August 25, 2007
The Iowa Attorney Grievance Commission found that a lawyer with thirty years of practice experience had engaged in incompetent representation in six probate estate matters. The commission recommended a private reprimand and an appeal was taken by the Disciplinary Board. The Iowa Supreme Court accepted the findings of misconduct but rejected the proposed sanction, imposing a six-month suspension with reinstatement conditioned on proof of fitness to practice. If reinstated, the attorney "shall satisfy this court that he has associated with an experienced probate lawyer, approved by the chief judge of his district, prior to representation of any probate estate." (Mike Frisch)
August 24, 2007
Dead Clients Tell No Tales
A lawyer with 36 years of practice without professional discipline was accused of misappropriation of funds held for a now-deceased client. Issue: does the New York Dead Man's Statute preclude the lawyer from offering testimony that the deceased client gave him the escrowed funds as compensation for unpaid legal services?
The Appellate Division, First Judicial Department held that the evidence was inadmissible as to the misconduct but could be considered as mitigating evidence. The majority ordered a two-year suspension, with a dissent favoring harsher discipline. (Mike Frisch)
Proposed Rules For Federal Judges
The Committee on Judicial Conduct and Disabilities of the Judicial Conference of the United States has promulgated proposed new rules for misconduct and disability preceedings against federal judges. The link here is to the D.C. Bar's links to the proposed rules and information concerning the comment period. (Mike Frisch)
Serving Two Masters
Can an in-house counsel for a corporation provide legal services to a sister corporation and can that corporation collect reimbursement for those services? Yes, according to a recent ethics opinion of the Virginia bar, so long as the lawyer is "mindful of his obligation to protect each client's confidences and secrets, properly address[es] any conflicts issues between [the two corps] and any funds collected from Corporation B for the lawyer's services [are] no more than reimbursement to Corporation A for the actual costs Corporation A incurs in employing that in-house counsel." (Mike Frisch)
Should Have Known
The Minnesota Supreme Court ordered a public reprimand of a district court judge for his "ex parte handling of a traffic ticket belonging to the husband of an administrative clerk employed by the judicial district." The court acknowledged that it is common practice in minor traffic cases for district judges to dismiss tickets without consulting the local prosecutor. Here, there was a written county policy that prohibited court employees from seeking special favors for"themselves or people they know."
The issue whether the judge knew that the favor sought was for the employee's spouse caused a dissent. The majority concluded that the judge "should have known that the ticketed driver was the clerk's husband..." The dissent agreed, but found "a significant distinction between actual knowledge and constructive knowledge in this context" such that a private warning was the approprite sanction. The dissent sees the real problem to be the casual manner in which minor traffic tickets are resolved: " I believe it would be more appropriate to vigorously condemn the court procedures but show more understanding for the judge who, by following these procedures, committed an act that violates the Canons."
Another judge of the same district court received a public reprimand for continuing for dismissal a ticket issued to the son of the same (and now former) clerk. The judge also had inappropriately contacted the clerk to discuss the pending investigation of judicial misconduct. (Mike Frisch)
August 23, 2007
Burden Of Proof
A lawyer who served as attorney for the personal representative of an estate also owned a real estate brokerage firm. The PR (now deceased) agreed with the lawyer to sell the estate's key asset--real property--through the brokerage firm for a reduced commission. The buyers quickly resold at a huge profit and estate heirs who had not consented to the sale sued the PR. The probate court found that the lawyer had engaged in a conflict of interest and had been negligent in selling the property for less than full value. The judge ordered that legal fees be repaid and the real estate commission disgorged.
On appeal, the D.C. Court of Appeals upheld the conflict if interest finding but found that the judge did not have the equitable authority to order the commission disgorged. The lawyer violated the business transactions with a client rule. The lawyer has the burden of proof to demonstrate compliance with the rule. However, the lawyer owed no ethical duties to the heirs and was not a party to the suit. Thus, the order of disgorgement was vacated.
Judge Thompson dissented, finding that the result was unfair to the lawyer. The dissent would find no basis to conclude that the lawyer violated the business transactions rule. "As far as I have been able to determine, the principle that the lawyer bears the burden of proving compliance with the rules of professional conduct has not heretofore been applied in a case such as this, where it is a third party, not the client, that alleges a violation and that third party fails utterly to present any evidence on the issue." (Mike Frisch)
August 22, 2007
$1,000/hour? Nero has become managing partner and is fiddling away....
