CURRENT ETHICAL ISSUES FOR LEGAL PROFESSIONALS

1
CURRENT ETHICAL ISSUES FOR LEGAL PROFESSIONALS

• Rob Charles
• [phone] (direct line)
• [phone] (fax)
• RCharles_at_LRLaw.com

2
Arizona Ethics Opinion on Restrictions on Rights
to Practice and Departing Lawyers

• The State Bar of Arizona Committee on Rules of
  Professional Conduct (Ethics Committee) issues
  formal opinions that represent non-binding advice
  on ethics issues for Arizona lawyers.
• In Op. 09-01, the Committee discussed the issue
  of a firm that employs associate lawyers using a
  contract that would require the departing
  associate to pay a flat amount to the law firm
  for each instance in which the departing
  associate continues to represent a client that
  had previously been represented by the law firm.

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Op. 09-01 (cont.)

• Because ER 5.6 states that a lawyer shall not
  participate in offering or making . . . a
  partnership, shareholders, operating, employment
  or other similar type of agreement that restricts
  the right of a lawyer to practice after
  termination of the relationship, except an
  agreement concerning benefits upon retirement . .
  . the restriction was unethical. Firms may not
  impose financial disincentives upon a withdrawing
  ways right to represent a client, as the
  decision to retain counsel is the clients
  decision, not the law firms.

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Termination of Representation Withdrawal Fees
Confidentiality

• In Op. 09-02, the Committee discussed issues
  arising upon the termination of the lawyer/client
  representation. Among other topics, ER 1.16
  describes the circumstances under which a lawyer
  may or shall withdraw from client representation.
  In litigation, a court may have jurisdiction to
  decide whether a lawyer is entitled to withdraw
  or not.

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09-02 (cont.)

• The obligation to maintain client information
  confidential as provided in ER 1.6 does not end
  upon termination of the representation. A lawyer
  may not disclose client confidential information
  simply because the representation is terminated.
  In fact, ER 1.9 explicitly imposes duties on a
  lawyer with respect to former clients, including
  the obligation to refrain from using client
  confidential information to the disadvantage of
  the former client or to reveal client
  confidential information except as provided in
  the Rules. ER 1.9(c).

6
09-02 (cont.)

• If the termination of representation is as a
  result of a controversy between the lawyer and
  the client, ER 1.6(d)(4) may allow the lawyer to
  disclose client confidential information to
  respond to allegations in any proceeding
  concerning the lawyers representation of the
  client. However, such disclosures can be made
  only to the extent the lawyer reasonably
  believes necessary. The lawyer may not simply
  disclose all client confidential information in
  the event of a dispute with a former client.

7
09-02 (cont.)

• If the termination of representation arises
  because of a dispute over the clients providing
  fraudulent evidence, the lawyer must consider ER
  3.3(a)(3) and decide whether disclosure is
  necessary if the client will not remedy the
  problem of having provided false evidence.

8
09-02 (cont.)

• Sometimes disputes arise in determination of
  representation over the fee for withdrawal
  related work. Legal fees must be reasonable.
  See ER 1.5. The ethics opinion notes that most
  authorities believe the client should not be
  charged for most withdrawal-related work, in
  order to avoid chilling the clients ability to
  retain counsel of choice.

9
09-02 (cont.)

• The withdrawing lawyer has other obligations
  under ER 1.9, including with respect to conflicts
  of interest. ER 1.16(d) addresses the
  requirement that the lawyer provide the client
  with a copy of the file without charge, unless
  the lawyer had previously provided the client
  with a copy of the file.

10
Trust Accounts Safekeeping Property

• There are lawyers licensed in Arizona who have
  offices in Arizona and elsewhere. In the
  multistate practice of law, some firms would
  prefer to keep their bank accounts in a central
  bank, rather than in each jurisdiction where the
  law firm or lawyer practices. The Arizona
  Committee explained in Op. 09-03 that client
  funds may be held in the home offices trust
  account, but that the law firm must continue to
  comply with the trust account rules. In
  addition, payment of sums to the Arizona
  Foundation for Legal Services and Education as
  required under Rule 43, Ariz. R. Civ. P.,
  requires payment to the Arizona entity.
  Consolidating bank accounts is not a basis to
  excuse the payment to the AZFLSE.

11
Confidentiality Maintaining Client Files
Electronic Storage Internet

• Lawyers increasingly are attempting to maintain
  files that have less paper, with a goal of
  becoming paperless. Related to that goal is
  maintaining client files in electronic form.
  Communications with clients are increasingly
  electronic, through email and the internet,
  rather than through meetings and mail.

12
09-04 (cont.)

