Sunday, March 26, 2017

Court of Appeals for the Second Circuit rejects argument that rules that ban lawyers from raising capital from non lawyers are unconstitutional

In an important and highly anticipated opinion, the Court of Appeals for the Second Circuit has rejected an argument against the rules of professional conduct which ban lawyers from accepting capital investment from non-laywers.  In this particular case, the specific rules challenged were those of the state of New York, but the reasoning of the court is likely to influence courts in other jurisdicitons.

The ruling is a big blow to those who have been proposing adopting different rules, now in use in the UK and Australia, that would allow lawyers to practice law through "alternative business structures." 

On the other hand, the ruling should not be unexpected since the American legal profession has proven to be very reluctant to adopt such a view.  There is a lot of literature about this and it was the hot issue in Professional Responsibility circles for the last couple of years.  

Many thought the ABA was ready to point the way toward change when, in 2014, it created the Commission on the Future of Legal Services and charged it with the task of studying how legal services are delivered in other countries and of recommending innovations that would improve the delivery of, and the public’s access to, legal services in the United States. 

Yet, when the Commission presented its final report at the 2016 ABA Annual Meeting it essentially merely encouraged states to “explore how legal services are delivered by entities that employ new technologies and internet-based platforms and then assess the benefits and risks to the public.”  As for the notion of alternative business structures, the Commission’s report’s language was even more tentative, merely stating that “[c]ontinued exploration of alternative business structures will be useful.”  For my comment on the Commission's report go here.  I also have a short article on the debate regarding the future of the profession in 41 Journal of the Legal Profession 1 (2016).

Not content on waiting for the ABA to act, the law firm Jacoby & Meyers, challenged the constitutionality of a collection of New York regulations and laws that together prevent for‐profit law firms from accepting capital investment from non‐lawyers.

In its opinion rejecting the argument, the court explained that the law firm alleged that, if they were allowed to accept outside investment, they would be able to—and would—improve their infrastructure and efficiency and as a result reduce their fees and serve more clients, including clients who might otherwise be unable to afford their services, and that the challenged rules unconstitutionally infringe the firm's rights as lawyers to associate with clients and to access the courts—rights that are grounded, they argue, in the First Amendment.

The District Court dismissed the complaint, concluding that the firm failed to state a claim for violation of any constitutional right and that, even if such rights were to be recognized, the challenged regulations withstand scrutiny because they are rationally related to a legitimate state interest.

The Court of Appeals agreed and affirmed.  You can read the full opinion here.

Yet another case on whether a fee sharing contract that does not follow the rules can be enforced

A few days ago I posted a note about a recent case on the issue of whether a fee sharing contract that does not strictly meet all the requirements of the rules of professional conduct can be enforced.  Since then, I have learned that the issue is currently under review by the Illinois Supreme Court.  You can listen to the oral argument here.

This is an interesting question and there are a few cases out there on the subject.  I will write a longer comment on the case soon.

Saturday, March 11, 2017

Is a fee sharing contract that violates the rules of professional conduct enforceable?

A few years ago I reported on an Illinois case that held that a contract that violated the rules of professional conduct could not be enforceable.  I did not like the decision, and my comments on it are here.

I was reminded of this case because just a couple of days I ago I read that a court in Washington DC recently reached a different result.  The Legal Profession blog has a report here.

ABA is seeking comments on proposal to amend advertising and solitication rules -- UPDATED

Feb. 24, 2017 
The ABA Standing Committee on Ethics & Professional Responsibility is currently accepting comments on APRL’s comprehensive proposal which seeks to standardize the rules and focuses regulation on false and misleading communications about legal services. It includes amendments to Model Rules 7.1, Communications Concerning a Lawyer’s Services; 7.2, Advertising; 7.3, Solicitation of Clients; 7.4, Communications of Fields of Practice and Specialization; and 7.5, Firm Names and Letterheads. The APRL proposal can be found here.  For more information, go to the ABA website here.

UPDATE (3-11-17):  The Illinois Supreme Court Commission on Professionalism has published an article summarizing the debate on this issue here.

Tennessee adopts duty of competence regarding "technology"; Two recent articles explore the meaning of such a duty

Last week, the Supreme Court of Tennessee issued an order adopting a number of amendments to the state's rules of professional conduct, including adopting a duty of technology competence.  Twenty seven states have now adopted such a duty.  Law Sites has more details here.

Meanwhile, Law Technology Today has published a two part article on the ethical duty of technology competence.  Part I is here; Part II is here.

