Today marks the fifth anniversary of this blog’s debut.

It’s been a wonderful ride. Waking up every Sunday morning (OK, most Sunday mornings), grabbing a cup of java, and writing 600 words about the latest in legal ethics might not be everyone’s idea of fun. But I’ve loved it.

Over the last half-decade our 230-some posts have been read about 75,000 times. We’ve twice won awards from the ABA Journal – in 2016 and 2018. The blog has been cited in law review articles, other blogs, news feeds like Law 360, and even in a law school casebook.

Best of all, this blog has allowed me and my co-editors to engage with lawyers from every sector of the legal community who are interested in legal ethics, and to be an ethics resource for companies big and small across the country – and around the world.  We are always amazed that we have faithful readers in places like Sweden, China, Saudi Arabia and Nigeria.

We have also paved the way for three more Thompson Hine blogs on the LexBlog platform: Trump and Trade, Source Code, and our newest, ERISA Litigation. You should check them out.

Thanks to all our readers, and here’s to many more years.

As we’ve noted before (here and here), the ethical duty of confidentiality is broad, and can even cover publically-available information.  Now comes a reminder that based on the confidentiality rule you should obtain consent  before using your client’s name in marketing materials — and that some jurisdictions go even farther.  For instance, South Carolina last month added a comment to its version of Model Rule 1.6 that expressly requires permission before using client information for advertising purposes, even including “generally-known” client information.

How about case citations?

The South Carolina bar had filed a petition last year seeking to amend Rule 1.6 to allow lawyers to reveal citations to published judicial opinions without getting consent from clients involved in the case.  But the law of unintended consequences kicked in.

Instead of approving the petition, the state supreme court tightened the confidentiality rule, saying in its order, “We decline to amend the rule as proposed by the Bar. Instead, we … add a new comment to the rule reminding lawyers that Rule 1.6 requires lawyers obtain informed consent from clients before revealing information about the representation to advertise their services.  The comment further clarifies [that] this obligation applies regardless of whether any information revealed is contained in court filings or has become generally known.”

The new comment notes that one exception to the broad duty of confidentiality embodied in Rule 1.6 is where disclosure of information is “impliedly authorized,” in order to carry out the representation.  (It’s easy to see that without such an exception, you couldn’t negotiate with the other side in a dispute, for instance, without express client consent; that would make representing a client unnecessarily cumbersome and inefficient, wasting resources and increasing the cost of legal services.)  But when it comes to legal marketing, the new comment says, there’s no such implied exception, because “the disclosure is being made to promote the lawyer or law firm rather than to carry out the representation of a client.”

Instead, the comment says, a lawyer must “obtain informed consent from a current or former client if an advertisement reveals information relating to the representation. This restriction applies regardless of whether the information is contained in court filings or has become generally known.”  Further, the consent must be specific:  “General, open-ended consent is not sufficient.”

Slippery slope?

This goes farther than other state versions of Model Rule 1.6, and may be a burdensome slippery slope when it comes to “generally-known” information.  Certainly, if a lawyer links to a reported case on her firm web biography, someone can follow it to see which party the lawyer represented.  But is the case citation itself confidential information that must be safeguarded under Rule 1.6?

On the other hand, clients value confidentiality and many want complete control over whether a firm publicizes its relationship with that client.  For instance, as a condition of the representation, many large organizations expressly prohibit their outside counsel from mentioning the fact of the representation in their marketing materials without express consent.

The bottom line is that legal marketing aims to generate positive good will towards you and your firm.  Even if your own jurisdiction has not gone as far as the Palmetto State on case citations and other “generally known” information, you should be leery of identifying clients in marketing materials without their consent.  Client disapproval of your advertising efforts can erase any upside you may gain, turning a potential positive into a negative.

“DQ” at this time of year makes me think of drive-in ice-cream cones.  But I actually mean “DQ” as in “disqualification,” and instead of sugar cones, it points to an interesting case involving some take-home lessons about conflicts of interest.

