Going abroad?  Think that “national counsel” is going to take care of anything that comes up when you’re gone?  Get swamped when you return and take “several weeks” to wade through the e-mail that piled up in your absence?  If you’re local counsel, that might be a recipe for disaster — for your client — as the Seventh Circuit Court of Appeals held recently.

What we have here is a failure to communicate

After the plaintiff filed a trademark infringement case, the Wisconsin district court’s docket shows that just a month later the parties reached a deal and jointly moved to file a consent order resolving the dispute.  But about four months after that, the plaintiff was back in court, moving for a contempt order and asserting that the defendant had violated the consent order.

Here’s where things began to go south, according to the appeals court opinion:  The defendant’s local Milwaukee counsel received notice of the contempt motion, via the electronic docketing system (presumably PACER).  When the lawyer failed to respond, the district court scheduled a hearing.  No one showed up on behalf of the defendant.  The district court then granted the plaintiff’s motion, holding the lawyer in contempt, requiring his client to pay the plaintiff’s fees and costs, and ordering the lawyer to explain his unresponsiveness.

As the court of appeals wrote, that order “caught [the lawyer’s] attention.”  Local counsel explained that he had been “traveling internationally” when the plaintiff filed its motion for contempt, and even though he returned five days before his client’s response to that motion was due (and 26 days before the scheduled hearing), “it took him several weeks to catch up on his email.”  He saw the court’s notices only after “all response dates had passed.”

The defendant’s request for reconsideration of the contempt order also pointed to what the appeals court called a “communication breakdown between local counsel and the company’s national trademark counsel.”  Local counsel believed national counsel would be “attending to any ongoing needs in the case; national counsel apparently had a different understanding,” the court wrote.

“Deadlines matter”

The result of this mess-up?  The district court found the local counsel in contempt, and after a line-by-line analysis of the plaintiff’s attorney fees and costs for the entire case — not just the contempt proceedings — sanctioned the defendant to the tune of almost $35,000.  The Seventh Circuit easily upheld those rulings, characterizing the whole situation as “unfortunate and avoidable.”

“Deadlines matter,” wrote the court, and certainly after the district court provided a second chance to the defendant by noticing a hearing, the lower court’s reaction in issuing its contempt order was not an abuse of discretion.  Nor did the defendant’s good faith provide any immunity from sanction, the appeals court said.

And the big take-away:  “Nor, of course, can communication breakdowns serve to exempt outside counsel … from compliance with the rules, or from the penalties for failing to do so.”

Beware local counsel duties — and check your e-mail

We’ve written before about local counsel duties. and a New York City Bar ethics opinion that is a helpful cautionary road map on local counsel duties.  The bottom line is that you don’t get any free pass for being “merely” local counsel.  The extent of local counsel’s role in any particular matter should be expressly set out in a carefully-considered engagement letter with the client.  If you think that “national counsel” is going to monitor a case or a docket after some certain end point, you should additionally clarify that understanding, something the court here said would have helped.

And, hey — Model Rule 1.1 (“Competence”) and Model Rule 1.3 (“Diligence”) mean that we can’t just totally put down our practices when we go on vacation.  That was true even in the days before e-mail and PACER, when someone “back at the ranch” would be monitoring our postal mail.  Now, the available technology means there is little excuse for not being aware of court filings in real time.

As for clearing up the inevitable post-vacation backlog of e-mails, the laundry from the trip might have to wait — but that’s okay, isn’t it?

locally grown red round grunge stamp on whiteIf you only agree to be “local counsel” in a matter, you can rest assured that your limited undertaking also limits the scope of your duties — right?   Wrong — as a recent disciplinary case and recent ethics opinion point out.

No “local counsel exception” to conduct rules

If your law school friend is serving as “national counsel” for a company defending product liability cases all over the country, you would naturally welcome a call asking you and your firm to serve as “local counsel” in your state in a claim against the company filed on your home turf.

In taking up the opportunity your friend is offering, you might make some assumptions — you might even regard these assumptions as “customary” in your bailiwick.  You might assume, for example, that your firm is only going to be a “mail drop,” and therefore you have no duty to know or advise on the substantive local law at play.  You might also assume that your duty to communicate is limited to interchanges with “national counsel.”  In fact, since you might never have any contact with the company itself, you might even designate the “national counsel” firm as the “client” in your billing system.

These assumptions may be “customary,” but they almost certainly lack any basis in your state’s version of the Model Rules of Professional Conduct — which make no distinctions between “local counsel” and “primary counsel” when it comes to the duties arising from the attorney-client relationship.

Cautionary tale

Disciplinary Counsel v. Broyles, decided October 29, illustrates how thinking of yourself as “only” local counsel can lead you astray.  The Ohio lawyer in the case drew a public reprimand for his conflict of interest in representing a couple in defending a foreclosure action brought by a lender.  The conflict consisted of the fact that nine months earlier, a law firm had hired the lawyer to be “local counsel” in representing the same lender against the same couple in obtaining a default judgment in the same foreclosure case against them.

The consent to discipline that the parties filed in the disciplinary case details that after the lender demanded the lawyer’s disqualification in the foreclosure suit, the court granted the motion, and the lawyer appealed.

On appeal, the lawyer argued that he was only providing local counsel services to the law firm that had hired him (which is where he sent his fee invoice) — and that he had never represented the lender.  He said “that he was providing a service to the law firm and not to [the lender] as he had no authority to make any representations to the court and did not advocate for any position in the case.”  There was no case law to support that contention, and the appeals court held that the lender was the client, and reasonably believed itself to be.

Bottom line:  the lawyer not only got disqualified from the foreclosure case based on his confusion about who his client was, but also was embarrassed with a public reprimand based on the violation of Ohio’s version of Model Rule 1.9 on former-client conflicts.

Ethics opinion guidance

In June, the Committee on Professional Ethics of the Association of the Bar for the City of New York issued an ethics opinion underscoring that lawyers who act as local counsel must adhere to the same ethics rules as lead counsel.  “An attorney who agrees to act as local counsel may be subjected to obligations and risks that she does not anticipate or intend to assume,” the Committee said.  If there are to be any limits on the scope of local counsel’s work, “it is the attorney’s obligation to communicate [them] to the client … rather than to rely on undefined terms, such as ‘local counsel.’  Preferably, local counsel will enter into an independent written retainer agreement with the client.”

This emphasizes the central role of the engagement letter, and the best practice of making the retention agreement directly with the client — not with “lead counsel.”  If you intend to limit your role to certain tasks, or a certain phase of the matter, you had better lay that out clearly at the beginning of the representation and get the client’s consent in writing.

As always, communication and documentation are the keys to avoiding unpleasant and potentially expensive surprises.