Florida Contemplates Fee Sharing with Out of State NonLawyers

A proposed advisory opinion by The Florida Bar’s Professional Ethics Committee addresses fee-splitting with out-of-state lawyers when the out-of-state lawyer practices in a law firm with nonlawyer ownership. In the opinion, the committee states that a Florida Bar member should not be subject to discipline simply because a nonlawyer owner of an out-of-state law firm could receive a portion of the legal fees.

Partnerships with out-of-state lawyers are hardly new, but tensions between Florida’s Rules of Professional Conduct, and the organization and ownership of out-of-state-firms led the Florida Bar to clarify the matter.

Under Florida Rule of Professional Conduct 4-5.4, lawyers are prohibited from partnering or sharing legal fees with a nonlawyer. However, some U.S. jurisdictions—Washington, D.C. and Washington state—permit nonlawyer ownership of law firms.

The Florida Bar proposed advisory opinion follows in the footsteps of ABA Formal Opinion 464, and several other jurisdictions, in deciding that nonlawyer ownership of law firms in jurisdictions where permissible should not cause collaborating Florida lawyers to violate the prohibition against fee sharing set forth in Rule 4-5.4.

The underlying policy of Rule 4-5.4  concerns the improper influence of a nonlawyer may on a  lawyer’s professional judgment. However in the scenario analyzed in the proposed opinion, Florida Bar committee believes that a lawyer’s professional independence is not at risk simply because a nonlawyer owner receives a portion of an out-of-state lawyer’s fees.

Ultimately, the proposed opinion encourages attorneys to work with out-of-state lawyers despite differences in ownership structure, and allows clients to maintain flexibility in choosing counsel from other jurisdictions. 

To read the proposed opinion please click here.  

From the Florida Bar webpage:

Pursuant to Rule 4(c) and (d) of The Florida Bar Procedures for Ruling on Questions of Ethics, comments from Florida Bar members are solicited on the proposed opinion. The committee will consider any comments received at a meeting to be held in conjunction with The Florida Bar’s Fall Meeting at 9:30 a.m. on Friday, October 13, 2017, at the Tampa Airport Marriott.Comments should be submitted to Elizabeth Clark Tarbert, Ethics Counsel, The Florida Bar, 651 E. Jefferson Street, Tallahassee 32399-2300, and must be postmarked no later than August 15, 2017.

Is Email Encryption the New Reasonable Standard? The ABA Opines

The ever-present threat to data security  in an increasingly digitized legal profession has redefined the  “reasonable efforts” standard for lawyers who handle client information. Nicole Black over at Above the Law offers a good summary of the recently released American Bar Association (ABA)  Formal Opinion 477, which addresses a need for lawyers to increase the security  of electronic communication by using encryption in certain situations to maintain competence and client confidentiality  She also explores New York State Bar Association (NYSBA) updated  Social Media Ethics Guidelines, which acknowledge and address newer state opinions in the realm of social media.

Click on the link below to access Nicole Black’s article from Above the Law and learn more about the potential impact of ABA Formal Opinion 477 and NYSBA’s Social  Media Ethics Guidelines on the legal community.

New Guidelines: ABA On Email And NYSBA On Social Media

Work-Product Protection in Full Force

The U.S. Court of Appeals for the Third Circuit held that evidence of a client thinking about using a lawyer’s advice to cover up a money-laundering scheme was not enough to defeat work- product protection.

As a result, a grand jury should have never seen a privileged email that the appellant received from his lawyer, but later forwarded to his accountant.

The appellate panel agreed with the district court that the appellant waived his attorney-client protection by forwarding the email to his accountant. However, the three-judge panel disagreed that the crime-fraud exception to the work-product privilege applied in this case.

Every state’s jurisprudence has some version of the crime-fraud exception, which allows the disclosure of certain communications that would otherwise be confidential. This exception to the work-product privilege is meant to prevent abuses of the privilege.

A party must satisfy two requirements when invoking the crime-fraud exception:

  • That the lawyer or client was committing or intending to commit an act of fraud
  • That the attorney work product was used in furtherance of that alleged crime or fraud

In this case, the “evidence is strong, but it is not sufficient by itself to pierce work-product protection.” The appellate panel reasoned that the second requirement can only be satisfied by a showing that the defendant actually engaged in an overt act to further the crime.

Merely thinking about a bad act is not enough to strip work-product protection, no matter how much evidence there is that the lawyer or client was intending to commit an act of fraud.

However, when a client uses work product to further a fraud, “the [client-lawyer] relationship has broken down, and the lawyer’s services have been misused.”

To read the full opinion, click here.

No Love for Lawyer Who Reported Ethics Violation for Personal Benefit

An attorney who agreed to a fee-sharing agreement with his former firm tried to void the arrangement by claiming that there was a conflict of interest between his former firm and defendant, the Board of Education of the City of Buffalo. The alleged conflict revolved around a member of the firm who also sat on the Board of Education.

The Supreme Court of the State of New York, Appellate Division, Fourth Department heard the case and refused to void the contract.

The Court reasoned that the attorney could not make the argument that the agreement should be voided on ethical grounds when the attorney “…freely agreed to be bound by and received the benefit of the same agreement . . . ” and given “there is no indication that the client was in any way deceived or misled.”

The court’s reasoning signals a repudiation of an attempt by a lawyer to use the Rules of Professional Conduct for his own pecuniary benefit. This case also reflects a judicial hesitantancy to issue a ruling that encourages members of the legal profession to interact in an underhanded manner with each other.

To read the full opinion, click here.

 

The Client Comes First: Lawyers Must Report Co-Counsel’s Potential Malpractice

The sanctity of the attorney-client relationship relies in large part on establishing and preserving a bedrock of trust between the parties. A recently released opinion by The New York State Bar reinforces this principle by concluding that a lawyer to must disclose to his client any potential malpractice of a co-counsel

This obligation arises when a lawyer “reasonably believes” that a co-counsel has committed a “significant error or omission.” The example used in the opinion is that of a lawyer who has learned that his co-counsel did not conduct discovery even though certain documents may have been critical to effective representation in the case.

The opinion recognizes that while a lawyer may desire to maintain a good relationship with co-counsel, the right of the client to be fully informed pursuant to New York Rule of Professional Conduct 1.4 (Communication) is paramount. However, the opinion notes that there is a potential that some lawyers could abuse this new duty to unfairly criticize co-counsel. The opinion addresses this fear and states that a lawyer cannot “wrongfully or improperly disparage the other lawyer in an endeavor to supplant him.”

To read the full opinion, click here.