Chapter 2: Regulation of the Legal Profession

wheatauditorSoftware and s/w Development

Oct 30, 2013 (3 years and 9 months ago)

201 views


Exam
: Casebook, Problem book, Supplement, No Arizona Rules of Court or library
books, Class notes, Handouts, Web materials, Any outline that you contributed to.


8
-
23
-
00

Chapter 2: Regulation of the Legal Profession


Problem 1: Character and Fitness in Ad
mission to the Bar

(page 42)


Rules 8.1 and 8.4


I.

Applicant’s & Attorney’s Responsibility to Disclose info about Applicants

A.

False Statements prohibited:

Rule 8.1: Applicant or Attny can’t
knowingly

make a
false statement of
material fact

about applicant.

B.

F
ail to disclose

relevant info

1.

Exception: No need to disclose confidential info (info that falls under M.R. 1.6)

a.

Here duty of
confidentiality

trumps duty to disclose

b.

Scope of Protected info is broader under the rules than the code.

a.

Fifth Amendment
: Rule 8.1

is subject to the provisions of the 5th.

II.

Why have character and fitness tests
?

A.

Rationales



Professor Deborah Rhode


pages 44
-

45.

1.

Shield Clients from potential abuses


misrepresentations, misappropriations of
funds, betrayal of confidences.

2.

Safeguard t
he administration of justice from those who might subvert it through
suborning perjury, misrepresentation, bribery, and the like

3.

Less frequently articulated


Maintenance of professional image in the
community and public.

B.

Substance of the C&F requirement u
nder Rule 8.1

1.

Character:
Notion that certain conduct/activities from a person’s past will allow
us to predict how they will
act

in the future.

2.

Fitness
: Person’s ability to practice. Is the person capable of providing valuable
legal services?

3.

Arizona’s Rul
e 36



5 relevant traits and 13 types of relevant conduct which are
evaluated according to 11 relevant factors


very complicated.

4.

ABA Model Rule 8.4

gives insight into generally (not specifically) what
character and fitness
may

mean: this rule is for disc
ipline, but may reflect
admission requirement.

C.

Applied

1.

Cheating on the test


the
cheating

for Mr. Smith
is in the past
,
but the lying is
current
.

a.

It is dishonest, recent

b.

Zbiegien (admitted plagiarism in law school) is rewarded for candor, Taylor
(admitted

misleading testimony in shoplifting trial) is punished for his.

c.

If there is any law school involvement, then it must be admitted on the Bar
application.

d.

See new matter


Radtke

2.

Marijuana use alone


2

a.

Rule 8.4

b.

Burden of proof on the applicant; disciplinary ca
se, the burden is on the Bar.

c.

Not recent

d.

On
past conviction

for DUI or substance abuse would not alone be able to
keep people out,
but it would lead to a more thorough investigation
.

e.

Matter of Prager

(applicant formerly involved in large scale mj smuggling

ring, flight from the country; later returned


probation, home for AIDS, Law
School


law review, clerkship. Question of sufficient
rehabilitation

and
image

of the bar. He was deemed not suitable until more
time had past
.

f.

Girard

3.

Fiscal responsibility

a.

In

re Mustafa


chief justice of a law school’s moot court team embezzles $2k
from the program to pay emergency expenses of sister. He repays and the
school support him in applying to bar. Only one year had past since the act;
he was denied admission.

b.

In r
e C.R.W.


default on loans a basis for denial; person goes into
bankruptcy, but had not shown that she was current on school loans. Needed
to show 6 months of current payments. Denied.

4.

Crime

a.

Arizona rule 36: served with criminal summons, questioned as pa
rt of
investigation, etc.

b.

Hamm


There is no legal basis for keeping him out of the Bar automatically,
but he can be disqualified after an assessment of the evidence


and
this issue
is rehabilitation
. Are Bar image concerns valid


professor says no.

5.

Mor
ality offense

a.

Relationship of authority and fiduciary concerns

b.

Adultery v. Abuse


Abuse is taking advantage of the authority relationship or
“position abuse” relating to lawyer/client relationships. Adultery apparently is
not as serious in the professor’
s mind.

6.

In re Hale


personal views will affect your work. They made sure that this was a
civil rights case and that the Supreme Court would hear it.


Class date: 8
-
28
-
00

III.

Disciplining Lawyers

a.

4 Basic Duties of the lawyer

a.

Competence


MR 1.1/ Diligence MR
1.3

b.

Communication


MR 1.6

c.

Confidentiality


MR 1.4

d.

Loyalty MR 1.3

a.

Why do we have lawyer discipline instead of allowing tort law to take care of the
problem?

a.

To protect clients

b.

Those who are there are better able to judge misconduct.

c.

The profession likes t
o have control over these things. The criticism is that they
are not sufficiently aggressive. In 1999 in Arizona, 37 people received censure of
some sort.


3

Problem 2: The Disabled Lawyer and the Problem of Neglect


I.

What things are attorney’s most often di
sciplined for?

A.

Incompetence: a lawyer should not take on work that he knows he is incapable
of doing.

1.

Model Rule 1.1 Competence. “A lawyer shall provide competent representation
to a client. Competent representation requires the legal knowledge, skill
,
thoroughness and preparation reasonably necessary for the representation.”

2.

DR 6
-
101(A)(1).


“A lawyer shall not handle a matter “which he knows or
should know that he is not competent to handle without associating himself with a
lawyer who is competent t
o handle it.”

B.

Neglect


a lawyer should not take on
more

work than he knows he can handle.

1.


Rule 1.3: A lawyer shall act with reasonable diligence and promptness in
representing a client. Comment 2


delay can cause a client to lose a case (if the
statut
e of limitations runs) or to experience anxiety needlessly.

2.

Old ABA: Consistent failure to carry out the obligations; conscious disregard for
responsibility owed; more than one time


repeated. The old ABA opinion is
stronger in its language.

3.

Model Rules
1.3 and 1.4 are particularizations of 1.1

4.

In general, “not knowing what to do” is not a disciplined offense.

5.

A lawyer should not use settlement as a solution to decrease his caseload. Some
cases need to be litigated. The attorney needs to assess his fina
ncial concerns:
sole practitioners with small firms of general practice often experience case
overload. Administrative difficulties in the small practice: the staff often is not
able to handle the juggling.


II.

What other kinds of conduct should subject a la
wyer to professional discipline?

A.

Any provision of Rule 8.4

B.

Options:

1.

Model Rule 8.4(b): A crime that
reflects

adversely on the lawyers honesty,
trustworthiness or fitness as a lawyer...Comment 1
-

says that the attorney should
be professionally answerable
only for offenses that indicate a lack of those
characteristics relevant to the practice of law.

2.

DR 1
-
102(A)(3) “Crimes of Moral Turpitude”


broader; crimes of personal
morality, such as adultery. The model rules have moved away from that.

3.

Compare MR. 8.
4 with Az.Rule51 which states, “
shall be

disciplined for serious
misdemeanors and
all

felonies. (This included unrelated offenses and uses the
word
shall

instead of
can
.) Notes indicate that Rule 57 particularizes.

4.

The trend seems to be heading toward di
sciplining lawyers for behavior that is
related to the profession of law.

C.

Examples.

1.

Horowitz (read page 61 again): driving on drugs and killed two officers.
Problems: history of extensive drug abuse; killed two police officers. The
concern about the publ
ic image played a role. Under the rules, you would have a
hard time showing that one DUI is functionally related.

2.

In Re Bloom: assisting in selling explosives to Libya. (page 61).


4

3.

People v. Musick: lawyer suspended on the basis of three incidents of physi
cal
assault on the woman he was living with. Overturning the lower court, the court
of review determined that the conduct is
malum in se

and reflected adversely on
his ability to practice law.

4.

Florida Bar v. Taylor: What about failure to pay child support
? Isn’t that failure
to follow a court order? Yes, but the court said the failure constituted civil
contempt but not a criminal act. But Florida Supreme Court has approved a new
rule 8.4(h) making non
-
payment of support a specific disciplinable offense
. (page
64).


III.

Proceedings; Self


incrimination; Crossover or criminal and disciplinary proceedings

A.

