Search results for: public

If you have not heard of the Corporate Transparency Act (CTA), now is the time to become familiar. Millions of companies will be affected by its reporting requirements. With the effective date being right around the corner, all lawyers need to be thinking about the CTA. The CTA, which Congress passed as a component of the Anti-Money Laundering Act of 2020, was created to enable the government to prevent, detect, and combat money laundering, the funding of terrorism, and other prohibited activity by requiring certain companies to report their beneficial ownership information to the Financial Crimes Enforcement Network division of the U.S. Department of the Treasury (“FinCEN”). There are still some moving parts with the CTA. For example, the reporting form is not yet available. However, the ethical implications inherent in CTA compliance must be considered now.

Reporting Companies & Beneficial Ownership

Companies that are deemed to be “Reporting Companies” are required to report beneficial ownership to FinCEN. There are two types of ”Reporting Companies”: Domestic Reporting Companies and Foreign Reporting Companies. There are currently twenty-three (23) exceptions that exempt entities that would otherwise be considered a Reporting Company. Lawyers and law firms alike will want to consider whether they intend to assist clients in ascertaining whether the client is a “Reporting Company.”

A beneficial owner is an individual who either directly or indirectly: (1) exercises substantial control over the reporting company, or (2) owns or controls at least 25% of the reporting company’s ownership interests. However, the Reporting Company does not have to report an individual as a beneficial owner to FinCEN should that individual fall under one of the five qualifying exceptions to the beneficial owner definition. Similarly, lawyers will want to consider whether they intend to assist clients in determining whether an individual qualifies as a beneficial owner.

Of specific interest to attorneys – the CTA also requires up to two “company applicants” to be identified for entities formed after January 1, 2024.  This may implicate law firms if they are involved in the preparation or filing or formation documents for clients.  The lawyers or paralegals providing those services would have the corresponding obligation under the CTA to register with FinCEN as a company applicant for the client.

Timing & Penalties

If an entity was formed before January 1, 2024, its report must be filed with FinCEN no later than January 1, 2025. Entities that are formed on or after January 1, 2024, have only ninety calendar days to file the report. Companies only have thirty days to report a change. Lawyers who intend to prepare and file CTA reports, monitor for changes in “Beneficial Owners” that would trigger an update, or otherwise dive into CTA related representations, must bear in mind that the CTA includes stiff civil fines and criminal penalties, such as potential imprisonment.  Failure to comply not only impacts clients but can lead to potential penalties for firms and for individual lawyers involved in violating its provisions.

Abundance of Ethical Considerations

The effect of the CTA is far reaching. Many practitioners will feel the impact it has on their practice, but all practitioners should know about it. Lawyers have a duty to stay abreast of changes to the law and the reporting requirements found in the CTA certainly qualify as a change. For example, the CTA likely implicates the provisions you want to include in employment agreements, shareholder agreements, or LLC operating agreements to require beneficial owners to provide the information needed by the entity to comply with the CTA’s reporting requirements.  In addition, due diligence for loans, mergers and acquisitions will likely need to include CTA compliance.   

Lawyers also have a duty to keep their current clients reasonably informed about the representation. While there is no duty to notify former clients, lawyers will want to be diligent in notifying current clients about the CTA. Now is the time to determine if the client is former or current.

Don’t wait until January to determine your firm’s capacity or desire to handle CTA related engagements and how it impacts various practice areas. Limitations on the scope of your representation will need to be clearly communicated with your clients. You will want to evaluate any third-party referrals for CTA filings and corporate formation filings.  If your firm will play a role in corporate formations and filings, you will want to consider who will be responsible for such filings and how to track and update FinCEN registration for those individuals.  Finally, you will want to start thinking of changes in firm policy and procedure that align with your level of involvement in CTA related representations, and ensure all staff are properly trained and supervised to comply accordingly.

The ABA Standing Committee on Ethics and Professional Responsibility, (the Committee”) recently issued Formal Opinion 508—which highlights the differences between proper witness preparation and unethical “coaching.” The Opinion also sheds light on how remote platforms have paved the way for easier and less detectable means of improper coaching.

What is allowed?

Discussing testimony with your clients can become necessary to their representation, but a lawyer cannot seek to improperly influence the testimony—and there is no bright line rule to make the distinction.  You must be thorough in your witness preparation or else fall short of your duty of competence. It is always permissible for lawyers to remind their clients to tell the truth during witness preparation. Similarly, it is acceptable practice to remind your client that they are under oath, explain to them that a truthful answer could be “I do not recall,” suggest proper attire, decorum, and demeanor, explain the nature of the testimonial process and purpose of the deposition. It Is likewise proper for the lawyer to provide context for the witness’s testimony, to inquire into the witness’s probable testimony and recollection and even identify other testimony that is expected to be presented and explore the witness’s version of events considering that testimony.

