March 13, 2009
The South Carolina Advisory Committee on Judicial Conduct has issued an opinion concluding that a judge may not preside over criminal cases when his uncle by marriage is the chief of police. The inquiry came from a municipal judge considering whether to appoint a particular candidate to a municipal judgeship. The committee concluded:
Canon 2 of the Code of Judicial Conduct requires that a judge “act at all times in a manner that promotes public confidence in the integrity and impartiality of the judiciary.” Rule 501, SCACR. Furthermore, Canon 3.E(1)(d), SCACR Rule 501 requires a judge to disqualify himself or herself if a person within the third degree of relationship or the spouse of such person is a party to the proceeding, acts as a lawyer to the proceeding, or is a material witness to the proceeding. The Code defines a person “within the third degree of relationship” as a “great-grandparent, grandparent, parent, uncle, aunt, brother, sister, child, grandchild, great-grandchild, nephew or niece.” Rule 501, Terminology (emphasis added).
The fact that the uncle of candidate for municipal judge is the chief of police who prosecutes cases in municipal court would require the judge to disqualify himself or herself from such cases. Repeated disqualification would render the judge unable to perform the duties of judicial office.
Since Machiavelli's Time
The Maryland Court of Appeals begins an opinion with a quote from Machiavelli. Noting that he had suffered the rack for his support as a public official for an administration that had been replaced, the court "considers what has changed since Machiavelli's time" in connection with a lawsuit brought by discharged employees of the Caroline County States Attorney's office for their support of the losing incumbent. One of employees who had filed suit was the coordinator of the victim witness unit of the office; the other had served in that position and been promoted to senior district court coordinator.
The court's 82-page opinion concludes that key factual disputes remain unresolved. The matter is remanded to the Court of Special Appeals with further instructions for remand to the trial court. The holdings are sufficiently complex as to require the court to append a chart setting out the results. (Mike Frisch)
Excessive Rhetoric Harmless Error
The Kansas Supreme Court found plain but harmless error in a prosecutor's closing argument in a felony murder trial. The prosecutor had argued:
"They [sic] saying that Brandi shook the baby when? She shook the baby that night while she's in there feeding her putting her to bed, is that what they want you to believe? They are saying that there's a reasonable doubt about that, that you don't know who did it. Well, you do when you look at all the evidence. And another thing is he's no longer presumed innocent. Case is in. Evidence is in. At this point based on everything that we've proved, he's guilty." (Emphasis added.)
The court held:
In this case, immediately after saying that the defendant was no longer presumed innocent, the prosecutor stated: "Case is in. Evidence is in." A rational juror could easily interpret the statement, in context, to mean that once the evidentiary portion of the trial is complete, the presumption of innocence no longer applies. Accordingly, we find that under the first step of the analysis, the prosecutor exceeded the limits of approved rhetoric. (citations omitted)
While we find that viewing the comment in its context does not save it from being error, the context does favor the State in the second step of the analysis. It does appear that the prosecutor was attempting to convey that the State had overcome the presumption of innocence by "everything that [it] proved." We see no manifestation of ill will. Moreover, the misconduct did not rise to the level of being so gross and flagrant as to constitute plain error. The comment likely had little weight in the minds of the jurors, and we find that the error was harmless.
The court rejected a number of other contentions in affirming the conviction. (Mike Frisch)
The Indiana Supreme Court considered judicial misconduct allegations in two consolidated cases involving findings that a judge and a commissioner of the same court had delayed excessively in ruling on post-conviction motions. The judge was suspended for 60 days and the commissioner agreed to a permanent bar to holding judicial office in the future. The court found that the judge had "relied on the Commissioner to his detriment, trusting her to perform duties she failed to perform."
A dissent would impose a one-year suspension, finding the misconduct was not an isolated instance. The judge's "disorganization and disinterest caused a man wrongfully to sit in prison for two years." (Mike Frisch)
Incorrect Equals Unethical?
