Law Practice Management

Putting your law firm name on coffee mugs and giving away donuts to prospective clients is apparently not enough anymore.  Recent firm branding campaigns have included sponsorships of pro golfers and cricket players, including emblazoning the bats with the firm name.

That may be the trend of the future in Biglaw, but a much more modest marketing effort recently landed an Ohio lawyer in disciplinary trouble.

No Justice, no peace?

According to the opinion, from 1981-1997, the lawyer in question practiced with another attorney, who eventually became (and continues to be) a Justice of the Ohio Supreme Court.  Fast forward to 2015.  With the permission of the Justice, the lawyer began using their old firm name, including on business cards, and hung a sign outside the office saying “O’Neill & Brown Law Office (Est. 1981).”

That only lasted for a few weeks before the local bar association began investigating.  After the disciplinary authorities advised the Justice that the sign violated Ohio ethics rules, the Justice instructed the lawyer to remove his name from the sign, and eventually the lawyer did so.

False and misleading

The Ohio Supreme Court (with the Justice in question not participating) agreed with the Board of Professional Conduct that the firm name on the sign and business card, and the reference to the firm having been established in 1981 were false or misleading communications that violated Ohio’s version of Model Rule 7.1.  The court also found a violation of Rule 7.5(c), which prohibits using a judge’s name in a firm name or other firm communication, unless the judge regularly and actively practices with the firm.

By a 4-3 vote, the court imposed a two-year stayed suspension on the lawyer.  A significant aggravating factor contributed to the sanction:  this wasn’t the lawyer’s first rodeo — he’d been disciplined several times before, according to the opinion, including a previous suspension for threatening a judge who served as chair of the local bar grievance committee.  But in mitigation, the court noted that his conduct “did not involve the provision of legal services,” that no clients were harmed, and that the Justice participated in the decision to use the “O’Neill & Brown Law Office” name on the sign.

The three-judge minority would have imposed an “indefinite” suspension, which in Ohio is a term of at least two years.

Stick to the tchotchkes

A good lesson here.  A prominent legal moniker on your office sign may be good marketing, but it would be best to stick to the coffee mugs — or cricket bats.

Hot on the heels of the publicity for Brian Cuban’s new book, “The Addicted Lawyer:  Tales of the Bar, Booze, Blow and Redemption,” comes the searing account in the New York Times of the 2015 death of a former IP partner at Wilson Sonsini Goodrich & Rosati, who secretly battled drug addiction and reportedly died of a bacterial infection that often afflicts intravenous drug users.

Cuban’s book (he is the brother of billionaire Dallas Mavericks owner Mark Cuban) is, by all accounts, a story of perseverance and recovery; Cuban redeemed his life, although he does not practice law any longer.

But the New York Times article, authored by the Wilson Sonsini partner’s ex-wife, is a harrowing call to arms about the need to do a better job — in the organized bar, in BigLaw, small law, corporate law and everywhere else — of identifying and helping addicted lawyers.

“Last call” — dial-in to a work conference

The Wilson Sonsini partner, identified in the NYT article only as “Peter,” is described as successful, driven and work-obsessed.  After a stellar law school career, in which he graduated first in his class, he replicated that success in a legal career that saw him regularly working 60-hour weeks over the next 20 years.

His ex-wife, with whom Peter maintained good relations, found him dead on the floor in his house, near half-filled syringes, a tourniquet, and crushed pills.  She had no idea that he was struggling with a severe addiction — reflected in detailed notes the lawyer kept of the times and amounts of his drug injections — although she writes that she noticed wild mood-swings in the months before his death, and voice mails consisting of “meandering soliloquies.”

Most poignantly, the lawyer kept working right up to the end.  The last call he made from his cellphone, his ex-wife wrote, was to dial in to a work conference call, even though he was “vomiting, unable to sit up, slipping in and out of consciousness.”

At Peter’s memorial service, his ex-wife wrote, while a weeping young associate eulogized the partner he had come to know, firm lawyers were bent over their own cellphones, tapping out e-mails — unable to put down their work even then.

Grim statistics

The statistics on lawyers and alcohol abuse are grim, and well-known.  More than a fifth of all lawyers are problem drinkers, according to last year’s joint report of the Hazelden Betty Ford Foundation and the American Bar Association Lawyers.

