Monday, April 18, 2016
The Rhode Island Supreme Court affirmed the imposition of Rule 11 sanctions against an attorney who had represented an unhappy seller of real estate and had purported to represent other client in the litigation.
The appellant, Keven McKenna, represented Mrs. Wells in those legal battles and he purported to represent several other plaintiffs as well. The Blanchards filed a lawsuit for malicious prosecution and abuse of process, naming Mr. McKenna and others as defendants...During that lawsuit, the Blanchards became aware, through deposition testimony, that several of the named plaintiffs in the prior cases had not been aware that they had been parties to some or all of the lawsuits filed by Mr. McKenna, supposedly on their behalf...
In his written submission to this Court, Mr. McKenna argues that the trial justice erred in granting the motion because: (1) the Superior Court lacked jurisdiction to impose sanctions in closed cases; (2) Mr. McKenna was protected "by the Due Process and Freedom of Speech Clauses of the R.I. and U.S. Constitutions"; (3) Mr. McKenna was immune from sanctions under the Anti-SLAPP Act, G.L. 1956 § 9-33-2, and G.L. 1956 § 45-24-67; and (4) the principles of res judicata, collateral estoppel, statute of limitations, laches, and the law of the case doctrine protected Mr. McKenna from sanctions.
The arguments presented to us by appellant in his written submissions are unpersuasive. Further, Mr. McKenna failed to appear before this Court to elucidate his reasoning for challenging the trial justice’s decision. Thus, we are unconvinced that the trial justice abused her discretion in finding that no attorney-client relationship existed between Mr. McKenna and Nicholas S. Mancieri. See In re Briggs, 62 A.3d 1090, 1097 (R.I. 2013) ("this Court reviews a trial justice’s decision to award or deny Rule 11 sanctions under an abuse-of-discretion standard"). Our review of the record demonstrates that Mr. McKenna received adequate notice of the show cause hearing on Rule 11 sanctions, a point that is accentuated by the fact that Mr. McKenna submitted an objection with supporting evidence, appeared at that hearing to present arguments, and even submitted the testimony of a witness in support of his objection to the motion for sanctions.
The sanctions amount to a tad less than $20,000. (Mike Frisch)
Friday, April 8, 2016
An attorney's effort to resist compelled disclosure of allegedly privileged information was rejected by the West Virginia Supreme Court of Appeals.
The case involved litigation over drilling rights
In January 2004, the Martins leased the right to drill for and produce natural gas on approximately sixty-one acres (the “Martin Lease”) to Martin Twist Energy Co., LLC (“MTEC”). Pursuant to the lease, MTEC drilled three wells upon the Martins’ property. Subsequently, AIO lent $2 million to MTEC. The loan was collateralized by various oil and gas leases and wells, including the Martin Lease and the wells that had been drilled. MTEC defaulted on its loan with AIO. Thereafter, AIO instituted foreclosure proceedings against MTEC in Kentucky. The proceedings resulted in the entry of an Agreed Judgment whereby the entire right and interest in the Martin Lease and the drilled wells was transferred to AIO in October 2008.
In March 2009, the Martins filed suit against AIO. The complaint set forth multiple grounds, including failure to pay appropriate royalties under the Martin Lease. Counsel for AIO, Scott Kaminski, first appeared in April 2009. Subsequently, AIO filed an answer and a counterclaim against Mr. Martin alleging that he interfered with AIO’s production from the wells by chasing AIO employees off the property with a gun and prohibiting them from working. A court-ordered mediation held in July 2010 was unsuccessful. A settlement offer presented by the Martins was rejected by Todd Pilcher (“Mr. Pilcher”), who was said to be acting on behalf of AIO.
Kaminski withdrew after consulting with disciplinary counsel. He then asserted attorney-client privilege to resist disclosure despite AIO's explicit waiver. He did so on behalf of a Mr. Twist (now deceased)
Rule 1.8(f) of the West Virginia Rules of Professional Conduct provides that a lawyer cannot accept compensation for representing a client from anybody other than the client unless three criteria are met. First, the actual client must give consent. Second, there can be no interference with the lawyer’s independent judgment. Third, all information relating to representation of the client must be protected as confidential. While Mr. Twist may have retained and paid Mr. Kaminski, the record does not establish how the Rule 1.8(f) criteria were met. Rather, what is plainly established is that no consent was given by AIO.
The attorney-client privilege belongs to the client. Typically, the client alone may waive the privilege. USF &G, 194 W. Va. at 442, 460 S.E. 2d at 688. The only privilege with respect to the Martin litigation belongs squarely with AIO, who is entitled to waive it regardless of the protestations of others who claim to be acting on behalf of AIO. We observe that all parties appear to accept the existence of an attorney-client relationship between AIO and Mr. Kaminski. The record establishes that AIO has expressly waived the privilege and provided documents to the Martins. The trial court’s conclusion that Mr. Kaminski failed to establish the existence of an attorney-client relationship with Mr. Twist and/or 530 West Main regarding the matters at issue with respect to the Martin complaint is not clearly in error and will not be disturbed...
We now address the claim by Mr. Kaminski that the West Virginia Rules of Professional Conduct apply to this matter such that he cannot be compelled to disclose client confidences. We find that Mr. Kaminski has failed to distinguish the evidentiary attorney-client privilege and the professional and ethical duties of confidentiality. The trial court correctly found that the evidentiary privilege exists apart from, and is not coextensive with, the ethical confidentiality precepts...
Rule 1.6 of the West Virginia Rules of Professional Conduct provides for the confidentiality of information relating to the representation of a client. Confidentiality applies even after withdrawal from representation. Here, Mr. Kaminski recognized his potential duties, consulted with disciplinary counsel, withdrew from representation, and disavowed pleadings. He has continued to assert and maintain confidentiality. Nevertheless, Rule 1.6(b)(6) specifically provides that an attorney may be compelled to reveal information relating to representation of a client so as to comply with a court order. That is the situation confronting Mr. Kaminski. The trial court did not commit clear error when it determined that the West Virginia Rules of Professional Responsibility do not bar disclosure of the contested documents.
The court further held that an attorney may not assert a "blanket claim of privilege" in response to an effort t o compel disclosure. (Mike Frisch)
Friday, April 1, 2016
The New York Court of Appeals decided a case involving the estate of Benihana founder Rocky Aoki.
