Disclosing client information on Facebook has gotten yet another lawyer in trouble.  A Massachusetts attorney was publicly reprimanded earlier this month for posting details of a guardianship case on the social media site, in violation of the Bay State’s version of Model Rule 1.6 (“Confidentiality of Information”).  The Board imposed a public reprimand, rejecting an argument that the only people who would have recognized the case from the information posted were the parties themselves.  The case highlights the risk of posting even information you have tried to anonymize.

“Back in the Boston office …”

After representing his client at a hearing in juvenile court, the lawyer (a member of the bar since 1977) posted on his personal Facebook page, which was public and had no privacy setting:

I am back in the Boston office after appearing in Berkshire Juvenile Court in Pittsfield on behalf of a grandmother who was seeking guardianship of her six year old grandson and was opposed by DCF [i.e., Department of Children and Families] yesterday.  Next date — 10/23.

Two people responded to the post.  A Massachusetts lawyer who was a FB friend asked, “What were the grounds for opposing?”  The lawyer answered, “GM [i.e. grandmother] will  not be able to control her daughter, the biological mother, and DCF has concerns.”  The friend responded (sarcastically), “DCF does have a sterling record of controlling children and questionable mothers, after all.”  The lawyer replied, “Indeed.”

A second FB friend, this one a non-lawyer, also responded:  “So what’s the preference … Foster care?  What am I missing here?”  The lawyer answered:

The grandson is in his fourth placement in foster care since his removal from GM’s residence in late July. I will discover what DCF is doing or not doing as to why DCF opposes the GM as guardian.  More to come.

Within a couple months, the lawyer’s client learned from her daughter about the lawyer’s FB post.  She later  complained to him and eventually to disciplinary authorities.

Connecting the dots?

The lower hearing committee recommended dismissing the disciplinary case, concluding that the FB post couldn’t reasonably be linked to the client, and therefore there was no confidentiality violation under Rule 1.6.  But the Board rejected that conclusion, because the post disclosed sufficient information to make it clear to the client’s daughter that the post referred to her mother. That belied the notion that no one could identify the case and learn confidential information from the post.

“Even if there were no evidence that a third party actually recognized the client in the post,” said the Board, “we would still conclude that the respondent had violated Rule 1.6(a).  There is no requirement that a third party actually connect the dots.”  Rather, the Board ruled, it was enough if it were “reasonably likely that a third party could do so.”

This was no mere hypothetical, or “shop talk” among lawyers the Board said.  The lawyer’s FB post did not seek advice from other lawyers, in the Board’s view, or have “any other purpose that would have served his fiduciary duty to his client.”  Rather, he violated the duty to “jealously guard … client secrets.”

The lawyer in this case had apparently practiced for 42 years without any other disciplinary history.  The Board brushed off his lack of previous discipline and said it was entitled to no mitigating weight.  Instead, the Board regarded the lawyer’s long experience as an aggravating factor, since “he should understand the importance of protecting client confidences.”

Be careful out there

Do we need to say it again?  Don’t even get close to talking about the specifics of your clients’ matters on social media.  Even if you try to disguise identities and details, that might not be enough to keep you out of trouble.

Bitcoin has come a long way since 2010 when Laszlo Hanyecz made the first Bitcoin purchase by paying 10,000 Bitcoins for two Papa John’s pizzas – a pizza order that today would have been worth over $80 million.

In addition to the pizza giant, some law firms are now accepting cryptocurrencies in exchange for legal services. Small firms in the technology industry, the Treasurer of the State of Ohio, and law firms such as Frost Brown Todd in Cincinnati and Steptoe & Johnson in Washington D.C. already are on the cryptocurrency bandwagon. Last week Am Law 200 firm Quinn Emanuel joined their ranks.

What is cryptocurrency?

Bitcoin is the oldest of over 1,000 cryptocurrencies – digital currencies not backed by any banks or governments. Cryptocurrencies are represented by entries in a digital ledger called a blockchain. The ledger is publicly accessible but encrypted. Each transfer of the cryptocurrency is recorded by adding to the ledger.

Individuals or entities that “own” part of the currency are identified by an anonymous key number. Each owner has a digital wallet, which can be stored in a smartphone app, that records transactions.

What are the ethics issues?

