July 28, 2010
Don't Mess With Texas
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)
July 26, 2010
An ethics opinion from Nebraska deals with ethics of the use of the "Of Counsel" designation. The summary:
An attorney may only be listed on firm letterhead and in firm advertisements as "Of Counsel" where there is close, ongoing, regular, and frequent contact with the firm for the purpose of providing consultation and advice.
A firm name may retain the name of a retired partner, but not if the retired partner resumes the practice of law elsewhere, even if he maintains an "Of Counsel" relationship to the former firm.
July 12, 2010
Posted by Jeff Lipshaw
I drove up I-75 from the Detroit area to Charlevoix yesterday, and was listening to the baseball game somewhere near Flint (WTRX, 1330-AM, part of the Detroit Tigers Baseball Network*) and heard an ad that I have to admit caught my attention. I've debated whether I really wanted to give this lawyer the free advertising that this post would entail, but what the heck. I leave to Mike and Alan to tell me technically whether there's a professional responsibility issue here; I can't decide if the lawyer is doing a public service or not.
It was a pretty standard divorce lawyer's radio ad ("When Matrimony Turns to Acrimony"), but what caught my attention was that the URL for the website was "dumpmyspouse.com." It went by quickly, so at first I thought that was the URL for a law firm, and that seemed pretty squirrelly to me. Would you really be doing a service to your clients by sending out communications to the courts, lawyers, and the public with your e-mail as "firstname.lastname@example.org?" (I should add, by the way, that I looked at this particular lawyer's online resume, and he seems to be a fully qualified, upstanding guy.)
I was wrong, however, about the website. "Dump My Spouse" is not a law firm, or a law firm's URL. It is a private referral service, obviously originated by this particular Flint lawyer. It has a map of the state of Michigan with all 83 counties outlined, and you are supposed to click on a county to find a lawyer who is part of the "Dump My Spouse" referral network. You can register to be part of the network. I wasn't going to click through all 83 counties, but I clicked on a random sample and, as far as I can tell, this Flint lawyer is still the only member of the network, which may answer the question posed in the preceding paragraph.
De gustibus non est disputandum.
* When I'm in Michigan, I get to watch my beloved Tigers to my heart's content on Fox Sports Detroit, but this pleasure has been sullied somewhat by the fact that 1-800-CALLSAM, the quintessential wee hours cheap advertising personal injury law firm of my professional youth in the Detroit area, has obviously prospered to the point that it is now the major sponsor of the ballgames, including the CALLSAM Post-Game Report. I think it even has one of the advertising spots right behind home plate, so that you get to watch Justin Verlander aim his slider at the right side of the M in alternate innings. By the way, just to make it clear that I'm an equal opportunity curmudgeon on this issue, I would get almost as disgusted (note the Latin root by the way) when I'd be listening to "All Things Considered" on NPR, and find out that it was underwritten in part by Silk & Stocking, the biggest law firm in town, and one to whom I was sending thousands of dollars of our legal business, with some goony slogan like "It's an Uncertain World: Be Advised" or "We Know the Territory."
When Law Partner Spouses Divorce
When a married couple enter into a law partnership, the divorce and resulting termination of the partnership is likely to wind up as a published opinion. The lawyers married in 1987 and commenced the partnership in 1988. The partnership lasted about a year before one spouse (here the plaintiff)left the partnership. A divorce action was filed in 1999.
After the divorce, one spouse sued the other claiming that the fee-splitting agreement that was incorporated into the decree covered workers compensation matters as "personal injury" cases. The claim, if sustained, would have entitled that spouse to a share of fees. The Connecticut Supreme Court agreed with the lower court that collateral estoppel (from the divorce) barred the claim.
A dissent would find that the issue in the present litigation was not barred by collateral estoppel and that a trial on the merits should go forward.
June 30, 2010
Both Sides Now
The North Carolina Supreme Court held that a trial court did not abuse its discretion when it revoked the pro hac vice status of two attorneys in litigation against Abbott Laboratories and a hospital when a child contracted a rare form of meningitis shortly after birth. The court reversed the Court of Appeals and held "that the North Carolina Rules of Professional Conduct do not limit the trial court's discretion to revoke pro hac vice status."
