Friday, November 30, 2007
The Alaska Supreme Court held that a state prosecutor must inform a grand jury that the person facing indictment has made a clear and unequivocal desire to testify before it. The grand jury can then decide whether to call the person as a witness. In the case at issue, the defendant had made such a request and the grand jury had "evinced a strong desire to hear from [the defendant] about his state of mind." The prosecutor did not fulfill the role of legal advisor to the grand jury in failing to apprise the grand jury of the defendant's request. (Mike Frisch)
An editorial in Tuesday's edition of TheState.com takes the South Carolina Supreme Court to task for its conduct in the recent controversy over the decision to admit 20 applicants who had been notified that they had failed the bar exam. The editorial accepts the court's explanation as proof that the decision was not made in order to benefit well-connected applicants:
"after the results had been posted, an examiner wrapping up his work discovered he had transposed the numbers in one person’s grade, changing a failing score to a passing score; that the court decided the only fair thing to do was to throw out that section so everybody who failed it received the same benefit as the inadvertent lawyer.
... we find the explanation entirely believable, because it is so completely in keeping with the cultural tradition that runs deep through our state and, apparently, our court — a tradition of bending the rules so as not to offend, of smoothing things over, of not adhering to the highest standards. It is a tradition that holds us back, in countless ways...
...By choosing the worst possible option, the court has failed in its role as a gatekeeper for the legal profession. And since most of the 20 lawyers who shouldn’t be lawyers haven’t been overtly identified, the decision casts a shadow over the competence of every lawyer sworn in this month." (Mike Frisch)
The Iowa Supreme Court decided a case today that involved an attorney who had neglected two matters. The attorney had successfully coped with attention deficit hyperactivity disorder until he learned that he may have passed the condition to his child. This sent him into a depressed state that led to the misconduct. The attorney acknowledged the misconduct and has participated in treatment. The court imposed a 60-day suspension, but declined to impose recommended probationary conditions because there is no effective way to monitor compliance with such conditions. (Mike Frisch)
The Minnesota Supreme Court imposed an indefinite five-year suspension in a disciplinary matter involving misappropriation of the funds of six clients, forgery, false statements to clients and initial failure to cooperate with bar counsel. The attorney had admitted the misconduct. Disciplinary Counsel and the attorney recommended, and the court agreed, to consider as mitigation a number of unusual factors. The attorney had no record of unethical behavior prior to a diagnosis of a terminal heart condition. He has a 70% chance to live five years. The misconduct occurred after this diagnosis and the inevitable depression resulting from the diagnosis. The result avoids the stigma of disbarment. (Mike Frisch)
A criminal defendant charged with illegal sale of steroids retained an attorney who is a member of the Albany County legislature. The attorney sought a determination from the judge as to whether he was disqualified because of his legislative role. The judge ordered disqualification and the client sought a writ of prohibition that would allow counsel of choice to represent her. The New York Appellate Division for the Third Judicial Department declined to grant the writ, holding that the issue whether disqualification was proper could be raised on appeal if there is a conviction. (Mike Frisch)
Thursday, November 29, 2007
Posted by Alan Childress
Avoiding Waiver of the Attorney-Client Privilege
Live Teleconference -
$199 ... Early Bird - $179
Register by December 13th, 2007 for Early Bird Pricing
January 17th, 2008 - 1:00 PM - 2:30 PM Eastern
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(The speaker is Joseph Mays, Jr. of the Bradley Arant firm.)
A law firm that had been sued by a former client for malpractice sought summary judgment, claiming that the client had not suffered a serious injury as defined by New York insurance law and that the malpractice complaint failed as a result. Unfortunately, the firm had filed a verified complaint on behalf of the client that alleged that the client had been seriously injured. The New York Appellate Division for the Second Judicial Department affirmed the trial court's order denying summary judgment to the firm. (Mike Frisch)
The D.C. Court of Appeals today imposed reciprocal discipline for a violation of Rule 8.4(g), which prohibits the threat of criminal or disciplinary charges solely to obtain an advantage in a civil matter. The lawyer had stipulated to the misconduct in Florida. This is an interesting (and no doubt appropriate) result notwithstanding a recommendation of the Board on Professional Responsibility in July 2006 that rejected a proposed hearing committee finding of an 8.4(g) violation. The Board there noted: "We have located no reported decisions that address Rule 8.4(g) or its predecessor..." (the pertinent analysis is at pages 35-36). The problem, of course, is that is mighty difficult for a disciplinary prosecutor to prove sole motivation by clear and convincing evidence. (Mike Frisch)
The District of Columbia Bar's Rules of Professional Conduct Review Committee has posted a notice seeking comments on a series of questions involving present Comment  to Rule 4.2. The comment, which relates to the application of the no-contact rule to criminal prosecutors, states :
"This rule is not intended to enlarge or restrict the law enforcement activities of the United States or the District of Columbia which are authorized and permissible under the Constitution and law of the United States or the District of Columbia. The 'authorized by law' proviso to Rule 4.2 is intended to permit government conduct that is valid under this law. The proviso is not intended to freeze any particular substantive law, but is meant to accomodate substantive law as it may develop over time."
