January 27, 2009
Michelson on Gender Inequality in China's Legal Profession
Posted by Alan Childress
New to SSRN is this paper by Ethan Michelson of Indiana-Bloomington's departments of sociology and East Asian studies: "Gender Inequality in the Chinese Legal Profession." Its abstract:
In China's urban context of labor retrenchment, women are faring poorly relative to their male counterparts. Is the same true in China's incipient, dynamic, and expanding legal profession? Findings from four sources of quantitative data suggest that gender inequality in China's private and highly market-driven legal profession is a microcosm of larger patterns of female disadvantage in China's evolving urban labor market. Although employment opportunities for women lawyers have greatly expanded quantitatively, their careers are qualitatively less successful than those of their male counterparts in terms of both income and partnership status. In the Chinese bar, women's significantly shorter career trajectories are perhaps the most important cause of their lower incomes and slimmer chances of becoming a law firm partner. Future research must identify the causes of this significant career longevity gap between men and women in the Chinese legal profession.
Ethics of Email CLE: Tomorrow in D.C.
Posted by Alan Childress
Sounds good, and is certainly affordable for 2 hours of ethics CLE credit. Provided by the D.C. Bar. To be held, pending weather, Wednesday, January 28, 2009, from 6:00-8:15 pm:
This interactive program uses hypothetical scenarios to explore unique issues involving the use of electronic communications and documents by lawyers. This practical class will help you to learn about the ethical limits on using new technologies when communicating with clients and others; the ethics implications of working with service providers and discarding electronic files; the rules governing communications with adversaries (including ex parte contacts, metadata, and sending "unscrubbed" documents, inadvertent transmittal of communications from adversaries, and limits on deceptive conduct); outsourcing of legal work; duty to retain electronic documents when anticipating litigation; and preparing privilege logs for electronic communications.
- Location: D.C. Bar Conference Center, at 1250 H Street, NW, near New York and 13th.
Out Of Time, Out Of Court
A legal malpractice suit against Dechert LLP was dismissed on grounds of statute of limitations. The plaintiff's appeal of that determination was rejected by the New York Appellate Division for the First Judicial Department, which also affirmed financial sanctions imposed on plaintiff's counsel:
Plaintiffs' legal malpractice claim is barred by the statute of limitations (CPLR 214), which began to run in January 2000, when the merger of the corporate plaintiffs was completed and defendant law firm filed the merger documents. Even assuming plaintiffs could sustain their allegations that defendant represented them with respect to the merger, the complaint would have to be dismissed because their claim of continued representation is without merit (see West Vil. Assoc. Ltd. Partnership v Balber Pickard Battistoni Maldonado & Ver Dan Tuin, PC, 49 AD3d 270, 270 ). [*2]
The court properly imposed sanctions on plaintiff's counsel for frivolous conduct (see 22 NYCRR 130-1.1[a], [c]).
"An Easy Disregard For the Truth" Warrants Disbarment
A hearing committee of the District of Columbia Board on Professional Professional Responsibility has issued a 54-page report in a case involving intentional failure to pursue the client's lawful objectives and related dishonest conduct. The lawyer had deceived his client and law firm by creating a forged document to cover his failure to act diligently in the matter. The law firm discovered the misconduct, discharged him and reported the matter to Bar Counsel.
The lawyer had compounded the dishonesty in the client's case with false testimony in the bar proceeding:
As Dr. Blumberg [bar counsel's expert] observed, Respondent 'lies with impunity.' Respondent's dishonesty was not limited to the Client's ERA [an easement agreement that the attorney had forged, falsely notarized and submitted in connection with a real estate transaction] and the resulting disciplinary matter. Respondent has an 'extensive history of impulsivity, manipulation and an easy disregard for the truth.' Putting [him] under oath at the hearing did not deter him from lying as he testified falsely about his cocaine usage and the treatment he had received. [He] eventually admitted that he has a 'problem' with honesty and trustworthiness and that he had lied to get out of trouble. This 'problem' with honesty and trustworthiness are apparently deeply ingrained, life-long, and not caused by his cocaine and alcohol use.