From the web page of the Virginia State Bar:
On January 29, 2009, a three-judge panel of the Arlington County Circuit Court imposed a public reprimand on [an attorney] for violating the disciplinary rule that governs meritorious claims and contentions. The misconduct occurred in a medical malpractice case, in which [he] incorrectly named a physician as a defendant.
The decision is not yet posted. It should be worth a read as to the particular facts. If the defendant was included in good faith and dismissed from the case when the lawyer learned of the error, there might be a strong argument against a finding of misconduct. (Mike Frisch)
A decision denying in part a claim filed with the Lawyers' Fund for Client Security was affirmed by the New York Appellate Division for the Third Judicial Department. The claimant must establish misappropriation in the course of an attorney-client relationship to obtain an award. The transactions at issue were deemed to be business arrangements (that had led to losses) in the claimant's area of expertise. The court also found that the decision was not invalidated by the lack of a transcript of the proceeding before the Fund.
It is worth noting that some client security funds award reimbursements for a broader scope of breaches of attorney duties. Ohio, for instance, will reimburse claimants who pay for legal services that are not performed. (Mike Frisch)
March 12, 2009
A four month delay in responding to Bar Counsel's repeated requests for information violates Maryland RPC 8.1(b). According to the headnote of the decision, the rule "does not require that a busy lawyer who is 'up to the elbows' in a trial or a transaction immediately 'drop everything' until completing his or her response...To comply with the requirements of [the] rule, the lawyer who receives a request from Bar counsel should (1) acknowledge receipt...(2) explain why he or she needs an extension of time to file a response, and (3) request that Bar Counsel consent to an extension for a reasonable period of time." The court imposed a reprimand.
A very interesting dissent disdains the "commingled" findings of fact and conclusions of law of the circuit court judge and would find other charged violations including failure to communicate. The dissent (joined by two other justices) characterizes the appropriate sanction for all the violations as a "difficult call." The justice writes: "Feeling a little like a forward observer calling in artillery fire on a target, I would suspend [the lawyer] indefinitely with a right to apply for reinstatement no sooner than 90 days following the date of the suspension." (Mike Frisch)
Winning The Case Creates An Ethics Issue
This has been a day for interesting legal profession cases from the Indiana Supreme Court. The court ordered a public reprimand of two law partners who had represented a client in a suit against two insurance carriers which had denied the client's fire loss claim. A first retainer obligated the client to make an initial $3,000 payment against bills to be charged at $150 per hour. One of the lawyers arranged a "focus group" to evaluate the case that indicated "they did not like" the client and might award from $0 to $300,999 as damages. The client rejected a $100,000 setlement offer.
As the case got closer to trial, the lawyers were concerned that their hourly charges might exceed the award. As a result, they proposed a new contingency agreement for 1/3 of any gross recovery. The client "was not happy with changing contracts..." but discussed it with his girlfriend and reluctantly agreed. As sometimes happens, the case went to a jury, which returned a verdict for $1,000,000. The insurance carrier paid the judgment and, as sometimes happens, lawyers and client had a fee dispute.
The court affirmed findings of misconduct in that the lawyers had failed to determine and disburse to the client the "minimum amount Client was indisputably due under either contract." The lawyers did not fail to provide an accounting. The revised contract did not violate Rule 1.8 (business transactions with client). Reprimand was appropriate as the attorneys had acted in good faith and cooperated with the disciplinary process. (Mike Frisch)
What Is A Law Firm?
The Indiana Supreme Court held yesterday that a lawyer did not engage in misconduct charged by its Disciplinary Commission. The issue was whether the charged lawyer and another lawyer ("Paul") were "associated in a firm" for purposes of imputed conflicts. Both lawyers handle indigent defense cases in a county that has no centralized public defender office. Office space for appointed lawyers is in an old courthouse law library that provides little in the way of confidentiality protections.
