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A Legacy of Integrity and Trust

CURRENT ETHICAL CURRENT ETHICAL ISSUES FOR LEGAL ISSUES FOR LEGAL PROFESSIONALSPROFESSIONALS

Rob Charles(520) 629-4427 (direct line)

(520) 879-4705 (fax)[email protected]

www.lewisandroca.com

Arizona Ethics Opinion on Restrictions on Rights to Practice

and Departing Lawyers

• The State Bar of Arizona Committee on Rules of Professional Conduct (Ethics Committee) issues formal opinions that represent non-binding advice on ethics issues for Arizona lawyers.

• In Op. 09-01, the Committee discussed the issue of a firm that employs associate lawyers using a contract that would require the departing associate to pay a flat amount to the law firm for each instance in which the departing associate continues to represent a client that had previously been represented by the law firm.


Op. 09-01 (cont.)

• Because ER 5.6 states that “a lawyer shall not participate in offering or making: . . . a partnership, shareholders, operating, employment or other similar type of agreement that restricts the right of a lawyer to practice after termination of the relationship, except an agreement concerning benefits upon retirement . . .” the restriction was unethical. Firms may not impose financial disincentives upon a withdrawing way’s right to represent a client, as the decision to retain counsel is the client’s decision, not the law firm’s.


Termination of Representation;

Withdrawal; Fees; Confidentiality

• In Op. 09-02, the Committee discussed issues arising upon the termination of the lawyer/client representation. Among other topics, ER 1.16 describes the circumstances under which a lawyer may or shall withdraw from client representation. In litigation, a court may have jurisdiction to decide whether a lawyer is entitled to withdraw or not.


09-02 (cont.)

• The obligation to maintain client information confidential as provided in ER 1.6 does not end upon termination of the representation. A lawyer may not disclose client confidential information simply because the representation is terminated. In fact, ER 1.9 explicitly imposes duties on a lawyer with respect to former clients, including the obligation to refrain from using client confidential information to the disadvantage of the former client or to reveal client confidential information except as provided in the Rules. ER 1.9(c).


09-02 (cont.)

• If the termination of representation is as a result of a controversy between the lawyer and the client, ER 1.6(d)(4) may allow the lawyer to disclose client confidential information “to respond to allegations in any proceeding concerning the lawyer’s representation of the client.” However, such disclosures can be made only “to the extent the lawyer reasonably believes necessary.” The lawyer may not simply disclose all client confidential information in the event of a dispute with a former client.


09-02 (cont.)

• If the termination of representation arises because of a dispute over the client’s providing fraudulent evidence, the lawyer must consider ER 3.3(a)(3) and decide whether disclosure is necessary if the client will not remedy the problem of having provided false evidence.


09-02 (cont.)

• Sometimes disputes arise in determination of representation over the fee for withdrawal related work. Legal fees must be reasonable. See ER 1.5. The ethics opinion notes that most authorities believe the client should not be charged for most withdrawal-related work, in order to avoid chilling the client’s ability to retain counsel of choice.


09-02 (cont.)

• The withdrawing lawyer has other obligations under ER 1.9, including with respect to conflicts of interest. ER 1.16(d) addresses the requirement that the lawyer provide the client with a copy of the file without charge, unless the lawyer had previously provided the client with a copy of the file.


Trust Accounts; Safekeeping Property

• There are lawyers licensed in Arizona who have offices in Arizona and elsewhere. In the multistate practice of law, some firms would prefer to keep their bank accounts in a central bank, rather than in each jurisdiction where the law firm or lawyer practices. The Arizona Committee explained in Op. 09-03 that client funds may be held in the home office’s trust account, but that the law firm must continue to comply with the trust account rules. In addition, payment of sums to the Arizona Foundation for Legal Services and Education as required under Rule 43, Ariz. R. Civ. P., requires payment to the Arizona entity. Consolidating bank accounts is not a basis to excuse the payment to the AZFLSE.


Confidentiality; Maintaining Client Files; Electronic

Storage; Internet

• Lawyers increasingly are attempting to maintain files that have less paper, with a goal of becoming “paperless.” Related to that goal is maintaining client files in electronic form. Communications with clients are increasingly electronic, through email and the internet, rather than through meetings and mail.


09-04 (cont.)

