Saturday, April 17, 2010
Posted by Jeff Lipshaw
I really think this should have been the epigram on the SEC's complaint against Goldman Sachs: "I'm shocked, shocked to find gambling is going on in here!" I've spent a little time in the last couple days digging past the allegations to the structure of the deal, and conclude that blaming Goldman Sachs for this is about as sensible as blaming the Race & Sports Book at Caesars Palace for taking bets on both sides of the game.
Seriously. Bookies don't gamble. They facilitate gambling. They set odds to equalize the betting on both sides. When the game or the race is over, they gather up what the losing side lost, pay what the winning side won, and skim a little bit for themselves. You know when you place a bet with a bookie that it's the nature of the system that the bookie HAS to have a counter-bet to offset your own. Now imagine that you'd like to bet against the Pakistani badminton team in its upcoming match against Indonesia because you think there are a lot of crazed Pakistani badminton fans who will bet the farm on their team. There aren't any bookies who take badminton action. So here is what you do. You find a reputable bookie and ask him to set odds on the match for no other reason than you see those Pakistanis as suckers just waiting to be taken. You'll even pay the overhead to set up the line. Caesars posts a line on the match; you bet Indonesia; the Pakistanis bet Pakistan; Indonesia creams Pakistan; Caesars collects the Pakistani bets, pays you off, and makes a little money in the process.
Then, horror of horrors! The bettors on the Pakistani team sue Caesars because it didn't disclose that it set the badminton line and took the action because somebody wanted to bet on Indonesia! Ludicrous, you'd say.
But as far as I can tell that's exactly what Goldman did here. What made the deal work for Goldman was that it was the purchaser from ABACUS of credit default swap bets on the reference portfolio and the seller of matching credit swap bets to Paulson on the same portfolio. I'm afraid that what's going on is that the deal is indeed so complex in its structure and terminology that even the sophisticated public is flummoxed. SYNTHETIC CDOS WERE NOTHING BUT GAMBLES ON THE DIRECTION OF THE HOUSING AND SUBPRIME MARKET. Like all derivatives, they might well have served as a conservative strategy if one had an underlying business that was exposed, and wanted to hedge away losses at the cost of additional speculative gains, either going long or short on the market. If ABN Amro and IDK Deutsche Bank wanted to bet on the subprime market, they had to have a bookie with counter action to create an opportunity for the bet!
At first I thought this case was odd for its secondary actor liability issues. Now I think it's just as interesting on issues of materiality, reliance, and causation.
Friday, April 16, 2010
The Kansas Supreme Court imposed a one-year suspension of anattorney who had allowed the statute of limitations to run on two accident claims. The attorney then advised the client that it was "no big deal" because that was why he had malpractice insurance. The attorney advised the client to seek new counsel, but she did not, and the statute of limitations on the malpractice case also has run.
The court found that the facts adequately alleged a concurrent conflict of interest in advising the client after the statute had run. The court found no Ruffalo violation with respect to the bar charges. The court also was not impressed with the pro se arguments of the attorney:
During oral argument before this court, respondent persisted in minimizing the seriousness of his conduct and attempted to shift responsibility for his actions to [the client]. Absent from respondent's demeanor at oral argument was an appreciation of the serious nature of the misconduct and the impact his actions had on his client.
The attorney is required to establish fitness for reinstatement. (Mike Frisch)
While noting that an attorney's series of retail thefts and efforts to avoid the ensuing criminal consequences evinced a "serious disregard for the law," the Wisconsin Supreme Court accepted the stipulated discipline of a six month suspension with a requirement that the attorney petition for rreinstatement. The court described the various incidents, including:
Attorney...'s professional misconduct primarily stems from a series of retail thefts and her subsequent interactions with law enforcement. These incidents cover a period of time from the spring of 2007 through the spring of 2008.