The statistically-robust report drew responses from 12,825 licensed and practicing lawyers from 19 states.  But only 25 percent of respondents answered questions about drug use — out of fear of answering, according to the study’s lead author.  Quoted in the NYT story, he said that  “I think the incidence of drug use and abuse is significantly underreported,” because in contrast to alcohol use, drug use is illegal.

In his book, Cuban describes snorting cocaine in his former law firm’s bathroom, to keep going after boozing it up and using drugs the night before.  Other memoirs, like “Girl Walks Out of a Bar,” by a former Pillsbury Winthrop lawyer, underscore the reality of lawyer drug addiction.

What is the profession doing to help?

Accounts like Cuban’s and the death of the Wilson Sonsini lawyer spotlight the need for the legal profession to step up its efforts to help.  The ABA’s Model Rule on Continuing Legal Education calls for just one credit of CLE every three years on mental health or substance abuse.

Some states, like my home state of Ohio, have moved away from a specific substance-abuse requirement;  since rule amendments in 2014, many subjects qualify to meet our “professional conduct” CLE requirement, so a lawyer never needs to have any substance abuse CLE.

Yet, in the days before that change was made, when lawyers still needed to get one hour of  substance abuse training every two years, each time I spoke on ethics at a CLE seminar, I observed at least one lawyer going up afterwards to the person who had spoken on substance abuse, and speaking earnestly.  These were lawyers in trouble — and we need to do more to help them.

Jurisdictions like Illinois seem to be moving in the right direction, as reported by Chicago ethics lawyer Allison WoodUnder amended rules, Illinois lawyers are now required to take one hour of mental health and substance abuse CLE as part of their six-hour professional responsibility requirement.  Both the directive to have at least some substance abuse training, and the size of the PR requirement are laudable.

Law firms also have a huge role to play — there’s room to ask whether firm culture “enables” alcoholism.  De-emphasizing the historic link between lawyering and drinking , including at firm events, would help.  So would increasing access to law firm employee assistance programs, as highlighted in guidelines here, from Massachusetts “Lawyers Concerned for Lawyers.”

And as I have done before, here’s a state-by-state list of links to lawyer assistance organizations.  No problem is ever made worse by seeking help.

Being inexperienced can contribute to getting into disciplinary trouble, but it can also be a mitigating factor in a bar disciplinary case.  That’s the message of a recent opinion of the Oklahoma Supreme Court, which imposed a six month suspension from state practice as reciprocal discipline on a lawyer who had already been suspended from federal bankruptcy court practice for five years.

Raising the risk?

Something like 37,000 students likely graduated from law school this year; that’s a lot of newly-minted JD’s coming into the world of practice.  And while they might know more about legal ethics when they graduate than they ever will again (as I tell the law students I teach as an adjunct ethics prof), it’s also surely true that simple inexperience can play a role in going astray and getting into disciplinary trouble.

For one thing, with the legal job market being what it is, many new lawyers will likely be hanging out their own shingles.  There are lots of opportunities for a novice to get mentoring, advice, and hand-holding from more-veteran members of the  bar.

But failing to take advantage of those resources can mean that an inexperienced solo lawyer is stuck in an echo-chamber, without the corrective that a more-seasoned viewpoint can contribute.  And even in a firm, it’s easy to make a mistake if the proper supervision is lacking.

Sooner State of confusion 

The lawyer in this disciplinary case was admitted to the Oklahoma bar and started practicing in 2013.  About 18 months later, she got her first client — a couple who were attempting to set aside a bankruptcy court order.

Her attempt on the couple’s behalf went badly wrong, and then spiraled out of control:  the bankruptcy court found the lawyer’s set-aside motion to be without any legal or factual basis; she missed the deadline to supplement the filing; and then she sued the trustee, the judge, the state courts of two counties and the layers representing the creditors.

The court dismissed that suit with prejudice, and the creditors moved for sanctions against the lawyer in the bankruptcy court, asserting among other things that she had filed frivolous litigation, misrepresented facts, and had threatened the bankruptcy trustee and attorneys with criminal prosecution in bad faith.

Before the sanctions hearing, the lawyer entered into a settlement, accepting a five-year suspension from practice in both Oklahoma bankruptcy courts.

