Ethics and Lawyering Today - Volume 1, Number 4
July 2001
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Ethics and Lawyering Today, an email newsletter published by William Freivogel and Lucian Pera, delivers pithy, practical updates for lawyers on the many ethics rules and other laws that govern how lawyers practice today. Subscriptions are free, and you can visit our website to subscribe. Feel free to pass on this email to anyone you think might be interested. Remarkably, The Same Rules Apply ATTORNEY-CLIENT PRIVILEGE: Applying the Privilege in the Context of Health Care Auditors Schmidt, Long & Assoc., Inc. v. Aetna U.S. Healthcare, Inc. Any Lawyer Should Have Known . . . SEX WITH CLIENTS: Indiana Lawyer Disciplined for Sex with Divorce Client, Despite Lack of Explicit Rule or Client Harm The respondent in this disciplinary case represented the client in several distinct domestic matters over several years, and had a consensual sexual relationship with her for several weeks shortly after the representation began. Despite the lack of any mention of sexual relations in the Indiana version of the Model Rules, or any explicit ban on client sex, and despite the fact that the respondent argued (apparently accurately) that there was no evidence of any impairment of his representation, the Indiana Supreme Court had no difficulty deciding that sexual relations with a client violates Rule 1.7(b). The court reminded lawyers that it had previously made similar holdings. The court then emphasized that ABA Op. 92-364 (1992) strongly discourages sexual relations with clients. Lastly, the court noted that the Ethics 2000 Commission has proposed a specific prohibition of sexual relations with clients at Rule 1.8(j). The lawyer was suspended for 30 days. This case is, among other things, another example of the influence of the work (though unfinished) of the Ethics 2000 Commission. With the upcoming ABA debate on Ethics 2000’s proposal, and courts such as Indiana quite willing to hold that the Model Rules (which now say nothing on client sex) ban client sex, it’s time for lawyers and firms to start focusing on this issue, regardless of the outcome of the ABA debate. But, Your Honor, They Were Only an "Accommodation Client"! CONFLICTS: Recent Cases Seem to Plow New Ground for Former-Client Conflicts The conflict of interest rules relating to former clients are different, of course, from those relating to current clients. A lawyer may not be directly adverse to a current client without a waiver. That rule is based upon notions of loyalty and confidentiality. As to former clients, loyalty is less frequently an issue, but the lawyer’s duty of confidentiality remains important. If a lawyer attempts to be directly adverse to a former client, it must not be in a matter in which there is a risk that the lawyer will use confidences learned in the earlier representation. If there is such a risk, the matters may be deemed "substantially related," and the lawyer may not take on the later matter without the former client’s waiver. A number of decisions, several of them quite recent, seem to have created an exception to the "substantial relationship" test, which goes something like this: A law firm has a longtime client, "A," and is defending A in a lawsuit. The law firm has been asked to represent another defendant "B" as an "accommodation" to B. The circumstances are that B has no expectation that any information it gives to the law firm will be kept confidential from A. Thus, B becomes an "accommodation client." Later, B sues A involving the same subject matter, and A wants to use its long-time law firm adverse to B. In similar scenarios, representation of A adverse to B was permitted in two very recent cases, Skidmore v Warburg Dillon Read LLC, 2001 U.S. Dist. LEXIS 6101 (S.D.N.Y. May 11, 2001), and In re Rite Aid Corp. Securities Litigation v. Grass, 2001 U.S. Dist. LEXIS 4669 (D. Pa. April 17, 2001). Both opinions cite Allegaert v. Perot, 565 F.2d 246 (2d Dir. 1977), an early expression of the "accommodation client" concept. The Rite Aid decision is also based in part on consent given by one client to continued representation of another joint client if a conflict arises. This case law is also discussed at Restatement Section 132, Comment i. In our opinion, prudent lawyers may well decide not to rely on this concept as a basis for going forward with a representation, but these cases may nevertheless signal a trend in the law or provide a basis for defending representations already well underway. These two recent cases can be found at: Skidmore v Warburg Dillon Read LLC In re Rite Aid Corp. Securities Litigation v. Grass Bill also discusses these cases in the "Former Clients" section of his site: http://www.freivogelonconflicts.com Defense Counsel, Watch Thy Back! MALPRACTICE: Arizona Finds Insurer’s Not the Client, Yet Is Owed Duty In Paradigm Ins. Co. v. The Langerman Law Offices, P.A., 2001 Ariz. LEXIS 87 (Ariz. June 13, 2001), the Arizona Supreme Court has joined a minority of jurisdictions in holding that a lawyer hired by an insurer to defend an insured is not thereby necessarily lawyer for the insurer. However, the court also held that, even though the insurer is not a client, the lawyer may have a duty of care to the insurer. One of the most interesting aspects of this opinion is the court’s heavy reliance on the Restatement. For example, as to when a lawyer-client relationship is formed, the court relies on Restatement Section 14. As to whether the lawyer for the insured is also the lawyer for the insurer, the court quotes from Comment f to Restatement Section 134. As to