Wednesday, December 30, 2015

New York amends its rules; allows lawyers from other jurisdictions to temporarily practice in New York

The ABA/BNA Lawyer's Manual on Professional Responsibility is reporting that "[l]awyers licensed outside New York are finally allowed to engage in temporary law practice in the Empire State, thanks to a new court rule adopted Dec. 10. With this long-awaited step, New York became the 47th state to adopt a version of ABA Model Rule 5.5 on multijurisdictional practice. The new temporary practice rule goes into effect Dec. 30, or as soon as certain steps required by New York judiciary law are completed. The New York rule differs from the MJP rules of other states in a couple of ways. Most notably, it allows temporary practice not just by lawyers licensed in other U.S. jurisdictions, but also by lawyers who are authorized to practice law in a non-U.S. jurisdiction. Also, New York's new MJP rule is a rule of attorney admission rather than a rule of professional conduct. This approach enabled MJP to be adopted in New York without getting approval from the presiding justices of the four appellate divisions, as is required for professional conduct rules."

The ABA/BNA Lawyer's Manual on Professional Responsibility has the full story at 31 Law. Man. Prof. Conduct 758 (here).

Friday, December 25, 2015

A conversation with LegalZoom's CEO

The Lawyerist has a podcast on LegalZoom with its CEO, John Suh, in which the hosts talk about  the nuts and bolts of how LegalZoom builds documents, the role LegalZoom plays in access to justice, its brushes with various states’ ethics boards, the ways LegalZoom partners with lawyers to deliver legal services, which it claims is more effective than LegalZoom or lawyers could do alone and about "why lawyers should stop treating LegalZoom like the bogeyman."  Go here to listen to the program/

Sunday, December 13, 2015

Five ethical issues to consider related to litigation financing

There is a lot of literature out there about litigation financing.  Here is a short article asking five important questions to consider when asking whether litigation financing is ethical.

May lawyers reveal conflidential information to prevent a client's suicide?

The Virginia State Bar recently addressed the question of whether an attorney can disclose confidential information in order to help prevent a client from committing suicide.

Although Virginia ethics rules don’t specifically address a client’s threat of suicide, a 1984 Virginia ethics opinion said it is not improper for a lawyer to disclose to appropriate mental health authorities a client’s intent to commit suicide.  Therefore, according to an update to the Virginia State Bar’s list on frequently asked legal-ethics questions, a lawyer may take reasonably necessary protective action when the lawyer reasonably believes a client’s suicide threat is credible, adding that the rules “should be interpreted to allow the lawyer to contact the client’s family, close friends, mental health care providers, or emergency medical services personnel so that an intervention can be made to save the client from harm.”   Check out question and answer #26 here.

The Legal Profession blog has more information and some links here.  

On the issues raised by the need to reply to negative reviews

As you probably know, consumers often take to the internet to review products and services.  These reviews can be helpful to other consumers considering buying or seeking similar products or services.  Sometimes, when the reviews are negative, those who are criticized can and do reply to "defend" themselves.  Can a lawyer do the same?

There are law review articles and other literature on this out there.  There is no general reason to say a lawyer can't respond to a negative review, but a lawyer clearly has to be careful not to violate the rules of professional conduct when doing so.  In particular, lawyers have to be careful not to disclose confidential information when replying to a review, and since the category of confidential information is so broad, it may prove to be very difficult to reply to a review without doing so.

It can be argued that the exception to Rule 1.6 that allows attorneys to disclose confidential information to the extent necessary to respond to a claim filed against them should apply to allow attorneys to defend themselves from attacks on negative reviews, but I think that is a stretch given the current language of the rule.  As explained by a recent post in Attorneys for the Profession,
Restrictions on lawyers' ability to respond to criticism do raise some troubling concerns. Negative online reviews by clients remain on the Internet indefinitely and may even dominate an attorney's search engine results for several years, available to anyone, anywhere there is Internet access with a few "clicks." So even though the New York State Bar Ethics Committee concluded in its Opinion 1032 that the exception to RPC 1.6 should not be "interpreted in a manner that could chill…discussion," the reality is that prohibiting attorneys from fully defending against such potentially ruinous online comments does just that, by allowing the disgruntled client's side of the story to go unchallenged. A strong argument can be made that the self-defense exception to Rule 1.6 that exists in every state except California should be extended to allow lawyers to go online to defend themselves to the extent reasonably necessary in order to correct false or misleading reviews without having to fear potential disciplinary consequences. But until such a change is made to a state’s RPCs, or the exception is reinterpreted, lawyers should remember that the rules currently do not permit the use of confidential information in responding [to online criticism]. . .
 You should read the full post here.