Abbott moved to disqualify counsel after admission had been granted. The issue related to a contact between plaintiff's counsel and defendant's expert in a case in Kentucky. Plaintiffs put into the record the state circuit court decision in that "factually similar" case. In that case, the circuit court found that the plaintiff's attorneys had contacted and retained the expert not knowing that Abbott had already done so. Abbott was not a party to the litigation at that juncture but was a potential defendant. The court found that plaintiff's attorney deliberately failed to advise the expert that Abbott might be sued in the case. As a result, the "expert found himself on both sides in [the case]." However, the Kentucky court denied the motion to disqualify.
The court here concluded that the trial court had the inherent authority to revoke the admission. The Court of Appeals had reached a contrary conclusion by focusing on the Rules of Professional Conduct and, in particular, the choice of law provisions of Rule 8.5. The court found that Rule 8.5 applies to a bar discipline matter. The trial court found an appearance of impropriety in the contact with the expert and that the conduct was "inconsistent with fair dealings as reflected by Rule 4.3 of the Rules of Professional Conduct." Those conclusions were sufficient to invoke the trial court's inherent authority to disqualify counsel.
The court also found sufficient evidence of involvement in the expert contact to justify disqualifying both attorneys. (Mike Frisch)
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)
June 19, 2010
My "Dean Speech" on the Future of the Legal Academy
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).
June 18, 2010
Dismissed For Cause
The New York Appellate Division for the First Judicial Department affirmed the dismissal of claims brought by a former partner against his law firm:
The Partner alleged in the first action, inter alia, that his former employer, KBTF, defamed him personally, as well as his business reputation, by KBTF's issuance of a press release stating that he had been "terminated for cause," ". . . because of extremely inappropriate personal conduct," and through a subsequent statement by a KBTF partner that the termination had occurred after a "thorough" and "weeklong" investigation by KBTF. The press release and statement were made after a certain publication reported that the Partner had joined his new firm "after jumping ship" from KBTF, taking with him certain important clients, and that the new firm had "nab[bed]" him. When the trade publication did not issue what KBTF regarded as a sufficient correction, KBTF published the allegedly defamatory statements quoted above.
The IAS court correctly dismissed the Partner's defamation claims upon finding that the Partner's pleading, and a December 2007 e-mail which he had sent to a senior partner at KBTF, effectively admitted that he was terminated for cause due to his inappropriate personal conduct while at KBTF. A review of the pleadings and documentary evidence submitted supports the motion court's conclusion that KBTF's alleged defamatory remarks were substantially true...KBTF's use of the term "extreme" to qualify the Partner's inappropriate conduct, when viewed in the context of KBTF's warranted response to the new firm's initial announcement, would be viewed by a reasonable reader as constituting opinion, and thus would be privileged.
The Partner failed to state a claim for tortious interference with business relations, inasmuch as his pleadings asserted that KBTF's alleged defamatory statements were made to gain, inter alia, economic advantage, and were not published solely out of malice; nor, for the reasons stated above, can the Partner prevail on this claim on the theory that KBTF employed "wrongful means" in making the challenged statements...The Partner's injurious falsehood claim was insufficiently pleaded absent viable allegations that false and disparaging statements were made which harmed the Partner's property or business reputation...The Partner's equitable claim alleging KBTF was unjustly enriched because he performed "transition" services for KBTF without pay was properly dismissed inasmuch as the parties' partnership agreement covered compensation issues for partners both in good standing with the firm, and those like the plaintiff, who had been expelled.
The court properly dismissed the causes of action in KBTF's complaint given the vague, boilerplate allegations of damages which were insufficient to sustain the causes of action asserted therein(citations omitted).
April 26, 2010
Another Disqualification Overturned
The Maine Supreme Court vacated a judgment disqualifying a Washington, D.C. law firm in a matter in which an employee claimed a hostile and discriminatory work environment while employed at the Maine Education Association.
The Association hired the law firm to conduct an investigation of the employee's allegations. The employee was interviewed by a firm attorney with her own counsel present. The attorney advised the employee that he did not represent the Association but was conducting an independent investigation. The employee claimed, but the interviewing attorney denied, that she was assured of confidentiality. The attorney later substantiated the employee's allegations of discrimination.
When the employee filed a complaint against the Association, two other law firm attorneys entered an appearance as pro hac vice counsel. The attorney who had interviewed the employee had departed. The trial court granted the employee's motion to disqualify the law firm in the litigation.