Before deciding to accept cryptocurrency payments from clients, law firms should understand and plan for the legal ethics issues that the digital currencies trigger. Among them:

  • Volatility

Cryptocurrencies are known for being extremely volatile, with sudden spikes and drops in value. Law firms accepting cryptocurrency must be careful not to run afoul of their jurisdiction’s version of Model Rule 1.5, which prohibits the collection of “an unreasonable fee or an unreasonable amount for expenses.”

Nebraska is apparently the only jurisdiction to have weighed in with an ethics opinion on cryptocurrency. It advises lawyers to convert a cryptocurrency payment to U.S. dollars immediately upon receipt and to notify their clients on how they will handle the digital currency, but questions remain as to the meaning of “immediate” (is a Monday morning conversion sufficiently immediate for a Friday night payment?), the applicable exchange rate (rate at time of payment or time of conversion?), and the exchange medium (which one should be used? Who pays transaction fees?).

  • Anonymity

The anonymous nature of cryptocurrency transactions has given digital currencies a reputation for attracting criminal behavior and may make it difficult to know who is paying your client’s legal fees. Of course, Model Rule 1.2(d) prohibits lawyers from assisting a client in conduct that the lawyer knows to be criminal. And Model Rule 1.8(f) mandates that lawyers may not accept compensation from anyone other than their clients unless certain conditions are met.

Before accepting cryptocurrency payments, law firms should establish practices, such as “know your client” procedures, to ensure that they are not facilitating criminal activity and that they know who is paying the bills.

  • Safeguarding client property

Model Rule 1.15 requires lawyers to safeguard client property. But cryptocurrencies cannot be deposited into your firm’s IOLTA account. The IRS defines cryptocurrency as property, and law firms must be technologically prepared to manage it. As financial institutions have not adapted to hold cryptocurrency in trust or to pay “interest” on such holdings to legal assistance organizations (which receive IOLTA interest under state-administered programs), this could be an area of uncertainty for firms.

Cryptocurrency can be stored in a digital wallet offered by online platforms, but there is a risk of hacking and lack of insurance against loss. Firms might also use “cold storage” by maintaining the cryptocurrency on a flash drive or other offline storage device.

Takeaway: Be tech savvy and have a good engagement letter

A detailed engagement letter tailored to compliance with the Rules of Professional Conduct is essential to manage the ethics risks of accepting cryptocurrency. A recent article counsels that the engagement letter should set forth the mechanics for conversion to U.S. dollars, identify the payer, and allocate responsibility for storage costs and the risk of loss – and that seems like prudent advice.

Remember: Model Rule 1.1 (“Competence”) as adopted in many jurisdictions carries with it the duty to be aware of the benefits and risks associated with relevant technology. You can certainly take advantage of the business development advantages of accepting cryptocurrency, but you should first carefully consider the ethical questions.

A New Jersey lawyer’s involvement in the sale of a massage parlor rubbed the district court the wrong way and resulted in his disqualification from a later suit over the transaction.  In its opinion last month, the court ruled that the buyer was the lawyer’s former client, and that the earlier work on the sale was “substantially related” to the later lawsuit in which the lawyer represented the seller against the buyer.  The case highlights key aspects of the rules on former-client conflicts of interest — and violating them is a common way to get tossed from litigation.

Massaging the facts

In his complaint, the seller alleged that he had sold the managing membership of Massages 4 All NJ 7, a New Jersey LLC, but that the buyer failed to get a permit or register the business properly with the borough as a massage business; rather, the buyer continued to display the prior permit listing seller as the owner.  Further, seller said in his complaint, buyer’s employee failed to register as a masseuse as required.

As a result of the permit transfer issues, said the seller, when the employees of Massages 4 All were arrested for prostitution, the police opened an investigation against the seller and he was eventually indicted on prostitution and  money laundering charges.  His bank accounts were frozen during the ensuing proceedings, he alleged.

The seller was eventually cleared, but sued the buyer asserting claims including breach of the covenant of fair dealing and negligent infliction of emotional distress.

The seller retained Matthew Jeon to represent him in the suit.  That set up the later motion to disqualify, because the buyer asserted that Jeon was involved in the underlying purchase and sale transaction for the massage parlor, and had represented him in the deal.   As his former lawyer, the buyer asserted, Jeon should be disqualified from suing him on behalf of the seller.  According to the court’s opinion, the buyer spoke Korean and had limited English language skills, and Jeon was fluent in Korean.