This appeal involves a challenge to the validity of two partial releases of testamentary powers of appointment executed by the decedent Hiroaki (Rocky) Aoki, the founder of the Benihana restaurant chain. The Appellate Division's order declaring the partial releases valid should be affirmed.
The court discussed the role of attorneys in various instruments prepared before and after Rocky's marriage to his third wife. She had attacked the validity of the releases.
[Attorneys] Dornbush and Shaw were clearly Rocky's fiduciaries. But that is only one part of the equation. The critical inquiry is whether they were either parties to the Releases or stood to directly benefit from their execution, such that the burden shifted to Devon and Steven to demonstrate that the Releases were not procured by fraud.
Here, the only individuals who stood to benefit from Rocky's execution of the Releases were his descendants. Neither Dornbush nor Shaw were parties to the Releases or stood to directly benefit from their execution (cf. Matter of Gordon, 45 NY2d at 698-700; Fisher, 108 NY at 29-30). If anything, the execution of the Releases all but ensured that Dornbush and Shaw would have no interest in, nor would receive any benefit from, the trust assets...
Absent any evidence of fraud, one who signs a document is bound by its terms...Because Keiko failed to raise a triable issue of fact that the Releases were signed as a result of fraud or other wrongful conduct, the Appellate Division properly granted Devon and Steven summary judgment.
Justice Stein dissented
To be sure, nothing in the record provides uncontroverted proof that the attorneys drafted, and arranged to have Rocky execute, the Releases at the behest of the children, only, and in the absence of a request by Rocky. In fact, there is some evidence to indicate that Rocky was present at all of the meetings attended by Kevin and Kana, perhaps demonstrating that the attorneys were not in an attorney-client or agency relationship with the children, but met with them only in furtherance of their professional and fiduciary obligations to Rocky. Nevertheless, all of the conflicting evidence, considered together, is sufficient to create a triable question of fact regarding whether the attorneys were acting on behalf of -- or as agents of -- the children, and not Rocky, when they drafted the Releases and supervised their execution.
Accordingly, I would reverse the Appellate Division order granting summary judgment to Devon and Steven Aoki, and remit the case to that Court...
Daughter Devon is an actress of some note. (Mike Frisch)
Wednesday, December 23, 2015
The Massachusetts Supreme Judicial Court held that there was no actionable conflict of interest in a circumstance
when attorneys in different offices of the same law firm simultaneously represent business competitors in prosecuting patents on similar inventions, without informing them or obtaining their consent to the simultaneous representation...
We conclude that the simultaneous representation by a law firm in the prosecution of patents for two clients competing in the same technology area for similar inventions is not a per se violation of Mass. R. Prof. Conduct 1.7. We further conclude that based on the facts alleged in his complaint, Maling failed to state a claim for relief. Accordingly, we affirm the judgment of dismissal.
The plaintiff, Chris E. Maling, engaged the defendant law firm Finnegan, Henderson, Farabow, Garrett & Dunner, LLP (Finnegan), including the three individual attorneys named in this suit, to represent him in connection with the prosecution of patents for Maling's inventions for a new screwless eyeglass.
After obtaining his patents, Maling learned that Finnegan had been simultaneously representing another client that competed with Maling in the screwless eyeglass market. Maling then commenced this action, alleging harm under various legal theories resulting from Finnegan's failure to disclose the alleged conflict of interest.
The court reviewed and applied the "subject matter conflicts" doctrine and found that no conflict had been properly alleged
This court has not defined a minimum protocol for carrying out a conflict check in the area of patent practice, or any other area of law. However, no matter how complex such a protocol might be, law firms run significant risks, financial and reputational, if they do not avail themselves of a robust conflict system adequate to the nature of their practice. Although Maling's complaint does not plead an actionable violation of rule 1.7 sufficiently, the misuse of client confidences and the preferential treatment of the interests of one client, to the detriment of nearly identical interests of another, are serious matters that cannot be reconciled with the ethical obligations of our profession.
This is a potentially significant holding for patent attorneys. (Mike Frisch)
Friday, December 4, 2015
The Virginia State Bar is addressing a difficult issue that attorneys sometimes face
May a lawyer disclose otherwise confidential information to protect a client who threatens to commit suicide?
Rule of Professional Conduct 1.14 ("Client With Impairment") http://www.vsb.org/pro-guidelines/index.php/rules/client-lawyer-relationship/rule1-14/ provides guidance to a lawyer whose client's physical and financial well-being is at risk of substantial harm due to the client's diminished capacity. Sadly, there have been many instances when a client facing incarceration, loss of child custody, or loss of income and property has informed his or her lawyer that the client intends to commit suicide. When the lawyer "reasonably believes" that such a threat is credible, the lawyer "may take reasonably necessary protective action" on behalf of the client. Neither the Rule nor the Comments which follow it specifically address a client's threat of suicide, but the Rule should be interpreted to allow the lawyer to contact the client's family, close friends, mental health care providers, or emergency medical services personnel so that an intervention can be made to save the client from harm. Lawyers who take protective action consistent with Rule 1.14 do not violate Rule of Professional Conduct 1.6 ("Confidentiality of Information") http://www.vsb.org/pro-guidelines/index.php/rules/client-lawyer-relationship/rule1-6/ because Rule 1.6(a) permits disclosures which are "impliedly authorized in order to carry out the representation". Lawyers must nonetheless adhere to the requirement of Rule 1.14(c) to reveal otherwise confidential information "only to the extent reasonably necessary to protect the client's interests."
The Standing Committee on Legal Ethics has opined that it is not a violation of the ethical duty of confidentiality for a lawyer to disclose to appropriate authorities a client's stated intention to commit suicide. See LEO 560 http://www.vsb.org/docs/LEO/560.pdf
Tuesday, November 17, 2015
Samuel Levine of Touro Law Center has announced that the winners have been selected for the sixth annual Fred C. Zacharias Memorial Prize for Scholarship in Professional Responsibility. The Prize will be awarded to Elizabeth Chamblee Burch, for her article Judging Multidistrict Litigation, 90 NYU L. Rev. 71 (2015), and Morris A. Ratner, for Class Counsel as Litigation Funders, 28 Geo. J. Legal Ethics 271 (2015). The Prize will be awarded at the AALS Annual Meeting in New York in January. Congrats! (Alan Childress)
Friday, October 23, 2015
The Iowa Supreme Court has held that a criminal defendant's threats against a Dubuque County Attorney did not require that entire office's disqualification from the prosecution.