The facts are a bit complex, but it appears that the charged attorney learned from attorney Paul (acting as an appointed public defender) of a conversation between Paul and her client that implicated the charged lawyer's client in a murder. As a result, he contacted the prosecutor and had Paul's client (i.e. the snitch) removed from his client's cell. He also gave the information to his client's retained lawyer. Eventually, Paul's client testified at trial and the charged lawyer's client was convicted of murder. The lawyer was charged with violating his duty of confidentiality and using a client's information to the client's disadvantage based on a theory that he and Paul were associated lawyers.
The court agreed with a hearing officer that there were no ethical violations. The court concluded that the hearing officer had properly found that the two appointed defenders were not in the same firm as a result of the library "office sharing" arrangement: "Paul gave Respondent information about someone, who turned out to be [Paul's client], who was acting against his client'[s] interests. Because [Paul's client] was not his client, [he] did not violate any of the cited provisions in passing on the information he received to [his client's] other attorney." The court did not express a view about the ethical implications of Paul's disclosures.
A dissent would find the public defender arrangement in the county to be a firm: "I believe that the Court employs an overly technical, indeed, near-sighted definition of 'firm' and in doing so loses sight of the principal interest at stake here: the inviolability of client confidences." (Mike Frisch)
Judge Reprimanded For DUI
A circuit court judge convicted of driving while impaired was reprimanded by the Indiana Supreme Court. The court determined that driving with a blood alcohol level of .15 violated judicial canons of ethics. the judge had tendered an agreement regarding discipline after charges were filed by the Commission on Judicial Qualifications. The agreement noted that the judge had pled guilty to a misdemeanor and sentenced to a year in jail with all but one day suspended. (Mike Frisch)
Efficiency On Display
The benefits of recent rule changes in the District of Columbia's disciplinary procedures are on display in two cases decided today. The first imposes a public censure as consent discipline based on admissions by the lawyer of lapses in two matters involving commingling and failure to maintain a normal attorney-client relationship. A hearing on the consent discipline led to findings that the lawyer "did not understand... accounting responsibilities, but had taken steps to correct the errors." The attorney must take CLE, meet with the Bar's Practice Management Advisory Service and comply with prescribed requirements. From hearing to final resolution took less than three months.
In the second matter, the court imposed reciprocal discipline based on the attorney Pennsylvania consent to disbarment in September 2008. The court had ordered the attornery to show cause why identical discipline not be imposed and ordered the sanction when he did not respond. Under prior practice, such a case would have been referred to the Board on Professional Responsibility. The board would receive briefs and make a recommendation. Now, that process is eliminated where the lawyer fails to seek it. (Mike Frisch)
March 11, 2009
Reverse Contingent Fees
A recent opinion of the D.C. Bar Legal Ethics Committee concludes:
A reverse contingent fee is a fee that is based upon the difference between the amount a third party demands from a lawyer’s client, and the amount ultimately obtained from the client, whether by settlement or judgment. The Rules of Professional Conduct (“Rules”) do not prohibit reverse contingent fees, and a fee arrangement of this nature may align the lawyer’s and client’s interests more closely than hourly or fixed fee arrangements. Like all fees, reverse contingent fees must be reasonable. Beyond the requirement of reasonableness, entering into a reverse contingent fee arrangement places increased burdens of disclosure on the lawyer in order to obtain informed consent to such a fee arrangement. The lawyer is in a better position to assess the likely outcome of a dispute than a client is, and the lawyer must fully and fairly communicate that assessment to the client in any discussion concerning a reverse contingent fee. In addition, a lawyer should take particular care in setting the percentage of the reverse contingent fee, because unlike contingent fees based upon a client’s recovery, there is little established practice upon which a client and lawyer can rely. Finally, as with other Rule provisions, the degree and nature of the disclosure required of the lawyer and the ensuing scrutiny of the fee arrangement may vary based upon the experience and sophistication of the client.
