Legal Ethics Forum

"Ethics Arbitrage"

Mark Herrmann at Above the Law uses hypotheticals about witness preparation to explore what he calls "ethics arbitrage" -- the use of lawyers from different jurisdictions (or with different professional licenses) so that the right lawyer can accomplish for the client what a different lawyer would be forbidden from doing. Herrmann's post doesn't dive too deeply into the choice of law issues, but it does raise a valid point. One example: biglaw firms can use lawyers who are governed by looser "no solicitation" rules to cold call corporate defendants who have been sued.  Other examples of how that plays out in the US? 

Prominent pro-Kurdish lawyer killed in Turkey

Stort at CNN. Excerpt:

Pro-Kurdish lawyer Tahir Elci, president of the Diyarbakir Bar Association in southeastern Turkey and a leading human rights defender, was killed while making a press statement Saturday.

The statement in the Sur district of the predominantly Kurdish Diyarbakir province was intended to call attention to damage done to the 1,500-year-old Four-Legged Minaret Mosque by recent clashes between Turkish security forces and Kurdistan Workers' Party militants.

Elci was a lead attorney in many cases dealing with Kurdish issues, including the deaths of 35 civilians in a 2011airstrike in Uludere.

Public comment sought on proposed California rules on prosecutors

This is good news, I think. The California Rules Revision Commission is fast-tracking approval of two rules about prosecutor behavior. From the SBOC:

Here's the proposed general rule on prosecutor conduct. Here's the proposed rule on prosecutorial duties to disclose information to the accused. 

Interested Persons:

At the request of the Commission for the Revision of the Rules Revision Commission, at the Board of Trustee’s November 20, 2015 meeting, the Board authorized an immediate 90-day public comment period for proposed amended Rules 5-110 and 5-220 of the Rules of Professional Conduct.  These rules address the special responsibilities of a criminal prosecutor, including required disclosure of exculpatory evidence to the defense.

The Commission recommended, and the Board agreed, that the processing of these proposed amendments should be prioritized and handled on a separate track from the Commission’s comprehensive proposed amendments to the Rules of Professional Conduct that are anticipated to be submitted to the Board in June of 2016.

The public comment deadline for these rules is February 29, 2016.  To allow the Commission sufficient time to review your comments you are encouraged to submit your comments in advance of the comment deadline.  A public hearing to receive oral comment on these rules will be held sometime in January or February.  The details concerning the hearing will be sent out as soon as the arrangements have been finalized. 

Use the following link to access the notice of public comment, draft rules and Board agenda materials:

http://www.calbar.ca.gov/AboutUs/PublicComment/201518.aspx

Viewabill lets clients have real time access to time sheets and bills

Article at Computerworld. (h/t: Bill Henderson)  Excerpt:

I've never been a big fan of professional advisers. Call me a skeptic, but I've never really felt that lawyers and accountants add much value. Rather they're mainly about avoiding risk. To make matters even worse, they have a tendency to charge like wounded bulls for (often) fairly intangible results. Who hasn't, on occasion, received a big fat bill from a lawyer, only to scratch one's head as to how that final figure was calculated?

 

For that past couple of years, software startup Viewabill has been trying to deliver some clarity in terms of those bills. It is a simple enough system -- Viewabill delivers a platform that lets clients see what happens across all of the different attorneys or law firms they use, in real time. Viewabill is like a (virtual) cab meter for legal activity.

While it may not make those six minute increments any cheaper, it goes a long way toward giving clients comfort as to how many of those increments a particular piece of work requires. It also changes the traditional model of attorney/client relationship .... 

California's proposed rule on flat fees and non-refundable retainers

Here's the current proposal and here are the paragraphs on non-refundable fees and flat fees:

 

(d) A lawyer may make an agreement for, charge, or collect a fee that is denominated as “earned on receipt” or “non-refundable,” or in similar terms, only if the fee is a true retainer and the client agrees in writing after disclosure that the client will not be entitled to a refund of all or part of the fee charged. A true retainer is a fee that a client pays to a lawyer to ensure the lawyer’s availability to the client during a specified period or on a specified matter, but not to any extent as compensation for legal services performed or to be performed.