Will lawyers be replaced by robots, part 3

In part because of the on going debate on 'innovation' and new ways to provide legal services, there is an on going discussion on the role of "artificial intelligence" in the practice of law.  See here and here for previous posts on the subject.  Adding to the discussion, Law Technology Today has a posted a short comment called "The Future of Law Firms: Will AI Replace Young Attorneys and Paralegals?"  It is available here.

California's proposal on "classic retainers" and flat fees

As you probably know, California is going through the process of revising it rules of professional conduct.  See here and here for recent updates on that.  If you are a long time reader of this blog, you may also know that I have often commented on the confused state of the law regarding flat fees.  See here, here and here for examples of why I have said that.  Much of that confusion relates to the issue of whether fees can be non-refundable.

California's proposal is actually pretty straightforward and, in my opinion, a good approach to the question.  It states, in part,
(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.

Section (d) says that a classic retainer can be non-refundable.  However, you must remember that the retainer is still subject to the rule that says that all fees must be reasonable.  So is it possible that under certain circumstances making the retainer non refundable can make it unreasonable?  How about a case where a client agrees to, and pays the retainer, and then decides the next day that he does not want the lawyer any more?  Or a case where the client pays the retainer and when he goes to ask the lawyer to provide services, the lawyer is not available?  In those cases, it seems to me the client would have a good argument that the lawyer has a duty to refund the retainer because otherwise the non-refundability aspect of it would make it unreasonable.  If I am right, then all the rules says is that, in the end, a classic retainer can be non-refundable only as long as making it non-refundable does not make it unreasonable.  I think that is pretty much the prevailing view, and I don't have a problem with it.

Section (e) is more controversial.  Many, perhaps most, jurisdictions, have held that flat fees (at least when they are paid in advance for work to be performed later) can't be non refundable.  However, I have argued that doing so eliminates the advantages of flat fees as alternatives to hourly fees.  For that reason I have argued that flat fees should be allowed to be non refundable as long as there is a real possibility that the work to be performed could take longer than originally expected or agreed upon.  Section (e) appears to take this approach.  As long as the service is completed, the fact that it is completed in less time than expected does not require the lawyer to reimburse the amount of money equivalent to the time saved.  Again, however, the fee is subject to the requirement of reasonableness, but in this case the reasonableness refers to the amount charged taking into account the difficulty of the task, how much time it is expected to take to complete, the market rate and other similar factors.  this is not the prevailing view, but, again, I don't have a problem with it.

Wednesday, December 9, 2015

Legal Zoom settles case vs North Carolina Bar

The stories regarding whether LegalZoom is engaged in the unauthorized practice of law (UPL) go back many years.  I have posts on this issue on this blog from the very first year I started it.  The first story I posted on this is from 2010, here and here, when the company was sued in Missouri for allegedly violating the rules regarding UPL.  That claim was eventually settled.  See here.

Then in 2011 it was LegalZoom which took the offensive and sued the North Carolina Bar challenging its application of the rules regarding UPL.  See here

Now comes news that LegalZoom's claim against the North Carolina State Bar has been settled. (Forbes).  According to the story, under the terms of the settlement the state bar has agreed to support  legislation that would clarify the definition of “unauthorized practice of law,” which currently is open to various interpretations and was used by the bar to challenge LegalZoom. 

This is becoming one of the most important debates for the profession.  The ABA has announced a partnership with Rocket Lawyer (Legal Zoom's competition), and has created a Commission on the Future of Legal Services to study other innovative approaches to providing legal services.

The ABA has been slow to adopt meaningful change to its rules and views on innovation and it is not clear at this point what the recommendations of the Commission will be.  Also, the recommendations one similar state commission were not entirely well received (here).  But whatever happens, the ongoing and future debate on these issues (usually bundled under the catchphrase (or catch-word, rather)  "innovation") will be interesting.

Lawyer Ethics Alert Blog has more on the story here.  (10/28/15)

For more on LegalZoom go here, here and here.

