the Mayor that City Manager Otto Knoe conducted a hearing regarding the grievance. The City Attorney proceeded to represent City Manager Knoe who has ultimate responsibility for determination of the grievance during the grievance proceeding.
The Director is unhappy with the decision of the City Manager to uphold the termination and appealed his decision to a grievance panel. The Director claimed that the City Attorney cannot ethically represent the City before the grievance panel.
*** Hypothetical used with permission from the Local Government Attorneys of Virginia, Inc.
1. Has representation of Director been undertaken? Perhaps.
City Attorney failed to properly advise Director of his role, the potential conflict of concurrently representing both Director and the City, and his paramount duty of loyalty to the City. Rule 1.13 (d). 12 Director may have formed a reasonable expectation that the City Attorney would be representing Director’s interests. Even if City Attorney did not expressly agree to represent Director, Director shared important information with City Attorney perhaps under the mistaken impression that the City Attorney would be protecting Director’s interests.
12 Rule 1.13(d): In dealing with an organization's directors, officers, employees, members, shareholders or other constituents, a lawyer shall explain the identity of the client when it is apparent that the organization's interests are adverse to those of the constituents with whom the lawyer is dealing.
2. Has there been a violation of confidences and secrets entrusted to the City Attorney by Director? Maybe.
The rules governing confidentiality of information apply to a lawyer who represents an organization of which the lawyer is an employee. Comment 5[a], Rule 1.6. Director may have revealed information that he would not want disclosed to others or the disclosure of which would be embarrassing or detrimental to Director. Even if City Attorney is found to have not undertaken the representation of Director, the information shared by Director may be protected under Rule 1.6 as the duty of confidentiality applies even if no legal representation ensues. See LEO 1546. The fact that such information may have been shared by Director with some of his superiors, is not a general waiver of confidentiality under Rule 1.6.
3. Is the interrogation of Director by City Attorney when Director is not permitted to have counsel appropriate? No. Does it matter that Director told City Attorney that he had engaged personal counsel? Yes
City Attorney should not have communicated with Director since he knew that Director was represented by personal counsel on subject matter substantially related to what City Attorney was investigating. Rule 4.2. 13 City Attorney needed the consent of Director’s personal attorney, who would probably have insisted that he be present during any examination of Director.
13 Rule 4.2: 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 do so.
4. Was the City Attorney's representation of City at grievance panel hearing after provision of advice to City Manager appropriate?
The mere fact that City Attorney gave advice to City Manager does not necessarily preclude City Attorney from representing the City at the grievance hearing. See Rule 1.13 (e). 14 In fact, it is likely that the advice given City Manager is consistent with the City’s positions at the grievance hearing and no conflict may exist. However, City Attorney’s prior communications with Director may be grounds for requiring City Attorney to withdraw from representing City, since the interests of the City and Director are in conflict. Rule 1.7. 15 Moreover, it may have been improper for City Attorney to have advised City Manager to terminate Director, if City Attorney relied on information provided by Director during a time when Director had a reasonable belief that City Attorney was acting on his behalf. Rules 1.6 (a), 1.8 (b).
14 Rule 1.13(e): A lawyer representing an organization may also represent any of its directors, officers, employees, members, shareholders or other constituents, subject to the provisions of Rule 1.7. If the organization's consent to the dual representation is required by Rule 1.7, the consent shall be given by an appropriate official of the organization other than the individual who is to be represented, or by the shareholders.
15 Rule 1.7(a): A lawyer shall not represent a client if the representation of that client will be directly adverse to another existing client, unless:
(1) the lawyer reasonably believes the representation will not adversely affect the relationship with the other client; and
(2) each client consents after consultation.
Rule 1.7(b): A lawyer shall not represent a client if the representation of that client may be materially limited by the lawyer's responsibilities to another client or to a third person, or by the lawyer's own interests, unless:
(1) the lawyer reasonably believes the representation will not be adversely affected; and
(2) the client consents after consultation. When representation of multiple clients in a single matter is undertaken, the consultation shall include explanation of the implications of the common representation and the advantages and risks involved.
H. Who is "the Client?" ****
Your partner represents the board of supervisors of a Virginia County. One of your best clients has asked you to pursue an action against that county’s School Board on a matter involving his young daughter.
Question: May you pursue the case against the school board even though your partner represents the board of supervisors?
Discussion: This hypothetical explores the issue of who is the client in the government context and is based upon LEO 495. The ethics committee concluded that a lawyer could be adverse to the School Board even though another partner in the firm represented the Board of Supervisors. The two entities are separate "with neither being a parent body of the other." See also LEO 243 ( a lawyer whose partner acts as counsel to a County Board of Supervisors may represent clients before an authority appointed by the Board, i.e., an Industrial Development authority, because it is a statutorily created entity independent of the Board).
**** Used with permission from Tom Spahn, Esquire and the Local Government Attorneys of Virginia, Inc.
I. Fairchild County v. Turner *****
You are the Director of the State Appraisal Board. You were contacted by Paul and Martha Turner who are two citizens of Fairchild County. The Turners are both retired and in their seventies. They are not represented by counsel and have very modest financial resources. On a friend’s recommendation, they contacted the State Appraisal Board for guidance. Mr. and Mrs. Turner own real estate on Salem Road in Fairchild County which they acquired in 1957. The County has approached Mr. and Mrs. Turner about acquiring their property to construct a new stadium and sports complex to house two professional sports franchises scheduled to move into Fairchild County next year. This complex had received great publicity from the Governor’s office and is an important part of the Governor’s economic recovery intiative.
