In the ethics class that I teach as an adjunct law prof, I refer to Model Rule 8.4(c) as “The Four Horsemen of the Apocalypse,” because of the four things the rule prohibits:  dishonesty, fraud, deceit and misrepresentation.

While these ethical no-no’s are certainly not equivalent to the biblical “four horsemen” (Death, Famine, War and Conquest), violating Rule 8.4(c) can have a bad (if not apocalyptic) effect on your law license, as lawyers in Rhode Island and Oklahoma recently discovered in two separate disciplinary cases — each involving false documents.

False deeds = misdeed

In the Rhode Island case, the lawyer was counsel to a homeowner association that managed a timeshare development.  If a time-share owner failed to pay annual maintenance fees, the association could foreclose on the delinquent party’s interest in the property, and the lawyer regularly represented the client in these foreclosure proceedings.

The foreclosure process involved preparing a deed for execution by the client’s authorized officer.  The signature was to be witnessed by a notary public; after being properly executed, the foreclosure deed was recorded.

To expedite the process, the lawyer began signing the client’s president’s name on the foreclosure deeds, and then acting as the notary witness to the false signature.  The lawyer then caused the falsely-executed documents to be recorded.

After these actions came to light during unrelated litigation, the lawyer self-reported to the state disciplinary authority, and the supreme court issued its opinion publically reprimanding the lawyer for violating the state’s version of Model Rule 4.1 (truthfulness in statements to others) and Rule 8.4 — the four horsemen.  (The relatively light penalty stemmed from the lawyer’s “lengthy unblemished history” and “heartfelt remorse.”)

If you are like most lawyers, you’re a notary; and maybe you think that you’d never falsely sign or notarize a document.  But it’s possible that the lawyer’s actions here were aimed at not bothering the client’s executive officers.  And imagined or real pressure to avoid inconveniencing clients can tend to disorient even the best lawyer’s ethical compass.

I get teased by relatives when I refuse to notarize car titles they present to me after they’ve signed them.  Start by resisting your relatives, and you’ll likely be able to resist any temptation to execute or notarize a document falsely!

Turning back the hands of time…

In the Oklahoma case, the grievance was filed by a county judge, who reported that the lawyer had turned back the date on the court clerk’s file stamp to make it seem that a pleading had been filed on April 15, when actually it had not been submitted until April 19.  The lawyer admitted the misconduct, and pointed to three other instances when the lawyer “may have” done the same thing.

The supreme court’s short opinion fails to explain what happened here, or the circumstances that made it possible for a lawyer to dial back a clerk’s time-stamp (not something that would be physically possible in my bailiwick).  But significantly, while disciplinary counsel and the lawyer’s counsel stipulated to a penalty consisting of a public reprimand, the trial panel rejected that proposal and recommended a six-month actual suspension, instead.

The panel observed that intentionally backdating an official court document is a serious offense deserving of more than a public reprimand.

The state supreme court agreed, adding that “such conduct is the type of dishonesty, deceit and misrepresentation while engaged in the practice of law that is forbidden” by the Sooner State’s version of Model Rule 8.4.

It’s hard to derive a moral from this case, without knowing more of the background.  But one thing is for sure:  any time you are tempted to get on any of those four horses, you should ride the other way.

The ABA is proposing changes to the Model Rules on lawyer advertising, modestly streamlining them and trying to re-establish their relevance to the way lawyers and clients interact in the digital age.  The proposed amendments and their supporting memo fail to make any express adjustment for the elephant in the room — on-line referral services like Avvo, and especially whether engaging with them involves lawyers in paying impermissible referral fees, as some recent state ethics opinions have found.

Rundown on proposed rule changes

First, an overview.  The ABA’s effort is in response to a three-year study and package of recommendations from the Association of Professional Responsibility Lawyers (which we’ve previously mentioned here).  The ABA adopted many of APRL’s recommendations.

The ABA’s memo supporting the rule changes acknowledges that “the patchwork of inconsistent state attorney advertising rules is a prime example of a system that ‘fails to make sense’ in the current climate of social media, technology, and global lawyering.”  In other words, as APRL urged, the current Model Rules are at risk of becoming irrelevant.  The ABA noted that the people who complain about lawyer advertising are predominantly other lawyers, not consumers; and few states actively monitor lawyer advertising.