Crisis of unhoused residents

California’s massive homelessness problem has been the subject of several federal lawsuits.  In Housing is a Human Right v. Orange County, three housing advocacy groups and several individuals sued Orange County and five southern California cities, alleging in the complaint that the defendants’ treatment of their homeless residents violates numerous provisions of state and federal law.

In their lengthy complaint, spotlighting the dire problems of unhoused people in southern California, the individual plaintiffs asserted entitlement to class certification, compensatory damages and injunctive and declaratory relief.

In May, the plaintiffs moved to disqualify Jones Day from representing three of the city defendants, and last month, in a short opinion, the district court denied the motion.

Switching sides, or not?

In their motion to disqualify, the plaintiffs asserted that Jones Day had previously represented a different advocacy group for the homeless, the People’s Homeless Task Force, plus several homeless individuals.  According to the district court’s opinion, the firm advised the Task Force about potential litigation against Orange County and the City of Anaheim regarding the practices of law enforcement there in seizing and destroying the property of homeless people.

In their motion to disqualify, the plaintiffs asserted that the members of the steering committee for the lead plaintiff, Housing is a Human Right, overlapped with that of Jones Day’s former client, the People’s Homeless Task Force, and that they had “interacted with Jones Day as their clients.”

Further, said the plaintiffs, the firm’s former pro bono representation of the People’s Homeless Task Force involved the same subject matter as the suit in which Jones Day is now defending the three cities.  “Jones Day is switching sides and attacking former clients on the very matters the firm represented them on, mandating disqualification,” wrote the plaintiffs.

DQ denied

The district court rejected the plaintiffs’ arguments and denied the motion to disqualify.  First, the court pointed to the limited scope of what Jones Day agreed to do in taking on the prior representation of the People’s Homeless Task Force.  In its engagement letter, the firm stated that its engagement “is limited,” and “does not create an attorney-client relationship with any person or entity other than you.”

The engagement letter also confirmed the former client’s agreement that the firm could represent future clients in unrelated matters adverse to the People’s Homeless Task Force.

Therefore, said the court, the premise of the disqualification attempt — that Housing is a Human Right and its directors were former clients of Jones Day — was flawed.

The court also rejected the argument that under California’s version of Model Rule 1.9 the firm’s earlier representation of the People’s Homeless Task Force was “substantially related” to its current representation adverse to Housing is a Human Right.  The former representation, the court said, was focused on law enforcement practices concerning the property of homeless people living in a certain encampment, while the current litigation deals with broader problems in a different part of Orange County, brought by different plaintiffs.

Finally, said the court, while Jones Day “was on the side of the homeless in the earlier litigation,” and is now “defending against the claims of the homeless,” the law “does not recognize such a sweeping basis for disqualification.”

Some take-home lessons

We have long emphasized the importance of detailing the scope of your representation in every engagement.  (For example, see here and here.)  That was a key factor in avoiding DQ here.

In addition, this case is a reminder that the conflict rules operate in pro bono representations.  Jones Day’s former client was not a paying one, but that was not a factor in the disqualification analysis.

Last, local law counts.  Different jurisdictions have defined “substantial relationship” in varying ways in their conduct rules, and courts have applied the substantial-relationship test in varying ways in analyzing former-client conflicts.  While the broad outlines of the law across jurisdictions is consistent, nuances can matter.

Looking for marketing ideas to help you or your firm stand out from the crowd?  If you’re tired of branding tee shirts and mugs with your logo, how about donating your legal services to be auctioned off by a charity?  As you might suspect, there are ethics issues — and Maryland’s state bar association recently weighed in on them.

In its opinion issued last month, the state bar’s ethics committee considered whether a lawyer’s services could permissibly be auctioned off on behalf of a charity, and if so, what the relevant constraints would be.

Banging down the gavel

Nearly forty years earlier, in 1980, the same ethics committee had turned thumbs down, saying that despite the charitable intent of such an auction, the donation of valuable attorney time violated the prohibition against giving anything of value to a person or organization in return for the referral of a client.  Obtaining a client through an auction bid at a charitable fundraising event came within the proscription, the committee held.