Witness preparation conduct that crosses the ethical line

Interaction with witnesses before and during testimony can both raise ethical issues.  Model Rule 3.4(b) prohibits a lawyer from advising or assisting a witness in giving false testimony (and probably Model Rule 1.2(d) and Model Rule 3.3(a)(3) as well). The Committee points out that encouraging false testimony can occur even if a lawyer does not instruct the witness to lie—such as telling a witness to downplay facts (such as the number of times they met with the lawyer to prepare). Lawyers must be careful when suggesting words to use or avoid, making sure that the taking of such advice does not result in the delivery of false testimony. Likewise, allowing your client to testify to fabricated evidence is an ethical violation.  It is also unethical for lawyers to advise clients or witnesses to disobey a court order regulating discovery or the trial process, offering an unlawful inducement to a witness, or procuring a witness’s absence from a proceeding.

Conduct during witness testimony that crosses the ethical line

Refining witness testimony during trial or deposition can also present ethical considerations. Manipulating testimony that is actually in progress would generally violate Model Rule 8.4(d)—conduct prejudicial to the administration of justice. Model Rule 3.4(c) would also be violated by failing to adhere to a court order restricting coaching behavior.  Many jurisdictions, for example, have specific rules about the content of objections made during a deposition.  “Speaking” or “suggestive” objections go beyond stating the basis for the objection and are suspected of being intended to impede the deposing lawyer’s discovery. Objections should not be used to instruct a witness how respond to the questions. Lawyers must also avoid physically signaling to their witnesses during testimony.

Remote considerations

              Formal Opinion 508 also addresses the fact that remote platforms and other technology provide ample opportunity for lawyers to secretly tell witnesses what to say or signal what not to say during proceedings. With changes in the legal practice, it is not uncommon that a witness, lawyer, and adjudicative officer could be sitting in three different locations during a remote proceeding. Sitting “off camera” makes it relatively easy to signal a witness without being detected. While it is improper for a lawyer to text or otherwise message a witness in the middle of a proceeding, one can see how it is effortlessly accomplished.  Lawyers have a duty to maintain a degree of technological competence. Understanding the risks involved with coaching in remote settings will allow lawyers and adjudicative officers to structure remote proceedings in a way that will help to deter its occurrence and increase detection.

The Committee concludes by suggesting several approaches to systematically address such conduct, though it points out that the approaches are not required under the Model Rules. Suggested methods include skillful cross-examination (questioning the witness as to the extent of any coaching), court orders directing uninterrupted testimony, and inclusion of protocols in remote deposition orders, scheduling orders, and proposed discovery plans. 

scales of justice 3

Rule 1.8 addresses conflicts that can arise between a lawyer and client (as opposed conflicts between clients).  Prior to the adoption of Model Rule 1.8 in 1983, the ABA Model Code flatly prohibited agreements limiting liability. DR 6-102(A) provided that “A lawyer shall not attempt to exonerate himself from or limit his ability to his client for his personal malpractice.” This rule was in stark contrast to the rules governing many others, including large accounting firms and lawyers in Europe, who often had agreements limiting their liability to clients for their work on deals alongside American lawyers who could not limit their liability (which raised numerous problems with potential disproportionate liability for deals gone bad). 

Model Rule 1.8 (adopted in 1983) softened the complete ban, adding conditions to make such prospective agreements permissible, yet still protecting client’s best interests in requiring the advice of independent counsel.  The first part of the Rule would then read “A lawyer shall not make an agreement prospectively limiting the lawyer’s liability to a client for malpractice unless permitted by law and the client is independently represented in making the agreement…” This amendment put some American lawyers on the same footing as colleagues here and abroad, but it was not widely adopted.

In 2002, the ABA again amended Model Rule 1.8(h), to eliminate the “unless permitted by law” requirement. The drafters supported the deletion by explaining that they were not aware of any such law.  Model Rule 1.8(h)(1) now states that “A lawyer shall not make an agreement prospectively limiting the lawyer’s liability to a client for malpractice unless the client is independently represented in making the agreement”.

Today, some states have adopted the revised rule.  And many of the states that have amended their version of Rule 1.8 deviate from the language found in Model Rule 1.8, resulting in varied degrees of permissibility as to whether their lawyers may prospectively limit malpractice liability to clients.   Approximately 28 states have adopted the language in Model Rule 1.8(h)(1) entirely. Seven states have similar language to that of the Model Rule but have added the requirement that such agreement must also be “permitted by law”. Nine states still outright prohibit such prospective agreement. The seven remaining states have language that does not squarely  fit into any of the aforementioned categories. The reasons for wanting to limit your liability in any given situation are likely obvious, but whether or how you should pursue such endeavor is far less clear.  

 Choose your language wisely  

Attorneys licensed in multiple jurisdictions and law firms spanning across multiple states must be keenly aware of any differences in the applicable rules.  Even in jurisdictions that permit lawyers to prospectively limit malpractice liability, lawyers must be careful to stay within the confines of the rules when drafting.  Ohio reminds lawyers that (their) Rule 1.8 allows for the prospective waiver of malpractice claims under certain conditions, but such permissibility does not extend to disciplinary proceedings.  Limiting malpractice claims is not synonymous with limiting the client’s ability to file a disciplinary grievance. Using the wrong language could subject the lawyer to additional rule violations.  Requiring a current or former client to refrain from filing a disciplinary grievance constitutes conduct prejudicial to the administration of justice under Rule 8.4(d) and conduct adversely reflecting on fitness to practice law under Rule 8.4(h).  

