Tuesday, May 23, 2017

New ABA Ethics Opinion on duties related to the use of modern technology -- UPDATED

The ABA Standing Committee on Ethics and Professional Responsibility recently issued Formal Ethics Opinion 477, which updates Formal Ethics Opinion 99-413, and which addresses different duties related to the use of modern technology.

The opinion concludes that "[a] lawyer generally may transmit information relating to the representation of a client over the internet without violating the Model Rules of Professional Conduct where the lawyer has undertaken reasonable efforts to prevent inadvertent or unauthorized access. However, a lawyer may be required to take special security precautions to protect against the inadvertent or unauthorized disclosure of client information when required by an agreement with the client or by law, or when the nature of the information requires a higher degree of security."

This does not strike me as new or surprising.  It essentially reinforces a duty already in place in Rule 1.6(c) of the Model Rules of Professional Conduct which states that a lawyer "shall make reasonable efforts to prevent the inadvertent or unauthorized disclosure of, or unauthorized access to, information relating to the representation of a client."

What is new (but I don't know if surprising) is that the committee declined to draw a bright line as to when encryption or other security measures would be required. Instead, the committee recommended that lawyers undergo a “fact-based analysis” that includes evaluating factors such as the sensitivity of the information, the likelihood of disclosure if additional safeguards are not employed, the cost of employing additional safeguards, the difficulty of implementing the safeguards, and the extent to which the safeguards adversely affect the lawyer’s ability to represent clients.  Thus, some cases may require lawyers to use encryption, while others might not.  

For a good explanation of the opinion go here, and here.

UPDATE 5/23/17:   Formal Opinion 477 has been revised to clarify that the opinion does not alter Formal Ethics Opinion 11-459 and to note that the change in Model Rule 1.6(c) supported 11-459. There is no substantive change in the opinion. The revised opinion can be found here.  For a good analysis of the opinion go here.

Saturday, May 20, 2017

Wednesday, May 17, 2017

North Carolina is considering amending its rules to make it easier for lawyers to participate in Avvo Legal Services

Long time readers of this blog know that I have been following and writing about the debates related to Avvo Legal Services for some time now.  For an article on my position on the subject go here

As you may remember Avvo has attempted to argue that lawyers should not worry about participating in Avvo Legal Services because doing so does not violate rules of professional conduct, or, if it does, because the rules are unconstitutional.  Yet, all the opinions issued so far have concluded that Avvo is wrong.  And that is because under the current regulatory scheme in pretty much all states, Avvo’s arguments are weak. 

Having said that, however, note that the key to the previous statement is “under the current regulatory scheme.”  Saying that participating in Avvo Legal Services would violate the rules is not the end of the debate.  The more interesting question is whether the rules should be changed to accommodate what Avvo wants to do. 

Today’s update on this story is that instead of continuing to argue that the rules don't apply or that they should be ignored, Avvo apparently has been trying to convince the North Carolina regulators to change the rules.  As a result, North Carolina may soon become the first state to change the regulatory approach in order to formally make it acceptable for lawyers to participate in services like Avvo Legal Services.  (Interestingly, as you might remember, North Carolina also amended its definition of the “practice of law” as part of an agreement with LegalZoom.)

According to documents I have reviewed, as a result of meetings between Avvo and a committee of the State Bar Association, the committee has drafted a proposal to amend several rules of professional conduct, including Rule 5.4, which bans splitting fees with non-lawyers.  The proposal would add a new paragraph to the rule to state that “a lawyer may pay a portion of a legal fee to a credit card processor, group advertising provider or online platform for identifying and hiring a lawyer if the amount paid is a reasonable charge for administrative or marketing services and there is no interference with the lawyer’s independence of professional judgment or with the client-lawyer relationship.”

Adoption of this new rule would be good news for Avvo, but would not necessarily clear the way entirely.  One point of contention within the committee was whether Avvo’s rating system operates as a recommendation to consumers which would result in a violation of rule 7.1 if lawyers were to pay Avvo for recommending them, particularly since Avvo does not disclose the basis of the rating system.  Within the committee, this created a concern over whether Avvo is providing recommendations that are not based on legitimate criteria because the rating system is not transparent since it does not provide information on the factors used to create the rating.

To address this concern, there is now a proposal to add a new paragraph to the comment of Rule 7.1 to state (in part) that “A lawyer may participate in online directories and other rating systems that allow the lawyer to “claim” the lawyer’s profile and to provide information for inclusion in the profile or to be used to rate the lawyer.  The information provided by the lawyer must be truthful and not misleading.  No money may be paid by the lawyer for a rating and, before voluntarily providing information to an online rating system, the lawyer must determine that the rating system uses objective standards that are verifiable and would be recognized by a reasonable lawyer as establishing a legitimate basis for evaluating the lawyer’s services. . . .”

