Tuesday, April 29, 2008
The Minnesota Supreme Court has put out for comment recommendations for revision of the rules governing judicial discipline. A key proposal would seperate the investigative and adjudicative functions of the Board on Judicial Standards. (Mike Frisch)
A corporation filed a lawsuit against its former attorney in Tennessee alleging an array of serious charges. The lawyer then filed a separate lawsuit against the corporation in Texas. Both matters were settled. The lawyer then sued the corporation's Tennessee lawyers for "abuse of process, fraud by concealment, and outrageous conduct allegedly resulting from [the firm's] actions(s) during discovery of the Tennessee and Texas litigation." The Tennessee Supreme Court affirmed the grant of summary judgment to the defendants. The court held that the remedy for improper representations in litigation is a motion for sanctions:
"This is a lawsuit over the conduct of litigation. The litigation that gave rise to this lawsuit was obviously contentious. The rules of procedure generally provide the proper vehicle for pursuing claims of misconduct against opposing counsel during the course of litigation...The invocation of the rules of procedure regarding the conduct of opposing counsel arising in the course of litigation should be the primary method of seeking redress, not the initiation of yet another lawsuit involving the causes of action alleged herein."
The court also held that the appeal of the summary judgment order was frivolous. (Mike Frisch)
Posted by Jeff Lipshaw
Sometimes a little facetiousness is all you need to provoke a meaningful discussion. A couple days ago, I commented on Elizabeth Warren's idea for a financial product safety commission. Apparently I made the mistake of thinking it was all about variable rate loans when in fact Professor Warren's concerns go more generally to the tricks that providers of consumer financial products bury in the fine print.
To support her point, I provided this anecdote. We never run a balance on our credit cards, but use them for convenience and the "free float." We once mistakenly underpaid a $3,000 credit card bill by about $10, and got charged interest from the date of incurrence because that is the normal provision if you run a credit balance, and you get a waiver by paying the WHOLE bill within the normal "free float" period. I can't remember who I had to call to get the interest charge removed, but I did by arguing that the provision was obviously not suited to a mistake, because the charge kicked in if you missed a $10,000 payment by $1, effectively costing you some uber-Mafia-like charge on the couple bucks. Indeed, to her point, I argued that the agreement was "defective" in failing to distinguish between a mistake and the conscious incurrence of debt.
Granting the "information asymmetries" that make markets less than perfect, and rational choice less than fully rational, the discussion comes down to whether having a federal commission to regulate consumer financial products makes more sense than other ways of tweaking the market. I noted the similarities of insurance products to credit products, and wondered whether years of regulation by insurance commissions have improved things. I think generally markets get it right more often than regulators do (I cut my teeth as a baby lawyer litigating in the Department of Energy's Office of Hearings and Appeals under the Mandatory Petroleum Allocation Regulations in the late 1970s), but I'm not fanatic about it: sometimes the markets don't work for all the reasons the behavioral economists have observed. In that vein, Peter Huang had a comment on the previous post (at MoneyLaw) about Nudge, the recent work by Richard Thaler and Cass Sunstein, suggesting that all you really want to do is tweak or nudge the market with a little bit of paternalism (not a lot), usually by changing the defaults, but not eliminating choice.
Professor Warren tells me that the Consumers Union model for financial products doesn't work, because the products are too easy to change, and still too hard to figure out. (She and Oren Bar-Gil have a piece coming out soon on it, and, by my sneak peek, it makes an impressive case for the existence of a problem, even if I have reservation about the proposal for a solution.) I agree with the idea (first articulated by Arthur Leff) that a financial instrument is more like a thing or a product than like a contract. And I recognize I'm probably not a typical consumer. I like the information I get from EnergyStar on appliances, and the data on sodium, calories, soluble fiber, and cholesterol now on food packaging. I think washing down a 600 calorie Sonic mini-cinnamon bun with a super-sweet 1,000 calorie mocha latte is disgusting (I think that's what was being advertised yesterday), but I would rather have information about it than have it banned. I am still skeptical that credit agreement-toaster analogy holds (i.e. getting disclosure on the financial products is like getting an unfathomable wiring diagram). Electrical fires are always dangerous, but some people can handle cinnamon buns with very sweet coffee, and even the provision in my credit card agreement may make sense if you are running a large balance (why should you get free credit as the default rule?).
