Legal Ethics Forum

Stephen Galoob & Ethan Lieb, "INTENTIONS, COMPLIANCE, AND FIDUCIARY OBLIGATIONS"

Article. Abstract:

This essay investigates the structure of fiduciary obligations, specifically the obliga-

tion of loyalty. Fiduciary obligations differ from promissory obligations with respect

to the possibility of “accidental compliance.” Promissory obligations can be satis-

fied through behavior that conforms to a promise, even if that behavior is done for

inappropriate reasons. By contrast, fiduciary loyalty necessarily has an intentional

dimension, one that prevents satisfaction through accidental compliance. The inten-

tional dimension of fiduciary loyalty is best described by what we call the “shaping”

account. This account both explains the conscientiousness that loyalty demands and

improves on other accounts of the intentional dimension of loyalty. Our analysis

challenges two of the most prominent ways of conceptualizing fiduciary obligations.

“Contractarianism” configures fiduciary obligations as a species of contractual duties.

The view that we call “proscriptivism” reduces fiduciary obligations to the juridical

prohibitions that apply to fiduciaries. Neither of these approaches is satisfactory,

because each neglects the intentional dimension of fiduciary loyalty.

Alex B. Long, "Reasonable Accommodation as Professional Responsibility, Reasonable Accommodation as Professionalism"

Article. Abstract:

The American legal profession has been slow to remove the barriers that exclude individuals with disabilities. As a result, people with disabilities remain underrepresented in the practice of law. While the Americans with Disabilities Act prohibits employment discrimination and requires employers to provide reasonable accommodations for employees with disabilities, there remain significant barriers to employment for lawyers with disabilities. This Article argues that the legal profession should view the legal requirements of reasonable accommodation and equal employment opportunities for lawyers with disabilities as fundamental components of professional responsibility and professionalism.

US Bankruptcy Court discusses lawyer's method of getting paid via postdated checks

In re Davis, 2014 Bankr. LEXIS 2985 (Bankr. N.D. Ala.,July 11, 2014)

The issues addressed in this Opinion do not pertain so much to the debtor's assets, debts or financial matters, or the circumstances that led him into bankruptcy. Rather the Court must examine the surreptitious scheme the debtor's chapter 7 attorney concocted to collect his fees from the debtor on a postpetition basis. This was not a one-off occurrence; similar postpetition-fee arrangements were employed by the same attorney in at least 200 additional chapter 7 cases. And what is most disturbing is his payment scheme was structured to avoid detection; indeed, it went undetected for more than two years.

[¶]

For at least the last two years, Cobb followed the same modus operandi for collecting his fees and expenses charged in virtually all chapter 7 cases he and his firm filed on behalf of their clients. When a prospective chapter 7 debtor first contacted Cobb — usually by phone — he was told to bring his checkbook to Cobb's office for the initial attorney-client meeting. At that meeting, the prospective debtor was instructed to write 15 postdated checks for $100.00 each, payable to Cobb. This routine became so commonplace that Cobb had stamps prepared so he could quickly stamp the checks with the monthly payment amount (i.e., $100) and his name, "L A Cobb," as payee. The checks were dated for 15 consecutive months, with the first dated approximately one month after the initial meeting. The checks were then sealed in an envelope addressed to Cobb, with postage affixed. The envelope containing the checks was given to the prospective debtor with instructions to mail it back to Cobb after Cobb's office called and told the debtor his case had been filed. Cobb did not dispute that virtually all debtors followed his instructions and returned the envelope. The following month, and for 14 months thereafter, one of the checks was deposited by Cobb into his operating account, not a trust account maintained for clients' funds. The checks dated for the first three months, and in some cases a small portion of the fourth, were used by Cobb to pay filing fees associated with the case, and the remainder were applied to his fees and expenses.