If Black were to invoke right against self
-
incrimination in discipline proceedings,
could that assertion be a basis for discipline as “prejudicial to the ad
ministration of
justice?”

1.

No.
Spevack v. Klein
. But information in criminal proceeding can be used in
later disciplinary proceedings.
In reSchwarz
.

2.

In Massachusetts, a lawyer can be disbarred for testimony given under federal
immunity.
In re Pressman
.

B.

Ma
y a lawyer who has been subjected to professional discipline later be criminally
prosecuted for the same conduct?

1.

Maybe

a.

It depends on whether the severity of the discipline and whether it would be
disproportionate to the behavior to add a criminal penalty
.

b.

And, it also depends on the purpose of the discipline.

2.

In Michigan, there is no double jeopardy because the purpose of lawyer discipline
is to protect the public, the courts and the legal profession, not to punish.

C.

Pardon does not insulate an attorney fr
om disciplinary proceedings because it cannot
wipe out the fact that false testimony was given.
In re Abrams
.


IV.

If a lawyer is licensed in two or more states and their disciplinary rules differ, which
state’s law should be used to judge a lawyer’s conduct?

A.

Model Rule 8.5 (b)(2)(ii)


the lawyer should be disciplined in the state where he is
licensed where his actions have had a
predominant effect
. If no predominant effect,
then the “
principle place of practice
” gets preference.

B.

Choice of Law: Arizona did
not adopt 8.5.


V.

What should be the relevance, if any, of an Harold Black’s alcoholism in deciding
whether he should be subject to professional discipline? Should it be a factor in
mitigation or aggravation? Do such defenses favor those with such problems
?

A.

Your answers:

1.

It depends on the purposes of discipline


if it is to protect the public, the courts,
and the law, then it should be an aggravating factor.

a.

Consider ADA liability (page 68)


Bi
-
polar/Manic Depression. It did not
prevent disbarment becau
se either way the lawyer must be qualified.
Florida
Bar v. Clement
.


5

2.

If we are being purely reactive, then we have to wait to see what the effect on the
public, courts and law is.

B.

Mitigation?
Matter of Walker

(page 67) alcoholism was the causative factor

in the
lawyer’s conduct. Lawyer keeps his license.

a.

“Burn
-
out syndome”
Conduct of Loew



does this defense protect clients?

C.

What is normally done in Az. is to place the attorney on disability inactive status.
Arizona rule 59 and 73. Peer counseling is
also used. 6 months and a day as a
sanction makes it harder to get reinstated than a 6
-
month sanction, because of some
jurisdiction’s brightline rules about the results of a 6
-
month suspension.


VI.

Do Andrews and Black have a duty to report each other to the
lawyer disciplinary
authorities in their state?

What is the lawyers duty to report?

A.

Model Rule 8.3 and DR 1
-
103

Under the Model rules the attorney must
be sure

that the offender has committed a
violation that raises a
substantial

question

as to the
offende
r’s honesty
,
trustworthiness, or fitness...Other appropriate alternatives to reporting are acceptable
if available.


1.

The lawyer must have
“knowledge
.


Many of the disciplinary rules have a
cognitive aspect


mens rea. See page 7 of supplement for an ambi
guous
definition of terminology.

a.

Knowledge = actual knowledge + what you reasonably should have known.

2.

A violation must raise a
substantial question

as to the lawyer’s honesty,
trustworthiness or fitness as a lawyer


seriousness of the violation. The old

code
required that everything be reported and the result was that no one at all reported.

3.

Confidentiality to the client trumps the duty to report attorney misconduct
.
See conmment and rule 1.6. Today, Himmel would not be able to report because
of the du
ty to the client.

4.

Read
In re Himmel

for practical problems of reporting other attorneys.
A lawyer
may not bargain away a duty to report a lawyer’s disciplinary violation in
order to get a better settlement for a client.

B.

Judge’s duty to report


Canon 3D(2
)


it is just about the same standard as for them
as for attorneys. Supplement , page 641
-
42,



Problem 3: Regulating Lawyers outside of the Formal Disciplinary System


I.

Overview of the Law of Malpractice

A.

Tort Law as applied to attorneys


most claims con
tain a tort and a breach of
fiduciary duty claim. “Breach of contract” claims are less common.

1.

Duty arising with an attorney
-
client relation; duties to non
-
clients are limited (see
problem 21).

These duties include “fiduciary duties.”

2.

Breach of the dut
y


what is the standard of care?

3.

Causation in fact; proximate causation. “Suit within a suit”


“no causation
because the client would have lost anyway.” Ironic.


6

4.

Damages

5.

Defenses


Comparative Negligence, etc.



Look at the Mallen & Smith,
Legal Malprac
tice 551
, 4th ed.1996.

Arizona Rule


B.

Duty

1.

Is X a Client: Lawyer has only a duty to a client

a.

Exceptions: page 88, text

(1.)

Prospective client: liability arises for revealing confidential information or
for failing to inform the prospective client of the soon
-
ex
piring statute of
limitations.

(2.)

Beneficiaries of a will may hold the attorney liable for not carrying out the
testator’s intention.

(3.)

Non
-
client to whom lawyer expresses an obligation to investigate facts
and accurately report to non
-
client, as when investiga
ting a client’s title
for the sake of a lender (non
-
client).

(4.)

Liability may arise when an attorney aids a trustee
-
like beneficiary to
breach an obligation to an intended benficiary. RS 3d §73;
Fickett v.
Superior Court
;
Franco v. Mitchell

(No duty to non
-
c
lient; however, it
does not clearly overrule
Fickett
)

(5.)

Lawyers represent mother as “personal representative” in wrongful death
suit for child’s father. Child’s case prevails; lawyer give money to mother
who misuses the funds.

2.

Basic Duties:

a.

Competence

b.

Confi
dentiality

c.

Communication

d.

Loyalty

C.

Breach

1


Standard of Care: “The attorney should be required to exercise the skill and
knowledge ordinarily possessed by attorneys under similar circumstances.”
Mallen & Smith.

2

“Adequate information”

a.

Negligently recommendin
g an inadequate settlement may constitute an action
for liability.

b.

Although some courts require that the attorney fraudulently induce the client
to take a settlement in order for client to have a basis for a claim.
Muhammed

(page 83)

c.

The attorney must t
ell the client of all the consequences of the settlement and
alternatives


this is the duty of communication.

3

Relation of Ethics duties to civil liability

a.

Competence

(MR 1.1)


Even though it is not necessarily a violation of the
ethics rules to take a cl
ient from outside your area of practice, if you think you
cannot handle it, turn the client away


no matter what the client says. Or,
associate with someone who can help you with the case.


7

b.

Problem 3


Tax. Fields admitted to not having the requisite ski
ll. Tell the
client.

c.

Effect of a violation of an ER on malpractice liability

(1.)

MR’s states that a violation of the MRs is not a basis for civil liability.
(page 6, paragraph 18) But most court consider it relevant because:



Standard indicator



shows what a

Lawyer should do.



Sovereign expression



of public policy



But the violation of the rule is not negligence
per se
. The disciplinary
violation and malpractice may not have any relation to each other.
Compare to statutory violations in tort law in general.

4.

If an attorney does not refer the case or seek a specialists help, it is his duty to
have the knowledge and skill
possessed and used by specialists in the same
locality and under the same circumstances.

5.

Criminal Cases: defendants must prove innocence in o
rder to prevail

a.

Courts are concerned about opening the floodgates of litigation from
unsatisfied clients.

b.

For Criminal matters


you can only sue your attorney if you case was
overturned. This is to combat the fact that no defendant will be happy with
the
ir case if they are not completely free at the end of the proceedings.

D.

Causation

1.

Some jurisdictions require only that the lawyer’s malpractice be
a

“substantial
factor” in bringing about the plaintiff’s loss; or that there need only be a “causal
connection
” between the malpractice and the loss


not that the plaintiff would
have been successful.
Conklin v. Hannoch Weissman
;
Vahila v. Hall

(pages 84
-
85)

E.

Damages

1.

$

2.

Punitives for Gross negligence in some jurisdictions. (page 89)

3.

Suit within a Suit
: sometimes
the plaintiff in a malpractice case must prove that
they would have won the original suit and collected damages in the case.