In this case of first impression, we are asked to decide whether under the facts presented here, the district court was correct in granting the motion for recusal or disqualification of the individual prosecuting attorney and the entire Dubuque County Attorney’s Office in its prosecution of the defendant. For the reasons set forth below, we conclude that the district court’s decision to disqualify the individual prosecuting attorney constituted an abuse of discretion. Consequently, it was likewise unnecessary to disqualify the entire Dubuque County Attorney’s Office. The writ of certiorari is sustained, and the case is remanded to the district court for further proceedings.
The defendant's threats came after a hearing on her boyfriend's criminal case. Although they were not co-defendants, they shared the same prosecutor.
On May 30, Erickson attended the bond review hearing for her boyfriend, James Evilsizer. Barnes also represented the State in the case against Evilsizer. After the hearing, the district court denied his requested relief, and Evilsizer was returned to the Dubuque County jail. Later that day, Erickson visited Evilsizer at the jail. The conversation between the two was video recorded. During the recorded conversation, Erickson made multiple disparaging remarks about Barnes. Erickson called Barnes a “c*nt,” a “biased c*nt,” and “literally Satan.”
Erickson also made remarks that could be taken as threats against Barnes. After Evilsizer told Erickson that her horoscope for the day said she was going to have a romantic evening, Erickson responded, “Yeah, with a sniper rifle for the State.” Later in the conversation, Erickson told Evilsizer, “I’m on the verge of going and buying a sniper rifle and just shooting this chick in her face.” When the two were discussing Erickson seeing Barnes after Evilsizer’s bond hearing, Erickson said she had thought, “Really, b*tch? You’re lucky we’re in court right now and I’m pregnant.”
Erickson also told Evilsizer that she was going to “get [Barnes] disbarred” by reporting her to the “judicial disciplinary committee” and that the committee would “rip her apart.” In addition to the remarks about the assistant county attorney, Erickson told Evilsizer that she was “about to snap the f*ck out,” that the State was “pushing [her] over the edge,” and that she was “borderline suicidal.”
These recorded remarks led to the revocation of Erickson's bond.
Here, the district court did not adequately explain its reasoning for concluding that Barnes had an actual conflict of interest or a serious potential for a conflict of interest. The district court provided no authority to support its decision to disqualify Barnes. The district court order also did not clarify under which standard Barnes was disqualified—actual conflict or serious potential for conflict...
We agree with the reasoning of other courts that have addressed the issue that threats alone are not sufficient to support a conflict of interest for a prosecutor which would require disqualification or recusal.
And there would be no imputed disqualification to the county attorney's office.
THOnline reported on the oral argument and the underlying case. (Mike Frisch)
Sunday, October 4, 2015
The Nevada Supreme Court has provided guidance to lower courts with respect to the proper trial and appellate court approach to attorney misconduct
After the jury rendered a verdict in favor of the [defendant] manufacturer, the plaintiff filed a post-trial motion seeking a new trial based upon alleged misconduct committed by the manufacturer's attorney. The district court denied the motion, but failed to make the detailed findings required by the Nevada Supreme Court.
The Nevada Supreme Court recently issued two opinions clarifying how claims of attorney misconduct must be handled both by the district court and subsequently on appeal. In this opinion, we take the opportunity to summarize those recent developments and to provide guidance to district courts tasked with resolving claims of misconduct. Because the district court in this case failed to make detailed findings regarding the alleged misconduct that might have enabled us to determine whether those cases would have affected its decision, we must remand the case to the district court to reconsider its decision in light of those cases and to make the necessary findings. To assist the district court, we identify some factors that must be considered on remand.
When a party claims misconduct by opposing counsel, the legal standard under which that misconduct is reviewed depends on whether a timely trial objection was made. See Lioce, 124 Nev. at 17-19, 174 P.3d at 980-82. When a timely objection was not made at trial, any review of that misconduct, either post-trial by the trial court or on appeal, is considerably more circumscribed than if an objection was made. When resolving a motion for a new trial based on unobjected-to attorney misconduct, "the district court shall first conclude that the failure to object is critical and the district court must treat the attorney misconduct issue as having been waived, unless plain error exists." Id. at 19, 174 P.3d at 982. To decide whether there is plain error, the district court must then determine "whether the complaining party met its burden of demonstrating that its case is a rare circumstance in which the attorney misconduct amounted to irreparable and fundamental error." Id. And "[lin the context of unobjected-to attorney misconduct, irreparable and fundamental error is error that results in a substantial impairment of justice or denial of fundamental rights such that, but for the misconduct, the verdict would have been different." Id. Thus, in this case, because no objection was lodged at trial, a new trial would only be warranted if Pentair committed misconduct and the misconduct amounted to "plain error."
Trial courts must
On remand, the district court must clarify, at a minimum, whether it found that no misconduct occurred or rather whether it concluded that misconduct did occur but was harmless under the standards of Lioce in view of: (1) the nature of the claims and defenses asserted by the parties; (2) the relative strength of the evidence presented by the parties; (3) the facts and evidence that were either disputed or not substantively disputed during the trial; (4) the type, severity, and scope of any attorney misconduct; (5) whether any misconduct was isolated and incidental on the one hand or repeated and persistent on the other; (6) the context in which any misconduct occurred; (7) the relationship of any misconduct to the parties' evidence and arguments; and (8) any other relevant considerations...when serious and repeated attorney misconduct has demonstrably occurred, the district court's deference to the jury is more limited than if such misconduct had not occurred, and the trial court must carefully consider whether the misconduct led the jury astray and caused it to base its verdict upon something other than the evidence and the applicable law.
The case involves a products liability action against a manufacturer of swimming pool filters. An explosion had cost the plaintiff an eye. (Mike Frisch)
Monday, September 28, 2015
A comprehensive series of reform proposals have been set forth in a recent report evaluating the New York State bar disciplinary system by the Commission on Statewide Attorney Discipline.
Two proposals strike me as particularly important and, in my view, should be adopted throughout these United States
Creation of a more easily accessible, searchable, consumer-friendly, statewide website geared toward the legal consumer. Critical information, such as where to file a grievance, should be available in languages in addition to English. Consideration should also be given to establishing a telephone “hot line” to accommodate individuals who do not have access to the internet.
