Professional Responsibility

DeGraw

I. Introduction to Professionalism

A. “Can Ethics be Taught in Law School?” - Supplement Article

1. Most people are moral in face-to-face activities

a. This is not enough, however; also need to be moral in our societal relations (Act morally for the common good).

b. Acting for the common good is more difficult, however, b/c you don’t know who is being affected - if you don’t know this, then you can’t be certain how to act.

2. Bottom Line = people can learn ethics whenever.

3. Even though your duty as lawyer is to zealously represent your client, you must also be accountable to society by the actions you take.

B. ABA Modern Rules of Professional Responsibility

- Latest installment of self-governing body. Old set of rules called the “Code”.

1. Preamble - A lawyer’s responsibilities (p.8 of codebook).

2. ABA MR (Model Rule) 8.4 Misconduct

- What our profession views as immoral conduct for a licensed attorney.

- Comments following the rule make it clearer.

3. ABA MR 8.5 - Disciplinary Authority and Choice of Law

(A) Disciplinary Authority - Regardless of where ethical misconduct occurs, lawyer is subject to the jurisdiction of where he is, but also can be sanctioned in any state (even where he isn’t licensed).

- 1993 - ABA thought this was too tough, so they put in ...

(B) Choice of Law - rules applied are those where the Ct. sits if conduct involved in that Ct.; if conduct didn’t occur in that Ct., then lawyer is subject to the jurisdiction where :

(1) lawyer previously practices, or

(2) where the predominant effect of the actions occurred.

C. TX Disciplinary Rules of Professional Conduct (p. 23 of supp.)

- Similar to ABA preamble, but goes beyond

- Ex. Zealous representation ¹ scorched earth policy (can’t use any tactics to get your clients an advantage).

- Remember, the ABA rules are merely a guide ® they don’t have any weight until a state adopts them; merely advisory.

1. TX 8.04 - Misconduct - somewhat diff. than MR

- Picks up where ABA rule leaves off - more changes made.

- has 6 more rules than ABA (7-12)

- Unlike MRs, TX doesn’t have a rule against saying bad things (??).

2. TX 8.05 - Jurisdiction

- If admitted to practice in TX, lawyers are subject to our state discipline.

- If there are problems in other jurisdictions, then TX Cts. can still get you:

(1) If there’s an 8.04 violation, or

(2) If another state disciplines you.

D. Defining Professionalism

1. Pound’s defn.

The term refers to a group ... pursuing a learned art as a common calling in the spirit of public service - no less a public service because it may incidentally be a means of livelihood. Pursuit of the learned art in the spirit of a public service is the primary purpose.

2. Freidson’s defn. - 4 things that make a job a “Profession”

1. That its practice requires substantial intellectual training and the use of complex judgments.

2. That since clients cannot adequately evaluate the quality of the service, they must trust those that they consult. (Trust = fiduciary relationship)

3. That the client’s trust presupposes that the practitioner’s self-interest is overbalanced by devotion to serving both the client’s interest and the public good.

4. That the occupation is self-regulating - organized in a way as to assure the public and the courts that its members are competent, don’t violate their client’s trust, and transcend their own self-interest.

II. The Lawyer-Client Relationship

A. What is it?

1. The relationship must be determined beforehand - can’t be liable to a client for malpractice if they aren’t really your clients.

2. Lawyers are liable to:

a. Clients - If you agree to represent a client, then your liability to them is a duty to do something for pay. Often, clients will want you to do something borderline illegal. Lawyers aren’t obligated to do so, despite the demands of clients. If they request you to do an illegal act, then it’s easy to spot and refuse. Harder to choose when they only ask you to do something immoral.

b. Judicial system - Lawyers are obligated as officers of the Ct. to act in certain manner. Ex.-Not supposed to “Rambo” someone into the ground.

c. Society - Lawyers are the key to the system.

d. Themselves and their family - This refers to self-interest. This liability comes last. Although remember the old saying, “In a home w/o bread, ethics is not an appropriate dinner topic.”

B. The Practice of law regulated different by each state.

In most states:

Executive (none)

Legislature (inherent) Judicial (delegated)

- Executive has no power to regulate lawyers

- Legislature has inherent, law-making power to regulate. In most states, however, Leg. delegates power to the Judiciary.

* Leg. retains:

1. Taxing power on lawyers (TX)

2. Regulate lobbying

3. Determination of who practices in front of state administrative agencies

4. Power of restraint - keep folks from practicing law who’re not lawyers

5. Barratry - no ambulance chasing

6. Power over Ct. jurisdiction - which Cts. get which cases

7. Day to Day operation of legal profession t State Bar. TX has a mandatory bar association.

- Besides the delegating power, Judiciary also has some inherent power (licensing attorneys, discipline, etc.).

C. The Client

1. The lawyer is the client’s agent - agency rules apply.

- Agency laws differ according to state.

2. Lawyer is also the client’s fiduciary - client’s trust rests w/them.

- Fiduciary role exceeds any responsibility you owe as an agent.

3. Lawyers may also be a trustee, but this isn’t as common - most lawyers don’t want to be trustees.

4. Lawyer can also be a govt. agent.

D. When is a Client a Client?

1. This is a question of law, not ethics.

2. Money need not change hands to form a relation, but this is usually a good indication when it does.

3. Courts are beginning to recognize that such a relation exists when the client reasonably believed under the circumstances that a relation existed (especially if confidential info. is exchanged).

- If you have a client, and your actions have been muddled from original plan, or your actions have not been clearly defined, you’ll likely get into trouble. This is b/c the lawyers actions that fall w/in the scope of the authority given by the client are attributed to the client.

- Only resource for client at this point = malpractice action. Ct. won’t rectify the situation b/c of lawyer ignorance/mistake.

- Taylor v. Illinois - Taylor, as attorney, refused to obey state discovery laws. Client is screwed, b/c attorney has full authority to manage the case t Client must accept the consequences of lawyer’s actions. “Litigant chooses counsel at his peril”.

- Cotto v. US - Failure to prosecute a claim is a decision (or mistake) made by the lawyer, and is attributed to the client too. Acts or omissions are visited customarily upon the client in a civil case.

- By hiring lawyer, client necessarily delegates authority to speak/act for him. If lawyer acts foolishly, client may still be bound, but may be able to sue for damages.

- Togstad v. Vesely, et al - Client went to lawyer about med mal case. Came down to each side saying a diff. story about what happened regarding whether or not lawyer accepted the case or not. Jury said he either did or gave the impression of that to his client. Why? She trusted lawyer - someone w/superior knowledge. The Ct. put an affirmative duty on the lawyer to tell client about SOL, which had run by then and barred claim. May also have a duty to say whether has or hasn’t taken the claim.

Rule = Must be very careful w/your relationships - You may take on a client w/o meaning to if it’s reasonable for the client to believe that you’re their lawyer.

- 3 Periods of the Lawyer/Client Relationship

1. Pre-representation - very few duties involved. Must be careful here though b/c this can easily turn into a client relationship.

- Confidentiality does arise even this early in the process

2. Representation - lots of duties here.

- Duties arise only when there is a client.

- Have to make sure there is a dividing period between pre-rep and rep. periods.

- In Togstad, the lawyer could have done things to ensure that a relationship didn’t arise w/o him knowing:

a. Tell her he’s not going to accept the case

b. Investigate the merits

c. Don’t give her opinions on the case

d. Advise her on the SOL

e. Follow-up letter saying that their business together was ended

3. Post-representation - Lawyer must send the follow-up letter saying that this concludes their business together.

- People who were clients will always be former clients. Therefore you will always have issues regarding their confidentialties, conflicts of interest, etc.

- If don’t send that follow-up letter, then clients may feel that they are still a client, so your attorney-client duties continue to exist.

4. Other issues of law that arise in Pro-Res.

a. Agency law - Lawyer is a special type of agent. Have both high duties and responsibilities. Lawyers also usually have fiduciary responsibilities as well, and sometimes that of a trustee.

- Test for agency = What would a prudent lawyer do? (The avg. lawyer).

* When a client is “bound” by his lawyers actions (e.g. in court), this is pure agency law.

* The authority to act ends when the client terminates the relationship.

- Test for fiduciary = much higher than agent. This makes it much easier for a client to prove a breach.

- Trustees have a high standard, but not nearly as high as that of fiduciary.

b. Malpractice

- In malpractice cases, normally lawyer has obligations to client that arise from either Breach of K or Tort/Negl.

* Most are brought under Breach - the SOL is longer and it’s an easier burden.

* Proving Negl. - In Togstad, lawyers brought in experts who testified. Once you show ordinary negl. (ordinary lawyer would have done otherwise), must also show proximate cause (in addition to the duty that was already shown to get to this point). PC is also proven w/ experts.

* If there is a breach of a fiduciary duty, then it is almost implied that PC is found.

- In majority of jurisdictions, lawyer must be in privity (have a duty) to a 3rd person that enables them to sue; TX doesn’t follow the majority - there must be a separate duty to the 3rd party.

- Exception - breach of fiduciary duty to a 3rd party will have standing (TX and all other states follow). Third party fiduciary cases are rare.

D. Duties within the Attorney-Client Relationship

1. Competence (MR 1.1)

- Very tough to prove.

- Always a supplementary charge to another claim by a client.

- Always arises during malpractice claims.

- Usually a fact question.

- Competence Standard = prudent lawyer in that jurisdiction act?

* Exception = If lawyer holds himself out as a client, then he’ll be held to higher standard. Specialist standard doesn’t rise to level of fiduciary.

a. Fiduciary Duties - competence standards in this area governed by states.

- There is agreement/conformity about which duties are fiduciary.

- Unique position of trust, which means that duty applies at the time the person becomes a client until they’re no longer.

- If lawyer commits an act that gives the client a COA against him, lawyer has obligation to turns himself over and reveal, b/c this duty is so high.

- No need for client to prove what they would have received competent advice - fact that fid. duty was breached is enough.

- Burrow v. Arce - Fiduciary relationship exists between attorneys and clients as matter of law. Because relationship between attorney and client is highly fiduciary in nature, dealings between client and attorney require utmost good faith, and dealings, intentions and intendments between attorney and client are subject to exacting scrutiny.

2. Diligence (M.R. 1.3)

- Lawyer must perform duties w/o delay. To the extent that the delay is undue, lawyer is subject to liability.

- Diligence is not a fiduciary duty.

- Diligence complaints aren’t usually malpractice, but occur in disciplinary actions and sanctions; Actions brought by clients, opposing parties, or judges.

- Duty arises the moment you accept a client and continues until task complete.

- When matter concluded, send that follow-up letter to “end” relationship. Most lawyers don’t do this, b/c it’s a symbolic “severing” of ties. Want to make it seem that the clients are still current. Much easier, however, in long run - don’t have to worry so much about conflicts of interest. Also alerts to any lack of diligence issues - client will call you to tell you otherwise if necessary.

- Loyalty - a related topic, which is a fiduciary duty. Lawyer must be free of conflicting duties ® aids in being more diligent. This is a conflict of issue matter as well.

3. Duty to Inform and Advise (Communicate) (M.R. 1.4)

- Applies to any area where client has final authority.

