South Carolina lawyers beware: anything you say can and will be used against you; Court imposes discipline because it found certain private speech offensive

I know that the big news item of the week was Rudy Giuliani’s getting an interim suspension, and I will comment on that tomorrow, but I want to start the week with a comment on an opinion from South Carolina which did not get any press but which I think is more interesting (and problematic.)

In this case, called In the Matter of Traywick, the Court accepted an agreement between the Office of Disciplinary Counsel (ODC) and a lawyer and suspended the lawyer from practice for six months. The case is important because the conduct upon which the disciplinary action was based was Constitutionally protected speech.  The Court did not address the First Amendment issue, however, because the lawyer did not raise it.  It is not clear why that was the case, but the court should have examined the issue anyway.  

There are so many things wrong with the opinion it is difficult to decide where to start, but since I am getting ahead of myself, let’s just start at the beginning.  

As the court explains it, beginning in June 2020, the ODC received complaints from forty-six separate individuals regarding statements that the lawyer made on his personal Facebook page.  Let's repeat that last point:  his personal Facebook page. The ODC identified twelve statements on the lawyer’s Facebook page that the court found problematic.  Yet, the opinion only cites two of them, which makes it impossible for us to evaluate whether the court's evaluation of the basis of the complaint is actually justified.

But I guess the point of only citing two of the statements is to suggest that those two statements, in and of themselves, justified discipline.  I guess the court did not feel the need to look at the other ten statements because those two were enough.  

Here is the problem.  Both statements were made in the lawyer’s personal page, both were statements of opinion and neither was related to the practice of law.  And, more importantly, even though offensive, both were protected speech under the Constitution.  The court seems to suggest that the statements constituted “incitement” but cites no proof that the statements were either directed at anyone in particular, nor had any actual effect on anyone’s conduct as a result.  Any way you look at it, the court simply imposed discipline because someone thought the content of what the lawyer said was offensive.  And that is precisely what the Constitution says the state can't do.

Yes, the lawyer’s expressions were offensive, but if the First Amendment stands for something, it stands for the principle that the state can’t impose sanctions simply because someone finds the speech offensive.  The fact that 46 people complained that the speech was offensive is irrelevant.  It may as well have been 460 people.  The result should have been the same.  Shame on the lawyer for saying what he said, but the state can’t take his license away for expressing himself unless the state can justify it without violating the lawyer’s rights under the First Amendment.

I find it laughable that the court says in the opinion that it considered the case being “mindful of [the lawyer’s] right to freedom of speech under the First Amendment to the United States Constitution.”  If the court had been mindful, it would have made an independent examination of the issue in order to make sure that the state's attempt to impose discipline did not violate the lawyer's rights.  And, I suggest to you, the state would have had a very difficult time supporting its position.

Ultimately, the court based its conclusion on the fact that apparently South Carolina still has a rule that allows the state to impose discipline for conduct that “brings the legal profession into disrepute” which is a standard that has been abandoned by most jurisdictions precisely because it is vague, difficult to justify and probably unconstitutional when used to regulate speech, as in this case.

Now, why do I think this obscure case is important?   

One reason it is important is that it is another example of why one of the arguments we keep hearing (and that I wish people would stop saying) in relation to Model Rule 8.4(g) is problematic.  The argument is that we don’t need to worry about Rule 8.4(g) because the rules are “rules of reason” and regulators and courts will not interpret them to discipline protected speech.  Really?  How many examples do we need of regulators imposing discipline for protected speech outside the practice of law to realize that if they can get away with it when there is no rule that justifies it, they will definitely try to get away with it when they have a rule that appears to justify it?

The lawyer's expressions in the South Carolina case would not have violated any version of 8.4(g) that I am aware of, and, yet, the court feels perfectly comfortable imposing discipline because the speech was offensive.  That worries me. 

Another reason the case is important is that it does not seem to be based on an allegation of a violation of any specific rule of professional conduct.  The type of general allegation that certain conduct violates "the sprit" of the rules or "the oath" would not be sufficient to support a claim for discipline in Illinois, where I live.  I am not sure what the state of the law is in other states, though.

