Next week we will begin discussing conflicts of interest in criminal law practice. Right on cue, the Legal Profession blog is reporting today on a case in which a lawyer was suspended because he had represented both a defendant husband and his cooperating wife in a drug distribution investigation and trial. The court found the conduct violated both Rule 1.7 and Rule 1.9.
The lawyer was representing the husband while representing the wife who cut a deal in exchange for testimony against the husband. For this reason, the court held that the lawyer "failed to appreciate the conflicting interests between husband and wife or to explain those conflicts to his clients and pursue the possibility or effectiveness of any waiver." For this reason, the court affirmed the finding that the lawyer had violated Rule 1.7, regardless of whether “actual prejudice” to the husband's defense occurred as a result. The case is called In re Solomon Neuhardt.
Thursday, April 3, 2014
Thursday, March 27, 2014
Lawyer convicted for helping client/husband conduct gang activities from prison
A lawyer who years ago got in trouble when she was caught on tape engaging in sexual contact with a client in a room for attorneys to meet with defendants in police custody, has now been convicted after admitting that she had helped her husband, a client whom she married while he was in prison, conduct gang activities from prison by providing money and information to others at his direction. Go here for more on this story.
Why was this judge not disbarred?
Yesterday, the Michigan Supreme Court issued an opinion (available here) removing from the bench a judge who was in the news some time ago after it was discovered that he "texted" a shirtless photo of himself to a courtroom bailiff and that he had sex in his chambers with a complaining witness in a child-support case. The court found that (1) the conduct was clearly prejudicial
to the administration of justice, (2) that the conduct exposed the legal profession or the court to contempt, censure, or reproach, (3) that the judge engaged in conduct that was contrary to justice, ethics, honesty, or good
morals, (4) that he testified falsely under oath, (5) that he failed to maintain high standards of conduct so that the integrity
and independence of the judiciary may be preserved, (6) that he failed to avoid all
impropriety and appearance of impropriety, (7) that he failed to promote public confidence in the integrity
and impartiality of the judiciary, (8) that he allowed sexual relationship to influence his judicial
conduct or judgment, (9) that he failed to be faithful to the law, (10) that he engaged in ex
parte communications, and (11) that he failed to disqualify himself when he should have.
As a sanction, the court removed the judge from the bench and, if the judge is reelected as a judge in November, suspended him for six years.
Sounds like a pretty substantial suspension; but it really isn't. Essentially, the sanction is a way to prevent the judge from running for the position again. Were he to get elected, he would not be allowed to serve because he would be suspended without pay. But the suspension does not apply if he is not elected. So what is the judge to do? Simple. Not run for re-election and continue to practice law. Wait. What? Wasn't he suspended? No. He was suspended from the bench. Not from the practice of law.
I don't understand why the sanction was so lenient. I think the judge should have been disbarred. Or at the very least, suspended from the practice of law.
UPDATE (3/29/14): One of my readers e-mailed me to let me know that in Michigan, to disbar a judge removed from office, a separate disciplinary proceeding needs to be filed by the Attorney Grievance Commission. So, that explains that. I still would have liked to have seen the court take a stance on the issue, though. I would have liked to have seen the court say that such a grievance should be filed. This is not necessary and I assume the Commission might take on the case anyway, but it never hurts to have a state Supreme Court remind lawyers in the jurisdiction that misconduct should not be tolerated.
As a sanction, the court removed the judge from the bench and, if the judge is reelected as a judge in November, suspended him for six years.
Sounds like a pretty substantial suspension; but it really isn't. Essentially, the sanction is a way to prevent the judge from running for the position again. Were he to get elected, he would not be allowed to serve because he would be suspended without pay. But the suspension does not apply if he is not elected. So what is the judge to do? Simple. Not run for re-election and continue to practice law. Wait. What? Wasn't he suspended? No. He was suspended from the bench. Not from the practice of law.
I don't understand why the sanction was so lenient. I think the judge should have been disbarred. Or at the very least, suspended from the practice of law.
