Tuesday, June 21, 2011
The Washington Court of Appeals has held that two attorneys had not agreed to resolve their disagreements through arbitration.
The two attorneys had both a personal and professional relationship in which one was an associate in the other's law firm. Both relationships ended and the former associate filed suit for both equitable distribution of property and on employment claims.
The court here agreed with the trial court that the two had not entered into an arbitration agreement. Rather, the parties had agreed only to non-binding arbitration in order to try to settle their dispute. "Non-binding" was given its ordinary meaning by the court in reaching its result. (Mike Frisch)
Wednesday, May 4, 2011
The New York Appellate Division for the Second Judicial Department held that a client may be responsible for paying a court reporter after the law firm that contracted for the services (Dreier LLP) declared bankruptcy.
The court sets out the issue:
On this appeal, we are asked to determine whether a court reporting agency may recover payment for services rendered directly from the client instead of being limited to pursuing the attorney who, as the client's agent, engaged the agency. For the reasons set forth below, we hold that although a court reporting agency may obtain payment for services rendered directly from the attorney who engaged it, a court reporting agency is not precluded from recovering those fees directly from the client.
Here, the plaintiff contended that it was not a party to the defendants' engagement letter with Dreier, LLP, and should not be bound thereby. The plaintiff maintained that the defendants are responsible for paying its fees related to services obtained by Dreier, LLP, on their behalf, inasmuch as General Business Law § 399-cc was never intended to allow a client, such as the defendants, to evade responsibility for paying the reporter and that the ultimate responsibility for the reporting fees lies with the client.
The defendants, in response, relied upon the Dreier, LLP, engagement letter and the payments they made thereunder. Thus, they contended that any payments owed to the plaintiff were or should have been paid from the monthly payments received by Dreier, LLP, from the defendants.
Given that the plaintiff sufficiently stated a cause of action to recover damages for breach of contract by alleging all of the essential elements; to wit, the existence of a contract, the plaintiff's performance pursuant to that contract, the defendants' breach of their obligations pursuant to the contract, and damages resulting from that breach (see JP Morgan Chase v J.H. Elec. of N.Y., Inc., 69 AD3d 802; Furia v Furia, 116 AD2d 694), and General Business Law § 399-cc does not prohibit the plaintiff from seeking its fee directly from the defendants as the clients, it was improper for the Supreme Court to have, in effect, granted that branch of the defendants' motion which was to dismiss the complaint...
Tuesday, March 29, 2011
The United States Court of Appeals for the Seventh Circuit affirmed the conclusion that an Indiana couple fraudulently understated their 2001 income. The court forewarns the reader of the opinion:
Appellants [husband and wife] (a married couple from Brownsburg, Indiana) ran into trouble with the Internal Revenue Service (IRS) in 2003, when a revenue agent began auditing their 2001 joint tax return. Through this audit, the agent discovered a web of corporate and partnership entities serving dubious purposes, undocumented financial transactions, and inconsistent reports regarding the [couple's] income. Incongruously, although [the husband] engineeered much of the financial and legal tangle that landed him and [his wife] in hot water with the IRS, [he] is a licensed Indiana attorney with a practice focused on business planning and tax matters. We outline the confusing maze of entities and financial dealings below, but be forewarned that much of it makes little business or legal sense as the [couple] fail to dispel the perception underlying the Tax Court's finding that the perplexing arrangements served as nothing but the after-the-fact attempts to avoid taxation on the substantial income [he] earned in 2001.
The court held that the Tax Court's reliance on a number of "badges of fraud" was not clearly erroneous. These factors included the couple's education and experience, the omission of over $2.5 million in income, the failure to maintain records, commingling business and personal assets, and the absence of a business purpose in moving funds around. (Mike Frisch)
Monday, March 28, 2011
The New York Appellate Division for the Second Judicial Department affirmed an order denying a defendant law firm's motion to dismiss claims of fraud and negligent hiring:
In May 2008, the plaintiff Robin Shimoff, through her attorney, tendered a check in the sum of $710,000 to the defendant Mario A. Tolisano, an employee of the defendant Law Office of Howard R. Birnbach (hereinafter the law office), to cover the purchase price of certain parcels of real property. In July 2008, Shimoff tendered to Tolisano the additional sum of $502,500 as a down payment for the purchase of certain other real property. Shimoff apparently borrowed the aforesaid funds from the plaintiff Jacob Selechnik. No closings of title occurred on either transaction, and the plaintiffs later learned, among other things, that Tolisano, whom they believed to be an attorney representing the seller of the properties, was not a licensed attorney. The plaintiffs commenced this action in November 2009, inter alia, to recover damages for fraud and negligent hiring and retention, and the law office moved to dismiss the complaint for failure to state a cause of action pursuant to CPLR 3211(a)(7). The Supreme Court denied the motion. We affirm.