If a commission is more likely to produce efficient market-nudging, that's something to consider. But regulatory systems usually have to choose among the disclosure model (federal securities law), the pre-approval model (state insurance regulation) or the product recall model (NHTSA and the CPSC). I'm more than a little concerned that this idea will naturally tend toward the latter two, with the law of unintended consequences taking over at some point.
Monday, April 28, 2008
Posted by Alan Childress
James Fischer (Southwestern Univ. School of Law), shown left [Southwestern has the best faculty pics], has posted to SSRN his article, "External Control Over the American Bar." It was first published in 19 Georgetown Journal of Legal Ethics, winter 2006. Here is his abstract:
Professional regulation is primarily about self-regulation. Codes of Professional Responsibility and Rules of Professional Conduct promulgated by the American Bar Association are prime examples of forum and content of self-regulation. While this approach does much to inform lawyers of their professional obligations, it does so at the macro-level, focusing on general obligations and duties. Professional codes and rules are largely silent at the micro-level; they often fail to inform lawyers of their day-to-day obligations, which are building blocks of the larger professional obligations set forth in the codes. Historically, these day-to-day activities were left to lawyers to work out on their own. With increasing frequency and detail, however, non-professional regulators are stepping in to regulate and control lawyer conduct and much of their attention is focused on the day-to-day activities of lawyers that the professional bar has largely ignored.
In this paper, I examine two non-professional groups who have entered the field of profession regulation: insurers and legislators. While for the most part insurers and legislators complement professional self-regulation, both insurers and legislators are taking positions regarding required lawyer behavior that is different in degree and kind from that required by professional codes and rules. The trend has been for both insurers and legislators to assume more aggressive postures. To date, courts have tempered the most aggressive impulses, but whether they will continue to do so is unclear.
The Virginia State Bar Disciplinary Board revoked the license of an attorney who had been suspended since 1989 for non-compliance with professional liability insurance requirements and nonpayment of bar dues. The attorney (who I began prosecuting in 1985 in a D. C. reciprocal discipline matter based on an earlier Virginia three-year suspension) had handled a lis pendens case and a divorce property settlement, deposited a fee into a personal account, and maintained a website that identified him as eligible to practice law. He also billed a client on letterhead that identified him as "Esquire."
My reciprocal case took over a decade to reach the unsatisfactory conclusion of a 30-day suspension. Perhaps it will not take quite so long to end his legal career in the District of Columbia. (Mike Frisch)
A Colorado attorney who had "knowingly converted sizeable amounts of third-party funds while serving as a qualified intermediary in their section 1031 tax-deferred exchanges" was disbarred by order of the Presiding Disciplinary Judge. While "[s]ignificant mitigating factors may overcome the presumption of disbarment" in conversion cases, none were presented. Indeed, the lawyer had defaulted and failed to participate in the disciplnary proceeding. (Mike Frisch)
An attorney who had set up a number of limited liability companies for a client was sued for state securities law violations and fraud. He had sought and won summary judgment "claiming he was only involved in securities work and the plaintiffs are unable to provide any evidence that his action caused them to invest or lose their investment. " The grant of summary judgment was reversed by the North Dakota Supreme Court:
"We hold that an attorney may be liable for violations of the Securities Act if he is an agent representing the broker-dealer, issuer, or is self-employed and effects or attempts to effect the purchase or sale of securities, and he participates or aids in any way in the sale or contract for sale made in violation of the Securities Act. An attorney who merely provides legal services, drafts documents used in the purchase or sale of the security, or engages in the legal profession's traditional advisory functions is not an agent within the meaning of N.D.C.C. § 10-04-02(1). To be liable as an agent, the attorney must do more than act as legal counsel, the attorney must actively assist in offering securities for sale, solicit offers to buy, or actually perform the sale. The question of whether an attorney is an agent who aided or participated in any way in the sale is a question of fact unless the evidence is such that reasonable persons can draw only one conclusion from the evidence." (Mike Frisch)
Posted by Alan Childress
Over at LawBiz Blog, Ed Poll wonders whether lawyers will adapt to, and adopt, social networking. In other words, can clients be developed via MySpace and Facebook? And even if they can, will the lawyers take advantage of the technology? The answer, he surmises, is largely age-based, yet he advises getting "registered...just in case." But not at the expense of more traditional networking avenues like "[g]oing to meetings, calling people or sending hand-written notes."
