Non-Resident New York Defense Counsel Disqualified: Virtual Office Space Insufficient

 A non-resident New York attorney and a California firm serving as co-counsel were disqualified from representing the defendants in a New York case based upon the plaintiff’s motion that alleged, in part, that defense counsel did not maintain a physical office space in the state of New York.  Justice Jerome C. Murphy, held that the California firm’s belated leasing of virtual office space did not satisfy New York’s Requirement under N.Y. Judiciary Law §470, which states that nonresident attorneys who are licensed in New York must maintain physical office space “for the transaction of law business in the state in order to appear in New York courts.” While those critical of §470 have argued that it is a dated restriction harking back to an age when only residents of New York could be admitted to the New York State Bar, the law has persistently survived constitutional attacks.

Defense counsel asserted that disqualification was not warranted because they had a lease agreement with a company that offers “virtual office space” on Wall Street, with an arrangement that includes “24-hour access to physical office space.” Justice Murphy noted that the lease agreements furnished by the disqualified firm were executed after the lawsuit commenced. The initial pleadings only referenced a Santa Rosa, California office.  Moreover, Justice Murphy explained that he could not ignore the fact that the firm had “no attorneys or law firm staff” in the New York location.

Read the full order here.




U.S. Supreme Court Chief Justice and Ninth Circuit to Study Workplace Code of Conduct

Allegations of sexual harassment in the workplace have recently been in the forefront of the country’s major news stories, and the judicial branch is no exception. In fact, in his end of the year report on the judiciary U.S. Supreme Court Chief Justice John Roberts noted

“Events in recent months have illuminated the depth of the problem of sexual harassment in the workplace, and events in the past few weeks have made clear that the judicial branch is not immune. The judiciary will begin 2018 by undertaking a careful evaluation of whether its standards of conduct and its procedures for investigating and correcting inappropriate behavior are adequate to ensure an exemplary workplace for every judge and every court employee.”

 The Chief Justice has requested James C. Duff, director of the Administrative Office of the U.S. Courts, to assemble a working group to examine current workplace practice and codes of conduct to determine whether changes are needed to appropriately address workplace conduct in the federal judiciary.

On January 12, 2018, the Ninth Circuit also announced the formation of an “ad hoc committee” assigned to review workplace environment policies. This group will coordinate with the group formed by Chief Justice Roberts. The Ninth Circuit will consider input from focus groups of staff, law clerks, and “interested parties” concerning workplace issues. The Ninth Circuit and the U.S. Courts working groups will submit a written report and recommendations to the Judicial Conference of the United States, which is the principal policy making body of the U.S. courts.

Read more about the Federal Judiciary Workplace Conduct Group here.

Read the Ninth Circuit’s announcement here.



New Hampshire Bar Finds Lawyer-Client Bartering is a Business Transaction

A recent opinion published by the New Hampshire Bar Association Ethics Committee finds that legal fee bartering is a business transaction with a client subject to ABA Model Rule 1.8(a) requirements, which apply a reasonable standard and include a thorough discussion with the client, the suggestion that the client seek advice from another lawyer, and written consent.

In the opinion, the committee defines bartering agreements as an agreement whereby a lawyer provides legal service and the client provides goods or services in place of a fee. The opinion rejects the idea that bartering agreements are standard commercial transactions, which are exempt from the requirements of Rule 1.8(a). The comments to Rule 1.8(a) explain that standard commercial transactions are exempt because “the lawyer has no advantage in dealing with the client.” Further, The Restatement (Third) of the Law Governing Lawyers, explains that in a commercial transaction a client does not need special protection.

The committee noted that The Restatement provides that “[a] lawyer may not participate in a business or financial transaction with a client, except a standard commercial transaction in which the lawyer does not render legal services.” Because barter transactions between a lawyer and a client “[do] involve the rendering of legal services, [they] cannot fall within the safe harbor of the standard commercial transaction.”

Therefore, an attorney who wishes to accept goods or services instead of a fee from a client will have to comply with the provisions of Rule 1.8(a).

Read the full opinion here.

Ask and You May Receive: The Obligation to Deliver a Client’s File in a Specific Format

A recent opinion from the New York State Bar Association Committee on Professional Ethics finds that where a former client requests documents regarding his case, a lawyer must take reasonable measures to deliver the documents in a form in which the client can access them; however, the lawyer may charge the reasonable fees and expenses incurred in delivering the documents in the form requested.

The inquiry arose from a lawyer who keeps client files in their electronic form on a secure, password-protected cloud storage site. When a client requests a copy of his file, the firm provides him with a link and password for the site. One (now incarcerated) former client requested that the firm send a printed copy of his file, which the inquirer said would be expensive to print and deliver.