Here, the court concluded that the moving party has the burden of establishing an affirmative ethical rule violation that would result in actual prejudice. General allegations will not suffice. The trial court must make express findings in that regard. The moving party had "failed to point to any particular prejudice she has suffered or will suffer and...the [trial] court made no such finding of actual prejudice."
A concurring justice would find the question closer than the majority and views it as "better practice not to have the same firm perform a discrimination investigation and represent the employer in any resulting litigation."
A dissenting justice would affirm the disqualification order, concluding that the interviewing attorney had misled the employee into believing he was an independent investigator and had disclosed information to the employer in violation of his commitment to her. The dissent also concluded that the attorney-investigator may be a necessary trial witness. (Mike Frisch)
Not Substantially Related
The New Jersey Supreme Court has reversed an order disqualifying a law firm from representing a municipality in defense of tax appeals during 2006-2007. The court concluded that the prosecution of individual taxpayer' 2009 tax appeals against the municipality was not "substantially related" to the matters handled on behalf of the municipality. The law firm had been disqualified by the Tax Court and the order was affirmed by the Appellate Division.
The court here found disqualification unwarranted because the law firm did not receive confidential information from the municipality that could be used against it in the taxpayer appeals: "In this record, the City has not met its burden of proving that, in fact, the current and former representations are 'substantially related. ' The superficial similarity of the subject matter of both representations-- the propriety of real estate tax assessments-- does not withstand closer scrutiny." The party seeking disqualification was unable to point to any confidential information that could be used against it. (Mike Frisch)
March 09, 2010
Claims Against Referring Firm Reinstated
A law firm that had represented a client sued the client for unpaid fees. The plaintiff firm also sued the law firm that had referred the client, claiming that the defendant law firm had represented that their clients (the Nassers) guaranteed payment of their fees. Plaintiff appealed the dismissal of claims against the referring law firm.
The New York Appellate Division for the First Judicial Department held that the claims were viable:
The complaint alleges that defendants-respondents represented to plaintiff law firm that they had authority from the Nassers to promise payment of $75,000 of the legal fees incurred by plaintiff's client when, in fact, they lacked the authority to bind the Nassers. Thus, the complaint alleges a viable claim for breach of the implied warranty of authority. The complaint also alleges that defendants-respondents falsely represented to plaintiff law firm that they specifically discussed the subject matter of their authority and representations with the Nassers. Thus, the complaint alleges a viable clam for tortious misrepresentation of authority and assurances of payment.
To the extent the motion court relied on the principle of apparent authority, lack of consideration and the statute of frauds to dismiss these causes of action, such was error. The doctrine of apparent authority is irrelevant because the fourth and fifth causes of action are not seeking to hold the principals (the Nassers) liable on the ground that defendants-respondents had apparent authority from the Nassers to make promises of payment. Rather, these causes of action are seeking to hold the agents, defendants-respondents, liable for contracts or representations they purported to make on behalf of the principal (the Nassers) while acting without authority from the principal. Therefore, the fact that the Nassers never manifested to plaintiff law firm that defendants-respondents were authorized to act on the Nassers' behalf has no bearing on the viability of the fourth and fifth causes of action. Moreover, regardless of whether or not there was consideration running to the Nassers, defendants-respondents can still be held liable for their own tortious conduct in making deliberate misrepresentations of fact that they had authority to make the promises that the Nassers would pay $75,000 of the legal fees incurred by plaintiff's client (see Restatement (Third) of Agency §§ 6.10, 7.01 ). In addition, the statute of frauds does not come into play since the fourth and fifth causes of action are not seeking to enforce the unwritten agreement by the Nassers to pay plaintiff's client's legal fees against the Nassers. These causes of action state a claim against the defendants-respondents regardless of whether there is an enforceable contract with the Nassers.