Tuesday, March 7, 2017

New Ohio opinion reminds us of the difference between fees and expenses

The Ohio Board of Professional Conduct recently issued an advisory opinion on lawyer advertising that emphasizes the need to be clear about the difference between fees and expenses.  The opinion, Advisory Opinion 2017-01, states that lawyers who provide services on a contingent fee basis may not use statements such as “There’s no charge unless we win your case,” or “No fee without recovery,” if the lawyer intends to recover the value of litigation costs and expenses from the client. If a lawyer intends to recover advanced costs and expenses of litigation from the client, a disclaimer is required in the advertisement that explains the client’s obligations for repayment.

Friday, March 3, 2017

California Committee issues final draft of opinion on whether blogs are subject to advertising rules

Legal Ethics in Motion is reporting that the California Standing Committee on Professional Responsibility and Conduct has finalized an opinion on whether attorney-authored blogs should be governed by the advertising regulations. The Committee concluded that blogs should be governed as attorney advertising if the blog directly or indirectly expresses the attorney’s availability for professional employment. Thus, a blog that is a part of a firm’s professional website is governed by the advertising guidelines.  “Stand-alone” blogs, or blogs that exists independently of any website an attorney maintains or uses for professional marketing purposes, are also subject to the rules if its content has the same effect as professional blogs.  For more information go here.

New York State Bar Association launches new platform to provide better access to legal representation

The New York State Bar Association, and, a developer of referral-network and marketplace platforms for the legal industry, have teamed up to launch a state-of-the-art lawyer referral platform that they say will significantly expand access to legal services in that state.  Interestingly, the developers of this new platform have been reported to describe it "as a more ethical alternative to privately run referral sites such as Avvo..." It will serve New York residents seeking legal help as well as businesses anywhere seeking advice on New York law.  Law Sites has more information here.

Monday, February 27, 2017

Judge finds party waived privilege by placing information on unprotected file sharing website

Earlier this month a federal magistrate judge in Virginia held that placing privileged materials on an unprotected file-sharing site waived a plaintiff's attorney-client privilege and work product protection for those materials.  The case is called Harleysville Ins. Co. v. Holding Funeral Home, Inc.  (also here).  For more details, go to 33 Law. Man. Prof. Conduct 76.  The ABA Journal has more information here.

Although some jurisdictions are divided on the issue of whether accidental disclosure automatically waives the privilege, in this case the judge held that the party's actions "were the cyber world equivalent of leaving its claims file on a bench in the public square and telling its counsel where they could find it. It is hard to imagine an act that would be more contrary to protecting the confidentiality of information than to post that information to the world wide web."

Saturday, February 25, 2017

Legal ethics professors file disciplinary complaint against Kellyanne Conway - UPDATED

If you saw the original story, scroll down to the end for an update:

I am sure you have heard by now that fifteen professors of legal ethics have sent a letter to the Washington DC Office of Disciplinary Counsel arguing that Kellyanne Conway has incurred in multiple violations of Rule 8.4(c) which recognizes as misconduct engaging in conduct involving dishonesty, fraud, deceit or misrepresentation.

The complaint has sparked a spirited debate among ethicists and other commentators. It certainly dominated the discussion for most of the day yesterday in the listserv of the Association of Professional Responsibility Lawyers.

Some of the debate has centered on whether the complaint has any basis in the rules [it does]; whether the rule is (or should be considered to be, rather) unconstitutional [it hasn't and there is precedent in many jurisdictions to suggest it wouldn't] and whether the bar has the authority to regulate Conway's conduct since it was not in the practice of law [there is precedent in many jurisdictions to support the view that it does].  Also, a separate question is whether the bar would (or should) spend resources on a complaint based on these types of allegations.

Given that the answer to that last question is that disciplinary agencies usually do not go after lawyers for relatively "minor" and or "private" instances of dishonesty, the issue depends on how important you think Conway's conduct (or alleged misconduct) really is. 

I am sure that if you "google" (a word that is now a verb) the story, you will find a lot of comments.  Here are just a few:

You can read the complaint itself here.

The Washington Post reports the story here.

Above the Law has a short statement that starts "It’s becoming increasingly likely that Kellyanne Conway isn’t a real person so much as a Professional Responsibility issue-spotter made flesh. Between making up terrorist attacks or shilling Ivanka’s crummy baubles or generally degraded political discourse by treating it like a criminal trial, Kellyanne’s had a busy month of run-ins with the generally accepted principles of legal ethics." 

Jonathan Turley argues the complaint is not justified and lacks credibility.

Attorney Paul Alan Levy criticizes the complaint on First Amendment grounds here.

The ABA Journal reports here.

UPDATE (2/27/17):  Professor Steven Lubet, a Legal Ethics professor at Northwestern, criticizes the complaint here