In Illinois, the Rules do not permit lawyers to prospectively agree with their legal clients that advice given to such clients in connection with insurance or investment products is not intended to be and should not be deemed legal advice, even if such determination could be reliably made. The Committee opined that such agreement is effectively one that prospectively limiting the lawyer’s liability to the client. Such agreements are prohibited by Rule 1.8 unless the requisite conditions are satisfied.

Wide spectrum of issues

Merely refraining from plugging in prospective agreements into your engagement letters will not ensure Rule 1.8 compliance. Lawyers barred in jurisdictions like DC, where such agreements are forbidden, must still examine less obvious conduct that may constitute a Rule 1.8 violation. For instance, many attorneys sit on boards of various entities.  DC Opinion 382 reminds lawyers that while directors on boards can limit liability to an entity, a director may not do so, if he or she is a lawyer, otherwise it violates the rule. 

While New York similarly prohibits lawyers from prospectively limiting malpractice liability, one New York opinion found that 1.8(h) is not violated simply due to a lawyer advising a client to accept a plea deal that includes waiving an ineffective assistance of counsel claim on appeal.  The basis was that advising the client does not constitute “making an agreement” and the giving of such advice does not make the lawyer a party to such agreement.  Plus, the lawyer could still be sued for malpractice.

What about employment concerns? Georgia opined that in-house lawyers employed by corporations do not violate 1.8(h) by entering into agreements with their employers which hold the lawyer harmless for malpractice committed within the course of his or her employment, if the employer is exercising an informed business judgment in utilizing the “hold harmless” agreement in lieu of malpractice insurance on the advice of counsel and the agreement is permitted by law.  The position of the client as employer and the sophistication of those who employ in-house counsel satisfies the concerns of overreaching. Plus, such agreement does not limit liability to third parties affected by in-house counsel representation. 

How about the structure of the firm? Mississippi opined that changing the form of practice from a professional corporation or general partnership to a “Professional Limited Liability Company” does not equate an agreement to limit liability under M.R.C.P. 1.8(h).

More than meets the eye

Lawyers may falsely see a green light if their state allows for the prospective limitation of malpractice liability. Prospectively limiting malpractice liability is a conflict of interest and compliance requires satisfaction of the Rule 1.8 conditions. Lawyers must be careful in choosing which words should or shouldn’t be used in the agreement. Lawyers in all jurisdictions, including where such agreements are prohibited, must also look beneath the surface of their conduct, and ultimately contemplate whether such conduct indirectly violates Rule 1.8(h).

Multijurisdictional practice can make any lawyer’s head spin, especially for lawyers licensed in multiple jurisdictions. The ABA Standing Committee of Ethics and Professional Responsibility, (the “Committee”) recently issued Formal Opinion 504, which breaks down the choice-of-law rules found in Model Rule 8.5.

Litigation

Model Rule 8.5(b)(1) provides that, for conduct in connection with a matter pending before a tribunal[1], ethics rules of the jurisdiction in which the tribunal sits shall apply.

  • Scenario: State A allows firms to have nonlawyer partners. State B adopted Model Rule 5.4, prohibiting firms from having nonlawyer partners. Lawyer is only admitted in State A. Lawyer’s office is in State A. Lawyer will appear pro hac vice before a State B tribunal. Will ethics rules in State B prevent Lawyer from sharing fees earned on the case with nonlawyer partners?
  • Answer: The ethics rules of the tribunal (State B) would apply to conduct in that tribunal’s matter, including conduct in representing the client in the proceeding and in dealings with the tribunal, opposing counsel, and opposing party. However, law firm structure is not “conduct in connection with a matter pending before a tribunal.” Accordingly, Lawyer would conduct that analysis through Rule 8.5(b)(2), which is discussed in the next section.

Non-litigation

Model Rule 8.5(b)(2) provides that for any other conduct (i.e., not connected with a matter before a tribunal), ethics rules of the jurisdiction where the lawyer’s conduct occurred will govern. However, if the “predominant effect” is in a different jurisdiction than where the conduct occurs, the rules of that jurisdiction apply.  

  • Scenario: Lawyer is admitted and works out of State X, but is also admitted in State Y. Client lives in State X and hires Lawyer to file litigation in State Y. When drafting the fee agreement, which state’s ethics rules apply?
  • Answer: “Securing a fee agreement is “conduct in anticipation of a proceeding not yet pending before a tribunal” and, therefore, Rule 8.5(b)(2) applies.” The predominant effect would be in State X, so State X’s Rule 1.5 governs. 

