Legal Ethics Forum

After five years as a stock broker and doing okay financially, guy goes to law school, incurs huge debt, makes less, and then gets dinged on character and fitness

No, not making it up.  Story here, with links to opinion.  Salt in the wound!?

Is the Rule 1.9 DQ Burden in N.J. Right?

The NJ Supreme Court says that once a former client has shown a prior representation and present adversity, the law firm "bears the burden of going forward to demonstrate that the matters at issue...are not 'substantially related,'" but the former client "retains the burden of persuasion" to show that they are. 

Now, evidence folks know that the burden of going forward (the burden of production) is exceedingly slight. So this opinion gives the former client the burden of proving that existence of a substantial relationship, apparently unaided be presumptions, which are not mentioned in the opinion.

Is this allocation of burden consistent with the rules elsewhere?

The result in the case (no DQ) seems correct but the burden allocation can be dispositive in other matters. 

City of Atlantic City v. Trupos (NJ 2010).

The Law School Racket

Sunday's New York Times had a long article on the front page of the business section, asking whether law school is a losing game.  Bill Henderson (who blogs at our arch-rival, LPB) was quoted as saying that "Enron-style accounting standards" are partially to blame for the depressing predicament of students who graduate with student loan debts well into the six figures, and jobs doing legal temp work at best, or working at Home Depot at worst.  There is a lot to comment on in the article (see, e.g., Leiter's dismissive reaction and an interesting economic analysis by Kenneth Anderson on Volokh Conspiracy), but I was struck by this line, which in fairness is the reporter's language, not Bill's, although the gist of the statement is attributed to him:  "[L]aw schools — which, let’s not forget, require students to take courses on disclosure and ethics — have a special moral obligation to tell the truth about themselves."

Okay, so what is the truth here?  What are applicants to law schools not understanding, which is causing them to feel duped when they graduate with $200,000 in debt?  Leave aside the Thomas Jefferson student profiled in the article, who sounds like a nitwit.  (The article reports:  "He borrowed so much that before the start of his first semester he nearly put a down payment on a $350,000 two-bedroom, two-bath condo, figuring that the investment would earn a profit by the time he graduated.")  The article suggests that even careful students who do their due diligence are being swindled.  Bill Henderson is quoted as saying to applicants, “You’re beginning your legal education at an institution that is engaging in the kind of disreputable practices that we would be incredibly disappointed to discover our graduates engaging in.”  His suggestion is that law schools are creating or at least exploiting an information asymmetry.  Applicants don't realize that their job prospects are dismal and thus make irrational investment decisions, from which we in legal academia benefit.

I'm not sure there's some kind of vast cover-up going on here, but I do think applicants may be tempted to fudge their own numbers when calculating their potential return on investment.  Suppose someone is trying to figure out whether it is worth investing $45,000/yr. for tuition, some additional amount, say, $10,000 for living expenses, and the opportunity costs of three years' worth of foregone earnings.  That investment might make sense for someone who expects to earn upwards of $100,000 per year in their starting salary.  At most law schools, however, that's not the potential upside.  A lot of students get jobs that are very good ones, in terms of the level of challenge, interest, legal experience, etc., but which pay quite a bit less.  The mythical Top 15 law schools may be different, so let's use an example of a school where I used to work, which is a top regional schools with some national presence.  Some percentage at the top of the class could expect to be competitive for big-firm jobs in New York, D.C., or Atlanta.  The middle of the class -- let's say just for the sake of argument those +/- 1 standard deviation from the mean -- had a very different likely job outcome.  They could expect jobs at employers such as:

-- One of the largest law firms in Charleston, West Virginia, with a general business and litigation practice.

-- An insurance-defense firm in Richmond.

-- A plaintiffs' PI firm in D.C.

-- The U.S. Attorney's office in Roanoke.

-- A public defender's office in Atlanta.

-- Staff counsel with a state enviromental agency.

-- A federal agency like the NLRB or EEOC.