The Turners were contacted by Dan Rater, a negotiator in the Fairchild County Attorney’s Office who offered the Turners $160,000. The Turners have no clue what the value of their property may be, but they think the offer is a good one. Nevertheless, the Turners want to check with someone before accepting the offer which is why they have contacted you. They previously contacted Mary Harper, the County Attorney, who refused to speak to them directly, nor would she share with them a copy of the appraisal prepared by County Appraiser Bill Watkins, who is licensed by the Board.
You contact Watkins who tells you that he did in fact appraise the Turners’ property and determined its value to be approximately $307,000, but his appraisal is not in writing. You know that Board regulations require Board official appraisals to be in writing, and such information is subject to FOIA. Watkins also tells you that County Attorney Harper has asked him not to put it in writing until the County determines if a condemnation proceeding is necessary (This is not really true, Watkins is just lazy). Watkins indicates, as an aside, that Rater thinks the appraised value is too high for the County, since two bond referanda for the stadium have failed. Rater wants to conclude the negotiations with the Turners at $160,000 because he believes they will accept it. The Turner parcel is the last one which the County needs to acquire, but without which the County will lose the sports complex and the forecasted $63 million in new revenues.
The Turners have called you again and left their number. You have to figure out what to say to them. Here are some of the questions going through your mind:
1. Because the Turners are unrepresented by counsel, do you owe any special legal or ethical duties to them?
If you choose to communicate with the Turners, you cannot give them legal advice or act or hold yourself out as being disinterested, if the interests of the Turners and the interests of your client (the Board/State/Governor) differ or conflict. Rule 4.3. If the Turners are looking to you as an independent or disinterested advisor, you owe a duty to make reasonable efforts to correct their misunderstanding. Obviously, you could not recommend that they accept the $160,000 offer nor advise them on how to proceed if the County will not make a higher offer.
In these facts, it is not clear whether the Turners and the Board are directly adverse. Clearly the County’s interests are directly adverse to the Turners; however, you are not employed by the County and therefore have no ethical duty to the County to refrain from communicating with or assisting the Turners. Nevertheless, your disclosure of the actual appraised value or fair market value of the property may cause the Turners to negotiate a prohibitive price for the property that may kill a negotiated sale and force the County to condemn the subject property, or perhaps back away entirely from the sports complex project. Moreover, if you were to share with the Turners the forecasted revenue expected from the sports complex, the Turners could hold out for a windfall well beyond the County’s reach. Such an action may cause a setback or delay of the Governor’s economic recovery initiative. Thus a reasonable argument could be made against disclosure since you and your Board are appointed by the Governor and communicating with the Turners could prove adverse to the interests of the Governor. Without making any disclosure of specific information about the subject property, you could inform the Turners that the law requires a written appraisal before condemnation and they could make a FOIA request of the County or Board for the appraisal. Some might consider this giving "legal advice" to an unrepresented party prohibited by Rule 4.3. Others would argue that such information is merely "general legal information" and not "legal advice" which you could provide.
2. Should you intervene in the County negotiations with the Turners? Why or why not?
Probably not. Under the facts presented here, it appears that the County is not dealing fairly with the Turners. However, you are not involved in the negotiations and therefore your services are not being used to perpetrate any fraud upon the Turners. The Rules of Professional Conduct would not require you to intervene since neither the Turners nor the County are your clients and your services are not being used to perpetrate a fraud on a third party. See Rule 1.6 (b)(3). Indeed, your intervention may be contrary to the interest of your client, the Governor, and therefore you should not have any communications with them.
3. Since the Board is appointed by the Governor, to whom are you responsible? Who is the client? The Board as an entity is your client and arguably the Governor, since you and the other Board members serve at the pleasure of the Governor.
4. Suppose you learn, after the initial settlement offer is made by Rater, that the Turners won $5 million in the state lottery, but were still contemplating Rater’s $160,000 offer. Would this change you decision as to whether to get involved in the County’s negotiations with the Turners?
No, it should not make any difference in the analysis. You still couldn’t tell the Turners that the County was "pulling a fast one" without jeopardizing the sports complex venture and that would be detrimental to the Governor’s interests.
5. What, if anything, should you do about the fact that Watkins has not prepared a written appraisal?
Current law requires a written appraisal to be made available to the Turners prior to any condemnation proceeding. Prior to that law becoming effective, there was no obligation to make a written appraisal available–the Turners would have to seek such information through formal discovery in the condemnation proceeding. Perhaps you could tell the Turners that they have the right to make a FOIA request for any written appraisals in tbe County’s possession. The law does not require, however, that the appraisal be made available to the Turners during negotiations. Assuming the law required a written appraisal, you should instruct Mr. Watkins, your subordinate, to comply with the law.
***** Used with the permission of Sharon Pandak, Prince William County Attorney and the ABA Government and Public Sector Lawyers Division for the Council on Licensure and Regulation.
An Assistant Commonwealth’s Attorney (ACA) is feeling overwhelmed by the large caseload in his new job. He is so busy and over-tasked, he misses critical filing deadlines for DNA evidence in several cases. He apologizes to his supervisor, the Commonwealth’s Attorney (CA) and explains, “But what you can expect? I’m so busy I couldn’t reasonably get to all these tasks.” ACA’s assessment of the burdensome size of his caseload is on target; no attorney could properly perform that amount of work.