The Opinion offers factors to determine where the “predominant effect” of the lawyer’s conduct occurs, including: (1) client’s location, residence, and/or principal place of business; (2) where the transaction may occur; (3) which jurisdiction’s substantive law applies to the transaction; (4) location of the lawyer’s principal office; (5) where the lawyer is admitted; (6) location of opposing party and relevant third parties (residence and/or principal place of business); and (7) jurisdiction with greatest interest in the lawyer’s conduct.

  • Scenario: Lawyer is licensed in State A and B. Lawyer’s office is in State A, which follows Model Rule 1.6. Conversely, State B does not follow Model Rule 1.6 and therefore requires a lawyer to disclose information relating to the representation to the extent the lawyer reasonably believes necessary “to prevent reasonably certain death or substantial bodily harm. State A permits but does not require the revelation of such information. Lawyer is representing Client/Buyer, who lives in State B, with the purchase of State A real estate. Negotiations occurred at Buyer’s place of business in State B. Client/Buyer threatened to seriously physically harm Seller at the next meeting if Seller won’t accept Buyer’s terms. Lawyer reasonably believes Client will act on his threat. 
  • Answer: This matter is not before a tribunal, and therefore Rule 8.5(b)(2) applies. Lawyer must look to the “rules of the jurisdiction in which the lawyer’s conduct occurred, or, if the predominant effect of the conduct is in a different jurisdiction, the rules of that jurisdiction.” Lawyer must weigh the aforementioned factors. Both States are involved. But ethics rules from State B would likely govern as Client/Buyer resides in State B, the threat was made in State B, and the next meeting where the threat would be carried out would likely occur in State B, as that is where past meetings have been held.  

Safe Harbor

The Committee highlighted the safe-harbor provision in Model Rule 8.5(b)(2).  The last sentence provides “A lawyer shall not be subject to discipline if the lawyer’s conduct conforms to the rules of a jurisdiction in which the lawyer reasonably believes the predominant effect of the lawyer’s conduct will occur.”

Summary

While many states have adopted Model Rule 8.5, others have their own variations.  As the Committee points out, in reference to Massachusetts, variations of the Rule may lead to a different analysis. The ABA provides a state-by state guide simplifying Rule 8.5 distinctions. Be sure to check your jurisdiction(s) and think not just about what you are doing, but also where the predominant effect of your conduct may occur.

[1]  ABA Model Rule 1.0 (m): “Tribunal” denotes a court, an arbitrator in a binding arbitration proceeding or a legislative body, administrative agency or other body acting in an adjudicative capacity. A legislative body, administrative agency or other body acts in an adjudicative capacity when a neutral official, after the presentation of evidence or legal argument by a party or parties, will render a binding legal judgment directly affecting a party’s interests in a particular matter”.

Caution text and sign.

Your client has just been sentenced as a first-time DWI offender earlier this morning. Later in the afternoon, you are in another courthouse. Your same client is facing sentencing for another DWI. The driver’s abstract has not yet been updated to reflect that, based on the morning’s plea, your client is no longer a first-time offender.  You validate the factual inaccuracy to the judge and prosecutor by commenting that the abstract was just run that day.  Technically this is true, but you know it is no longer accurate. You and your client are the only ones in the courtroom that know. You believe it is your job to make sure your client gets the most favorable sentence possible, and you don’t want to be deemed “ineffective.” It works. Your affirmation misleads the court into believing that your client has never been convicted of a DWI, and he is sentenced as a first-time DWI offender – for the second time that day. Are you just zealously advocating for your client by failing to disclose the first DWI, or do your actions violate the rules of ethics? A New Jersey lawyer found himself in this situation and was censured.

Actual knowledge creates duty to correct court’s misinformation  

The lawyer did not believe at the time of the hearing that he had a duty to inform the court or the prosecutor of his client’s DWI conviction earlier that morning based on State v. Kane, 2015 N.J. Super. Unpub. LEXIS 277 (App. Div. Feb. 17, 2015). In Kane, the Appellate Division rejected the argument that a defense attorney was unethical in failing to disclose a newly enacted statute that his client’s conduct violated, in addition to the driving offense for which he was entering his plea. The court found that it was the prosecutor’s responsibility to have been aware of the statute’s potential applicability.   

New Jersey’s Disciplinary Review Board (“DRB”) found that Kane was inapplicable.  Kane dealt with constructive knowledge and legal facts, but this case addressed the lawyer’s actual knowledge and candor concerning material and operative facts. The duty of candor toward a tribunal created a duty to correct the court’s misundertsanding to avoid deceiving the court into imposing an improper sentence.

The DRB instead pointed to In re Seelig, 180 N.J. 234 (2004), where the Court found an attorney violated Rule 3.3(a)(5) by failing to reveal to the court that the person involved in his client’s automobile accident had died, hoping the court would accept his client’s plea to motor vehicle offenses and precluding the indictable changes based on double jeopardy. The DRB found that “The Court observed that RPC 3.3(a)(5) “compel[s] a lawyer to act affirmatively against his or her client’s interests even when the primary responsibility for informing the court does not (or may not) lie with the lawyer.” Seelig, 180 N.J. at 253. Moreover, RPC 3.3(a)(5) “impose[s] a duty to disclose in order to prevent errors in decision making by a tribunal that [. . .] has been misled because it lacks information about material facts.” Ibid.”