The court concluded:
Here, while the complaint contains no allegations of any affirmative misrepresentations by the law office itself, a fraud cause of action was sufficiently stated by the allegations contained therein which give rise to permissible inferences that the law office had certain knowledge or information regarding Tolisano's employment with it and his activities thereunder that were not ascertainable by the plaintiffs.
The complaint alleges, inter alia, that Tolisano was employed by the law office, held himself out as an attorney with the law office, and distributed his business card to the plaintiffs, which, while not explicitly stating that he was an attorney, indicated that he was employed by the law office. Furthermore, the complaint alleges that at the time Tolisano made his representations to the plaintiffs, which induced them to turn over their money to him, the law office knew or should have known "that its attorney-employee-impersonator, cloaked with the apparent authority that comes from employment at the [law office], would offer false representations." These allegations were supplemented by the affidavit of the plaintiffs' real estate attorney, wherein he stated that when he met with Tolisano, Tolisano said he was a lawyer and gave him a business card "that made it appear as if [Tolisano] was a lawyer at the [law office]," and that during the pendency of the transactions, the plaintiffs' attorney sent a certified letter to Tolisano at the law office and made several telephone calls to the law office asking to speak with Tolisano and left messages, to which he received no reply.
Based on these allegations, the complaint adequately states causes of action to recover damages from the law office for the torts allegedly committed by Tolisano under the doctrine of respondeat superior and on the theory of negligent hiring and retention, which are not required to be pleaded with specificity.
Monday, March 14, 2011
A Starbucks and the owner of its premises won summary dismissal of a personal injury claim by an infant plaintiff whose injuries allegedly occurred in the following circumstances:
The infant plaintiff allegedly sustained injuries when a cup of hot tea spilled on him at premises leased by the defendant Starbucks Coffee Company (hereinafter Starbucks) from the owners, Allen Brafman and Edith Brafman (hereinafter together the Brafmans). Immediately prior to the accident, the infant plaintiff's nanny allegedly was wheeling him in a stroller up a ramp with her right hand, and balancing the cup of tea on a plate with her left hand. The plaintiffs commenced this action against Starbucks and the Brafmans, alleging that the accident was caused by a dangerous and defective condition on the premises. The Brafmans moved for summary judgment dismissing the complaint and all cross claims insofar as asserted against them on the ground that they were out- of-possession landlords who owed no duty of care to the plaintiffs, and Starbucks cross-moved for summary judgment dismissing the complaint and all cross claims insofar as asserted against it. The Supreme Court denied the motion and the cross motion. We reverse.
Starbucks established its prima facie entitlement to judgment as a matter of law by demonstrating that the plaintiffs were unable to identify a dangerous or defective condition actually causing the accident. In opposition, the plaintiffs failed to raise a triable issue of fact.
Since the affidavit of the plaintiff's nanny was insufficient to raise a triable issue of fact as to whether the ramp upon which the she allegedly wheeled the stroller was negligently designed, installed, or maintained, we need not address Starbucks' contention that the Supreme Court, in denying its cross motion for summary judgment, erred in considering that affidavit because the nanny's identity was not properly disclosed by the plaintiffs in their responses to the defendants' demands for disclosure or a preliminary conference order. However, the affidavit of the plaintiffs' expert, which the plaintiffs also submitted in opposition to the cross motion, should not have been considered by the Supreme Court, since that expert witness was not identified by the plaintiffs until after the note of issue and certificate of readiness were filed, attesting to the completion of discovery, and the plaintiffs offered no valid excuse for the delay. Accordingly, the Supreme Court should have granted Starbucks' cross motion for summary judgment dismissing the complaint and all cross claims insofar as asserted against it. (citations omitted)
Wednesday, March 9, 2011
The Mississippi Court of Appeals has held that a covenant not to be compete was reasonable and enforceable, reversing the judgment of the lower court. The circumstances of the case are a bit unusual, if not unique.
The employee went to work with the company as a teenager with little prior work experience. She was a broker of meat and poultry products between buyers ans sellers throughout the nation. At the outset, she signed a covenant not to compete with the company if she departed.
She married the son of the owners of the business. He got sick and needed a kidney transplant. A close friend donated a kidney. The donor and the employee had an affair after the transplant operation. The husband learned of the affair. He took the news badly. They divorced with a degree of acrimony and she left her job with the business.