While it may be not as obvious as in more regular attorney/client relationships, the ACA does have a client. That client is not his CA, but the Commonwealth. Government attorneys do not come within some lower ethical standard than do attorneys in private practice. Accordingly, ACA must provide the Commonwealth with competent, diligent representation, pursuant to Rules 1.1 and 1.3, respectively. There is no exception for excessive workloads in either rule. Comment 1 to Rule 1.3 clarifies that a lawyer should control his workload, “so that each matter can be handled adequately.” Comment 2 to that rule highlights that the duty of diligence includes timely performance of work for the client. Just like for an excessive caseload, there is no exception to either rule that an attorney operates under the supervision of another attorney. ACA was responsible for assessing the affects of his caseload on his competence and diligence and squarely addressing the problem. Rule 1.16 requires an attorney to decline representation in a matter, if its acceptance would cause the attorney to violate another ethical provision. LEO 1798.
Rule 5.1 establishes the parameters of the ethical responsibility of a supervising attorney for the conduct of those he supervises. Specifically, Rule 5.1(a) requires the CA to have in place policies and procedures establishing a work environment supporting the lawyers’ compliance with the Rules of Professional Conduct. Further, Rule 5.1(c) would hold CA responsible for any ethical violations of ACA if the CA either orders or knowingly ratifies the conduct involved. In assigning this particular caseload to ACA, CA should have assessed whether the size of that caseload precluded the provision of competent, diligent representation.
Pat N. Greenbacks was a trial lawyer at a large law firm doing commercial litigation when she assisted an intellectual property law firm in litigating a patent infringement action in Virginia. Pat enjoyed working on the cases and when the plaintiff patent owner was awarded a multimillion-dollar verdict, the allure of litigating patent infringement actions on a contingency fee basis drew her attention. She approached her firm and suggested that it allow her to develop a patent litigation practice using contingency fees. However, the firm was “risk averse” and indicated that while it would support her in developing a patent infringement practice, any such work would have to be performed pursuant to the firm’s standard practice of billing by the hour.
Pat and one of her colleagues decided to roll the dice and start their own firm to do patent litigation on a contingency fee basis. Pat has come to you for advice on how the retainer agreement she intends to use should be drafted and other issues concerning how she would like to handle her new practice.
Pat knows that in many patent infringement actions, the final resolution involves not only a payment for past infringement, but also a license agreement that provides for royalty payments to be made in the future for the life of the patent. She also knows that in settling a patent infringement action, a patent owner may be willing to provide a significant discount for the damages based on past infringement for a higher royalty rate to be paid on future sales. One issue Pat raises is whether in the retainer agreement she can provide that her firm receive a percentage of royalty payments to be paid in the future in addition to a percentage of any damages to be paid for past infringement. She is concerned this arrangement may be considered entering into a long-term business arrangement with the client.
Pat proposes to represent clients in patent infringement cases on a contingency fee basis (not domestic relations or criminal cases), so a contingency fee arrangement is allowable if the fee is reasonable. Rule 1.8(j); Rule 1.5(a) (factors to be considered in determining the reasonableness of a fee) & (d). All contingency fee arrangements shall be fully explained in writing, including the basis for calculating the contingency fee. Rule 1.5(c). Pat’s agreement to accept a percentage of future royalty payments, however, will be strictly scrutinized. Pat’s proposal is likely to be considered entering into a business transaction with a client, which is prohibited unless the terms of the transaction are fair and reasonable to the client; the terms are fully disclosed in writing to the client; the client is given a reasonable opportunity to seek the advice of independent counsel; and the client consents to the arrangement in writing. Rule 1.8(a).
Pat is also concerned that some of her potential clients – while bright inventors with potentially valuable patent portfolios – may not be able to afford paying the significant costs (much less the attorneys’ fees) of pursuing patent litigation. She wants to know if she can agree to represent a client on a contingency fee basis even if she knows that the client would never be able to pay the costs of the litigation in the unlikely event it was unsuccessful.
A lawyer may advance costs and expenses of litigation, provided the client remains ultimately liable for the costs and expenses. Rule 1.8(e)(1). If the client is indigent, a lawyer may pay the costs and expenses of litigation on the client’s behalf. Rule 1.8(e)(2).
Pat recognizes the importance of obtaining the services of experts in evaluating any potential patent infringement action and in litigating any patent infringement action that may be filed. Pat is also aware that these experts can be very expensive. Pat has contacted several potential experts that she would like to use in her cases and has learned that they are willing to provide their services to Pat’s clients on a contingency fee basis. Pat wants to know if she can retain these experts on a contingency fee basis and if it makes a difference whether the expert is used only as a consultant to evaluate the claims or as a testifying expert.
It is permissible for a lawyer to advance or pay reasonable expenses incurred by a witness in attending and testifying, reasonable compensation to a witness for lost earnings as a result of attending or testifying, and a reasonable fee for the professional services of an expert witness. Rule 3.4(c); LEO 587 (1984). Any testimony by an expert or other witness for compensation contingent on the outcome of the case, however, is unlawful. Rule 3.4, comment . A non-testifying expert used as a consultant, however, may be compensated on a contingency fee basis. LEO 449 (1982).