Former-client conflict rule spotlighted

The district court granted the motion to disqualify, agreeing that Jeon formerly represented buyer in the massage parlor transaction and was now precluded from representing seller in suing the buyer.

New Jersey’s rule on former client conflicts, like its Model Rule 1.9 counterpart, provides that absent written consent, a lawyer may not represent a  client against another client the lawyer has formerly represented in a “substantially related” matter.  Applying the rule, the district court opinion has some good take-home lessons:

  • The putative former client’s reasonable belief can create an attorney-client relationship and form the basis for disqualification.  Here, said the court, the evidence included Jeon’s filing of paperwork in connection with the transaction; his invoice to the buyer for legal services; the memo line on buyer’s check in payment, marked “Legal Services;” and the buyer’s averment that he had confidential communications with Jeon in which Jeon advised him regarding the transaction.
  • A “substantial relationship” can be shown based on likely exposure to relevant confidential information.  Two factors — confidential information shared in the former representation and the relevance of that information to the current litigation — are always key to analyzing conflicts under Rule 1.9.  Here, the court found that the buyer “likely” shared confidential information with Jeon, and that it was relevant to Jeon’s current representation adverse to the buyer.  The likely exposure and the fact that the current adverse representation revolved around the sale and operation of the massage parlor including the lack of proper business registration was sufficient to satisfy the necessary “substantial relationship.”
  • An open-ended prospective waiver can be insufficient to constitute consent to an actual conflict that arises later.  A former-client conflict is always subject to the former client’s written consent.  Here, Jeon argued that the buyer had waived the conflict in advance and in writing, including waiving any misunderstanding caused by the language barrier.  But the court rejected the waiver as too open-ended to be enforceable, because it merely sought to hold Jeon harmless against any further action arising from the massage parlor transaction.  That was insufficient, said the court, to identify what a future conflict would consist of or apprise the buyer of the material risks of the a potential future conflict.  Both are required in order to constitute a valid prospective waiver the court noted.

Be on the lookout for former-client conflicts — and be aware that federal district courts most often provide in their local rules that in resolving motions to disqualify they will look to the Rules of Professional Conduct in the forum state, as the court did here.

It’s no secret that lawyers struggle at disproportionate rates with mental-health and substance-abuse issues.  The National Task Force on Lawyer Well-Being reported in 2017 that in a study of 13,000 practicing lawyers, 28 percent struggled with depression; 19 percent struggled with anxiety; and between 21 and 36 percent qualified as “problem drinkers.”  Most at risk for depression and drinking problems are “younger lawyers in the first ten years of practice and those working in private firms[.]”

The Task Force’s alarming report gave rise to what some have called a “lawyer well-being movement” — including an ABA lawyer-wellness pledge campaign targeting law firms, resource tool-kits and broad discussions in the legal press.  (See here and here (subs. req.), for instance.)

What are the ethics duties? 

But what are the ethics duties of firms and their lawyers when it comes to dealing with  an impaired lawyer?  It is obvious that impaired lawyers may not be able to manage responsibilities to clients adequately, and may struggle to meet their duties of competence and diligence.  The risks are equally obvious:  the Task Force Report cites one study suggesting that “40 to 70 percent of disciplinary proceedings and malpractice claims against lawyers involve substance use or depression, and often both.”

The Washington, D.C. Ethics Committee issued an opinion earlier this month explaining the duties that partners, supervisory lawyers, subordinate lawyers and even non-lawyer employees have when they reasonably believe that a lawyer in the firm or government agency has a significant mental impairment that poses a risk to clients.  (The same principles would apply to corporate in-house legal departments, which are included in the definition of a “firm” under Model Rule 1.0(c).)

Whether the impairment is related to age, substance abuse, a physical or mental health condition or something else, if it is ongoing or has a likelihood of recurrence, then there may be a duty to take appropriate measures, the Committee said in Opinion 377.

What to do

Here is a digest of some of the guidance that the Committee provided in Opinion 377.