The board, which will review this report, has historically been reluctant to disbar for dishonest conduct. It will be worth watching this case to see if excuses can be found to justify a lesser sanction in light of the findings of the hearing committee. (Mike Frisch)
Cheerleading A Sport
In a case previously covered in the blog of the Wall Street Journal, the Wisconsin Supreme Court today held that a cheerleader who was injured in a pregame warmup exercise may not sue another member of the squad or the coach for negligence. The court concluded that a Wisconsin statute provided immunity because cheerleading is a physical activity involving contact, i.e., a sport:
This case presents the following three issues: First, is Bakke [the teammate-defendant] immune from a negligence suit arising out of an incident that occurred while he was participating as a cheerleader at Holmen High School. We conclude that, pursuant to Wis. Stat. § 895.525(4m)(a) (2005-06), Bakke is immune from liability because he was participating in a recreational activity that includes physical contact between persons in a sport involving amateur teams. Second, did the circuit court err when it concluded as a matter of law that Bakke was not reckless? We conclude that the circuit court did not err when it concluded as a matter of law that Bakke was not reckless. Third, we must determine whether Wis. Stat. § 893.80(4) provides the school district with immunity for the alleged negligent acts of the cheerleading coach. We conclude that the school district is immune because no ministerial duty was violated by the cheerleading coach and there was no known and compelling danger that gave rise to a ministerial duty.
A concurring opinion by Justice Abrahamson agrees with the ultimate conclusion that cheerleading may be considered a sport for the purposes of the statute. (Mike Frisch)
January 26, 2009
First Amendment Defense Rejected
An attorney who has practiced for 30 years without a disciplinary blemish is the subject of a recommended sanction of a two year suspension with reinstatement subject to court order. An Illinois hearing board found that the attorney, after discharge from employment as an assistant corporation counsel, engaged in misconduct involving frivolous accusations against judges who sat on her wrongful discharge claim:
The statements Respondent made about certain judges of the Seventh Circuit Court of Appeals are undisputed. The issue we must resolve is whether these statements violated ethical rules. We believe they did. It is apparent that Respondent repeatedly made statements in court documents that were false, attacked the integrity of judges, and accused judges of deciding cases on an improper basis.
In a motion for judicial recusal filed in May 2000, Respondent requested the recusal of all judges in the Seventh Circuit who have a son or daughter working for the City of Chicago because she had "concluded that there is an employment-opportunities e-mail chain letter that runs from City Hall to the judges’ chambers at the Dirksen Federal Building, and then to the computers of the judges’ kids." In an attachment to that motion, Respondent stated that that Judge Bauer would not enforce substantive or procedural laws relating to at-will employment. She further stated that Judge Ripple’s enforcement of these laws was based on his interest in receiving an appointment to the United States Supreme Court, and not the rule of law.
Also in May 2000, Respondent filed a supplement to a petition for a writ of mandamus in which she explained that her motion for recusal was not made simply because the court "wrongly decided" her appeal, but because it "deliberately wrongly decided it" and "outright lied" in the opinion. A few days later, Respondent filed clarification to the previous motions and stated that the court "casually enage[s] in the case-by-case judicial nullification of laws they do not like and in the undisguised and untroubled deceit inherent in selective faux appellate review (or who close their eyes to it when their colleagues do so) will just as casually overlook the inconvenient fact of a jurisdictional bar when doing so enables them to protect their own (conflict of) interest." In August 2000, in a motion for a ruling on a writ of mandamus, Respondent stated that Judge Rovner ruled against her because Judge Rovner’s son works for the Mayor’s office. Respondent repeated this allegation in an amended motion for reconsideration she filed in October 2000. She also characterized the court’s decision as "downright weird" and as a "shoot from the hip advisory opinion written by a haughty judge as an ostentatious demonstration of fidelity to her impugned colleagues whose integrity Mann has questioned because they rendered her an unwitting dupe in two successive ornamental appeals." There can be little question that these statements impugned the integrity of the judges and the court. She repeatedly accused various judges of deciding her case on an improper basis.
