Illinois State Bar Association issues three new ethics opinions

The Illinois State Bar Association’s Board of Governors approved three new Professional Conduct Advisory Opinions on May 15 during its regularly scheduled Board meeting.

The opinions address the duties of an in-house counsel when confronted with conduct that may be harmful to his or her employer; the prohibition on a lawyer threatening criminal charges to gain an advantage in a civil matter; and the propriety of a firm name of “X and Y” when one of the named lawyers has changed careers and no longer practices law.

Opinion 20-02

Opinion 20-02 relates to the duties of an in-house counsel when confronted with conduct that may be harmful to his or her employer. It discusses Illinois Rule of Professional Conduct 1.13 and the in-house counsel’s reporting obligations. It also covers the in-house counsel’s authority under Illinois Rule of Professional Conduct 1.13 and 1.6 to disclose confidential information outside of the entity in certain circumstances.

Opinion 20-03

Opinion 20-03 addresses prohibition of a lawyer threatening criminal charges to gain an advantage in a civil matter. The opinion concludes by indicating that in a demand letter, a lawyer may accurately set forth the law, including the possibility of civil and criminal liability, as well as including a copy of the applicable statute. However, a lawyer would be prohibited from stating that criminal liability could be avoided by complying with the demand.

Opinion 20-04

Opinion 20-04 addresses the propriety of a firm name when one of the named lawyers has changed careers and no longer practices law. The opinion also discusses the availability of the designation “of counsel” to a lawyer no longer practicing law with the firm, finding that such a designation would be inappropriate.


Thank you to Illinois Lawyer Now for this update, the summaries and the links.

New opinion on when an attorney can speak directly to in house counsel when the entity for which in house counsel works is represented by another lawyer

According to Model Rule 4.2, and its state equivalents, with a few exceptions, an attorney can’t communicate directly with someone the lawyer knows to be represented by counsel.  But how do these rules apply to in-house counsel?  Can a lawyer communicate with in-house counsel when the lawyer knows the entity for which in-house counsel works is represented by another lawyer?

Last month, the Virginia Supreme Court addressed these and other questions in its Legal Ethics Opinion 1890 (available here).  The Law for Lawyers Today has a comment here.

Challenges facing inhouse counsel

In the most recent Thinking Like a Lawyer podcast, hosts Joe Patrice and Elie Mystal, two popular contributors to Above the Law discuss a number of issues that face inhouse counsel, including a recent comprehensive survey of corporate legal departments which reveals confusion over privacy requirements and complaints over outside counsel costs.   (Note that the discussion begins with a completely different issue but eventually gets to the issues related to inhouse counsel at the 9:40 minutes mark.).  You can listen to it by clicking on the "play button" (triangle) below, or by going here.

Interesting new study on professionalism

Ethical Systems.org is reporting on a new paper on Professionalism and Moral Behavior which tests the hypothesis that individuals in traditional occupations that strongly identify as professionals (e.g., law, medicine) have a greater likelihood of engaging in unethical behavior. This is an important inquiry in light of ethical failures in companies where lawyers and accountants often act as “gatekeepers” on ethics and compliance issues vis a vis corporate practices.  Examples of incidents in these types of companies abound, with automakers and financial companies featuring prominently on the list.  Go here for more information and links.

On a related matter, here is a comment on the ethical culture that allows conduct as the one recently discovered Volkswagen perpetrated to deceive consumers and authorities.

California joins Massachusetts and Georgia holding the intra firm communication is privileged in case against the firm by former client

Back in July 2013, the Massachusetts Supreme Court held that confidential communications between law firm attorneys and a law firm's in-house counsel concerning a malpractice claim asserted by one of the firm's clients are protected from disclosure to the client by the attorney-client privilege.   Shortly after that, Georgia issued an opinion agreeing with this position.  A strong debate followed (see here and here).  Oregon was next, and the debate continued.

And now, California Supreme Court has joined the list of jurisdictions recognizing the applicability of the privilege:  "The question before us is whether the attorney-client privilege applies to intrafirm communications between attorneys concerning disputes with a current client, when that client later sues the firm for malpractice. We conclude that when an attorney representing a current client seeks legal advice from an in-house attorney concerning a dispute with the client, the attorney-client privilege may apply to their confidential communications."  The decision is called Palmer v. Superior Court and you can read it here.   Go here for a little more information.

Update on the story regarding Oregon's decision to consider intra-firm consultation protected under attorney-client privilege

Bernard A. Burk, Assistant Professor of Law Faculty Fellow, Parr Center for Ethics University of North Carolina School of Law, wrote to me in response to my original post with a couple of important points:

1.  There is a line of federal district and bankruptcy court decisions in the 90s and 2000s denying or limiting the privilege under similar circumstances. The cases reason, more or less, that internal consultation with firm counsel regarding the firm's rights and duties vis-à-vis a client, at least while the engagement continues, violates the firm's fiduciary duty of loyalty and thus should not be shielded by the attorney-client privilege. They cases include (among others) In re Sunrise Sec. Litig., 130 F.R.D. 560, 595 (E.D. Pa. 1989); Koen Book Distributors v. Powell, Trachtman, Logan, Carrie, Bowman & Lombardo P.C., 212 F.R.D. 283 (E.D. Pa. 2002); Bank Brussels Lambert v. Credit Lyonnais (Suisse) S.A., 220 F.Supp.2d 283 (S.D. N.Y. 2002); SonicBlue Claims LLC v. Portside Growth & Opportunity Fund Ltd. (In re SONICBlue Inc.), No. 03-51775, Bloomberg law Citation: 2008 BL 15488 (Bankr. N.D. Cal. Jan. 18, 2008); Thelen Reid & Priest LLP v. Marland, No. C 06-2071 VRW, 2007 BL 226352 (N.D. Cal. Feb. 21, 2007). There are all kinds of reasons why, in my humble opinion, the earlier federal decisions are poorly reasoned and implement bad policy. But the issue has been current a lot longer than some may think, and until recently was regularly decided the other way.

2. The ABA House of Delegates recently adopted a resolution supporting the decisions in Georgia and Massachusetts.

Thanks to Bernie for the updates!

Oregon Supreme Court holds conversations within law firm are privileged in malpractice case against the law firm

Last week, the Oregon Supreme Court became the third state high court to hold that consultations between a law firm's attorneys and the firm's in-house counsel are privileged from discovery in a malpractice action even if they concern the firm's potential liability to a current client. The case is Crimson Trace Corp. v. Davis Wright Tremaine LLP. The issue was most recently addressed in Massachusetts and later in Georgia and has generated an interesting debate. Go here for an article criticizing the Massachusetts and Georgia decisions, and here for a debate on them.

New York Times reports on internal investigation of GM legal department

Here is an interesting article in today's New York Times that reports on an on-going internal investigation on the role of GM's lawyers in the recent recalls and investigations that resulted in GM's agreement to pay a $35 million dollar fine.

For more on the GM mess go here and scroll down.

Debate about intra-firm privilege continues

Last month I posted a few links to other blogs and an op-ed piece on the issue of intra-firm privilege.  See here.  The Legal Ethics Forum now has more links here.

Article criticizing decisions that found converstations within a firm regarding possible malpractice are privileged

Last month I reported that the Massachusets Supreme Court recently found that confidential communications between law firm attorneys and a law firm's in-house counsel concerning a malpractice claim asserted by a current client of the firm are protected from disclosure to the client by the attorney-client privilege.  See here.  A few days later, Georgia reached the same result.  See here.   The Legal Ethics Forum had a debate  on the issue here and here.  Now, thanks again to the LEF, here is a link to an article by Richard Zitrin (professor at UC-Hastings) criticizing the decisions which he refers to as bad for clients who expect loyalty from the firms they employ.

Georgia Supreme Court agrees with recent ruling re intra-firm privilege

A few days ago I reported that a new decision from Massachusets recently held that confidential communications between law firm attorneys and a law firm's in-house counsel concerning a malpractice claim asserted by a current client of the firm are protected from disclosure to the client by the attorney-client privilege.  Now comes news that the Georgia Supreme Court has issued an opinion reaching the same conclusion.  The Legal Ethics Forum has the story and links here.

Massachusets Supreme Court recognizes in intra law firm privilege

The Legal Profession blog is reporting (here) on an important new decision from Massachusets on whether confidential communications between law firm attorneys and a law firm's in-house counsel concerning a malpractice claim asserted by a current client of the firm are protected from disclosure to the client by the attorney-client privilege.  The court concluded that they are, provided that (1) the law firm has designated an attorney or attorneys within the firm to represent the firm as in-house counsel, (2) the in-house counsel has not performed any work on the client matter at issue or a substantially related matter, (3) the time spent by the attorneys in these communications with in-house counsel is not billed to a client, and (4) the communications are made in confidence and kept confidential.  The case is called RFF Family Partnership, LP v. Burns & Levinson LLP.  The Legal Profession blog has more on the story and a link to the case here.  The Legal Ethics Blog also has more here. 

What to do if attorney discovers child pornography in a computer that belongs to a member of a corporate client

Prof. Monroe Freedman has posted this interesting question at the Legal Ethics Forum:  A lawyer who represents both civil and criminal clients is at the offices of a corporate client he is representing in a civil matter.  While he is there, the lawyer gets permission from a VP of the company to use the VP’s computer  (which belongs to the corporate client) to check the lawyer’s email.  In using the computer, the lawyer inadvertently discovers that it contains pornographic pictures of sexual abuse of children.  The VP is not the lawyer’s client, and the VP has no reason to believe that he is.  The pornography is unrelated to the client’s business.  What should the lawyer do?  Go here for the discussion.

Claiming the client made you do it will not save your license

The Legal Profession blog is reporting on a case that reiterates an important lesson for all lawyers.  Lawyers can't blame their clients for misconduct.  Lawyers have a duty to exercise independent professional judgment which, in some cases, may require the lawyer to quit, get rid of a client, talk the client out of a proposed course of action or taking other preventive or remedial measures.

