Legal Ethics Forum

Bully for Zeal!

I enjoyed Professor Anita Bernstein's new paper, The Zeal Shortage, in which she shows how "zeal" has been misinterpreted and misunderstood.

I, too, am a fan of zeal who thinks the term is misunderstood.  I once looked up the root of zealous and was surprised to find that it's a cognate of jealous.  How are the words related?

When we are jealous we are upset that someone who belongs to us has now sought favor elsewhere.  Our trust has been betrayed.  We’ve been sold out.  If the betrayal is significant enough, we may lose some of our ability to trust others in the future.   Disloyalty is a form of social violence.

How does a client feel—how should a client feel—if her trust has been betrayed?  When someone who was supposed to be zealous for her turns out to be pursuing someone else’s agenda?  If her lawyer pulled his punches because he wanted to stay on the judge's good side?  If he didn't fully press the client's point out of fear of damaging his long term professional relationship with the opposing counsel?  If he did push a particular argument because the lawyer's other client's might not like it?  The lawyer ought to realize and internalize that the client would justly feel some jealousy at being betrayed.  And the lawyer ought to be zealous for the client.  Understood in that light, zeal is a virtue, not a vice.  Bully for zeal!

The Milberg Indictment

John's post prompts a couple of thoughts on the indictment.

The basic charge, well-summarized here on White Collar Crime Prof. Blog, is that Milberg deprived class members of the honest services of class counsel (i.e., the firm) by kicking back money to class reps and failing to disclose the kickbacks to judges approving settlements.  The enormous draws of the named partners, and the alleged cash-filled safe in the credenza, are getting some press, as is the question whether institutional clients will fire Milberg because of the indictment, as the Ohio Attorney General has.

That sort of thing aside, the allegations raise the question of who, if anyone, was harmed by the alleged misconduct.  It is not clear that anyone was, meaning that the government's theory will rise or fall largely on the notion of lying by omission as opposed to stealing.  Assuming for the sake of argument that the allegations are true, consider:

1. An oft-heard critique of class actions, and a premise of the PSLRA, is that class representatives do not constrain the agency costs of class counsel.  To the extent that premise is correct (as I believe it is with respect to noninstitutional class reps, and therefore was before the '95 Act), then even if the defendants kicked back fees to class reps, the payments probably did not buy class counsel more leeway, because they probably were not constrained by oversight in the first place.

2. As the excellent analysis on White Collar Crime Profs Blog points out, there is really not much reason to believe class members would have received more money if the kickbacks had not been paid.  Securities defendants and their insurers probably would not have cared if the class reps got a portion of Milberg's fee.  They were just paying for cases to go away, which they did. Judges presumably thought the fee awards fair, because they approved them as such.  That means that the kicked-back money would not have gone to class members had the kickbacks not been made; Milberg would have kept the money.  In this sense, then, the firm internalized the cost of the alleged kickbacks. 

3.  Presumably judges would have approved lesser amounts if they had known about the kickbacks. The real point from a judge's perspective, though, would be that the court has a right to be informed of all material aspects of the settlement, and side payments are material in theory even if not in practice (because they might well not diminish constraint below the low baseline).  That means the gist of this aspect of the case is about lying by omission, not stealing.

4.  Favoring some class members over others breaches the duty of loyalty to the others, and the allegations in this regard are perfectly cogent.  It will be interesting to see whether (if the case goes to trial) these allegations resonate more with jurors than the allegations of misleading omissions.  I am not sure they will, if only because (see above) the money came out of the firm's pocket.

5.  The allegations do not bear one way or the other on the merit of the suits in which kickbacks allegedly were paid, much less on the merit of such suits in general.  My sense is that some such suits are meritorious, others are not, and it is hard to distinguish the two without getting into discovery and fighting hard against hindsight bias. 

6.  None of this excuses the alleged misconduct.  My point is only that we should be clear about what is at stake.

7. I don't think NY's rule on firm discipline affects the indictment of the firm or treating the firm as a RICO enterprise (para. 53), but that is just a gut reaction.