Misrepresentation is not a permissible litigation tactic

The DRB found that the lawyer’s breach of his duty of candor leading to the court’s improper sentencing and his dishonesty in responding to the court was conduct prejudicial to the administration of the justice system, violating Rules 8.4(c), 8.4(d), and 3.3(a)(5) of the Rules of Professional Conduct. The DRB further found that the lawyer failed to understand that “misrepresentation cannot serve as a permissible litigation tactic, even when carried out in the name of zealous advocacy.”

Zeal or no zeal?

Each jurisdiction has their own take on when ethical boundaries are crossed in the name of zealous representation. While ABA Model Rule 1.3, titled “Diligence,” itself imposes no duty of “zealous representation,” Comment [1] to ABA Model Rule 1.3 still, in part, provides that “A lawyer must also act with commitment and dedication to the interests of the client and with zeal in advocacy upon the client’s behalf.” Some jurisdictions have started removing any requirement to act with zeal from their rules of professional conduct.  Ohio, for example,  removed the requirement to act “with zeal in advocacy upon the client’s behalf,” from its Comment [1], reasoning that “[z]ealous advocacy is often invoked as an excuse for unprofessional behavior.“ Likewise, New Jersey’s Rule 1.3 simply provides that “[a] lawyer shall act with reasonable diligence and promptness in representing a client.” The word “zeal” does not appear. Conversely, Georgia’s Comment [1] still requires a lawyer to act with zeal in advocacy on the client’s behalf, although this would not suggest that Georgia lawyers may engage in conduct that is misleading to a tribunal.

Regardless of where your jurisdiction falls on the spectrum, always keep in mind that your desire to zealously represent your client should not come at the sake of violating your other ethical duties—particularly your duty of candor toward the tribunal.

Mental health

Lawyers face tremendous professional stress in the best of times between long hours, deadlines, and the adversarial nature of the work itself. The landmark 2016 report, The Prevalence of Substance Use and Other Mental Health Concerns Among American Attorneys[1], showed that attorneys experience problematic drinking at a rate much higher than other populations and are reluctant to seek help for substance abuse, depression, anxiety, and stress and do not seek out help because of concerns regarding privacy or confidentiality. For many, their stressors were exacerbated by the COVID-19 pandemic and the demands of remote practice. Failure to seek out that help causes many problems, including disciplinary violations when mental health impacts a lawyer’s performance.

While disciplinary authorities generally take mental health issues into account and often consider them a proper basis for mitigating sanctions, such problems are not a defense to disciplinary charges, as the West Virginia Supreme Court of Appeals recently concluded. In that matter, the court addressed complaints against a lawyer whose mental impairment was deemed to have impacted his client representation. While finding that the impairment was a mitigating factor, the court concluded that the impairment would not shield the lawyer from meaningful sanctions and imposed an active two-year suspension for the misconduct.

Lack of communication and diligence

As is typical for lawyers with impairments, the lawyer at issue failed to communicate with numerous clients regarding their cases. He was found to have committed over 50 violations. Violations of his duty to provide competent representation, communicate, and act with diligence were found in almost every instance of misconduct.

In one case, he failed to notify his clients that the opposing party had filed a counterclaim and never responded to the counterclaim. Opposing counsel requested the court dismiss the clients’ claims because of the lawyer’s repeated failure to obey court orders or rules of discovery. The lawyer never responded to the motion—and the court dismissed the claims.

Another client learned that opposing counsel filed a motion to dismiss for the lawyer’s failure to prosecute. When the client attempted to contact the lawyer, he would not respond. The court ordered the lawyer to respond, and when he failed to do so, the court dismissed the client’s lawsuit.

Yet another client retained the lawyer to defend her in a contract dispute. She asked the lawyer to file a counterclaim. He never did. He failed to present to the client the opposing party’s settlement offer prior to its expiration. The jury ended up awarding the opposing party thousands of dollars. Despite the lawyer’s promise to appeal, he never did.

Meaningful sanction

The lawyer presented evidence at the hearing that he was diagnosed with an adjustment disorder, which his mental health counselor attributed to stress and other emotional struggles. The social worker involved testified that due to the disorder, the lawyer “developed the capacity to avoid [and] became less productive.”

The Hearing Panel Subcommittee (HPS) recommended the lawyer be suspended for two years, but that the suspension be stayed. However, the Office of Disciplinary Counsel objected to the stay of the suspension. Ultimately, the court found the social worker never determined the lawyer was unable to understand the consequences of his actions and that the lawyer therefore acted knowingly when he disregarded the authority of the lower courts and his clients’ interests. The court made clear that when the Rules of Professional Conduct are violated, lawyers can inflict more than just monetary harm—of which malpractice settlements alone cannot cure.