The ABA’s approach, emphasizing consolidation and re-arrangement, differs from APRL’s, which had recommended slimming down the ad rules to just two, effectively excising three others.  As we’ve reported, Virginia’s revamped rules, effective this past July, take that approach.  The ABA’s proposal, in contrast, eliminates only current Rule 7.5 on firm names and letterhead (now there’s an anachronism); and it simply redistributes most of that rule’s content to the comments of other rules.

While there’s no radical surgery, the ABA proposal has some potentially helpful changes and clarifications.  Highlights:

  • “Solicitation” would be defined in a new subsection of Rule 1.0, “Terminology,” and would mean offering to provide legal services to a specific person in a particular matter.  Soliciting by “live person-to-person contact” (Skype and Facetime are specifically mentioned) would be generally prohibited — but exceptions would include if the lawyer knows the person is “an experienced user of the type of legal services involved for business matters.”  That’s potentially a big deal for business lawyers, whose potential clients would often meet that definition.  And texts, e-mail and “other written communications that recipients may easily disregard” are also excluded from the definition of live solicitation.
  • Putting a “Lawyer Advertising” disclaimer on targeted solicitations would be a thing of the past, causing gladness at firm marketing departments.  The ABA concluded “after much discussion” that such a disclaimer is no longer necessary because consumers have become used to receiving advertising material (!) and most “will not feel any compulsion to view the materials solely because they were sent by a lawyer of law firm.”
  • A new provision would permit nominal client gifts (at holidays, for instance), and clarifies that they are not barred as things of value in exchange for recommending the lawyer’s services to others.
  • It would no longer be necessary to include an “office address” on marketing communications, but only “contact information” of a responsible firm or lawyer.  The proposed change resolves an ambiguity that has created confusion, and is in line with modern day legal practice (including virtual offices), and the way that real-life ads now look.
  • The ability to claim to be a “specialist” in a practice area would be eased.  Implying that you are certified as a specialist in a particular area continues to be restricted to those certified by approved organizations.  But saying that you “specialize in” a particular field would be permitted “based on the lawyer’s experience, specialized training or education,” as long as the statement were not false or misleading.

Small change to referral fee comment

Now back to that elephant.  Recent ethics opinions — for instance, from New York and New Jersey — have specified that Avvo’s business model (and similar ones) violate state versions of Model Rule 7.2(b), which prohibits giving anything of value to a person for recommending the lawyer’s services (except for paying charges of non-profit and bar-association-approved agencies).

Under that provision, operations that are similar to Avvo Advisor and Avvo Legal Services have been found particularly problematic by state ethics boards.  As described in a recent Indiana Lawyer article, Avvo Advisor connects online consumers with a lawyer for a 15-minute consultation for $39.  Avvo forwards the fee to the lawyer and then collects a $10 marketing fee from the lawyer.  Avvo Legal Services provides fixed-fee document review, and services such as business formation or family law matters.  Avvo bills $149 to $595 for services, which is paid to the lawyer doing the work, and collects a marketing fee from the lawyer ranging from $40-$150.

The ABA proposal does not include any change to Rule 7.2(b).  It does add a section to the relevant comment, saying that “directory listings and advertisements that list lawyers by practice area, without more, do not constitute impermissible ‘recommendations.'”  That may be a small nod to Avvo, which in the past has suggested that at least in part, it merely functions as an on-line lawyer directory.

But the ABA’s small proposed change to the comment would not appear to touch on Avvo’s business of charging lawyers for obtaining referrals from Avvo, or similar business models.

Of course, the referral-fee issue is not the only ethics rule that state ethics opinions have cited when it comes to Avvo and similar on-line organizations.  As we’ve previously noted, in addition to the advertising rule on referral fees, other rules flagged include state versions of Model Rules 5.4 (independent judgment, fee-splitting); 5.5 (unauthorized practice of law); 1.15 (comingling lawyer and client funds); 1.16 (duty to refund unearned fees at end of representation); 1.5 (contingent fees); and 1.6 (confidentiality).

What comes next?