• The lawyer’s ethical obligation is to keep client information confidential, and to take reasonable steps to make sure that client files are not disclosed to third parties. See ER 1.6; Ethics Op. 05-04. In Op. 09-04, the Committee talked about some of the steps that a competent and reasonable attorney might take in order to maintain client confidentiality, particularly of client files. The facts of the opinion suggested extreme efforts at maintaining security by the lawyer, including with respect to emails with the client. These protections included password protections of the electronic file storage, for emails, and for information that was available to the client through a lawyer provided website. Those protections, while extensive, were not in the opinion of the Committee, the minimum standard. Rather, they represented one example of appropriate safeguards.


Confidentiality of Work Email

• Ordinarily, a communication between a client and lawyer for a purpose of obtaining legal advice if made with an expectation of privacy is protected by the attorney-client privilege. Problems can arise where a client uses non-confidential means to communicate with the lawyer. For example, standing in a crowd, talking to a lawyer, speaking loud enough for the crowd to hear, may be a waiver of the privilege. In a less obvious manner, using non-confidential email to communicate with the lawyer may result in a loss of the privilege. In Convertino v. United States Department of Justice, No. 04-0236 (D.D.C. Dec. 10, 2009), a former government lawyer argued that his communications sent from work to his personal counsel fell within the attorney-client privilege. Because the information was sent from a work email, there maybe concerns that the employee’s employment agreement or other applicable rules may treat such information as not confidential, particularly as against the employer. The District Court, however, in considering a request by a third party for disclosure of the former prosecutor’s emails, found that the client reasonably expected the emails with personal counsel to remain confidential.


Confidentiality of Work Email (cont.)

• A New York bankruptcy court had identified factors to be applied in determining whether the client intended to communicate in confidence and whether that intention was objectively reasonable. – Does the corporation maintain a policy banning

personal or other objectionable use,– Does the corporation monitor the use of the

employee’s computer or email,– Do third parties have a right of access to the

computer or emails, and– Did the corporation notify the employee, or was the

employee aware, of the use and monitoring policies? In Re Asia Global Crossing, Ltd., 322 B.R. 247, 258 (S.D.N.Y. 2005).



• In the particular case, the lawyer reasonably expected his email with his personal counsel to remain confidential.



• Similarly, the Bankruptcy Court in Global Crossing had to consider whether corporate officers and a consultant’s communications involving an attorney were protected by the privilege. The former employees had communicated with their personal counsel through use of company email. The company’s bankruptcy filing had not gone well, and a trustee was appointed, who then had control over the office email systems. The former employees sought to protect their email, as well as certain confidential documents, which had been left at the company offices under the control of the trustee.

• The trustee claimed that by using the corporate email system, the employees waived any privilege. The court applied federal common law to find that the issue was one of intent, but that the intent had to be reasonable. After considering the circumstances, the court could not conclude as a matter of law that use of the company email system waived the privilege. Nor did leaving documents in the company offices when directed to vacate the offices by the trustee represent a waiver of the privilege. In contrast, documents that would have been otherwise privileged but which were shared with a consultant no longer remained privileged. One of the hallmarks of the attorney-client privilege is that the information not be shared with persons outside the privilege. The consultant clearly was neither an attorney nor the client.


Abusive Lawyer Conduct

• A North Carolina lawyer was recommended for a 90-day suspension from the practice of law, with a subsequent two-year probation period, for sending 53 threatening and abusive voicemail messages to the successor administrator of his father’s estate, the attorney for the administrator, and the ex officio judge of the Superior Court who is responsible for overseeing the estate. The Review Department of the California State Bar Court found that the lawyer’s behavior was so abusive as to constitute acts of moral turpitude as well as threats to gain advantage in a civil dispute, disrespect the courts and judicial officer. The probation recommendation included extensive training and counseling to help the lawyer avoid future misconduct.


Supervised Lawyer Responsible for Firm Over

Charges

• In Disciplinary Council v. Smith, 124 Ohio St. 3D 49, 2009-Ohio-5960 (2009), the Ohio court disciplined a lawyer who represented clients in a personal injury matter for excessive charges by the law firm. The law firm attempted to charge a contingent fee from a client on insurance coverage that New York law prohibits contingent fees on. Other aspects of the firm’s billing were excessive.