[¶]

For the bankruptcy process to function as intended by Congress, disclosures by debtors and their attorneys must be accurate and complete. There can be no secrets, half-truths, coy responses, or limited and inadequate disclosures that require cross-examination to get the full story. "Neither the trustee nor the creditors should be required to engage in a laborious tug-ofwar to drag the simple truth into the glare of daylight." Boroff v. Tully (In re Tully), 818 F.2d 106, 110 (1st Cir. 1987) (citing Matter of Mascolo, 505 F.2d 274, 278 (1st Cir. 1974), and In re Tabibian, 289 F.2d 793, 797 (2d Cir. 1961)). It all starts with the attorneys; they are charged with knowing the Code,  Rules, and ethical cannons. When attorneys resort to trickery to skirt disclosure requirements, their clients recognize that something unsavory is afoot. Cobb's clients may not have known the exact purpose of the postdated-checks-and-return-envelope routine, but they were shrewd enough to know Cobb was up to something he wanted kept under the table, and that something lacked the bona fides you would expect from a lawyer who was guided by ethical principles rather than his pocketbook. Indeed, Cobb's conflict of interest was glaring: There was no incentive for him to impress upon his clients the importance of disclosing all their income and assets; after all, anything that was left undisclosed would not go to creditors, but potentially would be available to pay the checks Cobb would soon be depositing after the dust settled. The more that went undisclosed, the better chance those checks would be paid when deposited.

The Court needs to hear more from Cobb and the BA before deciding the consequences for Cobb's misconduct in Davis's chapter 7 case and other cases that involved the same undisclosed fee-collection scheme. Accordingly, by separate order, Cobb will be required to furnish the [54]  Court and BA with detailed information regarding his fees and the expenses charged in all chapter 7 cases filed by Cobb, his firm and any lawyer with his firm, from January 1, 2012 through the date of the order. After receipt of this information, the Court will determine whether disgorgement of fees and expenses, and imposition of sanctions are appropriate, and if the Court finds disgorgement or sanctions, or both, appear justified, it will order Cobb, his firm and other lawyer with the firm, to show cause why the same should not be ordered and imposed. The BA will be expected to advocate his position at any show-cause hearing.

Alice Woolley, "The Lawyer as Advisor and the Practice of the Rule of Law"

Article. Abstract:

When lawyers advise clients they help the law to accomplish both its function as a system of social settlement, and the respect for the governed reflected in its processes and structure – i.e., the rule of law. A lawyer can only do so, however, if her advice provides an objectively reasonable assessment of the law, while also facilitating the accomplishment of the client's goals and objectives. The lawyer as advisor is neither an advocate for the client's goals, nor an adjudicator of the legality of those goals. Rather, the lawyer’s advising role has an irreducible duality, requiring good faith respect for both the law and the client. Unfortunately, the law governing Canadian lawyers does not provide sufficient guidance to lawyers as to their obligations when advising clients. There are various ways in which that law could be reformed, each of which has strengths and weaknesses.

"[California] State Bar Moves Forward on Client Trust Account Audits"

Details at David Cameron Carr's KafkaEsq. Read the whole thing, as there are some interesting legal angles that David explores. Excerpt:

The State Bar is moving forward with random audits of attorney client trust accounts.  A presentation to the Regulation Admissions and Discipline Oversight Committee (RAD) Thursday April 17 detailed preliminary steps taken to institute such audits, including determination of the sample population and necessary changes in statutes or rules to authorize such audits and create an enforcement mechanism.  A consultant has been engaged to work on the sample issue and the State Bar Office of General Counsel has been tasked with reviewing the existing law and recommending changes.  It is hoped that the costs of such audits can be reduced by relying on attorney self-reporting through a detailed questionnaire, rather than relying on teams of full-fledged auditors to examine records

Lester Brickman, "Fraud and Abuse in Mesothelioma Litigation"

Article. Abstract:

Asbestos litigation continues apace. Sixty companies of the 100 that have been bankrupted to date by asbestos litigation have emerged or are in the process of emerging from bankruptcy by channeling their asbestos liabilities to trusts funded with their assets and insurance coverage. After having paid out over $15 billion in claims, these trusts still have assets exceeding $30 billion.

Asbestos litigation today differs in two major respects from what it was in the 1985-2003 period. First, hundreds of thousands of nonmalignant claims generated by litigation screenings have been replaced by 2500-3000 claims of mesothelioma filed annually and several thousand lung cancer claims that are rapidly increasing in number. Second, there are now dual compensation tracks: suits brought mostly in state courts alleging personal injuries and claims filed with the trusts.

This Article is about the interplay between trust payments to asbestos claimants and suits against solvent defendants in the tort system.