The ABA will host a public forum on the proposed amendments at its mid-year meeting in Vancouver on February 2.  Written comments on the proposed amendments are invited; the submission deadline is March 1.  The ABA Ethics Committee aims to submit a resolution and report on amending the advertising rules at the association’s August 2018 meeting.

Stay tuned for further developments.

Out of Massachusetts comes a disciplinary opinion illustrating (again) the multiple consequences that can come from the unauthorized practice of law.  In this one, however, the twist is that two brothers were involved — and they apparently got away with their UPL for 18 years.

Practicing in the Ocean State

The two brothers were licensed only in Massachusetts — but they opened a law office in Providence, Rhode Island, which was run by one of the brother’s then-wife.  She was licensed to practice in Rhode Island; but she worked only limited hours, owned only two percent of the firm, and did not have any supervisory authority over the brothers.

Seven years after they opened the Providence office, the brothers hired another Rhode Island-admitted lawyer; he had no cases of his own, and also lacked any supervisory authority.

The brothers made all the decisions on the firm’s cases, the court found, and did all the work on them — except for signing pleadings and filing appearances in court.  They apparently delegated those functions to admitted lawyers, which is what might have allowed them to fly under the radar for so long.

Eventually, though, Rhode Island authorities caught up with the brothers, and they pleaded no contest to five criminal misdemeanors there, related to their UPL.  The brothers agreed to cease practicing law in Rhode Island, and they were barred from maintaining an office there.   Lesson #1:  UPL is a criminal violation in many jurisdictions, as well as an ethical violation under state versions of Model Rule 5.5.

Although the firm website correctly stated that the brothers were licensed only in Massachusetts, the site featured images of the Providence skyline.  Each brother’s web bio stated that he was “born and raised in Rhode Island.”  (That should count for something, right?)   Lesson #2:  A website that shaves the corners will not help your cause in a UPL proceeding.

Discipline in the Bay State

The bar discipline opinion, though, comes from the Massachusetts Supreme Judicial Court, not from Rhode Island.  So if the brothers were considering starting over in Massachusetts, where they were licensed, that hope was dashed — the Massachusetts court suspended them both from practice there.  That’s in accord with Model Rule 8.5(a), which specifies disciplinary authority in the state of licensure and where the effect of the conduct is felt.  Court rules in many jurisdictions likewise specify the ability to impose “reciprocal discipline” in response to disciplinary orders issued from outside the state.  Lesson #3:  Professional discipline can be imposed not only where the effect of your conduct is felt, but also by your state of licensure.

In fact, while the parties had stipulated to a two-year suspension with the entire period stayed on conditions, the Massachusetts court rejected the agreement as too lenient, and imposed an actual one-year suspension.  Lesson #4:  While parties in disciplinary cases can agree on recommended sanctions, the final arbiter is the court hearing the matter.  A court can depart from the recommendation downwards — or upwards, as here.

Don’t let this happen to you

A cautionary tale to be sure.  In support of its sanction, the Massachusetts Supreme Judicial Court pointed to the length of the UPL, that the brothers were “well aware that they were not authorized to practice law in Rhode Island,” and that by doing everything but signing pleadings and appearances, and by failing to clearly advertise that they were unlicensed in the Ocean State, they intentionally created a system “designed to evade the rules of licensure.”

Does the new year have you thinking about taking on work in a new practice area?  Maybe business in your accustomed area is slowing, and you’re considering shifting gears.  If so, beware of dabbling in areas where you don’t have the requisite knowledge and skill to provide competent representation to your client.

The ethical duty of competence — Model Rule 1.1 — is the first rule in the rule book for a reason:  without competence, fulfilling your other ethical duties is meaningless.  A couple of recent cautionary tales shine a light on how lawyers can get it wrong.

Step carefully into specialized areas

One way lawyers get in trouble is in overestimating their ability to deal with the ins and outs of a specialized area that they may not be familiar with.

That might have been the problem in a recent District of Columbia Court of Appeals case.  The lawyer represented the client in post-conviction and immigration proceedings.  The client was at risk for deportation on the premise that he had been convicted of an “aggravated felony” as defined under the federal immigration statute.

The lawyer made several missteps in trying to forestall the client’s removal.  Initially, he petitioned the state circuit court to vacate the conviction and guilty plea, based on the mistaken claim that the court had failed to advise the client about the potential immigration consequences of the conviction.  Then, the lawyer dismissed the petition, conceded removability before the immigration court, and did not try to challenge or delay the client’s deportation on any other ground.