Revision of court rules and procedures to allow “plea bargaining,” or discipline upon consent, to encourage prompt resolution of disciplinary charges, where appropriate.
A notable present flaw
The Subcommittee reviewed a survey conducted by the ABA Center for Professional Responsibility of all 50 states and the District of Columbia concerning the stage of a disciplinary proceeding at which the process becomes open to the public. Although the nuances may differ, the vast majority of jurisdictions open proceedings upon the filing of a formal charge following a finding of probable cause. New York is one of only 9 jurisdictions which do not permit public dissemination of information concerning disciplinary proceedings until, at the earliest, a recommendation that discipline be imposed, and usually upon a final adjudication.
While the Report does not advocate for a single enforcement mechanism to replace the present Departmental disciplinary apparatus, it does argue for uniformity of approach in proposing
Approval by the Administrative Board of the Courts, and by each Department of the Appellate Division, of statewide uniform rules and procedures governing the processing of disciplinary matters at both the investigatory and adjudicatory levels, from intake through final disposition, which strike the necessary balance between facilitating prompt resolution of complaints and affording the attorney an opportunity to fairly defend the allegations. These new rules and procedures should include uniform discovery rules and information-sharing for attorneys who are the subject of a disciplinary complaint. This recommendation is of the highest priority and a firm deadline for adoption should be established.
Also noteworthy is the singling out of one particular type of misconduct
It is the position of this Commission that the Administrative Board should take immediate action to ensure that judicial determinations of prosecutorial misconduct are promptly referred to the appropriate disciplinary committee. Of equal importance, given the perception or misperception, that claims of prosecutorial misconduct are routinely “swept under the rug,” the coordinator of attorney discipline, proposed earlier in this report, should compile, and release as part of an annual report, a statistical summary including, inter alia, the number of complaints of prosecutorial misconduct received and reviewed, the number resulting in public discipline and the number resulting in private discipline.
One final point re prosecutorial misconduct: It is abundantly clear from the public hearings and comments received by the Commission that there is a perception of rampant prosecutorial misconduct which is ignored by the disciplinary committees. As stated earlier, the Commission finds no support for that contention. However, given that prosecutors are public officials, and given that the public has every right to scrutinize the conduct of those it entrusts with public office, this Commission believes that in all cases in which a prosecutor is sanctioned for misconduct, even if the sanction is a private one, appropriately redacted details should be publicly released. The public must be able to make an informed judgment about whether the result of a complaint of prosecutorial misconduct is fair, whether the disciplinary committee did its job and whether the system is working.
Much to consider here but any effort to improve disciplinary process and make it more transparent is highly praiseworthy.
Will the District of Columbia ever get the message (eloquently stated by the Commission) that meaningful plea bargaining is the only way to escape its present logjam where virtually every case takes five to ten years to resolve?
I fear not. (Mike Frisch)
Wednesday, August 19, 2015
A proposed ethics opinion in North Carolina deals with the issues that arise from third party escrow theft
Proposed 2015 Formal Ethics Opinion 6
Lawyer’s Professional Responsibility When Third Party Steals Funds from Trust Account
July 16, 2015
Proposed opinion rules that when funds are stolen from a lawyer’s trust account by a third party who is not employed or supervised by the lawyer, and the lawyer was managing the trust account in compliance with the Rules of Professional Conduct, the lawyer is not professionally responsible for replacing the funds stolen from the account.
NOTE: This opinion is limited to a lawyer’s professional responsibilities and is not intended to opine on a lawyer’s legal liability.
John Doe, a third party unaffiliated with Lawyer, created counterfeit checks that were identical to Lawyer’s trust account checks. John Doe made the counterfeit checks, purportedly drawn on Lawyer’s trust account, payable to himself and presented the counterfeit checks for payment at Bank. Bank honored some of the counterfeit checks. As a consequence, client funds held by Lawyer in his trust account were utilized for an unauthorized purpose. Lawyer properly supervised all nonlawyer staff participating in the record keeping for the trust account. Lawyer also maintained the trust account records and reconciled the trust account as required by Rule 1.15-3. Lawyer had no knowledge of the fraud and had no opportunity to prevent the theft.
Does Lawyer have a professional responsibility to replace the stolen funds?
A lawyer who receives funds that belong to a client assumes the responsibilities of a fiduciary to safeguard those funds and to preserve the identity of the funds by depositing them into a designated trust account. Rule 1.15-2, RPC 191, and 97 FEO 9. The responsibilities of a fiduciary include the duty to ensure that the funds of a particular client are used only to satisfy the obligations of that client. RPC 191 and 97 FEO 9. Rule 1.15-3 requires a lawyer to keep accurate records of the trust account and to reconcile the trust account. A lawyer has an obligation to ensure that any nonlawyer assistant with access to the trust account is aware of the lawyer’s professional obligations regarding entrusted funds and is properly supervised. Rule 5.3.
If Lawyer has managed the trust account in substantial compliance with the requirements of the Rules of Professional Conduct (see Rules 1.15-2, 1.15-3, and 5.3) but, nevertheless, is victimized by a third party theft, Lawyer is not required to replace the stolen funds. If, however, Lawyer failed to follow the Rules of Professional Conduct on trust accounting and supervision of staff, and the failure is a proximate cause of theft from the trust account, Lawyer may be professionally obligated to replace the stolen funds. Compare RPC 191 (if a lawyer disburses against provisionally credited funds, the lawyer is responsible for reimbursing the trust account for any losses caused by disbursing before the funds are irrevocably credited).
Under all circumstances, Lawyer must promptly investigate the matter and take steps to prevent further thefts of entrusted funds. Lawyer must seek out every available option to remedy the situation including researching the law to determine if Bank is liable;1 communicating with Bank to discuss Bank’s liability; asking Bank to determine if there is insurance to cover the loss; considering whether it is appropriate to close the trust account and transfer the funds to a new trust account; and working with law enforcement to recover the funds.
Prior to learning of the fraud and theft from the trust account, Lawyer issued several trust account checks to clients and/or third parties for the benefit of a client. Despite the theft, there are sufficient total funds in the trust account to satisfy the outstanding checks. However, because of the theft, funds belonging to other clients will be used if the outstanding checks are cashed.
What is Lawyer’s duty to safeguard the remaining funds in the trust account?