conflicts generally, the court cites Restatement Section 121. The court relies, in part, upon Restatement Section 51(3) to hold that the lawyer may owe a duty of care to the insurer, even though the insurer is not a client. The court remanded the case to the trial court to determine whether the lawyer did, in fact, violate his duty to the insurer. Paradigm Ins. Co. v. The Langerman Law Offices, P.A. Take Care During That Victory Lap CONFIDENTIALITY: The Broad Scope of Confidentiality Under Model Rule 1.6 Have you ever won an important trial using advanced courtroom technology and then been asked to speak about it at a seminar? Glowing from your victory, you trot out the PowerPoint presentations, scanned images, bar-coded documents, and hardware that you used so successfully at the trial to show everybody how it’s done. But, wait…. Recall what Model Rule 1.6 (Confidentiality of Information) protects - "information relating to representation of a client." One could argue that the older Model Code formulation in DR 4-101 ("confidence or secret") might permit the demonstration. After all, you did show it to a public courtroom full of people. Model Rule 1.6, however, is broader in what it protects, and you should consider getting the client’s consent before such a demonstration. You may decide the least complicated course is to make up another presentation. New Ethics Rule: Ohio Requires Lawyers to Tell Clients About Lack of Malpractice Insurance By a 5-2 vote, the Ohio Supreme Court has announced a new rule requiring all lawyers without malpractice insurance to notify their clients using a standard form. Lawyers must notify clients if they do not carry at least $100,000 per occurrence and $300,000 aggregate in limits, but corporate counsel and government lawyers are exempt. Only Alaska and South Dakota now require such notice, while only Oregon requires lawyers to carry malpractice insurance. Two Essential Websites on Multi-Jurisdictional Practice Issues As our regular readers know, "MJP" is fast becoming the hottest issue out there for those interested in lawyer ethics and regulation. With more lawyers and courts becoming sensitive to the issues and the ABA’s MJP Commission moving into high gear with recommendations due out in November, lawyers need to know that more resources than ever before are available on these important issues of cross-border practice, unauthorized practice of law, and the like. Two sites stand out on these issues. The first is CrossingTheBar.com, an excellent site developed and exhaustively maintained by George A. Riemer of Oregon, who also publishes an email newsletter on these subjects. The website contains all sorts of useful information on news in this area, admission rules and pro hac vice rules across the country, interviews with key players in this area, and numerous resources from all over. Check it out: http://www.crossingthebar.com/ The other important site on this topic is the ABA MJP Commission’s official site, which includes not just information concerning the activities of the Commission (including meeting notices, hearing transcripts, and the like), as well as an excellent series of background papers related to the ABA symposium that spawned the Commission. http://www.abanet.org/cpr/mjp-home.html The Gramm-Leach-Bliley Act Kicks In You know those inscrutable privacy notices we’re all getting from banks and brokerages? We hope and expect that you’ve heard by now, but the conventional wisdom is that many lawyers and law firms are required by that same new law, the Gramm-Leach-Bliley Act, to put out privacy notices, too. We hope you’ve heard about it by now, because the first notices were supposed to go out by July 1, 2001. Anyway, many of us have to live with the annual notice requirements now, and there are a few sites that might help. The following are a few resources sites, including one from the ABA, the Federal Trade Commission (the government agency charged with enforcing the law), a FindLaw resource page, a few law firm sites, and a commercial tax information site. http://www.abanet.org/poladv/glbfactsheet.html http://www.ftc.gov/privacy/glbact/index.html http://library.lp.findlaw.com/bankingfinancelaw_1_18_1.html http://www.cl-law.com/news/advisories/view.asp?ID=1043523142001 http://www.spsk.com/Articles/grammleach.cfm http://www.taxtools.com/tax.htm Ethics and Lawyering Today Ethics and Lawyering Today, an email newsletter published by William Freivogel and Lucian Pera, delivers pithy, practical updates for lawyers on the many ethics rules and other laws that govern how lawyers practice today. Subscriptions are free, and you can visit our website to subscribe. Feel free to pass on this email to anyone you think might be interested. THE USUAL DISCLAIMERS This newsletter and the related website are copyrighted by William Freivogel and Lucian Pera. Any reproduction of Ethics and Lawyering Today, portions of this newsletter, or the website is permitted for non-commercial purposes, provided the reproduction contains our copyright notice and correct attribution to us. Needless to say, this newsletter and the site are for informational purposes only, do not constitute legal advice, and are certainly not intended to create any attorney-client relationship of any kind. You’ve been warned. SUBSCRIBING UNSUBSCRIBING CONTACTING US We value your input tremendously. Send us your comments, criticisms, ethics cases (published and unpublished), ethics opinions, questions, or anything else of interest: Ethics and Lawyering Today To reach the authors, contact: William Freivogel Lucian Pera |
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