- Lawyer must advise clients of any matter that may affect their final decision.

- Inform/Advise/Communicate = means in a way that the client can understand.

- Nichols v. Keller - Nichols (P) was injured on job. Hired Keller to pursue workman’s comp. claim. D didn’t advise P that he might also have civil claims against others (manufacturers of defective products). P learned of civil claims after SOL ran and sued. Tr. Ct. gave SJ to D. P appealed.

Held - liability can exist b/c attorney fails to give advice. Attorney should advise even when client doesn’t ask about such matters. Attorney need not advise client of every possibility that may arise, but only those that may result in adverse consequences if not considered.

- D could have possibly gotten out of this mess by saying that P should go see a specialist, if the matter wasn’t a matter of expertise.

- Requirement to clarify falls upon lawyer.

4. Duty of Confidentiality (M.R. 1.6, TX 1.05) - significant diff. in MR & TX

- As lawyer, have to determine what happens if info. we have is privileged under the rules of evidence (Evidentiary Protection), and which is privileged under the rules of ethics (Ethically Protected).

- Ethical protection is much larger - think of it as two concentric circles, with ethical circle almost completely surrounding evidentiary protection (bit of evidentiary protection escapes).

- The two bodies have different origins

* Evidentiary privilege - developed through Ct. and statutory material

* Ethical privilege - drafted mostly by attorneys and adopted by states.

a. Evidentiary Protection (Attorney/Client Privilege) - involves person who seeks legal advice from lawyer acting on behalf of client for indeterminate period.

- The client may, and the lawyer must evoke a privilege of confidentiality not to testify regarding confidential info. to lawyer or govt. Exception = if client expressly or impliedly waives the privilege.

- Policy for Privilege = want clients to tell lawyers everything, so they can act in client’s best interests.

- Ct. and Govt. make exceptions when privilege can’t be taken:

1. In furtherance of a crime or fraud

2. Claimed through a deceased client

3. Defense to breach of duty suit against lawyer

4. Document stating/serving joint clients

5. Client waives (express or implied)

- Three specific evidentiary situations

1. Work Product - documents in preparation for trial may be privileged

2. Protective orders - appropriate to protect or divulge

3. Communications between lawyer and client are privileged.

- Consequences for failing to obey rules

1. Lawyer may be disciplined

2. Layer may be sued by injured party (e.g. aiding and abetting crime)

3. Improper revelation of info. can also be grounds for malpractice.

b. M.R. 1.6 “Tree” of Protection

“Branches” = Exceptions

1.6(b)(2) - may reveal info reasonably believed necessary to defend against client suit

1.6(b)(1) - may reveal info reasonably believed necessary to prevent crime involving death or substantial harm.

1.6(a) - may reveal info to carry out pleadings

“Roots” = mandatory law

1.6(a) - lawyer shall not reveal info relating to representation of a client unless the client consents after consultation.

c. TX 1.05 “Tree” of Protection

“Root” = mandatory

1.05(b) - Lawyer “shall not knowingly reveal”-

(1) confidential info of a client or former client (nothing in MR about former clients) to:

(i) person client said not to reveal info to

(ii) anyone else other than the client, clients rep, or lawyer’s firm,

(2) confidential info of client to clients disadvantage unless client says OK,

(3) conf. info of former client w/o consent, unless it’s common knowledge,

(4) privileged info (evidentiary) of client for advantage of lawyer or 3rd party unless client consents.

“Branches” = exceptions [1.05(c)-(f)]

* 1.05(c) - Lawyer may reveal confidential info:

(1) when has express authorization in furtherance of representation,

(2) when client consents after consultation

(3) to client, client’s rep, or lawyer’s firm, except when told not to,

(4) when lawyer believes necessary to comply w/a Ct. order,

(5) to the extent necessary to enforce a claim or establish a defense on behalf of lawyer in case against client,

(6) to establish a defense to criminal charge, civil claim, or disciplinary complaint against lawyer or associates based upon conduct involving the client,

(7) when lawyer believes necessary to prevent client from committing crime or fraud.

* 1.05(e) - Lawyer shall reveal confidential info (includes most of privilege and ethically protected) if it’s clearly established that client is likely to commit criminal or fraudulent act (1.6 doesn’t include fraud) that’s likely to result in death or substantial bodily harm to a person.

* 1.05(f) - Lawyer shall reveal confidential info. (most of privileged and ethically protected) when required by:

First - 3.03(a)(2) - lawyer shall not knowingly fail to disclose fact to tribunal when necessary to avoid assisting a crime or fraud.

Second - 3.03(b) - necessary to reveal falsity to tribunal.

Third - 4.01(b) - reveal to 3rd party to prevent lawyer from being party to a crime or knowingly assist a fraudulent act being perpetrated.

d. Consequences to lawyer who breaches or fails to reveal/breach confidentiality when he should have:

- can be held an accessory to crime or fraudulent act.

- subject to tort liability

- subject to disciplinary action

- sanction by the court in which the failure to reveal/breach occurred.

e. Remedy to Client when lawyer breaches?

- Criminal cases - breach of fiduciary duty, breach of K, or tort action. If convicted b/c of lawyer’s actions, don’t have any freedom remedies (can’t get out). Lawyers have lots of potential for harm in crim. cases, so they are monitored closely.

- Civil Cases - breach of fid. duty, K, or tort.

f. Cases

(1) Perez v. Kirk & Carrigan - Perez (P) drove Coke truck which struck school bus and killed kids. While in hospital, K&C, lawyers hired by Coke visited him to take his statement. P says they told him they were his lawyers and anything they told him was confidential. After taking statement, D‘s found P a crim. attorney and turned P‘s statement over to the DA. P sued for breach of fid. duty of good faith and fair dealing. D‘s claim they weren’t his attorneys, and couldn’t therefore be held to fid. duty. Ct. ruled for D‘s by SJ. Appeal from SJ for D.

Held - An agreement to form and attorney/client relationship may be imposed from the conduct of the parties. The relationship doesn’t depend on a payment of fees, but may exist as a result of rendering services gratuitously. Relationship can arise even during preliminary consultation. Burden on P to show he’s a client. Policy for confidentiality retention = want to encourage absolute candor, and absolute absence of ambiguity on part of attorneys.

g. Problems (p.32)

(1) The Guy has HIV - woman you represented in past has a boyfriend in jail. She pays you to take his case after he beat up a guy in a bar. While in jail, he tells you that he has HIV. Can you tell her or the bar guy he has HIV?

A: Probably not. Although she paid, the guy in jail is your client. Anything he tells you will be privileged unless an exception applies.

- MR allow you to disclose, but only if to prevent an imminent, future act resulting in death of substantial bodily harm. Nondisclosure to girlfriend may or may not be a crime (e.g., she could already be infected).

TX - 1.05(c)(7) - can reveal to prevent client from committing a crime or fraudulent act. Probably still not enough.

(2) I Know there’s a Gun - You represent a guy arrested for selling drugs. After arrest, he was searched and put in a squad car. Somehow, they missed a gun he had on them, and he managed to slip it under the seat. It’s probably still there. You ask him if you can reveal this, but it was used in another crime he committed and he won’t go for it. Someone else was convicted for that crime he did. Can you reveal the whereabouts of the gun?

A: Probably not.

First, always ask the client if you can reveal the info. (Consent is always going to let you reveal privileged or confidential info.). Second, is the communication privileged? Yes, since he’s a client, it’s ethically protected and probably privileged, so I need an exception. All of these actions were done in the past, and the exceptions are intended to prevent future crimes. Confidentiality requires condor, so can’t get this, even to protect the innocent guy.

(3) She’s Going to Kill Herself - Client comes in for estate planning. She needs the new will done in a week. You get the impression that she’s competent, but that’s she’s going to kill herself. She denies it. Can you reveal info?

A: MR = No. Suicide isn’t a crime.

TX - Our client isn’t going to be hurt. May be that the best thing to do is to talk to her.

h. Privilege issues with an Entity as a Client (MR 1.6, 1.13; TX 1.05)

- Prior to this point, we’ve thought of representing clients as a “one-on-one” basis. Client was protected on either a privileged or ethical basis.

- Representing an entity ® Issue is who is protected? A corporation is a legal fiction, therefore, Should the agents of the corporation be protected (as opposed to the direct client)?

- Remember - the purpose of privilege and ethical protection = get all the facts/truth to the lawyer. Corporations don’t have the same rights as an individual has (e.g., no 5th Amendment right against self-incrimination).

- Most courts say that entity agents deserve some measure of confidentiality. They differ on how much protection should be afforded.

(1) Three Basic Tests Determining who should be protected

(a) Control Group - the narrowest protection. The entity is protected as your client. The agents who implement your advice as counsel are the ones protected (e.g., CEO, Pres., Exec. VP, but probably not all VP’s). Protection usually afforded to those who speak for the corp.

** This exception can be expanded to anyone in the corp. who is not already protected, but actively seeks advice from corporate counsel.

- Upjohn v. US - 6th Cir. said only agents protected were those in the Control Group exception. S.Ct. disagreed, forming the second exception instead.

(b) Subject Matter - Doesn’t matter who has access to the information. As long as they have knowledge of the particular info., then they’re protected from revealing. It’s natural that lower-level employees have info. that’s sometimes required by corporate counsel. To adequately advise entity, counsel must have this info. This test greatly broadens the possible protection, but only if info. is given to lawyer for advice. This test encourages corporate lawyers to ask a lot of questions. All that info. revealed will be privileged, regardless of who gave it.

** Note 4, Upjohn - the communication itself is protected, not any particular facts. Can get the info. somewhere else.

- There is some concern that this gives corporations too much protection.

- This rule only applies to federal cases, although a majority of states and the Restatement have followed this rule.

(c) Functional Analysis - Came out after Upjohn, in AZ’s attempt to reign in the result in Upjohn. Test = even if person is in a control group, there is no protection unless the person has some function within the protected area. Also protected = employees that are in the functional line (people who have something to do with the affected area acting in their official capacity) who’s actions are attributed to the entity.

- Effect = takes people with knowledge only out of the equation.

- Fine line drawn by AZ Cts. Problem = no even they follow this anymore.

** EACH STATE CAN CHOOSE TO FOLLOW WHICHEVER TEST.

(2) Problem - Slip and Fall (p. 47)

Customer slips and falls in the dept. store. She sued, alleging the floor was excessively waxed. Under store policy, whenever someone sues, General Counsel’s office oversees an investigation.

Whose conversations will be protected?

	CG	SM	FA
Head of Maintenance	Y	Y	Y
Janitor who last waxed the floor	N (unless asked advice)	Y	Y
Salesperson nearby	N	Y	N
Salesperson in that dept. where injury occurred, off work, who came in for personal shopping	N (on per. business)	Y	N
Customer	N (employees only protected)	N	N

i. Exceptions to the Privilege or the Ethical Duty

(1) Self-defense - MR 1/6(b)(2) - have good reason to believe that revelation of information is necessary to his self-protection.