Lawyer must take reasonable measures to ensure that funds belonging to one client are not used to satisfy obligations to another client. Such reasonable measures include, but are not limited to, requesting that Bank issue stop payments on outstanding trust account checks; providing Bank with a list of outstanding checks and requesting that Bank contact Lawyer before honoring any outstanding checks; and determining if Bank is liable and, if so, demanding the outstanding checks be covered by Bank. If Lawyer determines Bank is not liable or liability is unclear, Lawyer must maintain the status quo and prevent further loss by not issuing new trust account checks. If payment will be stopped on the outstanding checks, Lawyer must contact the payees and alert them to the problem.
Assume the same facts in Inquiry #2 except there are insufficient funds in the trust account to satisfy the outstanding checks. Must Lawyer deposit funds into the trust account to ensure that the outstanding checks are not presented against an account with insufficient funds?
No. In addition to the remedial measures listed in Opinion #2, Lawyer should notify the payees if Lawyer knows that the checks will not clear.
Hacker gains illegal access to Lawyer’s computer network and electronically transfers the balance of the funds in Lawyer’s trust account to a separate account that is controlled by Hacker. Lawyer’s trust account now has a zero balance. Lawyer has written several trust account checks to clients and/or third parties for the benefit of clients. Because of the theft, there are insufficient funds in the trust account to satisfy the outstanding checks.
Does Lawyer have a professional responsibility to replace the stolen funds?
No, Lawyer is not obligated to replace the stolen funds provided he has taken reasonable care to minimize the risks to client funds by implementing reasonable security measures in compliance with the requirements of Rule 1.15.
Rule 1.15 requires a lawyer to preserve client property, to deposit client funds entrusted to the lawyer in a separate trust account, and to manage that trust account according to strict recordkeeping and procedural requirements. To fulfill the fiduciary obligations in Rule 1.15, a lawyer managing a trust account must use reasonable care to minimize the risks to client funds on deposit in the trust account. 2011 FEO 7.
In 2011 FEO 7 the Ethics Committee opined that a lawyer has affirmative duties to educate himself regularly as to the security risks of online banking; to actively maintain end-user security at the law firm through safety practices such as strong password policies and procedures, the use of encryption and security software, and the hiring of an information technology consultant to advise the lawyer or firm employees; and to insure that all staff members who assist with the management of the trust account receive training on and abide by the security measures adopted by the firm.
If Lawyer has taken reasonable care to minimize the risks to client funds, Lawyer is not ethically obligated to replace the stolen funds. If, however, Lawyer failed to use reasonable care in following the Rules of Professional Conduct on trust accounting and supervision of staff, and the failure is a proximate cause of theft from the trust account, Lawyer may be professionally obligated to replace the stolen funds.
Lawyer is retained to close a real estate transaction. Prior to the closing, Lawyer obtains information relevant to the closing, including the seller’s name and mailing address. Lawyer also receives into his trust account the funds necessary for the closing. Lawyer’s normal practice after the closing is to record the deed and disburse the funds. Lawyer then mails a trust account check to the seller in the amount of the seller proceeds.
Hacker gains access to information relating to the real estate transaction by hacking the email of one of the parties (lawyer, realtor, or seller). Hacker then creates a “spoof” email address that is similar to realtor’s or seller’s email address (only one letter is different). Hacker emails Lawyer with disbursement instructions directing Lawyer to wire funds to the account identified in the email instead of mailing a check to seller at the address included in Lawyer’s file as previously instructed. Lawyer follows the instructions in the email without first implementing security measures such as contacting the seller by phone at the phone number included in Lawyer’s file to confirm the wiring instructions. After the closing and disbursement, the true seller calls Lawyer and demands his funds. Lawyer goes to Bank to request reversal of the wire. Bank refuses to reverse the wire and will not cooperate or communicate with Lawyer without a subpoena.
While pursuing other legal remedies, does Lawyer have a professional responsibility to replace the stolen funds?
Yes. Lawyers must use reasonable care to prevent third parties from gaining access to client funds held in the trust account. As stated in Opinion #4, Lawyer has a duty to implement reasonable security measures. Lawyer did not verify the disbursement change by calling seller at the phone number listed in Lawyer’s file or confirming seller’s email address. These were reasonable security measures that, if implemented, could have prevented the theft. Lawyer is, therefore, professionally responsible and must replace the funds stolen by Hacker. If it is later determined that Bank is legally responsible, or insurance covers the stolen funds, Lawyer may be reimbursed.
While pursuing the remedies described in Opinion #2, may Lawyer deposit his own funds into the trust account?
Generally, no funds belonging to a lawyer shall be deposited in a trust account or fiduciary account of the lawyer. Rule 1.15-2(f). The exceptions to the rule permit the lawyer to deposit funds sufficient to open or maintain an account, pay any bank service charges, or pay any tax levied on the account. Id. The exceptions were expanded in 1997 FEO 9 to include the deposit of lawyer funds when a bank would not route credit card chargeback debits to the lawyer’s operating account. These exceptions to the prohibition on commingling enable lawyers to fulfill the fiduciary duty to safeguard entrusted funds.
Therefore, notwithstanding the prohibition on commingling, Lawyer may deposit his own funds into the trust account to replace the stolen funds until it is determined whether the Bank is liable for the loss, insurance is available to cover the loss, or the funds are otherwise recovered. If Lawyer decides to deposit his own funds, he must ensure that the trust accounting records accurately reflect the source of the funds, the reason for the deposit, the date of the deposit, and the client name(s) and matter(s) for which the funds were deposited.
With regard to all of the situations described in this opinion, what duties does Lawyer owe to the clients whose funds were stolen?
Lawyer must notify the clients of the theft and advise the clients of the consequences for representation; help the clients to identify any source of funds, such as bank liability and insurance, to cover their losses; defer a client’s matter (by seeking a continuance, for example) if necessary to protect the client’s interest; and explain to third parties or opposing parties as necessary to protect the client’s interests. If stop payments are issued against outstanding checks, Lawyer must take the remedial measures outlined in Opinions #1 and #2 to protect the client’s interest. Finally, Lawyer must report the theft to the North Carolina State Bar’s Trust Accounting Compliance Counsel.