The litigation here involves her employment by a direct competitor. (Mike Frisch)
Tuesday, March 1, 2011
From the web page of the Ohio Supreme Court:
The Supreme Court of Ohio will accept public comment until March 29 on a new field of law area of specialization: insurance coverage law.
Gov. Bar R. XIV, Section 2(C)(1)(a) through (e) requires that the Commission on Certification of Attorneys as Specialists (CCAS) recommend to the Supreme Court the fields of law subject to specialization designation.
On June 25, 2010, the Commission proposed insurance coverage law as a specialty area in Ohio with the following definition: the area of law involving issues between insurers and policy holders concerning the rights and responsibilities that arise under insurance policies, including the duty of good faith.
The Supreme Court established the CCAS to identify specialty areas and to set minimum standards for certification as specialists. After a specialty area definition recommended by the CCAS has been approved by the Court, agencies that have programs of certification in the defined area apply to the CCAS for recognition that their program meets the minimum standards. By this process, the agency that applied is approved to certify Ohio attorneys as specialists in the field of law.
Access the text of the proposed area of specialization. Comments should be submitted in writing to:
Susan Christoff, Director, Attorney Services Division
Supreme Court of Ohio
65 S. Front St., Fifth Floor
Columbus, Ohio 43215
Thursday, February 17, 2011
The New York Court of Appeals has reversed the Appellate Division and granted a defendant law firm's motion to dismiss the complaint on the condition that the law firm waive any statute of limitations defense that might be available in Texas.
The law firm had moved (and lost) a forum non conveniens motion seeking that the matter be heard in Texas:
This case involves the alleged malpractice by Texas lawyers representing Alaskan clients, whose principal places of business are in Connecticut, in a transaction with Texas companies that involves land in Texas. Further, the documentary evidence is located in defendant's Texas office, as are most of the attorneys who allegedly committed the malpractice and most of the potential witnesses.
Monday, February 14, 2011
Posted by Jeff Lipshaw
For those of you out in the practice world who are curious about how academic legal theory and first year contract law pedagogy might be combined with real world intuitions and experience, I've posted a new article, Metaphors, Models, and Meaning in Contract Law , on SSRN.
The gist of it is this: the dominant metaphor for contract in practice and the academy is "contract as model." One upshot of this metaphor is an article of faith (among lawyers at least) about the rational linkage between what is going on before the fact in the creation of the contract, and what gets litigated after the fact. Sometimes the metaphor is appropriate, and sometimes it is not. I've played with my intuition and admitted casual empiricism that the contract, even in a heavily negotiated deal, is as often the "thing" that Arthur Leff conceptualized in his iconic 1964 American University Law Review article as it is a model or map of the transaction . I've proposed an alternative metaphor of "journey" in which the objectification of an agreement in the contract (a milestone, metaphorically speaking) is often as important as the content itself. The piece contains illustrations I use in class (see Wood v. Lucy, Lady Duff-Gordon, above, but you have to read the article to get the context), as well as a discussion of how I use the fundamentals of metaphor theory to explain hard cases in which the parties assert, and judges must choose between, competing legal "algorithms".
Why does there seem to be such a wide gap between the subject matter of the usual first-year contracts course and what practitioners (particularly transactional lawyers) actually experience? My claim is that it is the result of a powerful theoretical system whose hallmark is a closed linguistic system—in the coinage of one noted scholar, “an epistemic trap.” The subject matter of contract law requires dealing with legal truth not just as a coherent body of doctrine, but also correspondent in some way to actual self-legislation of the parties. I propose escaping the trap with a turn to metaphor theory. The underlying metaphor common to prevailing conceptions of contract law, and which demands some form of correspondent truth from the contract (and contract law), is “contract as model of the transaction.” I suggest alternative metaphors of categories as containers, ideas (including “the meeting of the minds”) as objects, and the transaction life cycle as a journey. The goal is to focus on the “subjective to objective” process of the transactional life cycle, and to consider the perspectives of the participants in or observers of the transactional life cycle, and the models and metaphors that shape the conceptual frames from within which those participants and observers perceive and make use of the legal doctrine.