South Carolina adopts a limited version of the duty to understand technology as part of the duty of competence -- UPDATED

About a month ago I noted that Georgia was in line to become the 38th state to adopt the notion of understanding "technology" as part of the duty of competence, as suggested by comment [8] to Model Rule 1.1.

Now comes news that will Georgia is still in the process of doing this, South Carolina has in fact become the 38th state.  However, South Carolina’s version of the comment differs from the model rule's one.  The model rule states that “a lawyer should keep abreast of changes in the law and its practice, including the benefits and risks associated with relevant technology.”  In contrast, South Carolina's version adds that the duty extends only to “technology the lawyer uses to provide services to clients or to store or transmit information related to the representation of a client.”

Law Sites has a comment, and criticism of the added restriction, here.

UPDATE 12/8/19:  Louisiana Legal Ethics has more here.

South Carolina ethics advisory opinion finds that participating in programs like Avvo Legal Services is unethical

South Carolina's Ethics Advisory Committee has issued an opinion holding that participating in a program like Avvo's Legal Services is unethical. You can read the Opinion here.  

This comes as no surprise to me, or, I suspect, to readers of this blog since I have been saying that for quite some time.  (See here, here and here.  I also wrote a law review article on the subject which will be published by Georgetown Law Journal.  I will post a link when it comes out.)

Although the opinion does not mention Avvo specifically, it is clear from the description of the program it is commenting on that that is what is at issue here.  After describing the terms of the service, the opinion concludes that participating in it would violate the ban on sharing fees with non-lawyers:

In the situation described above, the service collects the entire fee and transmits it to the attorney at the conclusion of the case. In a separate transaction, the service receives a fee for its efforts, which is apparently directly related to the amount of the fee earned in the case. The fact that there is a separate transaction in which the service is paid does not mean that the arrangement is not fee splitting as described in the Rules of Professional Conduct.

A lawyer cannot do indirectly what would be prohibited if done directly. Allowing the service to indirectly take a portion of the attorney’s fee by disguising it in two separate transactions does not negate the fact that the service is claiming a certain portion of the fee earned by the lawyer as its “per service marketing fee.”

As I have argued before, the key to Avvo's problem is that the fee it charges is essentially a percentage of the lawyer's fee.  I have read Avvo's arguments to the contrary and they simply can't get around this fact. You can read their response to the South Carolina opinion here, and you will see they don't address this issue.  And that's because they don't have an argument. 

The opinion also states that marketing fees must represent the reasonable cost of the service, and these fees do not meet that criteria because the fees vary depending on the amount of the fees.  In other words, as stated above, the fees are essentially a percentage of the fees charged, as opposed to a set fee for advertising as Avvo claims.   As the opinion points out,

“Presumably, it does not cost the service any more to advertise online for a family law matter than for the preparation of corporate documents. There does not seem to be any rational basis for charging the attorney more for the advertising services of one type of case versus another.”

“The service, however, purports to charge the lawyer a fee based on the type of service the lawyer has performed rather than a fixed fee for the advertisement, or a fee per inquiry or “click.” In essence, the service’ s charges amount to a contingency advertising fee arrangement rather than a cost that can be assessed for reasonableness by looking at market rate or comparable services.”

Again, as I have argued in the past, I think this is correct. 

Interestingly, the opinion does not address another, perhaps worse, problem with Avvo's system:  the fact that Avvo retains the fee paid by the client until the work is performed, which I would argue violates the attorney's duty to safeguard that money by placing it in a trust account.

In any case, that is the third opinion this summer holding that for one reason or another participating in a program like Avvo's would be unethical.  See here (Ohio) and here (Florida).

Even so, though, according to the ABA Journal, Avvo is signing up lawyers in South Carolina and plans to launch there soon based on its stance that the opinion "is advisory and Avvo disagrees with the conclusions."  As Avvo's chief legal officer has stated “We’ve looked at the rules. We have our own interpretation of the rules."  That's cute.  Just like Avvo has stated elsewhere that it "believes" its fee arrangement system does not constitute fee sharing.

Of course Avvo will say it has a different interpretation of the rules.  Avvo wants to lure lawyers who need work into paying it for "leads."  But it is the the lawyers who take the risk of getting disciplined.  Remember that the rules don't apply to Avvo; they only apply to the lawyers who sign up with Avvo. 

