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.

Out of the Frying Pan Into the Fire? Attorney’s Voluntary Discipline Petition Denied Based Due to Inapplicability of Cited Legal Ethics Rule

The Georgia Supreme Court rejected an immigration attorney’s voluntary discipline petition because the attorney misapplied the ethics rules. The attorney self reported an ethics violation that consisted of signing a client’s name and filing his asylum application without explaining the application to the client in the client’s native language. The application requires an attested signature by the client in the presence of the lawyer. The client, a non-English speaking Guatamalan boy, was detained in Texas and subject to removal proceedings. His mother retained the attorney and subsequently completed and filed the asylum application on the boy’s behalf. Ultimately, another attorney represented the client who obtained asylum relief.

Nonetheless, attorney filed a petition for voluntary discipline thereby self-reporting a violation of Georgia Rule of Professional Conduct 1.2(d), which prohibits counseling or assisting a client in criminal or fraudulent conduct. Moreover, he requested the court impose a “review panel reprimand,” Georgia’s lowest public disciplinary action.

However, the Georgia Supreme Court rejected his petition finding that his actions were without consultation of his client and therefore he could not have “assisted” his the client in fraudulent conduct. “Instead . . .[attorney] engaged in criminal or fraudulent behavior on behalf of his client without ever discussing the matter with his client.” Although the attorney’s petition was dismissed the court noted in a footnote that the attorney’s conduct appears to support violations of Rules 1.2(a) and 8.4(a)(4), which require lawyers to consult with clients regarding the scope of the representation, and refrain from conduct involving “dishonesty, fraud, deceit or misrepresentation,” respectively.

It is unclear whether any further action will initiated by the Georgia State Bar or the attorney—Bottom line: Before you contemplate a “confession,” ensure that you understand the nature of your “crime.” To read the entire opinion, click here.

Taking Accountability Over Accounts: Familial Relationship Is No Excuse

The Supreme Court of Ohio recently released an opinion the sanctions to be imposed on two attorneys for their violations of several rules of professional conduct, including Professional Conduct Rules 1.5(a) (excessive fees), 1.15(a) (holding client funds in interest-bearing account with a clear fiduciary title), 1.15(a)(2) (maintenance of complete records of accounts with client funds), and 1.15(a)(5) (monthly reconciliations of accounts with client funds).

In this case, the attorneys—along with their client—were signatories on a special account set up by the firm as the client’s primary vehicle for managing her money. A third attorney, the father of the two signatory-attorneys, was primarily responsible for preparing accountings on the special account. The account did not bear interest, was not designated as a fiduciary account, and was not reconciled on a monthly basis. The attorneys also failed to maintain complete and accurate records on the account. The issue that received most of the court’s attention, however, was the charging of excessive legal fees. The client was essentially charged separate attorney fees, some of which were paid through the special account, for nonlegal services and was charged twice for several services. Additionally, unbeknownst to the two attorneys appearing in this case, some of the attorney fees were paid directly to their father.

The attorneys argued that their father was the “mastermind” behind the excessive fees and that they were “restrained from acting in the best interests of their client, at least in part, because of the familial relationship.” The Ohio Supreme Court declined to accept such a “family relations” excuse and declared that neither case law nor professional conduct rules offer an exception for situations where an attorney is complicit in a relative’s conduct. Ultimately, the court emphasized the responsibility that attorneys have to act in the best interests of their clients, even when that would require preventing the actions of relatives. The court concluded that because both attorneys had a fiduciary responsibility to oversee the special account and because their “collective silence…by their failure to oversee the special account was vital to their father’s success in overcharging,” both were ultimately responsible for the charging of excessive fees. The court therefore ordered both attorneys to pay restitution.

Taking a Menopause Jab at Opposing Counsel: A Definite “Don’t”

A U.S. District Court judge was unamused by a jab an attorney made at opposing counsel during litigation this past March. After a female attorney complained about the temperature in a room where 16 attorneys were participating in a deposition, a male attorney remarked aloud, “You’re not getting menopause, I hope.” After a motion for sanctions was filed against the attorney who made the offensive remark, the judge expressed his negative view of the offending attorney’s conduct.

The judge called the attorney‘s comment “discriminatory in nature.”

“Because menopause occurs only in women, and predominantly in middle-aged women…a comment suggesting that a woman may be menopausal singles her out on the basis of gender and age.”

The judge ruled that the attorney’s statement was a violation of ABA Model Rule 4.4 (Respect for Rights of Third Persons). “The public nature of [the male attorney’s] comment combined with the personal and private nature of menopause leads the Court to conclude that the comment was made to embarrass [the female attorney] and was not intended to serve any other purpose.”

Attempts to ridicule opposing counsel are unfortunately nothing new in the legal profession. Citing a 2015 ABA report, the judge noted that “inappropriate or stereotypical comments” made by opposing counsel are one cause for the under-representation of women in lead trial attorney roles.

Accordingly, the court decided that the violating attorney was to pay his opposing counsel’s reasonable attorneys’ fees of $1,000 for bringing the motion and complete a continuing legal education course on professional conduct.

For more information click here. To read the full opinion click here.

Emerging Technologies & EDiscovery: Redefining the Competent Lawyer

Future Law Office 2020, a report issued by Robert Half, contains a survey in which 350 attorneys were asked which issue would have the biggest impact on the practice of law in the next five years. Emerging technologies was the issue that garnered the most votes. Furthermore, 44 percent of the respondents identified eDiscovery as the main issue driving legal departments to work more closely with IT specialists.

Is your law firm up to speed on technology and eDiscovery? Emerging technologies are not only a trend, but also are becoming a matter of competence. In fact, recent sanctions imposed on the Defendants and their attorneys in a case in the U.S. District Court for the Southern District of California reminds us of the legal implications of poor handling of eDiscovery. HM Elecs., Inc. v. R.F. Techs., Inc., 2015 BL 254876, No. 3:12-cv-02884-BAS-MDD (S.D. Cal. Aug. 7, 2015).

In HM Elecs. Inc, the Plaintiff—a manufacturer of drive-thru headset systems—brought forth various claims against the Defendant—a repairmen of drive-thru headset systems—for trademark infringement and unfair competition and interference by the Defendant. During the course of the case, several discovery disputes arose, most notably related to the failure to properly and timely produce documents as required. The Plaintiff filed a joint motion alleging that Defendant intentionally withheld and destroyed highly relevant electronically stored documents (“ESI”), among other allegations.

The Court granted the Plaintiff’s request for reasonable attorneys’ fees and costs incurred as a result of Defendants’ eDiscovery misconduct pursuant to Rules 26(g)(3) and 37, and for not paying close enough attention to the misconduct of its clients. The court sanctioned discovery practices by the Defendant such as (1) signing certifications of discovery stating that certain documents didn’t exist, even though they did; (2) attorneys did not property craft and implement a litigation hold; (3) emails were sent to employees instructing them to destroy relevant documents; (4) massive amounts of data withheld by the used of limited search terms; and (5) failure to produce more than 375,000 pages of electronically stored information (“ESI”) until after close of discovery due to vendor error.

Thus, failure to be proactive in acquiring competence in emerging technologies and specifically in eDiscovery may result in a costly lesson that not only takes a financial toll on a lawyer and his client, but also may tarnish the reputation and career of the lawyer.  In other words, being a technophobe is becoming risky business for lawyers practicing law in the digital age.

To read the survey, click here.

To read the opinion, click here.