In this new case, the disciplinary authorities believed the attorney when he testified that he was "used" or "led down the wrong path" by his employer, which the lawyer characterized as an unscrupulous real estate development company.  The lawyer testified that, among other things, the client forged his name on checks. The lawyer testified to his remorse, his efforts to make his victims whole, and the fact that he did not misappropriate any funds for his personal use and realized no monetary gain from the subject transactions.

That was all fine, but the attorney was still suspended for two years by the New York Appellate Division for the Second Judicial Department. The court noted that the lawyer knew that his conduct was improper but took no action to blow the whistle or to step down from his position as in-house counsel with the company. Rather, he knowingly allowed his services to be used by another to perpetrate a fraud.

New opinion on the right of in-house counsel to sue former employer for retaliatory termination of employment

The question of whether in-house counsel have a right to sue a former employer/client for wrongful termination is one that continues to generate opinions around the country.  In class, for example, we discuss the (in)famous Balla v Gambro decision in which the court denies lawyers the right to sue for wrongful termination when they are fired for acting according to professional conduct obligations.

Other jurisdictions have taken different approaches, and just a few days ago, the D.C. Bar Legal Ethics Committee issued a new opinion in which it concludes that in-house lawyers suing their employers or clients for discrimination or a retaliatory firing can't disclose any confidences or secrets, unless they're defending against a counterclaim or affirmative defense.  The Blog of the Legal Times has more information here.

WSJ on firms buying lunch for clients using clients' own money

In class I am often asked if a lawyer violates the rule that says lawyers can't provide financial assistance to clients if the lawyer takes a client to lunch and pays the bill.  Well, it turns out that the question may be a non-issue since firms may be charging the clients for those lunches after all...  In a short article today, the Wall Street Journal law blog discusses the issue (here).  It starts:  "Here’s a tip for law firms who want to keep clients happy: Don’t buy them fancy lunches with their own money. . . . [Clients are] fighting over line items such as photocopies and food, and pushing back hard on charges for pricey legal research databases such as Westlaw and LexisNexis. Their position: many of these costs are law firm overhead, and so shouldn’t be passed on to the client in the first place."

New Formal Opinions from the ABA Standing Committee on Ethics and Professional Responsibility

Last month the ABA's Committee on Ethics and Professional Responsibility issued two new formal opinions.  There are available through the website of the ABA Center for Professional Responsibility.  Here are the official summaries:

Formal Opinion 11-459: Duty to Protect the Confidentiality of E-mail Communications with One’s Client

A lawyer sending or receiving substantive communications with a client via e-mail or other electronic means ordinarily must warn the client about the risk of sending or receiving electronic communications using a computer or other device, or e-mail account, where there is a significant risk that a third party may gain access. In the context of representing an employee, this obligation arises, at the very least, when the lawyer knows or reasonably should know that the client is likely to send or receive substantive client-lawyer communications via e-mail or other electronic means, using a business device or system under circumstances where there is a significant risk that the communications will be read by the employer or another third party. 

Read the full opinion here.

Formal Opinion 11-460: Duty when Lawyer Receives Copies of a Third Party’s E-mail Communications with Counsel

When an employer’s lawyer receives copies of an employee’s private communications with counsel, which the employer located in the employee’s business e-mail file or on the employee’s workplace computer or other device, neither Rule 4.4(b) nor any other Rule requires the employer’s lawyer to notify opposing counsel of the receipt of the communications. However, court decisions, civil procedure rules, or other law may impose such a notification duty, which a lawyer may then be subject to discipline for violating. If the law governing potential disclosure is unclear, Rule 1.6(b)(6) allows the employer’s lawyer to disclose that the employer has retrieved the employee’s attorney-client e-mail communications to the extent the lawyer reasonably believes it is necessary to do so to comply with the relevant law. If no law can reasonably be read as establishing a notification obligation, however, then the decision whether to give notice must be made by the employer-client, and the employer’s lawyer must explain the implications of disclosure, and the available alternatives, as necessary to enable the employer to make an informed decision. Read the full opinion here.

Information given to someone thought to be an attorney not in good standing is still privileged

Back in June of last year, I wrote about a case in which a federal court magistrate in New York has decided that information shared with someone the client mistakenly thought was a licensed lawyer was not protected by the attorney/client privilege. See here and here.

I criticized the decision arguing that if the client really did not know of the attorney's inactive status, the client should be given the benefit of the privilege.

Yesterday, the Legal Ethics Forum reported that the decision has been overturned. See here.

The text of the opinion is available here.

Full interview with former Toyota attorney

A couple of days ago, I reported that the magazine Corporate Counsel was going to publish a long article about a former lawyer for Toyota who has accused the company of hiding important and relevant documents in product liability cases. Here is the link to the six page long article.

Interview with former Toyota attorney who claims the company is guilty of discovery fraud

As you know, Toyota has been in the news recently because of claims of defects in its cars that cause sudden acceleration problems. A side story to that on-going litigation is the litigation against one of its former lawyers who has accused the company of hiding important and relevant documents in product liability cases. I reported on this back in March (here).

A couple of days ago, Law.com posted a video previewing an upcoming story in Corporate Lawyer on the lawyer who has accused Toyota of discovery fraud. The video of a conversation with the lawyer is available here.