Illinois Appelate court on whether there is a duty to disclose death of client during settlement negotiations -- UPDATED, again

Back in February, 2015 I posted a story about an Illinois appellate court's opinion on whether an attorney has a duty to disclose the death of a client when the attorney is negotiating a settlement in litigation. The case is called Robison v. Orthotic & Prosthetic Lab, Inc and it is available here.  I later updated the story with the news that a disciplinary action had been filed against the attorney.  Today I am updating the story again to report that the Illinois Supreme Court has censured the lawyer. Go to the bottom of the post for the most recent update.


Original Story (February 2015)

About ten days ago, the Illinois appellate court issued a good opinion that deals with several issues we cover in class. The first one is whether an attorney has a duty to disclose the death of his client when the attorney is negotiating a settlement in litigation. The case is called Robison v. Orthotic & Prosthetic Lab, Inc and it is available here.

In this case, the plaintiff, Randy Robison, filed a product liability action against the defendant, Orthotic & Prosthetic Lab, Inc. in 2008.   In January, 2013, while the case was still ongoing, the plaintiff died but the plaintiff’s lawyers did not alert the court or the attorneys for the defendant.

In September 2013, the attorneys for both sides began settlement negotiations and reached an agreement on September 24. To finalize it, the attorney for the plaintiff sent an e-mail to the attorney for the defendant in which he stated “My client has instructed me to accept . . . in full and final settlement of this matter. Please provide an appropriate release and I will present it to my client for review and approval.”

The plaintiff's lawyer did not notify the defendant's lawyer of the plaintiff's death until after the defendant had submitted the settlement agreement, and he did so when he sent an amended version of the proposed release in which he asked the defendant's lawyer to agree to substituting the plaintiff's son as plaintiff in the case.  The defendant's lawyer refused and asked how come he had not been informed of the plaintiff's death, to which the plaintiff's lawyer replied that he had researched the issue and determined that he had no affirmative duty to disclose the information because it was against his clients' interests and he had a duty to protect his clients' interests within the bounds of the rules of professional responsibility.

The defendant refused to follow through on the settlement agreement claiming it was not valid, and the plaintiff moved to enforce the settlement.  Eventually, the lower court granted the motion and the defendant appealed.

In a short and well written opinion, the Court of Appeals reversed holding that the agreement was not valid and suggesting that the conduct of the attorney for the plaintiff in not disclosing the death of the client was unethical.  Interestingly, it also suggested that the conduct of the defendant's lawyer was unethical in not reporting the conduct of the plaintiff's lawyer.  Here are the most important paragraphs of the opinion:

... The defendant further argued that the settlement was invalid because the death of the plaintiff was a material fact that had been concealed from the defendant prior to and during settlement negotiations. ...

....

Settlement negotiations commenced in September 2013, and an agreement was ostensibly reached on September 24, 2013. The defendant, however, had no knowledge about the plaintiff's death or the appointment of a personal representative throughout the period of settlement negotiations. [These facts were not disclosed until] weeks after the settlement was reached and months after the plaintiff's death. [The plaintiff's lawyer acknowledged that] the disclosure of the plaintiff's death would have adversely impacted the settlement value of the case. He stated that he believed that the decision to withhold the information was in his clients' best interest and was in keeping with the rules of professional responsibility. We strongly disagree. We find that the arguments expressed by [the plaintiff's lawyer] are specious and incredible, and we are concerned about his professional judgment in this case. In failing to disclose the fact of the plaintiff's death, [the plaintiffs lawyer] intentionally concealed a material fact that would have reduced the overall value of the claim for damages. In addition, and equally troubling, [he] led the defendant to believe that he had authority to negotiate a settlement of the litigation on behalf of the party plaintiff, when the action was without a plaintiff as the plaintiff had died and a representative had not been substituted. Given [these] intentional misrepresentations and material omissions prior to and during the settlement negotiations, we conclude that the settlement agreement is invalid and unenforceable, and that the trial court erred in granting the motion to enforce it. 

In my opinion, this is the correct approach to the issue, but it needs to be explained a bit further.  Although it is well known that a lawyer does not have a general duty to volunteer adverse facts to an opponent in litigation,  Rule 4.1 has been interpreted to imply an exception which requires the disclosure of a client's death.  The most cited case holding this proposition is Virzi v. Grand Trunk, 571 F. Supp. 507 (E.D. Mich. 1983), which approaches the issue from the perspective of a duty to the court because in that case the attorney did not disclose the death of the client until after the court had entered an order. However, the court does go on to say that just as the lawyer owes a duty to the court, he or she also owes the same duty to opposing counsel.  Based on this view, at least two courts (one in Ohio and one in Kentucky) have imposed sanctions on attorneys for failing to disclose their client's death. In Robison, the court did not discuss rule 4.1 but emphasized the attorney's general duty of honesty under rule 8.4, which is presumably owed to everyone.