The court found that the lawyer’s mental impairment was a substantial contributing factor in his misconduct. The court found due to that and other mitigating factors, the lawyer’s sanction was reduced to an active two-year suspension. The court found that without imposing significant consequences, this type of misconduct would not be deterred in the future nor would confidence in the profession be reestablished.

The dissent

Justice Wooten concluded that the penalty was “draconian” in his Dissenting Opinion, predicting that imposing such sanction on a solo practitioner would be the death penalty for his career. The dissent rejected the majority’s finding that the lawyer was motivated by greed—pointing to evidence that the lawyer was motivated by a depression that “caused him to ignore his duties to his clients and then stick his head in the sand as things fell apart.” The dissent would have made three months of the two-year suspension active, with the rest to be stayed on supervised probation.

Action steps

This lawyer is certainly not alone in his struggle—especially with depression rates remaining high for lawyers. When a lawyer thinks they have an issue, they should address it, as mental health issues can impact competent representation, the ability to act with diligence, and the ability to effectively communicate. Once the damage is done, it can be hard for a client to be made whole, so addressing a problem before it affects any client is key to maintaining compliance with our ethical duties. When clients are hurt and lawyers lose their ability to practice law, there are no winners. If you are showing signs of experiencing mental health issues, don’t ignore them. And undoubtedly, as we have pointed out before, lawyers should be compassionate and look for signs a colleague needs help rather than just watching from a distance. A Directory of Lawyer Assistance Programs by state can be found here. There are plenty of options for lawyers and effective treatment does not include a one-size-fits-all approach. Fortunately, strides are being made when it comes to the view of mental health in our profession.

[1] Krill PR, Johnson R, Albert L. The Prevalence of Substance Use and Other Mental Health Concerns Among American Attorneys. J Addict Med. 2016 Jan-Feb;10(1):46-52.

Many of us have had the experience of opposing counsel copying their client on an email about the matter (and sometimes an email that takes us to task for some supposed transgression).  The immediate response may be to “Reply All” and tell the lawyer (and their client) that they are wrong.  Satisfying, but when you do so, are you violating the “no contact rule” found in Model Rule 4.2 (“a lawyer shall not communicate … with a person the lawyer knows to be represented by another lawyer in the matter”)?

Over the years, many lawyers have taken the position that the Reply All is permitted because the lawyer’s inclusion of the client on the original email constitutes “consent” for other recipients to contact all recipients.  The ABA Standing Committee on Ethics and Professional Responsibility now agrees.

Implied consent

Earlier this month, the Standing Committee issued Opinion 503, which addresses the great “Reply All” debate. In it, the Standing Committee opined that the nature of these types of group electronic communications (i.e., the fact that Reply All is common) means that a sending lawyer impliedly consents to receiving counsel’s “reply all” response. Because Rule 4.2 is not violated by contact the lawyer for the represented party has consented to, the receiving lawyer’s Reply All to the client does not violate the rule, despite communicating with the sending lawyer’s client. The Standing Committee likened group electronic communications (such as emails or text messages) to adding a client to a phone call with the other lawyer or bringing a client to an in-person meeting with the other lawyer. The opinion also highlights that “reply all” is the default setting in some email platforms. The sending lawyer must be mindful of this when determining whether to include his or her client on the communication, as such inclusion may appear to invite a “reply-all” answer. The Standing Committee opined that the lawyer initiating the communication bears the responsibility in deciding to include his or her client in the email or text message—and this burden should not be placed on the receiving lawyer to decipher whether the sending lawyer impliedly consents. Further, the number of recipients may be large, and in such case, the receiving lawyer may be unaware that the sending lawyer’s client happens to be one of the recipients.

As the Standing Committee noted, the better practice is to leave the client off the email or text message to the receiving lawyer—and subsequently forward the message to the client in a separate communication. Further, including a client on electronic communications to receiving counsel creates a risk that the client replies to all in his or her response—which may not be a wise move.

Presumption of implied consent is not absolute

The sending lawyer can overcome the presumption of implied consent by communicating to the receiving lawyer, verbally or in writing, that the sending lawyer does not consent to a reply all communication. The Standing Committee opines that such communication should be prominent, ideally in writing, and made in advance. Further, the presumption of implied consent is limited to group electronic communications and does not extend to other types of communications (like paper) that carry different norms and standards. Therefore, a lawyer receiving a traditional hard copy letter in which the sending lawyer’s client is copied should not infer consent to mail a response to the sending lawyer’s client as there is no prevailing custom indicating implied consent. The Standing Committee also cautions lawyers that the content of their reply is limited by other rules—for instance Model Rule 4.4(b) is implicated when the lawyer has reason to believe the email was sent inadvertently.

Other perspectives

New Jersey also finds implied consent when the sending lawyer includes their client in the communication. Virginia likewise finds implied consent.

Washington finds that consent is not implied simply because the sending lawyer copied the client on the email, but it may be implied from an assortment of circumstances beyond merely having copied the client on a particular email. California and South Carolina have issued similar opinions.

Consent is generally not considered to be implied in Illinois merely by copying the client in an email.  The act of copying a client does not provide implied consent in Alaska and the receiving lawyer must ask the sending lawyer whether their client should be included on the reply.