The sixth cause of action against defendants-respondents for tortious interference with defendant Jacques Nasser's contract with plaintiff law firm to pay $37,500 of the legal fees incurred by plaintiff's client was also improperly dismissed by the motion court. In order for there to be a viable claim there must be a valid contract between Jacques Nasser and plaintiff law firm. Pursuant to General Obligations Law § 5-701(a)(2), every agreement, promise or undertaking which is a special promise to answer for the debt of another is void unless it is in writing. Under a long-standing exception to the statute of frauds, however, the promise need not be in writing if it is supported by new consideration moving to the promisor and beneficial to him, and the promisor has become in the intention of the parties a principal debtor primarily [*3]liable (see Martin Roofing v Goldstein, 60 NY2d 262, 264 , cert denied 466 US 905 ; Carey & Assoc. v Ernst, 27 AD3d 261 ). At the very least, the allegations in the complaint raise an issue of fact concerning whether Jacques Nasser agreed to act as a guarantor in the event plaintiff's client did not pay her legal fees, in which case there was no enforceable contract, or whether in seeking to secure the benefit of the cooperation of plaintiff's client in connection with the lawsuit against him by her employer, Jacques Nasser offered to lift the burden of the obligation to pay legal fees from plaintiff's client and pay the law firm directly, in which case the contract would not be barred by the statute of frauds (see Rowan v Brady, 98 AD2d 638, 639 ). Therefore, the sixth cause of action for tortious interference with contract is reinstated.
Finally, the motion court erroneously dismissed the seventh cause of action against defendants-respondents which alleges tortious interference by defendants-respondents with the attorney-client relationship between plaintiff law firm and its client, defendant Srour. Insofar as the complaint alleges that defendants-respondents, knowing that Srour was represented by plaintiff law firm, met with Srour alone, without informing plaintiff law firm of the meeting, and approximately three days later, Srour discharged plaintiff law firm, it is sufficient at this stage of the proceedings, to state a viable claim, and therefore the seventh cause of action is reinstated.
March 04, 2010
Termination, Not Hints, Triggers Wrongful Discharge Claim
The District of Columbia Court of Appeals affirmed the dismissal of a former law firm associate's claim of failure to accommodate a disability on grounds that the claim was time-barred. However, the court reversed the dismissal of a related claim of wrongful discharge and remanded that claim for trial on the merits.
The associate was hired by the law firm in 2000. While attending a firm trial training program in April 2001, her dominant hand was burned. She suffered extreme pain and medical limits on her activities and took a month leave of absence for treatment. She requested a number of accommodations on her return and alleges that she was told by her supervisor "that if she was still injured, she was 'of no use to anyone.' " After a second leave of several months, she claimed that she was told not to seek substantive billable work until she could work without restrictions. There were further requests for accommodations and performance reviews. The associate attorney received notice of discharge from the firm in late October 2002.
The court here concludes that the statute of limitations for wrongful discharge began to run with the formal termination. Earlier threats or hints of poor performance do not trigger the statute. (Mike Frisch)
March 02, 2010
Scrambled Eggs And Malpractice
The Maryland Court of Special Appeals recently held that a trial court order that denied a motion to quash a subpoena on grounds of attorney-client privilege was not subject to an immediate appeal. One law firm had represented a divorcing wife and had secured the divorce. One aspect of the divorce obligated the husband to continue to designate the ex-wife client as a beneficiary of an insurance policy. He did not. A second lawyer assumed responsibility for the insurance issue, which resulted in a settlement.
The first law firm sued the client for unpaid legal fees. The former client countersued for legal malpractice based on the contention that the first firm had failed to notify the insurer of the provision that obligated the ex-husband to continue her as the beneficiary. The first firm claimed that the loss was attributable to the improvident decision to settle by the client and the second attorney.
The law firm sought to depose the second lawyer. The motion to quash asserted attorney-client privilege. The trial court denied the motion to quash on grounds of waiver of the privilege.
The court here concluded that the trial court order could not be appealed at this juncture. The trial judge's ruling did not conclusively resolve any issue and can be reviewed if any appeal is taken. Further, the advice given to the client by the second attorney is central to the disputed issues in the litigation. As the court observes: "The eggs cannot be unscrambled." (Mike Frisch)
February 22, 2010
Imputed Conflicts And Contract Attorneys
An ethics opinion issued this month by the Legal Ethics Committee of the District of Columbia Bar is summarized below:
The imputation of a temporary contract lawyer’s individual conflicts to a hiring firm under D.C. Rule 1.10 depends on the nature and extent of the lawyer’s relationship with the firm and the extent of the temporary lawyer’s access to the firm’s confidential client information. A temporary contract lawyer who works with the same firm sporadically on a few different projects, or on a single project for a longer period of time, would not be “associated with” the hiring firm if the firm does not have or otherwise create the impression that the temporary contract lawyer has a continuing relationship with the firm, and the firm institutes appropriate safeguards to ensure that the temporary contract lawyer does not have access to the firm’s confidential client information except for the specific matter or matters on which he is working.