UPDATE (3/29/14): One of my readers e-mailed me to let me know that in Michigan, to disbar a judge removed from office, a separate disciplinary proceeding needs to be filed by the Attorney Grievance Commission. So, that explains that. I still would have liked to have seen the court take a stance on the issue, though. I would have liked to have seen the court say that such a grievance should be filed. This is not necessary and I assume the Commission might take on the case anyway, but it never hurts to have a state Supreme Court remind lawyers in the jurisdiction that misconduct should not be tolerated.
Illinois Appellate Court imposes sanctions for frivolous appeal
Today, the Illinois Court of Appeals reminds us that there are other rules that hold the same principle as to appellate practice. In a case called Fraser v. Jackson (available here), the court found a party and their lawyer should be sanctioned for pursuing a frivolous appeal. Quoting an older case, the court stated
We find that this appeal, viewed as a whole, was frivolous, that it was taken for an improper purpose, and that it was filed specifically to harass and to cause unnecessary delay and needlessly increase the cost of litigation. We choose to impose sanctions for this conduct, finding that cases like this drain valuable resources intended to benefit those who accept the social contract of living under a law-based system of governmentThe sanctions will have to be paid by both the client and the lawyer.
Tuesday, March 25, 2014
Illinois Appellate Court issues opinion on splitting fee agreements
Just over a week ago, the Illinois Appellate Court, First District, issued an opinion addressing two important issues related to fee splitting (or sharing) agreements: (1) whether attorneys can enforce fee-splitting agreements if they have not strictly complied with Rule of Professional Conduct 1.5(e), even if they can claim they "substantially complied" with the rule and (2) whether a lawyer accused of reneging on such an agreement can raise the non compliance with Rule 1.5(e) as a contractual defense where it was his own conduct that allegedly caused or contributed to a violation of the rule. The court says NO to the first question but YES to the second one. The case is called Fohrman & Assocs., Ltd. v. Marc D. Alberts, P.C., and it is available here.
As to the first issue, the court holds that lawyers' fee-splitting or referral agreements are unenforceable if the contracting attorneys do not strictly comply with the ethics rule that requires each lawyer to ensure that the clients are informed in writing about the basis for the arrangement—including the exact split in fees and the division of the lawyers' responsibilities.
I understand saying that the conduct is contrary to the rules if it does not follow the rule. In other words, I understand saying that a lawyer can be disciplined for not following the rule. That should be obvious and makes sense.
But the issue here is not about misconduct or discipline, it is about the validity of a contract. For this reason, I am not so sure I like the result of the case, particularly the answer to the second question.
In deciding that an attorney could raise the non compliance of the rule as a defense even when that attorney had arguably caused the non compliance, the court stated that "we ... reject an argument that the referral agreement should be enforced because of defendants' alleged "nefarious" conduct. ... In doing so, we do not condone any alleged misconduct or encourage unfairness in relationships between attorneys. We uphold the Rules' interest in protecting clients above the interests of attorneys in recovering fees."
Taking this position, the court may not be condoning the misconduct, but it is allowing the attorney who allegedly engaged in it to get away with it. And, more importantly, the reason it states to do so does not make sense. The court says it is deciding the case this way because it is best to protect the interests of the clients "above" the interests of the attorneys in recovering fees. Here is the problem with this: enforcing the agreement would not affect the interests of the clients at all; the only interest affected is the interest of one of the attorneys.
Take the typical splitting fee agreement for example: Lawyer A refers a case to Lawyer B. Lawyer B agrees to take the case on a contingency of 1/3 of the recovery and agrees with Lawyer A to share that fee. According to the agreement, Lawyer A would get 1/3 of the 1/3 Lawyer B gets out the eventual recovery. Now assume that Lawyer B dupes Lawyer A into believing that Lawyer A has done everything he needed to do for the agreement to be valid. [I am not saying this is what happened in the real case; this is a hypothetical]. Continue to assume that even though Lawyer B told Lawyer A the agreement is in order, the agreement does not strictly comply with the Rule 1.5(e). Months later, the case settles for $9,000. Lawyer B gets the check and gives the client $6,000, and keeps the $3,000 that corresponds to his fee. Lawyer A then calls Lawyer B asking him to share the fee as promised. Lawyer B refuses and they end up in court arguing over it.