On May 24, 2007, Attorney...was arrested for retail theft at a department store in
. She was subsequently convicted of misdemeanor retail theft (loss under $2,500). The circuit court imposed and stayed a sentence of 30 days in the Milwaukee County House of Correction and one year of probation. Attorney...'s husband timely notified the OLR of this conviction... Greendale, Wisconsin
Counts 2 through 4 relate to an incident that began at a gas station just off Interstate 94 (I-94) in
in November 2007. The Wisconsin State Patrol was notified that a vehicle registered to Attorney...had driven off without paying for gasoline. A state trooper subsequently stopped Attorney...on eastbound I-94. Attorney...acknowledged that she had not paid for the gas, but claimed that it had been an accident. A second state trooper arrived, and while the two officers were discussing the matter, Attorney...fled the scene of the traffic stop. A chase ensued on eastbound I-94, which ended when Attorney...drove her car over an embankment and into a farm field. At the local hospital Attorney...stated she had fled the scene of the traffic stop because she was afraid that she was going to be arrested. Windsor, Wisconsin
Attorney...pled guilty to one count of felony fleeing and eluding an officer. A charge of misdemeanor retail theft was dismissed and read in for sentencing purposes. The
circuit court sentenced Attorney...to pay a $6,430 fine, which she paid within 60 days. Attorney...failed to advise the OLR of this conviction within five days.... Dane County
Counts 5 through 7 of the complaint and stipulation arise out of two more retail theft incidents that occurred in
in January and February 2008. On January 14, 2008, Attorney...left a department store in Waukesha County with some stolen merchandise. As she entered her vehicle, a store employee asked her to come back to the store to discuss the theft. Attorney...told the employee to get out of the way or the employee would get hurt. She then drove off, but was subsequently arrested. For this incident, Attorney...was again charged with misdemeanor retail theft. That charge was ultimately dismissed and read in at sentencing for the conviction discussed in the succeeding paragraph. Brookfield
On February 14, 2008, Attorney...was arrested for stealing boxed sets of compact discs at a music store in
. She falsely told police that her name was Maree Sheridan and gave a series of false birth dates. With respect to this incident, Attorney...ultimately pled guilty to one count of misdemeanor retail theft. A count of misdemeanor resisting or obstructing an officer was dismissed and read in for sentencing purposes, as was the retail theft charge for the January 14, 2008, incident. The Brookfield circuit court sentenced Attorney...to 30 days in jail, but stayed that sentence and placed Attorney...on one year of probation, as well as imposed fines and costs totaling $602. Attorney...did report her arrest and the proposed plea agreement in this matter to the OLR... Waukesha County
That's a lot of thefts for such a short suspension. Of course, the attorney will have to prove present fitness in order to be reinstated. (Mike Frisch)
The Maryland Court of Appeals held that a trial court has the authority to appoint an attorney from the local public defender ("OPD") to represent a criminal defendant if the trial court concludes that OPD has erroneously denied representation. The trial court had found (contrary to the OPD) that the defendant was indigent and thus qualified for appointed counsel. The court reversed a finding of contempt against a local public defender, who had refused to appear in court on behalf of the defendant. The attorney was following the orders of his superiors not to appear.
Chief Judge Bell, joined by two other judges, dissented. While agreeing that the case was not moot and that the contempt should be reversed, the dissent would hold that the trial court lacked the authority to compel the OPD to provide representation.
The court decided another case today and reached the same result. The dissenting judges in the above case concurred in the conclusion that dismissal of the criminal case was improper but reasserted the view that the trial court lacked the authority to interfere with the public defender's decision not to take the case.(Mike Frisch)
Thursday, April 15, 2010
The New York Appellate Division for the First Judicial Department has revoked the license of a foriegn legal consultant admitted on the strength of his license to practice in Haiti. The court sustained a number of findings of misconduct by the appointed referee, including:
The Referee concluded that on May 10, 2006, only one week after being licensed as a legal consultant in New York, respondent applied for admission to the U.S. Supreme Court. In response to the application question, "State court(s) of last resort to which you are admitted to practice, and date(s) of admission," he answered "May 3, 2006, New York Supreme Court, Second Department, New York State." In addition, he attached copies of membership cards from various state and other bar associations to the application. On the same day, respondent applied for admission to the U.S. Court of Appeals for the Armed Forces. In response to the application question asking what is the "highest State court in which applicant has been admitted to practice," respondent again answered "Supreme Court of New York." Similarly, respondent answered "Licensed by the Supreme of New York" when asked where he was presently engaged in the practice of law. Attached to his application were letters of reference stating that respondent was an "active member in good standing of the following law societies and state authorities" including four bar associations, with "Bar no[s]." The letter included the following text, "Licensed by the New York Supreme Court, Second Department, New York State Bar Association NYSBA Bar no. 69-2242 (518)463 3200." The number listed is in actuality the number that appears on respondent's New York State Bar Association membership card. The Referee concluded that respondent's use of the number misleadingly suggested it was an official number assigned to him by the Office of Court Administration.