One question posed is whether the above comment should be replaced by language similar to the pertinent ABA comment, which provides:
" Communications authorized by law may include communications by a lawyer on behalf of a client who is exercising a constitutional or other legal right to communicate with the government. Communications authorized by law may also include investigative activities of lawyers representing governmental entities, directly or through investigative agents, prior to the commencement of criminal or civil enforcement proceedings. When communicating with the accused in a criminal matter, a government lawyer must comply with this Rule in addition to honoring the constitutional rights of the accused. The fact that a communication does not violate a state or federal constitutional right is insufficient to establish that the communication is permissible under this Rule." (Mike Frisch)
Wednesday, November 28, 2007
We are humble, but we are proud. Most of all, we're really thankful Mike Frisch blogs here.
Update: Honestly, doesn't the ABA have better things to do than tear asunder what was a perfectly good friendship between my esteemed colleague and Legal Ethics Forum founder, Andy Perlman, and me by making us competitors? I just want to note that while LEF readers, as Andy notes, "may have good taste," our readers are less filling. I also think that voters should pay close attention to Professor Perlman's stands on the Iraq War, the alternative minimum tax, the gold standard, and paper versus plastic at the grocery store.
An Illinois Hearing Board has recommended a six-month suspension of an attorney who was found to have improperly represented multiple interests in the development of a project involving a golf-themed restaurant. The board rejected the attorney's contention that he did not have an attorney-client relationship with the originator of the idea, who eventually was disadvantaged by the conflict (and obtained an $8.2 million judgment against the attorney and his firm):
"The evidence in this case shows that prior to July 3, 1996, Ruttenberg and Rudman had agreed to become partners in the golf-themed restaurant project. His purpose in partnering with Rudman, according to Ruttenberg, was to move the project forward. In furtherance of that, Rudman suggested that the two men use [respondent's] law firm, which he described as "a one-stop shop" for such projects. The firm could provide the necessary legal expertise as well as help in raising capital and finding an operator.
At the beginning of their July 3rd conference call, which lasted one and one-half to two and one-half hours, Rudman explained to Respondent that the restaurant concept was Ruttenberg’s idea but that he had invited Rudman to participate. Respondent then asked Ruttenberg to tell him everything he could, and Ruttenberg did so. He described his idea and all the work he had done on the project up to that point. He answered Respondent’s questions. Ruttenberg held no information back, as he believed he was speaking to his attorney. Ruttenberg clearly intended to have [respondent] and his firm represent him concerning the restaurant project, and reasonably believed by the end of the call that they were going to do so."
An attorney-client relationship depends on the reasonable perception of the person or entity claiming client status. Here, the lawyer was found to have received closely-held information and provided advice to both partners. Such interaction will create an attorney-client relationship absent specific and unequivocal disclaimers at the outset. Then, in dealing with multiple partners in a business development, the lawyer for the represented partner would be required to comply with Rule 4.3 in dealings with the unrepresented partner. An unhelpful fact here is that the accused attorney and Rudman had been friends since they were seven years old. (Mike Frisch)
Posted by Alan Childress
Sameer Ashar (CUNY) has posted to SSRN his article, forthcoming in California Law Review, called Public Interest Lawyering and Resistance Movements. His abstract:
A major strand of social justice activism, both within and outside the United States, finds purpose in opposition to the economic, political, and social conditions of globalization and neoliberalism. In the course of these campaigns, sometimes targeting the state and at other times powerful private entities, these numerous, loosely-linked movements of resistance both confront and creatively make use of legal structures, including courts, elected officials, and regulatory agencies. The adversarial campaign for immigrant workers in New York against a corporate chain of high-end restaurants that is the subject of this article began in August 2003 and lasted eighteen months. It included a range of legal and extralegal pressure tactics initiated by both sides, including direct action protests, attempts to influence customers, elected officials, and funders, lawsuits in state and federal court, and charges before the National Labor Relations Board. It ended with the negotiation of a comprehensive settlement agreement between the worker-members of the Restaurant Opportunities Center of New York (ROC-NY), a worker center based in Manhattan, and the corporation. This article will focus on the role of the lawyers and law students in the campaign and notes significant discontinuities from past public interest practice, including revised thinking on the accountability of lawyers to clients and the use of rights and rights-talk in adversarial campaigns. Additionally, this article focuses on the role of lawyers in relation to social movements, as intermediaries with the state and agents of cross-racial and globalized resistance movements.