What strikes me about this list is that these are very good jobs.  I would want graduates to be able to accept them and, moreover, if I were one of these graduates, I would want to be able to do jobs like these.  I'm a former big-firm lawyer, and was fortunate enough to be in a regional legal market where the billable hour pressure wasn't as bad as in a city like New York or L.A.  I don't think I would have lasted very long if I had to bill 2,400 hours a year.  But these are the only jobs that make it possible to repay the debt with which many students graduate.  It's incredibly difficult to service one's $150,000 student-loan debt on a salary of $55,000 at a state government agency or an insurance-defense firm.  Yet these are the kinds of jobs that one could make a career out of, as opposed to washing out after a couple of years because it is extremely difficult to have a balanced life, let alone a family, while working the hours required at a firm that pays $150,000/yr. to start.

For me the article boils down to this question:  Is the funding model of law schools sustainable, given the inability of many law school graduates to repay their loans while working at the kinds of employers that characterize the vast majority of the providers of legal services?  We've all accustomed ourselves to a pricing model that assumes Wall Street starting salaries.  It's unlikely that this sector of the market will recover soon and start hiring at pre-2007 levels, but even if it does, should law schools be pricing legal education as if graduates will be taking these jobs?  To put it another way, on the assumption of perfect information, would a rational applicant choose to pay the tuition of most law schools given the likelihood that he or she will end up working for an employer paying less than half of these astronomical starting salaries? 

It's true that there are mechanisms for mitigating this problem, like scholarships and loan-repayment assistance programs (LRAP) for graduates who work in the public interest.  These help, but there are still many, many students who pay full freight and do not qualify for sufficient LRAP funding to cover the cost of servicing their debt.  If applicants to law school were fully informed and rational, a large number would realize that they are likely to end up in this category.  Would they then choose to go to law school?  If they choose not to, what happens to law schools that depend on a seemingly endless supply of new applicants?  Observers of legal education have been predicting a shakeout, with many law schools closing.  Even if this occurs, however, surviving law schools may have a hard time persuading college graduates to invest in three years of tuition, given the likely outcome of their job search (and again, I'm not talking about working at Home Depot, but taking a legal job with an employer that offers challenging, satisfying work and a moderate salary).  Kenneth Anderson's fear is that human capital will be misdeployed.  We should have bright, hard-working young people becoming lawyers, but not only for huge NYC or D.C. firms.  Rather, we should have graduates going into prosecutors' and public defender offices, small and medium-sized law firms, and government agencies.  That is the career path that is the most threatened by the structural forces that are lurking in the background of the NYT article. 

Ethics Affirmations for Foreclosure Lawyers

The New York Times describes a new affirmation procedure in New York, where foreclosure lawyers have to sign a special statement that affirms the factual accuracy of the documents that they are submitting. The story suggests that the new procedures are necessary to prevent lawyers from initiating foreclosure proceedings that lack a proper foundation.

On the one hand, this new process strikes me as odd, because I would think that the existing ethics and civil procedure rules would be up to the task of addressing this problem.  New York Rule 3.1(b)(3) says that a lawyer cannot “knowingly assert[] material factual statements that are false.”  (Rule 3.3(a) contains similar language.)  “Knowingly” is defined in Rule 1.0(k) as “actual knowledge of the fact in question. A person’s knowledge may be inferred from circumstances.”  The applicable New York civil procedure provisions, which are referenced in the affirmation, impose similar obligations.  Given all of the stories associated with banks supplying false documents (i.e., given the “circumstances”), it seems to me that foreclosure lawyers already have an increased obligation to verify the accuracy of the documents that they are filing and that the existing rules should therefore suffice.

On the other hand, perhaps there is something unusual about this particular problem that warrants heightened attention and verification procedures.  In particular, perhaps we should ratchet up the lawyer’s duties because of the high stakes (i.e., someone is losing a home) and because of the sheer volume of inaccuracies that have been reported.  But if these are the reasons for ratcheting up a lawyer’s duties, wouldn’t it justify ratcheting up the ethical obligations of lawyers who practice in other high stakes areas of law, where procedural problems commonly arise?  I suppose we do that in certain circumstances, such as for prosecutors under Rule 3.8, but even in that context, we don’t require prosecutors to affirm their facts to the same degree as foreclosure lawyers are being asked to affirm theirs.  So what justifies the heightened scrutiny?  Moreoever, if the existing rules do not suffice in this context, does it suggest that the existing rules and procedures are inadequate in other contexts as well?  If so, what are the contexts and how do we identify them?