Times changed, however, and a growing number of jurisdictions rejected blanket prohibitions against participating in charitable auctions, or revisited and reversed their previous rejections.  The New York State Bar Association, for instance, changed course in 2013, and gave the green light to lawyers who wished to donate their services to be auctioned off for charity, with some limitations designed to avoid the ethics concerns.

As the New York ethics committee said, the evolution of judicial attitudes toward lawyer advertising now places the focus on “effectuat[ing] the [ethics] rules’ language and purpose consistently with the public interest in access to information about lawyers’ services, and lawyers’ legitimate interest in marketing their services.”

Sold! to the highest bidder

In line with that approach, the new Maryland opinion provides six guidelines for lawyers who want to help raise funds for a charitable organization by donating their legal services:

  • Specify the services you are donating, and only donate legal services that you can competently provide.  (Model Rule 1.1, “Competence.”)
  • Make your offer of services to the winning bidder conditional on there being no conflicts in providing the services, and on the prospective client being satisfied with the prospect of accepting the services.  (Model Rule 1.7, 1.9, on conflicts with current or former clients.)
  • Agree with the charitable organization that if for any reason you cannot accept the representation, the organization will refund the winner’s bid amount.
  • If you are offering a limited-scope package of services (such as a set number of hours of estate-planning advice), the limitation must be reasonable under the circumstances — that is, not too limited to be useful to the client.  If you are going to donate a set number of hours, but would intend to offer additional services for a fee, the auction materials should indicate that. (See Model Rule 1.2(c), on limited scope representations.)
  • Avoid situations where you have an on-going professional relationship with the charitable organization or related entities that could signal that your donation is giving the organization something of value in exchange for recommending you to the client.  (Model Rule 7.2(b), on recommendations.)
  • Review in advance any description of your services that the charity intends to publish in any promotional material, and retain the right to edit it.  (Model Rule 7.1, “Communications Concerning a Lawyer’s Services.”)

All sales final

The new Maryland ethics opinion is part of a trend toward reconsidering some marketing rules in line with the evolving realities of legal practice.  But not all jurisdictions are going with the flow.  My own Buckeye State, for instance, remains in the anti-auction camp, under a 2002 opinion issued under the former Code of Professional Responsibility.  You should carefully check the auction opinions in your own bailiwick and proceed with caution in donating your legal services for a charitable auction.

A New Jersey lawyer was suspended for six months for misrepresenting to clients for about eight years that their arbitration matter “was proceeding apace,” when he actually had never filed their claim.  The lawyer also concealed from his firm for almost two years the malpractice suit that the clients later filed, including the default judgment in the clients’ favor.  The case shines a light on the drastic lengths to which lawyers can go to cover up a mistake — and how that just makes things worse.

Lack of FINRA finesse

As described in the disciplinary review board’s recommendation, the long nightmare began when a couple retained the lawyer, an associate in a firm, to represent them in an action against their investment advisor. The lawyer filed suit in superior court, which was dismissed by stipulation nine months later, after it was determined that venue was not proper there, and that the claim needed to be submitted to the Financial Industry Regulatory Authority (“FINRA”).

But the lawyer only filed the FINRA claim six years later — and by then, it was too late.  The defendant moved to dismiss; the lawyer failed to oppose the motion; and a FINRA arbitration panel dismissed the action.  Over the many years, the clients periodically asked the lawyer for information; he repeatedly assured them that the matter was “proceeding apace.”

Eighteen months after the FINRA dismissal, the clients filed a legal malpractice suit against the lawyer and his firm — but the lawyer failed to inform his firm or file an answer.  Nonetheless, during the ensuing year, the lawyer communicated with and met with the couple’s malpractice lawyer, still without informing his firm of the ever-deepening trouble.

The malpractice case went to default, with a judgment against the lawyer and his firm for more than $450,000.  The lawyer received subpoenas seeking post-default discovery on his firm’s banking information.  The lawyer provided some of the information about firm bank accounts, but still without disclosing the nightmare to his firm.  To keep checks drawn against the firm account from bouncing, the lawyer deposited $3,500 of his own money.