While ABA opinions are persuasive, they are not binding in most jurisdictions and your jurisdiction may not necessarily agree.  Before copying your client on emails to opposing counsel, or deciding to “Reply All,” think twice.

Earlier this month, the Ohio Board of Professional Conduct (“Board”) issued an Opinion which provides guidance to attorneys engaged or contemplating engaging in an office-sharing arrangement. Sharing office space has many enticing advantages for lawyers such as reducing overhead and having access to other attorneys to collaborate with, all while maintaining a sense of independence. This may be particularly appealing for lawyers seeking to work in hybrid working environments or to establish offices in multiple locations in or out of state. Whatever the driving force may be, lawyers must take special care to consider the diverse ethical issues raised by such arrangements. 

Contours of sharing nonlawyer staff

While nonlawyer staff can generally be shared, there are limitations.  The Board cites Ky. Ethics Op. E-406 and cautions that when lawyers sharing office space represent adverse clients in a matter, the same nonlawyer staff member cannot be assigned to both lawyers during the representation. The Board recommends implementing a written policy to identify conflicts when office sharing lawyers do use the same nonlawyer staff. Rule 5.3(b) requires lawyers supervising nonlawyer staff to ensure their staff understand that the confidentiality obligations under Rule 1.6 apply equally to the staff members. Accordingly, nonlawyer staff cannot divulge client information to other nonlawyer staff and lawyers sharing the same space who are not working on the same client matter. And though not addressed in the Opinion, one could certainly imagine problems, even disqualification, if steps are not implemented to ensure that documents are not segregated from staff working for adverse parties.

Maintaining confidence 

Given the logistics of shared space, the Board reminds office-sharing lawyers to act competently in protecting confidential client information from reaching unintended recipients. The Board recommends separating and safeguarding electronic and physical client files from other lawyers’ filing systems, keeping all in-person, telephonic, electronic, and written communications regarding clients in a manner to prevent unintentional disclosure; and ensuring that staff and lawyers alike refrain from communicating with or about clients in waiting and common areas. Lawyers should train nonlawyers staff on how to protect confidential client information.

Office sharing lawyers permitted to divide fees and collaborate on matters as co-counsel

Lawyers sharing office-space, but who are not in the same firm, are only allowed to divide fees pursuant to Rule 1.5(e)(2). However, lawyers under this scenario must (1) either divide the fee in proportion to the services performed by each lawyer or alternatively each lawyer assume joint responsibility and agree to be accessible to consult with the client; (2) obtain written client consent; (3) if applicable,  obtain a closing statement signed by the lawyers and client; and (4) ensure the fee is reasonable. Similarly, lawyers sharing office space may informally assist or consult each other about a case without billing the client.  This type of casual collaboration does not establish a law firm per Rule 1.0 cmt.[2]. Also, pointing to ABA Opinion 480, the Board cautions lawyers that discussing hypotheticals that disclose facts that can reveal the identity of a client won’t pass Rule 1.6 muster.

Considerations from other states

DC’s Opinion 303 reminds lawyers that office sharing arrangements by unaffiliated attorneys can create a risk of public confusion that the attorneys are affiliated, and that D.C. Rule 7.1 (prohibiting false or misleading communications about the lawyer’s services) applies to a lawyer’s professional affiliations. In Opinion 764, Illinois SBA opined that those lawyers sharing an office-space cannot use common stationary.  Virginia Opinion 874 clarifies that a lawyer may share office space with a firm located in a large building, despite the lawyer’s office only being accessible through an area used by the sharing firm. Further, it would be appropriate for the lawyer to place a sign in the lobby to clarify his status as being unaffiliated with the sharing firm.

Model Rule 4.2 is often referred to as the “no-contact” rule, prohibiting lawyers from contacting represented parties regarding the subject matter of the representation without first obtaining a court order or the consent of the other party’s lawyer.  Just last month, the ABA issued Formal Opinion 502, which warns pro se lawyers—that is, lawyers who are representing themselves as a party in the litigation—that the “no-contact” rule still applies to them despite the fact that the lawyer is also a party to the representation.

No ability to remove the lawyer hat

As written, Rule 4.2 applies to lawyers in their representation of a client.  Of course, most often lawyers represent someone else.  But what about when a lawyer is pro se, i.e. representing herself?  The “no-contact rule” generally allows the parties to a dispute to communicate directly with each other, so why can’t a lawyer who is the party talk to his opponent?   See Comment 4 to Model Rule 4.2.  While the first clause of the “no-contact rule”— “In representing a client, …” can confuse the issue, the main policies behind Rule 4.2 are still in play.  The “no-contact” rule is designed to prevent “(1) overreaching and deception; (2) interference with the integrity of the client-lawyer relationship; and (3) elicitation of uncounseled disclosures, including inappropriate acquisition of confidential lawyer-client communications.”  Direct communications between pro se lawyers and represented parties significantly jeopardizes all three policy goals. The Standing Committee accordingly reasoned that it is impossible for pro se lawyers to remove their lawyer hat to circumvent Rule 4.2. The risks are too high.