Ultimately, the client got new counsel, who successfully argued against removal on the ground that the burglary offense he was convicted of was not an “aggravated felony” within the meaning of the immigration statute.  That appears to be something that a practitioner in the immigration area might have known, but which might not have occurred to someone not well-versed in the specialized world of immigration law.

The lawyer admitted to violating D.C.’s version of Rule 1.1, and was suspended for 30 days with one year probation.  The probation conditions included the requirement that he join an immigration lawyers’ association and attend 10 hours of CLE pertaining to immigration law.

Get help when needed

Another danger is trying to go it alone, and failing to get help when needed.  When you don’t know how to proceed, talk to a colleague; call the bar association to identify the head of a committee or section in the relevant area; reach out to the relevant lawyers’ group; look for resources on-line — just don’t isolate yourself.

Help like that might have aided a Louisiana lawyer who acknowledged that his primary area of expertise was criminal law.  He accepted representation in a civil case involving a school’s discipline of a student, and proceeded to file suit against the wrong parties.  The court extended time to cure the problem, but the lawyer didn’t amend the petition or file anything else in the case.

In its opinion suspending the lawyer for a year and a day, the Louisiana Supreme Court noted that the lawyer did not appear to understand the complexities of civil law practice and procedure.  He acknowledged that he didn’t properly research the case law for this type of claim and filed suit against the wrong parties.

Keep calm and learn on…

None of this means that you can’t move into new areas or deal with issues that are initially unfamiliar to you.  As comment [2] to Rule 1.1 explains, “the most fundamental legal skill consists of determining what kind of legal problems a situation may involve, a skill that necessarily transcends any particular specialized knowledge.”

Be assured, says the comment, that you can “provide adequate representation in a wholly novel field through necessary study” — you just have to recognize what you don’t know, and come up to speed on it.

It’s cold outside, baby! At least it is here in northeast Ohio.  If you live in the frozen north, you might be lucky enough to have a winter home in a more weather-friendly state where you spend part of your time.  What if you want to do legal work from there while enjoying the sunshine – are there any ethics issues?  The answer is “Yes.”  There are things you need to watch out for while wearing those sunglasses.

Interstate UPL

Assuming that you don’t have a license to practice in that sunny state, the issue, of course, is the unauthorized practice of law (UPL), which is proscribed by Model Rule 5.5(a).  Exceeding the jurisdictional bounds of your license is nothing to fool around with.  We’ve blogged about a Colorado lawyer who was disciplined in 2016 by the Minnesota Supreme Court for helping his Minnesota in-laws in a debt collection matter in a Minnesota court.  The court reprimanded the Colorado lawyer, even though he was only negotiating over the phone with opposing counsel, and never came to Minnesota.  A flawed decision, as we pointed out — but  it illustrates the border-protecting outlook that can sometimes characterize state bar regulators.

No waive-ins

Of course, if you are going to be spending time in your winter get-away every year, you can consider being admitted in the other state on motion, without examination — aka “waiving in.”  Many states have a provision for that, if you have some years of practice under your belt.

The problem is that some of the states with the best weather also try to protect their resident lawyers from snow-bird competition — we’re looking at you, Florida, Nevada, California and Louisiana.   They are among the jurisdictions that the ABA’s most recent listing shows as lacking any form of admission by motion, requiring anyone seeking admission to take the state bar exam.

For other jurisdictions, there can be paperwork and fees involved in waiving in, along with varying requirements for the number of years you must have practiced in order to be eligible.

Temporary practice

What if you don’t want to undergo the waive-in process, or your temporary home is located in one of the states that doesn’t offer it?

Model Rule 5.5(c), adopted in some form in 47 states, creates four safe harbors for lawyers to “provide legal services on a temporary basis” in a jurisdiction where they are not admitted.  They are: (1) associating with local counsel who actively participates in the matter; (2) being admitted pro hac vice in litigation; (3) participating in arbitration or mediation; and (4) where the legal services in the other state “arise out of or are reasonably related to the lawyer’s practice in a jurisdiction in which the lawyer is admitted to practice.”