Before the Referee, respondent did not deny he provided such answers, rather, he initially testified that he did include the words "foreign legal consultant" on his applications before they were submitted, and that the copy offered by the Committee had been altered by someone else without his knowledge. However, he did not produce a copy of the allegedly correct versions of the documents. Moreover, he provided a different explanation when previously questioned by the Committee, stating he omitted the words "legal consultant" because the forms did not leave sufficient space to include them.
Accordingly, the Referee concluded respondent stated he was licensed to practice in New York, and nowhere indicated he was a legal consultant, the limitations of his practice, or that he could not hold himself out as a member of the bar of this State.
The Minnesota Supreme Court has reinstated subject to a two year probation an attorney who was suspended for six months with fitness in 2008. The attorney had been a high court judge in Ethiopia who had fled Ethiopia in 1995 and was granted asylum in the United States. He attended law school and was admitted to practice in 2001. He was a solo practicioner with primarily a personal injury practice.
He abused his wife and then sued family friends who had sheltered her from his abuse for defamation. The suit was deemed meritless. Further, he obstructed his own deposition and compelled his wife to sign a false affidavit recanting the truthful abuse charges. They were divorced in 2005.
The Director of Office of Lawyer Professional Responsibility began an investigation after a trust account overdraft. Charges were filed for trust violations, obstruction of access to evidence in the defamation case and knowingly presenting a false affidavit in that case.
At the reinstatement hearing, the petitioner:
admitted in his testimony that when he and his ex-wife had arguments, he would regularly grab and hit her. He testified that in [his] culture, such behavior is considered "natural and normal" and is "not considered as abuse. " He stated that although he did not consider his actions to be physical abuse at the time, he now understands that he "made a mistake" and "shouldn't have done that." He "realized slowly, gradually," since the time of his suspension that hitting one's wife [is] considered physical abuse in this system." [He] further admits that he had falsely denied the abuse at his disciplinary hearing.
The panel that considered the petition had recommended against reinstatement. The court held that the panel had focused on the petitioner's earlier state of mind rather than his present character and concluded that he had demonstrated the moral regeneration required for reinstatement. (Mike Frisch)
The Indiana Supreme Court has found that the practices of an insurance marketing agency amounted to the unauthorized practice of law. The courtenjoined certain identified practices described in the opinion and remanded the matter for consideration of issues concerning disgorgement of fees.
The company targeted and mailed primarily to retirees information on avoiding probate. A sales representative contacted and met with responders, who would provide the representative with financial information (information also used to sell insurance products). The sales rep made false claims about the company's "team." The sales reps were paid on commission to sell the most expensive products.
An attorney was not involved until after the sale was made and the products purchased. The court rejected the company's suggestion that "the panel attorneys had the freedom to exercise their own independent judgment in ensuring that the client had an estate plan suitable for his or her needs." The court identified one client who clearly suffered for following the advice to pirchase a trust product.
The company sold 1,306 estate plans in Indiana for gross payments that exceeded $2.7 million over a period from October 2006 to May 2009. It is headquartered in Indianalpois and does business in thirteen states. The company claimed reliance on the opinion of an expert that their practices complied with unauthorized practice limitations. The state bar called an expert who testified to the contrary.
The court remanded the matter to its appointed commissioner to determine the appropriate amount to award to the state bar as attorney fees. The court also concluded that payment for the state bar's expert was a properly charged cost or expense. finally, the court set out the considerations for the commissioner to apply for an order of disgorgement as "we believe disgorgement or a similar form of restitutionary remedy serves as a more reliable and effective deterrent against the unauthorized practice of law and better protects the public from such practices."
Wednesday, April 14, 2010
In which I finally join the Luddite Party despite our destiny to lose elections because of the unwillingness to employ "new media" methods. Twitter's Entire Archive Headed to the Library of Congress, or Library of Congress to House Entire Twitter Archive. [Alan Childress]
The dismissal of a suit involving a dispute between attorneys who had jointly represented a client was affirmed by the New York Appellate Division for the First Judicial Department. The court described the claims:
At issue is the propriety of the motion court's dismissal of an attorney's claims under the theories of quantum meruit, as well as tortious interference with advantageous economic relationships. Both plaintiff Robert Steinberg and defendant Stanley Schnapp are attorneys admitted to practice in New York. Non-party Leon Baer Borstein also is an attorney, and was the preliminary executor of the estate of Isi Fischzang.
