ABA issues new opinion on duty to investigate circumstances related to the representation

 Yesterday - August 23, 2024 - the ABA’s Standing Committee on Ethics and Professional Responsibility issued a new Formal Ethics Opinion (number 513) on an attorney’s duty to inquire into and assess the facts and circumstances of the representation.  The summary reads as follows

As recently revised, Model Rule 1.16(a) provides that: “A lawyer shall inquire into and assess the facts and circumstances of each representation to determine whether the lawyer may accept or continue the representation.” To reduce the risk of counseling or assisting a crime or fraud, some level of inquiry and assessment is required before undertaking each representation. Further inquiry and assessment is required when the lawyer becomes aware of a change in the facts and circumstances relating to the representation that raises questions about whether the client is using the lawyer’s services to commit or further a crime or fraud.  The lawyer’s inquiry and assessment will be informed by the nature and extent of the risk that the current or prospective client seeks to use, or persists in using, the lawyer’s services to commit or further a crime or fraud. If after having conducted a reasonable, risk-based inquiry, the lawyer determines that the representation is unlikely to involve assisting in a crime or fraud, the lawyer may undertake or continue the representation. If the lawyer has “actual knowledge” that the lawyer’s services will be used to commit or further criminal or fraudulent activity, the lawyer must decline or withdraw from the representation.  When the lawyer’s initial inquiry leaves the lawyer with unresolved questions of fact about whether the current or prospective client seeks to use or persists in using the lawyer’s services to commit or further a crime or fraud, the lawyer must make additional efforts to resolve those questions through further reasonable inquiry before accepting or continuing the representation. The lawyer need not resolve all doubts. Rather, if some doubt remains even after the lawyer has conducted a reasonable inquiry, the lawyer may proceed with the representation as long as the lawyer concludes that doing so is unlikely to involve assisting or furthering a crime or fraud. 

You can read the full opinion here.

Breaking Down the ABA’s Guidance on Using Generative AI in Legal Practice

A recent article breaking Down the ABA’s guidance on using generative AI in legal practice is available here.

Two recent decisions reiterate the ABA's approach to flat fees paid in advance

 Last May I wrote a comment on an ABA Formal Ethics Opinion on flat fees which concluded that flat fees paid in advance should be considered client funds and, therefore, should be held in a trust account until earned.  In my comment I explained why I think this is the correct view even though there is some debate about it among some jurisdictions.  You can read my comment here. 

I am writing about this topic again today because of two interesting recent opinions, one from California and one from the District of Columbia.  

In In re Alexei, ___ A.3d ___ (D.C. Ct. of Appeals 2024), 2024 WL 3611154, (available here) the court held that flat fees paid in advance are unearned until the legal services they are supposed to pay for are completed.  As such, even though the attorney may have possession of the fees, the attorney does not have ownership and, thus, the fees property of the client until the fees are actually earned.  If an attorney removes the unearned fees from their trust account, the attorney may violate Rule 1.15(a).  The court also held that the fees are actually earned only upon completion of the entirety of the solicited services unless the fee agreement specifies otherwise.

Importantly, the court rejected the notion that a flat fee paid in advance should be considered earned upon payment because if a client consent could change when a fee is actually earned, it would not be true that a lawyer can’t earn a fee for doing nothing because a client could consent to an arrangement whereby the lawyer earns a fee upfront before actually performing any work for the client.  Also, allowing a lawyers and clients to “deem earned” fees that are not earned yet goes against the intent of the rules that mandate safekeeping of property.   

Having said that however, the court recognized that attorneys could depart from the default rule by either (1) specifying in the agreement for services when and how portions of the flat fee are earned or (2) obtaining informed consent from the client to treat unearned fees as their attorney property.

Notice how this second option contradicts the policy upon which the court based its decision to reject the notion that a flat fee paid in advance should be considered to be earned upon payment.  In fact, the court essentially says that the attorney can negotiate with the client to have the client agree to do something the court has decided could result in a violation of the rules.  This makes little sense, and I explore that topic in a forthcoming article called Advanced Magic in Illinois: Amendments to the Illinois Rules of Professional Conduct and the Confusion Over How to Handle Flat Fees Paid in Advance, 56 Loy. U. Chi. L.J. ___ (2024).