It’s that fourth factor that can be of help to a snow-bird lawyer, potentially covering work where you are not licensed.  A 2016 article by Ron Minkoff for the ABA’s Professional Lawyer notes that under that safe harbor, “if all you do in your second home is work for your … home state clients, applying only home state law, and do not attempt to solicit local clients, it is dubious that state disciplinary authorities [where your temporary home is located] will care.”

That’s good advice.  But some caveats:  “temporary practice” means temporary.  Minkoff cautions that regulators “will not be amused” if you hang out a shingle on your beach-side mailbox or list yourself in the local phone book — let alone rent out space in a storefront.  All those are indicia of more-than-temporary intent.

Also, broad though it may be, “arising out of” or being “reasonably related to” your practice in your home state is still subject to limits.  For instance, in the Minnesota case mentioned above, the lawyer tried to argue that his work for his in-laws related to his home-turf practice, but the court rejected the notion.

Comment [14] to Rule 5.5(c) lists some of the “varied” factors pointing to that “reasonable relationship,” among them:  the client may be a resident of your home state or have significant contacts there; the matter may have a significant connection to your home jurisdiction; the client may be drawing on your expertise in matters involving a “particular body of federal, nationally-uniform, foreign or international law.”  In the Minnesota case, there weren’t any factors pointing to a reasonable relationship with the Colorado lawyer’s home state, at least according to the court.

Keep warm and carry on

As always, local rules count here, and you should check those of the hopefully-warmer state where you winter — those are the ones that will apply to your border-crossing activities, not the rules in your state of admission.  But if you are one of those lucky snow-birds — well, I envy you.

Greetings 2018!  Time for some ethics trend predictions to kick off the Year of the Dog (according to the Chinese zodiac).  Let it be a year in which you doggedly pursue ethical practice (ouch).  No more bad puns — here’s what’s hot as we begin the year:

Law firm cyber-security

No surprise here that the top trend is data security.  It’s one of the “chief concerns” of GC’s, and for good reason:  It’s not if, but when, a firm is going to experience a cyber-attack.  The latest ABA report says that 22 percent of law firms of all sizes were hit with a data breach in 2017, up from 14 percent in 2016; several of the biggest firms experienced attacks and various kinds of disruption in the past couple years.  But small and medium-size firms are just as vulnerable, say the data.  Of course, lawyers have an ethical duty under Model Rule 1.6(c) to take reasonable steps to safeguard the confidentiality of client data.  Ethics rules also require lawyers to have the technological competence to recognize and address the problem.  (See comment [8] to Rule 1.1.)  Trending:  More clients are insisting that firms establish data security policies and procedures.

The “Uber” effect – on-line service providers and other tech disruptors

Just as Uber disrupted an entire market segment with its ride-hailing model, on-line businesses like Avvo and LegalZoom have taken aim at legal services and how they are marketed.  But these on-line types of business raise legal ethics issues, including fee-splitting, handling client funds and professional independence.  (Excellent summary is here.)  Some innovative models, like the traffic-ticket-fighting site TIKD, are under fire for potential antitrust violations and the unauthorized practice of law.  And will consumers soon be taking their legal problems to chatbots?  Will legal teams soon be using artificial intelligence to analyze complaints and generate document drafts?  Trending:  State ethics regulators have come down against Avvo-like platforms, but they are still thriving.  How will the legal industry adapt?  (Hint:  Watch the progress of the ABA’s consideration of a revamp of the Model Rules on lawyer marketing and advertising, aimed at “bringing them into the 21st century” and reported here, in the Professional Responsibility Blog.)

Gender bias and sexual harassment in the profession

The ABA adopted Model Rule 8.4(g) in 2016, barring lawyers from engaging in harassing or discriminatory conduct; states are now considering whether to adopt the rule into their own lawyer conduct codes.  (Box score as of 8/1/17:  1 aye, 1 nay, many studying; and some commentators raise First Amendment concerns.)  But 40 percent of women in the profession report that they have been subjected to harassment and discrimination; and there have been several high-profile discrimination and pay-equity claims against prominent national firms and individuals.  The judiciary has been hit as well, with a prominent federal judge apologizing and retiring abruptly after sexual harassment allegations; and 695 law professors and former clerks are now petitioning Chief Justice John Roberts, seeking revision of judicial employee guides and support for reporting misconduct.  Trending:  Women in the profession are adding their voices to #metoo.