Pat knows several wealthy entrepreneurs who would consider funding the costs of a potentially lucrative patent infringement action for “a piece of the action,” and she wants to know if she can refer her potential clients to those entrepreneurs.
If the entrepreneurs are to pay Pat directly, Rule 1.8(f) is implicated. Rule 1.8(f) provides that a lawyer shall not accept compensation for representing a client from one other than the client unless the client consents after consultation; there is no interference with the lawyer’s independence of professional judgment or with the client-lawyer relationship; and information relating to the representation of a client is protected as required by Rule 1.6. Pat needs to follow these requirements if she is to be paid directly by the entrepreneurs. If, however, the entrepreneurs merely become investors in the client’s business, this Rule would not appear to be implicated.
Finally, Pat wants to know if her firm can enter into a fee arrangement with the client whereby her firm receives either an equity interest in the company that owns the patent or an ownership interest in the patent that is the subject of the litigation.
Pat’s firm is prohibited from acquiring an ownership interest in the patent at issue. Rule 1.8(j) provides that, except for reasonable contingent fees or liens granted by law, “[a] lawyer shall not acquire a proprietary interest in the cause of action or subject matter of litigation the lawyer is conducting for the client.” Pat’s firm may be able to receive an equity interest in the client company only in accordance with the requirements of Rule 1.8(a). That rule states that a lawyer shall not knowingly acquire an ownership interest adverse to a client unless:
(1) the transaction and terms on which the lawyer acquires the interest are fair and reasonable to the client and are fully disclosed and transmitted in writing to the client in a manner which can be reasonably understood by the client;
(2) the client is given a reasonable opportunity to seek the advice of independent counsel in the transaction; and
(3) the client consents in writing thereto.
Marias Castas prides himself on being an entrepreneur. All his life, he has made his own way without the help of others. Recently, after returning from a trip abroad and enjoying the extra service he received on Virginia Air®, Marias had a great idea. Why not open a chain of hair salons that provide trendy services? He immediately came up with a name and designed a logo for his new business – Virginia Hair – that prominently featured a large, stylized, white “V” boldly splashed across a red background. He also had some friends in the advertising business cut a demo tape for a radio commercial in which a European sounding gentleman extols the offbeat virtues of Virginia Hair over the catchy beat of hip-hop music.
Marias took his idea to Carla Tibor, a business lawyer who previously represented Marias in corporate matters. Marias asks Carla to help him incorporate a limited liability company under the name Virginia Hair LLC, prepare an operating agreement and otherwise set up Virginia Hair LLC for conducting business. Wanting to protect the keen new name and logo he has developed, Marias also asks Carla to get trademark registrations for the name Virginia Hair and logo and a copyright registration for the logo art work.
As part of this effort, Carla prepares her first state and federal trademark applications and copyright application. As part of each application, Marias must sign, under oath that the mark has been “used in commerce” and that the logo art work was authored by Marias. Carla obtains her client’s signature as a matter of course and files the applications.
Several months later, Carla receives a call from Marias. Seems Virginia Air® has sued Marias for trademark and copyright infringement, trademark dilution and unfair competition. The suit alleges that Virginia Air®, a British company, has a federally registered trademark in its name and a stylized, white “V” displayed boldly on a red and white background. The suit includes a set of interrogatories which asks, among other questions, for Virginia Hair to delineate the “use” it has made of the Virginia Hair mark in interstate commerce.
Carla has a heart to heart with Marias. Come to find out, Marias did get the idea from seeing the Virginia Air® promotional materials and has not really set up any hair salons, other than the one in his mother’s garage where he coifed the hair of a few friends while trying to get them to invest in his company. He did recently have a company in Oregon make a sample bottle of Virginia Hair Shampoo, which he had shipped to a friend in Florida. He also recently setup a website, www.virginiahair.com, which features links to Marias’ favorite websites, including www.virginiaair.com.
Putting aside the legal response to Virginia Air®, what responsibility does Carla have to investigate the facts relating to his client’s activities and advise Marias in connection with the representation? Should Carla have asked more questions concerning the origin of the trade name or logo or advised Marias to do undertake certain actions before filing the applications?
Carla is potentially in violation of Rule 1.1, “A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation”. Though Carla prepared and filed trademark and copyright applications on Marias’ behalf, Carla is not an experienced intellectual property attorney and failed to ask appropriate questions with regard to information necessary to prepare the applications, failed to advise Marias regarding trademark availability searches and clearance issues and failed to advise Marias of the import of signing the applications. The Comment to Rule 1.1 provides that the Rule does not prohibit a lawyer from handling legal problems of a type with which the lawyer is unfamiliar, and that a lawyer can provide adequate representation in a wholly novel field through necessary study or associating a lawyer with established competence in the field in question.
What should Carla advise Marias to do with regard to the pending applications?
Rules 3.3 and 1.2 are potentially implicated by the applications, and Carla should consider advising her client to expressly abandon the applications. Rule 3.3 imposes a duty of candor to the tribunal and states that “a lawyer shall not knowingly make a false statement of fact or law to a tribunal” or “offer evidence that the lawyer knows to be false. If a lawyer has offered material evidence and comes to know of its falsity, the lawyer shall take reasonable remedial measures.” Rule 3.3 (a)(1) and (4). Rule 3.3(c) states, “In an ex parte proceeding, a lawyer shall inform the tribunal of all material facts known to the lawyer which will enable the tribunal to make an informed decision, whether or not the facts are adverse.” Rule 1.2 (c) provides, “a lawyer shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal or fraudulent ….” While the PTO or Copyright Office in this context may not constitute a tribunal under the Rules, the Comment to Rule 3.3 provides that a administrative tribunals may have corollary rules or other controlling precedent that require disclosures of material facts, and the PTO’s Code of Professional Responsibility would apply.