Here is the important part: the client has been satisfied and is out of the picture. He does not care what happens next. His rights have been well taken care of. The fight that ensues is between the attorneys and if they want to fight over it for years to come, that's their business. The client is not involved and couldn't care less. He has his money and has moved on.
The question for the court relates to the right of Lawyer A to be able to recover the fee he negotiated with Lawyer B. Would it be fair to allow Lawyer B to deny Lawyer A his share of the fee because Lawyer A did not comply with the rule if it is true that the reason that happened was because of Lawyer's B's assurances to Lawyer A? I don't think so.
As a contractual matter, it seems to me there were two more equitable solutions to the problem presented by the case in Illinois. First, it could be held that even though the conduct was in violation of the rules, the contract should be enforced between the parties (the lawyers) and then refer the matter of the misconduct to the authorities. In the alternative, the court could have adopted a view used in other jurisdictions that have decided that when lawyers from different firms agree to jointly represent a client, they enter into a “joint venture” or an “ad hoc partnership” in which the lawyers implicitly agreed to share profits or losses equally regardless of whether one attorney provides more labor or skill than the other. As a contract interpretation matter, wouldn't either one of these be a more equitable solution to the problem?
As to the first issue, the court holds that lawyers' fee-splitting or referral agreements are unenforceable if the contracting attorneys do not strictly comply with the ethics rule that requires each lawyer to ensure that the clients are informed in writing about the basis for the arrangement—including the exact split in fees and the division of the lawyers' responsibilities.
I understand saying that the conduct is contrary to the rules if it does not follow the rule. In other words, I understand saying that a lawyer can be disciplined for not following the rule. That should be obvious and makes sense.
But the issue here is not about misconduct or discipline, it is about the validity of a contract. For this reason, I am not so sure I like the result of the case, particularly the answer to the second question.
In deciding that an attorney could raise the non compliance of the rule as a defense even when that attorney had arguably caused the non compliance, the court stated that "we ... reject an argument that the referral agreement should be enforced because of defendants' alleged "nefarious" conduct. ... In doing so, we do not condone any alleged misconduct or encourage unfairness in relationships between attorneys. We uphold the Rules' interest in protecting clients above the interests of attorneys in recovering fees."
Taking this position, the court may not be condoning the misconduct, but it is allowing the attorney who allegedly engaged in it to get away with it. And, more importantly, the reason it states to do so does not make sense. The court says it is deciding the case this way because it is best to protect the interests of the clients "above" the interests of the attorneys in recovering fees. Here is the problem with this: enforcing the agreement would not affect the interests of the clients at all; the only interest affected is the interest of one of the attorneys.
Take the typical splitting fee agreement for example: Lawyer A refers a case to Lawyer B. Lawyer B agrees to take the case on a contingency of 1/3 of the recovery and agrees with Lawyer A to share that fee. According to the agreement, Lawyer A would get 1/3 of the 1/3 Lawyer B gets out the eventual recovery. Now assume that Lawyer B dupes Lawyer A into believing that Lawyer A has done everything he needed to do for the agreement to be valid. [I am not saying this is what happened in the real case; this is a hypothetical]. Continue to assume that even though Lawyer B told Lawyer A the agreement is in order, the agreement does not strictly comply with the Rule 1.5(e). Months later, the case settles for $9,000. Lawyer B gets the check and gives the client $6,000, and keeps the $3,000 that corresponds to his fee. Lawyer A then calls Lawyer B asking him to share the fee as promised. Lawyer B refuses and they end up in court arguing over it.
Here is the important part: the client has been satisfied and is out of the picture. He does not care what happens next. His rights have been well taken care of. The fight that ensues is between the attorneys and if they want to fight over it for years to come, that's their business. The client is not involved and couldn't care less. He has his money and has moved on.
The question for the court relates to the right of Lawyer A to be able to recover the fee he negotiated with Lawyer B. Would it be fair to allow Lawyer B to deny Lawyer A his share of the fee because Lawyer A did not comply with the rule if it is true that the reason that happened was because of Lawyer's B's assurances to Lawyer A? I don't think so.