Lawyer health and wellness — mental and physical

Finally, we’d be remiss, in our first post of 2018, if we didn’t mention the personal aspect of lawyering:  keeping yourself safe and sane.  As a profession, more of us fight alcoholism, substance abuse, depression and anxiety than the general population, and those trends start developing in law school.  The statistics are alarming.  Trending:  a hopeful resolve, via a new, comprehensive ABA report, to come to grips with these systemic issues.  If you made a New Year’s resolution to stop drinking or drugging, or to address mental health issues that are affecting your legal practice, every state has a lawyer assistance organization to help you.  We’ve linked to the ABA’s state-by-state listing before; but here it is again.  If it helps one person, there’s no such thing as posting it too often.

Happy New Year.

 

Holiday parties are great times to socialize and network with colleagues.  But the casual atmosphere and the sometimes-plentiful adult beverages can also tempt you to tell war stories that reveal too much about your past clients, potentially violating your continuing duty of confidentiality under Model Rule 1.9.  But what’s “too much”?  If something about a previous case or transaction you were involved in is in the news, or is contained in court pleadings, can you discuss it?

The simple answer is “Not really.”  Model Rule 1.9(c)(2) says that you have the same duty not to reveal information relating to the representation of your former client as you do to a current client.  That’s a very broad duty:  it extends to all information “relating to the representation” (i.e., much broader than the attorney-client evidentiary privilege).  That effectively rules out war stories that would be detailed enough to let your audience figure out who you are talking about.

When is former-client info “generally known”?

Outside of the cocktail party context, how about using information adverse to a former client?  For instance, you might be in a position to use information you have acquired about the workings of a former client’s business without actually revealing it.  Rule 1.9(c)(1) says that such use is prohibited, subject to an interesting exception — it can be used “when the information has become generally known.”  That seems like a common-sense exception that strikes an appropriate balance between the former client’s valid interest in continuing confidentiality and the fact that you are no longer counsel to that client.

However, the definition of “generally known” can seem pretty narrow.  Last year, we wrote about a disqualification case holding that even information that’s “of record” in a court file may not be “generally known” for purposes of meeting the exception.  Now comes the ABA Ethics Committee’s take on that issue, published last week.

In Opinion 479, the committee agreed that information is “not generally known merely because it is publicly available or …[is] a matter of public record,” and noted numerous authorities that have reached that conclusion.  So when is former-client information “generally known”?

Citing New York rules commentator Roy Simon and a 2013 New York state ethics opinion, the ABA committee said that for Rule 1.9 purposes, information is generally known under two circumstances:

  • it’s widely recognized by the public in the relevant locale; or
  • it’s widely recognized in the former client’s industry, profession or trade.

“Workable definition”

This “workable definition,” said the ABA committee, encompasses publicity through traditional media sources, the internet and through social media — channels that can lead to public notoriety.  And publicity in leading sources in a particular field can meet the “generally known” test if members of the industry, trade or profession would widely recognize those sources.  “Information may be widely recognized within a former client’s industry, profession, or trade without being widely recognized by the public,” said the ABA committee.

But the committee reiterated that unless information has become widely recognized by the pubic, or within the former client’s industry, the fact that the information may have been discussed in open court, or may be available in court records does not necessarily signal that it is “generally known.”

Party safely and ethically

When you’re at a holiday gathering with your brother- and sister-members of the bar, have fun — but at the same time, watch what you imbibe (and designate a driver) and watch what you say.  Being judicious in both regards is the best way to enjoy the season without regret.

Here’s a year-end reminder to in-house counsel:  make sure that you are properly registered and licensed, or you may run into disciplinary problems.  An Ohio lawyer who worked in a company’s law department learned that the hard way earlier this month, when she received a two-year suspension from the Ohio Supreme Court, with six months stayed.

If I don’t open that scary envelope…

The lawyer was suspended in 2013 because she failed to renew her registration with the state supreme court.  A year later, while still lacking any license, she got a second suspension based on her failure to complete CLE requirements.  She later stipulated that although she didn’t open letters she received from the supreme court, she was aware of her suspension.