Inexperience counts

It’s a little-known fact that drawing professional discipline in one jurisdiction where you are admitted to practice (including before federal courts), can bring reciprocal discipline in other jurisdictions where you are admitted.  That’s what happened here.

In response to the state bar’s disciplinary charges, the lawyer creatively argued that because her bankruptcy suspension was a result of an agreed settlement and not an “adjudication,” there was no basis for reciprocal state discipline.  The Oklahoma supreme court swept that argument aside, and held that her conduct violated the Sooner State’s versions of Model Rules 1.1 (competence); Rule 3.4 (unfairness to opposing parties and counsel; and Rule 8.4(d) (conduct prejudicial to the administration of justice.

But in weighing the appropriate reciprocal discipline, the court significantly took as a mitigating factor that the lawyer “was new to the practice of law and without supervision or training.”  Without intending to hold “new legal practitioners to different standards from  more seasoned lawyers,” the court nonetheless took account of the fact that the lawyer “was practicing on her own with little prior training or supervision and refused to ask for help.”

Thus, although acknowledging that the lawyer exceeded the bounds of zealous advocacy, and “displayed a lack of competency and insolence in the practice of bankruptcy law,” the court imposed only a six-month suspension from practice.

Don’t let this happen to you 

If you’re a newbie, recognize the limits of your knowledge and get help.  Don’t count on your inexperience to save you from harsh professional discipline; you don’t want to go there in the first place.  If you practice by yourself, take advantage of all the formal and informal mentoring and training resources available via state and local bar associations and law schools.

My hometown Cleveland Metropolitan Bar Association, for instance, has a solo and small firm practice section.  The Ohio Supreme Court has a lawyer-to-lawyer mentoring program, linking veteran lawyers with new practitioners.  Last, here are other mentoring programs, listed by state.

Just last month, we wrote about a North Carolina draft proposal that would ease the way via its ethics rules for Avvo and other on-line legal services to operate there.  Now, after a joint opinion from three New Jersey Supreme Court committees, the Garden State has turned thumbs down on such law platforms, citing issues including improper fee-sharing and referral fees.

Nix on Avvo, LegalZoom, Rocket Lawyer

The joint opinion bans participation in Avvo’s programs because of the “marketing fees” it collect from lawyers in exchange for participating in two of its offerings:  “Avvo Advisor,” in which clients talk to lawyers for 15 minutes for $40, with Avvo keeping $10; and “Avvo Legal Services,” where clients pay a flat fee to Avvo for access to affiliated lawyers, and then Avvo pays the lawyer net of its own fee.

The committees found that this arrangement violates New Jersey’s version of Model Rule 5.4(a), barring fee-splitting with non-lawyers, and it mattered not that Avvo called its cut a “marketing fee”:  irrespective of its label, said the committees, “lawyers pay a portion of the legal fee earned to a nonlawyer; this is impermissible fee sharing.”  In addition, said the committees, these payments signal a “lawyer referral service,” and payment of an “impermissible referral fee” under New Jersey’s Rules 7.2(c) and 7.3(d).

Icing the cake, the committees also raised a trust account issue, saying that Avvo’s practice of holding the lawyer’s fee until the conclusion of the matter violates the attorney’s duty to maintain a registered trust account and to hold client funds in it until the work is completed.

Avvo wasn’t the only on-line platform tagged — Rocket Lawyer and LegalZoom also were placed off-limits to New Jersey lawyers, but for a different reason.  While they do not require payment from lawyers to participate, and do not share the clients’ monthly subscription fees with lawyers, Rocket Lawyer and LegalZoom are “legal service plans” that have not been registered with or approved by the New Jersey Supreme Court, said the committees.  That places them outside the pale, even while not violating the fee-sharing prohibition.

A notice to the bar from the supreme court’s administrative office accompanied the joint opinion, listing the 46 state-approved legal service plans, including those offered through unions and government agencies.

What next?

As we’ve noted, the ABA’s Futures Commission sees the continuing onslaught of on-line platforms as something that is here to stay.  Nonetheless, this New Jersey ethics opinion joins other cautionary or negative ones issued by regulators in Ohio, Pennsylvania and South Carolina.  Against that backdrop, North Carolina’s recent consideration of rule changes may appear to be the outlier (although an Oregon state bar association task force also recently recommended ethics rule amendments that would be friendly to on-line service legal platforms).