4.

The uncollectability of any damages that the plaintiff would have won in the
original case is an affirmative defense in a malpracti
ce case when
defendant/lawyer has the burden. Courts are moving away from this.

F.

Proof:

1.

The disciplinary burden is greater than that of the malpractice tort burden case.
As far as the tax case is concerned, discipline under the model rules is not likely;

whereas a tort would be likely.

2.

Expert testimony is almost mandatory. If, however, the malpractice is so obvious
there is no need for an expert. Normally, the expert is one who practices in a
certain area. Page 86. Arizona case 77 P.2d 1180.

3.

The Supre
me Court rule and a statute are equally binding. The ethical rules set
out minimal standards and therefore are valid as evidence.

4.

Most jurisdictions allow the plaintiff to use the rules as evidence; as well as a law
professors.
Vidian v. Eliot
.

G.

Emerging
Issues in malpractice:


8

1.

Statutory defenses: Comparative negligence


what to do? Unless the statutes
specifically exempt lawyers, they are applicable defenses in malpractice cases.

2.

Limited Liability Statutes: Abolishing Vicarious Liability; however, the fi
rm itself
is liable for actions of the officers.

3.

There is a growing amount of litigation on how to apply the statute of limitations.

H.

Liability Waivers/Exculpatory Clauses

1.

Rule 8.1(h)


releasing the lawyer from liability by agreement in a contract. Two
re
quirements: a) permitted by law, b) independently represented. Not a popular
thing(?) Also, waivers must be permitted by law (ambiguous)

2.

The historic fiduciary relationship underlies the harsh rule that discourages
exculpatory clauses.


Chapter 3: Fundam
entals of the Lawyer
-
Client Relationship


Problem 4: The Relation of the Lawyer and Client

(page 103)


Look at the Restatement Third of the Law Governing Lawyers §26(1)


Look at it like a treatise.

Two new books: Rotunda,
The Lawyer’s Deskbook on Responsi
bility

and McCall,
Arizona
Handbook on Ethics


I.

Formation of the Relationship: marks the point when the atty owes duties, upon which
civil liabilities to client begin. RS §28: Loyalty, Confidentiality, Competence,
Communication, Diligence.


A.

Hybrid Basis


governed by principles of ordinary K law + principles of agency
(fiduciaries) + Rule 1.16.

1.

Agency law more influential than K law:
Devaux v. American Home Assurance
Co.
, (page 105). Agency: communications to the secretary are treated as
communications to
the lawyer. If the secretary is authorized to receive phone
calls (and she probably is), then there is an agency.

2.

The
risk rests on the lawyer
, not the client.
Togstad v. Vessley

(page 105)

a.

Contextual analysis:
There is a relationship between the client
and the
attorney when the client reasonably believes that there is one
.

b.

Sophistication: The lawyer is a more knowledgeable person and should bear
the duty to make clear whether there is or is not a relationship,
unless the
client has a sufficiently high le
vel of sophistication
.

3.

Solution: use an “engagement/retainer letter” and express clearly to the client that
there is no relationship until that occurs.

4.

Duties owed prior to acceptance of the client:

a.

Confidential information? The attorney is bound to keep
the information
confidential. See Ethics 2000 1.18 proposal.

b.

If advice is given, it must be sound

c.

Treat papers and property given to you as would a client’s.

B.

Obligation
: L’s generally are not obligated to take C’s case (except on ct
appointment.)




9

II.

Limiti
ng the Scope of Representation


A.

Allocation of Decisional Authority:

1.

Model Rule 1.2

(a)

Objectives/Means


lawyer
abides by client’s decision concerning
objectives
; lawyer decides with
consultation of the client the means
.



Identification of certain decisions.

“Other law”


in criminal matters,
constitutional law trumps the ethical rules in the allocation of decisions,
such as the client’s ability to testify, etc.

(b) Representation is not an endorsement of poli, eco, soc, or moral views.

(c)
A lawyer may limit

the
objectives

with client consent after consultation.

(d)

Distinguish between giving counsel as to consequences of action and assisting
in commission of crime.

B.

Is it an objective or a means?

1.

Make sure to clarify the client’s
objectives
.

2.

If the client is givi
ng up a substantive right, then he is giving up an objective.

C.

RS §§ 28, 32, 31
-
35

D.

Ethics 2000 Proposals abolish the notion of “means”


improvement.

E.

Lawyer’s Duty to Consult & Client’s right to Decide

1.

Consultation



to what extent must the L consult b/4 ac
ting?

a.

Rule 1.4


duty to Communicate

b.

L’s often don’t b/c



professional arrogance



time consuming

c.

Consult on anything that affects the client’s rights, pocketbook, business
or possible defenses whether means or objectives
.

2.

Can L pursue a “means” against a cli
ent’s wishes?

a.

Ultimately, the client has the right to say “no.” The lawyer is the agent to the
client, who is the principle.

b.

Frinvolous theories: C cannot require L to pursue a theory that is frivolous
(Rule 1.3). However, it is C’s case and he can lose

if he wants to, so if there
is a legal basis, the L must pursue the “losing” theory.

F. Client Autonomy

1.

Underlying Principle: C is seeking advice; L has a duty to inform; but ultimately
C has the right to reject the advice.

2.

Dilemma: Client with sufficien
t intellect decides whether to ask for death penalty.

a.

People v. Bloom



trial court allowed to grant motion for self
-
representation,
even though avowed purpose of defendant is to seek the death penalty.

b.

Handout in class: Jami McAlister


moral autonomy.

She, following her
client’s instructions, asked for the death penalty. She received a lot of flack
from the bar. Who has the right to make decisions about their own life?

F.

Lawyer withdrawal:

1.

Model Rules 1.16


most interesting provision: (b) “ ...if wit
hdrawal can be
accomplished without
material adverse effect

on the interests of the client, or” if
any number circumstances are met as listed in rule 1.16.

2.

RS §44


A lawyer may withdraw under certain circumstances. See §44(3)


10

3.

A client can fire a lawyer a
t any time. There is no breach of contract in this
context. Rule 1.16 comment 4; RS § 44.



Problem 5: The Duty of Confidentiality

(page 112)


I.

Introduction


Overview

A.
This is the most important area of the law of lawyering
.

B. Duty arises from thre
e sources.

1.

The Law of Evidence


the attorney client privilege

2.

The Law of Agency


the fiduciary duty

3.

The Law of Civil Procedure


the work product immunity.

4.

Constitution

C.

Burgeoning: Internet legal information. Generally, if there is legal advice, then th
ere
is an attorney
-
client relationship.


II.

Atty
-
Client Privilege
, Question 1

A. Policy:

1.

Life is complicated and attorneys are needed.

2.

They must be fully informed by the client and must fully inform the client.

3.

Without the privilege these full and frank disc
ussions would not occur.


B. Scope: Controversial


C.
The attorney
-
client privilege is in effect when someone seeks to compel the
testimony of a lawyer, client, or their agents in the litigation process. It has
nothing to do with
voluntary disclosures

o
utside of that process.


D.
Communications

are what are protected, not the underlying facts
. They cannot
ask:

1.

What did you tell your attorney?

2.

What did your attorney tell you?

3.

They can ask: What do you know?


E. RS (LGL) § 118

“Attorney
-
Client Privileg
e”

Except as otherwise provided in this Restatement, the attorney
-
client privilege may be
invoked as provided in §135 with respect to:

(1)

a communication

(2)

made between privileged persons

(3)

in confidence

(4)

for the purpose of obtaining or providing legal assistance

for the client.



III.

Work Product, Question 2

A.

Restatement: §136


11

1.

Work
-
product: tangible material or its intangible equivalent in unwritten or oral
form,
other than underlying facts
, prepared by a lawyer for litigation then in
progress or in the reasonable ant
icipation of future litigation.

2.

“Opinion work product” consists of the opinions or mental impressions of a
lawyer; all other w/p is ordinary w/p

3.

Unless other law applies, w/p is not subject to discovery or other compelled
disclosure.

B.

Sometimes the w/p is s
ubject to disclosure if it is impossible or unreasonably difficult
for the opposition to obtain the evidence needed. Didactions can be helpful here.