The second recent case addresses the question of whether a client’s creditor may seize funds held in trust pursuant to a flat fee agreement and concludes that, logically, the answer is yes if the fee held in trust has not been earned yet.  The case is Dickson v. Mann, Super Ct. No. 37-2021-00042299-PR-TR-CTL (July 16, 2024), available here.  

The court held, correctly, that “a flat fee paid by a client to a lawyer for future legal services does not belong to the lawyer until the fee is earned through the actual provision of legal services” and since the firm presented no evidence that it had performed any legal services yet the flat fee funds still belonged to the client at the time the creditor filed the notice of seizure. Accordingly, the court ordered the firm to produce the funds for seizure by the creditor.

Harvard Law Review blog essay on judicial ethics for the Supreme Court

The Harvard Law Review has published a very short blog essay titled "Enforceable Ethics for the Supreme Court" on the recent discussion about the need for an, you guessed it, enforceable code of ethics for the Justices of the Supreme Court.  You can read it here. 

Texas Supreme Court Preliminarily Approves Delivery of Legal Services by Licensed Paraprofessionals and Court-Access Assistants

 A couple of days ago I posted that Washington is considering a proposal to allow alternative business structures for the practice of law.  In a related matter, now comes news that the Texas Supreme Court has preliminarily approved the delivery of legal services by licensed paralegals and other non-lawyer approved professionals.  This is part of a trend that has been (very slowly) developing among various jurisdictions.  Recently, New Hampshire expanded its program.  See here.

Go here for more on the story.

A DC Hearing Committee proposes a two year suspension for Jeffrey Clark

Back in April I reported that a disciplinary panel in Washington DC had held that Jeffrey Clark had violated the rules of professional conduct.  See here.  

Now comes news that the Hearing Committee Report in the Jeffrey Clark District of Columbia bar discipline matter matter has been released and that it proposes a two year suspension.  You can read more about the story here, here and here.  You can read the 213 page opinion here.

Reportedly, Clark is seeking to review the decision.  See here.

Washington considering following Utah and Arizona in allowing "alternative business structures" for the practice of law

As posted in the Washington Bar Association's website:  

As proposed, the pilot program on entity regulation would allow entities to provide legal and law-related services in Washington under time-bound, limited exemptions from the otherwise applicable rules and statutes governing entities practicing law. If approved by the Court, among U.S. jurisdictions, Washington would follow only Utah and Arizona in executing a plan to determine how the delivery of legal services by entities can be regulated in a manner that protects consumers and promotes broader access to legal services. Under the proposal, participating entities would be required to abide by a Supreme Court authorizing order detailing conditions on their participation, including adherence to rules of ethics and regular reporting of data and information relating to their delivery of services to the public.

You can provide feedback to the WSBA and Practice of Law Board during the next Board of Governors meeting Sept. 6-7 or via email at entityregulationpilot@wsba.org.

Go here for more information.

Hunter Biden’s law license suspended in DC following gun conviction -- UPDATED

June 29, 2024

 It is never surprising to hear that a lawyer's license is suspended following a conviction, but that usually happens as a decision on the merits in a case for discipline.  As reported by The Hill, however, Hunter Biden's license has been suspended pending the proceeding.  This means that the suspension is an interim suspension, until it is decided whether he will be disciplined.  Although interim suspensions of this type are not unheard of (that is what was imposed on Rudy Giuliani in New York, for example), they are not that common.  Usually, lawyers are allowed to continue to practice until a disciplinary proceeding is decided.  The Hill has to full story here.

UPDATE 8/5/24: Hunter Biden's lawyers reply to the court's order to show cause.  Here is the full story.

ABA issues Formal Opinion on Generative Artificial Intelligence Tools -- UPDATED

July 29, 2024

The ABA Standing Committee on Ethics and Professional Responsibility has issued a new formal ethics opinion (ABA Formal Ethics Opinion 512) on ethical duties related to the use of generative artificial intelligence tools.  The summary states: 

To ensure clients are protected, lawyers using generative artificial intelligence tools must fully consider their applicable ethical obligations, including their duties to provide competent legal representation, to protect client information, to communicate with clients, to supervise their employees and agents, to advance only meritorious claims and contentions, to ensure candor toward the tribunal, and to charge reasonable fees.

You can access the full opinion here. 

UPDATE 8/5/24:  Here are a couple of comments on the new Ethics Opinion:

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Ethical Grounds