Avvo responded to the New Jersey opinion, telling the New Jersey Law Journal that it is “attempting to address the pressing need for greater consumer access to justice, and we will continue to do so despite this advisory opinion.”

Will market pressure become a tsunami that will eventually sweep legal ethics considerations away?  It may take awhile to tell, but until then, look for more ethics opinions to come out with differing views, potentially creating a patchwork of inconsistent state approaches.  We’ll be watching with great interest.

Beach Office 1Practicing law out of a “virtual law office” (“VLO”), without being tied to the overhead expense of a brick-and-mortar facility, is increasingly attractive to lawyers in many stages of their careers:  junior lawyers hanging out their shingles in a tough market; senior lawyers who want to keep practicing, but in a flexible format; and mid-career lawyers who are attracted to the increased options for leveraging their practices by using cutting-edge technology.

Ohio’s Board of Professional Conduct is the latest to issue an ethics opinion on the subject.  But by not discussing an inherent issue — multi-jurisdictional practice and possible unauthorized practice — the Ohio opinion leaves some gaps.

VLO:  OK in OH

The Ohio Board’s opinion lays out the basic concepts of a VLO:  it typically involves communicating with clients “almost exclusively” in a non-face-to-face way, using various forms of technology, including secure internet portals, and without “a physical office where the lawyer works, meets with clients, and stores client files.”  Following the lead of several earlier ethics opinions, including from Florida, Pennsylvania, North Carolina and Washington, the Ohio Board in general greenlights VLO’s for lawyers in the Buckeye State.

The Board pointed to several ethics duties inherent in operating a VLO:

  • maintaining the technological competence needed to operate the VLO;
  • using reasonable efforts to prevent inadvertently disclosing client information;
  • discussing at the outset of the representation the office technology the lawyer uses;
  • keeping up adequate communication with the client, “regardless of the type of technology used;” and
  • making reasonable efforts to ensure that technology vendors are providing their services “in a manner compatible with the lawyer’s professional obligations,” as required by Ohio’s version of Model Rule 5.3(a).

“Office address” requirement

Some jurisdictions — but not Ohio — have bar rules or court rules requiring a lawyer to have a “bona fide office,” interpreted as traditional office space.  Such rules clearly limit the ability to operate through a VLO.  But even without a bona fide office requirement, a corollary issue lurks:  most state versions of Model Rule 7.2(c) require legal marketing materials to include the “office address of … [a] lawyer … responsible” for the advertising.

The Oho Board resolved that issue, saying that the language does not require a physical address, and can also include the lawyer’s home address, the address of shared office space or even a registered post office box.  In order to avoid being misleading, lawyers who have untethered themselves from physical offices must state in their advertising that they are able to meet in person with clients “by appointment only.”

VLO’s and UPL/MJP

The Ohio Board’s opinion doesn’t discuss multi-jurisdiction practice, or when an Ohio lawyer’s operation of a VLO might risk crossing the line into the unauthorized practice of law (“UPL’) in another state.  That’s somewhat puzzling — first, because Model Rule 5.5(a) (as adopted in Ohio and elsewhere), bars lawyers from practicing in a jurisdiction in violation of regulations in that jurisdiction; and second, because the Board previously dealt with the flip side of the VLO/UPL issue.  In 2011, the Board opined that out-of-state lawyers who represented Ohio residents through a VLO had impermissibly established a “systematic presence” in Ohio for the practice of law, in violation of Ohio’s version of Model Rule 5.5(b).  The Board said that “‘systematic and continuous presence’ includes both physical and virtual presence in Ohio.”

Most jurisdictions have adopted some version of the rule prohibiting out-of-state lawyers from establishing a systematic presence in that jurisdiction.  Therefore, if another state were to adopt Ohio’s stance that “systematic presence” includes virtual presence, Ohio lawyers could risk a UPL finding if they provide services to clients in that state through an Ohio-based VLO.  That’s a risk that the Ohio Board could have cautioned about.

Ethics opinions from California and Illinois (citing the 2011 Ohio opinion) have discussed the UPL issues with VLO’s.

The ABA’s Task force on E-Lawyering has advised in its Suggested Minimum Standards for Delivering Legal Services On-Line that lawyers operating VLO’s should avoid UPL by serving “only clients who are residents of the state where the firm is authorized to practice, or clients who have a matter within the state where the law firm is authorized to practice.”