Posted by Nancy Rapoport
Jeff's post on this latest rate increase points out that some lawyers are worth $1,000/hour or more, but the group of lawyers that can justify that rate is a much smaller pool than the group of lawyers charging (or about to charge) that rate. And that high rate is efficient only if the lawyer charging it is doing those tasks that use his or her specialized expertise. The problem, of course, is that the rate doesn't distinguish between "review file" and "develop brand-new legal theory that saves the day." And then there's the copycat issue, where lawyers who think that they're worth $1,000/hour want to increase their rates just to stay in the game.
I found Steve Susman's comment about his hourly rate most interesting:
Plaintiffs['] trial lawyers often bill on a contingency-fee basis, earning a share of a settlement or verdict -- an amount that can dwarf top rates. "It represents an opportunity cost when I am working by the hour," says Mr. Susman, who last year raised his hourly fee to $1,100. He did it in part, he says, "to discourage anyone hiring me on that basis."
That reason I can understand, and I set my own consulting rate very high (but not $1,000/hour high!) for the same reason. How many of the law firms increasing their rates to the new four-digit high spend much time calculating their "value added" part of the equation? I'll bet that, instead, they're just trying to make ends meet, given the still-increasing overhead caused by high associate salaries, and of course there's always the ego problem (he charges $X, therefore I will, too). Other folks (including here, here, and here) have been noticing the increasing disconnect between fees and value. Something's going to give, and soon--and Nero's new rates are speeding it along.
Use Of Report Waives Privilege
The Sandia Corporation retained outside counsel (a law professor) to conduct an investigation of allegations by two internal ethics officers "that their work was being impeded and they were being retaliated against by Sandia managers." The attorney generated a 221 page report that identified several employees whose conduct "merited scrutiny." One of the identified employees was disciplined, terminated her employment and sued Sandia, claiming the report was a sham that had falsely accused her of misconduct.
A New Mexico district court held that Sandia's use of the report in the litigation waived the attorney-client and work product privileges and ordered additional disclosures. On appeal, the New Mexico Court of Appeals upheld the distirct court's order of additional disclosures as to communications between the outside lawyer and Sandia representatives aa well as work product materials provided to Sandia. However, the order to disclose "all materials prepared or compiled by [the outside lawyer]" was reversed as to work product that was not provided to Sandia. (Mike Frisch)
Posted by Jeff Lipshaw
The Wall Street Journal leads the Marketplace section today with an article on the impending crossing of the $1,000 per hour rate for some of the top lawyers in some of the top New York City law firms, like antitrust guru (and former director of the FTC Bureau of Competition) Kevin Arquit (right) at Simpson Thatcher.
To me, it's just a number. As a GC, I was far more interested in total budgets and value-propositions than the hourly rate. So I could see ponying up an ungodly hourly rate for the certain few (like Kevin or his counterpart at Weil Gotshal, the handsome and debonair Steve Newborn) who could bring value to bear (Brackett Denniston III, the GC of General Electric allows as he has done the same). I scratch my head more at paying a litigator that much for two reasons: it piles up quickly, and I can only imagine a very few "bet the company" cases that would warrant fees at that level. Indeed, one of our strategies within the company was to bid out important but not mission critical work to high quality lawyers at non-financial center firms. As an example, we pushed much of our national products liability litigation to the Butler Snow firm in Jackson, Mississippi.
But the psychological impact of barriers like this - 1,000 internals on the Dow, the millionth customer, 75,000 discrete hits on SiteMeter - are interesting.
Apropos of Absolutely Nothing Except a Good Laugh
Posted by Jeff Lipshaw
Yesterday I pulled out all the work I had been doing on an article idea over the summer, and mud-wrestled with it all day. I think I finally figured out by about 6 p.m. last night that it was three different theses masquerading as one, and I now need to start the extraction process. When in doubt, write the abstract.
So I was in a foul mood, but fortunately my RSS feeds supplied me with two out loud laughs in the loneliness of my office before 7 a.m. Check out Dan Solove's hilarious analysis of law review submission policies at Concurring Opinions. And then I read my daughter Arielle's blog entry on knitting, which I don't understand at all, but the photo from the new Mac cracked me up. A chip off the old block.
