Merri BaldwinBrian MartinJohn SteeleMaya Steinitz

Henry Sumner Maine

Ancient Law1861

Henry Sumner Maine

“The movement of progressive societies has hitherto been a movement from Status to Contract”

Maine, Ancient Law, Chapter 5

Henry Sumner Maine

“… [those] persons … are subject to extrinsic control [because] they [lack] the faculty of forming a judgment of their own interests; in other words, that they are wanting in the first essential of an engagement by contract.”

Maine, Ancient Law, Chapter 5

Status to Contract

“The legal profession is moving away from traditional conceptions of professionalism to a commercialized and industrialized alternative.”

John Flood, Will There Be Fallout from Clementi? (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1128398)

Status to Contract

Corporate GC and Biglaw Lawyer:

GC: “Are you trying to contract for the sale of your conflicts space?”

Biglaw: “Are you trying to buy it?”

Privatizing Ethical Obligations

“clients can, in fact, exert considerable influence over the ethical behavior of their outside counsel.  More significantly … such influence is an important form of ‘private regulation’ that may fill in the gaps between government regulation of legal ethics and self-regulation by the industry” [Christopher J. Whelan & Neta Ziv, Fordham Law Review, 2012]

Theses1. Courts should presume the validity

of contracts between lawyers and clients with in-house GCs.

2. Contracts of that type are generally beneficial to clients and lawyers.

3. Vulnerable clients should be more limited in their ability to enter into such contracts.

4. Judicial review of certain categories of agreements is necessary.

5. This process is more developed than most judges realize.

Contracting Around?

Clash of Ethics and Conflicts in Non-Class Aggregate Litigation

"Ethical Issues in Mass Tort Plaintiffs' Representation: Beyond the Aggregate Settlement Rule"

81 Fordham Law Review 3233 (2013).

Professor Nancy Moore (Boston University)

Questionable Provisions in Non-Class Aggregate Litigation

Lawyers shall: Recommend the settlement Rire clients who don’t settle Refuse new clients

Clients bound re settlement by: Majority or super-majority vote Committee vote

Clients receive a group representation rather than individual representation

Corporate Affiliate Conflicts

One Client Clause Enforced One Client Clause Not EnforcedGSI Commerce

Solutionsv.

BabyCenter, LLC

618 F.3d 204 (2nd Cir. 2010)

E2Interactivev.

Blackhawk2010 U.S. Dist. LEXIS

48333

Some Examples

2011 US App LEXIS 19414 (Fed. Cir. 9/22/11)

In re Shared Memory Graphics LLC

In-house lawyer covered by JDA

Advance waivers are ok, even beneficial

DQ motion denied Dissent: would

ignore advance waiver

APPC Servicesv.AT&T Corp.

Firm’s written agreement bound lawyer who left firm

Agreement exceeded ethics rules standards

2011 US Dist LEXIS 46237 (4/29/2011)

Multimedia Patent Trustv.Apple

Splitting suits to avoid current client conflict

Other firm handled suit against current client

Same technology at issue

Client intervened; DQ denied

62 Hastings L.J. 677 (2011)

RotundaResolving Client

Conflicts by Hiring "Conflicts Counsel"

2013 US Dist LEXIS 24171; N.D. Tex. (2/21/2013)

Galdermav.Actavis

Upholds open-ended advance waiver at to unrelated matters

Advance waiver held enforceable

Client: sophisticated purchaser of legal services

Client reppred by sophisticated GC

Macy's Inc. v. J.C. Penny Corp., 2013 NY Slip Op 04891 (App Div, 1st Dept June 27, 2013) [2013 BL 170689]

Macy’s v. J.C. Penny Corporation

Upholds open-ended advance waiver at to unrelated matters

Was not signed by client!

If you accept our work, you agree to these terms

In-house lawyer “subliminally rejected” clause

OCG Terms1. Client ID2. Definition of “Conflict”3. Process for Conflicts/Waivers4. Tasks and Tactics 5. Indemnification6. Most-Favored-Nation7. Choice of Ethics Rules8. 1-Lawyer Rule

Choice of Ethics Law

Choice of ethics law rejected

“Back door” provision in 8.5

Corporate Affiliates

This Representation is limited to representing the Company [and any entities listed on Exhibit A]. Company acknowledges that the Representation does not include the representation of any individual, officer or subsidiary, parent, or other corporate affiliate of the Company [unless included on Exhibit A]; any future expansion of the engagement beyond the Actions will be specified in writing.

Funding Clauses1. Choice of Counsel2. Decision-making3. Attorney Loyalty4. Frivolous Litigation5. Confidentiality/Monitoring6. Keeping Funder Advised