At least three documents relevant to this appeal appear in the record. In an undated and unsigned writing, Borstein advised that he had retained both Steinberg and Schnapp "as my attorneys with respect to all legal proceedings and asset administration concerning the wills, assets and estate of the late Isi Fischzang." Borstein also prepared a document dated September 2007, and entitled "Contract of Employment of Attorneys at Law." It provided that Steinberg was to serve as "trial counsel for all litigation issues," while Schnapp was designated as "the general counsel for the fiduciary and estate, with respect to all litigation proceedings concerning the wills, assets and estate of the late Isi Fischzang." There is also a June 2007 document, offered in reply papers from Schnapp, and signed by Borstein, in which Borstein also advises that he retained both Schnapp and Steinberg. In none of these documents, or in any other contained in the record, is there any suggestion of privity between Schnapp and Steinberg.
The arrangement among the attorneys did not last long, and on March 12, 2008 Steinberg instituted the action which gives rise to this appeal. He asserted two causes of action against Schnapp for quantum meruit and interference with advantageous economic relationships. In the quantum meruit cause of action he alleged that he had performed professional legal services for Schnapp at Schnapp's "special instance and request," but in connection with the Fischzang estate. He further alleged that he was orally retained by Schnapp, and that Borstein had confirmed the retainer in a writing. The services for which he seeks payment were services performed in conjunction with the estate, including two appearances in Surrogate's Court and negotiations with lawyers representing the decedent's widow.
In the claim for tortious interference Steinberg alleges that he was fired because the "underlying client" (Borstein) had become dissatisfied with the delays in the probate of the estate, but that Schnapp fired Steinberg to shift the blame for the delays to Steinberg. Notably, Steinberg acknowledges that the "underlying client" could have requested his discharge "whimsically or capriciously or for any reason or for no reason, but the discharge would remain without cause.'" His concern that there is an intimation that his termination was "for cause" apparently provides much of the impetus for this litigation.
As an at-will employee of the client, the attorney has no cause of action against co-counsel:
Steinberg intimates in his complaint that Schnapp failed to communicate certain problems concerning the probate of the estate to Borstein, but left Steinberg to incur the client's dissatisfaction. His concerns are amplified in his affidavit in opposition to the motion for summary judgment, in which he suggests that any fees he earned are being withheld as a result of allegations made by Schnapp concerning the quality of his work. The specifics are not offered. At best, Steinberg is suggesting that Schnapp made an inaccurate statement about the quality of Steinberg's work, which statement led Borstein to terminate the attorney relationship, a relationship that is terminable at will, in any event. Such statements would be neither tortious nor criminal.
[posted by Bill Henderson]
Here is a link to a very interesting American Lawyer video interview of Seyfarth Shaw Managing Partner J. Stephen Poor on his firm's adoption of Six Sigma methodology, Many things in the interview are noteworthy:
- Seyfarth is making a significant long-term investment in time and money -- the subtext is that it is reducing short term profits. Most large law firms don't make such long-term investments in human capital and business processes. Moreover, the initiative is not new; it began five years ago.
- The eventual payoff is designed to be a second order effect of serving clients. As Stephen Poor notes, the Six Sigma approach benefits clients by making them more competitive. "And what is good for our clients is what is good for Seyfarth." Seyfarth claims that Six Sigma has enabled it to grow client relationships. Many of Seyfarth's competitors focus primarily on profits -- to keep partners from leaving -- rather than clients.
- This business process approach has the potential of institutionalizing clients because lateral partners cannot replicate Seyfarth's efficiencies at their next firm. Moreover, Six Sigma in law firms is probably scalable. So if its price/quality combination takes off, Seyfarth can take market share from competitors.
- As Poor notes, Six Sigma is not limited to certain practice areas -- it applies to certain portions of all practice areas. This observation suggests that Seyfarth has carefully examined its work flows in a way that enables the firm to speak to clients at a very sophisticated level. Most GCs these days are talking about disaggregation of their legal matters, which is the first step in optimizing (i.e., stretching) their legal budget.
- Seyfarth appears to be behaving like a business rather than a law firm. It has a long term market differentiation strategy that is not based on specializing in "high-end", "bet-the-company", "non-commodity" work. In other words, it is heading in the opposite direction of most Am Law 100 firms. If law firms could sell stock, I would be interested in taking a long position on Seyfarth.
One final note: much of the what Stephen Poor has to say is understated. Seyfarth Shaw's managing partner is branding his firm without bragging, which is a subtle but valuable skill.
