On February 25, 2015, the Supreme Court of Florida imposed a thirty-day suspension without pay on a Seminole County Judge for using social media during her husband’s judicial campaign to “seek the assistance of her friends to help her husband correct perceived misstatement by his judicial opponent about [her] pending JQC matter.” The thirty-day suspension amounts to $11,500 in lost pay. The high court rejected an agreement between the Judge and the Judicial Qualifications Commission (“JQC”), an agency that investigates alleged judicial misconduct, to not impose additional discipline.
The Orlando Sentinel reports that the Court had already scheduled a public reprimand and a $25,000 fine against the Judge for a previous stipulation in an unrelated matter during her campaign for judicial office. The Court decided to treat the two cases against the Judge as separate violations warranting separate disciplinary action. The Court’s order gave both the Judge and the JQC thirty days to accept or reject the suspension.
In Formal Opinion 2015-1, the Association of the Bar of the City of New York Committee on Professional Ethics answered “a question of first impression in New York” concerning law firms’ use of professional employer organizations (“PEOs”), which “help small businesses provide employment benefits and human resource services to their employees.” The Committee opined that a law firm may use a PEO’s services, despite the triggering of several New York Rules of Professional Conduct (“Rules”), as long as four requirements are met:
(1) The firm does not allow the PEO to interfere with lawyers’ duty to exercise independent professional judgment and supervise lawyers and nonlawyers.
The Committee noted the value of a lawyer’s professional independence, stating that a PEO “must not be allowed to influence decisions that would impact a lawyer’s ability to provide independent professional judgment. Additionally, the PEO must not have control over law firm employees in connection with the practice of law and thus interfere with law firm’s supervisory responsibilities. See Rules 1.8(f), 2.2, 5.4(c), 5.4(d)(3) as to the interference with independent professional judgment. See Rules 5.1, 5.2 and 5.3 as to supervision.
(2) The firm does not allow the PEO to access confidential client information.
Law firms can comply with confidentiality rules by including in PEO arrangements “reasonable safeguards to prevent” breaches of confidentiality. See Rules 1.6 and 5.1.
(3) The firm complies with the rules regarding conflicts of interest.
PEO employees should be subject to the same conflict-checking procedures as firm employees would also appropriately be subject to. However, the PEO itself is not required to be subject to these procedures. The PEO may provide similar services to one firm as it does “to other law firms that represent adverse clients,” as long as the PEO does not interfere with lawyers’ professional independence, control or supervise employees, or access confidential information. See Rules 1.7, 1.9, and 1.10.
(4) The firm, in compensating the PEO, does not violate prohibitions against sharing fees with nonlawyers.
Payment arrangements with PEOs may not be based on fees paid by clients to the law firm. However, law firms may compensate PEOs based on “a percentage of total payroll, flat fee, or fee per employee or service.” See Rule 5.4(a).
On January 16, 2015, the U.S. Bankruptcy Court for the Northern District of California ruled that a California attorney forfeit all fees—both earned and already paid—for blatantly violating his duty of loyalty to a former client. After being terminated by the client, the attorney reversed his stance on arguments previously made on her behalf during her bankruptcy proceeding.
The client filed for bankruptcy protection after incurring $400,000 in attorney fees in a prior will contest, during which she was represented by another law firm. The attorney initially argued that although the original law firm’s fee obligations were secured by a deed of trust on the client’s home, the deed was invalid under California’s version of Model Rule 1.8(a) and that the value of her home should instead be used to pay her homestead exemption. Upon termination of his engagement, however, he revised his legal position.
In an attempt to secure payment of his own fees, the attorney now argued that the same lien was valid and that any value of the estate above the original law firm’s claim should inure to the benefit of unsecured creditors (including himself). Unfortunately, irrespective of the legitimacy or correctness of the attorney’s revised view, the court held that his now adversarial stance against his former client was a breach of ethical duty “so flagrant that he should be denied the fees he now seeks, and be required to refund all fees he [had] previously received.”
Click here to read more.
A West Virginia lawyer was reprimanded for depositing his personal funds into various client inmates’ prison accounts.
The Hearing Panel Subcommittee of the Lawyer Disciplinary Board of the West Virginia State Bar, alleged that the attorney’s monetary donations were made as payment to purchase referrals from inmates. The attorney denied the allegation and asserted that his contributions were donations that evidenced his sympathy for the inmates, and his desire to provide them with additional purchasing power at the commissary. The attorney admitted to instructing one of his employees to place money in the inmates’ accounts.
Although the donations were small, ranging from $25 to $50, the court determined that there was clear and convincing evidence that the attorney, by financially assisting litigation clients, violated Rules 1.8(e), 5.3(b), 5.3(c), 8.4(a) as well as 8.4(d).