February 14, 2011 in Abstracts Highlights - Academic Articles on the Legal Profession, Law & Business, Law & Society, Lipshaw, Teaching & Curriculum, The Practice | Permalink | Comments (0) | TrackBack (0)
Thursday, December 30, 2010
Posted by Jeff Lipshaw
The "Small Business" section of the New York Times has an article this morning about models small and entrepreneurial businesses are using to hire law firms, and strategies the firms are using to serve them. I'm not sure there's anything really new in here, but it does bring up a point that legal educators and young lawyers need to appreciate, particularly for those law grads who aren't headed to the traditional big law associate posting. Lawyers to small businesses are often the first and only outside adviser the firm has ever had. Listen to some of these snippets: "Make sure the attorneys understand your business - who your customers are, what your biggest areas of risk are, and so on." "One issue is a traditional distrust of lawyers shared by many entrepreneurs: 'They see the lawyer as saying no to daring business moves." "I needed access to a trusted source and only to pay for it when I use it, like weekends and so forth. I use my attorney also to brainstorm ideas."
This is consistent with my view that business lawyers (or at least effective or successful one) can't simply give clients the law and expect them to make the integrated business/legal decision. For more on this from a theoretical standpoint (with practical examples), see The Venn Diagram of Business Lawyering Judgments: Toward a Theory of Practical Metadisciplinarity, 46 Seton Hall L. Rev. 1 (2011).
Monday, November 29, 2010
The Utah Supreme Court found that a district court had abused its discretion by denying a plaintiff leave to amend his complaint against his former employer and supervisor. Those allegations included:
...[the supervisor] had engaged in numerous questionable management practices. Specifically, when an employee did not meet performance goals, [the supervisor] would draw a mustache on the employee using permanent marker or he would remove the employee's chair...he would patrol the employees' work area with a wooden paddle, which he would use to strike desks and tabletops. [The employer] was aware of [his] actions and encouraged his behavior because it led to increased revenue."
Could things get worse?
You bet, according to the complaint. The supervisor asked for volunteers for "a new motivational exercise." The exercise was waterboarding, after which the plaintiff alleges that he was told that he and his co-workers "should work as hard at making sales as [he] had worked at trying to breathe."
The case was remanded for further proceedings.
Wired has information about the suit here. (Mike Frisch)
Friday, November 19, 2010
The Nevada Supreme Court affirmed the grant of summary judgment to a law firm defendant because the plaintiff had already achieved a full recovery in a claim against a departed firm partner. The court lays out the facts:
Elyousef, a client of the O’Reilly firm, entered into a business transaction with his attorney, C. Dean Homayouni, who was employed by O’Reilly during the early stages of the transaction. The transaction resulted in Homayouni obtaining Elyousef’s interest in Nevada Oil and Land Development, LLC (NOLD), which in turn owns a gas station in Las Vegas. Homayouni left O’Reilly because the law firm opposed the transaction due to a conflict of interest between Homayouni and the firm’s client, Elyousef.
When the business relationship soured, Homayouni sued Elyousef. Elyousef filed a counterclaim against Homayouni, alleging that Homayouni negligently caused him to lose his interest in NOLD. The district court awarded Elyousef $150,000 in damages plus $225,631.22 in costs and fees. Homayouni subsequently settled with Elyousef for $50,000 plus the return of his interest in NOLD. Elyousef then sued O’Reilly for breach of fiduciary duty, negligence and legal malpractice, negligent supervision, respondeat superior, breach of contract, and breach of implied covenant of good faith and fair dealing. The district court granted summary judgment in O’Reilly’s favor, concluding that the doctrines of double recovery and issue preclusion barred Elyousef’s ability to recover from O’Reilly. On appeal, Elyousef maintains that neither doctrine bars him from further recovery.
Monday, October 11, 2010
Posted by Jeff Lipshaw
Imagine how difficult public debate in these partisan times can be for someone like me whose motto is "extremism in the pursuit of moderation is no vice." I haven't seen Inside Job, but I have read the reviews, good and bad, and I think I get the point. I confess to never having seen a Michael Moore "documentary," A Civil Action, or Erin Brockovitch. But this is from a reviewer, Keith Uhlich in TimeOut New York, who liked it, and it doesn't inspire me to fork over the twelve bucks: "Ferguson uses innumerable tricks of the slick-doc trade (pop-music montages; gotcha smash cuts; celebrity narration—in this case, Matt Damon). Even the title is a loaded, tragedy-invoking provocation." Nor am I enticed by the appeal to post-partisanship in the pursuit of outrage, as Uhlich describes it: "Ferguson’s trying to move beyond the political dichotomies that divide us into bellowing factions and show how rampant greed screws us all."