Posted by Jeff Lipshaw
I have just gone through a difficult session reviewing a student's "directed study" term paper. It was odd to hear a statement to the effect that "I was a good writer before I got to law school, but legal writing screwed me up." I can still remember vividly sitting in a small section of my sophomore year U.S. history survey course at the University of Michigan (circa 1973), and the teaching fellow (to become lifelong friend and widely-acclaimed historian and gerontologist) W. Andrew Achenbaum describing what we were to do when we wrote the three five page papers that were required for the course. "A history paper," Andy said, "is like a legal brief." Well, at age nineteen, I had no clue what that meant, but I do now. You make an overall assertion - the thesis statement - then supply supporting arguments that are backed by the historical evidence. (Note: just to make me feel really old, the other grader on the papers was Andy's best friend and fellow TF, Jan Lewis, the mother of current New York Law School prof James Grimmelmann.)
So, students, when you write those papers to fulfill your writing requirement, it's barely a leap from brief writing to expository prose. And consider what I pointed out in this instance as deficiencies on at least three levels:
The "Elevator Speech" Failure: This is the basic compositional and organizational failure. I can barely read your paper because I have no clue from section to section, paragraph to paragraph, and sentence to sentence, why I am reading what I'm reading. Before you start writing you should have an outline in mind, and it's not just a placeholder for the data you've collected. No, it's the elevator speech - the argument you make if you get on the elevator at the ground floor and have to present your conclusion in the ninety seconds or so it takes you to get to the fiftieth floor. It sounds something like this: "My main point is that the adoption of the Omnibus Garbage Collection Act is going to have unintended adverse consequences that outweigh the purported benefits. I have three points in support of that position. One, the benefits are grossly overstated (see supporting evidence). Two, the recognized consequences are understated (see supporting evidence). Three, there are additional consequences that have yet even to be recognized in the debates (see discussion by renowned garbage theorists). Four, there are ways of ameliorating these consequences to improve the legislation (see my proposals). Conclusion: The current legislation should be scrapped in favor of my proposal. Thank you very much. Here's your floor."
The "Peeling the Artichoke" Failure: You skimmed over the top and never dug deep enough into the materials. Rather than actually reading the statutes and cases, you relied on commentary you pulled out of law reviews, or worse, Wikipedia. As a result the paper is replete with basic errors simply because you were not thorough. Modern manufacturing methods have a problem solving technique called the "5 Whys." When you think you've hit pay dirt as to the cause of a problem, you ask "why" about that cause, and repeat it five times until you've asked five whys. In my metaphor, it's peeling the artichoke of an issue, digging deeply, questioning every source until you've gotten to something that may not be the bottom, but it's a helluva lot better than the superficial place you started.
The "Presentational" Failure: I hate to be a pedant, but remember when you write that there's a reader on the other end of the process. Misspellings, typos, incorrect citation forms, sentences with mixed tenses are all distractions, and suggest that sloppy form means sloppy substance. One particular peeve of mine: I've started to resign myself to the use of "they" to refer to a single entity like, for example, General Electric Company. I think GE is an "it", not a "they," but, as I said, I'm something of a pedant. But, damn it, if you are going to use the "they", do it consistently, and don't be switching from "it" to "they" and back from sentence to sentence.
One last thought. This may be a generational thing. The internet gives us unlimited access to data. Students have told me they get overwhelmed with the amount of articles, materials, etc. Information isn't knowledge, and knowledge isn't exposition. Once you've gathered the data, put it aside. Close the door. Clear your mind. Write your elevator speech. Create an outline based on the elevator speech. Then use the data to support the points in the outline. Trust me.
Tuesday, April 13, 2010
A bar discipline case is summarized on the web page of the Idaho State Bar:
On December 29, 2009, the Idaho Supreme Court issued a Disciplinary Order suspending [an attorney] from the practice of law for eleven months, with all but 60 days withheld, and placing him on Bar Counsel probation following reinstatement.
