Legal Ethics Forum

NY Court of Appeals says: To Practice Law in NY You Need A Physical Office

The NY State court of appeals on 3/31 answered a question certified by the second circuit: Interpreting a NY statute, the state court  said a lawyer who does not reside in NY must have a physical office to transact business in the state. Schoenefeld v. State of New York.

This is a statutory interpretation decision only. The federal district court had held the NY law unconstitutional under the Privileges and Immunities Clause. The state appealed. The circuit asked the state court of appeals to interpret the breadth of the office requirement.

To save the statute from a finding of unconstitutionality, the state itself asked the  court of appeals to hold that only a method to receive service of process was needed, not a real office. The  court  declined.

Now the case returns to the circuit, which will have to decide the constitutional question it probably preferred to avoid.  And which perhaps the state court would like it to address -- and to affirm the district court.

Meanwhile, poor Ms. Schoenefeld must find a spare file room or kitchen table from which to transact business. Not that much business in fact gets transacted in person anymore.  And if it does, there's always Starbucks. :-)

 

Veronica Root, "Modern-Day Monitorships"

Article. Abstract:

When a sexual abuse scandal rocked Penn State, when Apple engaged in anticompetitive behavior, and when servicers like Bank of America improperly foreclosed upon hundreds of thousands of homeowners, each organization entered into a Modern-Day Monitorship. Modern-Day Monitorships are utilized in an array of contexts to assist in widely varying remediation efforts. They provide outsiders a unique source of information about the efficacy of the tarnished organization’s efforts to remediate misconduct. Yet despite their use in high-profile and serious matters of organizational wrongdoing, they are not an outgrowth of careful study and deliberate planning. Instead, Modern-Day Monitorships have been employed in an ad-hoc and reactionary manner, which has resulted in repeated instances of controversy and calls for reform by scholars and legislators. Accompanying these calls for reform has been an implicit assumption that all monitorships are made equal; that broad-based rules could effectively regulate all monitorships.

Yet, when tested, this assumption is found lacking. This Article traces the rise of the Modern-Day Monitorship and, for the first time, analyzes the use of monitorships in five different contexts. The analysis demonstrates that Modern-Day Monitorships have experienced a rapid evolution with important consequences. First, as demonstrated by the Apple monitorship, the evolution has changed the manner in which courts and lawyers conceive of the appropriate boundaries and norms for court-ordered monitorships. Second, as demonstrated by the Penn State scandal, private organizations are coopting the use of monitorships, which may be transforming the nature of monitorships from one of a quasi-government enforcement mechanism to what looks like a privatized tool of reputation remediation. Third, monitorships fall into different categories based on the type of remediation effort the monitorship is meant to achieve. Because these different categories necessitate different monitorship structures, attempts to adopt universal rules governing monitorships may be misguided. In short, differences matter when evaluating monitorships. This Article’s analysis will assist policymakers and scholars engaged in efforts targeted at analyzing, reforming, or regulating monitorships.

Conference Announcement: Reconsidering Access to Justice

Lack of access to justice has long been a problem in the United States and other developed countries.  Recent regulatory reforms - from the adoption of Alternative Business Structures in the United Kingdom to LLLTs in Washington State - have been motivated by the desire to expand access to justice. However, normative questions such as what access to justice entails and why it should be a societal priority have received comparatively little attention.  With the generous support of the Earhart Foundation, the Texas A&M University School of Law is pleased to present Reconsidering Access to Justice from April 30-May 2, 2015 in Fort Worth.    

To view the full conference schedule and to register for free, please visit the Conference website.

"Attorney-Client Privilege not Extended to E-Mails Exchanged with Attorney Litigation Funder"

Case discussion at Legal Ethics in Motion.

"Supreme Court ruling puts [California] regulatory boards in crosshairs"

Article in the LA Times about the possible impact in California of a recent SCOTUS case (about teeth whitening in North Carolina). Excerpt:

Hanging in the balance is the state's ability to regulate not only barbers and pet groomers, but also doctors and surgeons, nurses, chiropractors, optometrists, accountants, architects, lawyers, pest exterminators and security alarm installers. That's a partial list of California professional boards affected by the ruling, which is based on a 1943 precedent set in a case involving a marketing program for California raisins. The Supreme Court ruled then that state regulatory bodies comprising industry members are entitled to antitrust immunity only as long as their authority to set regulations is constrained and their decisions are subject to "active supervision" by state officials.

Wow. The California Rules Revision Commission Is Considering whether to Fast Track a New Rule on Prosecutors' Ethics

As I prepared to attend this inaugural meeting, it seemed that it would all be prepatory and introductory. But the RRC just voted to create a sub-committee to (1) propose a standard by which some rules might be considered in an expedited way; and (2) propose whether or not to fast track a new rule on proecutors' ethics. (They may not propose to fast track it and, even if they do, the whole commission may decide not to, or the State Bar may decide not to recommend any such fast tracking.)