A year after that, still without an Ohio or any other license, she started working for a company’s law department as staff counsel and (ironically) director of institutional compliance.

Shortly after being hired by the company, the lawyer completed a securities industry application form, and falsely stated that her authorization to act as an attorney had never been revoked or suspended.

In 2015, after the lawyer had been working for the company for about a year, the GC noticed that she hadn’t received a request from the lawyer to reimburse her Ohio attorney-registration fee for the upcoming biennium.  When the GC checked the supreme court’s website, she learned that the lawyer had been suspended since 2013.

The lawyer later admitted that she had known about her suspension, and that before filling out the securities application form falsely, the lawyer had delayed completing it, because she knew that it asked about prior suspensions.

The company fired the lawyer immediately.

Making a bad problem worse

The disciplinary case proceeded by stipulation, and the supreme court found numerous ethics rule violations, including of the state’s versions of Model Rule 5.5(a) (unauthorized practice); Rule 5.5(b) (misrepresenting oneself as authorized to practice law); Rule 8.1 (false statements in connection with a disciplinary matter); and Rule 8.4(c) (conduct involving dishonesty, fraud, deceit, or misrepresentation).

As in many disciplinary cases, the initial problem (failing to register) was made a lot worse by what my family calls “avoidant behavior” — like the lawyer’s failure to open the letters from the supreme court informing her of the suspension and what to do to cure it.  And of course, things were made even worse by the subsequent misrepresentation on the securities registration form.  An emotional shut-down in the face of a mistake can be a normal human reaction, but fighting against it is the best course. (That’s easy to say, I know.)

As a side note, the lawyer here was working for a corporate employer in Ohio and was (or should have been) licensed in Ohio.  Most jurisdictions permit a lawyer to work in-house with a license from a different jurisdiction — as long as you are validly licensed by the highest court of some jurisdiction.

But it’s dangerous to let that license lapse through inattention.  And many jurisdictions also have special in-house counsel registration requirements in their court rules or other regulations. (The ABA Center for Professional Responsibility has a list with links, here.)

Pay attention to all those requirements, and reach out for help if you have dropped the ball in meeting them.

A lawyer representing an eBay seller in a dispute with the seller’s trading agents drew a defamation claim from the agents.  But the case had a happy ending for the lawyer, as the New Jersey court of appeals held last month that two letters the lawyer wrote to eBay were protected by the Garden State’s broad litigation privilege.  (H/t to Pete Gallagher, blogging over at Pete’s Take.)

The case spotlights the scope of the privilege, a “backbone” of the American judicial system, widely adopted in some form throughout the U.S., and enshrined in § 588 of the Restatement of Torts (Second).

“Dear eBay personnel…”

The underlying case started out in small claims court, where the two trading agents sued the seller.  The seller, represented by Lawyer, roared back with a multi-prong counterclaim that sought treble damages under the state consumer fraud act, plus punitive and other damages.  The counterclaim, which took the case out of small claims court, was based on an agreement for the trading agents to help seller sell goods on eBay.  The underlying case later settled.

But during the course of the underlying case, Lawyer wrote two identical letters to eBay, which was not involved as a party.  The letters were not addressed to anyone in particular at eBay.  They said that: seller had hired the trading agents based on eBay’s representations regarding its trading assistant program;  the trading agents had refused to pay money due to the seller; the trading agents “likely” never had a fidelity bond with eBay; and that eBay should suspend them from its program.  Lawyer also asked how eBay intended to “handle this matter.”

In their later complaint against Lawyer, the trading agents alleged claims including defamation and interference with contract, based on the letters.  The trial court dismissed the case, and the appellate division, in its unpublished opinion, affirmed.

Explore the truth — no recrimination

The privilege “provides immunity from suit to permit unfettered expression” in connection with litigation, noted the court of appeals.  Its contours under New Jersey law apply broadly to give absolute protection to:

  • any communication;
  • made in judicial or quasi-judicial proceedings;
  • by litigants or other participants;
  • to achieve the objects of the litigation;
  • where the communication has some connection or logical relation to the action.

Citing long-standing precedent, the privilege applies, said the court, even to statements spoken maliciously; even if connected to a not-yet-pending action; and even if addressed to a non-party to the litigation.