The Idaho Supreme Court’s Order followed a stipulated resolution of an Idaho State Bar disciplinary proceeding in which [the attorney] admitted that he violated I.B.C.R. 505(b) [Criminal conduct], I.R.P.C. 8.4(b) [Commission of a criminal act] and I.R.P.C. 1.7(a)(2) [Conflict of interest: current clients]. The Complaint related to two matters when [he] was the Caribou County Prosecutor. One matter related to Respondent’s guilty plea to one misdemeanor count of bribery-unlawful use of public position for personal gain, in violation of Idaho Code §18-1359 and the other matter related to his prosecution of a criminal defendant for probation violation and attempted escape charges.With respect to [his] misdemeanor conviction, between March 2006 and July 2007, [he] accepted a number of checks from defendants, made payable to charitable or public entities, in infraction cases in conjunction with plea agreements to have those infraction charges dismissed. During that timeframe, [he] deposited approximately $3,800 into a separate personal bank account and the Caribou County Sheriff’s Search and Rescue Fund. [He] deposited approximately $2,612 into a separate personal account dedicated solely for the Caribou County Fair 5K race. [He] used approximately $1,600 to purchase prizes for the Caribou County Fair 5K race. [He] did not use any of the funds deposited in his personal account for any personal use unrelated to the Caribou County Fair 5K race. During trial on the charges of misuse of public money by an officer, [he] accepted a plea offer to the one misdemeanor count noted above and was sentenced on June 5, 2008. The judge imposed a $1,000 fine, 90 days jail, with all 90 days suspended, two years of unsupervised probation, and 150 hours of community service.
With respect to the admitted violation of I.R.P.C. 1.7(a)(2), a conflict of interest, in April 2006, [he] prosecuted charges against a defendant for a probation violation and attempted escape from the Caribou County Jail. The defendant and [the attorney] eventually agreed to a plea bargain whereby the defendant pled guilty to three felony counts in exchange for dismissal of the remaining six felony counts. During 2006, [he] engaged in a sexual relationship with the defendant’s mother. The relationship lasted approximately two months. The exact timeframe of the relationship was disputed, but it occurred either before or during the defendant’s prosecution, resulting in the conflict.
The Disciplinary Order provides that [his] 60 day suspension will run from November 1, 2009 through December 30, 2009. Following his reinstatement, [he] will serve probation for one year, upon terms and conditions that include compliance with all the terms and conditions of his criminal probation. If [he] violates any of the conditions of probation, then the entire nine month withheld suspension shall automatically and immediately be imposed.
The case is Matter of James. (Mike Frisch)
A Louisiana Hearing Committee has recommended a three-year suspension, retroactive to a previously-ordered interim suspension, in a matter tried on primarily on stipulated facts. In one matter, the attorney's (now former) secretary "was kind enough to provide ODC with a deposition" in which she admitted misappropriating entrusted funds after the attorney had signed and given her blank checks from his operating account. In another matter, the attorney received legal fees when meeting a client's mother in a donut shop. The attorney agreed that he had violated a variety of ethics rules in several matters.
The attorney disputed "in part" that he had failed to cooperate with the investigation of the bar complaints. He had been arrested and pleaded guilty to attempted possession and possession of cocaine charges. He had been in drug rehabilitation in facilities in Louisiana and New York. While the committee found his testimony concerning his non-cooperation to be self-serving, it was unrefuted. The committee gave him the benefit of the doubt on that charge.
The committee found the attorney's substance abuse and recovery to be a mitigating factor. (Mike Frisch)
The Maryland Court of Appeals affirmed a trial judge's order that a husband pay his wife's attorney's fees in a case involving custody, visitation and child support for the couple's minor children. The wife's submissions documented legal work on her behalf by a non-profit domestic violence clinic that had represented her on a pro bono basis. The trial judge awarded the wife custody of the children and ordered the husband to pay $5,000.00 to the clinic for its legal work on her behalf.
The court here rejected the claim that the fee award was improper. Fees may be awarded when it is "just and proper under all the circumstances." The fees may be paid directly to the clinic pursuant to Family Law Article provisions that govern fee shifting in domestic cases. (Mike Frisch)
The web page of the Ohio Supreme Court reports:
The Supreme Court of Ohio today permanently revoked the license of [an] attorney... for engaging in multiple acts of professional misconduct in his dealings with five different clients. That misconduct included misappropriation of tens of thousands of dollars of funds held in trust for clients, neglect of clients’ legal matters, failing to respond to client inquiries and requests for documents, failing to pay or return funds in his possession to which clients were entitled, and making false and dishonest representations to clients about the status of their cases and disposition of their funds.
The Court unanimously adopted findings by the Board of Commissioners on Grievances & Discipline that in the cases of two different business clients, [the attorney] received regular payments from those companies over a multi-year period to cover their payroll tax and workers’ compensation insurance obligations, and represented to the clients that he was making regular disbursements for those purposes when in fact he kept or spent large amounts of those funds himself. As a result of his dishonesty, one client was assessed by federal and state tax authorities for more than $100,000 in back taxes and penalties, and the other was assessed for $340,000 in delinquent taxes, penalties and interest.