November 28, 2007 in Abstracts Highlights - Academic Articles on the Legal Profession | Permalink | Comments (0) | TrackBack (0)
Tuesday, November 27, 2007
A law firm that had been paid over $18 million in legal fees on an hourly basis in an estate matter negotiated a 40% contingency fee agreement after the client had asked about the possibility of a non-hourly fee arrangement. Three firm partners also had received "bonuses or gifts" from the client of over $5 million. When the matter settled 4 1/2 months later, the client retained new counsel and refused to pay under the contingency agreement. The firm filed a petition that sought an amount of 40% of "not less than $110 million plus 40% of any additional sums paid to the estate, less $348,272.78 paid by [the client] to [the firm]" after the new agreement had been executed.
The client sought to remove the case from Surrogate's Court, but the New York Appellate Division for the First Judicial Department held that Surrogate's Court had subject matter jurisdiction. The fee arrangement was held not to be unconscionable on its face, requiring a trial on that issue.
Judge Catterson dissented: "Because I believe that as a matter of law a legal fee of $40 million for five months work following years of litigation which was fully compensated on an hourly basis, is unconscionable, I respectfully dissent and would void the agreement embodying that fee."Judge Catterson agrees that the fee-related issues are properly resolved in Surrogate's Court, but:
"Regardless of the procedural aspects of the parties' negotiations, no court can condone such an exorbitant fee, where the risks taken by [the law firm] were virtually nonexistent (having been paid $18 million in legal fees already and negotiated another $1.2 million for the ensuing year, plus its disbursements) and the [law] firm only added, at most, another seven months of legal work to its 22 years of service. See Ween v. Dow, 35 AD3d 58, 822 N.Y.S.2d 257 (1st Dept. 2006) (finding that the "very nature" of the retainer agreement provision, allowing Ween to recover attorneys' fees in collection action, was fundamentally unfair and unreasonable, and was, on its face, unconscionable and unenforceable). Without the costs and risks generally associated with contingency fee arrangements, such a fee agreement is nothing short of plain greed. See King, 7 NY3d at 192, 818 N.Y.S.2d at 841 (policy behind allowing contingency fee arrangements is based upon providing access to the courts and the fact that attorneys risk their time and resources in endeavors that could prove fruitless). "
As to the "bonus or gift" (i.e. prohibited business transaction/excessive fee), the dissent recites the following averments from the client:
"C. Daniel Chill arrived at her home in Ridgefield, Connecticut; he claimed that, given the favorable results that he, along with Reich and Mallis, had obtained in the estate litigation, they were each entitled to a bonus; and, he explained that this type of bonus payment was routinely made to attorneys based upon excellent service. Alice then made payments to the three attorneys of the firm, defendants Chill, Elaine Reich, and Steven Mallis, in the amounts of $2,000,000, $1,550,000 and $1,500,000, respectively. Upon handing the checks to the individual attorneys, however, Chill told her to indicate on the check that this was a "gift" in bold letters. It is uncontroverted that the checks were then deposited into the respective attorneys' personal accounts. Then, in or about April 1999, Chill called Alice and advised her that due to the tax implications of her payments, the bonus amounts due to each of them would be dramatically reduced. Chill stated that in order to assure that the amounts paid over were indeed received in full, it was necessary that she file a gift tax return for 1998 and pay the appropriate taxes on behalf of the three attorneys. This tax amounted to approximately $2,700,000."
The dissenting judge also would refer the matter to the Departmental Disciplinary Committee for investigation of possible ethical violations.