As a contractual matter, it seems to me there were two more equitable solutions to the problem presented by the case in Illinois. First, it could be held that even though the conduct was in violation of the rules, the contract should be enforced between the parties (the lawyers) and then refer the matter of the misconduct to the authorities. In the alternative, the court could have adopted a view used in other jurisdictions that have decided that when lawyers from different firms agree to jointly represent a client, they enter into a “joint venture” or an “ad hoc partnership” in which the lawyers implicitly agreed to share profits or losses equally regardless of whether one attorney provides more labor or skill than the other. As a contract interpretation matter, wouldn't either one of these be a more equitable solution to the problem?
Is a claim for breach of fiduciary duty a torts claim or a contracts claim?
As you probably know, a cause of action against a lawyer for "breach of fiduciary duty" is different than a cause of action for malpractice. The latter is clearly a cause of action in tort which requires the plaintiff to meet the elements of a negligence claim. The former, however, is different and, in fact, sometimes allows a plaintiff to state a claim under circumstances where a claim for malpractice will not be recognized. See Tante v. Herring 453 S.E.2d 686 (Ga. 1994) for an example of this.
Having said this, then is a cause of action for breach of fiduciary duty not a torts claim? If not, what type of claim is it? A claim for breach of contract, perhaps? I imagine there are cases out there that have addressed this question, but I have not done the research to determine what seems to be the majority view on this.
What I can tell you today is that there is a new case on the subject and that it holds the claim is a torts claim. Interestingly, the holding worked in favor of the defendant because the statute of limitations just happened to be shorter for torts claims.
As reported in the Legal Profession Blog, the Connecticut Supreme Court concluded that "the plaintiff’s allegations sound in tort rather than in breach of contract, and, as a consequence, the plaintiff’s claim is barred by the three year statute of limitations applicable to tort claims."
The case is called Meyers v. Livingston and you care read it here.
Having said this, then is a cause of action for breach of fiduciary duty not a torts claim? If not, what type of claim is it? A claim for breach of contract, perhaps? I imagine there are cases out there that have addressed this question, but I have not done the research to determine what seems to be the majority view on this.
What I can tell you today is that there is a new case on the subject and that it holds the claim is a torts claim. Interestingly, the holding worked in favor of the defendant because the statute of limitations just happened to be shorter for torts claims.
As reported in the Legal Profession Blog, the Connecticut Supreme Court concluded that "the plaintiff’s allegations sound in tort rather than in breach of contract, and, as a consequence, the plaintiff’s claim is barred by the three year statute of limitations applicable to tort claims."
The case is called Meyers v. Livingston and you care read it here.
Colorado amends comment to Rules of Professional Conduct to deal with concerns about providing legal advice regarding marijuana
Because many aspects of the use of marijuana and the marijuana industry violate federal law, there is some debate as to whether counseling clients about legal matters related to state legalized marijuana would be a violation of the rule that bans an attorney from helping a client commit a crime. In response to these concerns, the Colorado Supreme Court has adopted a new Comment to Rule 1.2, which says that a lawyer "may counsel a client regarding the validity, scope, and meaning of Colorado constitution article XVIII, secs. 14 & 16 and may assist a client in conduct that the lawyer reasonably believes is permitted by these constitutional provisions and the statutes, regulations, orders, and other state or local provisions implementing them. In these circumstances, the lawyer shall also advise the client regarding related federal law and policy." Prof. Andrew Perlman shares his views on the issue at the Legal Ethics Forum.
Is financing your law practice through "crowdfunding" ethical?
Can an attorney accept a loan from a private lender if the attorney must commit to pay it back by agreeing to grant the lender a certain percentage of the attorney's earnings for a number of years? This is a new issue raised by a new form of funding known as "crowdfunding." I must confess I don't know much about it, but I think it presents an interesting question for lawyers.
Starting a law practice can be difficult under any circumstances, and it becomes even more difficult when you consider a bad economy and student debt. So what can a lawyer do? Crowdfunding offers a source of funds that is different from traditional loans. In a traditional loan situation, the lender will recover the loan by charging a set amount per month (including interest). Crowdfunding allows you to raise capital in exchange for a portion of your future income. In essence, through some crowdfunding websites, you can ask people to give you money and then promise to give them a share of your earnings.