Finally, six months after the default judgment, the firm’s sole shareholder got notice that the firm’s accounts were subject to a writ of execution.  When confronted, the lawyer professed ignorance, saying that this “was the first [he] heard about” a levy, and that he didn’t recall being served with a complaint against the firm.

Confession time

Finally, after the shareholder pressed him, the lawyer ‘fessed up.

The disciplinary case against the lawyer proceeded on stipulations, in which the lawyer admitted that this long course of conduct violated New Jersey’s versions of Model Rule 1.1 (“Competence”); Model Rule 1.3 (“Diligence”) and Model Rule 8.4(c) (dishonesty, deceit, fraud and misrepresentation).

Remarkably, the district ethics committee recommended only  a reprimand.  The disciplinary review  board, however, recommended a six-month suspension, and the New Jersey Supreme Court accepted the longer recommendation.

Unmentioned in the board’s opinion is the supervision issue, and how an associate’s handling (or non-handling) of a matter could go unexamined for such a long time by anyone with supervisory authority in the firm.  Under Model Rule 5.1(b), those with supervisory authority in a firm must make reasonable efforts to ensure that subordinate lawyers conform to the ethics rules.

Most significant, in the malpractice case, the court granted the firm’s motion to vacate the default judgment, and the case was resolved with the firm’s insurance carrier.  (The judgment against the lawyer, however, is still in force, according to the review board’s opinion.)

Digging a deeper hole

In discussing the appropriate penalty for the lawyer here, the review board described numerous cases involving lawyers who wove elaborate webs of deceit in order to cover up initial errors, including:

  • fabricating a promissory note;
  • fabricating a letter from the U.S. Embassy for Sweden, and forging the signature of a fictitious consul;
  • fabricating a $600,000 settlement agreement;
  • fabricating trial dates;
  • fabricating a motion for sanctions and traveling three hours with the client to a non-existent deposition;
  • fabricating court notices;
  • fabricating court orders and signing the name of a judge;
  • preparing fictitious orders of adoption.

And these are just the New Jersey disciplinary cases!  There are similar cases involving desperate lawyers in every jurisdiction.

Many of these cases, like the case involving the FINRA claim, started with a simple mistake.  And many of them, as with the FINRA claim, could have been substantially fixed at the outset, including through recourse to malpractice insurance.  Yet, the lawyers involved plowed on, digging themselves deeper and deeper holes.

Don’t let something like this happen to you.  If you make a mistake — as painful as it is — tell someone.  Living in an echo chamber of lies never provides a way out.

We’ve written before about “web bugs” — tracking devices consisting of an object embedded in a web page or e-mail, that unobtrusively (usually invisibly) reveal whether and how a user has accessed the content.  Three jurisdictions (Alaska, New York and, most recently, Illinois) have issued opinions pointing to the ethics issues that can arise when lawyers use such tracking devices surreptitiously to get a leg up on an opposing party.

The Illinois opinion, for instance, says that at a minimum, undisclosed use of web bugs in the course of representing a client violates the state’s version of Model Rule 8.4(c) (barring dishonesty, fraud, deceit and misrepresentation) and can be an improper invasion of the lawyer-client relationship, violating Rule 4.4(a) (barring obtaining evidence in violation of the rights of another).

The latest web-bug development comes not in a staid ethics opinion, but in military proceedings in which a Navy lieutenant is charged with conduct unbecoming an officer, with connections to a high-profile war crimes court-martial involving a Navy SEAL and an Islamic State prisoner.  The circumstances sound straight out of a thriller.

“Bug” basics

But first, how does “web-bugging” work?  It involves placing a tiny image with a unique website address on an Internet server, and dropping a link to that image into the bugged e-mail.  The image might be invisible or it might be disguised as a part of the document.  It works by transmitting specified information to the sending party when the recipient opens the “bugged” document.