Would your answer change if Marias testified in deposition or in Court that he had used the Virginia Hair mark in interstate commerce? If Marias has testified, does he need a criminal lawyer?
If Carla is aware that Marias gave knowingly false testimony Rules 1.2 and 3.3 would apply, and Marias’ testimony could constitute perjury. Further, the Bar has ruled repeatedly that false deposition testimony amounts to fraud on the tribunal. LEO 1650 (September 8, 1995); see also LEO 1450 (March 13, 1992); LEO 1663 (April 1, 1996).
Joe Eager is an associate with Business Methods R Us, PLLC, a patent prosecution and litigation firm. Credit Cards, LLC, a start-up credit card payment processing firm, has retained Joe to file a patent application for an improvement to a credit card payment processing method patent now assigned to Plastic Money, Inc., “the leader in credit card processing.” Credit Cards has provided Joe with some information indicating that Plastic Money and others were using the method claimed in the Plastic Money patent more than one year prior to the application and thus, the patent is invalid under 35 U.S.C. § 102 (b). They have asked Joe to do further research on the issue and, in addition to preparing the patent application, to draft an invalidity opinion regarding the Plastic Money patent.
Joe has worked diligently on the project for about 2 weeks and has a draft application prepared with 5 independent claims. During a lunch meeting, he mentions the project to Bill Staid, a Business Methods partner. Staid tells Joe that Business Methods has been aggressively pursuing Plastic Money’s patent work for several years. Two years ago Plastic Money retained Business Method to do a license agreement with Big Retailer, but otherwise the client development efforts have been rebuffed. Staid says that during the license agreement matter, he recalls discussions about modifying the Plastic Money method in a way similar to the improvement now claimed by Credit Cards. Joe pulls the license agreement file and discovers a confidential memo indicating that the credit card processing method employed by Plastic Money for Big Retailer includes the improved method of at least two of the independent claims in the draft Credit Card application.
Business Method regularly provides a firm newsletter and firm announcements to clients and prospective clients. Since the license agreement project, Plastic Money has received these mailings. Additionally, Staid recently wrote Plastic Money’s general counsel. A portion of the letter reads, “As part of our service to our valued clients, the firm provides notices regarding upcoming maintenance fee payments which may be required. You should be aware that the 7.5 year maintenance fee payment for your ‘123 patent must be made before September 30th of this year.”
This hypothetical addresses conflict of interests issues (Rules 1.7 and 1.9), the duty to preserve client confidences (Rule 1.6) and the patent attorney’s duty of candor, disclosure and good faith with regard to his dealings with the U.S. Patent and Trademark Office (37 CFR § 1.56)
May Joe file an application on behalf of Credit Cards?
Rule 1.6 precludes Joe from disclosing the contents of the confidential memo in the licensing agreement file to either his client or to the U.S. Patent and Trademark Office. This obligation exists irrespective of whether Plastic Money is a current or former client. If a patent application is filed, both Joe and the applicant have a “duty to disclose to the Office all information known to [them] to be material to patentability. . . .” 37 CFR § 1.56 (a). Information is material if it “establishes, by itself or in combination with other information, a prima facie case of unpatentability of a claim.” Under U.S. patent law, if the method now claimed by Credit Cards was known or used by Plastic Money in the U.S. more than one year prior to Credit Card’s invention of the method, then a patent cannot issue for the invention (see 35 USC § 102 (a)).
If the memo is material, Joe cannot file the application and withhold the memo from the USPTO. This would violate Joe’s duty of disclosure and might amount to inequitable conduct which would thereafter invalidate any patent which issued on the application. Conversely, Joe cannot disclose the memo without violating his duty to preserve client confidences under Rule 1.6.
There are two conditions under which Joe might, theoretically, be able to file the application. First, if Joe can establish that the invention of the method was completed by Credit Cards less than a year after the memo, a credible argument that the memo is not material can be made. Second, Joe could eliminate the two claims which assert a method disclosed in the earlier memo. Both of these alternatives run the risk of a later finding that the memo was, despite the alleged invention date, material and that, therefore, both the Joe and Credit Cards committed inequitable conduct in the prosecution of the patent. Additionally, the second may be difficult to sell to Credit Cards (especially without violating Rule 1.6) since most applicants would prefer a patent which asserts the broadest possible claims.
May Joe draft an invalidity opinion letter regarding the Plastic Money patent?
The question of whether Joe can draft the invalidity opinion letter turns, in large part, on whether Plastic Money is an existing client of Business Methods. Rule 1.7 prohibits a representation of a client which is directly adverse to another existing client. LEO 1774 provides that drafting an opinion letter for one client in order to invalidate the patent of a second existing client is, absent a waiver of the conflict, impermissible. Here, some evidence indicates that Business Methods has continued its representation of Plastic Money. In particular, the maintenance fee letter is troubling since it refers to Plastic Money as a client and it appears to be the provision of client services.