Finding that [the attorney] also failed to cooperate with disciplinary authorities or even file answers to the complaints against him, caused grave financial harm to multiple clients, failed to make restitution, and subsequently abandoned his law practice leaving scores of clients without access to important legal records and documents, the Court concurred with the disciplinary board’s recommendation that the only appropriate sanction for his misconduct was permanent disbarment.
The court's opinion is linked here. (Mike Frisch)
The South Carolina Supreme Court agreed with the state Attorney General's claims of privilege with respect to advice received from the National Association of Attorneys General and reversed an order complelling disclosure. The facts:
In 1998, South Carolina was one of many states to enter into a Master Settlement Agreement (MSA) with certain tobacco companies to settle litigation brought by the states to recover tobacco-related health care expenses. The MSA contained a Model Escrow Statute that South Carolina adopted and codified as the South Carolina Escrow Fund Act at S.C. Code Ann. § 11-47-10, et. seq. (Supp. 2008). The Escrow Fund Act provides that a "tobacco product manufacturer" (TPM) that sells cigarettes to consumers within the state must either: (1) join the MSA and make settlement payments required under the MSA, or (2) remain a "non-participating member" and make payments each year to a qualified escrow fund. Id. § 11-47-10.
Tobaccoville is an importer and distributor of Seneca brand cigarettes, which are manufactured by Grand River Enterprises Six Nations, Ltd. (Grand River) in Canada. Tobaccoville asserts that it is the exclusive "off-reservation" importer of the Seneca brand, and that Native Wholesale Supply is the exclusive "on-reservation" importer. Based on these and other assertions by Tobaccoville, the AG certified Tobaccoville as a TPM for the Seneca brand in November 2003. Tobaccoville was recertified as a TPM for years 2004 through 2006.
Since that certification, "on-reservation" Seneca cigarettes manufactured by Grand River and distributed by Native Wholesale Supply improperly were being sold "off-reservation" in South Carolina. In April 2007, the AG determined Tobaccoville no longer qualified as a TPM, and that Grand River would have to be certified as a TPM instead if Seneca cigarettes would continue to be sold lawfully in South Carolina. Tobaccoville appealed the AG's determination to the ALC. In the course of discovery, the AG produced thousands of documents and submitted a privilege log indicating numerous documents were confidential and not subject to production. Tobaccoville sought to compel production of some of those documents, arguing that the documents were necessary to properly litigate the case.
The ALC found that the documents at issue were properly discoverable and were not privileged. The AG moved for reconsideration and was denied. The AG then appealed to the court of appeals, which dismissed the appeal. The court of appeals, however, later certified this case to this court pursuant to Rule 204(b), SCACR after the AG's petition for rehearing.
The court held the the documents sought were privileged:
The AG asserts the documents in question were covered by the attorney-client privilege, and thus were confidential communications not subject to discovery. The ALC found that because neither the National Association of Attorneys General (the NAAG) nor the other state attorneys general were retained as counsel then there could be no attorney-client relationship upon which to premise the privilege. We disagree.
"The attorney-client privilege protects against disclosure of confidential communications by a client to his attorney." State v. Owens, 309 S.C. 402, 407, 424 S.E.2d 473, 476 (1992). "This privilege is based upon a wise policy that considers that the interests of society are best promoted by inviting the utmost confidence on the part of the client in disclosing his secrets to this professional advisor . . . ." Id. In State v. Doster, this Court explained the attorney-client privilege as follows:
(1) Where legal advice of any kind is sought (2) from a professional legal adviser in his capacity as such, (3) the communications relating to that purpose (4) made in confidence (5) by the client, (6) are at his instance permanently protected (7) from disclosure by himself or by the legal adviser, (8) except the protection be waived.
276 S.C. 647, 651, 284 S.E.2d 218, 219-20 (1981) (citation omitted).
While the relationship the AG has with the NAAG is not the traditional attorney-client relationship envisioned in Doster, we nonetheless find that these communications may be covered by the attorney-client privilege. As the ALC noted, the AG has not "retained" the NAAG attorneys in this matter or with respect to the disputed documents. However, the AG is a paid member of the NAAG, and NAAG staff attorneys are available to provide legal advice relating to the MSA and tobacco regulation and enforcement. We find it instructive that one court has previously held that similar documents between a state attorney general and the NAAG were protected by the attorney-client privilege. See Grand River Enterprise Six Nations, Ltd. v. Pryor, No. 02 Civ. 5069(JFK)(DFE), 2008 WL 1826490, at *3 (Apr. 18, 2008 S.D.N.Y.).