DM

Some Aspects of the Milberg Case

In discussing the Milberg case with colleagues, I've become aware of some questions about the widely reported case that I'm not sure I've seen answered.  First, does New York's unusual rule permitting discipline of law firms have any bearing on the criminal indictment of the law firm and the lawyers resident in New York?  Second, while there's been focus on whether the lawyers violated duties to the class, and on whether some of the payments were lawful referral fees, how much of the case will turn on the filing of federal court pleadings that failed to disclose the putative referrals?  Anyone have the scoop on those questions or links to solid analyses on those points?

"Left to Die on Mount Everest"

I recall that one of the classic articles on business ethics concerned mountain climbers faced with choice of continuing upward or abandoning the climb to help a dying moutaineer.  I can't recall the title or author, nor if the article was hypothetical or fact-based.  Today's news has an almost identical story, which is quite real and quite sad.

Milberg Weiss law firm and two partners indicted

Newswire accounts of the long awaited news are here and here.

Exam Questions (Spring 2006)

Just in case you are interested, here's my essay questions for my Spring 2006 class, "Legal Ethics in Non-firm Practice."

Essay Question No. 1

Advice Needed

One of your friends from law school needs help.  Please respond to her question:

My big law firm allowed me to take on a pro bono death penalty appeal.  In reality, I’m using the case as a chance to switch to public interest law, and death penalty defense cases in particular.  I’ve been getting lots of help from the California Capital Defense Project (CCDP), which is a public interest group that supports death penalty defense teams by providing briefs, organizing strategy conferences, developing legal theories, etc.

I will represent Ty Jackson who’s been on San Quentin’s death row for eight years since his conviction for the killing a storeowner during a robbery.  The evidence against him is uncontestable (confession , fingerprints, videotape, eye witnesses, and hot capture in the store’s parking lot!), but the trial was grossly unfair: all people of color were struck from the jury pool for pretextual reasons, the judge obviously favored the prosecutor, and the judge wouldn’t allow the defense to develop its theories during the penalty phase.

We’re preparing briefing before the Ninth Circuit—our best chance for a new trial.  In the long run, the best chance is to keep Jackson alive long enough for the political winds to change and for the death penalty to be abolished or at least suspended.  Realistically, the best we can hope is that Jackson will spend his remaining years in a brutally harsh prison environment.

I’m preparing to meet Jackson for the first time.  Terry Rushton, a CCDP lawyer, pulled me aside and talked to me about death row “volunteers”—prisoners who voluntarily drop all appeals and seek an early execution date.  Apparently, Jackson has raised the topic repeatedly.  I said I thought that was the client’s choice.  Rushton disagreed. Strongly disagreed.  This morning, my voicemail had the following message.  (It wasn’t Rushton’s voice.)

“Don’t let your client volunteer.  The death penalty is murder.  By necessity you must stop the murder of your client.  Because your client is on death row, he’s undoubtedly suffering clinical depression.  Imagine the brutality of his living conditions.  He’s a client under a disability.  Choose his objectives for him.  You have a duty not just to clients, but also to the system.  Permitting your client’s execution after the prosecutor struck African-American jurors will make that sort of racist execution easier in the future.  There are lots of specific techniques to prevent clients from volunteering.  Ask the CCDP attorneys.  I tell you this because I like you.  I want you to be a success at what you do, and not make a fatal mistake on your first matter.”

How should I approach this problem?

*          *          *          *          *

Give the lawyer advice.  The only governing law is the ABA Model Rules. 

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Essay Question 2

Issue Spotting

At 9:00 a.m., on her first day as a practicing lawyer, Andrea Martin arrived at her new job at a public interest law firm doing impact litigation.  At 9:05 a.m., Martin listened to this voicemail from her supervisor, Robin LaPlante:

Hey, sorry I couldn’t be there this morning, but I’m in Elmwood taking depositions.  Here’s what I need you to do.  Go see my secretary Roger and have him show you the client intake interview form.  Roger will walk you through how to interview potential new clients.  At 10:00 a.m., you will interview some possible clients in a race discrimination matter against Wal-Mart.  They’re worried about the costs of litigation, but assure them that they won’t have to pay a dime if we take their case.  We’ll front all the costs, including medical exams and whatever.  Hey, we’ll help them out with rent if necessary!  But don’t turn them into clients just yet.  We don’t know if we have the time and money to take on the case and our Board of Directors has final approval.  So be friendly and supportive but don’t seal the deal.  Also, tell them not to speak to Wal-Mart’s lawyers.  Those guys are nasty.  That should take about an hour, and then we need you to get downtown and speak to some more of those women who were forced to work overtime at Medical Devices, Inc.  We already represent three of the employees, but we need to get more of them.  Take the fee agreement Roger will show you and have them sign it if you can.  This could be a huge case for us in terms of a precedent and not to mention the attorneys fee award.  Be persuasive and persistent.  Get them signed up as clients!  And last of all, in the Smith v. Bravo case, I finally convinced the client’s mother to pay the hourly legal fees, but we need to get the mother to sign a writing on that.  Roger will get you the form.  You get her signature.  I will be back around 4:00 or 5:00.  We’ll take you out for a “welcome to the job” celebration down at Happy Jack’s.  See you then.

*          *          *          *          *

Only the ABA Model Rules of Professional Conduct apply.  Spot issues arising in this fact pattern, identify governing rules and/or comment paragraphs, and analyze the issues to the extent the time limits permit. 

*          *          *          *          *

Another Round of the Licensing Debate

The WSJ law blog asks whether licensing is necessary, citing a  post by Larry Ribstein that discusses the Akron School Board case I blogged about a couple of days ago.  Prof. Ribstein's post prompts a rejoinder from Jonathan Wilson, who argues that without licensing "Consumers could be easily bamboozled into trusting their money (and their legal rights) to smooth-talking salesmen (and women) who know nothing at all about lawyering."  Wilson thinks licensing is not needed to protect sophisticated corporate types.

I don't think Wilson's argument justifies licensing.  It is true that sophisticated corporate types are relatively well-positioned to assess lawyer quality.  It is also true, however, that these are the people who generally would hire fancy lawyers from fancy firms with or without licensing.  In other words, these folks suffer little from the price-increasing effects of licensing. 

Consumers, on the other hand, suffer most from such effects.  They pay for expertise they may well not need.  To borrow from Milton Friedman, to consumers a licensing requirement says in effect that if you have a car at all you must have a Cadillac. Consumers would be better off with free entry and the price competition it would spark than with a state-policed cartel that forces them to amortize costs lawyers incur clearing the barrier to entry.  As to bamboozling by charlatans, to do away with licensing is not to repeal laws against fraud, and there is every reason to expect that reputational effects of good and bad service would help weed out fraudsters. 

Prof. Ribstein's post suggests he may be backing away from his already well-qualified defense of licensing on the ground that it gives lawyers a stake in making good laws and reforming bad ones.  I agree with most of Professor Ribstein's acute criticisms of licensing (my take is here), and I applaud his work on the subject.  We would be better off if state regulators read Ribstein.

I was not persuaded by the notion that licensing gives lawyers a stake in making good laws, however, mainly because even bad laws are revenue streams for lawyers, at least where parties cannot choose a particular forum to obtain efficient laws (which is Professor Ribstein's point).  That covers a lot of ground.  1960s antitrust law was terrible from an efficiency point of view, but it was great for lawyers on both sides of the caption.  The same has been true of securities litigation, both before and after the PSLRA. (Indeed, I recall discussing the then-impending PSLRA with a prominent securities defense lawyer, who worried that the statute would kill the egg-laying goose, but who supported it publicly to curry favor with clients who really wanted it.) Clients have a greater stake in efficient laws than lawyers, I think, and clients can often organize effectively. 

Probably the best argument for licensing is that it allows disciplinary officials to hold hostage the premium lawyers can earn because of the barrier to entry: the bar can threaten to take away the premium by disciplinary action.  But that imposes costs on everyone to take care of a relatively few bad apples, who could be pursued under ordinary laws against fraud, etc.  (I concede that the bar may go after bad conduct that causes too little harm to interest other lawyers--but there are ways of getting at that problem other than licensing.)  On a net basis, the case against licensing seems compelling.