(e) A lawyer may make an agreement for, charge, or collect a flat fee for specified legal services as long as the lawyer performs the agreed upon services. A flat fee is a fee which constitutes complete payment for legal fees to be performed in the future for a fixed sum regardless of the amount of work ultimately involved and which may be paid in whole or in part in advance of the lawyer providing those services.

California Rules Revision Commission: ABA approach makes inroads; RRC considers broad rule on discrimination, diversity, and inclusion in the legal profession

(h/t: KafkaEsq.)

California's current Rules Revision Commission (RRC) is operating under a charter that prioritizes the drafting of a minimal set of disciplinary rules. As our readers may recall, I have been very critical of that decision because the ABA Model Rules are so superior to a "minimal" approach. The Model Rules provide a broad, useful framework for the regulation of lawyer behavior and California should follow suit while preserving any unique aspects of California law.

The good news: the ABA's approach is making major inroads as the RRC proceeds rule by rule. At this page you can see the proposed amended rules and the proposed new rules. My sense is that when one compares particular ABA rules to the analogous current California rule, the ABA rule just looks better. For example, the rule on prosecutor conduct would be much longer, with many more important prohibitions and required conduct. Plus, we would finally have rules on the ethical duties of supervisors and subordinates, a rule on communicating with unrepresented persons, and so on. Let's hope the ABA approach continues to exert its gravitational pull on the RRC process.

One of the new proposed rules governs discrimination in law practice. The current California rule, 2-400, can only be used for discipline if the lawyer has been adjudicated to have committed an unlawful act of discrimination by some tribunal. Apparently the RRC is inclined to delete that provision, which currently reads: 

No disciplinary investigation or proceeding may be initiated by the State Bar against a member under this rule unless and until a tribunal of competent jurisdiction, other than a disciplinary tribunal, shall have first adjudicated a complaint of alleged discrimination and found that unlawful conduct occurred. Upon such adjudication, the tribunal finding or verdict shall then be admissible evidence of the occurrence or non-occurrence of the alleged discrimination in any disciplinary proceeding initiated under this rule.

In addition, the State Bar's Council on Access and Fairness has suggested to the RRC that the rule be amended to include this broad, aspirational language. (Note: as I understand it, this language has not been considered or proposed yet by the RRC itself.)

In the management and operation of a law practice and in order to understand and properly protect and promote the public interest, members must engage in and promote a diverse and inclusive legal profession and practice. A diverse, inclusive and nondiscriminatory legal profession can be created and maintained through community engagement, strategic partnerships, education on access, fairness and the elimination of bias and by supporting a practice that reflects and is representative of the public and client community to be served.

What do our readers think of that language? Note that it doesn't say, "should promote," it says "must promote." What does that mean? Is that the kind of language that can and/or should be used for discipline? Is it a laudatory but aspirational provision? If the proposed rule is much broader in scope and potentially can be used for discipline in the first instance, what effects will it have on legal practice? 

Btw, here is the draft language of the currently proposed rule 2-400:

(a) In the management or operation of a law practice, a lawyer shall not, on the basis of race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, sexual orientation, age, military and veteran status, or other category of discrimination prohibited by applicable law, whether the category is actual or perceived:

(1) unlawfully discriminate or knowingly permit unlawful discrimination;

(2) unlawfully harass or knowingly permit the harassment of an employee, an applicant, an unpaid intern or volunteer, or a person providing services pursuant to a contract;

(3) refuse to hire or employ the person or to refuse to select the person for a training program leading to employment, or to bar or to discharge the person from employment or from a training program leading to employment, or to discriminate against the person in compensation or in terms, conditions, or privileges of employment; or

(4) terminate or refuse to accept the representation of any client.

(b) For purposes of this rule:

(1) "knowingly permit" means a failure to advocate corrective action where the lawyer knows of a discriminatory policy or practice that results in the unlawful discrimination prohibited by paragraph (b); and

(2) "unlawfully" and "unlawful" shall be determined by reference to applicable state or federal statutes or decisions making unlawful discrimination in employment and in offering goods and services to the public.

[edited since original posting]

Court rejects former Vanguard lawyer’s lawsuit seeking whistleblower award

(by Kathleen Clark & Nancy J. Moore)

Financial rewards for whistleblowers are becoming an increasingly important tool for law enforcement. The federal government has awarded over $4 billion to whistleblowers under the False Claims Act (“FCA”) and the Dodd-Frank Wall Street Reform and Consumer Protection Act.

