Top Ten Legal Ethics Stories of 2011

Here are previous years’ Top Ten Legal Ethics Stories Lists: 2004, 2005, 2006, 2007, 2008, 2009 and 2010. (Some of the text below may be from previous posts.)

In Memoriam

If you are aware of any legal ethics or legal malpractice lawyers we lost this year, please leave a comment and we can update this post.

[David Isbell, a DC-based lawyer and adjunct at UVA, was active in legal ethics circles in Washington, D.C.  From the Washington Post obit: "At Covington & Burling and across Washington’s legal community, Mr. Isbell was known as an authority on legal ethics. From 1982 until 1998, he was chairman of his firm’s professional responsibility committee, and he also advised other law firms on ethical matters. He addressed ethical questions arising from legal disputes among clients and lawyers and helped devise a disclosure process concerning gifts to the office of the D.C. mayor."]

Larry Ribstein (U-Illinois) wrote prolifically and insightfully on the economic future of the US legal profession.

Dick Huber (Boston College), the Dean from 1970-85, taught professional responsibility there.

Last year, we mentioned the passing of Professor Richard Nagareda, who wrote about civil procedure in a way that had implications for legal ethics. This year, both the majority and the dissent in the Wal-Mart v. Dukes case cited Nagareda’s scholarship.

The List

1. Contracting around Conflicts.  As I look back at some key conflicts decisions, a number of federal courts have upheld sophisticated agreements between lawyers and clients on how to handle conflicts arising in the future. For some time I’ve felt that in the context of sophisticated legal practice the courts, clients, and lawyers needed to treat the law of conflicts as setting broad default rules that could be “contracted around.” This year we’ve seen a lot of that. (Admittedly, there are some 2011 cases that cut the other way. Still, in my view, "contracting around the conflicts rules" is the ascendant approach.)

While some critics have opposed that trend, the sophisticated clients themselves (acting through their unofficial bar association, the ACC) have signaled that they need more flexibility in the conflicts rules. Large firms have taken the same position. If the sophisticated clients are asking for more flexibility, why not give it to them?  [Indeed, the ABA's 20/20 Commission has floated a comment to rule 1.7 that would give lawyers and clients more control over which conflicts rules apply. If approved, clients and firms will be able to choose to be goverened by conflicts rules of states that have more modern approaches.]

The Federal Circuit’s decision, In re Shared Memory Graphics, LLC discussed here, at the McDermott Will & Emery firm site, and at Law Firm Risk Management Blog, noted that advance waivers are not only permitted but also beneficial and it interpreted a joint defense agreement in a common sense way to the detriment of a party that wished it had drafted the JDA differently.

In Multimedia Patent Trust v. Apple, 2011 US Dist Lexis 46237 (April 29, 2011), a client and its law firm carefully structured and limited which defendants the firm would target in an IP enforcement campaign, so as to avoid having the firm target a company as to which it had a conflict. When the client hired a second firm to sue the non-targeted company in a separate suit, the company intervened in the main suit and sought disqualification of the first firm. The court gave credit to the structuring and denied the disqualification motion.

In Banning Ranch, en route to rejecting a motion to disqualify, the California Court of Appeal upheld a "framework agreement" by which a boutique firm and a client agreed to certain terms that would govern any pending attorney client relationships between them. The client had wanted the court to conclude that the ACR was ongoing. The court endorsed the firm's more flexible intepretation, based on the contract language.

In SEC v. Tang, a magistrate judge denied the SEC's motion to disqualify a firm that had represented two targets of an investigation and later continued to represent just one of the clients. The court held that the SEC lacked standing to challenge the agreement the clients had made with the firm and it upheld an advance waiver that anticipated the scenario that had played out.

Enforcing agreements between firms and clients can benefit the client, as it did when a former Dickstein Shapiro lawyer was disqualified from a matter adverse to AT&T.

Ron Rotunda published an article that usefully gathers and catalogs situations where courts have permitted lawyers to hire separate counsel to handle some part of an engagement as to which the first lawyer had some conflict.

To see why “contracting around conflicts” may be a necessary option, consider this graphic of all the mobile device companies suing other mobile device companies. Then imagine that the graphic showed all the firms representing all the parties, all the parties’ subsidiaries and their counsel, and all the firms’ lawyers’ prior law firms. A literal application of all the conflicts and imputation rules can make it extremely expensive and sometimes impossible for clients to retain their existing counsel or to obtain new counsel.

2. Turner v. Rogers.  In Turner v. Rogers, the United States Supreme Court held that the 14th Amendment does not categorically require the state to provide counsel for all indigent parents facing a civil contempt hearing for non-payment of child support where the other parent is also not represented by counsel. Under the court’s reasoning, state-provided counsel are required in some circumstances, but not others.