  • If you are a law firm manager or supervise other lawyers, you must closely supervise the conduct of a lawyer you reasonably believe to be impaired, because of the risk of harm to clients.  (See Model Rule 5.1.)
  • If the impaired lawyer’s violation of an ethics rule raises a substantial question as to the lawyer’s honesty, trustworthiness or fitness to practice, all lawyers, whether supervisors or not, have a duty to report it to appropriate professional authorities  — unless client confidentiality duties (or other law) prohibits disclosure.  (See Model Rule 8.3.)  On the other hand, client consent can lift the prohibition.  The reporting duty is not eliminated even if the impaired lawyer is removed or leaves the firm.
  • The firm might have communication obligations to clients that are considering whether to stay with the firm or transfer their representation to the departing lawyer.  (See Model Rule 1.4.)  But the firm must also be cautious — other law and the impaired lawyer’s privacy rights can limit the information permissible to disclose.
  • Mental impairment does not lessen the duties owed to clients, and a lawyer has a duty to withdraw if a mental or physical condition materially impairs the lawyer’s ability to represent the client.  (See Model Rule 1.16(a)(2).)
  • The firm’s ultimate ethical obligation is to protect the interests of its clients, and if an impaired lawyer does not or will not take steps to address the problem, then the lawyer’s partners, managers or supervisors must do so.

Humanity and compassion

Maintaining well-being in our stressful profession is a challenge.  Our humanity and compassion demand that we not stand by when a colleague is suffering and we should look out for signs that someone needs help.  Equally, our ethics obligations to our clients demand that we look to the steps we must take to ensure that their interests are safeguarded.

Every jurisdiction has resources to help lawyers — and law students — who are struggling.  Here is a link.  If you need help, try to reach out.  And if you know someone who needs help, try to give it.

It’s been dubbed “the Amicus Machine” — the seemingly limitless wave of amicus curiae filings in the nation’s highest court.  Statistics from the Supreme Court’s 2017-18 term reflect amicus briefs filed in every one of the 63 argued cases, averaging 14+ briefs per case.  For the current term, it is reported that groups have already filed over 260 amicus briefs on the merits.

And this week brought a New York State Bar Association ethics opinion on an interesting issue:  can the same law firm file amicus briefs on both sides of a Supreme Court case?

Be a real friend of the court

As an ethics wonk, I admit I enjoy reading ethics opinions, and one of the side-pleasures is the little peek they sometimes offer on the inner workings of firms that pose ethics questions to their state bar ethics committees.

As Opinion 1174 describes, a law firm circulated a proposal for its lawyers to provide pro bono services in support of a specific position in a Supreme Court case by preparing an amicus brief for filing with the Court.  “The response of the attorneys at the firm was mixed,” the opinion reports.  “Some associates favored one side of the issue before the Court, while others wished to take the opposing view.”  Surprise!  (Not.)

I can just picture the controversy at the firm and the e-mails flying back and forth while billable hours and productivity plummeted.

The firm’s proposed solution, once it had stirred up this hornet’s nest of dissension:  Create two separate teams to work on their respective positions, with each group submitting its own amicus brief.  That idea brought the firm to the door of the NYSBA Committee, asking:  Can lawyers at the same firm file amicus briefs on opposing sides of the same issue before the same court?

Non-consentable conflict?  Or what?

It depends, said the Ethics Committee.  In a scenario where one or more clients have asked the firm to submit amicus briefs on opposing sides of an issue, the answer is “No.”  New York’s Rule 1.7, like Model Rule 1.7(b)(3), bars a lawyer from representing clients on both sides of the same litigation or other proceeding before a tribunal.  That would be the case under that scenario, and the conflict raised is not consentable, the Committee said.

Comment [17] explains that consent can’t cure such a conflict “because of the institutional interest in vigorous development of each client’s position when the clients are aligned directly against each other in the same litigation.”

But the result is otherwise, the Committee said, in a scenario where the lawyers in the firm only propose to appear pro se, and not on behalf of any client.  Lawyers “are as free as anyone else” to represent themselves in litigation, reasoned the Committee, and it saw “no ethical reason why attorneys may not appear in their own name (rather than in the name of the firm) as pro se amici on opposing sides of a question before the Court.”

One caution, added the Committee:  the firm should consider whether the Supreme Court would expect lawyers appearing pro se on opposite sides of an issue to disclose their affiliation with the same firm — that information could affect the Court’s evaluation of the competing amicus briefs.

Being part of the “Amicus Machine” can be a valuable opportunity for a firm or an individual lawyer, but as the law firm inquirer in Opinion 1174 learned, it can raise complications.