Since I'm about to fly off to Minneapolis to give a milk-toasty response (see above motto) to the question "Did Capitalism Fail?" (my answer: Capitalism Didn't Fail, But the Metaphors Got a "C"), I decided I ought to think for a little bit this morning whether I was wrong, and director Ferguson was right. I thought that particularly because my friend Frank Pasquale at Concurring Opinions also liked the movie a lot, and that means I have to take it seriously, if for no other reason that Frank has taught me so much on other issues. As I expected, Frank gets past the slick doc stuff (I cringe at the idea of watching the 60 Minutes-style "did you stop beating your wife?" questions) and suggests there are four arguments being made: (1) Wall Street compensation is loopy; (2) the Obama administration hasn't done anything to create reform, instead relying on the same bankers as the Bush administration; (3) the Obama administration is as taken with the revolving door cabal of "Goldman Sach alums and fail-upward regulators" in which it is no longer possible to determine who captured whom; and (4) the U.S. has turned into a financial (rather than mechanical, civil, bio, or electrical) engineering power bound to lose out to China and others in the long run. I also think Frank's review is honest in describing its own position (see contra my motto above): "I’ll be looking beyond the core of the economics profession for a compelling account of a fair and just society. When it comes to finance, progressives should also realize they have few friends in the current administration."
I realize, however, that my milk-toasty approach hasn't quite failed me (I can't speak for others). My essay is about the relationship between causation, as scientists would explore it, and meaning, as the rest of us would derive it. The approach of Inside Job is less an explanation of what happened than a narrative of its meaning. I'm still agnostic on the question whether "rampant greed screws us all" mainly because I like my MacBook and my iPhone, and I think they are the products of rampant greed. On the other hand, I recently turned down the opportunity to invest in a derivative akin to a synthetic CDO in part because the idea of it bugged me, even though I had no good response to my broker why it was any worse than investing in the underlying market.* As I note in the essay, one way to interpret events for their meaning is to decide whether misfortune is the result of gods or demons, and sometimes it is. Sometimes, however, it is "stuff happens." (I decided I wanted this post printable someday in a family newspaper.) We are, however, imbued with a tendency to teleology, that is, the seeing of purpose (even if purpose is no more than "function") when things like solar systems, automobiles, and macro-economies seem to work with a predictability regularity. I like graphs, however, and I came up with this one as I was walking to the T this morning:
As you can see, I had no problem placing the Salem "witches," Saddam Hussein, and Andrew Fastow, one of the architects of the Enron scam, on the continuum. In the spirit of the movie, however, I wasn't quite sure where to place the rest of these names (or the myriad others - like God, the boogie-man, the Trilateral Commission, or the Bohemian Grove - that occurred to me).
My point is not that there are never culpable demons, but that sometimes those who we think are culpable demons are not. I have not yet been persuaded by the level of public discourse (Ann Coulter? Sarah Palin? Michael Moore? Glenn Beck? Jon Stewart? Stephen Colbert?) that we can say we've reached a level of rationality such that witch trials were then, and now is now. What is comforting is that at least I can have a reasoned and civil discussion with Frank, without the sound bites, even if we don't agree!
*UPDATE: Actually, I did come up with a reason or rationalization but it's almost as complicated as the investment vehicle, so I won't bother explaining it.
Monday, August 2, 2010
The New Jersey Supreme Court has held that a title insurance company is not liable for an attorney's theft of funds involved in the real estate transaction. The attorney had already stolen the entrusted funds when the transaction was completed. The court found that there was no agency relationship between the title insurer and the attorney.
The clients had filed a complaint against both the attorney and the title insurance company with the Lawyers' Fund for Client Protection. The fund sought to enforce the award that it had made to the clients, but the claim was dismissed by the trial court as to the company. The Appellate Division reversed the trial court on agency grounds.
Here, the court held that the evidence did not establish liability on the company's part. (Mike Frisch)
Wednesday, July 28, 2010
The New York Appellate Division for the First Judicial Department affirmed the denial of a motion to move a legal malpractice action to Texas. The case involves allegations that the defendant law firm identified the wrong entity entitled to payment from the client, causing the client to pay the wrong entity.
A dissent makes a powerful argument in favor of Texas, recounted in part below:
The motion court never expressly applied the factors that go into deciding a forum non conveniens motion but seemed to recognize that this case had little connection to New York. Instead, the court denied the motion because the parties represented that the Texas statute of limitations was shorter than New York's and defendant did not agree to the application of the borrowing statute. Nevertheless, this case clearly does not belong in New York. Defendant maintains an office here, but none of the attorneys at the New York office were involved in the events underlying this case. Plaintiffs' principal places of business are now in Connecticut and virtually all the underlying events occurred, for the most part, after plaintiffs had moved their offices. That plaintiffs previously maintained places of business in New York is not relevant, because the documents and witnesses are no longer within this jurisdiction.