1. See e.g. N.C. Gen. Stat. §25-4-406.
Wednesday, July 15, 2015
A decision from the Massachusetts Supreme Judicial Court
The issue presented in this case is the scope of a judge's authority under the inherent powers of the court to order an attorney for a party to pay the other parties' attorney's fees as a sanction for the attorney's misconduct where that sanction is not authorized by any statute or court rule, and where the attorney has not violated a court order or rule of procedure. We conclude that a judge may exercise the court's inherent power to sanction an attorney with an assessment of attorney's fees only if the attorney has engaged in misconduct that threatens the fair administration of justice and the sanction is necessary to preserve the judge's authority to administer justice. Because we conclude that the judge abused his discretion in exercising the court's inherent powers to sanction the attorney under the circumstances in this case, and that the attorney's alleged misconduct was more appropriately addressed by a referral to the Board of Bar Overseers (board), we reverse the judge's order imposing sanctions.
The case involved a supermarket sale. The alleged misconduct was an attorney's solicitation letter to potential clients while a settlement was being negotiated. It was alleged that the settlement broke down due to the solicitation.
The judge in this case essentially found that [attorney] Goren, by sending the solicitation letter, committed a breach of the "assumption of confidentiality" that was "central to the prospect of achieving settlement," and thereby thwarted a settlement that was on the verge of being executed, which wasted three months of attorneys' time that had been invested in negotiating the settlement, and "materially prejudiced" the court by delaying the judge's effort to move the consolidated cases towards trial. Further, although the judge recognized that he had no jurisdiction "[i]n a technical sense" to decide whether Goren had violated the rules of professional conduct, he nonetheless essentially found that Goren had violated these rules, and the judge relied on these violations to demonstrate that Goren had acted unreasonably to impede "the full and effective administration of justice." We review the judge's imposition of sanctions under the court's inherent powers for abuse of discretion. See Chambers, 501 U.S. at 55. "[A] judge's discretionary decision constitutes an abuse of discretion where we conclude the judge made 'a clear error of judgment in weighing' the factors relevant to the decision, . . . such that the decision falls outside the range of reasonable alternatives" (citation omitted). L.L. v. Commonwealth, 470 Mass. 169, 185 n.27 (2014).
We know of no other case, nor has one been cited by the parties or amicus, where a judge sanctioned an attorney pursuant to the inherent powers of the court for conduct that resulted in a breakdown of settlement negotiations where there was no breach of a settlement agreement or confidentiality agreement, and no violation of an order of the court or rule of procedure. The fair administration of justice does not require the settlement of a case; although the parties are free to settle their case, their entitlement under law is to a trial, not to a settlement in lieu of a trial...
It might be regrettable that money and time were wasted in negotiations that ultimately failed to bear fruit, but that risk is inherent in every negotiation. Because of the risk that judges may misuse the inherent powers to pressure a party to settle a case by threatening the party with sanctions, and also because of the risk that judges will be drawn into collateral disputes regarding what occurred during settlement negotiations by parties seeking sanctions, we must scrutinize with special care any exercise of the inherent powers in the context of settlement negotiations...
Because the alleged wrongs committed by Goren did not threaten the judge's ability to ensure the fair administration of justice, we conclude that the judge exceeded the inherent powers of a court by his assessment of attorney's fees and therefore abused his discretion in doing so.
Monday, June 29, 2015
The Fifth District Court of Appeal of Florida affirmed a criminal conviction and criticized defense counsel's advocacy
While no discussion of the merits of the case is required, we find it necessary to comment on the appellant's improper insertion of alleged facts in both the statement of the facts and the argument sections of her brief. As an appellate court, we are required to consider the facts in the light most favorable to the appellee, and the appellant must properly address the facts in that manner. Such was clearly not done by the appellant in this case. The facts in this case were highly disputed, and the trial court conducted an evidentiary hearing thereon. The court thereafter expressly found the testimony of the victim to be more credible than the testimony of the appellant. In spite of this explicit finding, the appellant's brief improperly presented as "fact" the testimony of the appellant, and counsel based her legal arguments on those facts. Such practices are inappropriate and unprofessional.
Hat tip to the excellent sunEthics blog. (Mike Frisch)
Wednesday, June 24, 2015
An opinion from the Oklahoma Supreme Court
The issue before this Court is whether the district court erred in sustaining the legal parent's motion to disqualify opposing counsel. The question we consider is whether the integrity of the judicial process is likely to suffer real harm when an attorney who represents a client in a proceeding to establish paternity and to determine custody of a minor child fails to report suspected child abuse to the proper authorities as required by statute, conducts a forensic interview of the child to obtain evidence to support the client's position, does not obtain the legal parent's permission prior to the interview, and files his own affidavit attesting to the credibility of the child's affidavit. We find that the district court did not err in sustaining the motion to disqualify opposing counsel when the attorney likely compromised the legal parent's right to a fair proceeding by contaminating the fact-finding procedure and by establishing a relationship of undue influence with the child...
Attorney inserted himself into the paternity proceeding as a forensic interviewer, interviewed a minor child without parental consent, and submitted a signed affidavit attesting to Child's credibility. Attorney and Child were the only persons present during the interview. Thus, Mother's only option to rebut the evidence presented in Child's affidavit, to ascertain what type of relationship Attorney may have established with Child during the interview, and to determine if Attorney distorted Child's recollections by suggestive or leading questions would be to call Attorney as a witness to Child's credibility. Were Attorney to testify at trial, the integrity of the judicial process would be harmed in all the ways Rule 3.7 is designed to protect against: (1) Attorney's interest in winning the case for Client would call into question his objectivity as a witness, (2) Attorney's dual role as advocate-witness could confuse the factfinder, and (3) public confidence would be shaken were Attorney allowed to interview Child without parental consent.
A lawyer is not prohibited from interviewing a child witness, and nothing in this opinion should be construed to prevent an attorney from interviewing a child witness. However, if an interview scenario results in circumstances similar to those here, then he or she is no longer able to continue as an attorney in that particular case. A lawyer in a proceeding to establish paternity and to determine custody of a minor child who ignores his statutory duty to report suspected child abuse, inserts himself into the role of forensic interviewer, interviews the minor child without the legal parent's consent, likely taints the fact-finding process with improper interviewing techniques, likely establishes a relationship of undue influence with the child witness, and submits affidavits attesting to a fact witness's credibility should be disqualified from all aspects of the proceeding. Mother proved by a preponderance of the evidence that Attorney's continued representation will likely cause real harm to the integrity of the judicial process. We affirm the district court's order sustaining the motion to disqualify counsel and remand for further proceedings. Attorney is disqualified not only from acting as an advocate at trial, but also from acting as an advocate in all aspects of the underlying proceeding.