However, if Business Methods can credibly assert that Plastic Money is not an existing client (e.g. Business Methods provided Plastic Money with a termination of representation letter after the licensing agreement was concluded), Rule 1.9 rather than 1.7 applies. Rule 1.9 would preclude Joe from representing Credit Cards to prepare an invalidity opinion only if that matter is the same or substantially similar to the matter in which Business Methods represented Plastic Money. Under the facts here, that seems unlikely. Joe may not, however, use any confidences gained during the Plastic Money representation to prepare the opinion.
Lindsay Cruise is a third-year associate in the Intellectual Property Section of the law firm of Holmes, Kidman & Rogers. One of the senior partners, Robert Grabby, has assigned her to draft a validity opinion requested by his longtime client, Risky Business Mfg. Co. (“RBM”). The subject patent concerns speech recognition software. Lindsay pulled the patent, owned by The Mission Impossible Corp. (“MI”), and started the assignment.
Later that week, she was having lunch with another associate, Jerry McGuire, who does patent prosecution work exclusively on chemical matters, when he mentioned that he was working on an application for MI. Lindsay was alarmed, and wondered whether giving RBM a validity opinion about a patent owned by MI might be some kind of conflict of interest. First, she confirmed that the speech recognition software patent she was reviewing was not prosecuted by her firm. Still concerned, though, Lindsay then went to Robert Grabby to let him know that MI was a current client of the firm, and suggested they might need to get RBM and MI to consent to the opinion work. Robert responded that the firm’s current patent prosecution work involves a completely different technology than the software at issue in the opinion work. He told Lindsay that because they had already invested substantial time in the opinion work, it would be unfair to RBM to halt the work or seek consents at this point.
What should Lindsay do next? Can she continue with the opinion without consents? Given Robert Grabby’s order to continue, what responsibility does Lindsay have for the situation? What responsibility does Robert Grabby have for the situation?
Virginia Legal Ethics Opinion 1774 addresses similar facts. Lindsay could only continue with the opinion with informed consents from both RBM and MI, and if she believes the opinion work would not adversely affect the firm’s relationship with MI. Rule 1.7(a) provides:
(a) A lawyer shall not represent a client if the representation of that client will be directly adverse to another existing client, unless:
(1) the lawyer reasonably believes the representation will not adversely affect the relationship with the other client; and
(2) each client consents after consultation.
According to LEO 1774, because the opinion potentially involves assisting RBM with the invalidation of MI’s patent, the opinion drafter would be directly adverse to MI, an existing client of the firm. Under Rule 1.10, no attorney at the firm can knowingly represent a client when a Rule 1.7 conflict prohibits any one of them practicing alone from the representation. Thus, the fact that different lawyers are working on the patent prosecution and the opinion does not negate the conflict. The opinion work can therefore only continue if the attorneys involved reasonably believe that it will not adversely affect the representation of MI, and if both MI and RBM consent after consultation. Obviously, the prospect of seeking informed consent from MI presents a significant problem, because RBM probably would not want MI to know that RBM is seeking a validity opinion on the MI patent.
Lindsay cannot continue with the opinion work without the necessary disclosure and consents, regardless of Robert Grabby’s orders. LEO 1774 notes that the VSB “consciously refrained from adopting” an ABA Model Rules provision relieving an associate of ethical responsibility when acting under the direction of a supervisory attorney. To address the conflict, Lindsay may wish to seek assistance, if available, from a mentor or ethics counsel at her firm. If no such avenue is available, or is unsuccessful in changing Robert Grabby’s mind, Lindsay must nonetheless decline to continue the opinion work in violation of the Rules of Professional Conduct.
Even though he personally may not be doing the opinion work, Robert Grabby is also responsible for any ethical violations involved. Rule 5.1(c)(1) provides that “[a] lawyer shall be responsible for another lawyer’s violation of the Rules of Professional Conduct if . . . the lawyer orders, or with knowledge of the specific conduct, ratifies the conduct involved.” According to LEO 1774, Robert’s orders to continue the work, even in the face of the conflict, breached his “responsibility of ethical supervision.”
Charlie Braver is a good lawyer. He has all the right credentials and works with a first-rate firm. Due to the onslaught of lawyers out of law school, Charlie recently has expanded his practice into the intellectual property law area and recently filed his first patent infringement case. His client, Gemini, Inc. (“Gemini”), is a locally owned, family company which manufactures a game toy called the Whirly Wizard®. The Whirly Wizard® acts like a frisbee, but due to a new technology, flies ten times the distance of a normal Frisbee. Gemini markets the Whirly Wizard® under a patent (“Gemini Patent”) owned by the company. Before filing suit, Charlie obtained an opinion of infringement from one of his partners who is admitted to the patent bar.
Acme Co., a large Hong Kong based company, produced a knock-off product which looks and acts like the Whirly Wizard® that Acme markets under the name “Whirling Warlock.” Charlie had an expert in aerodynamics, Bob Johnson, study the Whirling Warlock and provide him with an opinion that the Whirling Warlock violated one claim (the “Claim”) of the Gemini’s Patent. The Claim requires that the invention have a density of no more than + 10% the density of fresh water. Gemini has filed responses to interrogatories, requests for admission and a Rule 26(a)(2) Expert Report that claim that the Whirling Warlock meets all the elements of the Claim and therefore, infringes the Gemini Patent. During the course of discovery, Acme served a request upon Gemini for among other things, a claim chart, and all written communications between Gemini and its expert. Up until today, Charlie has provided copies of all such communications.