DM

 

CAFC Issues Important Opinion on Privilege

In In re Echostar Communications Corp., the Federal Circuit on May 1 addressed an important issue of patent law and ethics:  the scope of the waiver of privilege and work product when an opinion of counsel is relied upon to defend a charge of willful infringement.

Boiled down, the defendant relied on an in-house opinion to contend that its alleged pre-suit infringement was not willful, and eventually an opinion provided by Merchant & Gould for post-suit alleged infringement.  In both cases, the opinions addressed non-infringement (not invalidity or unenforceability).  The district court ordered the defendant to produce, not just actual opinions received by the client, but also (1) all communications on the subject, (2) all mental impressions of the attorneys even if not communicated to the client, and (3) documents that discuss a communcation between the lawyer and the defendant but which were not themselves communications with the client.

The Federal Circuit held that the scope of waiver reached the first and third, but not the second group.  Explaining why protection over opinion work product was not lost, the court reasoned that "if a legal opinion or mental impression was never communicated to the client, then it provides little if any assistance to the court in determining whether the accused knew it was infringing, and any relative value is outeighed by the policies supporting the work-product doctrine."

The opinion makes sense, but it does suggest that lawyers who write opinions be sure to communicate their views fully to the client -- those not communicated clearly cannot serve to defend the client's actionsn -- and also creates the opportunity for mischief.  What's that?

Suppose trial counsel provides the opinion.  Does this case mean that any communication with the client is now discoverable?  Stay tuned.

Shame on the Cleveland Bar Association

The NYT's excellent Adam Liptak reports on this appalling UPL claim filed by the Cleveland Bar Association against a father who represented his autistic child in a suit to seek benefits from the Akron, Ohio school board.  The father obtained concessions and $160,000.  The bar association's complaint sought a $10,000 fine against him, legal fees, and a promise that he not assist other parents trying to represent their own children in similar cases.  The association withdrew the complaint in the face of skepticism from the Ohio Supreme Court.

Technically, the complaint probably had a valid point.  The father represented another--his autistic son--in a legal proceeding.  But the father was the real party insofar as the economic side of the case was concerned (he would have to pay for special care if the district would not provide it), and it is wholly implausible that the bar association cares more for his son's welfare than he does.  Parental affection should ameliorate to some degree concerns that parents would place their children at risk by going it alone where they did not have the skills to do so.  And (absent evidence that the terms mentioned above were a sweet deal for the school board) the father's victory falsifies any claim that non-lawyers cannot effectively represent their children in such cases.

I think the case against licensing, and therefore against UPL suits, is overdetermined.  As neither licensing nor UPL is likely to go away in the near future, however, the best we can hope for is a certain modesty in UPL enforcement, and a sense of humility about the notion that lawyers, simply by virtue of being lawyers, possess skills others do not.  This complaint was neither modest nor humble.  Shame on the Cleveland Bar Association; kudos to the Ohio Supreme Court.

DM

Ethics in a Larger Sense

Okay, this is only tangentially legal ethics: it happened while I was on a trip to speak on legal ethics.

I've taken about 10 plane rides in the last month, and the incivility that is rampant in our society just shocked me.  Yesterday, for example, I was about to step onto the stairs leading up to the plane when my laptop strap caught on the handrail.  The fellow behind me said, "Jesus Christ!" when he had to pause for, oh, about 2 seconds.  Later, he said, "stupid bitch" when a woman was having trouble putting her luggage up.  All of these things were easily heard by me, and her.

An isolated dolt?  Onboard, I overheard a woman say to the man seated next to her, "Use your arm rest, not mine."  At first, I thought "older married couple squabbling."  But he responded:  "You have b.o.  I want a new seat."  Soon she pushed the stewardess call button, and one of them was relocated, but not before she complained about how "fat" he was, and he called her "an asshole."

I could go on.  It just struck me that the incivility we see in legal practice, and bemoan so much, is not much, if any, different than we see in every day life.  I'm not suggesting that lawyers shouldn't behave better, nor that the presence of common, gross incivility excuses the profession's lapses, but surely the overall decline in simple politeness has a link -- probably both as a cause, and effect.

Anyway, if you see a connection to legal ethics, comment away.