Respondent argues that there would only be an ethical violation if the statements were false, and the Administrator failed to prove they are false. Respondent’s argument is not an accurate recitation of the law. The Administrator need not prove that the statements were false. The plain language of the relevant Rules establishes that the Administrator need not prove that Respondent’s statements were false. Rule 3.2(a)(1) provides that a lawyer shall not "make a statement of material fact or law to a tribunal which the lawyer knows or reasonable should know is false." Rule 3.2(a) of the Illinois Rules of Professional Conduct (emphasis added). Rule 8.2(a)(1) provides that a lawyer shall not "make a statement the lawyer knows to be false or with reckless disregard as to its truth or falsity concerning the qualifications or integrity of a judge . . ." Rule 8.2(a)(1) of the Illinois Rules of Professional Conduct (emphasis added). Accordingly, the Administrator must only prove that Respondent had no reasonable basis for believing the statements were true or made them with reckless disregard for the truth. To meet this standard, we need go no further than her answer to the disciplinary complaint.
In her answer, Respondent stated: "nor does the Administrator identify any mechanism by which Mann -- who lacked access to the judges themselves, their clerks, their secretaries, and their internal memos – could have obtained information that indicated the falsity of the statements, least of all statements regarding scienter of the judges at issue; scienter, by its nature, almost always must be proven using only indirect, or circumstantial, evidence." By making this statement in her answer, Respondent has admitted that she had no facts or evidence to support her statements. She admits that she lacked access to the judges, court personnel or documents that might substantiate her claims.
Respondent also admitted in her answer that some of the statements she made "are, or probably are, accurate and that in any event so much time has elapsed since the events at issue that Mann probably will be unable to obtain the tangible evidence that she might otherwise have been able to obtain in order to prove the statements accurate (emphasis added)" This statement further supports the conclusion that Respondent had no evidence to substantiate her statements about the judges at the time she made them.
Accordingly, not only did Respondent lack a reasonable basis to make these statements about the judges, she admits that she had absolutely no basis for making them and made them with reckless disregard for their truth. Therefore, we find that the numerous statements Respondent made about sitting judges of the Seventh Circuit were unsubstantiated speculation and violated the Rules of Professional Conduct. Moreover, in making these statements Respondent engaged in conduct involving dishonesty, deceit and misrepresentation; conduct prejudicial to the administration of justice; and conduct that tends to defeat the administration of justice and brings the courts and the legal profession into disrepute.
Respondent suggests that she had a first amendment right to make these statements about the judges. We disagreed. Although attorneys have the same first amendment rights as any other citizen, "no individual enjoys the freedom under our Constitution to make false and defamatory statements against others with actual malice i.e., with knowledge that the statementsare false, or with reckless disregard for their truth or falsity." In re Zurek, 99 CH 45, M.R. 19164 (September 19, 2002) (Hrg. Bd. Report at 20), citing New York Times v. Sullivan, 376 U.S. 254, 84 S. Ct. 710 (1964); McDonald v. Smith, 472 U.S. 479, 105 S. Ct. 2787 (1985). Further, judges are not insulated from criticism, however "the public interest and the administration of the law demand that the courts should have the confidence and respect of the people. Unjust criticism, insulting language, and offensive conduct toward judges personally by attorneys, who are officers of the court, which tend to bring the courts and the law into disrepute and to destroy public confidence in their integrity, cannot be permitted."
The hearing board found other misconduct involving dishonesty and unauthorized practice for representing a client after the attorney was no longer eligible to practice before the Seventh Circuit. (Mike Frisch)
Update: I received an email from the attorney who is the subject of this proceeding in which she requested that I note that she disputes the findings of the hearing board and has filed a lawsuit in Michigan federal court, where she resides and does not practice law. The suit seeks declaratory and injunctive relief as well as money damages from the court clerk and several named judges of the Seventh Circuit.
