Florida Amends Bar Rules to Make Pro Bono Work More Accessible for Lawyers

On November 20, 2017, the Florida Supreme Court amended Florida Rule 4-1.2 and adopted Rule 4-6.6 to make it easier for lawyers to volunteer their services to legal aid organizations and pro bono clients.

In its order, the Florida Supreme Court noted that it is not always feasible for a lawyer providing short-term limited legal services through an organization to “systematically screen for conflicts of interest as is generally required before undertaking a representation.” Newly adopted Rule 4-6.6 directly addresses that issue, and states that a lawyer who provides short-term limited legal services to a client “under the auspices of a program sponsored by a nonprofit organization, court, government agency, bar association or an American Bar Association-accredited law school” will not be held to the standard conflicts of interest rules, barring two exceptions.

Specifically, the new rule states that a lawyer providing “short-term limited legal services to a client without expectation by either the lawyer or the client that the lawyer will provide continuing representation in the matter: (1) is subject to Rules 4-1.7 and 4-1.9 (a) only if the lawyer knows that the representation of the client involves a conflict of interest; and (2) is subject to Rule 4-1.10 only if the lawyer knows that another lawyer associated with the lawyer in a law firm is disqualified by Rule 4-1.7 or Rule 4-1.9(a) with respect to the matter.”

Among the amendments to Rule 4-1.2 are additions to the language of the rule that the Supreme Court wrote will “[exempt] a lawyer who gives advice in a short-term limited legal services program under new Bar Rule 4-6.6 from the requirement that a client’s informed consent to representation limited in objectives or scope must be in writing.” The Court also wrote that the new rules are intended to encourage lawyers to volunteer their services; thereby increasing access to justice “at a time when legal aid funding and staff cannot accommodate all individuals who need legal representation.”

The Florida Supreme Court’s order on the changes went into effect on November 20, 2017. Read the full order here.

USPTO Trying Out Diversion Program for Struggling Practitioners

On November 3, 2017, the United States Patent and Trade Office (USPTO) announced that the agency’s Office of Enrollment and Discipline (OED) will be launching a two-year pilot diversion program for patent and trademark practitioners who commit minor ethical lapses without causing actual client harm. The program is a chance for practitioners to avoid discipline by taking affirmative steps to rectify the underlying issue that caused their misconduct. The motivation behind the program came from a recent study which found high levels of drinking, substance abuse and depression among American lawyers. The USPTO hopes that the diversion program will help put lawyers suffering from addiction or mental health issues on the path to resolve their misconduct and prevent future misconduct.

However, not everyone will qualify for the pilot program. For example, practitioners cannot participate if they have been publicly disciplined in the past three years. In addition, practitioners cannot take part if the misconduct includes (1) misappropriation of funds or dishonesty, deceit, fraud or misrepresentation; (2) substantial prejudice to anyone; (3) serious crime; or (4) anything resembling prior misconduct in the past five years.

The USPTO expects and anticipates that the program will further the mission of protecting the public by strengthening the skills and abilities of USPTO practitioners.

To read the OED Diversion Pilot Program click here.

To read the full USPTO article click here.

To read the study mentioned click here.

Marijuana Businesses Spark Tensions Between State and Federal Law

As expected, a surge of new businesses emerged in response to the state-level legalization of marijuana, which is currently legal in twenty-nine states, including Florida. This not only gave rise to a new form of business, but also allowed attorneys specializing in start-up companies to increase their clientele.

Marijuana, however, is legal only under state law, not federal law.  In fact, the federal U.S. drug policy statute, the Controlled Substances Act, still lists marijuana as a “controlled substance.”  This tension between state and federal law also affects attorneys from an ethical standpoint.  Specifically, Rule 4-1.2 of the Florida Rules of Professional Conduct states that a lawyer cannot counsel or assist a client in conduct that the lawyer knows is criminal.  In essence, an attorney can counsel and assist a client who owns a marijuana business, as state law permits, yet simultaneously violate federal law.  Although The Florida Bar, and other bar associations, have released guidelines to help lawyers navigate through this conflict in their representation, there is still uncertainty as to the scope of such representation.

This tension between state and federal law becomes even more apparent in the area of bankruptcy. Chief Judge Laurel M. Isicoff, of the Bankruptcy Court for the Southern District of Florida, recently denied confirmation of a Chapter 11 plan for reorganization because the debtor’s plan proposed the rental of a commercial property that would obtain funds stemming from a marijuana business.  Although it was an issue of first impression in this jurisdiction, the court looked at other jurisdictions, which have unanimously held that “the cultivation and sale of marijuana is illegal under federal law and therefore the federal law and the federal courts are not available to any person engaged in that business.” Further, the court considered the plan a violation of the good faith requirement because it was “based on an enterprise illegal under [f]ederal law.”  Debtor amended the plan, yet the court still viewed the amendment as reflecting funds from a marijuana business.