This case is worth a close look and could be a very useful teaching example for inquiry into the ethics of charging and collecting fees for legal services. (Mike Frisch)
An order that compelled nonparty Prada to pay costs and expenses associated with the deposition of another nonparty (Martini) was affirmed by the New York Appellate Division for the First Judicial Department:
"Under the unique facts of this case, we agree with the motion court that Martini was entitled to be reimbursed for the expenses of her legal representation in connection with this deposition. We further agree that Prada's counsel, who had represented Prada at the time of Martini's wrongful termination lawsuit against it, was in conflict by virtue of that litigation and could not represent her at the deposition, especially since communications from Prada's law firm made clear that its loyalties lay with Prada, and its aid to Martini in preparing for her deposition would be governed by that loyalty. The court properly exercised its discretion, in its role of supervising discovery, under these unusual circumstances, to require Prada to reimburse Martini the costs of retaining independent counsel." (Mike Frisch)
A case decided today by the Louisiana Supreme Court involved a lawyer who, after winning a large judgment on behalf of a client at a bench trial, was solicited by the judge (appropriately named Judge Green) to give a donation to the campaign of the judge's niece for a seat in the Louisiana House. The lawyer gave $800 in cash to the judge, the transaction was videotaped by the FBI as part of "Operation Wrinkled Robe" and the tape was played at the judge's trial on federal bribery and mail fraud charges. A majority of the court found that "[a]ssisting a judge in a violation of the Code of Judicial Conduct is very serious misconduct for a lawyer." A suspension of one year and one day was imposed.
Two judges favored a shorter suspension, as the misconduct was "a one-time serious lapse of judgment at the request of a judge he considered a good friend and who was a former colleague when they served as assistant district attorneys." Further, the lawyer admitted the mistake and cooperated fully with the criminal investigation of the judge.
According to news reports, the judge was sentenced to 51 months in prison for the federal conviction. (Mike Frisch)
The Clients' Security Fund of Ohio has released its annual report (the link to the Ohio Supreme Court web page links to the report). The fund report summary states that it awarded nearly $900,000 to victims of dishonest conduct on the part of Ohio lawyers but assures the public that "the overwhelming majority of Ohio lawyers – more than 99 percent – observe high standards of integrity when entrusted with law client money or property." (Mike Frisch)
The New York Court of Appeals held today that "an attorney may interview an adverse party's treating physician privately when the adverse party has affirmatively placed his or her medical condition in controversy." The court further holds that HIPAA (the Health Insurance Portability and Accountability Act) "imposes procedural prerequisites unique to the informal discovery of health care professionals." The HIPAA aspect of the decision holds that a trial court may properly require the patient to consent to a waiver of the Act's protections as the lawsuit waives the physician-patient privilege. The decision involves three seperate cases with the common discovery issue.
The dissent states: "Our holding today grants defense counsel the unprecedented ability to compel a plaintiff...to execute authorizations allowing defense counsel to speak to his or her treating physicians outside the formal discovery process and without the plaintiff being present." (Mike Frisch)
Monday, November 26, 2007
The Missouri Supreme Court recently held that the Division of Employment Security ("DES") must be represented by counsel in an appeal of its decision to require an employer to pay employment taxes. The DEs had ben represented in the appeal at issue by a non-lawyer managerial employee. However, the other side did not object and the resulting decision was not void. The court does hold that DES must be represented by counsel in employment security proceedings.
The court defined the practice of law as follows:
"One is engaged in the practice of law when he, for a valuable consideration appears in a representative capacity as an advocate in proceedings pending or prospective, before any court, commissioner, referee, board, body, committee, or commission constituted by law or authorized to settle controversies, and there, in such representative capacity, performs any act or acts for the purpose of obtaining or defending the rights of their clients under the law." (Mike Frisch)
A law firm that had allowed a personal injury action to be dismissed sought coverage from their insurer in the ensuing malpractice case. A condition precedent to coverage was timely notice to the insurer of the claim. The firm had moved to reinstate the dismissed underlying claim in May 2003 but did not notify the insurer until a year later. The New York Appellate Division for the Second Judicial Department affirmed the trial court determination that the insurer was not obligated to defend: "plaintiffs failed to provide notice of a potential malpractice claim within a reasonable time in view of all the circumstances...the plaintiffs knew or should have known of a potential malpractice claim no later than July 2003 [when the motion to vacate default was denied]. The notice provided a year later was unreasonable as a matter of law." (Mike Frisch)
The Oklahoma Supreme Court disbarred an attorney for misappropriation of entrusted funds. The court found that an intent to eventually repay the funds did not warrant a lesssr sanction, quoting from an earlier case that quoted the decision of the New Jersey Supreme Court in in re Wilson:
"Lawyers who 'borrow' may, it is true, be less culpable than those who had no intent to repay, but the difference is negligible in this connection. Banks do not rehire tellers who 'borrow' depositors' funds. Our professional standard, if anything, should be higher. Lawyers are more than fiduciaries: they are representatives of a profession and officers of this Court." (Mike Frisch)