IV.

Ethical, Fiduciary Duty of Confidentiality, Question 3

A.

Model Rule 1.6

Overview and Basics


How differ fr
om Atty
-
Client privilege?

1. Broad notion


information “relating to representation” is protected (very broad).

3.

[Informed] Consent


let them know that with their consent, you can disclose; and
what the legal consequences of releasing or protecting the
information.

4.

Implied authorization


settlement negotiations, etc. Comments 7,8

5.

[Not mentioned in rule]


“Other law” (constitutions, legislation, court rules) such
as a court order can trump any confidential ethical duty, attorney
-
client privilege,
or wo
rk product immunity.

B.

Different than a/c or w/p


Rule 1.6, Comment 5

1.

c/l conf. applies in situations other than those where evidence is sought from the
lawyer through compulsion of law


voluntary disclosures
.

2.

c/l applies not only to communications, but
to all information relating to the
representation, whatever the source.


V.

Loss of privilege or other legal protection, Question 4

A.

If client by mistake or otherwise tells outsiders the substance of your confidential
conversations with him, the a/c privilege
is lost for all time.

B.

If the lawyer voluntarily waives the a/c by a voluntary, non
-
confidential disclosure,
he could be subjected to liability. RS §128, 130

C.

Can lawyers ask other lawyers advice on a case?

1.

Rule 1.6, comment 7 implies that this is ok.

2.

ABA F
ormal Opinion 98
-
411 gives suggestions as to what the inquiring lawyer
ought to do; and what the answering lawyer ought to do. See page 118, text.

D.

“Implied Authorization”


those situations where adequate representation requires
disclosure, such as an ind
isputable fact in litigation or disclosure necessary for a
satisfactory settlement in a negotiation. Rule 1.6, comment 7

E. Inadvertent Disclosure


1. Three rules re inadvertent disclosure

a.

A/C Never waived: involuntary (inadvertent), therefore no waive
r.

b.

A/C Always waived: confidentiality strictly construed/broad notion of waive

c.

A/C Middle Ground: law moves in this direction.

2. Cell Phones


Illinois recommends that attorney advise clients that if they are on a
cordless, there is a chance that the pri
vilege may be lost to someone using a radio
receiver.

3.

E
-
mail


ABA says that use of email does not violate c/l or a/c.


12

4.

Damaging memo misplaced in discovery packet, found by opposing party and
used. California says that is ok.

5.

Restatement: waiver does not
result if the client or other disclosing person took
precautions reasonable in the circumstances to guard against such disclosure.
§129.

F. Explain Advantages and Disadvantages to disclosure: If you think that it important to
disclose something that the
client does not want disclosed, then you need to explain to
the client why it should be disclosed, what the advantages and disadvantages are, and
what the legal consequences are.

G. Example: Process in the “past” abused child:

Is it protected (voluntary/c
ompelled)?

Is it information relating to representation?

Is the conduct for which representation may be necessary in the past or present?

If past and no statute requires disclosure, then no disclosure.

If statute, then the language of the statute dictates.


Not many states have adopted rule 1.6


VI.

Duration, Question 5

A.

The duty of confidentiality continues after the client
-
lawyer relationship has
terminated (rule1.6, comment 22), and therefore survives termination of a/c
relationship.

B.

A/C privilege survives th
e death of the client.
Hitt v. Stephens

(nmm);
Matter of
John Doe Grand Jury Investigation

(Charles Stewart
-

murder suspect who dies) and
State v. Macumber

(Murder defendant does not get the benefit of using atty testimony
which includes privileged infor
mation that another person did the murders. (page
121)

C.

But see,
Swindler v. Berlin



posthumous reputation not important.

D.

But Supreme Court came back and said that knowing that a/c does not survive death
of client, may cause client to not confide.


Probl
em 6: More on the Duty of Confidentiality


Organizational Clients

(page 127)


I.
Atty
-
Client Privilege for Corporations.

There was some belief at one time that
corporations had no privilege, but now every jurisdiction recognizes the existence of one.
The Restatement also recognizes one. Special problems result in determining how to apply
the privilege to corporations/organizations.

A.

Upjohn Case (page 135)
: (1981) decided the rule for the feds, not states


different
possibilities.

1.

Control Group



Privi
lege exists only between the group that controls the
corporation and the attorney.
Rejected

because otherwise lawyers cannot ensure
client’s compliance with the law fully

2.

Middle/lower
level employees are protected b/c conversations w/ employees with the
r
elevant information that the atty’s need to get in order to assist the corporation for he
corporation’s defense. Therefore communications with
any

employee needed to carry
out the functions of representation, with a few restrictions.


13

3.

Subject Matter
: not f
ollowed in
Upjohn
. If the subject matter is the issue in
litigation, then it is protected no matter who gives it. (
RS § 123 approach
)


Hypo


suppose a corporation clerk, while driving to work one day, sees corporation’s
truck hit a person. Under
Upjoh
n
, the information is not protected by the corporation’s
a/c privilege because this is not a
matter within the scope of employment
. Clerk is an
outside witness for all intents and purposes. Under RS approach it would be.


B.

Arizona:

1.

Samaritan Foundation v
. Goodfarb

(page 129)



Facts: small child injured in as a
result of medical malpractice. There are a bunch of people in the operating room


some who are accused of negligence; others who are merely present. Every one signs
papers saying they have an a/
c relationship. The court sees through it and initiates a
two prong test:

a.

If the employee whose conduct is at issue goes to seek advice, that is protected;

b.

Information gathered from those witnesses whose conduct is not at issue is not
protected.

2.
ARS 1
2
-
224


supposedly enacted to overturn
Samaritan

and embody
Upjohn
; the
law here is unclear at this time.


C.

Governments have a privilege
--

§ 124 of Restatement

and most states grant it.

1.

Restrictions:

a.

Deputy White House Counsel belongs to the government an
d the government
has no legitimate interest in covering up wrongdoing
. Therefore, the a/c
privilege does not apply unless the government attorney is merely acting as
intermediary between the president and private counsel
Lindsey

(page 130)

b.

Hillary Clinton
,
In re Seal



involved 2 sets of notes following the death of
Vincent Foster and the missing billing records of her former law firm. Notes
were not privileged.
Obligations to the office and of the special prosecutor law
precluded privilege.


c.

Consult a
private attorney; Whitehouse counsel must disclose.
In re Grand Jury
Subpoena Duces Tecum

(page 135)


II.

Crime Fraud Exception to A/C Privilege



A.

The Restatement § 132
. Procedure for invoking the exception is laid out in RS §132
comment f. Interpreted in
U
.S. v. Richard Roe, Inc.
: applies only when the client
communication was
itself

in furtherance of the crime or fraud. (page 131)

B.

Crime Fraud exception to the attorney
-
client privilege. This extends to crimes and frauds


this is outside the attorney
-
clie
nt privilege.

C.

The Duty of Confidentiality

1.

Model Code
: permissive; divulging all crimes (not fraud) DR §4
-
104(C)(3).

2.

Model Rules:
permissive; restrict it to future crimes of imminent bodily harm or
death. Rule 1.6. See footnote on p.18 of supplement. The c
riticism is that the model
rules are too protective and not every state follows the model rules

3.

See what states follow the model rules on pages 136
-
137 of supplement.


14

4.

Arizona Rules

handout and compare with Model rules.

a.

Criticisms of Arizona Rules.



It is ma
ndatory when death or bodily harm is likely; and permissive for other
crimes.



It fails to deal with the most problematic case


financial fraud (swindled
investors, etc.). It is still limited to crimes.



Making things mandatory is wrong


this ought to be
the product of
professional judgement.

5.

Restatement: Page 499, v.2 and Ethics 2000 (much broader, probably better
approach)


nothing is mandated, rather it is permissive
.

a.

Client Crimes: an attorney may use or disclose information...if necessary to
prevent
reasonably certain death or bodily harm. This applies to any and all
crimes, not just client crimes. Also, this covers any information relating to any
conduct, not just crimes.

b.

Ethics 2000 1.6 (b)(1)


follows the Restatement on crimes.

c.