Earlier in the day, Charlie received an unsolicited email from his expert, Johnson. Apparently, Johnson made a mistake in testing and calculating the density of the product, and in the email, reveals that the Whirling Warlock does not literally meet the density requirement of the claim although it still meets the doctrine of equivalents test. The expert confirms his mistake in oral communications with Charlie. This result is contrary to the position taken by Gemini in its answers to interrogatories, requests for admissions and in Johnson’s Rule 26(a)(2) Expert Report which has been filed with the Court under Rule 26 of the Federal Rules of Civil Procedure. Johnson also has testified in deposition that there is literal infringement.
Johnson’s “mistake” will make Braver’s case much harder to win. Discovery is completed and trial is scheduled for next month. Charlie also had entered into settlement negotiations with Acme and was very close to reaching a settlement when he learned of the “mistake.” As a consequence, Charlie did not supplement his answers to discovery or the request for copies of all communications between Gemini and its expert. Thereafter, the case is settled.
Does Charlie have a duty to supplement his client’s discovery responses? Does Charlie have to supplement them prior to settling the case? Are there ethical implications to his duty to supplement?
What duty, if any, does Charlie have to the Court to disclose this “mistake?” Would your opinion change if a motion for summary judgment had been filed based on Johnson’s report and deposition testimony?
Can Charlie allow Johnson to testify without explaining the mistake.
This hypothetical is based upon the peculiarities of patent litigation. Under controlling law, an accused product must exhibit each and every one of the claim limitations for at least one claim of the patent in-suit either literally or by the doctrine of equivalence in order to infringe the patent (the “All Elements Rule”). The absence of even one claim element in the accused device is sufficient to preclude the finding of infringement, since each element is deemed material and essential to the scope of the claim. Wolverine World Wide, Inc. v. The Nike, Inc., 38 F.3d 1193, 1199 (Fed. Cir. 1994). If the claims are literally infringed by the accused product, the analysis stops at this point.
An accused device that does not literally infringe a claim may still infringe under the “doctrine of equivalents.” Warner-Jenkinson Co. v. Hilton Davis Chem. Co., 520 US 17, 29-30 (1997); Cybor Corp. v. FAS Tech., Inc., 1308 F.3d 1448, 1460 (Fed. Cir. 1998). Equivalence is found where the differences between the claimed invention and the accused device are insubstantial, or where the accused device performs substantially the same function in substantially the same way to accomplish substantially the same result. Mas-Hamilton Group v. LaGard, Inc., 156 F.3d 1206, 1211 (Fed. Cir. 1998); Ethicon Endo-Surgery, Inc. v. United States Surgical Corp., 149 F.3d 1309, 1315-16 (Fed. Cir. 1998). Equivalence is not established by merely looking at the invention as a whole. Rather, every limitation of a claim must be found in the accused product either literally or by an equivalent. Roton Barrier, Inc. v. Stanley Works, 79 F.3d 112, 1125 (Fed. Cir. 1996); Pennwalt Corp. v. Durand-Wayland, Inc., 833 F.2d 931, 935 (Fed. Cir. 1987).
In the hypothetical, it is clear that the “mistake” made by the Aerodynamics’ expert, Bob Johnson, calls Gemini’s literal infringement position clearly into question. If the accused Whirling Warlock does not have the density called out within the Claim at issue in the patent, it cannot literally infringe the patent suit under the All Elements Rule. Assuming that the expert confirms his “mistake,” Charlie Braver is left with, at best, a claim that the Whirling Warlock infringes the patent in-suit under the doctrine of equivalents. As set forth in the revised hypothetical however, Charlie has taken the position, through his expert, and in affirmative discovery responses that there is literal infringement. Because of this, there are several consequences:
A. Duty to Supplement Discovery
Rule 26(e)(2) of the Federal Rules of Civil Procedure provides that:
a party is under a duty seasonably to amend a prior response interrogatory, request for production or request for admission if the party learns that the response is in some material respect incomplete or incorrect and if the additional or corrective information has not otherwise been made known to the other parties during the discovery process or in writing… (emphasis added)
The comments to Rule 26 provide, very clearly, that “[t]his [provision] does not impose a duty to check the accuracy of prior responses, but it prevents knowing concealment by a party or attorney…” (emphasis added). Clearly the expert’s and party’s materially different position has not been made known and Braver is under a duty to disclose the changed position of his expert and his client in this matter. Likewise, because his expert communicated to him in writing, the e-mail in question would not be privileged and would have to be turned over as part of the supplementation, as it is not a prior legal communication.
The rules are less clear on the timing of such supplementation. “Seasonably” is not an exact term and has been interpreted under the facts of each case; from a practical point, the closer to trial the parties are, the quicker one should supplement to prevent unfair prejudice to the other side. See, e.g., Nehi Bottling Co. Inc. v. All-American Bottling Co., 8 F.3d 159, 164 (4th Cir. 1993)(noting the court’s broad discretion under this rule) Where there is a pending motion before the Court – summary judgment in this matter – or the trial is at hand, there is a heightened duty to supplement in a prompt manner.