Is this just like the TV show "The Shark Tank" , but online and with "investors" who are just every day people? Would it be unethical for a lawyer to go on the TV show The Shark Tank and ask for money in exchange for a share of the law firm the lawyer wants to create? Assuming "the shark" is not a lawyer, it sounds to me a strong argument can be made the answer is yes because the end result would be that the shark would become a partner in the law firm.
Is crowdfunding different? This blogger says no. He argues that agreeing to the terms of a crowdfunding funding agreement would constitute a violation of rules against fee splitting with non lawyers. On the other hand, My Shingle argues crowdfunding is different and should not be considered to be a violation of the rules.
UPDATE August 19, 2015: New York State Bar Association issues opinion on whether using crowdfunding is ethical. Go here for the story and links.
Starting a law practice can be difficult under any circumstances, and it becomes even more difficult when you consider a bad economy and student debt. So what can a lawyer do? Crowdfunding offers a source of funds that is different from traditional loans. In a traditional loan situation, the lender will recover the loan by charging a set amount per month (including interest). Crowdfunding allows you to raise capital in exchange for a portion of your future income. In essence, through some crowdfunding websites, you can ask people to give you money and then promise to give them a share of your earnings.
Is this just like the TV show "The Shark Tank" , but online and with "investors" who are just every day people? Would it be unethical for a lawyer to go on the TV show The Shark Tank and ask for money in exchange for a share of the law firm the lawyer wants to create? Assuming "the shark" is not a lawyer, it sounds to me a strong argument can be made the answer is yes because the end result would be that the shark would become a partner in the law firm.
Is crowdfunding different? This blogger says no. He argues that agreeing to the terms of a crowdfunding funding agreement would constitute a violation of rules against fee splitting with non lawyers. On the other hand, My Shingle argues crowdfunding is different and should not be considered to be a violation of the rules.
UPDATE August 19, 2015: New York State Bar Association issues opinion on whether using crowdfunding is ethical. Go here for the story and links.
Project on Government Oversight report on department of justice attorneys' misconduct
Long time readers of this blog know that I have posted many stories on prosecutorial misconduct and that I have been critical of the Department of Justice's approach to misconduct by federal prosecutors. I have also criticized the practice of many judges who refuse to disclose the names of prosecutors who engage in misconduct while they have no problem disclosing the names of other lawyers.
Now comes news of a very disturbing report that supports my concerns. The Project on Government Oversight (POGO) has published a disturbing report that concludes that the Department of Justice has been concealing hundreds of ethical violations by its prosecutors. According to the POGO website,
Now comes news of a very disturbing report that supports my concerns. The Project on Government Oversight (POGO) has published a disturbing report that concludes that the Department of Justice has been concealing hundreds of ethical violations by its prosecutors. According to the POGO website,
An internal affairs office at the Justice Department has found that, over the last decade, hundreds of federal prosecutors and other Justice employees violated rules, laws, or ethical standards governing their work. The violations include instances in which attorneys who have a duty to uphold justice have, according to the internal affairs office, misled courts, withheld evidence that could have helped defendants, abused prosecutorial and investigative power, and violated constitutional rights. From fiscal year 2002 through fiscal year 2013, the Justice Department’s Office of Professional Responsibility (OPR) documented more than 650 infractions, according to a Project On Government Oversight review of data obtained through the Freedom of Information Act and from OPR reports.In the majority of the matters—more than 400—OPR categorized the violations as being at the more severe end of the scale: recklessness or intentional misconduct, as distinct from error or poor judgment.The report itself is available here, and there is more analysis of it here. The Legal Ethics Forum has more here and Seeking Justice has a comment here.
Monday, March 24, 2014
Is there something wrong with offering unpaid internships in a law firm?
I don't think there is anything illegal or unethical about offering unpaid internships in a law firm. However, the fact you can do something does not necessarily mean you should do it. Go here for a short post arguing that lawyers should not offer unpaid internships.
Subscribe to:
Posts (Atom)