There is a partial dissent from three non-lawyer members of the committee, including my friend and colleague David Luban. The final paragraph summarizes the concerns with the majority opinion:
It may well be that RCFs [reverse contingent fees] will mostly be proposed by sophisticated clients who understand quite well—maybe better than the lawyer—how to value cases. An insurer, for example, has extensive data on the settlement value of automobile collision cases. That insurer might well propose a flat fee with an RCF “bonus” to defense counsel who can beat the averages. In such cases, we agree with the Committee’s opinion: when the client proposes the terms of a RCF, the written agreement need say nothing beyond noting that fact. That satisfies the letter of the rule. But when the lawyer proposes a RCF and a baseline for calculating it, a written agreement that includes the baseline value but not even a hint of the method the lawyer used to arrive at that baseline violates the rule and under-protects clients. The Brown & Sturm case that the opinion discusses shows that lawyer overreaching in a RCF is not merely a hypothetical danger to clients.
It's nice to see the non-lawyer members of the committee expressing concern that the opinions of the lawyer members may be overly protective of the profession to the detriment of clients. (Mike Frisch)
Untimely Malpractice Suit Dismissed
The Connecticut Appellate Court affirmed a trial court order dismissing a legal malpractice case on statute of limitations grounds. The attorney had been admitted pro hac vice in Connecticut to handle the client's criminal defense. The court here held that the statute began to run at the time of sentencing and the malpractice case had been initiated more than three year after that date. A concurring opinion notes that local counsel did not appear with the sued attorney at the sentencing but would find that the criminal defendant could not establish that the absence of local counsel was the proximate cause of any damages. (Mike Frisch)
The Care And Feeding Of Magistrates
From the Ohio Supreme Court web page:
Two recent advisory opinions from the Supreme Court of Ohio’s Board of Commissioners on Grievances & Discipline offer guidance on travel expenses and dinner invitations for juvenile court judges and staff and on outside employment for full-time magistrates.
Opinion 2009-2 covers the proper conduct of juvenile court judges and court staff when a private placement facility for juveniles offers payment or reimbursement of travel expenses to the facility or extends gratuitous dinner invitations. The source of travel expenses under this type of relationship is improper under both the Ohio Code of Judicial Conduct and Ohio Ethics Law, according to the opinion. “A reasonable person would question whether influence was wielded and whether partiality was exercised in the placement of a juvenile in a facility that pays or reimburses the travel, meals, and lodging expenses of the judge or court staff.”
As for the gratuitous dinner invitation, the opinion states that an invitation extended in this manner does not fall under “ordinary social hospitality” under Rule 3.13(A)(3) of the Code of Judicial Conduct. “The gratuitous non-conference meal paid for by the owner (of the) private placement facility should not be accepted because the owner is interested in the court’s orders to place juveniles in private facilities.” Ethics law permits accepting a meal by a judge as long as it doesn’t result in a “substantial and improper influence.” However, “a meal is an improper influence when the source of the meal is a person interested in matters before, regulated by, or doing or seeking to do business with the court. ... Thus, by application of R.C. 102.03(I) the gratuitous non-conference meal paid for by the private placement facility should not be accepted.”
The opinion also notes that reporting on an annual financial disclosure statement the acceptance of travel expenses or a gratuitous non-conference meal via this type of arrangement does not resolve all of the impropriety.
Opinion 2009-1 considers whether it’s proper for a full-time magistrate to engage in outside employment performing legal research projects as an independent contractor for a legal publishing company. Rule 3.11 of the Ohio Code of Judicial Conduct greatly limits a judge’s or magistrate’s opportunities to engage in outside employment with a business entity. The activity is not permitted because none of the exceptions in section B of this rule apply:
- The legal publisher is not a business closely held by the judge [magistrate] or members of the judge’s [magistrate’s] family.
- The legal publisher is not a business entity primarily engaged in investment of the financial resources of the judge [magistrate] or members of the judge’s [magistrate’s] family.
- The proposed legal research activities for the business entity do not constitute writing or teaching for purposes of the rule.