Child Abuse Violates Disciplinary Rule
A Colorado attorney was suspended for 60 days, all stayed if he successfully completes probation. The presiding disciplinary judge approved a conditional admission of misconduct based on the attorney's guily plea to misdemeanor child abuse. He "became angry with his six-year-old daughter and struck her on the bottom three times. He also struck her with his open hand. The incident was witnessed in part by his ten-year-old daughter." The conduct violated Colorado Rule 8.4(b).
In the criminal case, the lawyer was sentenced to two years of suprevised probation, parenting classes, and court costs. (Mike Frisch)
Till Death Us Do Part
A Colorado hearing board found that an experienced personal injury attorney had violated ethical standards and imposed a six-month suspension, stayed in favor of six-months probation. The attorney was retained to pursue a claim for injuries that the client had sustained in an automobile accident. While the matter was pending, the client died. The attorney settled the matter with the defendant's insurer without disclosing the death, which the hearing board found to be material. Part of the settlement was $9,000 for pain and suffering, a claim that was extinguished under Colorado law with the client's death. Further, the attorney continued to press claims based on the deceased client's need for future treatment. When the insurer learned of the death from the client's brother, the lawyer falsely claimed he had only recently been advised of the demise.
The hearing board found that the lawyer had "acted dishonestly and deceitfully in his negotiations with [the insurer] but that the evidence failed to establish that he committed the felony of attempted theft.
The sanction was affirmed by the Colorado Supreme Court. (Mike Frisch)
Evidentiary Hearing Required Before Disqualification Order
The Oklahoma Court of Civil Appeals, Division I reversed an order disqualiying counsel in a dispute arising from an asserted attorney's lien. The lawyer represented the client while employed by a law firm. He left to open his own firm and took the client with him. He negotiated a settlement and the law firm asserted a lien against the proceeds. The lawyer secured a court order to release the funds, apparently without notice to the law firm. The law firm then sued the client, claiming conversion of its share of the proceeds, and sought to disqualify the lawyer due to a conflict of interest and his staus as a witnes. The trial court granted the motion.
The court here held:
Upon presentation of a motion to disqualify for an alleged conflict of interest, the trial court must hold an evidentiary hearing, and, if the trial court grants the motion to disqualify, the order of disqualification must include specific findings of fact supporting the decision. On appeal in such cases, "the function of an appellate court is to determine whether the [trial court's] findings are supported by substantial competent evidence and whether the findings are sufficient to support the trial court's conclusions of law."
In the present case, the trial court conducted a hearing on the LawFirm's motion to disqualify, but conducted no evidentiary hearing. Further, in its order granting the motion to disqualify, the trial court did not enter specific findings of fact supporting its decision to disqualify Attorney from Client's representation. In the absence of the requisite evidentiary hearing and findings of fact, we are unable to determine whether the decision to disqualify is "supported by substantial competent evidence and whether the findings are sufficient to support the trial court's conclusions of law." (citations omitted).
Expert Improperly Excluded
The Tennessee Supreme Court held that a trial court had committed error in a case where the defendant had been charged with sexual contact with his stepdaughter. The defendant contends that he was asleep when the alleged conduct took place and sought to present expert medical testimony to support his defense. From the court's web page:
This appeal involves the admissibility of expert testimony regarding a sleep parasomnia involving sexual behavior. A defendant charged with committing sexual acts with his stepdaughter asserted that he could not have formed the required criminal intent because he was asleep at the time and was unaware of what he was doing. To support his defense, the defendant notified the State that he intended to present the testimony of a physician who had diagnosed him as having sleep parasomnia involving sexual behavior. The Criminal Court for Davidson County granted the State’s motion to exclude the physician’s testimony because it was not sufficiently trustworthy and reliable to be presented to the jury. However, the trial court also granted the defendant permission to pursue a Tenn. R. App. P. 9 interlocutory appeal. After the Court of Criminal Appeals declined to hear the appeal, we granted the defendant’s Tenn. R. App. P. 11 application to address whether the trial court had properly discharged its gate-keeping responsibilities with regard to the proffered expert evidence. We have determined that the trial court erred by excluding the physician’s testimony regarding sleep parasomnia.