UPDATE (12-9-15):  In my original post (above) I stated the case was "settled" and referred to the terms of the "settlement."  To be accurate, though, the parties agreed to a "consent judgment" in the case, the terms of which are summarized by the North Carolina State Bar here.  You can also read the full text of the consent judgment here.  One important point not mentioned before is that the consent agreement does not terminate the litigation but merely suspends it for two years or until the legislature approves the proposed legislation to amend the definition of the practice of law.  If this is not achieved within two years, the agreement states the parties can resume the litigation.  If the parties resume litigation, they will be free to pursue all claims and defenses that were available to them before the Consent Judgment was entered.

ABA Commission on the Future of Legal Services has issued its final Resolution & Report; did we really need that? does it say anything new?

The ABA Commission on the Future of Legal Services has issued its final Resolution and Report: Regulatory Objectives. This Resolution is scheduled for a vote at the February 2016 San Diego ABA Midyear Meeting.

I glanced at the resolution and will have to spend more time thinking about it, but from what I saw at first glance, there is not much that is new here; nor innovative; nor controversial.  Who is going to argue that there is an interest in providing more and better access to legal services?  We have been saying that for ages.  The question is how are we planning to achieve the goal?  What are we going to do to improve on the current situation?  That is what we need to be discussing; that is what is at the heart of the on going debate (in the academic literature, at least) on the question of "innovation."  Yet, this resolution and report doesn't address it. Maybe I expected too much; or maybe I misunderstood the aim of the Commission.  Regardless, it seems the discussion of innovation and new approaches to the delivery of legal services will have to wait for another day.

...  and while I have your attention, let me take the opportunity for a shameless plug:  If you are interested in this subject consider attending the next International Legal Ethics Conference, July 14 to 16 at Fordham University in New York.  For more information go here.  I will be hosting two panels during the conference and one of them is on the question of innovation and the future of the profession.  You can read a description of the panel and about the panelists here.

Update on the process to revise the rules in California

Here is an update on the tumultuous process to revise the rules of professional conduct in California. (For the background story go to the California label and scroll down for multiple posts.)

Tuesday, December 8, 2015

Court of Appeals for the 7th Circuit on the validity of a contingency fee agreement

Last month (on Nov. 5), the U.S. Circuit Court of Appeals for the 7th Circuit issued a short, but interesting opinion on whether a certain contingency fee agreement was reasonable.  The case is called Goesel v. Boley International Ltd., Westlaw cite: 2015 WL 6774211.

The facts of the case were as follows:  A five year-old boy was injured when playing with a toy and his parents retained a law firm to sue on Cole’s behalf.  The agreement between the parents and the firm provided that the firm's fees would be one-third of any gross settlement or judgment, and that the clients would be responsible for litigation expenses.  In the event of no recovery, the clients would not be responsible for either expenses or fees.   After four years of litigation, the case was settled for $687,500. Under the retainer agreement, the firm’s one-third of the gross settlement amount was $229,166.67 and the litigation expenses totaled $172,949.19.  This meant the clients would recover about $288,000 or 42% of the total amount of the settlement.  Because the injured party a minor at the time of the litigation, the federal court’s local rules required court approval before the settlement could be finalized. At a hearing on the settlement, the district judge launched sua sponte into his objections to a contingent-fee arrangement.  Holding that the amount of recovery clients received was inadequate, the judge modified the fee structure, deducting expenses prior to calculating the one-third fee.  The law firm appealed.

On appeal, the court held that the fee agreement was reasonable because it did not exceed the prevailing market rate, nor did it defeat the public policy of protecting the interests of minors in litigation. In fact, the court noted that the duty to protect minors is consistent with the policy of promoting access to the courts through reasonable contingent fee arrangements.  The court, therefore, reversed the district court’s decision and ordered the original fee arrangement be reinstated.

This was the correct decision.  First, it should be noted that the court focused its analysis on the reasonableness of the agreement and not on the fee (or more specifically on the amount recovered by the firm).  This is an important distinction.  What defines a contingency agreement is the fact that there is a level of uncertainty as to the result of the case, and because of that it is possible that the case could end up generating less value than expected.  Also, the fact that the client is responsible for the expenses of the case in addition to the fee earned is not only the prevailing practice, it is also reasonable.  Remember that during the litigation, the firm is advancing these costs.  If the firm was forced to recover both fees and expenses out of the amount obtained by using the percentange agreed upon to determine fees, there would come a time when the firm could be losing money on the case, which will result in firms not taking certain cases and, therefore, less access to justice for clients.  This approach was unsuccessfully attempted as a form of tort reform in Florida.