If it is true that Avvo does not disclose the basis of its ratings, I am not clear how a lawyer can meet these requirements. 

Finally, as one would expect, another concern is whether allowing Avvo to retain the consumer’s payment until the lawyer finishes providing the legal services constitutes a violation of the lawyer’s duty to safeguard client’s funds in a trust account and to contribute the interest generated by that account to the state’s IOLTA program.

To address this concern, Avvo has suggested an amendment to the comment of the rule on safeguarding property, but it is not clear that the committee of the State Bar has adopted it.  Avvo’s proposal is to add a new paragraph to the comment to read: “Client or third person funds sometimes pass through, or are originated by, intermediaries before reaching the lawyer’s account.  Such intermediaries have traditionally included banks, credit card processors, or litigation funding entities, and have been chosen unilaterally by the client.  However, newer intermediaries include attorney marketing programs, chosen by the attorney, that collect payments directly from clients and pass them through to the attorney.  Attorneys have an affirmative obligation to ensure that such intermediaries 1) adequately protect client funds and 2) do not retain client funds for a period [of time] that materially impacts i) the client’s opportunity to earn interest on the funds, or ii) the availability of interest earnings for [state legal services organization that receives IOLTA interest, if applicable].  Absent other indicia of fraud (such as the use of non-industry standard methods for collecting credit card information), an attorney’s diligence obligation will be deemed met with respect to intermediaries that collect client funds using credit or debit cards and remit such funds to attorney accounts within [ ] days.”

As of now, I don’t know if the State Bar proposal will include this suggested language.  It is not included in the copy I have, but there may be more documents I have not seen yet.  Clearly, Avvo's goal is to exempt lawyers from having to deposit client money in a trust account, at least for some, as of yet not determined, period of time.  For those who have argued the rules about trust accounts should be abandoned or relaxed, this would not be a problem.  But for those who think they need to be followed strictly in order to protect clients, this proposal might be a problem.  The North Carolina rules regarding trust accounts can be found here.

The documents I have seen about these proposals are all from within the last three months, but I do not know what is the current status of the proposals.  It remains to be seen if they will be adopted by the State Bar Ethics Committee.

Stay tuned.

Tuesday, May 16, 2017

Florida Supreme Court dismisses Florida Bar’s petition proposing substantial revisions to lawyer referral service rules

Back in 2015, the Florida Supreme Court rejected amendments to state regulations on referral services and directed the State Bar to instead draft amendments that would “preclude Florida lawyers from accepting referrals from any lawyer referral service that is not owned or operated by a member of the Bar.”  See, In re Amend. to Rule Reg. The Fla. Bar 4-7.22—Lawyer Referral Services, 175 So. 3d 779, 781 (Fla. 2015).

The State Bar went back to work and adopted a new proposal in 2016, but this new proposal was recently rejected again by the Supreme Court because it still allowed attorneys to accept referrals from entities owned and operated by non-lawyers. 

What is interesting about this story is that the new proposal was adopted to make it easy for entities like LegalZoom, RocketLawyer and Avvo to participate in the state’s legal market.  To this end, under the new proposed amendments any private entities that connect consumers looking for legal services with lawyers would have been called “qualifying providers” regardless of whether they were “traditional” referral services or a technology-based “lead generator” (like Avvo, RocketLawyer or LegalZoom).

The Court however, rejected the proposal stating that the proposed amendments “do not comply with the Court’s direction concerning lawyer referral services that are not owned or operated by a member of the Bar” and it objected that the proposed amendments “seek to expand the scope of the rule to include “matching services” and other similar services not currently regulated by the Bar.”  This last reference, obviously, is directed at services like RocketLawyer, Avvo and LegalZoom.

Having said all that, however, the debate is not over.  The Court again sent the issue back to the State Bar stating that “the Bar’s petition in this case is . . . dismissed without prejudice to allow the members of this Court to engage in informed discussions with the Bar and those who are in favor or against the proposed regulation of matching and other similar services. The Court lacks sufficient background information on such services and their regulation at this time.”

In other words, it is still possible that the Court will adopt the proposed amendments; it just won’t do it at this time.

The Court’s order is officially called In Re: Amendments to the Rules Regulating The Florida Bar-Subchapter 4-7 and you can read it here.