The court was direct in its position and stated that “the law is very clear—a bankruptcy plan that proposes to be funded through income generated by the sale of marijuana products cannot be confirmed unless the business generating the income is legal under both state law and federal law.”  As a result, the debtor sought to convert to a Chapter 13, which allows for the discharge of more types of debts than in a Chapter 11; however, the court denied the debtor’s request, holding that the plan, under a Chapter 13, would “require the . . . Trustee to violate federal criminal law to administer the plan payments,” which is also impermissible.

Unfortunately, it appears this tension will exist for some time, as it does not seem likely that the federal government will sanction the legalization of marijuana any time soon.

Read full bankruptcy opinion here.

Insurance Counsel Can’t Advise Client on Misrepresentation

The New York County Bar Association’s Ethics Committee published an opinion advising that an insurance defense lawyer cannot advise the insured whether to inform the insurance carrier about false information or a misrepresentation on the insured’s application. Instead, the Ethics Committee suggests that a lawyer advise the client to seek independent counsel as to whether the client needs to disclose the information to the insurance carrier.

This issue arises because insurance carriers often retain firms as “panel counsel” from which they select counsel to defend insured in lawsuits. The opinion deals with the conundrum that may confront a lawyer, who has been retained as “panel counsel,” and then learns that the insured lied on his application. The opinion describes a lawyer who is confronted with the dilemma of whether to report the client’s lie to the insurance company, who may then deny coverage for the client, or to fail to disclose the misrepresentation at the risk of losing a highly coveted panel counsel position.

The Committee concludes that, in this situation, the lawyer’s client is the insured and therefore the duty to the client is paramount. The lawyer owes a duty of confidentiality to his client under the Rules of Professional Conduct Rule 1.6 (Confidentiality), which restrains the lawyer from revealing an insured’s misrepresentation to the insurance carrier.

However, beyond the duty of confidentiality, the committee notes that the lawyer has a conflict under Rule 1.7 (Current-Client Conflicts), because of his personal, financial interest in his business relationship with the insurance carrier. Thus, the lawyer is not likely to be in a position to advise the client even after full disclosure of the conflict to the client.  Ultimately, the opinion concludes that if the client fails to correct the misrepresentation and thereby insists on pursuing a fraudulent course of action, the lawyer may withdraw.

Find the opinion here.

$9M Sanctions Against Florida Tobacco Lawyers for Frivolous Claims

On October 18, two Florida lawyers were ordered to pay more than $9 million in sanctions for pursuing over a thousand nonviable claims in tobacco litigation. The four-judge panel for the Middle District of Florida found that Norwood Wilner and Charlie Farah undermined the “integrity and trust” of the judicial process on a “breathtaking scale” by pursuing 1,250 meritless lawsuits.

Of those 1,250 cases, 588 were complaints involving dead plaintiffs, 572 involved plaintiffs who never authorized the attorneys to file lawsuits, 15 were unauthorized, 18 involved plaintiffs who weren’t even smokers, 36 were on behalf of plaintiffs who never lived in Florida, and 28 that were previously adjudicated.

The litigation giving rise to the sanctions arose out of the Engle class action. In 1997, a Florida jury ruled against tobacco companies in Florida state court, finding in favor of the Engle class. The Florida Supreme Court, however, decertified the class and gave the plaintiffs one year to file individual lawsuits. Wilner and Farah filed 3,700 of these individual complaints and eventually reached a $100 million settlement with the tobacco companies. The federal court overseeing the settlement appointed the U.S. Attorney as a special master to investigate the lawyers’ conduct.

The 148-page opinion lambasted the attorneys for violating Fed. R. Civ. P. 11, which authorizes sanctions for filing meritless pleadings, 28 U.S.C. § 1927, which imposes sanctions against lawyers who vexatiously drag out proceedings. Moreover, the attorneys’ conduct appears to have violated numerous rules of the The Florida Bar’s Professional Conduct including, but not limited to the rules that require lawyers to communicate with their clients, file meritorious actions, and conduct themselves with candor toward the tribunal. The court has referred the matter to the The Florida Bar and it remains to be seen how The Florida Bar will proceed.

The immense monetary sanction was the result of the court’s calculation of $6,983.42 per frivolous case, reflecting of the cost of the waste of the court’s resources, plus another  $435,129.12, for the special master’s time. The opinion explains that the sanction was imposed to compensate the public for the waste of public resources resulting from the frivolous lawsuits. Moving forward, the size of the sanction is a warning sign to plaintiffs’ lawyers about filing and maintaining meritless cases.

Read the full opinion here.