In addition, the temporary contract lawyer and the hiring firm must protect the confidentiality of all client information, and the firm must take appropriate steps to avoid obtaining the confidences and secrets the temporary contract lawyer learned during his former employment.
January 05, 2010
Conference Announcement on Law Firm Evolution; Timely WSJ Article Begging the Question: "Do Lawyers Evolve Sufficiently to Use the Technology Placed at Their Fingertips?"
Posted by Jeff Lipshaw
Carole Silver (Georgetown) passed along an announcement for “Law Firm Evolution: Brave New World or Business As Usual.” The conference will take place at Georgetown Law Center in Washington, beginning with an evening reception on March 21st and running through lunch on March 23rd. Speakers will include Richard Susskind (author of “The End of Lawyers?” and “The Future of Law”), but more importantly, friends like our own Bill Henderson, David McGowan, Michele Beardslee, co-author Larry Ribstein, and Paul Lippe of Legal OnRamp. Other notables: Jeff Lehman, former dean of the Michigan Law School, Cornell president, and current dean of the Peking University School of Transnational Law, David Wilkins, and Aric Press of the American Lawyer.
All of which segues nicely into an article entitled "Using Web Tools to Control Legal Bills; Big Law Firms Turn to Technology to Provide Clients With Real-Time Expenses, Automate Tasks" from the Wall Street Journal this morning which trumpets "new technology" about which I was harping during the law firm beauty contests our staff held for purposes of choosing "preferred providers" back at the beginning of this decade (which began on 1/1/2001 and doesn't end for another year). Pardon my occasional slip into facetiousness, but what follows ain't a technology issue, except as it relates to the technology extant in the six inches between a lawyer's ears.
Let me provide some background here. In 1998, my old law firm, Dykema Gossett PLLC (now Dykema "A Firm Unlike Any Other") installed billing software that allowed any human being (I include lawyers) to open a program in the morning, keep it open, and, without resorting to paper time sheets, memory, Post-It notes, or scrawls on one's body (like that guy in Memento), to record one's billables in, as we have come to say, REAL TIME. The upshot of this was the potential of fine grapes in/fine wine out: somebody could actually tell a client in REAL TIME how much a matter was costing.
Fast forward a couple years to about 2002. I'm now the general counsel of a public company. Put aside whether it's a good thing for society - public companies report their earnings every three months, and whether they give "guidance" or not, securities analysts make models in which they predict what those earnings will be. On the inside, the company knows what those estimates are and, all other things being equal, tries not to rub too many analysts' noses in the dirt by surprising them on the downside. In short, you can't rule out contingency and surprise, but the whole point of having information available to management about sales, costs, trends, weather, the macro-economy, etc. is to plan for it.
Now consider a law firm managing some major matters for that client. During the beauty contest, the GC will say: "Look, I need you to understand how important financial management is, wholly apart from the quality of your work. X dollars in absolute terms equals Y cents per share, and if you surprise me with bills or accruals in the last month of a quarter or a year that can be X or more, you've actually affected our relationship with our shareholders." This is because the GC knows how law firm billing cycles work. Associate Miguel does twelve hours of work on November 3. This work doesn't get rolled up into a "pre-bill" for review by the relationship partner until some time after the end of the month, say December 8. The final bill comes out a couple weeks later, say, December 23. Which means that there's almost a sixty day lag between when the firm does the work creating an accrual, since the company owes the firm for the work, and when the firm finally tells the company how much it owes. If the company finds out on December 23 that, indeed, the firm ran up multiples of X dollars in the preceding sixty days, the GC finds herself in an extremely uncomfortable conversation with the CEO and CFO, not because the work didn't need to be done, but because the management of the information relating to the work was so badly butchered.