There is however, one aspect of the agreement that should also be examined.  The rules require that a firm proposing a contingency fee agreement explain its consequences and alternatives.  This is so precisely to make make that attorneys explain the possibility that the firm may end up recovering a higher amount than the client in the end, as happened in this case.  The client must give valid, informed consent, which means the client must freely agree to the fee arrangement with an understanding of this possibility.  Presumably this happened in this case, after all it was not the client who objected to the agreement but the trial judge on his own. 

Monday, December 7, 2015

Excellent post on the proper and improper conduct during depositions

Over at Litigation & Trial, Max Kennerly has published an excellent short post on proper and improper conduct of lawyers when making objections during depositions. 

Thursday, December 3, 2015

Do prosecutors have too much power?

Last month, Northwestern University Law School hosted a debate on the topic of whether prosecutors have too much power.  The debate featured two speakers in favor of the proposition that prosecutors do indeed have too much power and two speakers against the proposition.  The speakers for the proposition were Paul Butler, a former federal prosecutor and currently a professor at Georgetown Law School and Nancy Gertner, a former federal judge and now a lecturer at Harvard Law School.  The speakers arguing that prosecutors do not have too much power were David Hoffman, former federal prosecutor and partner at Sidley, Austin and Reid Schar, also a former federal prosecutor and now a partner at Jenner & Block.

The debate was organized by a group called "Intelligence Squared" (or "lQ2") which has its own website with lots of useful information on the topic, the panelists and links to the both video and audio versions of the full debate.  Unfortunately, I can't embed the video here, but you can watch it here.

I thought the program was a bit too long, but other than that it was very interesting.  They actually have the audience vote on which side "won" the debate and the results are presented at the end.  I won't spoil it for you, but even if you don't watch the full show, fast forward to the end to see the results.

Check out the IQ2 website for upcoming debates and mark your calendar.

Nearly all members of the Washington Practice of Law Board resign accusing the Washington State Bar Association of systematically undermining the Board's mission

As I have argued before, the "hottest" issue in professional responsibility today is the notion of "innovation" which is shorthand for a discussion on new approaches to providing legal services.  And one of the most important recent developments on the subject was the approval of a proposal in Washington state to allow (and to regulate) the provision of limited legal services by state certified legal technicians (known as Limited License Legal Technicians, or LLLTs).  I discussed this development here and here

By taking this approach, Washington state became the leader in the discussion of innovative ways to provide access to legal representation.  Yet, it appears this came at a cost, and that things are not running as smoothly as I thought.

Last month, nearly all members of the Washington Practice of Law Board resigned accusing the Washington State Bar Association of systematically undermining the Board's mission.  The resigning members sent a letter to the Washington Supreme Court detailing their concerns in which they state that "the Washington State Bar Association has a long record of opposing efforts that threaten to undermine its monopoly on the delivery of legal services" including the fact that "[t]he Washington State Bar Association opposed the Limited License Legal Technician Rule..."  You can read the full letter here.  It ends by stating that "[t]he treatment of the Practice of Law Board over the last three years is a textbook study on how to discourage and disempower a board comprised of volunteers ..."

The Washington State Bar Association has replied that the letter contains “significant misinterpretations and misunderstandings” and that “[a]ccess to justice and the protection of the public are unwavering commitments shared by the Washington Supreme Court and the Washington State Bar Association.”  Lawyerist and the ABA Journal have the story here and here.

The assertion that the Bar Association has tried "to protect its monopoly on the delivery of legal services" is not surprising in the sense that that has always been part of the debate on issues of innovation.  A lot of the recent discussion on innovation deals with opening the doors to the market of legal services to non-lawyers and it is not uncommon to hear the accusation that lawyers try to keep the doors closed in order to protect their control on the market. 

I don't have any information to know whether this accusation is true or accurate when it comes to the Washington Bar Association, but it is a common argument with the larger debate on how to make legal services more accessible, more affordable though innovation.

As you probably know, the ABA has created a Commission on the Future of Legal Services to study these issues. 

ABA files brief urging Supreme Court to review case that the ABA contends threatens the attorney work product doctrine

The ABA Journal is reporting that the ABA has filed a brief urging the U.S. Supreme Court to review a decision favoring the Federal Trade Commission in its battle to obtain attorney documents regarding a drug company’s settlement agreement with a generic manufacturer, arguing that the appellate decision “opens the floodgates” to disclosure of attorney work product in government investigations.  The ABA's  arguments are summarized in a press release available here.  The full brief is available here.