The West Virginia Supreme Court of Appeals determined that “[the lawyer’s] clearly impermissible conduct is not excused by his stated altruistic intent.”
As a result, the court issued a reprimand, required supervision of his law practice for one year, and required additional ethics training.
For more information, click here.
BigLaw’s failure to discover a paralegal’s error resulted in JPMorgan’s loss of its secured interest in a $1.5 billion loan.
The situation arose as work that trickled down the ladder was not properly reviewed when it was sent back up the chain of command. A partner at Mayer Brown instructed an associate to prepare documents to release JPMorgan’s security interest in a financing transaction that General Motors was repaying. The associate delegated the task of searching for the financing statements documenting the security interest to a paralegal who was unfamiliar with the transaction.
The delegation ultimately resulted in the inadvertent termination of JPMorgan’s security interest in an unrelated $1.5 billion transaction. The release of lien documents were transmitted to and presumably approved by the senior lawyers at Mayer Brown, by Simpson Thacher & Bartlett, the law firm representing JPMorgan, and by JP Morgan’s in house counsel. Although the Bankruptcy court excused the error, the Second Circuit Court of Appeals, held that “although the termination statement mistakenly identified for termination a security interest that the lender [JPMorgan] did not intend to terminate, the secured lender [JPMorgan] authorized the filing of the document,” and therefore, the “termination statement was effective to terminate the security interest.”
What is the lesson for attorneys everywhere? Be extra careful when reviewing documents—especially when important tasks are delegated to assistants. ABA Model Rules 5.1, 5.2 and 5.3, and the states that have adopted versions of those rules, provide that law firms must have reasonable supervisory procedures in place to assure that both associate attorneys and nonlawyer assistants adhere to the legal ethics rules, which include the fundamental duties of competence and diligence in representing a client.
The U.S. District Court for the District of Colorado clarified Colorado Rule 1.2(c), on limited scope representation in an order that was precipitated by a disagreement over the type of assistance that an attorney is permitted to provide a pro se litigant.
The Court found that an attorney is not permitted to draft general documents or documents that a pro se litigant is submitting to the court or to opposing counsel. Also, that an attorney may not communicate with opposing counsel on behalf of a pro se litigant, even if the pro se litigant is included in the communication.
However, the Court did find that an attorney may speak with a pro se litigant to provide advice. The order also allows an attorney to attend a pro se litigant’s hearing as a member of the public, and to assist a pro se litigant with clerical tasks, such as locating forms and sample documents.
It is interesting to note how the Colorado order differs from Florida’s Rule of professional Responsibility 4-1.2. In Florida, a lawyer is permitted to provide advice to a pro se litigant concerning the operation of the court system, and with drafting pleadings and responses. If the document will be submitted to the court the attorney must indicate that the document was prepared with the assistance of counsel.
Thus, states differ on the do’s and don’t for limited scope representation so it is important for attorneys to stay informed of their state rules pertaining to assisting pro se litigants. For more information click here, for Florida rule 4-1.2 click here. To read the Order, click here.
Attorney’s Website Posts Judges’ Praise: Another Victory for the First Amendment in Attorney Advertising?
An August 2014 decision continues to cause a stir among free speech supporters. The Third U.S. Circuit Court of Appeals ruled in favor of a New Jersey attorney, overturning a June 2013 District Court’s ruling, finding that a New Jersey advertising guideline that prohibited attorneys from including “on a website or other advertisement, a quotation or excerpt from a court decision (oral or written) about the attorney’s abilities or legal services,” is unduly burdensome. The Third Circuit ruling will open the door for the New Jersey attorney to post, on his firm’s website, excerpts from unpublished opinions praising the quality of his work.
Free speech supporters have applauded the decision and believe it to be highly persuasive and likely to become national precedent. Clay Calvert, director of the Marion B. Brechner First Amendment Project at the University of Florida in Gainesville, stated that the opinion is “important because it finally gives judicial pushback to an example of sweeping governmental overreach….” Similarly, First Amendment scholar Rodney A. Smolla, claims it “properly rejected the highly paternalistic view that consumers, including the potential clients of lawyers, are too unsophisticated to figure out for themselves that an accurately excerpted quotation from a judge, taken from the public record, is not a blanket endorsement of a lawyer’s abilities.”
Currently, the New Jersey attorney is waiting on the trial court to issue the order implementing the mandate from the Third Circuit and waiting to see if the state files a petition for writ of certiorari to the U.S. Supreme Court before reposting the excerpted quotes on his website. As of the publishing of this post, the quotes have not yet been reposted.