More important, there will likely be a need for testimony from non-party witnesses, such as individuals from the two Apollo entities, who are located in Texas. Plaintiff argues that there will be no need to call anyone from Apollo. I cannot agree. Rather, testimony from Apollo witnesses may be integral to determine whether defendant law firm was negligent in confusing the Apollo entities. For instance, the determination could depend on what someone at one of the Apollo entities communicated to defendant. The lead attorney on the underlying transaction, who lives in Texas, no longer works for defendant, and as with the Apollo witnesses, it is unlikely a New York court itself can compel his live testimony without assistance from a Texas court. This case thus represents an unnecessary burden on the New York courts. In addition, all records that either Apollo entity has are located in Texas. Further, the events pertinent to this case all occurred outside New York, the documents are in Texas and, as this case concerns what defendant did or did not do, all of the relevant witnesses are in Texas. Finally, Texas certainly has an overriding interest in regulating the conduct of the lawyers admitted in that state. (citation omitted)
Thursday, June 24, 2010
An order denying the disqualification of Buchanan Ingersoll based on a former client conflict was reversed by the West Virginia Supreme Court, which granted a writ of prohibition. The court recited the following facts:
Bluestone Coal and Bluestone Coal Sales, the petitioners herein, are companies engaged in the production and sale of coal. Both Bluestone companies are part of a conglomerate of twenty-nine affiliated closely-held companies owned and operated by James C. Justice, II (hereinafter “Mr. Justice”). These affiliated companies share one common General Counsel, Mr. Stephen W. Ball (hereinafter “Mr. Ball”), and the majority of these companies, including the two Bluestone companies involved in this case, are headquartered in the same office building in Beckley, West Virginia.
Mountain State, one of the respondents herein, owns and operates a coke plant in Follansbee, West Virginia, and purchases coal to convert into coke; Mountain State's principal place of business is in Wheeling, West Virginia. On October 5, 2007, Mountain State and Bluestone Coal Sales entered into a coal supply agreement whereby Bluestone Coal Sales agreed to supply all of the coal required by Mountain State's Follansbee coke operations. Bluestone Coal served as the guarantor for Bluestone Coal Sales' obligations under this agreement. When Bluestone Coal Sales failed to deliver the requisite amount of coal in accordance with the agreement's terms, Mountain State filed suit against both Bluestone Coal Sales and Bluestone Coal in the Circuit Court of Ohio County on September 9, 2008.
The law firm representing Mountain State in the underlying litigation, whose disqualification the Bluestone companies seek, is Buchanan Ingersoll. Buchanan Ingersoll is a large, nationwide, law firm, whose principal place of business is in Pittsburgh, Pennsylvania. At various times, Buchanan Ingersoll has been retained as counsel for certain of Mr. Justice's companies, including Dynamic Energy, Inc.; Harlan Development Corporation; James C. Justice Companies LLC; and Sequoia Energy, LLC, for which representations engagement letters were signed. Buchanan Ingersoll also has either directly represented or provided legal counsel to both Bluestone Coal and Bluestone Coal Sales; however, the exact nature of the relationship between Buchanan Ingersoll and the Bluestone companies, as well as whether there currently exists an attorney-client relationship between these entities, is disputed by the parties and will be discussed in further detail in Section III.B. of this opinion. See Section III.B., infra. It appears that Buchanan Ingersoll began
providing legal services for both Mountain State and Mr. Justice's companies in approximately 2005.
Following Buchanan Ingersoll's institution of Mountain State's Ohio County lawsuit, the Bluestone companies moved the circuit court to disqualify Buchanan Ingersoll from continuing its representation of Mountain State. In support of their motion, the Bluestone companies variously contended that they were current clients of Buchanan Ingersoll such that continued representation of Mountain State in an adverse capacity would violate Rule 1.7 of the West Virginia Rules of Professional Conduct; that they were former clients of the law firm such that continued representation would violate Rule 1.9; and that, because certain, individual attorneys had formerly represented the Bluestone companies, their disqualification should be imputed to the entire law firm in accordance with Rule 1.10. By order entered November 20, 2009, the circuit court denied the Bluestone companies' motion to disqualify Buchanan Ingersoll, ruling that “no disqualifying conflict exists with respect to Buchanan Ingersoll & Rooney, LLP's representation of Mountain State Carbon, LLC, Plaintiff, in this action.”
The court found the matters substantially related:
...it is apparent that the nature of Buchanan Ingersoll's representation of Mountain State in the underlying proceedings is “substantially related” to its prior representation of Bluestone Coal insofar as both the former and subsequent representations concern the Bluestone companies' performance, or lack thereof, under coal supply agreements under the factual, circumstantial, and legal contexts of the two cases.