A lawyer’s obligation to deliver the client the client file upon request derives from rule 1.15(c)(4) of the New York Rules of Professional Conduct, which states that a lawyer must “promptly…deliver to the client…as requested by the client… the funds, securities or other properties in the possession of the lawyer that the client…is entitled to receive.” But, as noted by the Committee, “except where original documents have particular evidentiary or similar value, a lawyer is not required to maintain the client file in any particular form.”

Thus, the Committee concluded that where the client is unable to read electronic documents, “the lawyer should make reasonable efforts to transmit the file in a form in which the client can access the documents” and may charge the client the reasonable fees and expenses incurred in printing out and delivering a paper copy.

Read full opinion here.

Ohio Joins New York in Approving the Use of Virtual Law Firms

In a recent Board Advisory Opinion, Ohio joined other states, like New York, Pennsylvania, North Carolina, and New Jersey, in approving the use of virtual law firms. The opinion is the latest in a wave of decisions reflecting that inevitability of technological advancements in the practice of law.

The main hurdle in allowing virtual offices lies in Rule 7.2 of the Model Rules of Professional Conduct. Ohio, like other states, tracks the language of Rule 7.2, which requires advertising communications to include the “office address” responsible for the content of the communication. The Ohio Board Advisory Opinion does not remove the “office address” requirement from advertising communications. Rather, it allows those using a virtual law firm to list the “office address” as the “lawyer’s home or physical office, . . . shared office space, or a registered post office box.”

The Advisory Opinion also requires all lawyers who establish virtual offices to implement safeguards and be subjected to heightened scrutiny pertaining to “rules regarding competence, communication with clients, confidentiality, and the supervision of nonlawyer[] vendors.”  For instance, a lawyer must understand the technology and ensure confidential information is secure.  Given the nature of a virtual office, a lawyer be fully transparent with clients about the structure of the law firm and accommodate a client’s “preferred method of communication.”

As technology becomes more prevalent in the practice of law, we will continue to see how the rules of professional conduct are re-shaped to comport with these advancements.

Find the full opinion here.

Proposed Amendments to Modernize ABA Model Rules on Attorney Communications

The ABA Standing Committee on Ethics and Professional Responsibility has presented proposed amendments to the ABA Model Rules on communication to modernize the rules’ guidance. The ABA Model Rules with proposed amendments are rules 1.0 and 7.1 through 7.5.

The Association of Professional Responsibility Lawyers (APRL) published reports in 2015 and 2016 stressing a need for modernizing the Model Rules governing communication. During an open forum at the 2017 ABA Midyear Meeting held in Miami, various members of the legal profession gave mixed reviews to the APRL’s reports. Proponents of the reports praised its movement toward a modernized philosophical shift of the Model Rules, while opponents criticized, among other things, what they deemed the reports’ mischaracterization of “advertising” as “communication.”

Currently, the Standing Committee has published a working draft of the proposed amendments, dated December 21, 2017. The Standing Committee is scheduled to host an additional open forum on its proposed amendments and working draft on February 2, 2018, in this year’s ABA Midyear Meeting in Vancouver, Canada. In addition, the Standing Committee is accepting written comments to its proposed amendments through until March 1, 2018.

Read the ABA’s most recent release on the Standing Committee’s proposed amendments here.

Read the Standing Committee’s working draft dated December 21, 2017 here.

Read an article on the mixed reviews following the 2017 ABA Midyear Meeting here.

Read APRL’s 2015 report on its proposed amendments here.

Read APRL’s 2016 report on its proposed amendments here.

Joint Clients Need Warning Even if Interests Align

In a recent ethics opinion, the New York City Bar Association Committee on Professional Ethics advised attorneys asked to simultaneously represent multiple clients to communicate the potential dangers of joint representation, even in situations where the clients’ interests appear to be aligned.

Under Rule 1.7, when representing multiple clients with differing interests, a lawyer must obtain informed consent to the representation. However, according to the opinion, even if clients’ interests align, such that informed consent is not required under Rule 1.7, Rule 1.4 imposes a duty of communication, which “require[s] the lawyer to make disclosures to clients concerning the aspects of the joint representation.” The opinion stresses the importance of explaining the potential implications of the representation to “the extent reasonably necessary to permit each client to make informed decisions about the representation.”

The opinion specifically highlights the potential issues surrounding the attorney-client privilege. Because information material to the representation disclosed by one client cannot be withheld from the other joint client, information that would otherwise be protected by the privilege will not be protected between joint clients in the event of a dispute.

The committee concluded by advising, “while Rule 1.4 does not require a lawyer to make disclosures about the implications of joint representation in writing, it will often be sound practice for the lawyer to so.”

Read the full opinion here.