Thus we hold that the attorney-client privilege may apply to this very narrow factual scenario because the AG, as a paid member, has solicited the NAAG attorneys for legal advice and consultation on matters relating to the tobacco litigation, the MSA, subsequent enforcement of the MSA, and tobacco regulation. We remand the matter to the ALC to determine if the allegedly privileged documents are confidential communications pertaining to the above legal matters.
Monday, April 12, 2010
An attorney who had negligently failed to supervise an embezzling paralegal was suspended for a period of one year and a day, all suspended in favor of a two-year term of unsupervised probation, by order of the Louisiana Supreme Court. The attorney had been seriously ill at the time of the paralegal's theft of escrow funds and made restitution to the victims. However, the attorney had failed to restrict the paralegal's access to entrusted funds after learning that a prior employer had accused her of stealing over $100.000.00. The paralegal denied the accusation.
Justice Knoll dissented, finding the sanction unduly harsh under the circumstances.
In an unrelated matter, Justice Knoll also dissented from the grant of conditional admission to an applicant for bar admission, concluding that the evidence established that the applicant was not an alcoholic and did not suffer from substance abuse. (Mike Frisch)
The Supreme Judicial Court of Maine has found that an attorney engaged in misconduct and directed the parties to set forth their positions on sanction in light of their conclusions. The attorney represented a client in a family matter in which the opposing party (the father) sought to expand his contacts with their child. The attorney and client offered "widely different accounts of which occured during their time together after [a] mediation session."
The court found that the attorney put his hand on the client's thigh during their breakfast together: "These actions made [the client] uncomfortable, but she thought that [the attorney] was kidding and she made light of the behavior." They went to a diner later that day and discussed the case over beers. They then went to the attorney's car, where he photographed her buttocks on his cell phone, told her she "had a nice ass" and deleted the photo on her request. He told her he was attacted to her and proposed that they go to his house for sex. She responded that the suggestion was inappropriate as he was her attorney. As a result, she was "confused and shaken."
When the client thereafter discharged the attorney, she made arrangements to pick up her file. The attorney required her to sign an acknowledgment of fees in order to get the file. The court found that this conduct improperly asserted a lien on the client's file in order to secure payment of his fees.
The court found that the evidence did not establish that the attorney had proposed a "sex-for-fees" arrangement, which was the most serious charge. The client, under oath, testified that she could not recall what he had said during the breakfast meeting.
It appears that the attorney was admitted in Maine notwithstanding a prior felony conviction, according to this recommendation of the Board of Bar Examiners. He had been convicted of conspiracy to possess marijuana with the intent to distribute, which he claimed was intended to provide financial relief to the family's failing pig farm. According to the board's report, he contended that "the only ones who benefitted [from his criminal conduct] were the pigs at the farm, the attorneys and the government." (Mike Frisch)
May a judge's spouse actively participate in the political campaign of a family member? Yes, according to a recent opinion of the South Carolina Advisory Committee on Judicial Standards:
The brother-in-law of a part-time municipal judge is running for an elected office. The judge inquires into the propriety of the following political activity.
1. Can judge's spouse put magnetic signs on a personal automobile? If so, Can the judge ride in that vehicle?
2. Can the judge's spouse wear a campaign t-shirt? If so, can the t-shirt be worn in the presence of the judge?
3. On election night, is the judge permitted to gather with friends and family in a public place for the counting of the votes?
4. Can the judge's spouse put a campaign sign in their front yard? Similarly, can the judge's spouse assist the brother-in-law in placing campaign signs around the city and county?
The judge's spouse may participate in the political campaign of a family member.
Rule Canon 5.A (1), Rule 501 SCACR, governs the political activity of judges, and prohibits judges from endorsing other candidates, attending political gatherings, or making contributions to a political candidate. However, the Application of the Code of Judicial Conduct specifically exempts part-time judges: A continuing part-time judge is not required to comply...at any time with ...Section 5A(1)[.]" Since the judge is not bound by the prohibitions against political activity, the judge's spouse is free to participate in the political campaign as described above. Furthermore, the judge may also accompany the spouse in the activities described above.