Interestingly, the court did not stop there and also took up the fact that counsel for the defendant did not report the misconduct under rule 8.3:

Finally, we believe that we have a profound responsibility to comment on the conduct of the attorneys in this case.  ... Rule 8.4(c) of the RPC states that it is professional misconduct for a lawyer to engage in conduct involving dishonesty, fraud, deceit, or misrepresentation. ...   Rule 8.3 requires a lawyer to report unprivileged knowledge of misconduct involving fraud, dishonesty, or deceit, or misrepresentation by another lawyer to the Illinois Attorney Registration and Disciplinary Commission (ARDC). ...

In this case, we believe that the material omissions and misrepresentations ... constitute serious violations of Rule 8.4. We also believe that defense counsel possessed sufficient knowledge to trigger a duty to report [the plaintiff's lawyer's] misconduct to the ARDC, and that the failure to report the misconduct constitutes a potential violation of Rule 8.3.

UPDATE 10/26/15:  About ten days ago, a formal disciplinary complaint was filed against the lawyer who did not report the death of the client.  You can read the complaint here.  (Thanks to the Legal Profession blog for the update.)  It remains to be seen if there will be a complaint against the lawyer who did not report the misconduct.  Given the language in the opinion, it seems to me it would be inconsistent, to say the least, if the administrator did not do so.

UPDATE 12/14/15:  The attorney has now filed an answer to the disciplinary complaint (available here) in which he argues that he researched the issue and discussed the matter with his partners and concluded that the death of his client was confidential information which he had a duty not to disclose under Rule 1.6(a). 

UPDATE 5/27/16:   The Illinois Supreme Court has imposed a censure on the lawyer for settling the case without informing court or opposing counsel of the client’s death.  The case is In the Matter of: Anthony Patrick Gilbreth, No. 6289576, Commission No. 2015PR00100 (Ill. SC May 18, 2016).   Lawyer Ethics Alert Blog has more information here.

New Podcasts

The Legal Talk Network has just posted a bunch of new podcasts, most of them related to "technology" and innovation.  Here is a list of (and links to) a few of them:

How Artificial Intelligence Will Influence the Future of Legal Practice

How Technology Has, and Will, Impact the Practice of Law

What Lawyers Should Know About Cloud Computing Security Standards

The Limited License Legal Technicians Program

Rocket Lawyer’s Charley Moore sees lawyer collaboration as the future

Prosecutors Coercing Defendants to Contribute to the Prosecutor’s Favorite Charities

Ron Rotunda's most recent column at Verdict  is about prosecutors who force defendants to contribute to charity. His conclusion:  "The best way to avoid the appearance of impropriety is not to engage in the conduct at all. Fines in plea bargains should go to the state or federal treasury, not to friends of the prosecutor."

Puerto Rico adopts statute of limitations for disciplinary proceedings

About two weeks ago, the Governor of Puerto Rico signed into law a bill that creates a 3 year statute of limitations for disciplinary proceedings (subject to a few exceptions).  As you may know, the majority of the states follow the approach suggested by the ABA in Rule 32 of the Model Rules for Disciplinary Enforcement, the comment to which states:

Statutes of limitation are wholly inappropriate in lawyer disciplinary proceedings. Conduct of a lawyer, no matter when it has occurred, is always relevant to the question of fitness to practice. The time between the commission of the alleged misconduct and the filing of a complaint predicated thereon may be pertinent to whether and to what extent discipline should be imposed, but should not limit the agency's power to investigate. . . .

Discipline and disability proceedings serve to protect the public from lawyers who are unfit to practice; they measure the lawyer's qualifications in light of certain conduct, rather than punish for specific transgressions. Misconduct by a lawyer whenever it occurs reflects upon the lawyer's fitness.

If you can read Spanish, you can read my comment on the newly adopted statute in Puerto Rico here.  In that article I argue that adopting the new statute does not make much sense for a number of reasons:

1.  There is no need to adopt a statute of limitations because there is precedent that holds that a disciplinary action should be dismissed if the amount of time the state has taken to file the complaint has placed the attorney in question at a disadvantage.  Under that approach, cases are decided on a case by case basis depending on whether the passage of time has had a detrimental effect on the attorney's ability to defend himself or herself against the allegations.

2.  There is no logic in placing the statute in the Puerto Rico Civil Code.  The statute of limitations should be in the rules for disciplinary enforcement.  In fact, the Puerto Rico Supreme Court is currently considering a proposal to establish new rules.  The Legislature should have deferred to the Supreme Court at least until it finished its revision of the rules.

3.  The majority of American jurisdictions do not have a statute of limitations for disciplinary actions, and the time period adopted in Puerto Rico is shorter than almost all of those adopted in the few jurisdictions that have adopted one.

4.  Although the statute does recognize an exception for conduct that constitutes a crime, it does not recognize an exception for cases of non-criminal intentional conduct.  In fact, the statute makes no distinction among different types of conduct.