May lawyers – like other employees and insiders – receive whistleblower awards? We explore this question in an article that will be published by the Boston College Law Review next month.

On November 13, 2015, a New York state court ruled against a whistleblower-lawyer who sought a financial award under New York’s False Claims Act. New York ex rel. Danon v. Vanguard Group Inc., No. 100711-13 (Sup. Ct., N.Y. Cnty., May 8, 2013). The court’s decision is consistent with other precedents that have also prevented lawyers from obtaining FCA whistleblower rewards.

David Danon, formerly in-house counsel to Vanguard, filed a qui tam FCA case alleging that the company engaged in large-scale tax fraud. According to the lawsuit, Danon repeatedly raised questions within the company about its allegedly illegal practices, to no avail. In January of 2013, Vanguard told Danon that he would be terminated. He began collecting documents and turned them over to the New York Attorney General’s office, the SEC and the IRS. (Both the SEC and the IRS have whistleblower reward programs.)

In May of 2013 – one month before he was terminated – Danon filed his qui tam lawsuit under seal. (This is the first reported case in which a lawyer-whistleblower filed an FCA lawsuit against a client while still employed by the client.) After the New York Attorney General declined to intervene and the case was unsealed, Vanguard sought dismissal of the suit and disqualification of Danon and his counsel, arguing that in bringing the qui tam lawsuit, Danon violated ethical rules on confidentiality and conflicts of interest.

The court dismissed Danon’s qui tam lawsuit because it determined that he violated New York’s confidentiality standards, Rule 1.6 and 1.9(c). While New York permits a lawyer to disclose otherwise confidential information in order to prevent a client from committing a crime, the lawyer may disclose only that information the lawyer “reasonably believes necessary” to prevent the crime.

According to the court, bringing a qui tarn action is not “reasonably necessary to prevent [a client] from committing … a crime” because a lawyer could simply inform law enforcement, as Danon did, rather than seeking an FCA award. In our forthcoming article, we suggest that there are times when filing an FCA lawsuit may be reasonably necessary to prevent ongoing crimes (or rectify past crimes) because the government often relies on whistleblowers’ lawyers to conduct a preliminary investigation to determine which claims are worth pursuing. The court also found that Danon’s extensive disclosure of Vanguard’s past misconduct was improper because disclosing past misconduct is not “necessary to prevent” a client’s future violations. In addition to dismissing the case, the court disqualified both Danon and his lawyer from pursuing any related qui tam action.

The court did not address Vanguard’s argument that Danon also violated New York’s conflict of interest rule, which prohibits a lawyer from representing a client if there is a significant risk that the lawyer’s judgment will be adversely affected by the lawyer’s own financial interest.

Danon worked in-house for Vanguard in Pennsylvania, and was licensed in both Pennsylvania and New York. The court applied New York’s confidentiality rules. The Pennsylvania rules, unlike the New York rules, permit disclosure in order to rectify or mitigate a client’s past crime or fraud if the client used the lawyer’s services in the wrongdoing. The court’s decision did not indicate whether Vanguard used Danon’s services in furtherance of its alleged fraud. Nor did it explain why it applied New York (rather than Pennsylvania) rules.

 

Judge Kozinski's criticizes criminal prosecution; DOJ responds

Kozinski's article is here. The DOJ wrote a response letter. (h/t: Above the Law)

 

 

Congratulations to 2015 Zacharias Prize Winners

On behalf of Sam Levine and the other members of the selection committee, I would like to announce that the winners have been selected for the sixth annual Fred C. Zacharias Memorial Prize for Scholarship in Professional Responsibility. The Prize will be awarded to Elizabeth Chamblee Burch, for Judging Multidistrict Litigation, 90 NYU L. Rev. 71 (2015), and Morris A. Ratner, for Class Counsel as Litigation Funders, 28 Geo. J. Legal Ethics 271 (2015).

The Prize will be awarded at the AALS Annual Meeting in New York in January.

Thanks to all who submitted papers and to the committee for their hard work.

Technical difficulties over (I hope)

You may have noticed that we had some technical difficulties that I hope are now past. Thanks for your patience.