(2) Waiver - Client may waive the protection of either the privilege or the ethical duty of confidentiality. Waive may be explicit or implicit. Waiver will be implied where client puts the confidential communication at issue in a litigation. Clients may also waive the protection of attorney/client privilege by revelation of the confidential communication.

(3) The Crime-Fraud Exception - Communications between attny/client aren’t privileged (although they may be ethically protected) when the client has consulted the lawyer to further a crime or fraud, whether or not the act is actually committed, and even though the lawyer did nothing to further the act. Fraud = actual or attempted intentional misrepresentation. Only applies when Ct. determines that the client communication was itself a furtherance of the crime.

(4) Identity and Fees - Usually impossible to attempt to protect the identity of clients, and the fees paid by them. May be protected when there are assumptions that can be drawn from the fees or the client’s identity.

(5) Public Policy - Cts. occasionally suggest that the attorney/client privilege may sometimes have to give way to other values. May be pierced upon a showing of need, relevance and materiality, and the fact that the information could not be secured from any less intrusive force.

(6) Is there a Professional Relationship? There must be an attorney/client relationship for there to be a privilege.

j. The Murderer’s Sex Tapes - Client hid tapes in his apt. showing sexual acts with girls that he eventually killed. Attny. eventually went an removed them when client asked his too. Privilege to keep them hidden?

* Gen. Rule - if attny. has possession of physical ev. that was used to commit a crime, he cannot keep that privileged. Back to the Gun-in- the -car-seat hypo.

* This situation is a bit different - Tapes weren’t used to commit a crime. It was a communication to his attorney, so it’s usually privileged. He shouldn’t have removed it from the crime scene, but it is privileged info. when told to him. Even though DA reprimanded attny. for trying to use it’s presence in a plea bargain, it wasn’t necessarily improper.

k. Model Rule 1.13 - Organization as Client

- What do you do when you know someone in the entity is going to commit (or has already done so) an act which has neg. consequences to client (the entity)?

* Under privilege ® Attny. has some privileged info/ethically protected information. Doesn’t matter if in-house or outside counsel.

Step 1 - Assess the consequences. Matter must be material for a breach of privilege/ethical protection.

Step 2 - Ask the person involved not to do it. If already done, tell them to turn selves in.

Step 3 - If unsuccessful, advise person about getting separate legal counsel outside the entity.

Step 4 - Go to higher authority (above the guilty party).

Step 5 - If nothing done, must withdraw. If outside counsel, drop client. Special rules exist for in-house counsel.

* None of these steps constitute a breach of privilege as long as violator isn’t your client.

* Noisy Withdraw Rule - allows counsel to withdraw, but telling the next counsel the details of the problem.

III. Autonomy of Lawyers and Clients

A. Controlling the Representation

1. Model Rule 1.2 - Lawyer’s Scope of Representation

(a) Lawyer shall abide by client’s decisions concerning the objectives of representation, and shall consult w/him as to the means.

Civil - client decides whether to settle

Crim. - Client decides (after consultation) whether to take plea.

(b) Lawyers actions don’t constitute an endorsement of client’s views.

(c) Lawyer may limit the objectives after meeting w/client.

(d) Lawyer can’t counsel client in engaging in action he knows is a crime/fraud, but may advise of consequences of good faith legal actions.

* Can’t violate other rules or Const. laws to comply w/client’s wishes.

* Lawyer Agreement to client must be express on issues ® Client understands therefore exactly when the representation will end.

2. The Scope of the Attorney/Client Relationship

a. Bottom Line = Client has the ability to make decisions in regards to the “ends” of the representation (objective); Lawyers have authority to determine the “means” to get there, after consulting w/clients.

3. The Lawyer’s Autonomy (Defining the diff. between ends and means)

a. Jones v. Barnes - client insists on ends and means of representation. Lawyer did right thing: Disagreed, but talked it over w/client to explain why he wants to do what he does. S.Ct. agrees w/lawyer.

- Dissent says that in this criminal matter, lawyer should have abided by client’s wishes where there’s a conflict b/c there was a liberty interest involved. Ct. says that there is no taking of client’s autonomy. b/c he made his decision to appeal (ends), and Lawyer made his autonomous decision on the means to do it.

- Ends and means are not always easy to define.

b. Problem - Ms. Niceperson - Deadline to file is known to you, but not to opposing counsel. Do you have a duty to inform him, or is your duty to your client such that you should ignore the situation and take a default judgment for your side?

A: Have a duty to client, but also have a duty as an officer of court. Clients autonomy doesn’t extend to making lawyer take advantage of other party’s mistakes, b/c this extends into attorney’s right to autonomy about the means of representation (even if Client tells you to do so).

4. The Client’s Autonomy

a. Olfee v. Gordon - Client told lawyer to sell her real estate, but instructed him not to take a 2nd mortgage. Lawyer sold it w/a 2nd mortgage w/o telling client. and when purchaser defaulted, Client lost $25K.

- Client’s autonomy ® sell home by terms set.

- Lawyer broke this condition. Is this a means or an end issue? Lawyer led client to believe that there was no violation of the terms. Lawyer lost on malpractice action, b/c Client clearly defined the ends.

b. People v. Petrovich - Petrovich, despite objections of lawyer, decided not to give the jury the choice of manslaughter during his murder trial. After murder conviction, Client said the decision belonged to lawyer. NY ct. didn’t buy it, b/c client was attempting to minimize the risk of conviction, and was not a matter of strategy or tactics which lawyers usually have autonomy over.

c. Matter of M.R. -Clients w/diminished capacity - when clients suffer from diminished capacity (physical or mental), or b/c the client is a minor, the issue of allocating decisionmaking authority is more difficult. M.R., who has Down’s Syndrome, wanted to move in w/dad. Mom didn’t agree, and filed guardianship proceeding to stop it. Counsel appointed to investigate the matter made a decision that either would be OK.

Model Rule 1.14 - Clients Under a Disability

(a) To the extent of the scope you represent them. if it’s an appropriate topic for them to decide (or capable of deciding), attorney must respect and advise clients of situation, i.e., maintain a normal attorney/client relationship.

(b) Lawyer may seek the appointment of a guardian or take other protective action w/respect to client, only when lawyer reas. believes that the client can’t adequately act in his own self-interest.

5. Model Rule 2.1 - Advisor

Lawyer shall exercise indpt., professional judgment when representing a client and give candid advice. In giving advice, lawyer may refer to law, but also any moral, economic, or political factors that may be relevant.

- Lawyers may be advisors when asked by clients. No duty until then.

- Tells us that we don’t normally have a duty to investigate our client’s affairs, only their claims. No duty to investigate their lives.

6. Model Rule 2.2 - Intermediary (rule that often gets lawyers in trouble)

(a)Lawyer may act as intermediary between clients if:

(1) gets consent of both parties after explaining the advantages and risks, and remains loyal to both clients,

(2) lawyer believes the matter can be resolved in manner compatible w/both clients’ best interests intact, little chance of prejudice involved, and each client can make a materially informed decision,

(3) lawyer reas. believes that common representation can be undertaken impartially w/o improper effect on other responsibilities to clients.

(b) Lawyer shall meet w/each client while acting as intermediary, in matters concerning decisions made, so each party can make informed decisions.

(c) Lawyer shall withdraw if any conditions in (a) no longer is satisfied, or if any client requests. After withdrawal, lawyer can’t represent either client in the matter was the subject of the intermediation.

7. Problems

a. “I’d Rather Die” (p.91) - client you represent has been on death row for several years, when you finally get some info. that could get him new trial. You advise him of it, but he refuses to give you permission to get a stay of execution. He says he can’t take death row anymore, even if the time may eventually get him his freedom. What can you do?

- Perhaps argue he’s under a disability, and get a guardian ad litem appointed under M.R. 1.14 ® if his mind clouded his judgment, then may be able to get a hearing w/o his consent. Maybe go to his family.

- Usual rule = if he tells you to get lost, then you do.

b. “Accept the Offer” (p.92) - client comes in for divorce representation. Against your advice, she advises you to accept a ridiculously low settlement offer, b/c she feels guilty for breaking up the marriage. You are certain that if you go back w/a reasonable counteroffer, it will be accepted. You’re certain that in 6 months she’s going to be pissed off at you for this lousy deal. What can you do?

- Can’t force your values on client. Remember, it’s client’s decision to settle in civil matters. Once the decision has been made, you’re not free to do whatever.

- How, then do you CYA?

1) Draft a letter for her to sign stating that she is accepting this settlement against the advice of counsel after hearing the alternatives.

2) If children are involved, lawyer has 2 options (b/c the decision doesn’t just affect her):

a)Tell client that this is repugnant to you, and you will not represent her if she treats her family this way, OR

b) Get a guardian for the children who can draft a deal together or separately that will satisfy their needs.

B. Terminating the Relationship

1. Termination by Client

a. Lawyer must clearly withdraw after being fired by client, who may fire for any reason or none.

b. M.R. 1.16 - can’t represent a client if you’re impaired (e.g., drugs or mental disease).

c. M.R. 8.3 - If you know that opposing counsel is impaired (defined as “not being able to carry on the representation of another), you are obliged to turn them into either the (1) Disciplinary committee, or (2) TLAP.

d. Indigent crim. D‘s can’t fire lawyers appointed to represent them, but they can ask for new counsel.

e. Clients w/retained lawyers may not be able to fire counsel if close to trial date, b/c the interests of others (opposing counsel, court) may be given weight in not delaying trial.

f. When client fires lawyer, he is still liable for the attorney fees earned for the work to date.

2. Termination by Lawyer

a. When can lawyer withdraw?

1) If objectives sought are repugnant to lawyer.

- M.R. 1.16(b)(1) - withdrawal OK if believes client is acting out a crime or fraudulent act.

2) If client fails in obligations to us (e.g., paying fees).

3) If the matter is going to be a financial burden on attorney

- Must be a substantial financial burden (e.g., force you into bankruptcy).

4) May withdraw for any reason that can be accomplished w/o material adverse effect on the interests of the client [M.R. 1.16(b)].

5) Jerk Law - if lawyer withdraws from case, he is obligated to help client find a new attorney, and must refund any advancements not earned to that point.

b. Neither client nor lawyer may fire for any discriminatory reason (e.g., race. religion). This rule developed from agency law.

3. When do you know that the relationship has ended?

a. Letter sent by either party ending the relationship.

- Lawyer must eventually sever the relationship so client is not considered a “current” client.

b. Model Rule 1.17 - Sale of Law Practice

OK to sell practice, but your clients don’t become their clients until you notify them:

1) Notice of transfer, AND

2) Give client opportunity to transfer (pick up their files).

* Clients fees from your practice remain stable/same.

* Presumption, if client doesn’t respond, that transfer is accepted (normally response from letters is quit low).

IV. Protecting the Relationship

A. Communication w/another Lawyer’s Client

1. General Rule = If ind. represented by another attorney, then you can’t talk to them, unless permission given by other attorney. Bottom line = it’s pretty rare.

a. Alternative method of “speaking” w/opposing party = through discovery (depositions and interrogatories).

b. The general rule only applies if speaking to other lawyer’s client regarding the legal matter in question. Pretty hairy.