• The lawyers ethical obligation is to keep client
  information confidential, and to take reasonable
  steps to make sure that client files are not
  disclosed to third parties. See ER 1.6 Ethics
  Op. 05-04. In Op. 09-04, the Committee talked
  about some of the steps that a competent and
  reasonable attorney might take in order to
  maintain client confidentiality, particularly of
  client files. The facts of the opinion suggested
  extreme efforts at maintaining security by the
  lawyer, including with respect to emails with the
  client. These protections included password
  protections of the electronic file storage, for
  emails, and for information that was available to
  the client through a lawyer provided website.
  Those protections, while extensive, were not in
  the opinion of the Committee, the minimum
  standard. Rather, they represented one example
  of appropriate safeguards.

13
Confidentiality of Work Email

• Ordinarily, a communication between a client and
  lawyer for a purpose of obtaining legal advice if
  made with an expectation of privacy is protected
  by the attorney-client privilege. Problems can
  arise where a client uses non-confidential means
  to communicate with the lawyer. For example,
  standing in a crowd, talking to a lawyer,
  speaking loud enough for the crowd to hear, may
  be a waiver of the privilege. In a less obvious
  manner, using non-confidential email to
  communicate with the lawyer may result in a loss
  of the privilege. In Convertino v. United States
  Department of Justice, No. 04-0236 (D.D.C. Dec.
  10, 2009), a former government lawyer argued that
  his communications sent from work to his personal
  counsel fell within the attorney-client
  privilege. Because the information was sent from
  a work email, there maybe concerns that the
  employees employment agreement or other
  applicable rules may treat such information as
  not confidential, particularly as against the
  employer. The District Court, however, in
  considering a request by a third party for
  disclosure of the former prosecutors emails,
  found that the client reasonably expected the
  emails with personal counsel to remain
  confidential.

14
Confidentiality of Work Email (cont.)

• A New York bankruptcy court had identified
  factors to be applied in determining whether the
  client intended to communicate in confidence and
  whether that intention was objectively
  reasonable.
• Does the corporation maintain a policy banning
  personal or other objectionable use,
• Does the corporation monitor the use of the
  employees computer or email,
• Do third parties have a right of access to the
  computer or emails, and
• Did the corporation notify the employee, or was
  the employee aware, of the use and monitoring
  policies? In Re Asia Global Crossing, Ltd., 322
  B.R. 247, 258 (S.D.N.Y. 2005).

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Confidentiality of Work Email (cont.)

• In the particular case, the lawyer reasonably
  expected his email with his personal counsel to
  remain confidential.

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Confidentiality of Work Email (cont.)

• Similarly, the Bankruptcy Court in Global
  Crossing had to consider whether corporate
  officers and a consultants communications
  involving an attorney were protected by the
  privilege. The former employees had communicated
  with their personal counsel through use of
  company email. The companys bankruptcy filing
  had not gone well, and a trustee was appointed,
  who then had control over the office email
  systems. The former employees sought to protect
  their email, as well as certain confidential
  documents, which had been left at the company
  offices under the control of the trustee.
• The trustee claimed that by using the corporate
  email system, the employees waived any privilege.
  The court applied federal common law to find
  that the issue was one of intent, but that the
  intent had to be reasonable. After considering
  the circumstances, the court could not conclude
  as a matter of law that use of the company email
  system waived the privilege. Nor did leaving
  documents in the company offices when directed to
  vacate the offices by the trustee represent a
  waiver of the privilege. In contrast, documents
  that would have been otherwise privileged but
  which were shared with a consultant no longer
  remained privileged. One of the hallmarks of the
  attorney-client privilege is that the information
  not be shared with persons outside the privilege.
  The consultant clearly was neither an attorney
  nor the client.

17
Abusive Lawyer Conduct

• A North Carolina lawyer was recommended for a
  90-day suspension from the practice of law, with
  a subsequent two-year probation period, for
  sending 53 threatening and abusive voicemail
  messages to the successor administrator of his
  fathers estate, the attorney for the
  administrator, and the ex officio judge of the
  Superior Court who is responsible for overseeing
  the estate. The Review Department of the
  California State Bar Court found that the
  lawyers behavior was so abusive as to constitute
  acts of moral turpitude as well as threats to
  gain advantage in a civil dispute, disrespect the
  courts and judicial officer. The probation
  recommendation included extensive training and
  counseling to help the lawyer avoid future
  misconduct.

18
Supervised Lawyer Responsible for Firm Over
Charges

• In Disciplinary Council v. Smith, 124 Ohio St. 3D
  49, 2009-Ohio-5960 (2009), the Ohio court
  disciplined a lawyer who represented clients in a
  personal injury matter for excessive charges by
  the law firm. The law firm attempted to charge a
  contingent fee from a client on insurance
  coverage that New York law prohibits contingent
  fees on. Other aspects of the firms billing
  were excessive.