That seems like a good way to stay out of border-crossing trouble, and to minimize UPL risks while using technology to engage in virtual practice, with its potential benefits.

One dollar billsLitigation funding is in the news again, with the U.S. Chamber of Commerce spearheading a request to amend the Federal Rules of Civil Procedure to require initial disclosure of all third-party agreements for compensation that are “contingent on, and sourced from, any proceeds of the civil action, by settlement, judgment or otherwise.”

The Chamber joined with 28 other organizations in a letter sent earlier this month to the federal courts’ Rules Committee, saying that its aim is to bring third-party litigation funding out of “the shadows” and to identify “a real party in interest that may be steering a plaintiff’s litigation strategy and settlement decisions.”

The new push follows up on a 2014 proposal that the Chamber and a few other organizations made to the same rulemaking committee, which was rejected.  Things have changed since then, the Chamber’s June 1 letter said, citing expansion of third-party funding in the U.S., with several significant players reporting significant and steady growth, and on-line marketplaces opening the way for investors to shop for individual cases to contribute to.

Shift in momentum?

As we reported in February, the U.S. District Court for the Northern District of California became the first court to mandate disclosure of litigation funding that parties in class actions receive from outside sources, under a revision to the court’s standing order.  That was followed up in March, when the U.S. House of Representatives passed the Fairness in Class Action Litigation Act of 2017, which likewise would require disclosure of third-party funders in class actions.  The bill is now before the Senate Judiciary Committee.

Problems with alternative litigation funding

The process for amending the federal civil rules is a lengthy one.  But with at least some momentum on its side, the U.S. Chamber cited several justifications for the rule change it seeks, including:

  • The champerty problem.  This old legal doctrine, which seeks to prevent buying and selling lawsuits, still continues to be in play, with at least three state courts of appeals citing it or suggesting it as a viable defense in 2016-17, and a U.S. bankruptcy court in January finding an agreement to be champertous.
  • Fee-sharing issue.  Model Rule 5.4(a) bars almost all forms of sharing legal fees with non-lawyers, with the goal of preserving the lawyer’s independent professional judgment. But some models of third-party litigation funding apparently involve plaintiffs’ counsel repaying the funder’s investment out of the lawyer’s attorney fees, if any.
  • Confidentiality and conflicts.  To the extent that funding arrangements require disclosure of client information to the financier they could raise confidentiality concerns under the ethics rules, as well as privilege issues.  And lawyers who have “contracted directly with a funding company may have … duties to it that are … perhaps inconsistent with” the duties of loyalty to the client, including conflicts arising from steering clients to favored funders.

Watch and wait

In a press release, one large litigation funder, Bentham IMF, said that the Chamber’s proposal was misguided, including because the law firms using such financing were assisting under-served and under-funded clients — small-to-mid-size businesses and individuals — who could not otherwise afford to litigate their claims.  Bentham also said that the rule amendment proposal was unfairly one-sided, and that defendants should have to abide by similar disclosure rules.

Litigation funding will continue to be a hotly debated issue, and if your clients are involved in civil litigation, these are developments that bear watching.  Stay tuned.

Stand out from the crowd concept femaleAvvo Legal Services has been meeting with North Carolina bar regulators, resulting in a draft proposal that would amend several legal ethics rules and make it easier for Avvo to operate in the Tar Heel State, according to Prof. Alberto Bernabe, a Chicago law professor who has seen some of the relevant documents, and blogged about them last week.

Ethical problems?

Several state legal ethics opinions have recently found client-referral services using an Avvo-like model to be ethically problematic, including opinions from regulators in Pennsylvania, South Carolina, and my home state, Ohio.  Rule revisions in Florida now pending for approval by the state supreme court there likewise call aspects of the model into some question.