The opinion also notes that a magistrate performing this kind of work, which wasn’t explicitly restricted under the old Code of Judicial Conduct, should stop as soon as practical; that the opinion does not prohibit a full-time magistrate from writing or teaching as long as certain conditions are met; and the advice offered in this opinion also applies to a full-time judge.
March 10, 2009
Ribstein & Lipshaw's New Unincorporated Business Association Casebook
Posted by Jeff Lipshaw
Attention law professors who are going to be teaching a course called anything like "Unincorporated Business Associations," or "Agency and Partnership" or "Partnerships and LLCs"! Larry Ribstein (Illinois, left) and I are in the final stages of preparing our Unincorporated Business Associations, 4th Edition for publication in May. The Teacher's Guide should also be available shortly thereafter. Rather than re-invent the wheel, I'm simply going to quote from the letter LexisNexis will be sending out:
Like its predecessors, the new edition of Unincorporated Business Associations takes a business planning approach to teaching the modern law of partnerships and other unincorporated firms. In the five years since the Third Edition, the proliferation of unincorporated business forms has outgrown the scope of the traditional three-credit "Business Associations" or "Corporations" course. Today's business lawyers are likely to be called upon to organize limited liability companies rather than closely held corporations, or to advise clients forming privately or public held investment partnerships. Practice in this area involves not just a thorough grounding in the default rules of partnership and "uncorporate" forms of limited liability firms, but an understanding how lawyers customize the statutory standard business forms to match the needs of the business clients. The traditional business law curriculum has not adequately covered those skills, and Professors Ribstein and Lipshaw designed Unincorporated Business Associations to fill the gap.
Significant changes to the Fourth Edition of Unincorporated Business Associations include:
• The material on LLCs has largely been rewritten, reflecting the rapid development in this form over the last several years. The chapter contains sixteen new problems, ranging from issues of form selection, management, limited liability, transferability of interests, to dissolution and merger.
• Each chapter contains new and updated notes and problems that provide a "hands-on" approach to the consequences of, and planning and drafting for, issues in agency, partnership, limited partnerships, LLCs, and limited liability partnerships. The problems also draw together materials from disparate areas of the law, including tax, bankruptcy, securities, and employment discrimination, involved in business planning.
• The first chapter introduces teachers and students to several realistic business situations that continue through the book.
• The materials on partners' financial rights now includes a short primer on financial accounting, designed to teach students with no other grounding in the subject enough about the very basics to understand legal issues touching on capital accounts in unincorporated business associations.
• The Teacher's Guide is almost six-fold expanded from previous versions. It contains approaches to organizing classes, synopses of all the cases, lecture outlines, proposed questions and answers, discussions of answers to all the problems, diagrams of the complex cases, and flow charts of complex statutory analysis in areas like partnership dissolution and winding up. There are proposed syllabi for two-, three-, and four-credit courses. Reflecting new thoughts in classroom pedagogy, the manual also includes three big interactive problems, in which students get asymmetric information about business goals and are asked to craft legal solutions.
• Professors Ribstein and Lipshaw will maintain a website from which the Teacher's Guide materials (including animated versions of the slides and flow charts) and other classroom aids will be available for download.
The advance page proofs for the Fourth Edition of Unincorporated Business Associations will be available in April. Please contact Sean Caldwell (email@example.com / 513-721-2506) to request access to the advance page proofs.
Vacated But Not Reinstated
An attorney was disbarred in New York as a result of a felony drug conviction. He participated in court-ordered treatment which resulted in the reduction of the felony conviction to a misdemeanor offense. He then moved to vacate the order of disbarment. The Departmental Disciplinary Committee agreed to vacatur but filed a cross motion to impose interim suspension rather than immediate reinstatement because the misdemeanor involved a serious crime. There had been no fact-finding in connection with the disbarment order, which had been automatic as a result of the felony conviction.