Can we be Facebook friends?  That’s one question left open by the ABA earlier this month in Formal Opinion 488, on the subject of judges’ personal relationships with lawyers as grounds for disqualification.  While spotlighting judicial ethics duties in maintaining impartiality, the opinion fails to provide some needed guidance on social media relationships.

Model Code of Judicial Conduct rules

Under Rule 2.11(A)(2) of the Model Code of Judicial Conduct, judges must disqualify themselves when their impartiality may reasonably be questioned, including (not limited to) where the judge’s spouse or domestic partner (and certain of their relatives) is a lawyer or party in the proceeding.

In Opinion 488, the ABA Ethics Committee advises on situations that fall outside the bounds of Rule 2.11(A)(2); that is, where judges may have “social or close personal relationships with the lawyers or parties” but not as a spouse, domestic partner or other family member.

The Committee identifies three categories of such relationships between judges and lawyers:  acquaintanceships; friendships; and close personal relationships.

In a common-sense application of Rule 2.11(A)(2), the Committee concluded that judges are not required to disqualify themselves or make disclosure when they are merely acquainted with a lawyer — for instance through being members of the same worship-place, gym or civic organization, or even having been co-counsel on a case before the judge took the bench.  Standing alone, acquaintanceship is not a reasonable basis to question a judge’s impartiality, the Committee said.

“Friendship” implies a greater degree of affinity, according to the opinion.  Friends may be casual (periodically meeting for a meal, staying in touch through calls or correspondence) or closer (routinely spending time together, vacationing together, sharing a mentor-protegee relationship developed while colleagues).  Not all friendships require disqualification, but there may be situations “in which the judge’s friendship with a lawyer or party is so tight” that there might be reasonable questions about the judge’s impartiality.  It’s a matter of degree, the Committee advised.

Last, a judge may have a personal relationship that goes beyond friendship but that still does not implicate Rule 2.11.  The judge may be involved romantically with a lawyer, or desire a romance; the judge and a lawyer may be amicable ex-spouses; or the judge may be a god-parent to a lawyer’s child or vice versa.  Existing or desired romantic relationships require disqualification, said the Committee.  “Other intimate or close personal relationships with a lawyer or party” at least require disclosure “even if the judge believes that he or she can be impartial,” and could require disqualification — it depends on the circumstances, the Committee said.

What’s left out?

Over at Professional Responsibility Blog, Prof. Alberto Bernabe points out that while the opinion is sensible, it doesn’t deal with an issue of concern to many lawyers — namely social media “friendships” with judges.  (Elected judges in particular sometimes seek out such virtual friendships.)  The issue is also the subject of several state ethics opinions, which have been somewhat divergent in their approaches.

Opinions in Ohio and New York, for instance, suggest that a social media friendship with a lawyer is not a per se basis for judicial disqualification.  Opinions in some other jurisdictions are more restrictive, and bar judges from being Facebook friends with lawyers who are currently appearing before them (California) or even may appear before them (Massachusetts).

Late last year, the Florida Supreme Court ruled in a divided opinion that there is no basis to single out social media “friendships” between judges and lawyers for a per se rule of judicial disqualification.  That makes sense to Prof. Bernabe and other commentators (see here):  given that real-life friendships aren’t automatically disqualifying, why should virtual ones be?

But earlier this year, a Wisconsin court of appeals rejected a per se rule while still holding in a child custody case that accepting a Facebook “friend” request from a party with a motion pending creates an appearance of impropriety and warrants judicial disqualification.

The ABA Ethics Committee could have been more helpful in clarifying the social media rules of the road on this issue for lawyers and judges.  In the meantime, lawyers should be mindful of their state’s version of Model Rule 8.4(f), which bars knowingly assisting a judge in conduct that violates the rules of judicial conduct, as well as any applicable state ethics opinions or cases that make it unfriendly to be a (social media) friend.

The practice of law comes in many forms and sizes. It may include giving advice about a legal right, representing a client in a legal proceeding, preparing legal documents, and negotiating on a client’s behalf. Yet what all these acts have in common is that you must have state authorization to so act. You face serious repercussions for unauthorized practice of law, whether the unauthorized practice is just for a single, quick transaction or a representation spanning more than a decade. The recent case Ohio State Bar Assn. v. Doheny in the Supreme Court of Ohio highlights two important points about the unauthorized practice of law.