The information available from a web bug is wide-ranging, and can include:

  • the approximate geographical location of the recipient
  • when and how many times the e-mail was opened
  • how long it was reviewed (including whether it was in the foreground or background)
  • whether the recipient opened attachments
  • how long the attachment or a particular page of the attachment was reviewed
  • whether and when the e-mail and/or attachment was forwarded

Bitten by a bug?

As reported in the ABA Journal, earlier this month defense lawyers for Lt. Jacob Portier filed a motion accusing a military prosecutor of sending “bugged” e-mails to thirteen lawyers and paralegals, plus a reporter with the Navy Times.  According to reporting by the Navy Times, Portier is accused of holding a reenlistment ceremony for a Navy SEAL next to the corpse of an Islamic State prisoner allegedly stabbed to death by the SEAL.

The SEAL has pleaded not guilty to a charge of murder in the stabbing death, which occurred in Iraq in 2017, and the military case has drawn much attention, including from President Donald Trump, said the Navy Times.

The e-mail with the tracking device is reported to have been sent by a Navy prosecutor to defense lawyers for both Portier and the SEAL, plus the Navy Times reporter responsible for reportage based on leaked documents.

According to the ABA Journal, the military acknowledged that it “used an audit capability” to investigate the leaks; the motion filed by Portier’s defense lawyers described the tracking software as being in a logo showing an American flag and a bald eagle perched on the scales of justice.  The motion seeks additional information about the web tracker, and cites the possibility that it could intrude on the attorney-client relationship, along with Portier’s constitutional rights under the Fourth and Sixth Amendments.

Think twice

Outside of the client-representation context, e-mail tracking devices can be used for benign ends.  For instance, e-mailed newsletters sometimes use a kind of web bug to provide metrics on how many readers open the newsletter, and what pages they look at.  But using web bugs to get information on opposing counsel or opposing parties, or for forensic purposes, can raise red-flag legal ethics issues that you need to consider.

Do lawyers need to be reminded not to lie to a federal agency?

As reported earlier this week on Law 360, the staff of the Federal Trade Commission has issued a wake-up call to lawyers who practice before the agency, warning them that intentionally misleading the Commission could lead to “public reprimands, sanctions and even disbarment” from Commission practice.

The warning came in an FTC blog post you can read here.  The blog post notes that most lawyers who come before the FTC are honest, but “for a few,” there may be “perceived opportunities to seek an advantage in the debate through misrepresentation of key facts.”  The post says that there have been instances when “internal documents expressly contradict representations made by counsel and clients during investigations,” and “where the innocent explanation” for such  inconsistencies “seemed implausible.”

The blog post details the several FTC rules, codified in the CFR, that prohibit giving false information to the Commission at any stage of any proceeding, and authorize the agency to sanction lawyers who violate the rules.

Our three take-aways from this interesting piece:

1.  DUH!

First, it is startling that lawyers apparently need a tutorial on the “duty of candor and professionalism” owed to the Commission and its staff.  In its adjudicative role, the FTC is a “tribunal” under Model Rule 1.0(m), and therefore, Model Rule 3.3 (“Candor toward the Tribunal”) would apply.  And in any event, all the other numerous ethics rules against lying apply, too.  See Model Rules  3.4 (fairness to opposing party and counsel), 4.1 (truthfulness in statements to others), 4.4 (respect for rights of third persons), 8.4 (dishonesty, fraud, deceit and misrepresentation). Lawyers representing clients in regulatory proceedings do not shed the Rules of Professional Conduct at the agency door.

2.  Agencies have ethics rules, too.

While you don’t escape the guiderails of the Rules of Professional Conduct, administrative agencies also have their own ethics rules, as the FTC blog post notes.  Agencies with rules for lawyer conduct include the Patent and Trademark Office and the Securities and Exchange Commission.  There are many others.  See George M. Cohen, The Laws of Agency Lawyering, 84 Fordham L. Rev. 1963, 1978 (2016) (noting 46 federal agencies with rules regulating conduct of lawyers).  As Cohen notes, lawyers practicing before agencies “must comply with state ethics rules … And they must consider how the agency’s own rules may impact their ethical obligations under the general ethics rules.”