Unabomber's former lawyer to represent Arizona shooter: the problem of client autonomy when the accused has mental health issues

News accounts say that Judith Clarke,who formerly represented the Unabomber, will represent the Arizona shooter, Jared Lee Loughner.  Legal ethics types may recall that the defense of the Unabomber was quite controversial, in that some believed the defense lawyers usurped their client's decision-making and deliberately kept him in the dark until the very last minute. That version of the story can be found in the long piece by William Finnegan in The New Yorker (sub. req'd).  (It's a great reading for PR classes, btw.)

At the same time, Clarke and her co-counsel in the Unabomber case, Quinn Denvir, have the highest of professional reputations and I've heard criminal defense lawyers make very strong defenses of the choices Clarke and Denvir made in that case.  If you're really interested in the issues, you might read some of the work of the late Michael Mello (Vermont).

In the Arizona case, my sense is that the evidence of severe mental health issues may prevent the replay of the Unabomber case.

Top Ten Legal Ethics Stories of 2010

Here’s this year’s list and links to the lists for 2009, 2008, 2007, 2006, 2005, and 2004.

In Memoriam

In the field of legal ethics, Steve Krane, of Proskauer, was a colleague, leader, and superb lawyer.  He will be missed.

Richard Nagareda, of Vanderbilt, didn't write about legal ethics per se, but his writings about aggregate litigation were closely related to our field.

The List

1.  Congress, the Supreme Court, the First Amendment, and Lawyering.  Although state law traditionally controls the law of lawyering, especially since the McDade Amendment, but 2010 saw two cases where the Supreme Court was asked to interpret or strike down federal legislation appeared to limit the advice lawyers could give their clients.  In Milavetz, Gallop & Milavetz, P.A., et al. v. United States, the Supreme Court held that the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) applied to lawyers but held off on addressing the First Amendment issue for now.  Later in the year, in Holder v. Humanitarian Law Project, the court rejected a First Amendment challenge and upheld a law forbidding lawyers from engaging in normal lawyering for entities that have been designated terrorist organizations.  Renee Knake and Margaret Tarkington, among others covered the topic.  One can only assume that this trend will continue.

It would be an overstatement to say that whereas lawyers used to look to MR 1.2(d) and 1.16 to find the outer limits of lawyering, they now look to federal statutes and legislative histories.  But for an example of that kind of analysis, read Amanda Peters, Lawyers Who Break the Law: What Congress Can Do to Prevent Mental Health Patient Advocates from Violating Federal Legislation.

2.  Padilla v. Kentucky.  The Supreme Court held that it was ineffective assistance of counsel for a criminal defense lawyer to fail to advise a client about the effect of a guilty plea on the client’s deportation status.  Hence the proper scope of a lawyer’s representation has now been partially federalized and made a constitutional issue.  Post here.  The DOJ has stepped in with a white paper to help lawyers understand the immigration law issues.  The ABA has created a task force to look at this issue.

3.  Resolution of the Torture Memos Discpline.  The Office of Professional Responsibility finally issued its report on the OLC lawyers who wrote the torture memos—but the DOJ rejected the report as flawed.

4.  The Internet and Lawyering.  Web 2.0 and other internet technology was exploding everywhere.  Trials were infected by Facebook improprieties.  Lawyers were reaching out to potential clients via Avvo, LinkedIn, Facebook, etc.  The ABA’s 20/20 Commission has been looking at all of it.  Lawyers started keeping their files in the cloud.  Post here. 

5.  Advertising and Free Speech.  New York advertising restrictions were struck down. Florida's rules drew heat too.

6.  The Clinics Strike Back.  Law school clinics were attacked by state legislatures—but the clinics seemed to hold their own.  In New Jersey, the clinics unsuccessfully sought to be exempted from open record requests.

7.  New Rules for the Golden State?  The State Bar of California approved about seventy new rules, which now sit on some desk at the Supreme Court of California.  Because the state had never based its ethics rules on the ABA approach, the adoption of the new rules will be a sea change here.