Some of the identified ethical issues raised by Avvo-like referral services, as identified by various ethics opinions are:

  • the company — and non-lawyers — control significant aspects of the attorney-client relationship, including functions that can constitute the practice of law (see Model Rule 5.5(a));
  • the structure can interfere with the lawyer’s exercise of independent legal judgment on behalf of the client (see Model Rule 5.4(c));
  • the way the fees are managed could constitute or invite commingling of clients’ funds and lawyers’ funds (see Model Rule 1.15(a));
  • the fee structure makes it difficult to comply with the duty to refund unearned fees at the end of the representation (see Model Rule 1.16(d));
  • a model where the lawyer is paid only after the representation is concluded makes the fees contingent on the outcome, which can violate the prohibition on contingent fees for certain kinds of cases (see Model Rule 1.5(d));
  • receiving and holding client funds paid in advance may violate the lawyer’s duty to hold those funds in a trust account (see Model Rule 1.15(c));
  • although part of the fee paid by the client and kept by the company may be designated as a “marketing fee,” the fact that such fees are calculated as a percentage of the full fee makes the arrangement likely to be impermissible fee-splitting with a non-lawyer (see Model Rule 5.4(a));
  • the business model can threaten the confidentiality of the lawyer-client relationship (see Model Rule 1.6).

North Carolina considers amendments

In light of these issues, Avvo has tried to allay concerns, including by saying that its model actually comports with ethics rules, and that it is providing advertising that is protected by the First Amendment.  (A recent Georgetown Law Journal article by Prof. Bernabe details Avvo’s arguments.)

According to Prof. Bernabe, North Carolina may now be considering a different regulatory approach:  amending its lawyer conduct rules to “make it acceptable for lawyers to participate in services like Avvo.”

Documents he has seen include a proposal to amend the fee-splitting rule to permit payment of a portion of the lawyer’s fee to an on-line platform if the amount is a reasonable charge for administrative or marketing services and there is no interference with the lawyer’s independent professional judgment.

Another proposed comment amendment would allow lawyers to participate in Avvo-like rating services without fear of being held in violation of the prohibition against giving something of value in exchange for a recommendation of employment.  (See Model Rule 7.2(b).)

Yet another amendment would allow the company to keep the client’s payment until the end of the representation, imposing on the lawyer the obligation of ensuring that such “intermediaries” “adequately protect client funds” — instead of placing such advance payments in the lawyer’s trust account.

Brave New World

Although nothing is certain yet, and the documents that Prof. Bernabe describes are certainly preliminary and might be incomplete, the path that North Carolina appears to be contemplating significantly departs from the road that bar regulators in other jurisdictions have so far taken.  Whether acquiescing to market trends — even ones that seem to be irresistible — is in the true best interest of legal consumers and the legal profession remains to be seen.

Road Sign with THE FUTURE and SkyWhat is the future of legal services in the U.S.?  How should the enormous unmet need for services — to the middle class and to the poor — be met?  Judy Perry Martinez, the Chair of the ABA Commission on the Future of Legal Services, was in Cleveland last week, and discussed the Commission’s 100+ page report and some of its controversial recommendations.  She spoke at the Cleveland Metropolitan Bar Association to members of its ethics committee and other bar leaders. Martinez’ talk was wide ranging.

  • On-line service providers are here to stay:  Entities like Avvo, Rocket Lawyer and LegalZoom now have a presence in some legal market segments, said Martinez, and “they are not going away.”  Lawyers must acknowledge this force, and that “they are no doubt innovating in a way that consumers of justice are paying attention to.”  Like attorney advertising, which was once derided but is now ubiquitous, on-line service delivery platforms are “now part of the ecosystem.”  The challenge is to ensure that these and other technology-driven models meet the standards most critically important to the profession.  The Commission report recommends that state courts adopt the ABA Model Regulatory Objectives for the Provision of Legal Services, so that if and when a court examines on-line or other providers (including lawyers), any regulation is guided by the stated objectives.   These include such core principles as independence of legal judgment, protection of confidential and privileged information and accessible civil remedies for negligence and discipline for misconduct.
  • The public needs more from us:  The Commission’s report details a huge unmet need for legal services.  In some jurisdictions, more than 80 percent of the civil legal needs of low-income people and the majority of middle-income people go unmet — even as new law graduates struggle to find work.  “Our efforts have woefully failed” so far, Martinez said, to meet the goal of providing some form of effective assistance for the essential civil legal needs of all people otherwise unable to afford a lawyer — which is the Commission’s #1 recommendation.
  • We’re trained to be innovation-averse:  Our legal training itself makes lawyers resistant to change, and that threatens to leave us behind.  We are trained to look at the past, and to avoid unnecessary risk.  The traditional service delivery models that we accordingly embrace constrain innovation, and can limit access to justice.  Yet, it is crucial to overcome these barriers.  “If we don’t shape the future, others will,” said Martinez.
  • Despite adverse comment from the rank-and-file, conversation about “ABS” continues:  Permitting non-lawyer ownership stakes in law firms (aka “alternative business structure”) has generated much controversy; it is currently barred in every jurisdiction except the District of Columbia (although in the state of Washington, a very narrow form is encompassed under its Limited License Legal Technician program).  In 2016, the ABA solicited comments on its issue paper on ABS for law firms, including non-lawyer ownership.  Based on a lack of data showing that ABS would benefit the public, and being aware of opposition from some, the ABA recommended continued exploration.  According to Martinez, the issue is continuing as a topic of discussion at bar association and court meetings, and those interested are watching developments in the UK, where ABS is growing.  What should the burden of proof on the issue be, asked Martinez:  that there is “no evidence of harm to the public,” or that there is “evidence of benefit to the public”?