Here, the court said, Lawyer’s detailed letters were related to and relevant to the underlying case between Lawyer’s client and the trading agents.  They were in line “with the type of inquiry deemed … to be necessary to a thorough and searching investigation of the truth, and therefore, essential to the achievement of the objects of litigation.”  EBay’s response could have led to a claim against eBay; or could have prompted eBay to investigate the trading agents’ practices, possibly leading to additional support for seller’s claims against them.

The Lawyer’s statements, held the court, were well within the scope of the absolute privilege and its policy to “explore the truth of a matter without fear of recrimination.”

But don’t go wild

The litigation privilege is obviously good for lawyers and allows us broad scope to make statements relevant to litigation.  But a caveat:  as always, state wrinkles may apply.  (See this 2015 law review article, at n. 14, commenting about Georgia and Louisiana, for instance.)  And you should be aware that for disciplinary purposes, your motivation counts.  In representing a client, Model Rule 4.4 bars using means that have no substantial purpose other than to embarrass, delay or burden a third person.

One of 2017’s biggest legal trends is the upswing in law firm merger activity.  Altman Weil’s MergerLine site reports 76 deals announced through 2017 Q3, the most ever recorded through three quarters, with a prediction that there might be 100 mergers by year-end, surpassing the 2015 high of 91.

Firm mergers raise lots of conflicts issues, and some mergers are scuttled when they can’t be resolved.  Another issue that can be troublesome in the courtship stage involves the considerable amount of financial information disclosed, namely:  How can firms that are exploring a merger guard against the possibility that revealing financial information to each other might lead to poaching each other’s top rainmakers in the event that the merger doesn’t go forward?  Can firms enter into non-solicitation agreements, to alleviate this reasonable concern?

Issue of lawyer mobility

A new ethics opinion from the North Carolina state bar addresses agreements, made as part of merger negotiations, not to solicit or hire lawyers from each other for a specified period of time in the event that the firms decide not to merge.

The ethics issue arises under Model Rule 5.6(a), which prohibits a lawyer from offering or making an agreement that restricts the right of a lawyer to practice after terminating an employment relationship (except for retirement benefits agreements).

The rationale is that agreements that impose practice restrictions after a lawyer leaves a firm limit a lawyer’s professional autonomy; and more important, they limit the freedom of clients to choose a lawyer.

De minimis restriction

The North Carolina opinion reviewed an agreement between two firms exploring a merger.  In addition to customary terms barring disclosure of confidential client and proprietary firm information, if the firms decided not to merge, each firm agreed not to:

  • induce or solicit each other’s lawyers or other employees to join either firm;
  • hire or engage each other’s personnel as partners or counsel;
  • for the term of the merger exploration agreement (one year) and for two years after termination of the agreement.

The Committee noted the reality of the merger marketplace, surmising that “the non-solicitation provision was included in the agreement to foster the trust necessary for both firms to disclose financial information about [lawyer] productivity”  without fear that if negotiations fell apart, one or both firms would try “to lure highly productive lawyers or ‘rainmaker’ lawyers away” from each other.

The proposed agreement was permitted under the Tar Heel State’s adoption of Rule 5.6, the Committee said, viewing it as a matter of first impression.  First, the agreement imposed only a de minimis restriction on the mobility of the two firms’ lawyers.  “If there is a reasonable business purpose,” the Committee said, a “restriction that impacts lawyer mobility may be permissible.”  This one was for a relatively short, defined period of time, and only affected employment with one other law firm.

In addition, the Committee said, the restriction on lawyer mobility did not impair client choice:  it would not prevent or inhibit a client from following a lawyer who left one of the firms in order to take a position with a firm that wasn’t subject to the agreement.

The Committee cited the ethics rules as “rules of reason” (as noted in their scope section).  Under that rubric, and with its limited impact, the “no poach” provision passed muster.

Any more out there?

I’m not aware of other ethics opinions that deal with this aspect of Rule 5.6(a), or a no-poach clause.  If your firm is part of the hot merger marketplace, it would be wise to tread carefully and seek advice before including such a clause in your agreement with a potential merger partner.  And of course, as always, check your jurisdiction’s version of the rules.