5.  The Puerto Rico Supreme Court is currently considering new rules for disciplinary procedures and new rules of professional conduct.  The proposal for disciplinary proceedings has two options as to a possible statute of limitations.  The first one is not to adopt a statute; the second one is to adopt a 5 year statute of limitations with a series of exceptions.  The drafters wanted to give the Supreme Court the alternatives and let it decide.  The Legislature has now taken that decision from the Court.  Some have argued this is a violation of the principle of the separation of powers.

Two days ago I lamented the lack of action against prosecutors who present false testimony; here is an example of the opposite

A couple of days ago, I commented on a news story about possible perjury by prosecutors’ witnesses and complained about the lack of action against prosecutors who present false testimony.

In response, one of the readers of the blog sent me a copy of Grievance Administrator v. Plants (March 20, 2012) in which the Michigan Attorney Disciplinary Board disbarred a prosecutor for presenting perjured testimony. In its opinion, the Board stated that "knowing submission of false testimony is among the most serious of ethical violations and the presumptive sanction for such misconduct is disbarment."

Thank you very much to Cynthia for the link!

ABA Journal on perjury by prosecutors' witnesses, but no comment on the conduct of the prosecutors -- UPDATED

The ABA Journal has a story today on how courts are not doing much about a little kept secret in Chicago courts:  that police officers sometimes lie on the stand.  I wrote "sometimes" but the tone of the story clearly implies this is a much bigger problem than that.

In any case, the story and the comments are all about how there are little consequences for the officers who lie on the stand, which is likely true.  But what is not discussed in the story is the role of the prosecutors who present the testimony.  How come they get a pass too?  If it is true that "everyone knows" the witnesses are lying, can you really say the prosecutors didn't know?  And if that is the case, shouldn't they be disciplined for it?

Obviously, part of the problem is proving the allegations of "knowledge" but the rules clearly hold that knowledge "can be inferred from the circumstances."   I have said it a million times and will continue to say it.  If you want to do something about prosecutorial misconduct, judges have to start taking it seriously.

For more comments on prosecutorial misconduct go here and scroll down.

UPDATE 10:30pm:  So, a few hours after I posted this comment and my complaint about judges not taking prosecutorial misconduct seriously, I came across this story in Simple Justice about what appears to be the very first ever attempt to impose sanctions on a prosecutor in Utah.

Ohio's Board on Professional Conduct issues opinion on duty to report misconduct, which is different under Ohio rules

Back in February I wrote a comment on the first ethics opinion of the year by the Ohio Board on Professional Conduct in which I argued the opinion was based on faulty analysis.  As I looked more into the issue, I realized the problem was not with the opinion but with the text of the Ohio rules which is different than that of the Model Rules.  I later wrote an article about it.

Just about a month ago, the Board issued its second opinion of the year and it again illustrates that another of Ohio's rules is different from the text adopted in most jurisdictions.  The opinion (available here) attempts to clarify an attorney's duty to report misconduct under rule 8.3.

Ohio's version of Rule 8.3 states (in relevant part) that "A lawyer who possesses unprivileged knowledge of a violation of the Ohio Rules of Professional Conduct that raises a question as to any lawyer's honesty, trustworthiness, or fitness as a lawyer in other respects, shall inform a disciplinary authority empowered to investigate or act upon such a violation."

So here is my first question:  what is "unprivileged knowledge"?  Knowledge can't be privileged or unprivileged.  What is privileged is the information about which one has knowledge.  But that's just a matter of language.  It seems to me it is clear that what the rule means to say is "a lawyer who has knowledge of privileged information.."

The Board appears to read the text this way too since it states in the opinion that in order to determine if there is a duty to disclose lawyers should consult rule 1.6 to determine whether information is privileged or unprivileged.

Yet, this statement does not make much sense since Rule 1.6 does not address that question.  Rule 1.6 defines the duty of confidentiality, not the extent of the privilege, which is a matter of the law of evidence.  The Board seems to confuse the important distinction between confidentiality and privilege.

For this reason, it is not entirely clear that the Board realizes that, as it is drafted, Ohio's Rule 8.3 (on reporting misconduct) requires attorneys to disclose misconduct even if the misconduct is discovered as a result of a confidential communication as long as the information is not privileged.

Model Rule 8.3 states that a lawyer is not obligated to disclose misconduct if it would require disclosure of confidential information (protected under MR 1.6).  In contrast, in Ohio a lawyer is obligated to disclose the misconduct even if doing so would require disclosure of information protected by the duty of confidentiality under Rule 1.6, as long as the information is not privileged.

In addition, the Rule in Ohio applies if the information raises a question as to a lawyer's honesty, trustworthiness or fitness to practice, while according to the Model Rules, the duty to report only applies if the information raises a substantial question as to those same elements.

In other words, for these reasons, the duty to disclose misconduct is much broader in Ohio than in other jurisdictions that have adopted the language of the Model Rules.