§67 in the update
d RS


financial harm. Ethics 2000 again follows the
Restatement.

d.

Professor Rose does not like the Model Rule; He likes the Kutak (see footnote
under current M.R. 1.6); He really likes the Restatement and Ethics 2000.

6. The law in this area is neithe
r uniform nor settled.


9
-
13
-
00

Problem 7: Setting Legal Fees

(page 140)
-

Paul Eckstein

I. Why is the money being paid?

A.

Fixed non
-
refundable fee

B.

Down payment on services to be rendered

C.

Payment for the attorney to be there and ready when needed.
Hirschf
eld

and the
“engagement retainer fee.” This notion is a perfectly permissible thing to do.

II. Types of Fees and their Common Uses:

A.

Contingency
: must be in writing (Rule 1.5(c)); certain percentage based on a damage
award


many variations.

1.

High risk/r
eward ration in cases like class actions

2.

Defense contingent fees: “If I get a damage award below..., by get a percentage.

3.

W/in 40 days of filing, both sides must file a disclosure statement including all people
who have some knowledge of the case & set out

your damage fee.

B.

Hourly rate
: encourages thoroughness by the attorney; usually based on what the
competition is doing. Clients like this, but it is better to base the rate on your level of
skill in a particular area. Rule 1.5(a)


8 subcategories.

C.

Hourl
y rate with a cap


hourly rate up to a certain number of hours, then no further
charges.

D.

Retainers: client retains someone for a certain amount for a certain amount of time. Very
common for corporate clients


most common is to retain someone to do a var
iety of
matter that they will do for a set fee usually paid monthly. Raises the question of
whether there can be a fixed retainer, especially in cases where corporations pay
retainers to keep certain firms and certain lawyers “on ice.” How does this work

with the
prohibition that lawyers’ fees are to be reasonable? Is it reasonable to pay someone

15

$100,000 to do nothing? From the lawyer’s point of view, the lawyer must keep
expertise in this area and forego other clients to be available.
Az.
Hershel
: Fi
xed retainer
not violative of Rule 1.5 per se


Zlacket
. Fixed non
-
refundable retainers need to be
looked at very carefully. Whenever you see “In re (lawyer’s name)” you don’t want to
be one of those lawyers.

E.

Flat fee for service:
X

for a DUI, Bankrupt
cy, or simple will.

F.

Combination of some or all of A
-
E

G.

Statutory Fee: 42 U.S.C. §1988


civil rights


awards attorney’s fees in cases where the
plaintiff prevails. In class actions, the court sets the fee.


III. What should be in the fee letter?



Method of

payment



Estimate of cost to the client



Notice of potential additional expenses (secretarial overtime, copy costs, transcripts)



How often the client will be billed.



Interest rates



Who will work on the case



Mediation clause (if things go sour)



“Escape hatch
es”


this is our best estimate today, but things may change.



SCOPE OF REPRESENTATION


set out what the engagement is.



“Either party may terminate this agreement...”



Retainer in a specific amount.


IV. Setting Legal Fees


Rule 1.5

(a.)

Reasonableness


based

on 8 factors.

(b.)

When L has not regularly represented the C. L must communicate the fee, preferably in
writing
, w/in a
reasonable time

after commencing representation.

(c.)

Contingent fee must be in writing that states the method by which the fee will be
determi
ned, when expenses will be deducted (b/f or aft fee is calculated). Upon
conclusion, writing required stating outcome and client’s remittance and method of
determination.


Reasonableness:

Does the lawyer take a contingency on the net or gross?

Undecided a
t this time; but it seems more ethical to take it on the net.

Is risk to be calculated into reasonableness? Yes.


Two reasons to put contingencies in writing:



Because of the negative view of them



People taking contingent fees are often less sophisticated
and need the greater protection of written
agreements.

It is good business to put
any

payment fee arrangement in writing to the client.


(d.)

Prohibitions on contingency fees

(1.)

No contingencies in domestic relations

(2.)

No contingencies in Criminal matters.


Policie
s for prohibition of contingencies:


16

1.

Domestic relations: PP favors marriage. Don’t want L to have a financial stake in dissolving marriage.

a.

Some allow w/prop settlement b/c marriage already dissolved.

b.

Az rules 1.5(d) 1993 comment


permits use in child sup
port cases.

2.

Criminal Cases: concern that L may be more likely to accept plea bargain, etc.

a.

Criticism: may just be excuse to get $ up front b/c clients won’t pay later.

b.

Fee must be refundable to be reasonable.


DR §2
-
106 Prohibits contingencies in Criminal

cases

3. One other example of prohibited contingent fees: Fees that are contingent upon successfully passed
legislation fees. ARS 12
-
143.


V.

How much should the client’s ability to pay come into play? Two Arizona cases:
In re
Schwartz

686 P.2d and 889 P
.2d 20


VI. Is it a good idea to suggest to the client to look at another attorneys to see if the fee is
reasonable? Note 1 in the comments to rule 1.5. The client must be able to make an
informed choice. Rule 1.4(b)


Something of discussion is deleted

in Ethics 2000 rules of September.


Problem 8: Limits on Techniques for Collecting a Fee

(page 152)


I.

No work No pay:



A.

Hypo: Retained attorney refuses to file an answer unless $75k is paid immediately.
The lawyer cannot threaten withdraw and has most

likely violated
Rule 1.16 (b)(4)
.
But what if there was no agreement? Then the “reasonableness” of the fee (
1.5
) and
the warning (
1.16(b)(4)
) will be assessed.

B.

Two solutions for the attorney

1.

Go to the other side or the court and ask for an extension fo
r the client to give
them time to hire another attorney or yourself.

2.

File an answer, then ask the court to let you out.


II.

Non
-
refundable retainer in case where attorney has done little or no work.

Reasons justifying:



Client preclusion: if you take $ fr
om client B, you cannot take client A in the same
suit.



Time preclusion:


III.

Taking an interest in the real estate.

A.

Never take a property interest in the cause of the matter or the subject matter of the
action. This is a violation of
Rule 1.8(j)
. Excep
t the lawyer may:

1.

Acquire a lien to secure the lawyer’s fee


Security interest is different than
property interest.

2.

Contract for a reasonable contingent fee in a civil case.


III.

Trust accounts:
Never co
-
mingle your funds with your client’s funds
.
Rule 1.15
.

A.

Segregation



secure the money by putting it into a trust account set up just for them.

B.

Notification



notify the client upon receiving funds.


17

C.

Delivery



pay client what he is entitled to receive.


Chapter 4: The Requirement of Loyalty to the Client


Prob
lem 9: Representing multiple parties dealing with each other


I.

Introduction to Conflicts of Interest

A. Various categories of Conflicts

1.

Simultaneous Conflict


two current clients

2.

Former Clients


a present client and former client(s)

3.

Personal interest and
that of the client

4.

Non
-
client third person

B. Code Provisions: MR 1.7 is the basic conflict; MR 1.8 is much for specific; MR 1.9
former client; MR 1.10 Imputation

C. Sources of Authority: The Restatement is structure differently and understandable.
The
Ethics 2000 1.7 (On the website is now a new category of the September draft.
Compare old to new and then to the Model Rules). The comments are very helpful.

D.

Basic Rationale for conflict rules:

1.

Effect on vigorous representation,

2.

Client expectation of l
oyalty: subjective feeling that client believes that attorney
will be loyal now and in the future (not sued by his attorney in another case later.

3.

Protect confidences,

4.

Interest legal system in full good faith representation.

E.

Implicate 4 basic ethical du
ties: Conf, Loyalty, Com, Competence

F.

Costs



1.

increase conflict, more fighting because of attorney involvement

2.

2 fees,

3.

Restrict client choice (few experts, etc.)

4.

Autonomy & lawyer freedom.


II.

Apply Model Rules & Restatement, Question 1


Hypo: Potential fo
r conflict in representing husband and wife in amicable divorce

1.

Differing interests


“unforeseen bumps” (custody and support problems; what if one
moves; substantial inflation; college; re
-
marriage)

2.

Confidence problem



a.

“common attorney or pooled infor
mation exception.” Presumption that
information should be able to be disclosed in husband/wife issues.

b.