Disciplinary Council v. Smith Disciplinary Council v. Smith (cont.)(cont.)

• The lawyer argued that the owner of the firm, not the lawyer, was responsible for the excessive billings. The court responded in part, “Respondent’s counsel stated at oral argument that respondent prepared the disbursement sheets as a scribe would, following the dictates of his superior. Actually, respondent is not a scribe, but an attorney, responsible for zealously representing his client’s interests.” Id. ¶ 17. The supervised lawyer could not simply rely on assurance from the firm’s owner that the owner would look into the responsibleness or legality of the firm’s charges. To the extent that the lawyer’s explanation was that he was unaware of the limitation of contingent fees on this particular source of personal injury recoveries, the court agreed that the lawyer’s position demonstrated he was not competent to provide the client the advice he was providing, due to lack of education or training.

• The court determined to issue a public reprimand about the lawyer’s conduct.


Conflict Between Lawyer and Client Concerning the Lawyer’s Own

Malpractice

• ER 1.7 and other rules require that lawyers avoid conflicts of interest, including with the lawyer’s own interest. Where a lawyer may have committed mistake, a conflict can develop between the lawyer’s interests with respect to the mistake, or alleged malpractice, and the client’s interest.


Minn. Op. No. 21 (cont.)

• The Minnesota Ethics Committee Op. No. 21 addresses this issue. It describes an obligation of the lawyer to communicate with the client under Rule 1.4. The opinion directs the lawyer who is aware of a non-frivolous malpractice claim by a current client that materially affects the current client’s interests, to inform that client about that conduct to the extent necessary in order to keep the client reasonably informed about the status of the representation, to make informed decisions regarding the representation, and to be sure that the client is properly informed about the means by which the client’s objectives are to be accomplished. There is no privilege or protection against self incrimination that would allow the lawyer not to report a possible malpractice claim to the client.


Disclosure of Conflicts Information When Lawyers Move Between Law

Firms

• The ABA Standing Committee on Ethics and Professional Responsibility issued its formal opinion 09-455 (2009). This opinion addresses the issue of client confidentiality in the context of a lawyer changing firms.


ABA Op. 09-455 09-455 (cont.)

• On the one hand, a lawyer has an obligation to maintain client information confidential under ER 1.6.

• On the other, the lawyer and a new law firm have the obligation to avoid conflicts of interest under ER 1.7.

• The question is the extent to which the lawyer may disclose information about pending representation in order to check there are conflicts caused by changing firms.


ABA Op. 09-455 09-455 (cont.)

• The ABA opinion argues that since a conflicts analysis is necessary in order to evaluate the impact of the lawyer changing firms, at least some limited use of confidential information must be allowed in order to check for conflicts.

• However, only minimal information should be provided to the new firm for the conflict check.

• Nor should disclosing such information compromise the attorney-client privilege or otherwise prejudice the client.

• If it appears that there may be a conflict and a question whether there is a “substantial relationship” between two matters, the lawyer may not disclose client confidential information to the other firm in order to evaluate the facts of the conflict.

• Using a third party as conflicts counsel would not solve the problem, as the information would be disclosed to the third party.

• Finally, the lawyers should be sensitive to the timing issues involved in obtaining client consent to the disclosure of confidential information for conflict checking purposes.


Courtroom Attire

• A New York Lawyer argued that his right to free speech and his liberty interest in his own personal appearance permitted him to wear jeans and a hat in court.

• The New York State judicial system does not permit this type of attire, even for pro se litigants.

• The United States District Court held that there was no constitutional right to violate the state court rules, and that the obligation to maintain courtroom civility prevailed over the pro se lawyer’s wardrobe desires.

Bank v. Katz, No. 1:08-cv-01033 (E.D.N.Y., September 24, 2009).


Rob CharlesRob Charles

Rob Charles is a partner with Lewis and Roca LLP, where he represents clients in business bankruptcy cases, commercial lawsuits and business transactions. He primarily represents both secured and unsecured creditors, as well as debtors, in all aspects of Chapter 11 business bankruptcy cases before the bankruptcy courts of Arizona and Nevada and on appeal.

Mr. Charles is a member and past chair of the State Bar of Arizona Committee on Rules of Professional Conduct; and a fellow in the American College of Bankruptcy and is an adjunct professor of law at the University of Arizona College of Law.