2. Model Rule 4.2 - The No Contact Rule

May not contact the client of another attorney w/o permission. If have consent of other lawyer, then free to do whatever.

- Sometimes can be authorized by law to talk to opposing counsel client.

E.g., Govt. as client, Rule 11 issues.

- If you’re barred from speaking to them directly, then you can’t get a 3rd party to do so for you (e.g., investigator, client) indirectly. Rule doesn’t apply retroactively (if you didn’t know they were going to do so and they did). Just can’t encourage them to do so. Can you use the info. that you got?

- Rule’s Purpose = prevent lawyers from getting admissions from parties before they have a chance to know what it means, that end up giving you an advantage before counsel has a chance to go over it w/their clients.

- Lawyers’ objections to rule = makes getting info. expensive b/c it can’t be done informally. Has to be done directly at greater costs.

- Rule won’t apply if you don’t have a client.

- TX version - Need opposing counsel’s permission to talk to:

1. Current employees in the control group (power to bind or speak for org.)

2. Current employees who can bind org.

3. Current employees who can make admissions.

* CAN speak to: Regular employees.

- Once a person protected by the entity’s umbrella gets his own attorney, the org.’s protection is gone ® Don’t have to deal w/entity lawyer anymore.

3. Model Rule 4.3 - Dealing with Unrepresented Person

If you can get to a person before they are represented by counsel, you can talk to them, but you must let them know you’re representing some other party ® Duty to Warn them.

- Careful - if they ask advice and you give it to them, they become your client.

4. Niesig v. Team I (leading case in nation in Civil Matters)

* Rule regarding speaking to persons represented by counsel, when client is an entity = Entity has a right to protect its agents from being spoken to, even though the agents themselves are not being represented.

* Looks similar to the Control Group Rule® All current employees are protected (current employees, people w/interests at stake, officials who have ability to speak for corp., and any persons whose actions may be imputed to entity).

* No former employees are protected from being spoken to by opposing counsel, even if they are represented by counsel. Also, any current employees represented by counsel are not protected.

5. Problem - Help from her Friends (p.109)

Lisa H, in-house counsel, was denied promotion and suspects it was race- related. When she came to see you, she brought along 2 friends: a co-worker who can relate incidents of racial bias by Lisa’s bosses against her and others, and a VP who can relate the org.’s policies regarding minority personnel. Can you speak to either?

a. Co-worker - Must make sure she’s not represented by counsel (she’ll know if she has counsel). Protection under entity lawyer usually for mgmt. types. As long as she doesn’t have counsel already, probably can talk to her.

b. Personnel VP - as mgmt. in the area of controversy, his statements can be imputed to the org. Although we definitely want to speak w/him, he’s under the umbrella of the entity lawyer. If he gets his own attorney, then we only need get permission from attorney, not from entity lawyer.

B. Criminal Matters

* MR 4.2 applies equally to civil and crim. law.

* 6th Amend. also applies and prevents state from questioning a D against whom charges have been initiated outside the presence of counsel

1. What can prosecutors do when acquiring evidence for trial? The No Contact Rule applies especially strongly in criminal matters.

2. When the No Contact Rule doesn’t apply in criminal matters:

a. Pre-indictment discussions (guy’s in custody) - usually the No Contact Rule doesn’t apply yet b/c D hasn’t been charged yet. Usually doesn’t have representation at this point. If D does have counsel, then can’t contact them.

- Possible problem = indigent folks - we know they don’t have representation. Allowing prosecutors to get around rule?

b. Where provision is otherwise authorized by law

1) Right to investigate by subpoena

2) Hammad - 4.2 will not allow prosecutors a criminal exception to be made when a person acts as their “alter ego”. Prosecutors are able to investigate matters, that’s all.

- Determination of alter ego is a question of fact.

- Case impt. b/c Attorney Gen. felt that fed. prosecutors shouldn’t be bound by state ethical rules (giving them carte blanche to talk to whomever/whenever).

3. Sanction for violation of the Ethical Rule (4.2) = State sanctions you w/punishment from the state bar association.

a. In Hammad, they wanted the evidence suppressed, but suppression has its roots in 6th Amend.

b. There is the possibility of getting sanctioned by state bar and getting info. tossed out or suppressed.

C. Improper Acquisition of Confidential Information

1. The prohibition on communications w/another lawyer’s client has, as one of its objectives, protection of attorney-client confidences. Courts are protective of gaining confidential info. from improper sources.

2. MR 4.4 - Respect for Rights of 3rd Parties

In representing client, lawyer shall not use means that have no substantial purpose other than to embarrass, delay, or burden a 3rd party, or use methods of obtaining ev. that violate the legal profession.

- Can’t get info. by abusing people’s rights or violating discovery rules.

- The act itself is enough to get punished

* No requisite intent

* Don’t have to be acting as a person’s advocate (you’re always a lawyer, regardless if you have a particular client).

V. Fees and Client Property

A. Client Fees

1. Who pays for lawyers?

a. Lawyers themselves (pro bono, client reneges on you).

b. Client (usually the way) - diff. types of ways client pays

1) Hourly fee (most common in U.S.)

2) Flat fee for a particular service

3) Contingent fee (doesn’t have to be PI case).

4) Performance/Value Added fees (fee determined after the service rendered by lawyer and client, and depends on the outcome).

5) Retainer (non-refundable, stand-by fee) - help client on a month-to-month basis, but costs more for large matters.

c. 3rd parties - relatives, friends, insurance co., employers.

d. IOLTA (Interest out of Lawyer Trust Accounts) - interest out of attorney common funds (when they hold cash for clients) is given to programs to finance clinics, etc.

e. State - indigent folk via services or Pds, or state-paid private parties (like in Harris Co.).

f. Opponent - in fee-shifting cases (DTPA or civil rights cases) where loser is forced to pay.

g. Some combo

2. MR 1.5 - Fees

* Lawyers fees shall be reasonable (this is the test)

* Factors considered in reasonableness:

1) time/labor involved, novelty/difficulty of case, skill needed to perform

2) likelihood, if apparent to client, that acceptance of the particular employment precludes other work for lawyer

3) customary fee for that job in that area.

4) amount involved and the result obtained

5) time limitations impose by client

6) nature/length of the per. relationship w/the client

7) skill, experience, and ability of the lawyer involved

8) whether fee is fixed or contingent

* Lawyer must communicate fees to client, preferably in writing, w/in a reas. time after commencing the representation - give them a ballpark figure. Why?

(1) Eliminates part of the client’s autonomy to go somewhere else if you wait too long.

(2) Wait until the end to spring fee, it’s a form of coercion.

* Fees may be contingent on the outcome of the matter, except where prohibited. Contingent Fee Agreements (CFAs) must be in writing. Upon the conclusion, lawyer must give a statement to client showing the cost breakdown and a general accounting.

* CFAs are prohibited in 2 scenarios

(1) Criminal representation - against public policy to allow b/c we don’t want lawyer turning down good pleas to get a chance at the bigger cash if he gets the D off.

(2) Domestic Relation situations - against policy to encourage divorce or certain outcomes in order to get paid; likelihood of reconciliation is less likely, and the state has an interest in keeping family harmony.

* Division of Fees - if not in same firm, only allowed if:

(1) the division is in proportion to the services performed by each lawyer, or by written agreement w/client, each lawyer assumes joint responsibility for representation,

(2) the client is advised of and doesn’t object to the participation of the lawyers involved, AND

(3) the total fees are reasonable

- Each lawyer has a risk ® either work performed or responsibility.

3. TX 1.04(a) - MR equivalent

- Has an additional requirement that the fees be “unconscionable”

- Unconscionable = A reasonable lawyer couldn’t form a reasonable belief that the fees were reasonable (circular).

- TX doesn’t recognize the CFA ban on domestic relations case ® only criminal (although TX Code says that CFAs in domestic situations are rarely justified).

- TX has an additional time when fees may be divided ® Referral Fees

* TX is only state which allows a lawyer to take cash w/o responsibility.

* Problem = sometimes people charge higher CFAs to make up for the referral fees, so client ends up getting screwed.

4. Fees can be in form other than cash

* Problem = how do you value the services to measure if it was overreaching or unreasonable?

* Doesn’t matter ( for “unreasonable” purposes) if client was willing to pay so much.

5. Fees can be paid in advance

* Very common for a lawyer to be hired w/a retainer agreement.

* Retainer is usually refunded when the amount given was too much (notwithstanding Cooperman).

B. The Role of the Marketplace

1. Brobeck v. Telex - complicated retainer agreement was complained of by Telex, when P got them out of a serious situation, but engaged the complicated retainer. Lawyer ends up suing client when refuses to pay.

a. Shows us how complicated the retainer agreement can be

b. Shows how much money can be made if you’re the best at what you do and people are willing to pay for your services.

c. Shows us that CFAs are not limited to PI cases.

d. Cts Standard of Review for Unreasonable Fees = “No man in his senses and not under a delusion would make on the one hand, and as no honest and fair man would accept on the other”.

e. Shows that it can sometimes be good idea to sue client

f. Shows that the test for unconscionability of fee is determined “with reference to the time when the contract was made and cannot be resolved by hindsight”.

C. Unethical Fees

1. Bushman v. State Bar - state bar disciplinary action against lawyer who charged a retainer fee grossly more than the work he actually performed, and then refused to refund. Ct. ordered legal fees to be paid to him, but he neglected to mention the retainer. Board suspended him for 1 yr.

* Test for Unconscionability adapted from Brobeck ® now includes not refunding cash retainer that you haven’t earned.

2. Matter of Fordham (note case p.139) - lawyer took case on subject he was unfamiliar with, and charged his client the hours that he spent researching the matter. Legal fee ended up being $50K (others offered to represent from $3K- 10K). Client refused to pay and complained to disciplinary board.

Rule = Unreasonable fees are unreasonable, no matter if you were acting in good faith or not. Determination of reasonableness can be made outside the context of which it was made (Look at #3 of reasonableness factors in MR 1.5 - customary fees charged for services in that area).

3. Problem - What are You Worth? (p.139)

Porgby is worth $12B. He’s indicted for hiring 2 men to kill his partner, who was found dead. He goes to see Johnny Scheck, acknowledged as being the finest criminal defense lawyer in the country. JS recently retired, but Porgby persists. Finally JS says he’ll take the case, but for $2B, saying he doesn’t need the cash, and that’s his final offer. Porgby hires him and is acquitted. Afterwards, Porgby refuses to pay and claims the fee is unconscionable. What result?

- Unless you’re delusional, can’t you K for whatever the mkt. will bear? Probably so.

- Don’t we worry that doctors will do the same thing? They have the Hippocratic Oath to worry about.

- Lawyers use the sliding scale approach (recovery decreases as recovery increases - also a factor in contingency cases).

- Courts have inherent power to modify fee arrangements, but won’t often do it, unless client complains to them.

4. MR 1.15 - Safekeeping Property

(a) Lawyer shall hold prop. of clients/3rd persons in the lawyers’ possession in connection w/representation sep. from lawyers’ prop. Sep. account in lawyers’ state, or elsewhere if client consents.