Self-representation vs. client representation; a distinction without a difference

In Opinion 502, the Standing Committee clarifies that a pro se lawyer is still “representing a client” for purposes of Rule 4.2, even if they are their own client.  Upholding the underlying policy considerations is important and serves as the basis for this determination.  These policy considerations are crucial to the functioning of the attorney-client relationship and the fact that the lawyer is representing herself does not serve as a sufficient basis to disregard them.

The Dissent

There is, however, a dissenting view. The dissent agrees that the purpose of Rule 4.2 is served by extending it to pro se lawyers, but that the language contained in the Rule does not allow for such application, notwithstanding the number of opinions that have adopted Opinion 502’s approach (“error compounded is still error”).  Even a sophisticated reader, the dissent argues, would not equate self-representation with representing a client and questions exactly what in the language of the Rule would lead a pro-se attorney to conclude that additional research is required. “The lesson here must be that nothing is clear.” The dissent questions whether the text of the Rule means what it says or what we want it to say. The dissent expresses that a trap is created by leaving this rule as is and that it should be amended to accomplish the outcome promoted in the majority opinion.

Proceed with caution

Some jurisdictions – like Texas – have not adopted the “lawyer is a client” approach and permit contact.  Other jurisdictions—such as DC and New York, appear to be in alignment with Opinion 502.  While states are clearly split on the interpretation of whether the “no-contact” rule extends to pro se lawyers, until your jurisdiction amends the wording of the rule or otherwise authorizes the conduct through an opinion, the wiser course may be avoiding the trap.

The Supreme Court of Georgia disbarred a lawyer for conduct that violated Rules 1.15(I)(a) and 1.15 (II)(b) of the Georgia Rules of Professional Conduct—the maximum sanction for such violations. After failing to respond to various attempts from the State Bar and Special Master to determine the validity of the allegations, the Court found that the lawyer’s “utter failure to participate in the disciplinary process” gave the Court no basis to impose a lesser sanction.

Seriousness of the allegations

All allegations of misconduct are taken seriously, but the Court here noted that trust account violations are extraordinarily serious. The lawyer was alleged to have paid past Bar dues with a check drawn on his trust account, made deposits to his trust account from his personal account, and made payments from his trust account that appeared to be connected to his personal expenses. Likewise, he was alleged to have made numerous cash withdrawals from his trust account. This conduct violates the requirement of Rule 1.15(I)(a) that a lawyer’s property or funds be kept separate from that of their client. It also violates Rule 1.15(II)(b) which prohibits depositing personal funds into a lawyer’s trust account and withdrawing funds from trust accounts for personal use.

Failure to participate in disciplinary process

When the investigation began, the State Bar’s investigator was unable to serve the lawyer by personal service at the address listed with the Bar’s membership department.  The State Bar ultimately resorted to perfecting service by publication.  When the lawyer did not respond, the State Bar filed a Motion for Default requesting that the Court disbar the lawyer. The Court rejected the recommendation, asserting disbarment was inappropriate given the ‘limited record before it and the allegations contained in the notice of discipline.’ The court then referred the matter to a Special Master for hearing to determine the nature and severity of the lawyer’s conduct.

More attempts at service were made and it is not clear whether the lawyer ever got notice of the proceeding.  If he did, he ignored it (including failing to respond to requests for admission).  If he did not have notice, it may have been that he’d failed to notify the Bar that his address changed – with disastrous results.

The Special Master conducted a hearing, but the lawyer did not attend or otherwise try to communicate with the Special Master or State Bar regarding the allegations. The Court found that minor violations of trust account rules may result in sanctions less severe than disbarment. However, the Court ultimately agreed with the Special Master that the lawyer’s failure to participate in the disciplinary proceedings is an aggravating factor and may constitute an admission by failure to reply that he does not acknowledge the wrongfulness of his conduct.  The Court then found that the lawyer’s failure to participate in the disciplinary process provided no basis to impose a sanction less than disbarment and Ordered the lawyer’s name be removed from the rolls of persons authorized to practice law in the State of Georgia.

Takeaway

Ignoring notice of a disciplinary charge is a dangerous business.  The failure to participate can transform a minor violation into something that costs a lawyer their license and livelihood.  In some states, disbarment is truly permanent—meaning the lawyer loses their license for life and with no opportunity to be readmitted to that state’s bar. But even in those states where it isn’t, the lawyer will be required to meet rigorous requirements for reinstatement, including waiting years before he or she is even permitted to apply for readmittance.  And even then, those efforts may be unsuccessful. Georgia requires disbarred lawyers to wait five years before applying for readmittance. Further, even if a lawyer is not disbarred, failure to respond can be independent grounds for discipline in certain jurisdictions.  While the lawyer here may have been disbarred even if participating fully in the process, he deprived himself of any shot of a less severe sanction by his total failure to engage in the process. This case serves as a lasting example of how high the stakes can be for lawyers who disregard the disciplinary process.