Thanks to Lawyer Ethics Alerts Blog for the update.

Monday, May 15, 2017

NPR article on one example of prosecutorial misconduct

NPR has published an interesting short article chronicling a criminal case recently dismissed because of prosecutorial misconduct.  The title says it all:  "'This Was A Colossal Screw-Up': A Close Look At A Case Dismissed For Misconduct."

Georgia Supeme Court finds duty to disclose exculpatory evidence does not necessarily require disclosure before trial

The Georgia Supreme Court recently absolved a state prosecutor of ethics charges arising from an alleged violation of the duty to disclose exculpatory evidence because, according to the court, the “record fail[ed] to show any clear-cut violation of Brady or Rule 3.8 (d), and for that reason, we conclude that no discipline at all is warranted.”

Given that the court concludes the record shows "clearly and convincingly" that the prosecutor failed to disclose evidence to the defense, I wonder what the court means by a “clear cut violation.”  Does that mean that the record showed a violation but that it was an “acceptable violation,” a “so-so violation”...?  Hm; don’t know, but I will let that slide.

There are two more interesting things to point out here.  The first one if that the court does not make any distinction between the obligation imposed by the Constitutional standard in Brady and the regulatory standard in the Rules of Professional Conduct.  As you probably know, some jurisdictions consider the Rules to impose a broader duty.

The second interesting point is the reason the court did not find a violation of the prosecutor’s duty to disclose.  The court found that even though the record “clearly and convincingly shows that [the prosecutor] failed to disclose to defense counsel [the material evidence] before trial . . . Brady does not always require pretrial disclosure of exculpatory evidence . . .”  Citing several older Georgia cases, the court holds that a prosecutor can withhold exculpatory evidence from the defendant until the trial itself and that the duty would be satisfied even if the disclosure is made at the last minute if defense counsel has a chance to cross examine the witness who offers the evidence.  According to this line of cases “[w]hether a disclosure at trial is timely enough to satisfy Brady depends on the extent to which the delay in disclosing the exculpatory evidence deprived the defense of a meaningful opportunity to cross-examine the pertinent witness at trial, whether earlier disclosure would have benefited the defense, and whether the delay deprived the accused of a fair trial or materially prejudiced his defense.”

I find it difficult to think that a prosecutor can knowingly delay disclosing information there is a duty to disclose and that it would be acceptable to surprise the defense in the middle of trial.  (And, even if the information is not withheld "knowingly," as the court states in the case, Brady applies irrespective of the good faith or bad faith of the prosecutor.)  I find the last quote of the court (above) to be of little comfort.  However, I am not an expert on criminal procedure or the Brady doctrine, which is maybe why I find this result surprising.  I just don’t know if this approach is common among jurisdictions.  Do you?  Let me know.


The Legal Profession blog has more information here.

Sunday, May 14, 2017

Virginia to amend rules regarding advertising

The Virginia Supreme Court has announced that it will adopt new lawyer advertising rules effective July 1, 2017.  Here is the announcement and the text of the new rules.  The new rules will largely follow the suggestions of the Association of Professional Responsibility Lawyers which, for some time now, has been advocating the simplification of advertising rules. Go here for a post on the APRL's report on the subject and here for a comment on it.

I don't have a problem with an effort to simplify the rules on advertising.  But there is an inherent problem in any rule that allows for discipline to be imposed based on a finding that information is "misleading."  The word misleading is so vague it leaves too much up to interpretation. Yet, the word is part of the Constitutional analysis developed by the Supreme Court, so we have learned to tolerate it, I guess.

For a comment on the new rules in Virginia go here.

2 Civility has a comment with some links here.

UPDATE 5/14/17:  The Law for Lawyers Today blog has a comment here.

Thursday, May 4, 2017

Hot potato doctrine applied in Mississippi

The Law for Lawyers Today blog is reporting on a recent case applying the "hot potato doctrine" in Mississippi.  You can read the story here.  The case does not seem to add much to what we already know about the doctrine other than the fact that the case did not quite involve the typical scenario in which the doctrine applies.

Typically the hot potato doctrine applies when a lawyer drops a current client in order to take on a new client.  In the Mississippi case, the lawyer took on the new client and then dropped the current client.   Thus, in this case what the lawyer did was enter into a concurrent conflict for a short period of time and then tried to resolve it by dropping one of the two concurrent clients.  In other words, the doctrine is usually applied when a lawyer drops a client in order to avoid entering into a conflict, while here the lawyer dropped a client in order to remedy a conflict he was in already.