So we manage this, understanding as we do it's partly science and very much art. Every quarter we hold a reforecast meeting on each legal matter. In November, we tell the law firm we want an estimate of an accrual through December 31, meaning all the work that has been completed and is waiting to be billed ("WIP") and everything the firm thinks it needs to do through December 31. The firm says "oh, no problem, we have a system just like the one you used at Dykema A Firm Unlike Any Other." And the GC says, that's great, do you have a culture in which the lawyers actually put their time in every day so that we get fine grapes in and fine wine out? And the answer is almost always, despite the slickness of the Power Point, "well, it's hard to get the lawyers to do that." Garbage in, garbage out. So the GC pounds his fist on the table and says, "I want to be able to call you at 1:00 p.m. on Friday, and know exactly how much time we've invested in each of our matters through the close of business on Thursday, and I want you to be able to get the report back to me within an hour." (By the way, this should be music to the managing partners' ears because it means that time gets billed, bills get sent, bills get paid, and partners make money.)
Well, read the WSJ story. Foley & Lardner can do that now. Indeed, I shouldn't be facetious. The firm can look at a matter by activity, suggest it's being handled inefficiently, and recommend alternatives, such as bringing it back in-house. No doubt the technology is better. But garbage in/garbage out (or as we used to say, the human interface) is still going to be an issue, and only leadership and culture change that.
P.S. As long as I'm ranting (albeit with ten fingers on a keyboard that I will post in REAL TIME), I can still remember an old partner, who was OLD circa 1980 or 1981, who produced documents as follows: he would write them out long hand, then call in his secretary and dictate to her from what he had written. Then she would go to her IBM Selectric typewriter and type out what he had dictated in OCR (optical scan) format, which was then fed into a mainframe computer, which then turned out a draft, which she reviewed, then sent back for a final, which she then gave to him, which he marked up with a pen, gave it back to her, and so on. I have to believe the cycle time for the production of a moderate length brief was three weeks.
December 24, 2009
Remand In Litigation over Fees
The District of Columbia Court of Appeals has issued its decision in the litigation between Douglas Rosenthal and his former firm Sonnenschein Nath & Rosenthal. The case involves a dispute primarily over fees for representation against Libya arising out of the destruction of Pam Am 103 over Lockerbie. The trial court had awarded Rosenthal $3.7 million in compensatory damages. The firm won an award against Rosenthal and his new firm for tortious interference.
At issue were claims for compensatory damages for two periods of time. The court held that the jury was presented with sufficient evidence that the firm had been "unevenhanded and thus unreasonable" in setting compensation for the second period. Rosenthal's retirement did not preclude him from suing the firm. The evidence was insufficient to award punitive damages against the firm.
The court remanded for a new trial on compensatory damages for the second time period. and reversed the award to the firm on the tortious interference claim. Rosenthal was given the option of a new trial on compensatory damages or accepting an award as reduced by the court's opinion.
The decision can be accessed through the court's web page (Rosenthal v SNR) and was decided today. (Mike Frisch)
December 22, 2009
No Fee For You
A recruitment firm sent an unsolicited resume of a lawyer who specialized in Korean practice to a New York law firm. The firm had no Korean practice in its New York office but later hired the applicant for its Washington office through a different recruiter. The first firm sued for a fee. The New York Appellate Division for the First Judicial Department affirmed the dismissal of the suit:
As it is undisputed both that the New York partner did not know that the candidate was being interviewed by the Washington office, and that the Washington office did not know prior to interviewing the candidate that his resume had been sent to the New York partner, the required assent necessary to establish an implied contract cannot be inferred. There was no "meeting of the minds" (I.G. Second Generation Partners, L.P. v Duane Reade, 17 AD3d 206, 208 ) sufficient to establish an implied contract pursuant to which defendant agreed to pay plaintiff a fee even if there was no causal connection between plaintiff's submission of the candidate's resume and defendant's decision to interview and hire the candidate.
December 15, 2009
No Agreement To Arbitrate
An attorney was hired as "of counsel" of another attorney under a one-year employment contract on November 1, 2005. The contract authorized discharge for cause and had an arbitration clause. The employment relationship had "issues" but extended past the fixed term. Eventually, the employed lawyer was discharged with notice given in August 2007. The parties disagree as to the reasons. The employed lawyer sued the employing lawyer on claims that included wrongful discharge. The employing lawyer moved to dismiss, invoking the arbitration clause.