When they're not required, the court declared that certain substitute procedural safeguards are required: "But we attach an important caveat, namely, that the State must nonetheless have in place alternative procedures that assure a fundamentally fair determination of the critical incarceration-related question, whether the supporting parent is able to comply with the support order."

As many of our readers know, there has been a movement for various forms of "Civil Gideon" rights to be established, so that indigent litigants would be assured state-provided counsel for certain kinds of litigation that most direct affect liberty interests (e.g., divorce, custody, eviction). The movement has been stymied politically and fiscally, but the ultimate fate of the movement is still very much up for grabs. (California has established a pilot program for Civil Gideon.) Although no broad Civil Gideon right was recognized, it must be of some comfort to the movement that the majority opinion was written by the more liberal side of the court. We'll have to see what the minimum "alternate procedures" turn out to be.

In a similar vein, in Guardianship of HC, the Supreme Court of California held that a mother did not have a due process right to counsel in a guardianship case.

3. Law Schools and Allegations of Fraud. This year saw an explosion of suits against law schools alleging that the schools have been pumping out fraudulent statistics about the employment of their graduates. The schools have responded by asserting that their statistics are compliant with ABA norms. But the ABA quickly re-wrote the regulations to increase disclosure and close loopholes. Even the Congress is jumping into the fray. As the courts rule on the schools’ motions to dismiss, we may see an increase in the number of schools that are targeted by the suits. In some situations, such as at Illinois and Villanova, we have seen schools admit that they have been “juking the statistics”—an issue we’ve been discussing here since 2005. If the most powerful form of teaching ethics is leading by example, then the good news is that more schools are now making detailed disclosures about the economic fates of their graduates.

4. Connick v. Thompson. The United States Supreme Court held that a single violation of Brady obligations is not sufficient to create civil damages liabilities for a district attorney’s office under section 1983. (A New York Times account of the accused’s ordeal is here.) But this year the court has taken up a second case on similar facts and there is a possibility that an increased threat of civil damages will provide an incentive to comply with Brady obligations.

5. Johnson v. Nextel Communications. The Second Circuit issued a scathing opinion in a non-class aggregate litigation where the plaintiff's law firm had taken on over 500 clients, had structured an ADR process, and had been promised about $7 million in legal fees by the defendant. The Second Circuit declared that the clients had been deprived of individualized representation, that the conflict of interest created by the conduct of plaintiffs' counsel was non consentable, and that the entire arrangement had the effect of transforming the plaintiffs' counsel into agents of the defendant.

6. ABA’s 20/20 Commission. The Commission has looked and issued papers about multi-jurisdictional practice, rules revisions, outside ownership of law firms, admission by motion, chioce of conflicts law, and other cutting edge issues.

7. Politics and Judicial Recusals: Healthcare and the Same Sex Marriage Litigation. This year saw a number of politically charged recusal challenges against federal judges. In the Same Sex Marriage Litigation in federal courts in California, the trial court judge's ruling was challenged after the judge publicly revealed what had been widely understood: that he is a gay man in a longterm relationship with a man. The challenge was rejected and then was appealed to the Ninth Circuit, where a ruling is expected soon.

In the same litigation, there was a challenge to the participation of Judge Reinhardt because his spouse, who was an attorney at a regional ACLU office, had been loosely connected to the litigation. Reinhardt declined to recuse himself.

A number of partisan public advocacy groups mounted a publicity campaign urging Justice Thomas to recuse himself from the now-pending challenge to the constitutionality of the healthcare reform statute. As was the case with Judge Reinhardt, the principal allegation was based upon the political activities of Thomas's spouse. Additionally, Thomas's attendance at politically flavored conferences and dinners was cited as a ground for recusal, and was also cited against Justices Alito and Scalia.

Justice Kagan's former role as Solicitor General has led her to recuse herself in a couple dozen cases, but she took steps as SG to not participate in the healthcare litigation so that she could participate in the case as a SCOTUS justice. There were allegations that she did in fact particpate in those cases and that an email she sent after passage of the reforms demonstrates bias. (Neither of which has me convinced that recusal is appropriate.)

The controversies (be they organic or "astroturf") prompted some commentators to suggest that the SCOTUS justices should be governed by an ethics codes or that some new arrangement should be created to adjudicate recusal claims or to provide justices to sit by designation when a recuals occurs.

8. King & Spalding and the DOMA Litigation. The King & Spalding firm withdrew from its defense of the DOMA statute. Depending on how you interpret the news accounts, either the matter was erroneously taken in by the firm before conflicts had fully cleared or the firm decided that defending the unpopular statute wasn't good publicity.

9. Therasense. In a much anticipated en banc decision from the Federal Circuit, the court made it much harder to establish that a patent prosecutor had committed fraud on the PTO ("inequitable conduct").