For that reason, I would not advise a lawyer to sign up with Avvo in Ohio, Florida or South Carolina before the rules are amended unless he or she is willing to be disciplined in order to challenge the rules in court.

If that is a risk you are willing to take, my advise is for you to read up on Avvo's arguments in support of its "own interpretation of the rules."  Those are the arguments you would be trying to use in your defense against a disciplinary charge.  Just because Avvo claims it ‘believes’ that participating in its services does not place lawyers at risk of violating the rules of professional conduct does not make it so. Relying on Avvo’s claims is not a good substitute your own careful judgment.

For another comment critical of Avvo (other than my own) go here.

South Carolina opinion finds lawyer can wait until litigation is over to report misconduct under rule 8.3

The South Carolina bar's ethics committee has issued an opinion (S.C. Bar Ethics Advisory Comm., Op. 16-04, 7/18/16) holding that a lawyer who believes an opposing attorney in a pending matter has committed professional misconduct may wait until the proceeding concludes to make a disciplinary report.

The generally accepted rule on this is that if the rule applies, attorneys must disclose misconduct "promptly."  However, it is not always clear what "promptly" means.  In the well known In re Himmel case in Illinois, the affected attorney argued that he did not want to disclose the misconduct because doing so would be contrary to his client's interests.  The attorney wanted to wait until he got his client the compensation the client wanted before disclosing.  In that case, the court did not buy the argument.

Yet, it appears the SC committee agrees with it, holding that a lawyer may wait until the conclusion of the matter if the lawyer determines immediate reporting may hurt the client. However, the misconduct should be reported “promptly” at the conclusion of the litigation or appeal.  Thus, the committee concluded that “it is appropriate for a lawyer to consider any potential adverse impact to his or [her] client in determining the timing of a report against another lawyer.”

I understand the spirit of the opinion, but it seems to me it does not take into account that civil litigation can take years to conclude.  Indeed, although not all cases take years to conclude, it is certainly not uncommon for some cases to last a long time.  Should that make a difference?  And what if the representation is not in litigation? 

South Carolina redefines when the clock starts for purposes of the statute of limitations in a claim for legal malpractice

Last week, the South Carolina Supreme Court overruled prior precedent and held that the statute of limitations in a legal malpractice claim starts to run after the underlying case that gives rise to the malpractice action is resolved on appeal.

In this case, everyone agreed that the statute starts to run when the affected party knew or should have known that it had a legal malpractice claim against its trial counsel.  The question was whether the party 'knows or should have known' at the time they lose the case at the trial level, or at the time the higher court affirmed the decision of the trial level.

Overruling prior precedent on the issue, the court held as follows:  "We overrule Epstein and now hold that the statute of limitations for a legal malpractice action may be tolled until resolution on appeal of the underlying case if the client has not become aware of the injury prior to the decision on appeal. We find this rule comports with the discovery rule and effectuates the purpose of the statute of limitations."

The case is called  Stokes-Craven Holding Corp., v. Scott L. Robinson and Johns on McKenzie & Robinson, LLC, and it is available here. The Legal Profession Blog has more information here. Professional Liability Matters has a comment here.

South Carolina Supreme Court recognizes the right of a beneficiary of a will or trust to sue a lawyer for malpractice

About ten days ago, in a case called Fabian v. Lindsay, the South Carolina Supreme Court recognized a cause of action, in both tort and contract, by a third-party beneficiary of an existing will or estate planning document against a lawyer whose drafting error defeats or diminishes the client's intent. The Court added that "[r]ecovery under either cause of action is limited to persons who are named in the estate planning document or otherwise identified in the instrument by their status. Where the claim sounds in both tort and contract, the plaintiff may elect a recovery."  You can read the opinion here.

More criticism of the political ad in South Carolina

I just posted a long comment on the political ad in South Carolina attacking a candidate because he used to do criminal defense work (see below).  Thanks to the Legal Ethics Forum, here is yet another article criticizing the ad.

South Carolina Supreme Court finds LegalZoom is not engaged in unauthorized practice of law

The Legal Ethics Forum has the story, links and comments here.