- Records of funds held should be kept for 5 yrs. after end of representation.

(b) Upon receiving funds/prop. which client or 3rd party has an interest, lawyer shall promptly notify them.

- Lawyer shall deliver funds to client/3rd party promptly, and give accounting (EAOP) upon request.

(c) If during the course of representation a lawyer is in possession of prop. in which both lawyer and 3rd party claim interests, the prop. shall be kept sep. until there is an accounting and severance of interests.

* Old days, this rule required 2 sep. accounts. Today - IOLTA ® instead of a trust account w/no interest, put in a trust account w/interest payable to fund that affords legal clinics.

* Rule is critical b/c lots of disputes arise (proper fee holding, commingling).

* Have to make sure that the account being held for client doesn’t slip below a certain amount, or else could be trouble.

- Not Malpractice though - MR’s aren’t ever the basis for a civil suit (i.e., breaking them doesn’t get you sued automatically). They can, however, be used as substance for it.

5.Retainer Fees

a. Usually thought of as unearned legal fees, which must be returned if not earned.

b. Matter of Cooperman (1994) - written fee agrement in criminal matter named $25K price, which was non-refundable. Client signed. One month after the agreement, lawyer was discharged by client, but he refused to return retainer. Cooperman ignored 2 previous warnings about non-refundable retainers.

- NY eliminated “special retainers” - which were non-refundable. These are like bonuses ® coerces the client to stay w/lawyer, which violates the rule that he can fire lawyer at any time.

- NY allows “general retainers” - cash that promises your availability the moment that the client has a problem, but costs you more when you start working.

- NY may not have done the right thing - this decision is widely criticized outside of NY. This was a bad guy, but such a broad stroke may not have been the best thing. Many states allow such retainers if they’re reasonable (i.e., don’t prevent client from seking alternative counsel).

D. Contingent Fee Agreements (CFAs)

1. Another controversial method of client payment.

a. Some states regulate strictly, while others just require a written agreement.

2. Proponents argue that this enables certain parties access to ct. that wouldn’t be able to get there.

a. Lawyers who feel the case deserves to be heard have a way to recoup their costs if they win. This requires that lawyer decide that he can win upon the merits of the case. Usually there’s a premium associated w/the risk he will take (usually a high % of award).

3. Factors that lawyer looks at in deciding to take a case on contingent basis

a. likelihood of prevailing (unlikely to take these on contingent basis)(most impt.)

b. length of time before resolution

c. probable size of recovery (will spend more time on these)

d. amount of work required (need to evaluate this carefully, b/c if you get bogged down, can’t work on other cases. If lose, you’re in trouble).

e. amount of lawyer’s recovery

* First 4 require predictions, which in turn determine 5.

* lawyers better able to determine that client.

4. Problems w/CFAs

a. State may cap amount recoverable under CFAs (Statutory Fee Ceiling)

- may lead to fewer cases being heard in ct., b/c can’t afford risk

5. Remember, CFAs are not allowed in:

a. Matrimonial cases

1) State has an interest in seeing as much $ staying w/the families

2) No need - Statutes empower Ct. to order wealthier spouse to pay other’s ct. costs.

3) CFA may give lawyer incentive to recommend course of action not in client’s best interest (e.g., see case to trial and not recommend reconciliation).

b. Criminal cases

- CFA on acquittal could prompt a lawyer to encourage a client to reject a favorable plea and fo to trial in order to try and get the acquittal.

E. Court Awarded Fees (Alternatives to CFAs)

1. Eng. Rule - Loser Pays Winners’ costs

- Debatable issue where some close call cases won’t risk being heard when they should be b/c of the fear that can’t afford to pay other party costs.

- Indigent parties under civil rights cases aren’t made to cover other party’s costs.

2. US Rule - Fee Shifting (Ct. awarded fees)

1) Occurs in cases (usually federal Ct.) where there is a strong public policy in bringing every type of suit (e.g. DTPA, civil right violations, environ. cases).

2) Rivera - hispanic guys sued after cops roughed them up during the break up of a party. Lawyers sued for violation of civil rights and won. Recovery for plaintiffs was $33K, w/$13K for civil rights violation (would be $11K under CFA). Since this was a fee-shifting case, Ct. makes violating party pay (state). Ct. decides what the attorney fess were, and gave them $250K using Lodestar Method.

- Lodestar = method for determining attorney fees

= Reas. hrs. x Reas. fees

- Key = Not necessarily what the lawyers actually did.

- Fee was so out of proportion b/c we want these cases brought. High fee is to get their attention.

- The larger the spread between fees and damages award reflects the work done by lawyers ($33K vs. $250K).

3) City of Burlington v. Dague - lawyer said the Lodestar should be enhanced b/c of the risk taken by accepting the case on a contingent basis (Lodestar was enacted b/c this was an environmental case).

- S.Ct. said that there was already a Lodestar formula for fixing the contingency consideration (it was already factored in). You already look at reas. hours and fees. It may not be what you normally charge, but it isn’t bad.

- For class action suits, cts. will normally award contingent enhancements.

4) Settlement Conditional upon fee waivers (additional prob. w/ Fee shifting stat)

- Evans. v. Jeff D. - Legal aid lawyer representing civil rights case brought by mentally and physically handicapped kids got a favorable settlement offer which conditioned that the fee for the lawyer be waived. LA lawyer knew that fees are used to fight other battles, but he’s there to serve clients. He took offer, and Legal Aid sued, saying that conditioning settlements this way will eliminate the possibility of these suits in future.

* S.Ct. said that fee shifting is not absolute. It’s a request that Ct. may deny if pt. of a ct. settlement.

* There is no conflict w/lawyer - he serves client, not self.

* Lawyers can cure this by having a fee agreement beforehand.

* Solution = Merits and fees cannot be negotiated together.

F. Mandatory Pro Bono Plans

1. Why have them at all? Equal justice for all (S.Ct. building)

a. Only one pro bono system in US - El Paso requires mandatory hours.

b. FLA has gone ther farthest - Even w/their “voiluntary program, there have been legal challenges. FLA requires a manddatory reporting of your voluntary participation. If you don’t do it, then you have to pay the cash equivalent.

2. Why not have taxes pay the fees, rather than having lawyer eat the fees?

Taxpayers can’t foot the bill.

G. Division of Fees

1. MR 5.4 - Professional Independence of a Lawyer

(a) Lawyer/firm shall not share legal fees w/nonlawyer, except that:

(1) agreement w/lawyer’s firm, partner, or assoc. may provide for payment of money over reas. period of time after lawyer’s death, to his estate or specified person;

(2) Lawyer who purchases practice of a deceased/disabled/disappeared lawyer (MR 1.17) may pay the estate or other rep. of that lawyer the purchase price; and

(3) Lawyer or firm may include nonlawyer employees in compensation or retirement, even though plan based on a profit-sharing agreement.

(b) Lawyer shall not form partnership w/nonlawyer if any of the activities of the partnership consist of the paractice of law.

(c) Lawyer shall not permit a person who recommends, employs, or pays the lawyer to render legal services for another to direct the direction of the lawyer’s recommendations.

(d) Lawyer shall not practice with or in the form of a professional corporation authorized to practice law for a profit if:

(1) nonlawyer owns any interest (except that a fid. rep. of the estate of lawyer may hold stock of lawyer for a reas. time),

(2) nonlawyer is corp. director, OR

(3) nonlawyer has right to direct/control lawyers prof. judgment.

* Rule designed to control sharing of fees w/nonlawyers, but only in specific areas. Can’t share fees w/nonlawyers if practicing law.

* Multidisciplined practices (MDPs) can’t pactice law. Boutique firms can’t compete.

VI. Conflicts of Interest

A. Background

1. Basis

a. Based on lawyer’s fiduciary duty; very serious.

b. Also based on the danger to client confidence.

2. Ramification of Conflict (if I don’t do something about it)

a. Discipline

b. Disqualification from representation

c. Rule 11 Sanctions

d. Delay w/respect to your client’s cause (more damages result)

e. Malpractice suit (damages and liability to you)

3. Conflicts, over the course of your career, are unavoidable and inevitable.

4. Types of Conflicts

a. Concurrent - between 2 clients, client and 3rd party, client and lawyer.

b. Successive - conflict between the cause and the sides representing them.

c. Imputed - Ex. dating the mayor, your firm then can’t represent a suit against him.

d. Govt. Employment Revolving Door - hire someone if they worked in govt. Can you then sue the govt. later for other stuff?

e. Lawyer as witness - serve as W, you can’t serve as advocate.

f. Entity problems - represent agent or entity?

g. State Ct. rules vs. Fed. application

h. Breadth vs. Narrowness of rules

5. MR 1.7 Conflict of Interests: General Rule

(a) Lawyer shall not represent client if the representation of that client will be directly adverse to another client, UNLESS:

(1) Lawyer reasonably believes representation won’t adversely affect relation w/other client, AND

(2) Client consents after consultation.

(b) Lawyer shall not represent a client if the representation may be materially limited by the lawyer’s responsibilities to another client or 3rd person, or by the lawyers’ own interests, UNLESS:

(1) Lawyer reas. believes rep. won’t be adversely affected, AND

(2) Client consents after representation. When representation of multiple clients in a single matter is undertaken, the consultation shall include explanation of the implications of the common representation and risks involved.

* Consultation = full disclosure after problem is disclosed.

* If lawyer reas. believes that conflicts won’t adversely affect his representation, then he can represent client, even with conflict. DO this first, then see if client will sign off on it.

6. TX 1.06 Conflict of Interest: General Rule

(c)(2) defines “Consultation” - full disclosure of the existence, nature, implications, and possible adverse consequences of the common representation and the advantages involved, if any.

(d) Lawyer who represents multiple parties in matter shall not represent any of such clients in a dispute among the parties arising out of the matter w/o prior consent from all parties.

(e) If lawyer accepts rep. in violation of this rule, or if multiple rep. properly accepted becomes in violation of this rule, then lawyer shall promptly withdraw from one or more representations to extent necessary to not be in violation.

(f) If lawyer would be prohibited by this rule from engaging in particular conduct, no other lawyer while a member or associated w/that lawyer’s firm may engage in that conduct.

B. Client/Lawyer Conflicts

1. Matter of Neville - when you have a relationship w/another client, unless it’s clearly terminated, you can’t switch over to other party’s side. Why? A: Layperson’s minds don’t draw such fine distinctions.

- Must act w/fiduciary duty in attorney/client relation as you do w/another client.

- Duty comes and goes depending on what or where the relationship is (more formal).

2. MR 1.8 - Conflict of Interest: Prohibited Transactions

(a) lawyer shall not enter into bus. w/client or knowingly acquire an interest (ownership, possessory, security, or other pecuniary) adverse to a client UNLESS:

(1) The transaction and terms on which the lawyer acquires the interest are fair and reas. to client and are fully disclosed and transmitted in writing to client in a manner which can be reas. understood by client,

(2) Client is given reas. opportunity to seek advice of indpt. counsel, AND

(3) Client consents in writing.