There is a concurring/dissenting opinion that would disqualify counsel but not impose the "blanket restrictions" of the majority opinion.
While I concur that under the particular circumstances, the attorney in this case should be disqualified; I do not believe lawyers should be per se prohibited from interviewing a child witness in custody disputes. Of paramount importance in any legal decision affecting the welfare of a child is consideration of his or her best interests. The majority opinion renders this basic principle subservient to the mother's custodial rights and the majority's perceived transgression of ethical boundaries governing attorney conduct...
the abuse suffered by the minor child in this case was shocking. So much so, the trial court issued an emergency order placing custody of the child with father--a direct result of the efforts undertaken by counsel and father. There were allegations the step-father drank excessively, hit the minor child, and imposed inappropriate discipline such as forced calisthenics. Additionally, it was suggested mother inflicted undue physical punishment on her son. However, the real issue presented in the trial court was the sexual abuse endured by this child. Although mother and step-father were not the perpetrators, mother had knowledge of the child's illicit encounters. She discovered the molestation and notified father. However, she apparently did not fully disclose the severity of the situation and urged him not to confront the child. On January 11, 2014, the child voluntarily disclosed the ongoing sexual activity to his father.
The father's efforts to get help through public agencies failed
After receiving no assistance from DHS and weighing the urgency of the situation, father sought to protect his son by contacting his attorney. While the attorney's interview in this case may have exceeded what was necessary, there is no ethical proscription which forbids attorney interviews of children. Moreover, at the time the child was not represented by counsel and a guardian ad litem had not been appointed. Inherent in a lawyer's responsibilities is the obligation to thoroughly evaluate the facts of each case. This includes seeking information through witness interviews. It should be noted that [attorney] Thomas served as a Tulsa County Sherriff's Deputy for ten years prior to entering law school. During his service, Mr. Thomas interviewed numerous victims of criminal acts, including child and domestic abuse.
Tuesday, June 9, 2015
The Rhode Island Supreme Court has decided that ghostwritten pleadings are improper but nonetheless vacated sanctions against three attorneys who had engaged in the practice
We have carefully considered the various comments of amici and, pursuant to our general supervisory authority, we declare the policy in our courts to be as follows: An attorney may provide legal assistance to litigants appearing pro se before courts, provided the scope of the attorney’s representation is reasonable and the litigant gives informed consent. See Rule 1.2(c). Such consent shall be in writing and shall set forth the nature and extent of the attorney-client relationship. An attorney, however, shall not assist a pro se litigant with the preparation of pleadings, motions, or other written submissions unless the attorney signs the document and discloses thereon his or her identity and the nature and extent of the assistance that he or she is providing to the tribunal and to all parties to the litigation. The attorney shall also indicate on the written document, if applicable, that his or her signature does not constitute an entry of appearance.
Unless and until we are persuaded otherwise, we believe that full disclosure of the attorney’s involvement, albeit limited, is the better practice.
The court's web page summary
This set of appeals emanated from the activities of three attorneys who authored pleadings, but did not disclose their respective identities, on behalf of pro se defendants in three separate debt collection cases, a practice colloquially known as ghostwriting. These appeals presented the Supreme Court with two issues of first impression: (1) whether Rule 11 of the Superior Court Rules of Civil Procedure applies to an attorney who neither signed a pleading nor entered his or her appearance in the case; and (2) whether the anonymous preparation of pleadings for self-represented litigants is a permissible practice pursuant to the Supreme Court Rules of Professional Conduct.
The hearing justices imposed sanctions on each attorney for drafting, but not signing, answers and objections to dispositive motions on behalf of the three pro se defendants. All three attorneys argued that Rule 11 did not apply to their respective situations because none had either signed the pleadings or entered an appearance. The Supreme Court held that the conduct of the three attorneys did not violate Rule 11 and, accordingly, vacated the sanctions imposed by the three Superior Court orders.
The attorneys also argued that ghostwriting was a permissible form of limited-scope representation pursuant to Article V, Rule 1.2(c) of the Supreme Court Rules of Professional Conduct. The Supreme Court declared the policy in our courts to be as follows: An attorney may provide legal assistance to litigants appearing pro se before courts, provided the scope of the attorney’s representation is reasonable and the litigant gave informed consent. Such consent shall be in writing and shall set forth the nature and extent of the attorney-client relationship. An attorney, however, shall not assist a pro se litigant with the preparation of pleadings, motions, or other written submissions unless the attorney signs the document and discloses thereon his or her identity and the nature and extent of the assistance that he or she is providing to the tribunal and to all parties to the litigation. The attorney shall also indicate on the written document, if applicable, that his or her signature does not constitute an entry of appearance.
Through an order, the Supreme Court invited comment from members of the bench, bar, and public on the subject of limited scope representation in general and the practice of ghostwriting in particular.
In my view, the benefits that ghostwriting pleadings provide in terms of access to justice outweighs the harms. (Mike Frisch)
Monday, April 20, 2015
Thanks to Sam Levine at Touro Law for letting us know:
Submissions and nominations of articles are being accepted for the sixth annual Fred C. Zacharias Memorial Prize for Scholarship in Professional Responsibility. To honor Fred's memory, the committee will select from among articles in the field of Professional Responsibility with a publication date of 2015. The prize will be awarded at the 2016 AALS Annual Meeting in New York City. Please send submissions and nominations to Professor Samuel Levine at Touro Law Center: email@example.com. The deadline for submissions and nominations is September 1, 2015.
A worthy project, honoring a good man. (Alan Childress)
Tuesday, December 2, 2014
In this case involving divorce and related proceedings, the husband's attorney also is his second wife.
His first wife moved to disqualify her.
The court here found the trial court's order of disqualification to be overbroad
We conclude that the order of disqualification departs from the essential requirements of law because it is not limited to Ferrer’s participation during the contempt hearing. As is well established by numerous Florida courts, the fact that Ferrer was a potentially necessary witness at the contempt hearing would not prevent her from serving as the former husband’s attorney in other pre-trial, trial, and post-trial proceedings.