I would add something that seems to be lost on students and lawyers in an age-based way, too (the other age-way around): handwritten thank-you notes and other traditional communications are becoming even rarer in light of technology -- and will surely catch the recipient's eye a lot more than they used to, given the effort that seems to be required compared to emails and mass digital means. Job applicants, for example, who mail a real, cursive thank-you note after an interview will certainly stand out. Your mother was right, even if she cannot program a universal remote.
Although Maya Space is college-educated and provides links to 31 friends ranging from Paris Hilton to Jesus, his occupation is listed as "observer and guardian." One will likely have to go elsewhere, virtually or otherwise, for legal counseling or advocacy.
The West Virginia Supreme Court of Appeals reversed a criminal conviction as a result of the prosecutor's impermissible comments concerning the failure of the defendant to testify. The defendant had been charged with having a sexual relationship with a minor. When she became aware of the investigation, she consulted a Maryland state trooper friend and followed his advice to promptly confess to police. The confession was the key evidence at trial. The court concluded:
"Based upon the evidence before the jury, we cannot pronounce with any degree of certainty that the State has proven beyond a reasonable doubt that the prosecutor's comments did not contribute to the jury's verdict. As discussed above, the State presented essentially two elements tending to prove the Appellant's guilt: the testimony of J.G. and the Appellant's own confession. Only the Appellant could have contradicted the contents of her confession. In three distinct statements, the prosecutor specifically referred to the absence of any individual appearing to offer contrary evidence, drawing attention to the fact that the Appellant had not appeared to testify regarding her actions or her confession. Thus, we find reversible error in the State's impermissible comment on the Appellant's failure to testify. We cannot conclude beyond a reasonable doubt that the improper comment did not contribute to the guilty verdict, and we therefore reverse the Appellant's conviction on this basis." (Mike Frisch)
Sunday, April 27, 2008
Posted by Alan Childress
Via the site-collecting resource of Electronic Ephemera, among its recent posts, I note these three useful sites out there to be tapped (beyond "every Simpsons' couch site gag" nicely spooled, in under five minutes):
(1) SocialScan allows you to measure, simply by entering URL, a website's popularity as measured by its being linked on 12 known social sites, like Digg and Bloglines. Our own site earns 5,763 total points, which compares favorably with some of their recent examples, such as Above the Law (5,046), PrawfsBlawg (1,439), redcross.org (12,598 [I know, but they save lives]) and domaintools.com (6,308). Pay no attention to Paul Caron [left] behind the iron TaxProf Blog curtain (10,898). Slate earns 271,753 points. Mr. Skin earns 1,090 points. Poor priorities? Or maybe a methodology issue with the measuring site?
(2) Delaycast allows you to estimate flight delays in advance. "Use our on-time prediction engine to help you book your flights. We’ve built mathematical models of the U.S. air transportation system to predict delays and cancellations. If you need to make that meeting on time or are afraid of missing a connection, don’t book until you check out the predictions here!" Alternative method: just find out what flight I have booked, or which teller line I picked. [Caron, above left, is shown delayed in an airport. ]
(3) This site, BeFunky, allows you to turn photos into cartoons and uvatars. (Not quite the psychodelicious quality of our post in 2006 on a way to turn photos into Andy Warhol classics, but still nice.) They can be crude B&W sketches or modern art.
Jeff, right, is a cartoon (ironic, since he is also a cartoonist). I am shown left. I have no photo of Mike, sorry. But Sam (top) is a nice gelding (as is Jeff).
The site even always you to re-dress your image with thousands of outfits and accessories. I resisted the temptation to dress up Jeff. But it is killing me.