(b) lawyer shall not use info. relating to the rep. of a client to the disadvantage of client unless client consents after consultation, EAOP by MR 1.6 or 3.3.

(e.g., can’t use info. as negotiationg ploy).

(c) Lawyer shall not prepare an instrument giving the lawyer or a person related to the lawyer as parent, child, sibling, or spouse any substantial gift, except where the client is related to donee.

(d) Prior to conclusion of rep. of client, lawyer shall not make or negotiate an agreement giving the lawyer literary or media rights to a protrayal based in substantial part on info. relating to the representation.

- TX - can’t negotiate until the entire matter is concluded, i.e., if you’re fired from project, still have to wait until the matter is resolved (could be a long time).

(e) Lawyer shall not provide financial assistance to client in connection w/pending litigation, except that:

(1) lawyer may advance ct. costs/expenses in contingent litigation,

(2) lawyer representing indigent client may pay.

* TX - includes necessary living expenses that are reasonably necessary may be advanced. MR excludes b/c fear that lawyers w/lots of $ could buy clients and get bus. Also fear that this would reduce ability of clients to change lawyers (form of coercion).

(i) Lawyer related to another lawyer (parent, child, sibling or spouse) shall not represent client directly adverse to person lawyer knows is represented to related lawyer, except upon consent by client after consultation.

- This is personal to lawyer; doesn’t impute to firm.

- Gellman v. Hillal - P was represented by lawyer whose wife had previously represented D‘s in previous malpractice action regarding same technique. D‘s moved to disqualify husband b/c of fear that if wife divulges her knowledge to husband, they will be prejudiced. Ct. said this is a case-by-case determination; No Automatic Disqualification. Each lawyer is under own ethical obligation to not divulge info.

* We’re very skeptical of lawyers who go into bus. w/clients.

- Can get bus. prop./interests as fees (e.g., stocks).

- CANNOT GO INTO BUSINESS WITH THEM; requires formal realtion.

- Written requirements are to ensure that lawyer didn’t trick client.

3. MR 1.10 Imputation of Conflict

(a) While lawyers are associated w/a firm, none of them shall knowingly represent a client when any one of them practicing alone be prohibited from doing so by Mrs 1.7, 1.8, 1.9 or 2.2.

(b) When client has terminated realtionship, firm is not prohibited from representing thereafter if not currently represented by another firm unless:

(1) matter is same or substantially same as firm represented previously,

(2) any lawyer remaining in the firm has protected info. by Mrs 1.6 or 1.9(c) that is material to the matter.

(c) A disqualification prescribed by this rule may be waived via MR 1.7.

- Berkowitz - corp. client asked longtime counsel (Berk.) at large firm for help in matter. Partner in Berk.’s firm had an interest in the matter, which was in direct conflict with the goals of Berkowitz’. To escape discipline, lawyers argued unsuccessfully that Berkowitz had never actually accepted client’s request to represent him. Ct. held that regardless if he actually accepted the case, his relationship with client as corp. counsel, his indication that he would investigate matter, and client’s apparent reliance on Berk. were sufficient to est. attny./client realtionship.

4. MR 3.7 - Lawyer as Witness

(a) Lawyer shall not act as advocate at trial in which he is likely to be a necessary witness except where:

(1) the testimony relates to an uncontested issue,

(2) the testimony relates to the nature and value of the legal services rendered in the case, or

(3) disqualification of lawyer works substantial hardhip on client.

(b) Lawyer may act as advocate in trial in which another lawyer in his firm is likely to be called as witness unless precluded from doing so by Mrs 1.7 or 1.9.

5. Problem - Karen Horowitz’s Dilemma (p.222)

Woman working in a firm for 5 years has worked on a particular case for 2 years. She is Jewish, and the case is going to be tried in the South. Firm is worried that jury won’t take to a Jew lawyer, so they don’t allow her to litigate. She’s mad, but firm says it’s not b/c she sucks, but rather to be sure that client won’t lose case b/c of lawyer. What can be done?

- Comment in MR 8.4 - There is an exception for MR 8.4 (Lawyer Misconduct). While it’s misconduct to “ . . . engage in conduct that is prejudicial to the administration of justice.”, there is an exception where a lawyer, in the course of representing a client, knowingly manifest by words or actions, prejudice or bias upon race, sex, etc., if such actions are prejudicial to the administration of justice (Exception for legitimate advocacy).

- There remains the possibility of civil liability due to the employer/employee relationship, esp. is she’s an associate. To stem problems, make her a partner; then she’s no longer an employee, but rather an employer.

C. Client/Client Conflicts

1. Criminal Cases

a. Defining Lawyer Conflicts - most occur b/c of multiple representation; crime involving 1+ alleged D‘s, and they all go to same lawyer b/c he knows case and to save cash.

(1) Is there a client/client conflict when alleged D‘s are accused of same crime? Not on the surface, but possibly below ® interests in cases often diverge (e.g., first one to testify against other gets better deal, resulting in conflict if one lawyer representing diff. interests). Conflict will ride all the way to a possible appeal.

(2) Lawyers sometimes give co-D‘s to other lawyers in his firm. This also won’t work b/c of MR 1.10 - Imputation of Conflict (same firm, same conflict). To ensure indpt. counsel, must go outside firm.

(3) Can client “waive” conflict? YES, if done knowingly, after consultation regarding the conflict.

(4) “Whip Sawing” - issue where by using something they think is favorable, lawyer or client end up getting hurt when it is used in a harmful manner.

Ex. 6th Amend. guarantees representation. If go to client w/conflicted lawyer, and he’s then convicted, client will claim that he was denied his 6th Amend. right to effective counsel. If ct. denies him the lawyer of his choice (who has a conflict), then D will claim that his 6th Amend. right to counsel of choice was violated.

b. Cuyler v. Sullivan - 3 D‘s accused of crime. One (Sullivan) had sep. attny., but eventually signed on w/attny. representing the other 2. Nobody raised conflict issues b/c of multiple representation. Sullivan (P) goes to trial, but doesn’t testify b/c he doesn’t want an affair he had to come out. He’s convicted. Other 2 are acquitted. P sued to get conviction overturned claiming he didn’t get 6th Amend. right to effective counsel (stating that multiple D‘s automatically raise conflict of interest; and since his case was handled diff., he didn’t get effective counsel).

- Ct. held can’t presume a conflict b/c it may be a common interest defense (best defense for all 3 D‘s, and he just got screwed).

- RULE = P must prove that there’s a conflict of interest that adversely affected his lawyer’s performance.

- 2nd Issue = Did trial judge have obligation to inquire or prevent multiple representation? Ct. said NO; Can’t go back and look at this unless P brings up the possibility of conflict beforehand. Otherwise, reviewing ct. not required to inquire. Fed. cts. are required to inquire, but this was state ct.

- We rely upon ethical considerations of attorneys to refuse to take cases where they might have a conflict.

(1) Strickland v. Washington (4 yrs. after Cuyler) - S.Ct. decides that instead of test being “P must prove that there’s a conflict of interest that adversely affected his lawyer’s performance,” New Test should be whether counsel’s performance was reasonable under the circumstances: if it wasn’t, then party complaining must show there’s a reasonable probability that but-for counsel’s error, different result (No need to prove actual conflict, only a reasonable probability of conflict).

(2) Freund v. Butterworth - client (doctor charged with murder along w/co-D, who was a longtime friend) argued ineffective counsel. Attorney concocts scheme to plead doctor not guilty by reason of insanity, which shifts entire blame to him, and implied that the co-D was innocent. Didn’t work, and doctor is serving jail time, while co-D is free man. No one raised an objection under MR 8.3 (Professional Misconduct).

c. Wheat v. United States (1988) – 3 co-D’s were represented by same counsel on charges that overlapped each other. Counsel notified ct. of multiple representation. Govt. objected to this as conflict of interest (1. govt. had not yet accepted plea between one co-D and govt., and if it was rejected, the co-D could withdraw and go to trial, 2. Counsel’s representation of one D would be at odds w/petitioner). Petitioner came back w/6^th Amend. Right to Counsel arg.

- Whip Saw Argument = 2 Conflicts ® right to effective counsel vs. right to counsel of your choice. Which one trumps?

1. Client knew counsel was still working on other stuff, but was willing to waive the problem.

2. If Ct. grants him this counsel, and D eventually loses, then D will claim whip saw problem of ineffective counsel (b/c of conflict).

3. If Ct. denies, then D claims denial of counsel of choice.

- Ct. eventually decides that D can’t waive his conflict in this case. Why?

1. If there’s an actual conflict (conflict which exists at the time), judge can deny the representation, i.e., conflict-free representation trumps counsel-of-choice.

2. However, if the conflict is a possible conflict at the time representation is made, then Ct. is allowed substantial latitude. Generally favor a presumption of counsel of choice, but Cts. Aren’t bound to it.

- Ct. is concerned more w/the administration of justice than w/D’s rights (One of D’s rights are going to be infringed either way).

- Dissent = Wheat didn’t want substitution of counsel; he wanted to add counsel. Majority never considered this idea.

- U.S. v. Stites (note case, p.244) - D wanted lawyer who had defended his co-D. In his trial, the co-D called Stites a “cheat, wicked”, etc. Lawyer did a good job, and co-D wanted him. Can Ct. allow this? No.

1. We can’t allow lawyers to blame one D one day, then shift his argument the next; public won’t believe the truthfulness of the judgment.

2. Nothing in prof. ethics permits lawyers to talk out of both sides of their mouth. Ethics rules are a list of prohibitions, not a list of what you can do.

3. Rule is diff. in diff. jurisdictions – CA allows a lawyer to put on diff. args. for different D’s in same case (what happened in Stites).

d. Problem – All or Nothing (p.248)

Lawyer was hired to represent 3 criminal D’s, all charged w/1^st degree murder. Two were accused of committing the murder, while the 3^rd was charged under felony-murder rule (he drove getaway car). All could get life w/o parole. Prosecutor said she would plead out w/murder two on all 3, but only if all 3 take deal. Two who committed the murder want to take deal, but 3^rd doesn’t. Fact is the prosecutor has a better case against the first two. It’s a pretty good deal for all three, but may get 3^rd off b/c his case is weak. What do I do?

- There is an actual conflict here.

1. If you go to trial, you hurt the 2 who committed murder.

2. If take the deal, then 3^rd guy is hurt.

- Talk to 3^rd guy about taking the deal. At least he has a parole chance w/murder two. Better than no chance at parole.

- Main point = at the beginning of the case before trial, lawyer cannot take on all 3 D’s; at most, he can only take on the 2 w/the similar interests. If he takes on all three, then they will try to rat each other out.

* Best scenario = get all three separate counsel.

2. Criminal cases involving Prosecutors

a. Prosecutor’s Role = Justice, not efficiency. They can have conflicts too.

1. E.g., Prosecutor formerly a PD, defended someone previously that he’s no prosecuting. He didn’t tell anyone about the conflict and ended up suspended for 90 days.

2. Prosecutors in small towns often take cases in addition to their duties as prosecutors. They may have to step out of their role as prosecutor.