In addition there may be situation where what you are required to tell a client to
get consent requires disclosure.


A.


The General Analytical framework
under both the Ethics 2000 1.7 and the
Restatement §§201
-
02 (121
-
22) are basically the same and far superior to the more
confusing current model rules:

1.

Is there a Conflict of interest either current or potential?


18

a.

RS 201 (121): “
substantial risk

that the L’
s representation would be
materially and adversely

affected by the L’s interest, or by L’s duty to
another
current or former client,

or a third person.

b.

Ethics 2000 7.1(a) and (b): representation of one client
will

be
directly
adverse

to another cleint; or
there is a
significant risk

that representation will
by
materially limited

by duties to another [existing] client or former client...

2.

If so, then is this a “consentable” conflict?

a. RS §202 (2) (122(2)) and Ethics 2000 1.7(b)




One not prohibited by law



One not involving the assertion of a claim by one client against the other
in the same litigation.



One where attorney reasonably believes that he can adequately represent
both clients; or where it is reasonably likely that he can...

3.

If so, how do you go a
bout getting consent?

a.

RS §202(a): Informed consent requires that the each client be advised of all
material risks of the representation.

b.

Ethics 2000: “Informed consent” in
writing
. Advised of all foreseeable
adverse effects


comment 10.

*Note: be aware o
f RS §§ 209 (128), 210 (129), 211 (130).

B.

Model Code DR 5
-
105 (A)
: Adverse effect or differing interests = conflict;
consentable if lawyer reasonably believes he can adequately represent both; not
consentable if not. No specific prohibitions regarding two

clients in the same
litigation or prohibitions of law.

C.

MR 1.7 (a) & (b):

Two kinds of conflicts (this division does not exist in the
Restatement and barely in ethics 2000.). This provision was written poorly and is
very unclear.

1.

1.7(a)


“direct advers
ity”


is there a direct conflict

2.

1.7(b)


“potential adversity”


is there potential for conflict with another client or
third person.

3.

Under each there is a consentability provision


“representation will not be
adversely affected” (nothing specific as in

2000 and the RS).

4.

Client consent: if directly adverse, then client consent. If potentially adverse, the
client consent after all risks are explained.

5.

Applied to the Hypo:



It might be directly adverse because of laws that may be in effect



The potential pr
oblems may be so likely that it becomes directly adverse,
especially in a divorce case.

D.

If trouble brakes out in the future, you will have to withdraw from representing either
one of them. It turns on the likelihood of discord within the context of the em
otional
nature of divorce. Case
-
law is split in the divorce area regarding dual representation.

E.

Restatement comments: if it deals with only property, then one attorney can handle it.
Read the Reporter’s noted in the Restatement.


III.

Consent & Conflicts, Ques
tions

A.

What conflicts are nonconsentable?


19

1.

Rule 1.7, Comments on Loyalty. Loyalty to a client prohibits the lawyer from
undertaking representation that will have an adverse effect on the client. The
lawyer, therefore should not ask for consent if they bel
ieve that the representation
will be adverse to the any client. This is the non
-
consentability provision implicit
in the structure of the rule.

2.

Take this rule, Model Code 5
-
105, the Restatement, and the Ethics 2000
(Comments 6
-
9 on non
-
consentable confli
cts); and understand that all of them are
basically saying the same thing.


Application to Hypo:

Is the problem with the Greens consentable or non
-
consentable?

Step 1: Can the atty represent both without adverse; can he ask for consent? If it goes
into li
tigation, it has become non
-
consentable. If the lawyer must disclose confidential
information to one party, then it is non
-
consentable. Can the lawyer reasonably believe
that he can provide adequate representation to each client? No, this is domestic re
lations,
it will get ugly.

Step 2: If it is
not

non
-
consentable, adequately inform the client (this is built into MR
1.4). Ethics 2000 has a new definition section rule 1.0


“informed consent”


to make it
clearer.



The facts that may lead to problems:
litigation could occur; problems in the
agreement


everything. Other things might go wrong as well.



Under joint representation, rules of confidentiality change one party can know the
information the other party gives.



Also give the benefits (advantag
es as well as disadvantage).



Options or alternatives: two attorneys; talk to another attorney (are you ethically
required to do this?); do it yourself.



What will happen if a conflict breaks out? The lawyer will not be able to represent
either.

This is a
difficult conversation to have with the clients because you want for them to trust
you. The “parade of horribles”


malpractice is always in the back of the lawyer’s mind.

Get the consent in writing. It is the best evidence of client understanding and pr
otects the
attorney’s self interest. Under Ethics 2000, it is required.

Frequently, in real life, the controversy involves a situation where no discussion at all
regarding client consent. At times,

In re Shannon
, a mere mention about the possibility of
conflict without more is
inadequate to meet the demands of ethical behavior.

Neville
, the lawyer must disclose every circumstance and fact that the client needs to
make an informed decision.



IV.

Other Contexts, Question 3 (page 171)

A.

Corporate Counseling; how

do they differ



Client Identification is more difficult



Parties may be more aligned in their interests



Mainly, there will be less conflicts with transactional things by their nature.

Ethics 2000,
Rule 2.2


20

B.

Estate Planning


multiple representation is consen
table in the RS §211 under the
same conditions as under §202

C.

Bankruptcies

Controversy:

Whether or not you are adverse depends to some extent on bankruptcy law.
Comment (C)(2) to RS §209 (128)


V.

Too quick to Find Conflicts, Question 4

VI.

Remedies, Question 5



Disqualification; Malpractice & Breach of fiduciary duty; fee
forfeitures.


PROBLEM 10


The Duty of Loyalty

(page 176)

These issues usually arise on motions to disqualify. Courts want to get to the problem early to
avoid issues on appeal such as “Ineffe
ctive assistance of Counsel.” Federal District courts will
usually adopt the local rules of ethics. This is good for disciplining lawyers, but there discussion
on uniform disqualification rules in the federal system. This does not mean that the law of
d
isqualification is subversive to this.


Rule from this problem: adverse representation to a current client in an unrelated matter.
It is a conflict of interest to be adverse to a current client in an unrelated matter.


I.

Analytical Framework

A.

Are you pote
ntially or directly adverse; consentable?

B.

Is this an unrelated matter? Even if it is, that is not dispositive.
Rule 1.7, comment 8

says that
ordinarily

a lawyer may not act as an advocate against a client that the
lawyer represents in some other matter.

However, there are circumstances where will
be proper such as in large corporations with diverse operations. RS 209


you may not
sue a client you represent in another matter.
Where the relationship is a continuing
one, adverse representation is prima fa
cie improper, and the atty must show that
at
the very least
, there will be no
actual or apparent

conflict in loyalties or diminution
in the vigor of his representation
.
Cinema 5 Ltd. v. Cinema, Inc.

(Conflict when large
firms have different offices who are

representing 2+ clients in litgation.)

1.

Policies: undivided loyalty and zealous/vigorous representation.

2.

This is not a “Confidences” problem because in unrelated matters there is rarely a
confidential problem.

3.

Cinema 5



presumption of conflict must be ov
ercome by the attorney.

C.

Is the client an individual or a corporation? (no hard and fast rule)

1.

Image Tech. Svcs v. Eastman Kodak Co
:
Multi
-
office/multi
-
city lawfirm
. Facts:
The law firm had participated in a Supreme Court anti
-
trust case against Kodak tha
t
had now been remanded for trial. If was discovered that the Hong Kong office of the
firm represented a division of Kodak with respect to sales of an unrelated product in
China. Division managers had orally consented to the representation, but the
corpo
rate general counsel was not consulted.
The court disqualified the firm from
all further participation in the case b/c (a.) the vigor of rep might be
undermined, (b) there is direct adversity.

2.

ABA Ethics Opinion 95
-
390: The attorney must ask whether:


21

a.

If
sub and parent are acting as one corporation.

b.

There has been some agreement to treat the family as one client.

c.

If obligations to parent will limit pursuit of claim against sub.

3. Class discussion: seems to indicate that there was no real conflict in
Ko
dak
, despite
what the court said.There will probably be no confidence problem. What could we
learn about the contract matter that would hurt Kodak in the anti
-
trust matter?
Nothing, because they are unrelated matter.