No ticket in the Buckeye State

In Doheny, the practitioner was or had been licensed in Indiana, Virginia, and the District of Columbia, but never in Ohio. The Ohio State Bar Association charged him with 11 instances of unauthorized practice: he provided legal advice to more than six Ohio residents, negotiated on behalf of several Ohioans in legal matters, drafted purchase agreements and quitclaim deeds for real property located in Ohio, and collected approximately $70,000 in fees for those services.

Meanwhile, the practitioner held himself out as an attorney in Ohio by using false and misleading letterheads and titles to create the impression that he was authorized to practice law in the Buckeye State.

After initially cooperating in the investigation, the practitioner neither answered the complaint nor appeared in the proceedings. The Board on the Unauthorized Practice of Law recommended an injunction against further illegal acts and imposition of a $25,000 civil penalty.

In adopting the Board’s recommendation, the court provided two key takeaways about the unauthorized practice of law.

Practicing without a license

One key takeaway is that if you practice in a jurisdiction where you are not licensed you will be treated in that state as if you are not a lawyer at all. The court emphasized that “when an individual who is not licensed to practice law in Ohio negotiates legal claims on behalf of Ohio residents or advises Ohio residents of their legal rights or the terms and conditions of settlement, he or she is engaged in the unauthorized practice of law.” Because the practitioner in Doheny provided such services without an Ohio license, the court ruled that he engaged in the unauthorized practice of law.

Preventing individuals from engaging in the unauthorized practice of law was imperative to the court for two reasons: first, said the court, it is “necessary to protect the public from agents ‘who have not been qualified to practice law and who are not amendable to the general discipline of the court.’” Second, the public needs to be protected from the “incompetence, divided loyalties, and other attendant evils that are often associated with unskilled representation.” The court aimed to further these two policy objectives with its decision.

Holding yourself out as a lawyer

Another key takeaway from the court’s decision is that falsely holding yourself out as being authorized to practice law in a jurisdiction is equivalent to actually engaging in unauthorized practice. In line with state statute, the court defined the unauthorized practice of law in Ohio to include “the ‘[h]olding out to the public or otherwise representing oneself as authorized to practice law in Ohio’ by any person who is not admitted or otherwise certified to practice law in Ohio.”

In Doheny, the practitioner held himself out as an attorney in Ohio by using the honorific “Esq.” in his Ohio communications. He also used false and misleading letterhead by placing his name above the word “Principal” and including a Hamilton, Ohio office address which he neither owned nor had permission to use. After adopting these findings of fact, the court ruled that the practitioner engaged in unauthorized practice of law.

Don’t let this happen to you

Even in our current increasingly-globalized legal market, states take unauthorized practice seriously and will give it significant attention. Like the practitioner in Doheny, individuals in Ohio found to have engaged in the unauthorized practice of law can be enjoined from practicing law and fined up to $10,000 per offense. Before providing legal services in any jurisdiction, you should always make sure that you are authorized to do so.

The California court of appeals has denied a bid by an employment discrimination defendant to disqualify the plaintiff’s legal team.  The name partner in the law firm representing the plaintiff was formerly the employer’s chief operating officer — but the court rejected the assertion that his firm should be disqualified merely based on his knowledge of the employer’s “playbook.”  The opinion shines a light on the playbook theory.  (Hat tip to Dan Bressler over at Bressler Risk Blog, who also reports on the case.)

Bentley dealership woes

The plaintiff, Wu, was in sales at O’Gara Coach at its Beverly Hills Bentley dealership.  Alleging that he was called “chink,” “Buddha” and “sumo wrestler” by his supervisor, Wu asserted racial discrimination and wrongful termination claims against his former employer.  Wu retained the Ritchie Litigation law firm to represent him.  According to the court’s opinion, the name partner, Ritchie, was a law school graduate who had joined O’Gara Coach in 2013 and worked his way up to be president and chief operating officer of the company before he left, passed the California bar exam, and established his law firm.

Based on Ritchie’s former role with the company, defendant O’Gara Coach moved to disqualify his firm, asserting that in his former role Ritchie was directly involved in policy-making, discussed strategy in pending employment claims with the company’s outside counsel, and was responsible for workplace policies when Wu’s claims arose.