In previous publications, I have laid bare the massively fraudulent enterprise that lawyers, litigation screening companies and doctors perpetrated in nonmalignant asbestos litigation — findings that were largely corroborated in a report by U.S. District Court Judge Janis Jack who found that the litigation doctors hired by asbestos lawyers had “manufactured diagnoses for money.”

In this article, I lay bare the scheme used by lawyers in “big-dollar” mesothelioma cases to maximize tort recoveries by suppressing the fact that the plaintiffs they represent have claimed and will claim “meaningful and credible” exposures to the products of 20-25 reorganized companies when filing trust claims even as they deny, “under penalty of perjury,” all such exposures in the course of discovery and trial of their tort claims. Plaintiffs’ counsel are able to effectuate such a scheme because of (1) their effective control over the production of evidence of exposure to asbestos — containing products; and (2) their control over the creation and administration of asbestos bankruptcy trusts and their use of that control to include provisions in the trusts’ Distribution Procedures designed to limit, if not preclude, defendants’ ability to use discovery to access evidence that tort plaintiffs have filed multiple trust claims contradicting their sworn discovery responses and trial testimony.

My conclusion is supported by the findings of U.S. Bankruptcy Judge George R. Hodges in his estimation order on January 10, 2014 in the Garlock bankruptcy. Judge Hodges’ conclusions, based on very limited discovery that the debtor was permitted to conduct, has allowed us to peer behind the heretofore impermeable asbestos curtain that has shrouded the inner workings of the highly successful scheme to use the judicial system to defraud asbestos defendants in mesothelioma litigation out of billions of dollars.

Though plaintiffs’ counsel strenuously deny the occurrence of any fraudulent conduct in mesothelioma litigation (with the exception of a “one-off” case), after reading Judge Hodges’ order in the Garlock bankruptcy and this article, no one can now legitimately deny that mesothelioma litigation is permeated with fraud.

Update: law professor's complaint against public defender apparently does not lead to any action by state bar

We previously reported on the efforts of a law professor to have disciplinary proceedings initiated against a public defender who posted under the name dybbuk on so-called scamblog sites. Prawfsblawg is reporting that the state bar declined to take action.

“Do you even ethics bro?”

This story at ABA Journal gave me a chuckle.

A man wearing a T-shirt that appeared to comment on ethics charges against a Pennsylvania judge was asked to leave the courthouse on Thursday.

Sheriff John Loomis says the man was asked to leave because he didn’t stop when a deputy sheriff asked to speak with him, the Erie News Times reports. Loomis did not release the man’s name to the newspaper.

The T-shirt had a picture of Judge Stephanie Domitrovich of Erie County, along with the words, “Do you even ethics bro?”

(The phrase, "Do you even lift, bro?" is an internet meme.)

Christopher B. Mueller & Laird C. Kirkpatrick, "§ 5:34 Waiver of Privilege — Inadvertent or Involuntary Disclosure"

Article. Abstract:

In their first twenty years (1975-1995), the federal rules of evidence changed little. However, changes have accelerated since 1993, with creation of the Evidence Rules Advisory Committee which meets regularly and proposes changes to the rules almost every year. One change, which grew out of the work of a special committee, was the addition of an entirely new provision, Rule 502, which governs waiver of attorney-client privilege. This rule became law in 2008 through congressional enactment (privilege rules must be passed by Congress in order to take effect). Sections 5:34 discusses this new provision. Under "Privileges: Rule 501,"section 5:34 discusses waiver by inadvertent or involuntary disclosure.

Bowe Bergdahl's lawyer talks about representing an unpopular client

Interesting story at WSJ. Excerpt:

Army Sgt. Bowe Bergdahl’s lead counsel is a military legal expert and lecturer at Yale Law School who said he felt compelled to defend a client he thinks has been demonized in the media.

Eugene R. Fidell, who is of counsel at Feldesman Tucker Leifer Fidell LLP in Washington, D.C., said he was retained by Sgt. Bergdahl 10 days ago, telling The Wall Street Journal that his client went through a harrowing ordeal as a Taliban captive.

“I think everybody should hold the phone until the facts have unfolded,” Mr. Fidell told WSJ, saying he’s spoken to Brig. Gen. Kenneth Dahl, who is leading the Army investigation of Sgt. Bergdahl’s 2009 disappearance and capture. He said he also met with his client in San Antonio in recent days.