3.  Blogs!

The third notable thing about the FTC’s pronouncement is that it appeared in the blog published by the agency’s Bureau of Competition staff, titled Competition Matters.  I guess we shouldn’t be surprised that a federal government agency chose to use the medium of a blog to issue an important policy reminder to practitioners — blogs of all kinds have been go-to sources of information for a long time now.  Litigants cite blogs in their briefs.  (Although here is an article criticizing the trend.)  This blog, I’m proud to say, has been cited in two law review articles (here and here [sub. req.])  and in a law school case book.

In many contexts, you can’t beat a blog when it comes to putting out timely and useful content.  We hope you continue to enjoy reading this one!  Just remember to keep on the straight and narrow when you’re before an agency.

A New York lawyer representing a landlord was suspended earlier this month for conduct that included threatening a tenant with arrest and telling him that he was worthless and should commit suicide.

In its opinion, the court found that the lawyer violated Rule 3.4(e) of the state’s Rules of Professional Conduct, which bars threatening to bring criminal charges solely to obtain an advantage in a civil matter, and meted out a four-month suspension.  The case shines a light on threats of criminal charges under state ethics rules.

“I gotta get this guy”

A resident in one of the buildings that the lawyer’s client owned allegedly used a website to post accusations that the landlord overcharged tenants.  According to the court’s disciplinary opinion, the lawyer sent a letter to the tenant, calling the posts defamatory and demanding that they be removed.  Receiving no response after a week, the lawyer texted the tenant, “We are filing [a] lawsuit against you for millions of dollars of damages you have caused as a result of your defamatory website.”

Later that day, said the court, the lawyer phoned the tenant — who recorded the conversation.  The lawyer told the tenant that “you’re one of those people in the world that really should just kill themselves.”  Then, apparently turning to someone else present in his office, the lawyer said about the tenant, “start the lawsuit … I need him arrested … I gotta get this guy.  He’s gotta be arrested.”  The lawyer also told the tenant that his office was “in contact” with the District Attorney’s office, and that “you’re gonna be paying for this heavily for the rest of your life.”

The grievance committee charged the lawyer with threatening criminal charges solely to obtain an advantage in a civil matter; there were other disciplinary charges based on separate conduct, as well.  At the disciplinary hearing, the lawyer presented no evidence that his firm ever filed suit against the tenant.

The four-month suspension that the First Department of the New York Appellate Division handed down was partly based on finding that the lawyer was a repeat offender and failed to take full responsibility for his conduct.  (The referee had found that the lawyer was sorry that his actions had caused his disciplinary problems, but had not properly apologized or recognized “that his aggressive litigation tactics must be controlled.”)

No Model Rule…

Interestingly, while New York and many other jurisdictions have ethics rules barring threats of criminal prosecution to gain an advantage in a civil matter (see, e.g., Ohio, D.C., Florida, Texas, California), and the concept was embodied in DR 7-105 under the former Code of Professional Responsibility, the Model Rules omit this specific prohibition.  The ABA explained in Formal Opinion 92-363 that the drafters believed that extortionate, fraudulent or otherwise abusive threats were dealt with by other more general rules (e.g., Model Rules 4.4, “Respect for Rights of Third Persons,” and 8.4, “Misconduct”).

Where is the line?

As ethics commentator Roy D. Simon points out in his New York Rules of Professional Conduct Annotated, threats to present criminal charges are “at the heart” of Rule 3.4(e).  “The thinking is that if a person has engaged in criminal conduct, it ought to be brought to the attention of the appropriate authorities, not merely threatened,” he says, “and if a person has not engaged in criminal conduct then there is no basis for threatening to bring criminal charges.”  Threats that are not carried out (as in the case discussed), may especially put a lawyer on risky ground.

What about the New York requirement that the threat’s purpose is “solely” to get leverage in a civil matter (language that varies across jurisdictions)?  Simon notes that “courts and disciplinary authorities have sometimes paid little attention to the word.”  Indeed, it’s not analyzed in the case discussed here.  Some ethics opinions do call attention to the distinction raised by the word.  See D.C. Ethics Op. 339 (can include citation to criminal statute in demand letter as long as threat is not solely to gain advantage in collection matter).