O’Gara argued that although Ritchie was never a lawyer for the company, he had been involved in matters substantially related to Wu’s claims and exposed to O’Gara’s confidential information, mandating disqualification under California’s rules on former-client conflicts of interest.

Playbook in play?

Rejecting the employer’s argument and reversing the trial court, the court of appeals said that at most, Richie possessed confidential information about O’Gara’s workplace policies, operations and general litigation strategies.

The court noted that this is commonly referred to as “playbook” information, and as the ethics scholar Prof. Charles Wolfram described it, the usual claim is that a lawyer’s possession of this type of confidential but general company information “would give the lawyer significant advantage if it were permissible to represent an adversary against the former client, regardless of the factual dissimilarities between the two representations in other respects.”

But under California law, said the appeals court, a law firm is not subject to disqualification merely because “one of its attorneys possesses information concerning an adversary’s general business practices or litigation philosophy acquired during the attorney’s previous relationship with the adversary.”

Rather, the appeals court ruled, more is required — namely a “material link” between Richie’s knowledge of O’Gara’s anti-discrimination policies and the actual issues presented by Wu’s lawsuit.  What Richie might know about O’Gara Coach based on his work as a non-lawyer executive had to be separated from his exposure to confidential and potentially privileged communications, the court said.  And no category of information that Richie had, the court held, was directly at issue in the case or had unusual value for his firm’s representation of Wu.

Across the jurisdictions

As ethics authority Bill Freivogel puts it at his always-useful Freivogel on Conflicts site, the issue in the playbook analysis is “when does a lawyer learn enough about the former client’s thought processes and procedures that the new representation may be deemed ‘substantially related’ to the former one,” thus requiring disqualification under Model Rule 1.9(a) and its state counterparts.

The Wu case is a good example of the approach in the Golden State — but results may differ in your own jurisdiction.

For example, applying the New Jersey Rules of Professional Conduct, a New Jersey district court judge ordered disqualification last year based on a playbook theory.  The defendant’s lawyers had formerly represented the plaintiff, and had gained information generally about its “patent prosecution strategy and [its] approach to defending the validity of its patents,” and knowledge about what the former client “protected as trade secrets apart from its patented inventions.”

When the playbook theory is in play, jurisdiction and factual nuances can matter.

If you and your spouse are both lawyers, you know that you potentially face a few unique ethics issues — conflicts and confidentiality are the most obvious ones.  (We’ve considered some of the ins and outs here and here.)

But what if your nearest and dearest is also your law partner — or what if it maybe only looks that way?

The Third Circuit Court of Appeals held last month in a non-precedential opinion that a New Jersey lawyer couldn’t be held liable for her husband’s alleged legal malpractice because the client hadn’t relied on the existence of an apparent partnership.

The opinion spotlights some interesting law/spouse partnership issues.

“No legal entity”

As set out in the court of appeals opinion, the client contacted George Cotz to discuss an anticipated action against her employer.  Later, at an in-person meeting, the client signed a retainer agreement.

The retainer agreement had several significant features:  it was on letterhead reading “Cotz & Cotz Attorneys at Law;” at the side, the “members” were listed as George Cotz and Lydia Cotz; and George Cotz signed the retainer agreement on behalf of “Cotz & Cotz.”

But “notwithstanding this document,” the court said, “no legal entity named ‘Cotz & Cotz’ existed and the Cotz’s had never entered into a partnership.”  (It would be interesting to know more of the underlying facts — like whether there had ever been such a partnership, and why this letterhead was used — but the opinion does not provide them.)

As the Third Circuit opinion describes, George Cotz filed the client’s employment action in state court, but he later failed to oppose the defendant-employer’s summary judgment motion, and it was granted.

The client filed a legal malpractice suit against George Cotz and “Cotz & Cotz,” and later amended her complaint to also name George Cotz’s wife, Lydia Cotz.

A divided appellate panel upheld the district court’s ruling:  no actual law partnership existed between George and Lydia Cotz, and the client lacked evidence that she relied on the appearance held out in the retainer agreement — namely, that there was such a partnership.


Interpreting New Jersey’s partnership statute, the Third Circuit said that in order to impose liability on someone who has purported to be a partner, the complaining party is “require[ed] in all cases” to have “acted in reliance on the representation.”

Here, Lydia Cotz escaped liability as a partner-by-estoppel for her husband’s alleged malpractice because there was no evidence that the client “transacted with [George Cotz] in whole or in part because of” the various representations that he was in a partnership.