Is there a problem of diminished re
presentation? Only Image technical
services has worries, not Kodak



This is a pure loyalty problem.



Is this a consentable or non
-
consentable conflict? Who do you get consent
from? General counsel or vice president for legal affairs in some cases.
Figure
out who is authorized. Loyalty conflicts are more likely to be
consentable then confidentiality conflicts. Cases like IBM (page 78) and Int’l
Bolts should be consentable. Absolute rule? Lawyer rep of lawyers


ABA
Op 96
-
406, diff egs;
Flatt

D.

Current clie
nt


not adverse on unrelated problem; Former client


not adverse
on related problems
. Cure: terminate one relationship. Many will not want to do
this because they want continued business. See IBM. Representing corporations
within corporations, etc. See

ABA Opinion on page 180


no hard and fast rule.
Conflicts can develop as a result of corporate or law firm mergers. The law firm has
to drop one of the clients.

E.

Core Question = Client’s subjective perception

II. Client Identification, Question 2


Form
er v. Current Clients. The burden is on the attorney to
prove that the relationship with a client is terminated.

A.

Inactive client is NOT necessarily a former client.


If there is a
continuing
relationship
, the client is current for purposes of the conflict
s rules.
IBM v Levin
:
Law Firm had and on
-
going atty
-
client relationship & then firm represented a client
against IBM.
Rule
:
although the firm had no specific assignment from IBM on
the day that it filed the suit against IBM, and even though the firm per
formed
services for IBM on a fee for services basis rather than pursuant to a retainer
arrangement, the patterns of repeated retainers, both before and after the filing
of the suit, supports a finding of a continuous relationship. Disqualified.

B.

If the cli
ent subjectively thinks there is a current relationship, there is one.

When there is a repeated pattern of representation from time to time, the
representation is assumed to be continuous until there is
explicit termination

of the
relationship.

C.

There is n
o prohibition on taking a case that is adverse to a former client.
The
problem is in establishing the “former” status of the client.


22

D.

Simultaneously representing clients whose interests are generally adverse
requires the attorney to overcome model rule 1.7
.

E.

Simultaneously representing a trade association and its members
.

Generally, a
firm can represent a trade association and at the same time, sue some of its members.
However, where the firm in representing the association, receives
confidential

info
from

some of the members, those individuals become the firm’s client and the firm
cannot sue the.
Westinghouse

(page 181).

F.

Hot Potato Rule
: Where a conflict develops between two current clients, you may
not eliminate the conflict by choosing to represent the m
ore favored client and
withdrawing from representing the other one.
Picker

(page 182) requires withdrawal
altogether, unless consent is obtained from all the parties to represent the favored
firm.
Strategem Dev. Corp

said that a firm could not drop a sub
sidiary in order to file
an unrelated claim against the parent corporation. However, some jurisdictions allow
firms to choose one client over the other if there is an “inadvertent conflict” if there is
no adverse effect.
Pennwalt Corp
.

“Advance Waiver”


RS § 202(122)


depends on the sophistication of the client and
opportunity to get independent legal advice.
Worldspan

(page 185) In most cases,
under independent legal counsel, the advance waiver will be valid, but courts are
cautious.

G.

Positional Confl
ict
: Where two separate clients have antagonistic positions on a
single legal question that has arisen in different cases, the lawyer
may represent
both parties unless representations of either client would be adversely affected.

This is no problem for tw
o trials, but what about a trial and an appeal? You want to
free lawyers from not being able to represent adverse positions in unrelated matters.


Problem 11: Conflict of Interest in Criminal Litigation

(page 194)


I. Ordinarily a lawyer should decline

to represent co
-
defendants. Potential for problems so
high that normally this is a non
-
consentable conflict.


II. Problems that arise in representing co
-
defendants

A.

Strategy


shifting culpability from one onto the other

B.

Evidence


There may be evidence

that hurts one and benefits the other

C.

Closing arguments


your ability to point to other possible suspects is limited.

D.

Handling witnesses


Aggressive cross may benefit one and hurt the other.
Gotti
: gov’t
successful in motion to have atty disqualified b
/c they were going to call him as a
possible witness & gov’t was calling a witness that was an associate of Gotti’s and was
represented by the same atty Gotti wanted.

E.

Plea bargain


may be conditioned on one testifying against the other.

III. Confide
ntiality is a major problem since there is not privilege between co
-
clients. Any
breakdown in the relationship among the three, may result in voluntary disclosures that
waive the a/c privilege. This
must be explained

in gaining consent.


23

IV.

Withdrawal: if co
nfidential information is shared and then a conflict arises, the atty must
withdraw completely.

V.

Consentable with informed consent: Constitutional problems: could give rise to a later
claim of Ineffective Assistance of Counsel.

VI.

Dealing with unrepresented pe
rsons:
Rule 4.3



an unrepresented person may assume
that a lawyer is a disinterested party even when the lawyer represents a client. During the
course of representing a client, a lawyer should not give legal advice to an unrepresented
person other than t
he advice to obtain counsel. Comment.

VII.

Corporate Attys: Rule 1.13
. The corporate attorney must be clear in dealing with
employees of the corporation that they represent the corporation on not the employee.
Explain
to the employee:
I represent the company

and not you: Miranda in civil case.
Anything you tell me, I will tell the corporation.

A.

Samaritan case

employee/corporation. Employees did not need a lawyer; they were
not the defendants. Yet, the paralegal had the employees sign on as clients. This is
clearly impermissible.

B.

Perez
: Truck drive injures people on a school bus. Lawyers from the company went
to visit truck driver in hospital. They should have explained that they were working
for the corporation. He thought they were working for him as wel
l as the corporation.
Later the information was used in a manslaughter conviction.

VIII.

Prosecutor Conflicts

A.

Atty representing party in a civil suit cannot be appointed special prosecutor for
the criminal aspect of the same matter
.
Vuitton

(page 202): C
ivil attorney for
Vuitton wanted for court to appoint him special prosecutor in criminal contempt
against the defendant who was violating the trademark infringement injunction. The
court did so and it resulted in conviction. On appeal it was overturned b
ecause of
“actual conflict.”

B.

Greer

(page 201)


in criminal cases, the courts tend to be fairly tough, requiring
disqualification of the entire office. But in this case they allowed prosecutor’s office
to take a case in which the victim’s mother, who was
going to be a witness also
worked in the pros’s office. Victim stood to gain custody of children if D was
convicted.

C.

Lewis

(page 201). D=auditor
-
controller of county going into bankruptcy, which
results in financial disaster at prosecutor’s office. Pros
ecutor took case personally
and even called a county supervisor to tell him not to vote to pay for defendant’s
defense. Prosecutor’s office disqualified.

D.

Eubanks

(page 202):
Corporations may not pay investigative fees of prosecutor’s
office to obtain info
rmation to prosecute competitor.

XI.

Regarding Model Rule 2.2: Ethics 2000 has recommended that it be deleted because 1.7
covers it.


Problem 12: Conflicts Between Client Interests and the Lawyer’s Personal Interest

(page 204)


I. Stock instead of cash for fe
e, Question 1


A.

Lawyers may receive Stock as fee, but must heed rules on Conflicts and Fees


24

1.

Venture Law Group


is it a law firm or a start up company? Highly lucrative firm
where instead of taking cash they take stock as their fees. Their employees
sup
posedly work less.

2.

Articlea:
Who Wants to Be a Millionaire

a.

Risky for firms to take stock, because payment dependent upon success of client.

b.

Lawyer who owns stock or sits on the board of directors may be sacrificing
objectivity and independence. The more c
ompanies you are tied to, the more
suspect your independence.

c.

Loyalty



some firms invest as a show of loyalty



some client demand that the firm invest as a show of loyalty

B. Two ways attorneys get stock in their clients:

1.

Invest


No 1.5 problems

2.

In lieu o
f a fee

C. Rules implicated



MR 1.8 (a)


Business Transactions with a Lawyer (Go back to problem 7,
Hawk

case and implication of 1.8(j))


the lawyer is not to acquire a proprietary interest in
the cause of action or the subject matter.



But MR 1.5 is more

on point “reasonable”



MR 1.7


avoid conflict.