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Disciplinary Council v. Smith (cont.)

• The lawyer argued that the owner of the firm, not
  the lawyer, was responsible for the excessive
  billings. The court responded in part,
  Respondents counsel stated at oral argument
  that respondent prepared the disbursement sheets
  as a scribe would, following the dictates of his
  superior. Actually, respondent is not a scribe,
  but an attorney, responsible for zealously
  representing his clients interests. Id. 17.
  The supervised lawyer could not simply rely on
  assurance from the firms owner that the owner
  would look into the responsibleness or legality
  of the firms charges. To the extent that the
  lawyers explanation was that he was unaware of
  the limitation of contingent fees on this
  particular source of personal injury recoveries,
  the court agreed that the lawyers position
  demonstrated he was not competent to provide the
  client the advice he was providing, due to lack
  of education or training.
• The court determined to issue a public reprimand
  about the lawyers conduct.

20
Conflict Between Lawyer and Client Concerning the
Lawyers Own Malpractice

• ER 1.7 and other rules require that lawyers avoid
  conflicts of interest, including with the
  lawyers own interest. Where a lawyer may have
  committed mistake, a conflict can develop between
  the lawyers interests with respect to the
  mistake, or alleged malpractice, and the clients
  interest.

21
Minn. Op. No. 21 (cont.)

• The Minnesota Ethics Committee Op. No. 21
  addresses this issue. It describes an obligation
  of the lawyer to communicate with the client
  under Rule 1.4. The opinion directs the lawyer
  who is aware of a non-frivolous malpractice claim
  by a current client that materially affects the
  current clients interests, to inform that client
  about that conduct to the extent necessary in
  order to keep the client reasonably informed
  about the status of the representation, to make
  informed decisions regarding the representation,
  and to be sure that the client is properly
  informed about the means by which the clients
  objectives are to be accomplished. There is no
  privilege or protection against self
  incrimination that would allow the lawyer not to
  report a possible malpractice claim to the client.

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Disclosure of Conflicts Information When Lawyers
Move Between Law Firms

• The ABA Standing Committee on Ethics and
  Professional Responsibility issued its formal
  opinion 09-455 (2009). This opinion addresses
  the issue of client confidentiality in the
  context of a lawyer changing firms.

23
ABA Op. 09-455 (cont.)

• On the one hand, a lawyer has an obligation to
  maintain client information confidential under ER
  1.6.
• On the other, the lawyer and a new law firm have
  the obligation to avoid conflicts of interest
  under ER 1.7.
• The question is the extent to which the lawyer
  may disclose information about pending
  representation in order to check there are
  conflicts caused by changing firms.

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ABA Op. 09-455 (cont.)

• The ABA opinion argues that since a conflicts
  analysis is necessary in order to evaluate the
  impact of the lawyer changing firms, at least
  some limited use of confidential information must
  be allowed in order to check for conflicts.
• However, only minimal information should be
  provided to the new firm for the conflict check.
  
• Nor should disclosing such information compromise
  the attorney-client privilege or otherwise
  prejudice the client.
• If it appears that there may be a conflict and a
  question whether there is a substantial
  relationship between two matters, the lawyer may
  not disclose client confidential information to
  the other firm in order to evaluate the facts of
  the conflict.
• Using a third party as conflicts counsel would
  not solve the problem, as the information would
  be disclosed to the third party.
• Finally, the lawyers should be sensitive to the
  timing issues involved in obtaining client
  consent to the disclosure of confidential
  information for conflict checking purposes.

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Courtroom Attire

• A New York Lawyer argued that his right to free
  speech and his liberty interest in his own
  personal appearance permitted him to wear jeans
  and a hat in court.
• The New York State judicial system does not
  permit this type of attire, even for pro se
  litigants.
• The United States District Court held that there
  was no constitutional right to violate the state
  court rules, and that the obligation to maintain
  courtroom civility prevailed over the pro se
  lawyers wardrobe desires.
• Bank v. Katz, No. 108-cv-01033 (E.D.N.Y.,
  September 24, 2009).

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Rob Charles

• Rob Charles is a partner with Lewis and Roca LLP,
  where he represents clients in business
  bankruptcy cases, commercial lawsuits and
  business transactions. He primarily represents
  both secured and unsecured creditors, as well as
  debtors, in all aspects of Chapter 11 business
  bankruptcy cases before the bankruptcy courts of
  Arizona and Nevada and on appeal.
• Mr. Charles is a member and past chair of the
  State Bar of Arizona Committee on Rules of
  Professional Conduct and a fellow in the
  American College of Bankruptcy and is an adjunct
  professor of law at the University of Arizona
  College of Law.