8.  Funding of Public Defenders.  The battles over the funding of public defender offices continued—but the economic conditions would seem to preclude any easy solutions.

9.  Litigation Funding.  Although litigation funding has been around in various forms for a long, long time, this year saw a flurry of developments and policy disputes.  Link to article here.  Post by Brad Wendel here.

10.  The BP Oil Spill.  The spill led to discussions about the usefulness of plaintiffs’ lawyer, whether there was anything wrong with BP getting “lawyered up,” and questions about the proper compensation of the “czar,” Kenneth Feinberg.

 

Young lawyer spends 1,200 hours exposing lawsuit scam operation; scammer gets 14 year sentence

A family-run towing company used fraudulent lawsuits to build a lucrative stream of income.  The victims were working class people who kept telling the commissioner that the suits were bogus.  Eventually, the scammer sued an insurance company and a young lawyer, Greg Adler, stepped in, smelled fraud, and spent 1,200 of his own hours to bring the scheme to a halt -- and send the scammers to jail.  Stories here and here.

Alexandra Lahav wins the First Annual Fred Zacharias Scholarship Prize

During yesterday’s AALS PR Section Lunch Alexandra Lahav, Professor of Law at the University of Connecticut, received the First Annual Fred Zacharias Scholarship Prize for her article Portraits of Resistance:  How Lawyers Respond to Unjust Proceedings, 57 UCLA L. Rev. 725 (2010), available here. The prize honors outstanding legal ethics scholarship that furthers the tradition of Fred Zacharias’s fine scholarship and recognizes his ethic of mentorship of others in the field. 

Slightly Delayed Live-Blogging of the AALS PR Section Program Lawyers’ Special Responsibilities as Public Citizens in a Rapidly Changing World

As promised, here is a recap from the AALS PR Section Program that took place yesterday morning.  I didn’t have access to Internet at the time, and then I found myself wanting to think a bit more about the presentations, so here is a slightly delayed posting of my attempt at live-blogging.  I’ll do my best to make you feel like you were there.  (My apologies in advance to the speakers if I butcher your presentations in the process…I know my recap won’t do your excellent talks justice, but I will try to at least hit the highlights…and others who were in the audience, please feel free to supplement my observations with your comments.)

David Trager, Hammad, Simels, and a Judicial Opportunity

US District Court Judge David Trager, who died yesterday at age 73, was US Attorney in the EDNY when the 2nd Cir., per Judge Irving Kaufman, issued an opinion  and then thrice revised opinions in the Hammad case. Essentially, Hammad said federal prosecutors in NY are bound by the anti-contact rule in the state. It declined to suppress the defendant's admissions, however, on the ground that the rule was previously unclear. (That didn't stop Kaufman from calling the prosecutor's conduct 'egregious' in one of the intermediate opinions. How can conduct be egregious if it was not previously clear that it was even forbidden?)

Long story here but Hammad eventually and indirectly led to the McDade amendment, which says that federal lawyers are bound by the ethics rules of states in which they practice.

David and other US Attorneys in NY were worried about the reach of Hammad and its implications for undercover operations, leading to various motions for reconsideration. And indeed the circuit did cut back but not on the essential holding. 

David got a chance to limit the reach of Hammad, to some extent, when by designation he sat on the circuit in In re Simels. The court, Trager writing, distinguished Hammad and declined to read the NY anti-contact rule to permit federal discipline of Robert Simels for contacting a represented person who was on the verge of being charged along with Simels' own client. So David got a sort of revenge, though that's probably not the right word. I suspect though that the opportunity gave him much satisfaction.

Hammad is still good law and occasionally cited, but very often distinguished or disagreed with. The opinion went through three revisions. Only the final one is available so far as I know. Kaufman cut back on the opinion's language repeatedly. I suspect he did so to avoid a rehearing en banc. 

And while we're at it: Simels, a very (make that VERY) successful criminal defense lawyer, was convicted last year in the EDNY for obstruction-related crimes -- Trager was not the judge --  and sentenced to a long prison term. Hammad did not figure in his prosecution.