The New York Appellate Division for the First Judicial Department agreed with the committee's position and directed prompt consideration of the appropriate final discipline for the underlying conduct:
In this case, respondent's misdemeanor conviction under Penal Law § 220.03 does not meet the definition of a "serious crime" as set forth in Judiciary Law § 90(4)(d). Nevertheless, under the present circumstances, we find the Committee's cross motion for an interim suspension, followed by the possible filing of formal charges for respondent's underlying criminal conduct, to be appropriate. Moreover, given the procedural posture of this matter and the interests of judicial economy, the Committee would not oppose referral of the matter directly to a Hearing Panel for a hearing on formal charges, thereby bypassing a Referee's hearing. As the Committee points out, Hearing Panels frequently serve as the initial fact finders in "serious crime" and reinstatement matters and, since this matter involves issues akin to those frequently raised in those proceedings, a Hearing Panel would be capable of reviewing the facts of the case and making recommendations as to a final sanction.
The court noted that the attorney had not practiced since his 1994 guilty plea and had opened a gourmet sandwich shop. (Mike Frisch)
Unmet Needs Lead To Amended Admission Rule
The North Dakota Supreme Court has adopted effective March 15 a new rule that will allow attorneys admitted in other jurisdictions to provide volunteer legal services in civil matters through approved legal services agencies. The rule was adopted in light of the court's concern about unmet needs of indigent clients. The court requires that participating attorneys be admitted for five years and provide an application so that the court can evaluate the applicant for suitability for the limited permission to engage in North Dakota practice. (Mike Frisch)
Sorry, I Lost It
A Louisiana hearing committee agreed with a joint proposal for sanction and recommended a six-month stayed suspension in a case where the lawyer was hired to seek removal of a material man's lien. The lawyer received a fee advance of $2,000 but did not know what to do on the merits. The client sought return of the fee and file without success. A bar complaint resulted in the hearing. The committee finds that the lawyer did not make the fee arrangement clear, could not account for his charges and thus had violated Rules 1.5 and 1.16.
Interestingly (and, I think, wrongly), the committee found that the lawyer's assertion that he had stored the client file in his attic and could not find it showed that he had not violated Rule 1.16 with respect to the return of the file. The hearing committee concludes that loss of the file is a defense and that the loss must be intentional. Such an interpretation in effect negates an important client protection interest articulated in the rules governing withdrawal from representation. While loss of the file to fire or flood may mitigate the violation to a de minimus level, it does not extinguish the strict liability obligation to hold and return the client file. Losing the file "in good faith" should not be a basis to find no ethical lapse, even if it would not change the result here. (Mike Frisch)
Lassie Come Home
During the course of their 13 year relationship, a couple purchased a pedigree dog for $1,500. They were both registered as owners of the pet with the kennel club. When the relationship ended and effects were divided, the woman took (and clearly loved and cherished) the dog. Thereafter, she left the dog with him while she was on vacation. On return, he refused to let her have the dog back. She sued, seeking specific performance (i.e. return of the dog) as relief. The trial court found the woman a credible and sincere witness but held that specific performance did not apply to pets. The trial court ordered him to pay her $1,500 in damages.
On appeal, the New Jersey Appellate Division remanded, concluding that the trial court had the authority to order the return of the dog. An amicus brief was filed by the Animal Legal Defense Fund and Lawyers in Defense of Animals urged the court to "adopt a rule that requires consideration of the best interests of the dog." (Mike Frisch)
Pay The Invoice
A criminal defendant charged with malice murder was convicted and sentenced to death but his habeas petition led to an order for a new trial. New counsel were appointed by the then Director of the Georgia Public Defender Standards Council to handle the second trial. The lawyers were assured that they would be paid out of the Council's funds.
The lawyers submitted periodic bills, which were not paid. When the lawyers completed the representation, they submitted a bill for services to the public defender of slightly less than $69,000. The Council refused to pay them anything, claiming that payment was not under the statutory appointment scheme.
The Georgia Supreme Court rejected the contention and ordered that the lawyers be paid. The financial problems that the Council was experiencing did not justify non-payment. (Mike Frisch)