The Washington State Court of Appeals, Division I held that the there was no basis to conclude that the lawyers agreed to extend the arbitration provision beyond the fixed term:
Where a fixed-term employment contract expires and the employee continues to render the same services provided under the previous agreement, a court will presume that the employee is serving under a new, implied contract having the same terms and conditions as contained in the expired contract. However, where it is clear that the implied contract does not have the same terms and conditions as the earlier agreement, there is no basis
to presume that the contracting parties necessarily renewed any specific term of
the prior agreement. Because the evidence in the record and the pleadings
herein establish that Judith Lonnquist and Reba Weiss did not completely renew
the terms of Weiss's written, fixed-term employment contract after Lonnquist
terminated it, there is no basis to presume that the parties subsequently entered
into an implied agreement to arbitrate Weiss's employment-related claims as was provided for in the terminated contract. Inasmuch as a court cannot compel litigants to arbitrate claims unless they agreed to do so, the trial court correctly denied Lonnquist's motion to compel arbitration. Accordingly, we affirm.
November 13, 2009
New Data on BigLaw Contraction: Patterns of Winners and Losers
[posted by Bill Henderson, cross-posted to ELS Blog]
A careful analysis of the recently released National Law Journal 250 reveals some surprising trends. The NLJ reports that the nation's largest 250 firms (by lawyer headcount) shrank by 4%. Yet, when broken down by geography (see figure below, click on to enlarge), nearly half of the losses (2,096) were concentrated in the 45 firms headquarters in New York City. And another 20% (883) fell on the 17 NLJ 250 firms headquartered in Chicago.
- New York City (45 firms) -7.0%
- Dallas (7 firms) -5.9%
- Houston (4 firms) -5.4%
- Philadelphia (15 firms) -5.4%
- Atlanta (9 firms) -5.3%
- Chicago (17 firms) -4.7%
- Los Angeles (11 firms) -2.7%
- Boston (10 firms) -2.1%
- Washington DC (18 firms) -1.6%
- San Francisco (9 firms) -0.1%
November 10, 2009
Fee Dispute Appeal Oral Argument
The District of Columbia Court of Appeals will hear oral arguments this Friday (November 13th) in a case described in a June 2008 report reprinted below from Law.com:
In March, a D.C. Superior Court judge awarded Douglas Rosenthal, a former Sonnenschein Nath & Rosenthal antitrust partner, only part of the compensation he claimed was owed to him by the firm. Now, nearly three months later, Judge Melvin Wright has whittled down that award from more than $3 million to $65,639.
Rosenthal (who is not related to the Rosenthal in the firm's name) sued his ex-employer for $8.5 million, claiming he had not been fairly compensated for representing the families of those killed in the 1988 bombing of Pan Am Flight 103 over Lockerbie, Scotland. That contingency work generated nearly $17 million for Sonnenschein. Rosenthal also claimed he was owed origination credit for Sonnenschein's representation of Sun Microsystems against Microsoft Corp. That work produced $20 million in fees for the firm.
After a 2 1/2-week jury trial, Judge Wright entered judgment in favor of Rosenthal on March 28 to the tune of $3.73 million. However, Sonnenschein was also awarded $300,000 in its counterclaim against Rosenthal and his new firm, Constantine Cannon. Sonnenschein filed that claim because it said Rosenthal and Constantine had interfered with clients when Rosenthal left in 2005.
Sonnenschein filed a motion on April 10 arguing that Wright had not properly adjusted the jury's $3.73 million award. Sonnenschein said the court agreed that it would subtract the amounts that Rosenthal actually earned during the years in question from the amounts the jury determined he should have been compensated. According to Sonnenschein's motion, after that calculation, the damages award becomes $365,639. After also subtracting the $300,000 for Sonnenschein's counterclaim, judgment for Rosenthal is reduced to $65,639. Last Thursday, Wright granted the motion to decrease the damages award to that amount.
One of Rosenthal's lawyers, Constantine Cannon partner Gary Malone, says he believes the judge "erred" and plans to appeal the decision within the next month. Rosenthal is also represented by Constantine partner Robert Begleiter. Michele Roberts, a partner at Akin Gump Straus Hauer & Feld, and James Hamilton, a partner at Bingham McCutchen, represent Sonnenschein.
First reported in The BLT: The Blog of Legal Times
The oral argument may be heard in real time by access through following link. Click on the link highlighted in yellow to hear the agrument. (Mike Frisch)