What can be done on the local level?  Martinez said that lawyer education aimed at helping lawyers and judges understand the benefits of applying technological innovations to the access-to-justice problem was front and center, and that every bar association should be incorporating a futures component into its long-range planning.

Bottom line:  we lawyers had better get on board because like it or not, the future is here, and it holds opportunities for the profession and for increased access to justice.

Last WillWhat if you suddenly became disabled and couldn’t handle your law practice?  Or, if you were to die, who would deal with your pending matters?  Who has the password for your computer?  Who knows where you bank?  The Ohio Board of Professional Conduct last week published an ethics guide titled “Succession Planning” that addresses these issues, and it’s worthwhile reading if you practice on your own or in a small firm, in any jurisdiction.

Trendlines point to need for planning

Two trends are converging that underscore the topic of succession preparedness:  the predominance of solo and small firms, and the graying of the profession.

  • The ABA reports that in 2005, 63% of all private practitioners were in firms of fewer than five people.  And 49% practiced on their own.  (Seventy-five percent of U.S. lawyers were in private practice in 2005.)
  • And we are not getting any younger — in fact, the opposite.  The median age of lawyers in 2005 was 49; 13% were over 65 years old.  And recent trends are going to increase the proportion of older lawyers:  total J.D. enrollment between 2011-12 and 2013-14 decreased by 12%, or by more than 17,000 students.  First-year law school enrollment decreased by 29% between 2010 and 2016, and for the 2016-17 school year it remained flat over the previous year.

Be prepared

The Ohio ethics guide notes that “failing to plan for the unexpected can result in harm to clients and in confusion and hardship for the lawyer’s family, staff and professional colleagues.”

Every state’s lawyer conduct rules has some version of Model Rule 1.1 and 1.3, dealing with competence and diligence, and the Ohio guide notes that while having a succession plan is not mandated by the Ohio rules, having a plan “can be viewed as a continuation of a lawyer’s duty of competent and diligent representation.”

Some jurisdictions go further.  As of June 2015, the ABA reported that several specifically addressed succession planning in their conduct rules, registration rules or in comments.  (A state-by-state chart is here.)  For instance, Florida requires the designation of an “inventory attorney,” who can agree to take action in the event of a lawyer’s death or disability.  Indiana provides as part of its annual registration process for permissive designation of an “attorney surrogate.”  South Carolina’s Rule 1.19, “Succession Planning,” says that lawyers “should prepare written succession plans” in anticipation of their death or disability.

What to do & who can help?  

The Ohio guide points to several components of a succession plan, which will help avoid the burden on your family and possible prejudice to your clients if the unexpected happens:

  • a written agreement with a designated successor lawyer;
  • information on the status and location of open and closed client files;
  • details regarding trust accounts, operating accounts and client ledgers;
  • location of log-in and password information for office computers, mobile devices, e-mail, voicemail, billing and calendaring systems, online banking, etc.;
  • location of accounts payable and receivable information;
  • information on leases, insurance, key vendors and other details needed to wind up a law practice, if needed.

Here in Ohio, two city bar associations have specific programs and resources.  My hometown bar, the Cleveland Metropolitan Bar Association, has a “What-If Preparedness” program, with a site that links to a wealth of material, including forms.  The Columbus Bar Association has a program called the “Advance Succession Registry.”  Details are here.  The ABA likewise has resources and links, including to jurisdiction-specific materials.