3. Big Issue = When one prosecutor is conflicted, does the conflict impute the whole office (via MR 1.10 – Imputation of Conflict of one lawyer to whole firm)? Not really; rule is applied less vigorously to govt. employees, but it can happen.

b. Young v. United States Ex. Rel. Vuitton Et. Fils. S.A. – A prosecutor’s only duty is to justice. This duty cannot be corrupted. In this case, private prosecutors were used to prosecute a contempt charge in violation of an injunction that they themselves had won previously. They had allegiances to third parties (clients). This cannot be allowed.

c. Problem – Conscientious Objectors (p.254)

After a prosecutor had objected to capital punishment is elected to DA office, the state leg. passes into law providing for death penalty for certain homicides. The DA is charged w/deciding which cases to seek death. Can she properly exercise her discretion to never use the death penalty?

- No. Refusing to use discretion is breaking the law.

- If she exercises her discretion and then decide not to pursue the death penalty, then her decision will either be affirmed or not affirmed at the next election.

- If she never exercises her discretion, then no re-election will prevent this from being a violation of the law.

D. Civil Cases of Client/Client Concurrent Conflicts

1. Civil concurrent conflicts can arise in litigation or outside it.

2. Fiandaca v. Cunningham – Public interest class action suit by inmates who want a female detention center built. Filed that the state violated their civil rights to equal protection. State ordered a female prison be built. Warden challenged the district ct.’s decision not to disqualify plaintiff’s class counsel (New Hampshire Legal Assistance) due to unresolvable conflict due to adverse interests. NHLA represented both the inmate class, as well as a group that occupied the site for the proposed prison, in another matter. When NHLA refused to put the prison on this site, which would be shared, the state moved to disqualify.

- State moved to disqualify pursuant to MR 1.7 – NHLA’s representation of the P class in this litigation was materially limited by its responsibilities to the other group.

- As class counsel, NHLA owed the inmates a duty of undivided loyalty. They knew before the trial that there may be a conflict, and they knew that they couldn’t go to the inmates w/this settlement.

- This is an Actual Conflict.

- Ct. of Appeals has to decide what to do. They decide they must all start over regarding the issue of disqualification.

- Why doesn’t whole case start over? By splitting the issues (unconstitutionality and disqualification), it’s good for the P’s.

- RULE = an attorney may not represent 2 clients when a settlement offer made to 1 is contrary to the interests of the other.

- Why does the govt. have standing here? Because of public good of its citizens, obligation to court/tribunal, attorneys not doing their jobs if there is a conflict.

3. May a lawyer act adversely to a client on an unrelated matter?

a. MR 1.7 doesn’t speak on this; Comment to rule says the answer is no.

- Duty of loyalty is the overriding concern (even if there are unrelated matters, can’t have the appearance of a breach of loyalty).

- Policy = Client should feel there’s no chance of breach of duty possible, even in an unrelated matter.

- Why is MR bad?

1. Limits the free choice of lawyers as a client (too many conflicts reduces lawyer pool).

2. Requires that lawyer find out exactly who the client is (esp. when dealing w/large conglomerates). Lawyers won’t want a conflict w/a large group that deprives them of choice clients. Lawyers want to be able to have client “waive” the conflict between two clients (which is OK as long as client understands).

- If there’s a duty of confidentiality involved, waiver will not be effective.

- Hypo#1

Jones works for V&E in Atlanta, negotiating a deal w/ABC against XYZ.

Smith works for V&E in Houston, representing XYZ in litigation.

MR 1.10 imputes a conflict to the entire firm.

This law is for the benefit of clients, not lawyers.

This is probably a conflict on an unrelated matter (litigation in only one).

Jones will be barred under MRs from taking the case against XYZ.

This is so even if XYZ is not worried about a conflict and/or waives it.

- Hypo#2

Jones works for AB in Atlanta, suing HP.

Smith works CD in Chicago, as a tax advisor for HP.

Day 1 – HP calls Smith for tax advice.

Day 2 – Smith calls back and says he’ll have an answer on Day 4.

Day 3 – AB and CD merge.

Day 4 – Smith gives advice to HP.

Does the merged firm get disqualified? Technically yes, but the risk is so minimal that it probably won’t be to disqualification status. However, Smith will likely be screened from suit against former employer.

Remember ® disqualification falls under the disciplinary rules.

b. TX 1.06 – A firm/lawyer may act adversely to a client on an unrelated matter. TX favors independence for the lawyer. If don’t, then all the big guys will horde the best lawyers.

c. Problem – Will you represent us both? (p.272)

Two minorities allege that a white guy w/less experience was promoted over them. They want a single lawyer to take the case. What can he do?

- 1^st issue – are there Actual Conflicts between the 2 clients? If not, is there a conflict between the lawyer and his clients? If not, is there a conflict between the lawyer and the 2 clients?

- 2^nd issue – are there Potential Conflicts w/any of those combinations in the future?

- If there’s an actual conflict between the two clients, then we can keep one of them (they don’t both have to be turned away). Careful – if we give advice to them, then they both become clients, and we’re screwed.

- Ex. of Actual Conflict = they both want the same job that white guy got.

- Ex. 2 = If they’re suing for cash, there may be a potential conflict (have to prove facts in one case, may hurt the other client’s chances).

- Ex. 3 = If they both are suing only to get the white guy out of the job, then there’s probably not an actual conflict.

- If you take them both on as clients, then you need consent from both in writing. One exception where writing isn’t required = _____________.

- If you represent both for a while, but it later appears that employer really only discriminated against one, you can meet w/them both and formally withdraw from the one guy’s case b/c there is no case. Can do this, b/c other obligations to court prevent you from going forward w/bogus claims.

d. Problem – Can we do both cases? (p.272)

Asked to represent landowners in Wis. about the constitutionality of its law in regulating the use of the land that amounts to a taking. Meanwhile, partner in the CA office is a member of an org. that wants him to file a brief in a state court action against some developers who are arguing that the county law restricts the use of their land. Cases are similar but not identical. Possibly one claim is valid and the other isn’t. It’s also possible that either claim is invalid under their respective constitutions. Do we need consent?

- Are these two cases substantially related? If you argue one way in WIS, must you argue the same way in CA? If the law is state law, as it is here, there’s less likelihood of a problem. Could be a problem if case makes it to U.S.S.C.

- How far must you look to foresee possible problems? It depends on the state rules. MR 1.7, comment 9 – Allow you to take these 2 cases provided the representation of either client won’t be affected. ABA ruling – usually not advisable to take cases of conflicting loyalty (may breach later).

- How do we get out of this problem?

a. Is the environmental group in CA a client? If not, then there’s no conflict.

b. Get consent from both parties.

c. In CA law, this dual representation, making inconsistent arguments is allowable in criminal law.

e. Problem – Can the lawyer be our client? (p.273)

I have an IP case against Rich Bellow. My client says his client is infringing against a registered name. Bellow is a partner at a good firm in town. Bellow’s firm got sued for malpractice. His managing partner came to my partner, Nell Krinsky, whose specialty is defending malpractice. I tell her I’ve got a case against Bellow. Nell says the cases have nothing to do w/each other. Can Nell defend Bellow’s firm while he’s my adversary?

- Can I take the case to sue Bellow under MRs? Maybe. Doesn’t really matter that the cases are substantially different.

- Key – Lawyer must (1) reasonably believe that no conflict will exist now or in future, and (2) if lawyer so believes, then he can get consent from all parties involved.

- ABA opinion – Proper for my partner to represent the other firm that I’m suing, where the firms are adversaries in my case, if both sides consent.

f. Cowboy Ethics (Supp.)

Boyce, as gen. counsel for XYZ, had used same outside counsel for some time, but decided to pursue separate counsel for separate jobs in an effort to get a crack team. She needs guys that are loyal to her. She has a case in TX and hires a good guy who is doing a bang-up job. He later comes in and tells her that he’s suing a subsidiary of hers and wants her consent. She says no way. He says OK, I’ll do it anyway b/c TX 1.06 allows me to sue you whether you like it or not. Her friend in TX confirms this. She goes to ct. on the matter, along w/the leading ethics people in the country, all of whom say it’s a bad rule. Judge says this is TX, and we don’t want all the best lawyers tied up b/c of conflicts. If you don’t like the dual representation, judge tells Boyce to fire lawyer from defending her. She’s pissed. Then her fellow gen. counsel for a competitor in PA says that he hired lawyer to work for them years ago. PA case says that confidential info. regarding previous clients, if they’re competitors, creates a conflict between the lawyer and the new firm and the competitor. Boyce therefore cannot hire lawyer to work for her at all. Bottom line = do your homework.

E. Malpractice Based on Conflicts

1. Remember – A conflict of interest is a breach of the fiduciary duty of loyalty to client.

- Malpractice isn’t based on a breach of the rules – it’s a COA based on a tort (negligence) or a breach of K issue.

- Remember – Rules of Professional Conduct can’t be used as basis for civil liability (this is in the preamble). This doesn’t mean that they can’t be used to form the basis of conduct. It just means that a client can’t sue his lawyer for breach of MR __ per se.

2. Remedies for Malpractice for Client

a. Damages (normal remedy is money).

b. Disqualification from the case.

c. Discipline – if client doesn’t have or can’t prove damages, or doesn’t want an injunction for disqualification.

3. Simpson v. James – woman sues lawyer who brokered a sale of her co. to a buyer, who then defaulted. This malpractice action arose out of a transaction, not litigation (which is where these cases usually arise).

- 2 incidents of negligence alleged by P (seller)

a. Initial handling of sale of stock was negl. (lawyer didn’t name seller as beneficiary of D’s insurance, where D’s co. eventually went bankrupt after fire).

b. Restructuring of note to seller with assurances that didn’t happen.

- Lawyer represented both sides in this matter. Even if there was no actual conflict, there could certainly be a potential one. He just shouldn’t have represented both sides in this transaction.

- Lawyer must either (1) choose a client, or (2) get consent from both parties. But remember ® he can’t get consent from parties because of conflict if it’s an actual conflict, only potential conflict. He must reasonably believe that representing both parties can be done w/o adverse risk of conflict to either client.

- In this case, it’s probably best for him to withdraw, but it’s not a requirement.

- It’s unnecessary to have a conflict issue and a negligence issue in this case to allow seller to recover (like they did here). Seller could recover solely on the negligence (malpractice) claim. Conflict issue helped regarding proof of negligence.

- What if there was a conflict issue, but no negligence? Then seller would have more a grievance, and damages would be much harder to prove. Seller would probably get disgorgement of all fees.

- Does the buyer have a COA? They could sue lawyer of the conflict issue.

- There is no implied consent to conflict on the parties’ part by continuing on with this particular lawyer. Remember – the MRs always begin with a lawyer expressly explaining his conflicts with clients, then letting them make a decision. There are no implied consents to conflict.

- It’s not possible for a client to always consent to a potential conflict, because before lawyer ever brings it to client, he must (1) believe that it’s reasonable for a client to consent to conflict (he can’t always do this), and (2) client must expressly consent to it.