D. Business transactions with a lawyer

1.

potential harms business transactions with lawyer


impact on detached independent
advice,
overreaching
, confidential info, drafting documents;

2.

Mershon

case


defendan
t’s burden is pretty heavy; the attorney must show that by
active diligence, the client/business partner was fully informed of atty’s interests and
rights and interests; and that the client has either counsel or the same level of
disclosure that he would h
ave if he did have counsel.

3.
Rule 8.1

(a)(1)


fair and reasonable; full disclosure

(a)(2)


no requirement to affirmatively help them seek other advice; this means a
sufficient time interval must be given before the transaction is made.

(a)(3)


Ethic
s 2000 has made two changes: advise the client of the desirability of
seeing outside counsel and it must be done in writing.

Writing: positive (client understanding); negative (drafted by the possibly self
-
interested attorney).

4. Should the attorney
-
cli
ent privilege be more flexible allowing for safeguards for the
unsophisticated client? Low relevance of contract rules because of the fiduciary
nature of the relationship.

5. Why are attorneys going into business with clients

a.

Gains are dramatic in IPO’s

b.

Keep attorneys around


not wanting them to go work for start up companies and
other law firms

c.

Clients are demanding it


companies want you to take the risk with them.

d.

Attorneys want the business


Loyalty

E. ABA Safeguards (handouts) that some law fi
rms have adopted:


25

1.

Limit the investment to an insubstantial percentage of stock and the amount invested
in any single client to a nonmaterial sum.

2.

Now what about investing in a client’s competitor? Clearly a conflict of interest.

F. Insider Trading:
Unit
ed States v. O’Hagan

Is there an ethical rule that deals with the
lawyer ability to do this? Yes M.R. 1.8.Under the RS of Agency, you may not use the
client’s information period. The Model Code also bans the use of client information.
Model Rules only pr
ohibit using the information if it hurts the client, making
insider trading in some circumstances ok, under 1.8(b)
. Ethics 2000 retains the
adverse impact only approach. 1.8(b) is only a rule for discipline. The Restatement of
Agency and Law Governing La
wyers do not relate to discipline. So even if it does not
hurt the client, you are liable for the profits.


II. Sex with Clients

A.

Legally: there is no rule against it in the current model rules.

B.

Related rules: MR 1.7 (conflict of interest); 1.6 (attorney c
lient privilege);

C.

Ethics 2000 added a flat prohibition under 1.8(k)


no sex unless there was a pre
-
existing,
consensual relationship.

D.

California Rule 3
-
120 (page 361, Supp.)


prohibited if “required,” “coerced,” or causes
attorney to perform legal servi
ces incompetently.

E.

Arizona avoided a specific rule because of interpretive problems.


Problem 13: Representing the Insured and the Insurer

(page 215)


I. Who is the client? Problem arises when an insured person is sued. The insured is always a
client;
but the insurance company may also be a client.

A.

Two Models:

1.

Both the insured and the insurer are the client

2.

Only the insured is the client, but attorney is paid by the insurer = majority view
(Restatement §215)

B.

Why does it make a difference who the client
is?

1.

Confidentiality problem


insurance company wants a lot of information.

2.

Control: Also the right to control the litigation will be affected.

3.

Consent: If both are the clients, they must consent to dual representation.

4.

Malpractice: can the insurer s
ue the attorney for malpractice (
Langerman
)

C.

1.7 Interests with third parties


there is still a conflict of interest problem does not go
away.

D.

What else will govern how much information the insurance company gets or how much
right they will have in the set
tlement decision? Provisions in the insurance policy. The
insured contracts away rights. This is outside the scope of the law of lawyering.


II. Confidentiality, Question 2

A. Basic Duty
-

MR 1.6
-

Henderson’s views on prompt notice, confidential?

B D
uty applied to insurance representation:

1.) Facts regarding duty to cooperate, confidential?


26

2.) Collusion
-

Larry statement to Henderson, other impressions re: collusion, impact
duty to cooperate on informing insurer?
The attorney may not reveal
infor
mation gained through representation of client (insured).
Langerman

3.) Progress reports, discovery


the attorney may give progress reports to the
insurance company.

C. On all four
-

info relating to representation? work product? Impact on insurer of

duty
to cooperate & insurance policy generally, what can Henderson tell insurance co?
General impact on insurer of policy provisions? Express or implied authorization?
Holding of
Parsons
? LGL § 215(134) comment f


the attorney cannot do anything
to viola
te the duty of confidentiality between himself and the client. Here the
primary duty is to the insured. Anything that infringes is likely a violation.

D. Should Henderson withdraw? Indirect disclosure? "Noisy withdrawal, MR 1.6
comments 15 & 16


only w
ithdraw if it is fraudulent or criminal conduct
. No
disclosure of client’s confidences.

III. Settlement Offers, Question 3

Who has authority to settle? Impact of insurance policy, professional liability policies;
Lawyer duty to disclose settlement, duty t
o evaluate & recommend; relevance policy limits,
ABA Op. 96
-
403Professional insurance policies.

The majority of the opinions and law seem to say that the representation to the insured
is limited; and that


usually because of the contract


the insurer has

the last word on
taking a settlement. However, the insured must be informed so that they can take
another attorney or argue with the insurance company.


IV. Control of Litigation, Question 4

A. MR 1.8(f), impact insurance policy, relevance of policy limi
ts, LGL § 215(134)
comments d & f & illus 5


Many state ethics committees hold that lawyers are to
remain independent of the insurer’s control.

B. Malpractice liability, right of insur co to sue lawyer for malpractice even if not client,
cases 221
-
22;
Lan
german
, NM.
Use 1.2(c)


limit the scope ahead of time if you are
an independent attorney; otherwise the law is unclear. (see pages 221
-
222)

V. Impact reservation of rights, Question 5

MR 1.7, 1.6, continued representation permissible under 1.7(b)?

VI. Ot
her Third Party Payment Situations, Question 6

Father & daughter charged with DUI; corporate director or employee; legal aid atty



PROBLEM 14


The lawyer and her former client

(page227)


I. Basics Former Client Conflicts, Questions 1 & 2



27

A. Gen Discu
ssion of MR 1.9, 1.10 & Code,
T.C. Theatres

(judge
-
made law standards based
on appearance of impropriety), 1989 ABA Amends, Az ER 1.9 & 1.10, MR 1.9(b) & Az
ER 1.10(b);

1.

Note all 1.9 conflicts consentable

(this is different than “current client conflicts”
in
which there are some non
-
consentable conflicts. This shows a need for balancing
because of the right of clients to choose their attorney and the right of attorneys to
practice as they desire.
Preservation of confidential information
. Impaired ability
to represent a subsequent client. Representation of current client might undermine
duties to protect the former client.);

2.

“Appearance of impropriety” std & Az. law; LGL §213(132), Comment b
-

4
policies; Note 1.9(a) prohibition despite MRs 1.8(b) & 1.9(c)
(1); Contrast present &
former client rules,
IBM
; Ethics 2000 Rule 1.9 & comment 1. The “appearance of
impropriety” rule has been attacked by commentators as having no value. Despite
this, the rule has made it into the judge
-
made law, because of its appe
arance in the
model code. After the model rules were adopted, the rule was trashed, but it was still
in the case law.
There is a gradual diminishing reliance on “appearance of
impropriety.”


B.

Definition of "Matter"
-

1.9 Comment 2; cases, pp. 228
-
29. Bro
ad term:
very contingent
upon the facts of a given case and it is a question of degree. Question: was the
lawyer so involved in the matter that the subsequent representation can justly be
regarded as a changing of sides in the matter in question.


C.

Costs o
f Disqualification:

1.

The client may not get the attorney of choice.

2.

The attorney does not get to choose the client.

3.

When the client finds a new attorney, he will have to start all over again; If he uses
information from the disqualified attorney, he risks d
isqualification of the 2d
attorney.


II. Same or Substantially Related, Question 3


A.

Side switching in the
same case
, judge collection Ques. 3 (a); rationale
-

loyalty, LGL §
213(132)(1) & Comment d(I)& (ii); cases Ques 3(a).

1.

Loyalty

a.

Damron

(page 228)