But harsh words and a sanction for the first wife's counsel
Under normal circumstances, we would conclude this opinion by simply granting the petition and quashing the trial court’s order of disqualification and therein recognize that the order of disqualification was impermissibly overbroad. However, the actions of counsel for the former wife, Kenneth Kaplan, have transformed this "simple" matter into an unnecessary and protracted controversy by the failure of Kaplan to acknowledge clear and unambiguous controlling law directly adverse to his client’s position. As such, we are compelled to take the extraordinary but not unprecedented step of awarding appellate attorney’s fees as a sanction.
Nor did the court spare the second wife in a footnote
...we are deeply troubled by attorney Ferrer’s reply, since stricken, to the response to the petition. Ferrer does not aid her husband (and client’s) case by lobbing acrimonious grenades in the form of unprofessional comments directed at opposing counsel and the trial court. We are stunned at Ferrer’s disrespectful, offensive, and inflammatory argument directed at the trial judge...
Ferrer’s filings in this court, and indeed below, are verbose and unnecessarily digress in excruciating detail into irrelevant matters. An attorney who is too personally involved with the issues in a litigation should consider withdrawing or risk violating ethical duties owed to the client.
The court found that the reply bordered on contempt. (Mike Frisch)
Wednesday, October 22, 2014
My favorite issue of the Georgetown Journal of Legal Ethics -our yearly compilation of student notes on current developments in ethics law - has just hit the street.
This issue holds up well with the past editions and gives the reader excellent exposure to the hottest legal ethics issues that face 21st century members of the legal profession.
As co-faculty advisor (along with my colleague Professor Mitt Regan) to the journal, I am biased in its favor.
With that disclaimer, I highly recommend that all practitioners with an interest in ethics take a look.
Kudos to the journal staff for their hard work and dedication to this notable contribution to the profession. (Mike Frisch)
Saturday, August 23, 2014
From the web page of the Tennessee Supreme Court
The Tennessee Supreme Court has ordered a new trial for Noura Jackson, a Shelby County woman convicted of the second degree murder of her mother, Jennifer Jackson, because the Court found there were constitutional errors made in the course of the proceedings.
The Court explained that during the 2009 trial, the lead prosecutor impermissibly commented upon the defendant’s exercise of her state and federal constitutional right to remain silent and not testify at trial. In addition, the Court said the prosecutor violated the defendant’s right to due process by failing to turn over to the defense a statement a key witness gave to law enforcement officers investigating the murder. The Court concluded that the State had failed to establish that these constitutional errors were harmless beyond a reasonable doubt.
Jennifer Jackson was stabbed to death on June 5, 2005, in the bedroom of the home she shared with the defendant. Around 5:00 a.m. that day, the defendant reported to neighbors and the police that she had discovered her mother’s body. After the defendant gave police conflicting statements about her whereabouts at the time of the murder and about how she sustained a cut to her hand, the police began investigating the defendant.
The defendant was charged with first degree murder, but she never admitted involvement in the crime, and no DNA evidence or scientific evidence implicated her. The prosecution’s case was based on circumstantial evidence alone.
The jury acquitted the defendant of first degree murder but convicted her of second degree murder. The defendant appealed. Although the Court of Criminal Appeals affirmed the conviction, the three judges on the panel did not agree on the rationale for their decision. One judge found no constitutional error. The other two judges found the lead prosecutor had violated the defendant’s constitutional right to remain silent but concluded that the error did not prejudice the defendant.
The Supreme Court concluded that the prosecution had violated two of the defendant’s constitutional rights: her right to remain silent and not testify at trial, and her right to due process of law. The Court explained that when constitutional errors occur in criminal trials, a new trial is required unless the State establishes that the error was harmless beyond a reasonable doubt. The Supreme Court concluded that the State had failed to make this showing, and as a result, the defendant is entitled to a new trial.
The Supreme Court expressed concern that the prosecutor had violated the more than 100-year-old legal rule prohibiting Tennessee prosecutors from commenting on a defendant’s exercise of the right to remain silent. The Supreme Court reiterated a statement first made in 1984, which is that“the subject of a defendant’s right not to testify should be considered off limits to any conscientious prosecutor.” The Supreme Court also cautioned prosecutors in the Thirtieth Judicial District to comply fully in the future with the 50-year-old legal rule requiring disclosure of material evidence to the defense.
Read the unanimous opinion in State v. Noura Jackson, authored by Justice Cornelia A. Clark.
Wednesday, April 23, 2014
The New Jersey Appellate Division sharply criticized counsel who had failed to timely advise the court that the case had settled.
We were on the eve of filing a comprehensive opinion on the many issues raised in this appeal when, on April 9, 2014, respondent's counsel advised the matter had settled. Upon further inquiry, we learned the parties reached a settlement months ago. Despite our discretion to file an opinion when notified at such a late hour, we have decided not to file our opinion on the merits and now write to dismiss the appeal with the emphatic reminder that counsel must advise this court in a far more timely manner of a settlement or serious settlement discussions so that scarce judicial resources are not needlessly wasted.
But no sanctions
Because of the enormous amount of time needlessly expended in this matter, we have seriously considered the imposition of sanctions against both counsel pursuant to Rule 2:9-9, but instead have determined that the publication of this decision is sufficient deterrent to repetition. It is within our discretion to issue an opinion when notified of a settlement shortly before an opinion is scheduled to be released, and we have done so many times. We nonetheless dismiss this appeal.
Monday, February 24, 2014
The Virginia State Bar seeks comment on a proposed revision to the Imputed Conflicts Rule:
Pursuant to Part Six: Section IV, Paragraph 10-2(C) of the Rules of the Supreme Court of Virginia, the Virginia State Bar’s Standing Committee on Legal Ethics (“Committee”) is seeking public comment on a proposed amendment to Rule 1.10 of the Rules of Professional Conduct.
This proposed Rule amendment is intended to avoid a situation in which a lawyer avoids the imputation of a conflict of interest by avoiding the knowledge that another lawyer in the firm has a conflict as to the representation. Under the current standard of “knowing” that another lawyer in the firm is prohibited from undertaking the representation, a lawyer can avoid the application of Rule 1.10(a), which would impute a conflict to him, by willfully failing to learn the information that establishes the existence of the conflict. The proposed Rule amendment imputes a conflict if the lawyer “knows or reasonably should know” that another lawyer in the firm is prohibited from representing the client. The proposed amendment adds a new Comment [2a] to explain that the failure to maintain or use a system for identifying conflicts may be deemed a violation of Rule 1.10(a), if proper use of the system would have identified the conflict.
My comment --a good idea. (Mike Frisch)