- In this case, lawyer expressly told one of the parties that they weren’t his client. Does this serve to prevent to prevent the formation of attorney-client privilege? Can client still sue? MR 1.16 – Lawyer can’t ever just tell a client I won’t take your case. He has to help him get a new lawyer, by doing whatever’s necessary under the circumstances.

4. Problem – What Kind of Consent? (p.283)

- Lawyer sets up small businesses. Some of them are groups of 3 or 4 people.

- Who do you need to get consent from? All 3, if lawyer reasonably believes that there’s no actual conflict (Actual conflict precludes representation).

- Big issue is usually potential conflict. Need to set them all down individually and explain the risks to them so they can make an informed decision regarding consent. If these guys are fighting already, then separate representation is probably best.

- If you go forward, and then a potential conflict arises, you need to tell them you have to withdraw because (1) as intermediary, you have to withdraw, or (2) as lawyer you have to withdraw because of possession of confidential info. you possess (they all tell you their info., and it would be improper for you to have it and then use it against one of them).

- Have to let the clients make the decision. If they sign off after you tell them you think it will be OK, then it’s OK.

- Best way to proceed = get them to sign a written doc. about what steps will be taken if a squabble ever happens.

- Remember – only when there’s an actual conflict must lawyer not take case or withdraw.

5. The Insurance Triangle – Public Service Mut. Ins. Co. v. Goldfarb – insurance co. which D has a policy with refuses to pay the fees to defend him in a civil trial under his dental liability policy, since he acted criminally and has already been convicted. Ins. co. arguing that ins. policy not intended to provide coverage for sexual abuse, and even if it was , public policy does not allow for contractual indemnification for civil liability arising from the commission of a crime.

- Sometimes, during a suit against one of its insured, ins. co. is not a party to the proceeding, even when the policy will be used to pay the damages. Ins. co. can be a 3^rd party payor only, and not have a say in proceedings. When they are a part of the proceedings, then ins. co. and the insured are under joint representation.

- If we view the ins. co. and the insured as having the same intent or not, we say they are jointly represented. When their interests diverge, then the ins. co. and the insured have a conflict, and ins. co. acts as a 3^rd party payor.

- The Conflict = Ins. co. won’t pay to defend insured if they don’t have control over the lawyer they are paying, who is representing the insured’s interest. This happens when there is a dispute over whether or not the insured’s policy covers the action he’s being sued for. If there is such a conflict, ins. co. is a 3^rd party payor, and not a joint participant.

- When such a conflict arises, ins. co. has a duty to defend the insured while the issue of coverage is being determined (in a DJ action, like this one), and ins. co. will have its own attorney separate from the insured.

- Ethical issue = what are the duties of the insured’s lawyer? Can ins. co. as 3^rd party payor set limits on what the attorney can do since they are paying? Under MRs, ins. co. shouldn’t have such control (lots of litigation on this topic these days). Ins. wants to have more control, and this is a problem.

- If jointly represented, then lawyer has same duty to insured and ins. co.

6. Problem – The Insurer Would Want to Know (p.289).

Our client is a lawyer who was hired by an insurance co. to defend its insured, which is a law firm and one of its partners, in a malpractice action. The partner in the action represented the plaintiff in some transactional matters, which the P says she messed up. Turns out that the partner sabotaged the transaction b/c she had a client who’d lose business if P succeeded. She tells our client that he can’t tell anybody. Can he tell the firm or the insurer of her actions, and if so what? The policy doesn’t cover intentional wrongdoings, but the firm will be vicariously liable for her actions.

- When lawyer gets a new client, first needs to conduct a conflict check (both current and former. If there is one, he can’t take the case for various reasons (e.g., confidentiality issues).

- Do you need to get consent from anyone at this point? No, b/c there is a huge actual conflict between the 3 parties (ins. co., firm & partner, and P).

- Whenever there’s more than one party involved, need to get a confidentiality waiver from the parties involved. This is a problem for our client here. If he has a confidentiality waiver, he can tell. But, even if he doesn’t have one, he can argue that “you didn’t say I can’t tell” – he has to agree that there he can’t tell, and he didn’t agree not to tell until the partner told him that he couldn’t.

- If our client tells of the partner’s complicity to ins. co., they will tell him to stop working. The client’s firm will say the same thing.

F. The Lawyer as a Witness

1. Problems with the lawyer in a litigation being a witness in the same trial.

a. Jury accords lawyer’s testimony either more or less deference (depending on if they like him) b/c of his special knowledge of case.

b. Prof. courtesy may inhibit cross-examination.

c. Laypersons may question whether or not counsel has compromised his integrity on the stand to win.

d. Jury may not distinguish between lawyer’s role as witness or advocate (i.e., may give testimonial weight to his closing).

2. MR 3.7 – Lawyer cannot testify – blanket rule/mandatory. Three exceptions

a. Matter relates to an uncontested issue ® must be very clear that it’s uncontested.

b. Testimony relates to fees/value of legal services.

c. Disqualification relates extreme hardship on client (where most claims under MR 3.7 occur).

- Must be on the level that there are no other lawyers in the jurisdiction that are w/o conflict, case is too technical, etc.

- All of these exceptions are very technical and tough to apply esp. #3.

- MR 3.7 doesn’t impute to entire firm – other lawyer can testify as long as no conflict (e.g., MR 1.9, 1.7)

- Rule applies equally strong to both civil and criminal cases.

G. Successive/Imputed Conflicts

1. MR 1.9 – Conflict of Interest: Former Client

a. A lawyer who’s formerly represented a client shall not represent another person in the same of substantially related matter, if the new client’s interests are materially adverse to former client, unless former client consents after consultation.

b. Lawyer shall not knowingly represent a person in the same or substantially related matter in which a firm which lawyer used to work at was associated or previously represented a client:

(1) whose interests are materially adverse to that person, AND

(2) about whom the lawyer had acquired info. protected by MRs 1.6 and 1.9(c) that is materially related to matter,

unless former client consents after consultation.

c. Lawyer who has formerly represented a client in a matter or whose present or former firm has formerly represented a client in a matter shall not thereafter:

(1) use info. that is materially adverse to former client, unless MRs 1.6 and 3.3 make the revelation of such info. mandatory, or such info. becomes generally known, OR

(2) reveal info. relating to the representation except as MRs 1.6 and 3.3 would permit or require w/respect to a client.

2. What is “substantially related”?

a. Matter specific – basically the same case, but you as lawyer are now on the other side.

b. Info. specific – possibility of usage of confidential information that was gained through representation that would be used in adverse manner to former client’s interests.

- MR 1.9 applies even when you fail to remember a client – doesn’t require any conscious malice or conflict, only negligence.

- MR 1.9 applies even if you never filed an action on their behalf – the fact that they gave you confidential info. at the beginning of the matter is all that’s required. Imputation part of rule also applies if you never filed.

- Example of where/how the rule applies – Lawyer represented 2 P’s. One P settled. When he did this, that P became a former client. He can stop you from representing the other guy now, b/c it’s probably the same matter, and it’s at least substantially related to the matter.

3. Analytica, Inc. v. NPD Research – Malec was an employee of NPD. When NPD wanted to give him more shares, Malec went to Schwartz firm to value the shares. To do this, Schwartz needed confidential info. about NPD. Eventually Malec left and formed a competitor to NPD, and brought along Schwartz as counsel (this is typical). When Malec later sued NPD, NPD moved for disqualification of Schwartz as counsel.

- Firm can sue NPD, but not if they are a former client in a same or substantially related matter.

- 1^st step – Is NPD a former client? Yes, Schwartz has confidential info. that they used to value stock, even though it was for Malec’s benefit.

- 2^nd step – Is this the same or substantially related matter? It’s substantially the same, b/c this is an info. specific matter (possibility of use of confidential info. in matter adversely affecting former client).

- What does Schwartz do? Disqualify themselves, and they were also fined for filing a frivolous lawsuit (ct. felt they should have known there was a conflict).

- Schwartz got a litigation firm to handle the matter for them against NPD; their knowledge is imputed to lit. firm, so they too are disqualified. This isn’t always required, but they were tainted here b/c of the close relationship of Malec and firm.

- Schwartz only had Malec on record as a client, and not NPD – doesn’t matter, b/c the actuality of the conflict is what’s impt.

- MR 1.9 is used differently here than Judge Posner would have used it. He argued that if lawyer could have gotten confidential information, then it would be a substantial relation, and firm would be disqualified. Result is same even though the wording is diff.

4. Hypo #1 – Husband (H) hires a lawyer to purchase a business. When that was done, both H and Wife (W) become officers and jointly liable. H later asks lawyer to draft a pair of reciprocal wills for he and W, which lawyer does. W comes in afterwards and tells lawyer she wants her will changed w/o telling H. Lawyer refuses b/c H is a client. W says forget it, and hires another lawyer to change will.

- W is under the assumption that lawyer won’t tell H about wanting to change will. Issue = Does she get former client status when she eventually sues for divorce, entailing lawyer to withdraw from representing H (b/c he has confidential info.)?

- W is not a former client – although lawyer did some work that affected her (bus. & will), the work was being done for H.

- If during the communication, lawyer says he can’t represent W b/c he has an obligation to H, then she probably is a client. If only way that she’s a former client b/c she’s Mrs. H, then she probably is a former client. W is probably a former client b/c lawyer didn’t get rid of her properly.

- Is the divorce a substantially same subject matter problem?

a. Not matter specific – divorce is not similar to will or bus. start-up.

b. Information specific? Probably, esp. w/the will information.

- In a matter to disqualify lawyer from divorce, judge could probably disqualify lawyer from case b/c of the similarities.

- USFL v. NFL – the congruence of factual matters, rather than the law, establishes substantial relationship.

- The duty of confidentiality is not the only basis for disqualification. The duty of loyalty can also be used, and it’s a much broader rule (confidentiality actually falls w/in the duty of confidentiality).

- Duty of confidentiality also applies to arbitrators, mediators, etc. Does not have to be a lawyer/client relationship, but fear that the info. is so powerful may lead to disqualification, even if they promise to keep quiet.

5. Hypo #2 – Picker was represented by Jones Day since 1911. Varian’s lawyers were MH&S, but only regarding IP stuff. Picker sues Varian on something other than IP. Meantime, Jones day and MH&S merge. When they do a conflict check and see that Picker is suing Varian, they see the conflict b/c they’re both current clients. What can they do?

- MR 1.7 – disqualification when you have actual conflict that’s directly adverse to a current client and lawyer reasonably believes that the conflict will affect the representation. If lawyer believes that conflict won’t materially affect his performance, then client must consent.

- If Varian won’t consent, what can the firms do?

a. Don’t merge until the litigation is over. MR 1.7 – Concurrent conflicts of interest (Remember, TX is different). RULE = current client, look to clients; former client, look to subject matter.

b. Under MRs, screening of lawyers from matter that conflicts w/the other matters (Chinese screen) is impossible. Can be used in some jurisdictions (7^th Cir.) to screen out migratory lawyers. In firm merger cases, cts. presume that entire firm knows all things about all cases.

c. If MH&S decide to fire Varian so that he’s a former client, will this work? Although in theory it would, b/c MR 1.9 looks to subject matter for former clients, courts say that you can’t fire a