Think about the unthinkable

Thinking about death and disability is never easy — for lawyers or anyone else.  But coming to grips with these topics and taking action can put your mind at ease that you have protected your clients and minimized a possible future burden on those you love.  That’s worth doing, no matter how difficult.

Business Ethics Concept with icons* Our guest blogger is a Certified Compliance & Ethics Professional (CCEP)® in Thompson Hine’s Dayton, Ohio office.

A growing list of businesses are eager to promote a strong culture of ethical corporate compliance, and lawyers should be ready to get on board by developing knowledge and skills to address this need.

Companies devoting resources to ethics

I recently participated as the Ethicist in Residence  for Xavier University’s International Business Ethics Program.  In addition to being a guest panelist regarding international trade compliance issues at the University Cergy-Pontoise’s School of Law in France,  I traveled in London and Paris to learn more about how corporate giants like L’Oreal and BP tackle compliance and ethics on a daily basis.

My trip was eye-opening.  I visited the London-based Institute of Business Ethics,  had dinner with Michael Woodford, the former CEO/President of Olympus (and whistleblower exposing corruption at the company in 2011).  I also spoke with Robert Bond, a legal expert on data privacy in the UK.

Bottom line from all of these events?  Ethics and compliance are increasingly important to today’s businesses, as evidenced by the growing number of programs and resources that companies are putting in place.  As a result, lawyers need to be prepared to weigh not only compliance concerns but also ethical considerations in doing business.

Legislative pressure

First, companies are focusing more on compliance and ethics because of increasing legislation and pressures.  France recently enacted the Sapin II Law, which aligns French anticorruption law with aspects of U.S. and UK corruption enforcement.  Sapin II was prompted by  concerns of political leaders who believed that increased trade globalization was contributing to corruption and undermining economic interests.

The Organization for Economic Co-operation and Development has criticized France in the past for lagging behind other countries in its corruption enforcement efforts.  Unlike the U.S., France has never convicted a company for bribing foreign officials, despite the fact that those same companies often found themselves subject to investigation or prosecution abroad for such conduct.  Now, French companies are looking to U.S. companies and legal counsel for tips on how to comply with the new law.

Globalization shines a light on ethics

Second, companies are increasing resources for compliance and ethics due to expanding multi-jurisdictional cooperation on a global basis to enforce anti-corruption efforts and hold wrong-doers accountable.  Examples include Operation Car Wash in Brazil, as well as the VimpelCom enforcement action, which coordinated efforts among the United States, Sweden, Switzerland, Norway, the British Virgin Islands, Caymans, Bermuda, Ireland, Estonia, Spain, Latvia, the United Arab Emirates and others.  Thus, not only are companies faced with more legislation, there is also increased international cooperation to coordinate investigations and to detect wrongdoing across national boundaries.

Attracting and retaining talent

Third, companies see value in increasing their compliance and ethics programs to attract and retain talent.  During a briefing to the Xavier University International Business Ethics Program participants, BP expressed that by refusing to bow to  cultural pressures of corruption, the company has been able to attract employees who would prefer to work for a fair and ethical organization.

L’Oreal representatives also commented that they are able to retain talent through efforts such as their Ethics Day, Ethics Café, and other ethics-focused programs throughout the year.  L’Oreal was recently named 2017’s Most Ethical Company by the Ethisphere Institute, winning the annual honor for the eighth time.  Unlike companies that lump compliance and ethics together, L’Oreal created a separate Ethics Department.  It was one of the first companies to appoint a Chief Ethics Officer, in 2007.

Takeaways

It is important for lawyers to understand that compliance is not just obeying this or that specific regulation.  Helping clients to create  a Code of Conduct or overall compliance program requires more than knowledge of certain regulations.  Further, ethical considerations must be built-in.  Just because something is legal does not make it ethical (and vice versa).  It is becoming vital for lawyers – both law departments and outside counsel — to understand not only the law, but also the ethical considerations involved.

Whatever an organization’s goals in creating a culture of ethical responsibility, lawyers must be able to respond, based on our own responsibilities under the Rules of Professional Conduct and with our  clients’ business perspectives in mind.