For instance, said the court, the client testified that she had been referred to “the law office of Cotz & Cotz,” but not that “she called him because she thought he was in a partnership.”  Hence, the panel majority held, no partnership-by-estoppel was raised.

Need for magic words?

The dissenting judge wrote that there was at least a fact issue on whether the client relied on the existence of the Cotz & Cotz firm in making her hiring decision.

“What reasonable person would be referred to a law firm, go to the office of the law firm, and sign a retainer agreement with the law firm, only to think that they were hiring an individual attorney, rather than a law firm?” asked the dissenting judge.

The majority, said the dissenter, essentially established a requirement that under New Jersey law, “to establish a partnership by estoppel,” a plaintiff “must use the magic word ‘rely’ in their testimony.”

Partner, partner, who’s got a partner?

Of course, as in other state-law-based contexts, results may vary.  And the opinion is a federal court’s interpretation of New Jersey state law — and a non-precedential interpretation at that.

But the Third  Circuit’s grant of a litigation off-ramp to an alleged partner-by-estoppel is worth noting for its close reading of the reliance requirement when it comes to holding a purported partner liable.

Being in the cross-hairs of a client’s legal malpractice claim is a horrible-enough experience for any lawyer.  Even worse would be if your house had to be sold in order to satisfy the former client’s default judgment against you, as the Seventh Circuit ordered in a case earlier this month.  The opinion spotlights how state law impacts the bankruptcy code when it comes to protecting a residence from bankruptcy creditors — including those who might have a judgment against you.

Tenants in the entirety

According to the Seventh Circuit’s opinion, a client hired an Illinois lawyer to file a medical malpractice claim on her behalf, but the statute of limitations expired before the lawyer filed suit.  The client sued for legal malpractice, obtained a default judgment, and recorded it against property that the lawyer and his wife owned as tenants by the entirety.  The client claimed that with post-judgment interest, her claim against the lawyer totaled more than $1 million.

In 2015, the lawyer sought bankruptcy protection as a result of his own financial issues and filed a chapter 7 voluntary petition for relief.  In his bankruptcy schedules filed with the court, the lawyer identified his debt to the former client and acknowledged that it was secured with a judgment lien on his residence.  At the petition date, the lawyer and his wife owned the  property as tenants in the entirety; but prior to receiving a discharge order in the bankruptcy, the wife died.

Under Illinois law, the tenancy by the entirety ended when the wife died, and the lawyer’s interest became an individual one, in fee simple.

In the bankruptcy court, the lawyer argued that his residential property was exempt from the client’s lien under 11 U.S.C. § 522(b)(3)(B).  The Bankruptcy Code section exempts from the bankruptcy estate property in which the debtor has an interest as a tenant by the entirety “to the extent that such interest … is exempt from process under applicable non-bankruptcy law.”

The lawyer argued in the bankruptcy court that his contingent future interest in the home while his wife was alive was sufficient to keep it out of his Chapter 7 estate.  Tracing the tenancy-by-the-entirety doctrine back to the English feudal system, and reversing the bankruptcy court, the Seventh Circuit rejected the argument.

State-by-state approach

The court noted that tenancy in the entirety is a form of ownership originating before married women had legal identities and property interests of their own.  The doctrine enabled spouses to own property jointly, which would belong to the survivor when one spouse died.  But once women could hold property in their own right, states “splintered in their approach to tenancy the entirety,” the court said.

The Bankruptcy Code requires a state-by-state analysis, the court pointed out — and Illinois law, unlike that of some states, mainly provides protection against a forced sale of the property to collect a debt against only one of the tenants.  “Illinois law does not make all interests held by tenants in the entirety immune from process,” the court said, citing section (1)(c) of the Illinois joint tenancy statute, and fails to provide an exemption for contingent future interests such as the lawyer claimed.

In contrast to the law of Illinois, the court pointed to neighboring Indiana.  Under the Hoosier State’s statutes, “any interest the judgement has in real estate as a tenant by the entireties” is immune from bankruptcy process, noted the court.

Legal S.O.S.

We hope that you’ll never be in a legal-malpractice mess or a bankruptcy situation, let alone both.  But if you are, get expert help on the nuances of state law and how it affects your exemptions and interests in property — the home you save could be your own.