Factually, the two representations are virtually the same. Both the Coal Sourcing case and the instant litigation involve the same type of contract: a coal supply agreement. The agreements both involve the same mine, i.e., the Keystone Mine, and the same coal from that same mine. In both proceedings, Bluestone Coal has been named as a party defendant with respect to the failure to deliver coal as specified by the subject coal supply agreements and is ultimately liable for any obligations arising thereunder.
Circumstantially, the two representations also are substantially related and strikingly similar insofar as “the current matter involves the work the lawyer performed for the former client.” Both cases allege deficient performance of a coal supply agreement, which is precisely the type of case in which Buchanan Ingersoll formerly represented Bluestone Coal. Specifically, Buchanan Ingersoll formerly represented Bluestone Coal as a defendant defending against allegations of a failure to perform a coal supply agreement in the Coal Sourcing case, and now is currently representing Mountain State as a plaintiff claiming that the coal for which it had contracted has not been delivered pursuant to the governing coal supply agreement in the instant litigation.
Legally, the two representations are nearly identical such that “there is a substantial risk that representation of the present client will involve the use of information acquired in the course of representing the former client, unless that information has become generally known.” ...Under the facts of this case, not only is there a substantial risk that the attorney could have used information obtained from the former client in the prior representation, there is actual evidence that such knowledge has been used to the former client's detriment. In both cases, Bluestone Coal was named as a party defendant. During the course of the Coal Sourcing litigation, Bluestone Coal asserted a defense of force majeure to excuse its nonperformance of the subject coal supply agreement. Reliance on this defense required Bluestone Coal to reveal its confidential coal supply agreements to its counsel. During the litigation initiated by Mountain State, Buchanan Ingersoll, on behalf of Mountain State, requested documents from Bluestone Coal regarding its prior reliance on the defense of force majeurebefore Bluestone Coal had filed an answer to Mountain State's complaint or had indicated what, if any, defenses it intended to assert in response to such claims. Because Bluestone Coal had not yet attempted to rely upon the defense of force majeure, and had not even had an opportunity to respond to Mountain State's complaint, it is apparent that Buchanan Ingersoll, from its former representation, possessed sufficient knowledge of Bluestone Coal to anticipate the defense upon which it may have relied in response to Mountain State's complaint. This strategy indicates that Buchanan Ingersoll used information it obtained from its former representation of Bluestone Coal to the detriment of its former client. Thus, because the subject matter of Buchanan Ingersoll's former and subsequent representations are virtually the same, it is clear that the third criterion for disqualification has been satisfied.
The court found that the elements of a prohibited former client conflict had been established. (Mike Frisch)
Saturday, June 19, 2010
Posted by Jeff Lipshaw
The always insightful and interesting Howard Wasserman (FIU, left) provoked a discussion over at PrawfsBlawg on "student centered" teaching that, in the comment thread, turned into that ancient debate about all those theorist law professors at odds with their practical minded students. I posted a comment, responding to "Vladimir" and "BL1Y", that I thought was worth re-posting here. I think, as a long time practitioner AND law professor (me) interested in highfalutin' theory (that is, given my odd background, I think I could teach a jurisprudence class, a trial skills class, and a transactional skills class), I have some credibility on both sides of the issue.
How the legal academy came to its present configuration wasn't the result of some logical exercise, but a matter of historical happenstance. That's not uncommon. Most intractable social and political realities arise that way (see Northern Ireland or Israel-Palestine). The reality now is that you are both correct in your fundamental observations: there IS a gap between what most law students want (unless they go to Yale) out of their educations, and what most law professors want out of their careers. It may well be that something like the financial crisis of the last couple years, and the shrinking of big law firms engenders a complete restructuring of the legal academy into a Ph.D. like "department of jurisprudential studies" with its place in the College of Arts and Sciences, and more trade school like professional schools, but I doubt it for two reasons that undercut both polar positions.
1. Law professors can't merely be theorists and have their gravy train survive. What allows so many law professors to engage in theory is the fact that their students who have little such interest fund the theoretical pursuit. First, law schools are notorious cash cows. When is the last time you heard of anyone organized a proprietary or for-profit sociology department? The cost of providing the education, unlike in the hard sciences or med schools, is relatively low compared to the market price of the tuition. Second, it's the salaries in private law firms that by and large set the benchmark for law professor salaries. Even if you take a pay cut to move into academia from the big law firm that is the typical immediate pre-professor job, you aren't getting paid like an assistant professor in the English department.