10. Laura Stevens Prosecution Fails Miserably. The ill-conceived criminal prosecution of Glaxo-Smith-Klein in-house lawyer, Laura Stevens, imploded. Stevens' alleged criminal conduct was ordinary lawyering in the context of responding to administrative demands for information. The bureaucrats got mad and the DOJ failed to exercise judgment.

Honorable Mention
(in no particular order)

• Dealing with Opponents. The ABA issued the controversial ethics opinion, 11-461, dealing with a laywer's right to assist a client to communicate directly with an opposing party that is represented by counsel -- and even to assist the cilent to reach a binding agreement with the represented party.  It also issued 11-460, which deals with the increasingly tricky scenario where a lawyer is handed privileged emails between the opponent and opponent's counsel. Normally, the recipient lawyer does the "stop, notify, and return" or "stop, notify, and meet-and-confer" routine. But we've seen that some states are now ruling that when a company publishes a policy providing that it may review all emails sent or received on its email system, an employee who uses the company's system to communicate with counsel loses privilege. In that case, does the "stop & notify" duty apply? Opinion 11-460 had to give a nuanced answer to that subtle problem. California's ethics committee issued an opinion (2011-181) declaring that consent under the no-contact rule may be implied consent. And, finally, a Nevada case ruled that when a lawyer receives an anonymously sent document that appears to be privileged, the "stop & notify" duty does apply.

• Stanley Chesley: Disbarment Recommended.

• Gucci decision overturned.  A US District Cour judge overruled a magistrate judge's decision which had stripped a party of its attorney client privilege because its in-house lawyer had not maintained any bar memberships.

• Sen. Ted Stevens Prosecutors. A report was issued, severely criticizing the prosecutors in the criminal charges against the late Senator Stevens -- but no criminal contempt charges against them were recommended.

• Oasis West Realty. I can't decide if this is an odd, "one-off" case or if it will deeply affect the law of conflicts of interest. The Supreme Court of California reinstated a damages complaint against a real estate lawyer who helped a developer client with the permit process for a new hotel and then later, after the attorney client relationship was over, publicly opposed the project.

• DOJ’s New Discipline Unit. What effect will it have in disciplining DOJ lawyers? Is the current system too lax, too tough, just right?

• Fast & Furious. The political right has been building a case that the DOJ mishandled the program by which thousands of guns were permtted to "walk" from the US to drug cartels in Mexico and that the alleged mishandling reached all the way up to the Attorney General. While the end result of those allegations have yet to be seen, we did learn that the person who leaked a memo which was used to discredit whistleblowers was the former US Attorney in Arizona, Dennis Burke.

• Geir Lippestad and the Defense of Anders Breivik. The mass murderer and political terrorist in Norway, Anders Breivik, is being represented by the highly regarded lawyer Geir Lippestad. I've been wondering if we would have a case where the client and the lawyer disagreed on the sanity defense (reminiscent of the defense of the Unabomber several years ago). Lippestad has been publicly building a case for his client's insanity; here also. I haven't been able to glean whether or not Breivik agrees with that defense but my working assumption was that the client wants his day in court to defend his ideology. (There may be a practical consideration at play here: apparently under Norweigian law the only way to keep Breivik locked up for life is to find him insane, and one might expect that some pressure exists to ensure that that's what happens.)

• Office of Federal Contract Compliance Programs v. O'Melveny & Myers LLP, DOL OALJ, No. 2011-OFC-00007. An administrative law judge ruled that a law firm that entered into a contract to provide legal services to a federal agency was subject to audit by the OFCCP, which had sought the law firm's affirmative action plan. It will be interesting to see how that issue plays out.

• Janus Capital Group, Inc. v. First Derivative Traders, __ US __, 131 S.Ct. 2296 (2011). The US Supreme Court continues to limit exposure of secondary participants in securities actions (including law firms) -- a trend that is welcomed by big firms and decried by plaintiffs' firms.

Comments

[SFJD]

I think the "Civil Gideon" issue is likely to be one of the biggest issues in legal ethics, and the legal profession as a whole, in the coming year.

[Monroe Freedman]

Ramona Ripston wasn't loosely connected to the gay marriage case. The ACLU, which she heads, filed a brief in the lower court. And, because she lives with the judge, she has daily opportunities for ex parte communications.

The same is true of Ginny Thomas regarding ex parte communications, here by a well-paid lobbyist against health care, whose income is Thomas family income. And Thomas has accepted valuable gifts from Harlan Crow, who supports organizations that oppose the health care legislation; Crow also has had extensive opportunities for ex parte communications with Thomas, on his yacht and on his private planes.

[Bill Freivogel]

John, absolutely nice job. Bill

[John Steele]

Thanks, Bill.