Six Month Suspensions For Escrow Violations
Noting that a sanction of disbarment was within the range of options for the misconduct, the Georgia Supreme Court imposed a six month suspension for intentional misuse of entrusted funds. The lawyer had used the funds for his own personal and business expensers.
The court gave significant weight to the lawyer's voluntary disclosure and repayment to the client, who expressed a willingness to continue to retain the lawyer. The court also noted personal issues of a non-recurring nature that mitigated against a greater sanction.
The court imposed the same sanction in an unrelated case involving the handling of funds entrusted to a minister as fiduciary for a disabled individual that had begun prior to the minister's bar admission. The court found commingling and failure to deposit the funds in an escrow account, noting the inexperience of the sanctioned lawyer. A dissent would impose more severe discipline. (Mike Frisch)
The New York Appellate Division for the Second Judicial Department accepted an attorney's resignation and ordered disbarment. Because there was a pending investigation into escrow account violations, the order may be supplemented with a restitution requirement:
To the extent that any funds being held by him in a fiduciary capacity for third parties may be unaccounted for, [the attorney] is aware that in any order permitting him to resign, the Court could require, pursuant to Judiciary Law § 90(6-a), that he make monetary restitution to any person whose money or property was misappropriated or misapplied or to reimburse the Lawyers' Fund for Client Protection.
[He] is further aware that any order issued pursuant to Judiciary Law § 90(6-a) could be entered as a civil judgment against him and he specifically waives the opportunity afforded him by Judiciary Law § 90(6-a)(f) to be heard in opposition thereto.
[He] concludes by apologizing to the Court, his family, and his colleagues for any disrepute which his actions may have caused.
January 25, 2009
Calorie-Counting, The Foundering Ark, and Credit Default Swaps
Posted by Jeff Lipshaw
Although I sometimes wonder if all the various behavioral psychology theories ultimately cancel each other out (sort of like Karl Llewellyn's famous table of contradictory construction axioms), Gretchen Morgenson's New York Times column on credit default swaps got me to thinking this morning about optimism bias. This is the documented tendency of human beings to over-estimate the likelihood of positive future events and under-estimate the negative. I suspect optimism bias is, for example, a personality staple for all entrepreneurs. The other tendency (does it cancel out optimism? I'm not sure) comes from prospect theory, which says people evaluate prospective outcomes based on the change from a reference point, not on the absolute expected utility of the outcome. The idea here is that people evaluate the risk of positive and negative outcomes based on how things will change from the present reference point. What is important to understand here is that the weighting of positive and negative outcomes (i.e. risk assessment) may change based on the size of the outcome. I may be perfectly happy to risk $100 for an evening of blackjack at the casino (the risk of my losing $100 is far greater than chance I will win $100), whereas I may weigh outcomes quite differently if you ask me to take all my savings and invest it in one very risky start-up company.
I decided a couple days ago that I wanted to lose ten pounds. These are "vanity" pounds, so it's not easy to lose them. Weight loss is actually a pretty digital affair: you will lose roughly one pound for every net 3,500 calorie deficit. So if you burn on average 2,300 calories a day, and you restrict yourself to 1,800 calories of intake a day, you will lose about one pound a week (7 x 500 calorie deficit per day). Consistent with the behavioral observations, there is optimism bias. When faced with the decision how much ice cream to cram into the dish, I under-estimate the future cost. The solution is regulation. Diet experts tell you to keep a log of what you eat, and count the calories (or the Weight Watchers points). But the optimism bias is so strong, even then I'm inclined to understate in the records how much I'm really consuming, either by using the most optimistic data, or by understating how much I'm really consuming. Example: unadulterated air-popped popcorn has 31 calories per cup. Orville Redenbacher's "Smart-Pop" microwave stuff, which says it is 94% fat-free (note that it still contains oil and butter), claims 15 calories per cup on the box. I'm sorry, but that cannot be, and while I am not accusing Orville of lying, somebody is trying to appeal to my optimism bias!