There are, however, more serious consequences for this “mistake.” The “mistake” may be construed under Rule 3.3 as “false evidence.” Rule 3.3 (1) prohibits a lawyer from knowingly “making a false statement of fact or law to a tribunal…” and Rule 3.3 (4) prohibits a lawyer from “offer[ing] evidence that the lawyer knows to be false.” More importantly, “[i]f a lawyer has offered material evidence and comes to know of its falsity, the lawyer shall take reasonable remedial measures.” (emphasis added.) In addition, Rule 3.3 (d) even imposes a requirement of promptly reporting on the fraud to the tribunal if the lawyer has information “clearly establishing that a person other than a client has perpetrated a fraud upon a tribunal…”
The Bar has ruled repeatedly that false deposition testimony amounts to fraud on the tribunal. LEO 1650 (September 8, 1995); see also LEO 1450 (March 13, 1992); LEO 1663 (April 1, 1996). Arguably, expert reports that are filed in court under the rules or in connection with a motion for summary judgment fall into this category. The bar tends to weigh the materiality of the fraud by asking whether the disclosure of the information is necessary to prevent the court’s judgment from being corrupted. If the information at issue is deemed “false evidence,” clearly it could corrupt the Court’s decision in this matter. As an officer of the Court, Charlie cannot allow the Court to proceed upon material evidence when he knows it is untrue, i.e. false, cannot allow the expert to testify without the expert disclosing this “mistake,” and cannot allow his client to proceed in the matter at trial or on motion claiming that there is literal infringement in the matter. See Rules 1.2, 8.4. It does not matter that Charlie still has a claim under the doctrine of equivalents.
B. Implications for settlement.
A more interesting question arises as to whether Charlie must supplement or disclose this “mistake” prior to settling the case. The easy thing to do—not necessarily the professional course of conduct—is to keep quiet and settle the case. Although this approach has surface appeal—i.e. the Court has not ruled, no trial, no decision on the summary judgment motion and the opposing counsel has its own expert to apprise it on density—the evidence has still been given and Charlie knows that the opposing counsel is relying upon it in making a decision on settlement. Rule 1.2(c) (along with Rule 3.3 above) would counsel against aiding the client in obtaining the settlement based on fraudulent information and accepting the settlement would violate his ethical duties, and Charlie should not do so. See LEO 1650 (expert deposition testimony discovered false after case settled; Bar deemed false testimony about expert’s qualifications material to the expert’s opinion and therefore “fraud on tribunal. Bar ruled that the fraud had to be revealed to the tribunal whether the matter is tried or is settled.); see also LEOs 730, 1079, 1093, 1140, 1270, 1272, 1296, 1347, 1362, 1367, 1451.
One of the central issues in ethics study is why lawyers are held in low esteem by the public. A key factor is lack of professionalism. One of the qualities of professionalism is a sense of giving or selflessness. To the extent that lawyers are viewed as greedy and selfish, rather than giving, caring and selfless, the reputation of the profession suffers. This is why pro bono services are so important - not only do they meet community needs, but they are necessary to revitalizing the professionalism of the law.
Aspirational goals to consider:
1. Maintaining vigilance over the integrity of the system of justice;
2. Seeking to change outmoded or improper law or procedures;
3. Espousing causes and changes which a lawyer conscientiously believes to be in the public interest;
4. Seeking to support the appointment of qualified and fit judges;
5. Cooperating in the disciplinary system to ensure that those lawyers practicing are fit to do so;
6. Supporting the organized bar as it strives to regulate and improve the profession.
1. Pro bono services. Rule 6.1, Comments  through  define the categories of pro bono services:
 Pro bono services in poverty law consist of free or nominal fee professional services for people who do not have the financial resources to compensate a lawyer. Private attorneys participating in legal aid referral programs are typical examples of "poverty law." Legal services for persons whose incomes exceed legal aid guidelines, but who nevertheless have insufficient resources to compensate counsel, would also qualify as "poverty law," provided the free or nominal fee nature of any such legal work is established in advance.
 Pro bono publico legal services in civil rights law consists of free or nominal fee professional services to assert or protect rights of individuals in which society has an interest. Professional services for victims of discrimination based on race, sex, age or handicap would be typical examples of "civil rights law," provided the free or nominal fee nature of any such legal work is established in advance.
 Free or nominal fee provision of legal services to religious, charitable or civic groups in efforts such as setting up a shelter for the homeless, operating a hotline for battered spouses or providing public service information would be examples of "public interest law."
 Training and mentoring lawyers who have volunteered to take legal aid referrals or helping recruit lawyers for pro bono referral programs would be examples of "volunteer activities designed to increase the availability of pro bono legal services."
 Service in any of the categories described is not pro bono publico if provided on a contingent fee basis. Because service must be provided without fee or expectation of fee, the intent of the lawyer to render free or nominal fee legal services is essential. Accordingly, services for which fees go uncollected would not qualify.
2. The privilege to practice law carries with it the clear and distinct responsibility to ensure that legal services are available to those who cannot afford them.
3. Lawyers who are unable to represent clients directly because of conflicting positions, such as lawyers employed by the judicial system or the government, can nevertheless utilize their legal training and skills in civic matters of social or public interest or in charitable endeavors.
4. Lawyers should also participate in educational activities.
5. Representation of clients on a pro bono basis can take the form of doing cases free, or on a reduced fee basis, or where attorney’s fees may be available by statute, but where attorneys are otherwise donating substantial time in the expectation of not being fully reimbursed.
Copyright © 2012 Virginia State Bar. All rights reserved. Updated 11/26/12