As our readers know, ABA Model Rule 3.8 has a pretty full treatment of prosecutors' ethical duties. The currently existing rule in California, 5-110, which has no accompanying comments or discussion, only provides as follows:

Rule 5-110 Performing the Duty of Member in Government Service

A member in government service shall not institute or cause to be instituted criminal charges when the member knows or should know that the charges are not supported by probable cause. If, after the institution of criminal charges, the member in government service having responsibility for prosecuting the charges becomes aware that those charges are not supported by probable cause, the member shall promptly so advise the court in which the criminal matter is pending.

The potential fast tracking appears to have been prompted by a letter from the Supreme Court of California and perhaps as well by a letter by Barry Scheck and Laurie Levenson urging California's State Bar to end its status as the only jurisdiction in the US without a comprehensive rule of ethics for prosecutors. We should learn in May whether or not the RRC will try to fast track this issue or will treat the issue with its big package of rules expected to be delivered in 2017.

[edited since posting, for clarity]

Different Ways to Think about "Structural Change" in our Profession

At TaxProf Blog, Paul Caron links to an article from The Economist titled, " Attack of the Bean-counters. Lawyers Beware: The Accountants Are Coming After Your Business." 

At Leiter Law Reports, Michael Simkovic posts, "The Absence of Evidence for Structural Change: Recent Entry Level Outcomes."

What I like about both posts, despite their differing outlooks, is that they address the existence vel non of structural changes with concrete metrics. If this were a horse race, I'd bet heavily on "yes, there is a structural change happening," but I'm grateful for empirical discussions with clear definitions of what we're discussing. For me, the bottom line question is whether, and to what extent, the market has found a lawful, sustainable way to avoid paying supra-competitive profits to licensed lawyers. If so, that has profound implications for legal education and the daily lives of lawyers. Both of those posts left me better off in understanding what's happening.

California Rules Revision Commission begins its work

The first meeting, currently being held in San Francisco, is about the basics (e.g., introducing the members, clarifying the open access rules, travel & expenses, etc.). For more detail about their schedule, discussion items, etc., visit this page.

Here is the Commission Charter:

The Commission is charged with conducting a comprehensive review of the existing California Rules of Professional Conduct and preparing a new set of proposed rules and comments for approval by the Board of Trustees and submission to the Supreme Court no later than March 31, 2017. In conducting its review of the existing Rules and developing proposed amendments to the Rules, the Commission should be guided by the following principles:

1. The Commission’s work should promote confidence in the legal profession and the administration of justice, and ensure adequate protection to the public.

2. The Commission should consider the historical purpose of the Rules of Professional Conduct in California, and ensure that the proposed rules set forth a clear and enforceable articulation of disciplinary standards, as opposed to purely aspirational objectives. 3. The Commission should begin with the current Rules and focus on revisions that (a) are necessary to address changes in law and (b) eliminate, when and if appropriate, unnecessary differences between California’s rules and the rules used by a preponderance of the states (in some cases in reliance on the American Bar Association’s Model Rules) in order to help promote a national standard with respect to professional responsibility issues whenever possible. 4. The Commission’s work should facilitate compliance with and enforcement of the Rules by eliminating ambiguities and uncertainties. 5. Substantive information about the conduct governed by the rule should be included in the rule itself. Official commentary to the proposed rules should not conflict with the language of the rules, and should be used sparingly to elucidate, and not to expand upon, the rules themselves.

The proposed amendments developed by the Commission should be accompanied by a report setting forth the Commission’s rationale for retaining or changing any rule and related commentary language. 

Massachusetts Adopts Changes to Rules of Professional Conduct

There are quite a few changes, but most of them are designed to align the Massachusetts rules more closely with the Model Rules (including the recent Ethics 20/20 changes).  The amendments are effective July 1, 2015.

Law Firms and Cybersecurity

Today's New York Times describes a Citibank report that is critical of law firms for failing to reveal cybersecurity breaches.  According to the Times, the report also warns "bank employees [to] be mindful that digital security at many law firms, despite improvements, generally remains below the standards for other industries."

In my view, the story highlights two distinct, but related, cybersecurity issues.  The first is the increasing difficulty of preserving client's confidences in a digital age.  Not too long ago, the duty of confidentiality required not much more than tight lips and locked cabinets.  The recent addition of Model Rule 1.6(c) (see also Comments [18]-[19]) was intended to remind lawyers that they now need to do a bit more to satisfy their the duty of confidentiality.  Rule 1.6(c), however, only requires "reasonableness" when safeguarding client confidences, and sophisticated clients may want cybersecurity protocols that are considerably more robust.  For example, there may be a fairly large gap between what is reasonable under Rule 1.6(c) and what a large financial services client might expect and demand.

The second cybersecurity issue concerns a lawyer's duty to report a breach.  Although breaches can occur even when using the most sophisticated security procedures, the Times story suggests that many law firms are nevertheless reluctant to report the problems to the government as well as to clients. Regarding the latter, lawyers have a duty to keep their clients informed about the status of a matter, and it seems to me that such a duty could be interpreted to mean that lawyers should notify their clients when their confidential information has been compromised.  Moreover, an increasing number of statutes (federal and state) now impose such a duty.  That said, a lawyer's ethical duty to report a breach to a client shouldn't turn on a strained reading of Rule 1.4 or whether the lawyer happens to be subject to one of the small number of reporting statutes.  As an ethical matter, there may be a need for greater clarity on this issue, either in the rules or elsewhere.