But that possible lack of clarity would seem to create some uncertainty (and therefore risk) in knowing where the ethical line is, particularly where the lawyer’s conduct presents a closer call than the court found in this case.

A former part-time Ohio judge and bankruptcy trustee whose bookkeeper was convicted of stealing funds from his trust account was publicly reprimanded last week for failing to reconcile his trust account monthly and failing to adequately supervise his staff.  The court’s opinion spotlights the potential legal ethics problems that dishonest non-lawyer staff can create.  Below are some ways to steer clear of possible pitfalls.

Employee embezzlement

The respondent was a part-time judge, which allowed him to have a private practice, and he was a bankruptcy trustee for 30 years.  In his bankruptcy practice, the respondent received significant amounts of cash from clients for legal fees and court costs.  The respondent’s long-time bookkeeper recorded the payments in a client ledger, but was found to have regularly converted funds for her own use rather than depositing them in the respondent’s trust account or operating account.

The bookkeeper eventually left the respondent’s office to work elsewhere.  Two years later, in preparing to close his solo practice and merge with another lawyer, the respondent audited his books and discovered money was missing from his accounts.  The state attorney general conducted a forensic audit and determined that over a nine-year period, the bookkeeper had embezzled more than $185,000.  (She was later sentenced to 36 months incarceration.)

Failure to supervise and reconcile

Regularly reconciling the records of funds held on behalf of a client is a best practice, of course.  What is not well-known is that some state versions of Model Rule of Professional Conduct 1.15(a) (“Safekeeping property”) really get down to the nitty-gritty.  Ohio’s version, for instance, specifies that lawyers must perform and retain a  monthly reconciliation.  The ABA/BNA Lawyers’ Manual on Professional Conduct notes that “Most of the jurisdictions … have gone well beyond the [Model Rules’] paradigm and incorporated detailed recordkeeping and accounting requirements.”

The respondent admitted that while the bookkeeper worked for him he reviewed bank statements for his trust account, but never conducted a monthly reconciliation by comparing the client ledgers with the client-trust account registers and bank statements.

In addition, the respondent stipulated that he had failed to adequately supervised the bookkeeper, violating Ohio’s version of Model Rule 5.3 (“Responsibilities regarding non-lawyer assistance”).  Rule 5.3(b), as broadly adopted across the U.S., requires a lawyer with direct supervisory authority over a non-lawyer to make reasonable efforts to ensure that the non-lawyer’s conduct is compatible with the lawyer’s own professional obligations.  The rule requires us to monitor staff so their actions are in line with our own ethics duties; it forecloses any “free pass” for ethics violations just because an unfaithful employee under your direct supervision commits them.

The sanction here — a public reprimand — is the lowest level of discipline available in Ohio.  The court noted that the respondent had deposited $35,000 his own funds to make up the net shortfall in his accounts after it was discovered.  None of his clients lost money as a result of the employee’s theft, and respondent had a clean disciplinary record.

The court noted other disciplinary cases from Ohio and elsewhere, however, where aggravating factors led to stiffer penalties, including suspension from practice.

Tips for staying out of trouble

The court here properly noted that “delegation of work to non-lawyers is essential to the efficient operation of any law office.”  But on the other hand, “delegation of duties cannot be tantamount to the relinquishment of responsibility by the lawyer,” and “supervision is critical in order” to safeguard client interests.

  • If your jurisdiction specifies periodic account reconciliations or other kinds of detailed recordkeeping, it goes without saying that you should comply.  Don’t wait for a post-embezzlement forensic audit.
  • Trust but verify.  Even long-time trusted employees can do bad things under some circumstances.  Be alert for red flags.
  • Don’t stop supervising.  In some of the cases where lawyers received suspensions after employee thefts, they  had completely relinquished control of their office functions to staff, and stayed “oblivious” to potential problems.