What Ms. Morgenson observes this morning seems reasonable: there is a place in the world for credit default swaps, just like there's a place in the world for any kind of insurance, whether it be fire insurance or currency hedging. It does, however, seem plausible to me, for reasons explained by optimism bias and prospect theory, that anybody making lots of small bets will under-estimate the risk of a negative outcome (paying on the swap or finding more fat around one's middle) against the present utility (getting the premium or eating the Ben & Jerry's Yes Pecan). Back in the 1980s, I was up to my eyeballs as a working lawyer involved in insurance company insolvency, and a fellow by the name of Charles McAlear in Michigan wrote a little book called The Foundering Ark about the state of the property and casualty insurance industry. What he wondered was why an insurance company given an "A" rating by A.M. Best (the equivalent of a credit agency rating) could be in receivership a year later. The answer had to do with the relationship of minimum capital requirements and loss reserving. In a nutshell, loss reserves (which in the insurance industry constitute costs or liabilities) are merely estimates by human beings. If you regularly under-estimate your reserves, say, by 20%, it's entirely possible that you have real world liabilities or expenses that would wipe out what you have otherwise stated on your books as your net worth. McAlear's point was that the industry (a highly regulated one, by the way) was fraught with systemic under-reserving of losses.
Moreover, each instance of underwriting is little compared to the whole business, and thus more like tossing $100 at the roulette wheel than staking your entire fortune on your cousin's idea to start an online dog-washing service. That's the prospect theory part of it.
Why, then, is it not a surprise when Ms. Morgenson observes that "[s]ellers of C.D.S.'s spent years raking in premiums while underestimating or simply ignoring the possibilities of rising defaults. Regulators let the market grow unchecked. . . . In the end, far too much of this insurance was written at way too cheap a cost"? I'm not into the blame game, so I will leave for others demonizing boards and management who oversaw companies who did it, but there are indeed regulatory systems in place for industries like banking and insurance in which there is, or can be, a systemic "over-optimistic, small bet" bias. Shareholders like to eat their ice cream now. Managers will respond to that, even if they aren't the demons they can be made out to be.
A little Coaseian economics about regulatory solutions below the fold.
This is how we dealt with the cost of casualty insurance failure, at least when I was practicing it some twenty years ago. There was no federal bankruptcy (as is the case today) for insurance companies. Failed companies when into receivership in their domiciliary state. Each state had a "guaranty association" chartered pursuant to statute. Most all of the them worked on what was known as the "post-insolvency assessment model." I'll use Michigan as an example. Let's say the Failsafe Insurance failed, and went into receivership in New York. The Michigan guaranty association statute governed losses related to Michigan policyholders of the failed company. The GA employs a group of adjusters who step in and calculate the expected losses for Failsafe's Michigan policies, and assess the rest of the insurance companies registered in the state pro-rata in accordance with the amount of premium they have written in the most recent year. (Michigan was interesting because it excluded GA coverage for policy holders with a large net worth, on the rationale either than they could bear the loss themselves, or should have been sophisticated enough to do a better job choosing their insurers).
Now, all the other insurance companies were entitled to count these assessments when setting their own future premium rates for insurance. In other words, the state didn't bail out either the insurance company or the policy holders. The good news was that the initial charge was placed on the lowest cost avoiders - the insurance companies themselves - who might or might not have to absorb the cost or pass it on to customers depending on competitive state of the business. The bad news was that if the costs couldn't be passed on, and the companies wanted to keep their profitability at the same level, this might well spur additional under-reserving and more systemic insolvency. But overall, while running in cycles, the system seemed to hold up, probably because the total failure rate and the ensuing assessments were still a very small component of the industry's costs.
The difference, however, was that there was solvency regulation. It didn't stop insurance companies from going belly up, but it did have to have a salutary effect. I suppose this is all another way of saying that the problem here is the migration of a market system under relatively benign regulation to one entirely unregulated. But doesn't an enforced system of counting, like my little calorie-counting notebook, force us to consider the biases at work?
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