August 20, 2007
Pre-Suit Litigation Privilege
A Tennessee law firm solicited business through a newspaper ad and website against a manufacturing company that sells screw fasteners for use in outdoor wood decks. The company sued the law firm in federal district court for defamation alleging that the law firm had falsely communicated that their product was defective. The federal district court certified to the Tennessee Supreme Court the question whether an absolute litigation privilege applied.
The supreme court held that the litigation privilege applies to pre-litigation communications if: made in the capacity of counsel, relating to the subject matter of litigation, "the proposed proceeding must be under serious consideration by the attorney acting in good faith", and with a client or an identifiable prospective client when the communication is published. However, "attorneys do not have an unfettered license to defame their adversaries." An attorney who "exceeds the bounds of permissible conduct may face collateral consequences" including malpractice, Rule 11 sanctions or bar discipline. (Mike Frisch)
Top Ten List
Nevada has implemented changes to its rules regarding attorney advertising effective September 1. The bar has put out a top ten list of things Nevada lawyers who advertise need to know about the new rules. (Mike Frisch)
Judge Sits Above Politics
A judge may not remain a member or otherwise participate in a club or committee of a political party after election to the bench, according to a recent opinion of the Standing Committee on Judicial Ethics and Election Practices in Nevada. Although the Nevada judicial conduct code does not specifically forbid such membership, "the fact that some activities are expressly prohibited does not mean that all others are permitted." The general canon that states that a judge "shall not be swayed by partisan interests" means that "the membership and participation contemplated here would...create the appearances and doubt which [the canons] are intended to prevent." (Mike Frisch)
The Allure of Generalization
Posted by Jeff Lipshaw
I have decried, on several occasions, the non-empirical generalization of a corporate governance crisis from the well-publicized companies who have made life more difficult for all the honest and hard-working executives and corporate boards out there. As I've noted, there are 9,000 publicly-held companies, more or less, on all the exchanges and over-the-counter, in the United States, and I still don't know how many of them are Enron or WorldCom ilk. There's little doubt the editorial writers at the Wall Street Journal would agree with the foregoing agnosticism about widespread corruption in the executive ranks.
But this morning the doyens of the of the left-hand column at the Journal have sunk their collective teeth into the backside of a favorite target - tort trial lawyers. Now I have no love lost for tort trial lawyers. And I don't know much about the underlying case - a web of scandal involving lawyers, judges, and fen-phen in Kentucky.
As far as I can tell, after several wealthy tort lawyers were charged with fraud, federal judge William Bertelsman (above) ordered them held without bail because of flight risk, saying "he wanted a speedy proceeding because 'not only these three gentlemen are on trial, the whole legal profession is on trial in this case.'" The Journal says:
For this bit of candor, Judge Bertelsman has been assailed, with law professors publicly complaining that it was inappropriate to impugn the whole profession, or to jail the poor millionaire attorneys. We'd say Judge Bertelsman has been the only one clear-eyed enough to realize that the foot-dragging and wink-winking that characterized the treatment of these attorneys has already left a bad taste about the way some lawyers and judges protect their own.
I guess your willingness to ascribe evil as a general matter from the acts of a few depends on where you sit. Taking the allegations in Enron and the Kentucky fen-phen scandal as true, I am still not willing to impugn the class of business executives or trial lawyers (as much as I'd like to!) solely on the evidence of those particular cases.
August 19, 2007
Ethics of Alternatives to Billable Hours
Posted by Alan Childress
Lots of law blogs have bemoaned billable hours and the ethical implications of this payment system. On our blog, and her own, Nancy Rapoport has nicely raised such issues for a while now. Jeff and Mike have chimed in from time to time. Now David Giacalone at his f/k/a blog here is asking to move the debate beyond billables and into the ethics and practicalities of the alternatives. And he has a good round-up of and links to various blogs currently replying to Scott Turow's recent polemic on the subject in August's ABA Journal.
Prosecutor Charged With Theft Of Evidence
The Illinois ARDC recently filed ethics charges against a former Assistant State's Attorney for Coles County. The prosecutor had been assigned to one of two cases arising out of a traffic stop in which marijuana had been seized. After one matter had resulted in a guilty plea and the other dismissed, the prosecutor is alleged to have falsely told a sheriff's deputy that the drugs were needed for "court purposes". The allegations include a theft charge but do not say what happened to the missing evidence. (Mike Frisch)