Making “reasonable efforts to ensure” that your non-lawyer staff adhere to your own ethics duties takes attention; don’t fall down on the job.

Although I love my home state of Ohio, I have to acknowledge that we are not often in the avant-garde when it comes to legal ethics.  After all, Ohio was one of the last jurisdictions in the Union to adopt the Model Rules of Professional Conduct (2007).  But last week, the Ohio Supreme Court put out for public comment proposed rule amendments that would add the Buckeye State to a small number of progressive jurisdictions — namely, those that permit lawyers to practice temporarily while awaiting approval of their applications to “waive in” to the bar.

Out-of-the box AWOX

As background, most U.S. jurisdictions have some form of “admission without examination” process (“AWOX”), to allow lawyers licensed elsewhere, who have a specified number of years of practice under their belts and meet other qualifications, to become licensed without having to take the bar exam.

But the AWOX application process is a bureaucratic one and can be slow, requiring a character-and-fitness assessment, filling out a long form and providing lots of documentation.  In Ohio, the process can take nine months.  (Like gestation of another sort.)

In the meantime, what can the applicant do as far as practicing law?  Most jurisdictions answer “Nothing.”  Without a license in that state, an AWOX applicant essentially has the status of a law clerk during the time that the application is pending.

Restrictive AWOX rules limit the opportunities of migrating lawyers, in an economy that is increasingly borderless in other respects.  For instance, a lawyer who has to move to a new jurisdiction to follow a spouse’s employment can face considerable downtime, even though the lawyer is eligible for AWOX.  The rules also put law firms who want to hire laterals from out of state in a bind, knowing that a candidate might have to put down an existing practice and work (and be billed) as a paralegal while awaiting AWOX.

The ABA has long been a proponent of a model rule that it calls “Practice Pending Admission.”  The proposed rule, promulgated in August 2012, establishes a window of time during which a lawyer who has a license in good standing elsewhere and a designated number of years of experience can practice temporarily in a different state while awaiting admission there.

Select group with progressive rules

Only a very few jurisdictions currently permit any form of practice pending AWOX.  They include the District of Columbia, under Ct. of Appeals R. 49(c)(8) (“Limited Duration Supervision by D.C. Bar Member”) and Missouri, under Sup. Ct. R. 8.06 (“Temporary Practice by Lawyers Applying for Admission to the Missouri Bar”).

Now, Ohio proposes to join this vanguard.  Under proposed amendments to the state supreme court’s bar governance rules, an applicant who is eligible for AWOX and has submitted an AWOX application could apply for permission to practice for 365 days while awaiting processing of the application.

Two of the key requirements under the proposed Ohio rule:  the applicant must submit the AWOX application within 90 days of establishing an office or “systematic presence” in Ohio, and must either “associate with an active Ohio lawyer who is admitted to practice in Ohio” or attest that the applicant will “only practice the law of the jurisdiction in which the applicant is already admitted.”

The Ohio proposal is out for public comment until April 10.

In re Application of Jones

The new Ohio proposal follows the state supreme court’s decision last fall in In re Application of Jones.  The case involved a licensed Kentucky lawyer who moved just across the Ohio River to join the Cincinnati office of the firm she was already practicing with.  Sitting in Cincinnati, she continued to represent her Kentucky litigation clients in Kentucky courts, but when she applied for AWOX under Ohio’s current rules, the Board of Character and Fitness said she had been engaging in the unauthorized practice of law.

The Ohio Supreme Court, though, held that the lawyer was engaging in a permitted form of temporary practice under Ohio’s version of Model Rule 5.5(c)(2), which says that a lawyer can practice in Ohio in connection with proceedings before a tribunal located where the lawyer is authorized to practice, and approved the lawyer’s AWOX application.

That was the right result, and I’m proud to say that my firm spearheaded a group of law firm amici that submitted a brief in the case.

But, arguably, a better and more-direct way to support practice pending admission without examination is via a rule change — and that is what is now under consideration.  Ohio might sometimes lag behind in ethics innovations, but this time it is in the vanguard.