2. Law students don't REALLY want to be trained in the legal equivalent of the barber college or truck driver school. While law students may get frustrated with the theory often foisted upon them by their professors, the present paradigm in the academy (and, honestly, this preceded the influence of US News, because the elite schools in US News were the elite schools when Bob Morse was still wearing short pants), they show over and over again that they are significantly influenced by the brand of the law school, regardless of the specifics of the pedagogical program. And the brand, as the institution of the legal academy has developed, has a lot to do with all that theoretical stuff law professors are churning into law review articles. I'm not arguing that is good or bad (although I wouldn't be a law professor just to teach; it's the theory that floats my boat after all those years of practice); it's just the reality. Seriously, tell me that a rational student, faced with the choice of Stanford or UCLA, with all those practice-challenged theorists, or an excellent "skills-focused" third or fourth tier school, and no significant difference in tuition (see point 1) (and maybe not even then, but that's an interesting econometric question), wouldn't choose Stanford or UCLA?
My "dean speech" (that nobody has asked me to give) is that this is an intractable polarity that the profession is simply going to have to manage by way of leadership that provokes empathetic perspective at both poles. The poles aren't coherent, and there is no rule of nature that says they have to exist, much less coexist. But they can, just like lots of polarities, continue to coexist. Faculties simply have to make concessions to the concerns and needs of students or their gravy train is going to disappear; students and alumni are going to have to acknowledge the driving forces of academic prestige and advancement, or they are going to lose that patina (and brand, and earning power) that comes with a law degree other than from ITT Tech, DeVry (which owns a med school on the island of Dominica, "a lush, classically Caribbean environment"), or the University of Phoenix, all of which would be perfectly capable of offering what BL1Y wants (InfiLaw already does).
Monday, June 7, 2010
A majority of the Georgia Supreme Court held today that the Administrator of the state's Fair Business Practices Act has no authority to compel a law firm engaged in debt collection on behalf of creditors to comply with his investigative demands. The majority found that
...the nature of ...representation of clients in a legal capacity is not destroyed by the utilization of "staffing, training, equipment or support personnel." (citation omitted) Indeed, the manner in which such support is used and managed in the representation of clients is part of the actual practice of law and, therefore, does not involve the entrepreneurial or commercial aspects of professional practice within the contemplation of the [Act].
Justice Melton, joined by Justices Hines and Nahmias, dissented:
Because the [Act] is a law of general application that has nothing to do with impermissibly regulating the practice of law in violation of separation of powers, I must respectfull dissent from the majority's erroneous conclusion that the remedies relating to [the law firm's] allegedly abusive debt collection practices "must be found outside the [Act]." (quoting the majority) Investigating violations of the law that happen to involve lawyers does not automatically amount to impermissibly "regulating" the practice of law, as a lawyer who violates the law is just as subject to investigation as any other common offender.
Wednesday, June 2, 2010
Posted by Alan Childress
One of my students doing a brief "independent study" on legal ethics wrote her paper on the 2009 Louisiana bar regulation of advertising, including internet and web advertising and blogging, and certain per-use fees and screening the bar requires. The rules were modeled on the restrictive Florida rules. The Louisiana act was challenged in federal district court late in '09 to a mixed result, as she details -- the judge nixing some procedures and fees while approving other parts of the act.
It's an interesting story and she helpfully explains what this means in nearly 25 other states. The student is Brittany Buckley--now a proud Tulane grad--and she said I could share it on LPB. It is called Intersecting the First Amendment, Ethics, and the Internet: Memo to Other States From the Louisiana Experience, and you can Download Buckley_ch 1 here.
This paper was turned into chapter one of the student book, called Hot Topics in the Legal Profession~2010, sold digitally on Amazon and Smashwords in nine formats including simple PDF (plus soon available for Nook and Apple--though iPad can read it now on its Kindle app). You do not need to own a Kindle to read Kindle books, but anyway there is always pdf or rtf from Smashwords. I blogged about the project here and included my Foreword as a download. This chapter should give you another taste of what the overall book includes, such as friending judges and judicial elections; ancillary businesses of law firms under labor law, actual friendships of judges, settlement ethics, and the Caperton case and final result. Get it while it is hot, and remember that sales benefit Tulane's nonprofit Public Interest Law Foundation.
The ethics book is featured on my publishing website at Quid Pro Books. We seek submission of books or monographs on law, legal history, and law and society -- and of course legal ethics -- plus other academic subjects. For information for you to submit your dissertation, here is my earlier post, but we also publish panel presentations, proceedings, and original manuscripts. Information for prospective authors is here.